S.B. No. 778
 
 
 
 
AN ACT
  relating to trusts.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subsection (f), Section 113.053, Property Code,
  is amended to read as follows:
         (f)  A national banking association, a state-chartered
  corporation, including a state-chartered bank or trust company, a
  state or federal savings and loan association that has the right to
  exercise trust powers and that is serving as trustee, or such an
  institution that is serving as custodian with respect to an
  individual retirement account, as defined by Section 408, Internal
  Revenue Code, or an employee benefit plan, as defined by Section
  3(3), Employee Retirement Income Security Act of 1974 (29 U.S.C.
  Section 1002(3)), regardless of whether the custodial account is,
  or would otherwise be, considered a trust for purposes of this
  subtitle, may, subject to its fiduciary duties:
               (1)  employ an affiliate or division within a financial
  institution to provide brokerage, investment, administrative,
  custodial, or other account services for the trust or custodial
  account and charge the trust or custodial account for the
  services[, provided, however, nothing in this section shall allow
  an affiliate or division to engage in the sale or business of
  insurance if not otherwise permitted to do so]; [and]
               (2)  unless the instrument governing the fiduciary
  relationship expressly prohibits the purchase or charge, purchase
  insurance underwritten or otherwise distributed by an affiliate, a
  division within the financial institution, or a syndicate or
  selling group that includes the financial institution or an
  affiliate and charge the trust or custodial account for the
  insurance premium, provided that:
                     (A)  the person conducting the insurance
  transaction is appropriately licensed if required by applicable
  licensing and regulatory requirements administered by a functional
  regulatory agency of this state; and
                     (B)  the insurance product and premium are the
  same or similar to a product and premium offered by organizations
  that are not an affiliate, a division within the financial
  institution, or a syndicate or selling group that includes the
  financial institution or an affiliate; and
               (3)  receive a fee or compensation, directly or
  indirectly, on account of the services performed or the insurance
  product sold by the affiliate, [or] division within the financial
  institution, or syndicate or selling group that includes the
  financial institution or an affiliate, whether in the form of
  shared commissions, fees, or otherwise, provided that any amount
  charged by the affiliate, [or] division, or syndicate or selling
  group that includes the financial institution or an affiliate for
  the services or insurance product is disclosed and does not exceed
  the customary or prevailing amount that is charged by the
  affiliate, [or] division, or syndicate or selling group that
  includes the financial institution or an affiliate, or a comparable
  entity, for comparable services rendered or insurance provided to a
  person other than the trust.
         SECTION 2.  Section 116.201, Property Code, is amended to
  read as follows:
         Sec. 116.201.  DISBURSEMENTS FROM INCOME. A trustee shall
  make the following disbursements from income to the extent that
  they are not disbursements to which Section 116.051(2)(B) or (C)
  applies:
               (1)  one-half of the regular compensation of the
  trustee and of any person providing investment advisory or
  custodial services to the trustee unless, consistent with the
  trustee's fiduciary duties, the trustee determines that a different
  portion, none, or all of the compensation should be allocated to
  income;
               (2)  one-half of all expenses for accountings, judicial
  proceedings, or other matters that involve both the income and
  remainder interests;
               (3)  all of the other ordinary expenses incurred in
  connection with the administration, management, or preservation of
  trust property and the distribution of income, including interest,
  ordinary repairs, regularly recurring taxes assessed against
  principal, and expenses of a proceeding or other matter that
  concerns primarily the income interest; and
               (4)  recurring premiums on insurance covering the loss
  of a principal asset or the loss of income from or use of the asset.
         SECTION 3.  Subsection (a), Section 116.202, Property Code,
  is amended to read as follows:
         (a)  A trustee shall make the following disbursements from
  principal:
               (1)  the remaining one-half of the disbursements
  described in Section [Sections] 116.201(1) unless, consistent with
  the trustee's fiduciary duties, the trustee determines that a
  different portion, none, or all of those disbursements should be
  allocated to income, in which case that portion of the
  disbursements that are not allocated to income shall be allocated
  to principal;
               (1-a)  the remaining one-half of the disbursements
  described in Section 116.201(2) [and (2)];
               (2)  all of the trustee's compensation calculated on
  principal as a fee for acceptance, distribution, or termination,
  and disbursements made to prepare property for sale;
               (3)  payments on the principal of a trust debt;
               (4)  expenses of a proceeding that concerns primarily
  principal, including a proceeding to construe the trust or to
  protect the trust or its property;
               (5)  premiums paid on a policy of insurance not
  described in Section 116.201(4) of which the trust is the owner and
  beneficiary;
               (6)  estate, inheritance, and other transfer taxes,
  including penalties, apportioned to the trust; and
               (7)  disbursements related to environmental matters,
  including reclamation, assessing environmental conditions,
  remedying and removing environmental contamination, monitoring
  remedial activities and the release of substances, preventing
  future releases of substances, collecting amounts from persons
  liable or potentially liable for the costs of those activities,
  penalties imposed under environmental laws or regulations and other
  payments made to comply with those laws or regulations, statutory
  or common law claims by third parties, and defending claims based on
  environmental matters.
         SECTION 4.  (a)  Except as otherwise expressly provided by a
  trust, a will creating a trust, or this section, the changes in law
  made by this Act apply to a trust existing or created on or after
  September 1, 2013.
         (b)  For a trust existing on September 1, 2013, that was
  created before that date, the changes in law made by this Act apply
  only to an act or omission relating to the trust that occurs on or
  after September 1, 2013.
         SECTION 5.  This Act takes effect September 1, 2013.
 
 
 
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
         I hereby certify that S.B. No. 778 passed the Senate on
  April 16, 2013, by the following vote: Yeas 28, Nays 1; and that
  the Senate concurred in House amendment on May 23, 2013, by the
  following vote: Yeas 30, Nays 1.
 
 
  ______________________________
  Secretary of the Senate    
 
         I hereby certify that S.B. No. 778 passed the House, with
  amendment, on May 20, 2013, by the following vote: Yeas 147,
  Nays 0, two present not voting.
 
 
  ______________________________
  Chief Clerk of the House   
 
 
 
  Approved:
 
  ______________________________ 
              Date
 
 
  ______________________________ 
            Governor