78R2207 KLA-F
By: Harris S.B. No. 1178
A BILL TO BE ENTITLED
AN ACT
relating to guardianships of incapacitated persons; providing a
criminal penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 606(d), Texas Probate Code, is amended
to read as follows:
(d) Notwithstanding any other law, in [In] those counties in
which there is a statutory probate court, all applications,
petitions, and motions regarding guardianships, mental illness
matters, or other matters addressed by this chapter shall be filed
and heard in the statutory probate court[, unless otherwise
provided by law].
SECTION 2. Section 607(c), Texas Probate Code, is amended
to read as follows:
(c) In all actions by or against a person in the person's
capacity as a guardian, a statutory probate court has concurrent
jurisdiction with a district court. For purposes of Subsection (b)
of this section, a cause of action by or against a person in the
person's capacity as guardian is considered a cause of action
appertaining to or incident to a guardianship estate only if the
cause of action is related to the settlement, partition, or
distribution of the estate.
SECTION 3. Section 608, Texas Probate Code, is amended to
read as follows:
Sec. 608. TRANSFER OF GUARDIANSHIP PROCEEDING. A judge of a
statutory probate court, on the motion of a party to the action or
of a person interested in a guardianship, may transfer to the
judge's court from a district, county, or statutory court a cause of
action appertaining to or incident to a guardianship estate that is
pending in the statutory probate court or a cause of action relating
to a guardianship in which a guardian, ward, or proposed ward in a
guardianship [personal representative of an estate] pending in the
statutory probate court is a party and may consolidate the
transferred cause of action with the other proceedings in the
statutory probate court relating to the guardianship estate.
SECTION 4. Section 633, Texas Probate Code, is amended by
amending Subsections (d) and (f) and adding Subsection (d-1) to
read as follows:
(d) The [court clerk, at the applicant's request, or the]
applicant shall mail a copy of the application for guardianship and
a notice containing the information required in the citation issued
under Subsection (b) of this section by registered or certified
mail, return receipt requested, or by any other form of mail that
provides proof of delivery, to the following persons, if their
whereabouts are known or can be reasonably ascertained:
(1) all adult children of a proposed ward;
(2) all adult siblings of a proposed ward;
(3) the administrator of a nursing home facility or
similar facility in which the proposed ward resides;
(4) the operator of a residential facility in which
the proposed ward resides;
(5) a person whom the applicant knows to hold a power
of attorney signed by the proposed ward;
(6) a person designated to serve as guardian of the
proposed ward by a written declaration under Section 679 of this
code, if the applicant knows of the existence of the declaration;
(7) a person designated to serve as guardian of the
proposed ward in the probated will of the last surviving parent of
the ward; [and]
(8) a person designated to serve as guardian of the
proposed ward by a written declaration of the proposed ward's last
surviving parent, if the declarant is deceased and the applicant
knows of the existence of the declaration; and
(9) each person named as next of kin in the application
for guardianship as required by Section 682(10) or (12) of this
code.
(d-1) The applicant shall file with the court:
(1) a copy of any notice required by Subsection (d) of
this section and the proofs of delivery of the notice; and
(2) an affidavit sworn to by the applicant or the
applicant's attorney stating:
(A) that the notice was mailed as required by
Subsection (d) of this section; and
(B) the name of each person to whom the notice was
mailed, if the person's name is not shown on the proof of delivery.
(f) The court may not act on an application for the creation
of a guardianship until the Monday following the expiration of the
10-day period beginning the date service of notice and citation has
been made as provided by Subsections (b), (c), and (d)(1) of this
section and the applicant has complied with Subsection (d-1) of
this section. The validity of a guardianship created under this
chapter is not affected by the failure of the [clerk or] applicant
to comply with the requirements of Subsections (d)(2)-(9)
[(d)(2)-(8)] of this section.
SECTION 5. Section 634, Texas Probate Code, is amended to
read as follows:
Sec. 634. SERVICE ON ATTORNEY. (a) If an attorney has
entered an appearance on record for a party in a guardianship
proceeding, a citation or notice required to be served on the party
shall be served on the attorney. Service on the attorney of record
is in lieu of service on the party for whom the attorney appears.
Except as provided by Section 633(e) [633(f)] of this code, an
attorney ad litem may not waive personal service of citation.
(b) A notice served on an attorney under this section may be
served by registered or certified mail, return receipt requested,
by any other form of mail requiring proof of delivery, or by
delivery to the attorney in person. A party to the proceeding or
the party's attorney of record, an appropriate sheriff or
constable, or another person who is competent to testify may serve
notice or citation to an attorney under this section.
(c) A written statement by an attorney of record, the return
of the officer, or the affidavit of a person that shows service is
prima facie evidence of the fact of service.
SECTION 6. Section 665B(a), Texas Probate Code, is amended
to read as follows:
(a) A court that creates a guardianship for a ward under
this chapter, on request of a person who filed an application to be
appointed guardian of the proposed ward or for the appointment of
another suitable person as guardian of the proposed ward, may
authorize compensation of an attorney who represents the person who
filed the application at the application hearing, regardless of
whether the person is appointed the ward's guardian, from:
(1) available funds of the ward's estate; or
(2) the county treasury if:
(A) the ward's estate is insufficient to pay for
the services provided by the attorney; and
(B) funds in the county treasury are budgeted for
that purpose.
SECTION 7. Section 682, Texas Probate Code, is amended to
read as follows:
Sec. 682. APPLICATION; CONTENTS. Any person may commence a
proceeding for the appointment of a guardian by filing a written
application in a court having jurisdiction and venue. The
application must be sworn to by the applicant and state:
(1) the name, sex, date of birth, and address of the
proposed ward;
(2) the name, relationship, and address of the person
the applicant desires to have appointed as guardian;
(3) whether guardianship of the person or estate, or
both, is sought;
(4) the nature and degree of the alleged incapacity,
the specific areas of protection and assistance requested, and the
limitation of rights requested to be included in the court's order
of appointment;
(5) the facts requiring that a guardian be appointed
and the interest of the applicant in the appointment;
(6) the nature and description of any guardianship of
any kind existing for the proposed ward in any other state;
(7) the name and address of any person or institution
having the care and custody of the proposed ward;
(8) the approximate value and description of the
proposed ward's property, including any compensation, pension,
insurance, or allowance to which the proposed ward may be entitled;
(9) the name and address of any person whom the
applicant knows to hold a power of attorney signed by the proposed
ward and a description of the type of power of attorney;
(10) if the proposed ward is a minor and if known by
the applicant:
(A) the name of each parent of the proposed ward
and state the parent's address or that the parent is [, the names of
the parents and next of kin of the proposed ward and whether either
or both of the parents are] deceased;
(B) the name and age of each sibling, if any, of
the proposed ward and state the sibling's address or that the
sibling is deceased; and
(C) if each of the proposed ward's parents and
siblings are deceased, the names and addresses of the proposed
ward's next of kin who are adults;
(11) if the proposed ward is a minor, whether the minor
was the subject of a legal or conservatorship proceeding within the
preceding two-year period and, if so, the court involved, the
nature of the proceeding, and the final disposition, if any, of the
proceeding;
(12) if the proposed ward is an adult and if known by
the applicant:
(A) the name [60 years of age or older, the names
and addresses, to the best of the applicant's knowledge,] of the
proposed ward's spouse, if any, and state the spouse's address or
that the spouse is deceased;
(B) the name of each of the proposed ward's
parents and state the parent's address or that the parent is
deceased;
(C) the name and age of each of the proposed
ward's siblings, if any, and state the sibling's address or that the
sibling is deceased;
(D) the name and age of each of the proposed
ward's children, if any, and state the child's address or that the
child is deceased; and
(E) if the proposed ward's spouse and each of the
proposed ward's parents, siblings, and children are deceased, or,
if there is no spouse, parent, adult sibling, or adult child, the
names and addresses of the proposed ward's next of kin who are
adults;
(13) facts showing that the court has venue over the
proceeding; and
(14) if applicable, that the person whom the applicant
desires to have appointed as a guardian is a private professional
guardian who has complied with the requirements of Section 697 of
this code.
SECTION 8. Section 687(c), Texas Probate Code, is amended
to read as follows:
(c) If the basis of the proposed ward's alleged incapacity
is mental retardation, the proposed ward shall be examined by a
physician or psychologist licensed in this state or certified by
the Texas Department of Mental Health and Mental Retardation to
perform the examination, unless there is written documentation
filed with the court that shows that the proposed ward has been
examined according to the rules adopted by the Texas Department of
Mental Health and Mental Retardation not earlier than 24 [six]
months before the date of a hearing to appoint a guardian for the
proposed ward. The physician or psychologist shall conduct the
examination according to the rules adopted by the Texas Department
of Mental Health and Mental Retardation and shall submit written
findings and recommendations to the court.
SECTION 9. Section 702(b), Texas Probate Code, is amended
to read as follows:
(b) A bond is not required to be given by a guardian that is:
(1) a corporate fiduciary, as defined by Section 601
of this code; [or]
(2) a guardianship program operated by a county; or
(3) a parent or sibling of the ward if:
(A) the parent or sibling is appointed only as
guardian of the person of the ward; and
(B) the court finds that the parent or sibling
has demonstrated a history of consistent attentiveness toward and
responsibility for the ward.
SECTION 10. Sections 729(a) and (e), Texas Probate Code,
are amended to read as follows:
(a) Not later than the 30th [90th] day after the date the
guardian of the estate qualifies as guardian, unless a longer time
is granted by the court, the guardian of the estate shall file with
the clerk of the court a verified, full, and detailed inventory, in
one written instrument, of all the property of the ward that has
come into the guardian's possession or knowledge. The inventory
filed by the guardian under this section must include:
(1) all real property of the ward that is located in
this state; and
(2) all personal property of the ward wherever
located.
(e) The court for good cause shown may require the filing of
the inventory and appraisement at a time not later than the 30th
[90th] day after the date of qualification of the guardian.
SECTION 11. Section 745(c), Texas Probate Code, as amended
by Chapters 127, 217, and 1174, Acts of the 77th Legislature,
Regular Session, 2001, is reenacted to read as follows:
(c) When the estate of a minor ward consists only of cash or
cash equivalents in an amount of $100,000 or less, the guardianship
of the estate may be terminated and the assets paid to the county
clerk of the county in which the guardianship proceeding is
pending, and the clerk shall manage the funds as provided by Section
887 of this code.
SECTION 12. Section 765, Texas Probate Code, is amended to
read as follows:
Sec. 765. SUCCESSORS' RETURN OF INVENTORY, APPRAISEMENT,
AND LIST OF CLAIMS. A successor guardian who has qualified to
succeed a prior guardian shall make and return to the court an
inventory, appraisement, and list of claims of the estate, not
later than the 30th day [90 days] after the date the successor
guardian qualifies as guardian [of qualification], in the same
manner as is required of an original appointee. The successor
guardian shall in like manner as is required of an original
appointee return additional inventories, appraisements, and lists
of claims. In all orders appointing a successor guardian, the
court shall appoint an appraiser as in original appointments on the
application of any person interested in the estate.
SECTION 13. Subpart E, Part 4, Chapter XIII, Texas Probate
Code, is amended by adding Section 767A to read as follows:
Sec. 767A. INTERFERENCE WITH RIGHTS OF GUARDIAN OF THE
PERSON. (a) In this section, "possessory right" means the right of
a guardian of the person to have physical possession of a ward and
to establish the ward's legal domicile, as provided by Section
767(1) of this code.
(b) A person commits an offense if the person takes,
retains, or conceals a ward when the person knows that the person's
taking, retention, or concealment interferes with a possessory
right with respect to the ward.
(c) A person commits an offense if, with the intent to
interfere with a possessory right with respect to a ward, the person
knowingly entices or persuades the ward to leave the ward's legal
domicile established by the guardian.
(d) An offense under this section is a state jail felony.
SECTION 14. Section 768, Texas Probate Code, is amended to
read as follows:
Sec. 768. GENERAL POWERS AND DUTIES OF GUARDIAN OF THE
ESTATE. The guardian of the estate of a ward is entitled to the
possession and management of all property belonging to the ward, to
collect all debts, rentals, or claims that are due to the ward, to
enforce all obligations in favor of the ward, and to bring and
defend suits by or against the ward; but, in the management of the
estate, the guardian is governed by the provisions of this chapter.
It is the duty of the guardian of the estate to take care of and
manage the estate as a prudent person would manage the person's own
property, except as otherwise provided by this chapter. The
guardian of the estate shall account for all rents, profits, and
revenues that the estate would have produced by such prudent
management.
SECTION 15. Section 774(a), Texas Probate Code, is amended
to read as follows:
(a) On application, and if authorized by an order, the
guardian of the estate may renew or extend any obligation owed by or
to the ward. On written application to the court and when a
guardian of the estate deems it is in the best interest of the
estate, the guardian may, if authorized by an order of the court:
(1) purchase or exchange property;
(2) take a claim or property for the use and benefit of
the estate in payment of a debt due or owing to the estate;
(3) compound a bad or doubtful debt due or owing to the
estate;
(4) make a compromise or a settlement in relation to
property or a claim in dispute or litigation;
(5) compromise or pay in full any secured claim that
has been allowed and approved as required by law against the estate
by conveying to the holder of the secured claim the real estate or
personalty securing the claim, in full payment, liquidation, and
satisfaction of the claim, and in consideration of cancellation of
a note, deed of trust, mortgage, chattel mortgage, or other
evidence of a lien that secures the payment of the claim;
(6) abandon worthless or burdensome property and the
administration of that property. Abandoned real or personal
property may be foreclosed on by a secured party, trustee, or
mortgagee without further order of the court; [and]
(7) purchase a prepaid funeral benefits contract; and
(8) establish a trust in accordance with 42 U.S.C.
Section 1396p(d)(4)(B), as amended, and direct that the income of
the ward specified by that section be paid directly to the trust,
solely for the purpose of the ward's eligibility for medical
assistance under Chapter 32, Human Resources Code.
SECTION 16. Section 776, Texas Probate Code, is amended to
read as follows:
Sec. 776. AMOUNTS [SUMS] ALLOWABLE FOR EDUCATION AND
MAINTENANCE OF WARD. (a) Subject to Section 777 of this code, if a
monthly allowance for the ward was not ordered in the court's order
appointing a guardian, the guardian of the estate shall file an
application with the court requesting a monthly allowance to be
expended from the income and corpus of the ward's estate [the court
may direct the guardian of the person to expend,] for the education
and maintenance of the [guardian's] ward and the maintenance of the
ward's property.
(a-1) The guardian must file the application requesting the
monthly allowance not later than the 30th day after the date on
which the guardian qualifies as guardian or the date specified by
the court, whichever is later. The application must clearly
separate amounts requested for education and maintenance of the
ward from amounts requested for maintenance of the ward's property.
(a-2) In determining the amount of the monthly allowance for
the ward and the ward's property, the court shall consider the
condition of the estate and the income and corpus of the estate
necessary to pay the reasonably anticipated regular education and
maintenance expenses of the ward and maintenance expenses of the
ward's property. The court's order setting a monthly allowance must
specify the types of expenditures the guardian may make on a monthly
basis for the ward or the ward's property. An order setting a
monthly allowance does not affect the guardian's duty to account
for expenditures of the allowance in the annual account required by
Section 741 of this code[, a sum in excess of the income of the
ward's estate. Otherwise, the guardian may not be allowed, for the
education and maintenance of the ward, more than the net income of
the estate].
(a-3) When different persons have the guardianship of the
person and estate of a ward, the guardian of the estate shall pay to
the guardian of the person the monthly allowance [a sum that is] set
by the court, at a time specified by the court, for the education
and maintenance of the ward. If the guardian of the estate fails to
pay to the guardian of the person the monthly allowance [sum] set by
the court, the guardian of the estate shall be compelled to make the
payment by court order after the guardian is duly cited to appear.
(b) When a guardian has in good faith expended funds from
the income and corpus of the estate of the ward [of the guardian]
for support and maintenance of [for] the ward [under this section or
Section 777 of this code,] and the expenditures exceed the monthly
allowance authorized by the court, the guardian shall file a motion
with the court requesting approval of the expenditures. The court
may approve the excess expenditures if:
(1) the expenditures were made when it was [is] not
convenient or possible for the guardian to first secure court
approval;
(2) [, if] the proof is clear and convincing that the
expenditures were reasonable and proper;
(3) [, and are expenditures that] the court would have
granted authority in advance to make the expenditures; and
(4) [out of the corpus, and] the ward received the
benefits of the expenditures[, the court may approve the
expenditures in the same manner as if the expenditures were made by
the guardian out of the income from the ward's estate. An
expenditure under this subsection may not exceed $5,000 per ward
during an annual accounting period, unless the expenditure is made
to a nursing home in which case the court may ratify any amount].
SECTION 17. Section 814, Texas Probate Code, is amended to
read as follows:
Sec. 814. SPECIAL PROVISIONS PERTAINING TO LIVESTOCK. (a)
When the guardian of an estate has in the guardian's possession any
livestock that the guardian deems necessary or to the advantage of
the estate to sell, the guardian may, in addition to any other
method provided by law for the sale of personal property, obtain
authority from the court in which the estate is pending to sell the
livestock through a bonded livestock commission merchant or a
bonded livestock auction commission merchant.
(b) On written and sworn application by the guardian or by
any person interested in the estate that describes the livestock
sought to be sold and that sets out the reasons why it is deemed
necessary or to the advantage of the estate that the application be
granted, the court may authorize the sale. The court shall consider
the application and may hear evidence for or against the
application, with or without notice, as the facts warrant.
(c) If the application is granted, the court shall enter its
order to that effect and shall authorize delivery of the livestock
to any bonded livestock commission merchant or bonded livestock
auction commission merchant for sale in the regular course of
business. The commission merchant shall be paid the merchant's
[his] usual and customary charges, not to exceed five [three]
percent of the sale price, for the sale of the livestock. A report
of the sale, supported by a verified copy of the merchant's account
of sale, shall be made promptly by the guardian to the court, but no
order of confirmation by the court is required to pass title to the
purchaser of the livestock.
SECTION 18. Subpart L, Part 4, Chapter XIII, Texas Probate
Code, is amended by adding Section 854 to read as follows:
Sec. 854. GUARDIAN REQUIRED TO KEEP ESTATE INVESTED UNDER
CERTAIN CIRCUMSTANCES. (a) The guardian of the estate is not
required to invest funds that are immediately necessary for the
education, support, and maintenance of the ward or others the ward
supports, if any, as provided by this chapter. The guardian of the
estate shall invest any other funds and assets available for
investment unless the court orders otherwise under this subpart.
(b) The court may, on its own motion or on written request of
a person interested in the guardianship, cite the guardian or the
guardian's investment agent to appear and show cause why the estate
is not invested or not properly invested. At any time after giving
notice to all parties, the court may conduct a hearing to protect
the estate, except that the court may not hold a final hearing on
whether the estate is properly invested until the 31st day after the
date the guardian or the guardian's investment agent was originally
cited to appear under this subsection. On the hearing of the
court's motion or a request made under this section, the court shall
render an order the court considers to be in the best interests of
the ward.
(c) The court may appoint a guardian ad litem for the
limited purpose of representing the ward's best interests with
respect to the investment of the ward's property at a hearing under
this section.
SECTION 19. The heading to Section 855, Texas Probate Code,
is amended to read as follows:
Sec. 855. STANDARD FOR MANAGEMENT AND INVESTMENTS [WITHOUT
COURT ORDER].
SECTION 20. Section 855, Texas Probate Code, is amended by
amending Subsections (a) and (b) and adding Subsections (a-1) and
(g) to read as follows:
(a) In acquiring, investing, reinvesting, exchanging,
retaining, selling, supervising, and managing a ward's estate, a
guardian of the estate who has not delegated investment authority
to an agent as provided by Section 855C of this code shall exercise
the judgment and care under the circumstances then prevailing that
persons of ordinary prudence, discretion, and intelligence
exercise in the management of their own affairs, considering the
probable income from as well as the probable increase in value and
the safety of their capital. The guardian shall also consider all
other relevant factors, including:
(1) the anticipated costs of supporting the ward;
(2) the ward's age, education, current income, ability
to earn additional income, net worth, and liabilities;
(3) the nature of the ward's estate; and
(4) any other resources reasonably available to the
ward [The guardian of the estate may retain, without regard to
diversification of investments and without liability for any
depreciation or loss resulting from the retention, any property
received into a guardianship estate at its inception or added to the
estate by gift, devise, or inheritance or by mutation or increase.
A guardian of the estate is not relieved from the duty to take care
of and manage the estate as a person of ordinary prudence,
discretion, and intelligence would exercise in the management of
the person's own affairs].
(a-1) In determining whether a guardian has exercised the
standard of investment required by this section with respect to an
investment decision, the court shall, absent fraud or gross
negligence, take into consideration the investment of all the
assets of the estate over which the guardian has management or
control, rather than taking into consideration the prudence of only
a single investment made by the guardian.
(b) A guardian of the estate is considered to have exercised
the standard required by this section with respect to investing the
ward's estate if the guardian invests in the following [If the
guardian of the estate has on hand money that belongs to the ward
that exceeds that amount of money that may be necessary for the
education and maintenance of the ward, the guardian shall invest
the money as follows]:
(1) [in] bonds or other obligations of the United
States;
(2) [in] tax-supported bonds of this state;
(3) except as limited by Subsections (c) and (d) of
this section, [in] tax-supported bonds of a county, district,
political subdivision, or incorporated city or town in this state;
(4) [in] shares or share accounts of a state savings
and loan association or savings bank with its main office or a
branch office in this state if the payment of the shares or share
accounts is insured by the Federal Deposit Insurance Corporation;
(5) [in] the shares or share accounts of a federal
savings and loan association or savings bank with its main office or
a branch office in this state if the payment of the shares or share
accounts is insured by the Federal Deposit Insurance Corporation;
(6) [in] collateral bonds of companies incorporated
under the laws of this state, having a paid-in capital of $1,000,000
or more, when the bonds are a direct obligation of the company that
issues the bonds and are specifically secured by first mortgage
real estate notes or other securities pledged with a trustee; or
(7) [in] interest-bearing time deposits that may be
withdrawn on or before one year after demand in a bank that does
business in this state where the payment of the time deposits is
insured by the Federal Deposit Insurance Corporation.
(g) The court may modify or eliminate the guardian's duty to
keep the estate invested or the standard required by this section
with regard to investments of estate assets on a showing by clear
and convincing evidence that the modification or elimination is in
the best interests of the ward and the ward's estate.
SECTION 21. Subpart L, Part 4, Chapter XIII, Texas Probate
Code, is amended by adding Sections 855A, 855B, and 855C to read as
follows:
Sec. 855A. RETENTION OF ASSETS. (a) A guardian of the
estate may retain without court approval until the first
anniversary of the date of receipt any property received into the
guardianship estate at its inception or added to the estate by gift,
devise, inheritance, mutation, or increase, without regard to
diversification of investments and without liability for any
depreciation or loss resulting from the retention. The guardian
shall care for and manage the retained assets as a person of
ordinary prudence, discretion, and intelligence would in caring for
and managing the person's own affairs.
(b) On application and a hearing, the court may render an
order authorizing the guardian to continue retaining the property
after the period prescribed by Subsection (a) of this section if the
retention is an element of the guardian's investment plan as
provided by this subpart.
Sec. 855B. PROCEDURE FOR MAKING INVESTMENTS OR RETAINING
ESTATE ASSETS. (a) Not later than the first anniversary of the
date on which the guardian of the estate qualified as guardian, the
guardian shall file a written application with the court for an
order:
(1) authorizing the guardian to:
(A) develop and implement an investment plan for
estate assets;
(B) delegate investment authority with respect
to one or more estate assets as provided in this subpart;
(C) declare that one or more estate assets must
be retained, despite being underproductive with respect to income
or overall return; or
(D) loan estate funds, invest in real estate or
make other investments, or purchase a life, term, or endowment
insurance policy or an annuity contract; or
(2) modifying or eliminating the guardian's duty to
invest the estate.
(b) On hearing the application under this section and on a
finding by the preponderance of the evidence that the action
requested in the application is in the best interests of the ward
and the ward's estate, the court shall render an order granting the
authority requested in the application or an order modifying or
eliminating the guardian's duty to keep the estate invested. The
order must state in reasonably specific terms:
(1) the nature of the investment, investment plan, or
other action requested in the application and authorized by the
court;
(2) when an investment must be reviewed and
reconsidered by the guardian; and
(3) whether the guardian must report the guardian's
review and recommendations to the court.
(c) The fact that an account or other asset is the subject of
a specific or general gift under a ward's will, if any, or that a
ward has funds, securities, or other property held with a right of
survivorship does not prevent:
(1) a guardian of the estate from taking possession
and control of the asset or closing the account; or
(2) the court from authorizing an action or modifying
or eliminating a duty with respect to the possession, control, or
investment of the account or other asset.
(d) The procedure prescribed by this section does not apply
if a different procedure is prescribed for an investment or sale by
a guardian. A guardian is not required to follow the procedure
prescribed by this section with respect to an investment or sale
that is specifically authorized by other law.
Sec. 855C. DELEGATION OF INVESTMENT AUTHORITY. (a) On
application by a guardian of the estate, the court may render an
order authorizing the guardian to employ an investment agent and
delegate to the agent investment decisions with respect to the
guardianship estate.
(b) A guardian who delegates investment authority to an
agent as provided by this section is subject to the standard
required by Section 855 of this code in delegating investment
decisions to the agent.
(c) In determining whether a guardian of the estate
exercised the standard required by Section 855 of this code with
respect to delegating investment decisions to an agent, the court
shall, absent fraud or gross negligence, take into consideration
the investment of all the assets of the estate over which the
guardian has management or control, rather than taking into
consideration the prudence of only a single investment made by the
guardian or agent.
(d) Except as provided by this subsection, the guardian of
the estate and the guardian's surety are liable for the agent's
investment decisions. A guardian of the estate and the guardian's
surety are not liable for investment decisions made by an agent
employed in accordance with this section if:
(1) the guardian exercises the required standard in
selecting the agent and establishing the scope and terms of the
authority delegated to the agent;
(2) the guardian investigates the credentials of the
agent, including:
(A) reviewing the agent's experience, investment
performance history, and financial stability, including verifying
the agent's capital and surplus; and
(B) verifying that the agent is licensed or
registered, if required, and is bonded or insured, if required;
(3) the agent is subject to the jurisdiction of the
courts of this state;
(4) the terms of the delegation agreement provide that
the agent is subject to the standard prescribed by Section 855 of
this code or the standard established by court order and the agent
assumes liability for deviating from that standard; and
(5) the guardian reviews the investment decisions made
by the agent at least as frequently as annually to verify compliance
with the investment plan developed by the guardian.
(e) The delegation agreement may also include a requirement
of safekeeping of estate assets in a financial institution as
provided by Section 703(e) of this code.
SECTION 22. The heading to Section 857, Texas Probate Code,
is amended to read as follows:
Sec. 857. INVESTMENT IN, OR CONTINUED INVESTMENT IN, LIFE
INSURANCE OR ANNUITIES.
SECTION 23. Section 858, Texas Probate Code, is amended to
read as follows:
Sec. 858. LOANS AND SECURITY FOR LOANS. (a) If, at any
time, the guardian of the estate has on hand money belonging to the
ward in an amount that provides a return that is more than is
[beyond what may be] necessary for the education, support, and
maintenance of the ward and others the ward supports, if
applicable, the guardian may lend the money for a reasonable [the
highest] rate of interest [that can be obtained for the money]. The
guardian shall take the note of the borrower for the money that is
loaned, secured by a mortgage with a power of sale on unencumbered
real estate located in this state worth at least twice the amount of
the note, or by collateral notes secured by vendor's lien notes, as
collateral, or the guardian may purchase vendor's lien notes if at
least one-half has been paid in cash or its equivalent on the land
for which the notes were given.
(b) A guardian of the estate is considered to have obtained
a reasonable rate of interest for a loan for purposes of Subsection
(a) of this section if the rate of interest is at least equal to 120
percent of the applicable short-term, midterm, or long-term
interest rate under Section 7520, Internal Revenue Code of 1986, as
amended, for the month during which the loan was made.
(c) Except as provided by this subsection, a guardian of the
estate who loans estate money with the court's approval on security
approved by the court is not personally liable if the borrower is
unable to repay the money and the security fails. If the guardian
committed fraud or was negligent in making or managing the loan,
including in collecting on the loan, the guardian and the
guardian's surety are liable for the loss sustained by the
guardianship estate as a result of the fraud or negligence.
(d) Except as provided by Subsection (e) of this section, a
guardian of the estate who lends estate money may not pay or
transfer any money to consummate the loan until the guardian:
(1) submits to an attorney for examination all bonds,
notes, mortgages, abstracts, and other documents relating to the
loan; and
(2) receives a written opinion from the attorney
stating that the documents under Subdivision (1) of this subsection
are regular and that the title to relevant bonds, notes, or real
estate is clear.
(e) A guardian of the estate may obtain a mortgagee's title
insurance policy on any real estate loan in lieu of an abstract and
attorney's opinion under Subsection (d) of this section.
(f) The borrower shall pay attorney's fees for any legal
services required by this section.
(g) Not later than the 30th day after the date the guardian
of the estate loans money from the estate, the guardian shall file
with the court a written report, accompanied by an affidavit,
stating fully the facts related to the loan. This subsection does
not apply to a loan made in accordance with a court order.
(h) This section does not apply to an investment in a
debenture, bond, or other publicly traded debt security.
SECTION 24. Section 860(a), Texas Probate Code, is amended
to read as follows:
(a) The [When the] guardian of the estate may invest estate
assets in real estate if:
(1) the guardian believes that the investment is in
the best interests of the ward;
(2) there are on hand sufficient additional assets to
provide a return sufficient to provide for:
(A) the education, support, and maintenance of
the ward and others the ward supports, if applicable; and
(B) the maintenance, insurance, and taxes on the
real estate in which the guardian wishes to invest;
(3) the guardian files [of a ward thinks it is best for
the ward who has a surplus of money on hand to invest the money in
real estate, the guardian shall file] a written application with
[in] the court [in which the guardianship is pending] requesting a
court order authorizing the guardian to make the desired investment
and stating the reasons why the guardian is of the opinion that the
investment would be for the benefit of the ward; and
(4) the court renders an order authorizing the
investment as provided by this section.
SECTION 25. Section 863, Texas Probate Code, is amended to
read as follows:
Sec. 863. LIABILITY OF GUARDIAN AND GUARDIAN'S SURETY [FOR
FAILURE TO LEND OR INVEST FUNDS]. (a) In addition to any other
remedy authorized by law, if [If] the guardian of the estate fails
[neglects] to invest or lend estate assets in the manner provided by
this subpart, the guardian and the guardian's surety are [surplus
money on hand at interest when the guardian can do so by using
reasonable diligence, the guardian shall be] liable for the
principal and the greater of:
(1) [for] the highest legal rate of interest on the
principal during the period the guardian failed to invest or lend
the assets; or
(2) the overall return that would have been made on the
principal if the principal were invested in the manner provided by
this subpart.
(b) In addition to the liability under Subsection (a) of
this section, the guardian and the guardian's surety are liable for
attorney's fees, litigation expenses, and costs related to a
proceeding brought to enforce this section [for the time the
guardian neglects to invest or lend the surplus money. The amount
of principal and interest on the principal may be recovered in a
court of competent jurisdiction].
SECTION 26. Section 868A, Texas Probate Code, is amended to
read as follows:
Sec. 868A. DISCHARGE OF GUARDIAN OF ESTATE AND CONTINUATION
OF TRUST. On or at any time after the creation of a trust under this
subpart, the court may discharge the guardian of the ward's estate
[only] if [a guardian of the ward's person remains and] the court
determines that the discharge is in the ward's best interests.
SECTION 27. Section 883, Texas Probate Code, is amended by
adding Subsections (f), (g), and (h) to read as follows:
(f) This section does not partition community property
between an incapacitated spouse and a spouse who is not
incapacitated.
(g) If the court renders an order directing the guardian of
the estate of the incapacitated spouse to administer certain
community property as provided by Subsection (c) of this section,
the community property administered by the guardian is considered
the incapacitated spouse's community property, subject to the
incapacitated spouse's sole management, control, and disposition
under Section 3.102, Family Code. If the court renders an order
directing the spouse who is not incapacitated to administer certain
community property as provided by Subsection (d) of this section,
the community property administered by the spouse who is not
incapacitated is considered that spouse's community property,
subject to that spouse's sole management, control, and disposition
under Section 3.102, Family Code.
(h) An order described by Subsection (g) of this section
does not affect the enforceability of a creditor's claim existing
on the date the court renders the order.
SECTION 28. Sections 389, 856, 859, and 864, Texas Probate
Code, are repealed.
SECTION 29. The changes in law made by Sections 1 and 2 of
this Act apply only to a proceeding instituted on or after the
effective date of this Act. A proceeding instituted before the
effective date of this Act is governed by the law in effect on the
date the proceeding was instituted, and the former law is continued
in effect for that purpose.
SECTION 30. The change in law made by Section 3 of this Act
applies only to a motion to transfer or a cause of action filed on or
after the effective date of this Act.
SECTION 31. The changes in law made by Sections 4-8 of this
Act apply only to an application for the appointment of a guardian
filed on or after the effective date of this Act. An application
for the appointment of a guardian filed before the effective date of
this Act is governed by the law in effect on the date the
application was filed, and the former law is continued in effect for
that purpose.
SECTION 32. The changes in law made by Sections 9, 10, and
12 of this Act apply only to a person appointed by a court to serve
as guardian of the person or estate of a ward on or after the
effective date of this Act. A person appointed by a court to serve
as guardian of the person or estate of a ward before the effective
date of this Act is governed by the law in effect immediately before
the effective date of this Act, and the former law is continued in
effect for that purpose.
SECTION 33. (a) The changes in law made by Sections 14-25
of this Act apply only to an application for the appointment of a
guardian that is filed on or after September 1, 2003.
(b) The following may be modified to conform to the changes
in law made by Sections 14-25 of this Act:
(1) an application for the appointment of a guardian
that is filed before September 1, 2003, in which a guardianship has
not been created; and
(2) a guardianship existing on September 1, 2003.
SECTION 34. This Act takes effect September 1, 2003.