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By:  Hartnett                                                     H.B. No. 3503



A BILL TO BE ENTITLED

AN ACT

relating to trusts.                                                           
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Section 111.002, Property Code, is amended to 
read as follows:   
	(a)  Except as provided by Subsections (b) or (c) of this 
section, if [If] the provisions of this subtitle and the terms of a 
trust conflict, the terms of the trust control.
	(b)  The [except the] settlor may not relieve a corporate 
trustee from the duties, restriction, and liabilities under Section 
113.052 or 113.053.
	(c)  The settlor may not modify or eliminate the power of the 
court to remove a trustee under Section 113.082.
	(d)  This subtitle and the Texas Trust Act, as amended 
(Articles 7425b-1 through 7425b-48, Vernon's Texas Civil 
Statutes), shall be considered one continuous statute, and for the 
purposes of any statute or of any instrument creating a trust that 
refers to the Texas Trust Act, this subtitle shall be considered an 
amendment of the Texas Trust Act.
	SECTION 2.  The heading of Section 113.059, Property Code, 
is amended to read as follows:
	Sec. 113.059.  POWER OF SETTLOR [TRUSTOR] TO ALTER TRUSTEE'S 
DUTIES AND RESPONSIBILITIES.
	SECTION 3.  Section 113.059, Property Code, is amended to 
read as follows:   
	(a)  Except as provided by Subsections (c), (d), (e) or (f)
[(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 or by common law.
	(b)  In order to relieve a trustee from any such duty or 
restriction, the settlor must specifically and explicitly provide 
in the instrument creating, modifying, amending or revoking the 
trust that the duty or restriction is modified or eliminated.
	(c)  A settlor may not relieve a corporate trustee from the 
duties or restrictions [, restrictions, or liabilities] of Section 
113.052 or 113.053 of this Act.
	(d)  A settlor may not modify or eliminate the power of the 
court to remove a trustee as provided in this subtitle.
	(e)  A settlor may not modify or eliminate a beneficiary's 
right to a trust accounting as provided in this subtitle.
	(f)  A settlor may not authorize the trustee to act in bad 
faith; to intentionally commit a breach of trust; to act with 
reckless indifference to the interest of the beneficiary; or to 
obtain any profit from a breach of trust.
	(g)  An exculpatory provision in a trust instrument is not, 
by itself, effective to modify or eliminate any of the trustee's 
duties or restrictions.
	SECTION 4.  Chapter 113, Subtitle B, Title 9, Property Code, 
is amended by adding Section 113.0591 to read as follows:
	Sec. 113.0591.  EXCULPATORY PROVISIONS.  (a)  Except as 
provided by Subsections (b), (c) and (d) of this section, the 
settlor by provision in the instrument creating, modifying, 
amending or revoking the trust may relieve the trustee from 
liability for breach of trust.
	(b)  A settlor may not relieve a corporate trustee from the 
liabilities of Section 113.052 or 113.053 of this Act.
	(c)  A provision in the trust instrument is not effective to 
relieve the trustee of liability for breach of trust committed in 
bad faith or intentionally or with reckless indifference to the 
interest of the beneficiary, or of liability for any profit which 
the trustee has derived from a breach of trust.
	(d)  To the extent to which a provision relieving the trustee 
of liability for breaches of trust is inserted in the trust 
instrument as the result of an abuse by the trustee of a fiduciary 
or confidential relationship to the settlor, such provision is 
ineffective.
	SECTION 5.  Subsections (h), (i) and (j) are added to Section 
142.005, Property Code, to read as follows:
	(h)  A trust created under this section is subject to 
Subtitle B, Title 9, Property Code.
	(i)  To the extent of a conflict between Subtitle B, Title 9, 
Property Code, and a provision of this section, the provision of 
this section controls.
	(j)  No provision in a trust created under this section which 
relieves a trustee from any duty, responsibility or liability 
otherwise imposed by this section or by Subtitle B, Title 9, 
Property Code, is enforceable unless:
		(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 by clear and convincing evidence that the 
inclusion of the provision is in the best interests of the 
beneficiary of the trust.
	SECTION 6.  Subsections (c) is added to Section 868, Probate 
Code, to read as follows:
	(c)  No provision in a trust created under Section 867 which 
relieves a trustee from any duty, responsibility or liability 
otherwise imposed by this subpart or by Subtitle B, Title 9, 
Property Code, is enforceable unless:
		(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 by clear and convincing evidence that the 
inclusion of the provision is in the best interests of the 
beneficiary of the trust.
	SECTION 7.  This Act takes effect September 1, 2003, and 
applies only to a trust existing on or created after that date.