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H.B. No. 3503
AN ACT
relating to exculpatory clauses in trusts.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The heading to Section 113.059, Property Code,
is amended to read as follows:
Sec. 113.059. POWER OF SETTLOR [TRUSTOR] TO ALTER TRUSTEE'S
RESPONSIBILITIES.
SECTION 2. Section 113.059, Property Code, is amended by
amending Subsection (a) and adding Subsections (c) and (d) to read
as follows:
(a) Except as provided by [Subsection (b) of] this section,
the settlor by provision in an instrument creating, modifying,
amending, or revoking the trust may relieve the trustee from a duty,
liability, or restriction imposed by this subtitle.
(c) A settlor may not relieve the trustee of liability for:
(1) a breach of trust committed:
(A) in bad faith;
(B) intentionally; or
(C) with reckless indifference to the interest of
the beneficiary; or
(2) any profit derived by the trustee from a breach of
trust.
(d) A provision in a trust instrument relieving the trustee
of liability for a breach of trust is ineffective to the extent that
the provision is inserted in the trust instrument as a result of an
abuse by the trustee of a fiduciary duty to or confidential
relationship with the settlor.
SECTION 3. Section 142.005, Property Code, is amended by
adding Subsections (h), (i), and (j) to read as follows:
(h) A trust created under this section is subject to
Subtitle B, Title 9.
(i) Notwithstanding Subsection (h), this section prevails
over a provision in Subtitle B, Title 9, that is in conflict or
inconsistent with this section.
(j) A provision in a trust created under this section that
relieves a trustee from a duty, responsibility, or liability
imposed by this section or Subtitle B, Title 9, is enforceable only
if:
(1) the provision is limited to specific facts and
circumstances unique to the property of that trust and is not
applicable generally to the trust; and
(2) the court creating or modifying the trust makes a
specific finding that there is clear and convincing evidence that
the inclusion of the provision is in the best interests of the
beneficiary of the trust.
SECTION 4. Section 868, Texas Probate Code, is amended by
adding Subsection (c) to read as follows:
(c) A provision in a trust created under Section 867 that
relieves a trustee from a duty, responsibility, or liability
imposed by this subpart or Subtitle B, Title 9, Property Code, is
enforceable only if:
(1) the provision is limited to specific facts and
circumstances unique to the property of that trust and is not
applicable generally to the trust; and
(2) the court creating or modifying the trust makes a
specific finding that there is clear and convincing evidence that
the inclusion of the provision is in the best interests of the
beneficiary of the trust.
SECTION 5. This Act takes effect September 1, 2003, and
applies only to a trust existing on or created after that date.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 3503 was passed by the House on May 6,
2003, by a non-record vote; and that the House concurred in Senate
amendments to H.B. No. 3503 on May 30, 2003, by a non-record vote.
______________________________
Chief Clerk of the House
I certify that H.B. No. 3503 was passed by the Senate, with
amendments, on May 28, 2003, by the following vote: Yeas 31, Nays
0.
______________________________
Secretary of the Senate
APPROVED: __________________
Date
__________________
Governor