Bill Text: TX HB2333 | 2023-2024 | 88th Legislature | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Relating to noncharitable trusts without an ascertainable beneficiary.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Passed) 2023-06-18 - Effective immediately [HB2333 Detail]
Download: Texas-2023-HB2333-Introduced.html
Bill Title: Relating to noncharitable trusts without an ascertainable beneficiary.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Passed) 2023-06-18 - Effective immediately [HB2333 Detail]
Download: Texas-2023-HB2333-Introduced.html
88R2814 ATP-F | ||
By: Allison | H.B. No. 2333 |
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relating to noncharitable trusts without an ascertainable | ||
beneficiary. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Chapter 112, Property Code, is amended by adding | ||
Subchapter F to read as follows: | ||
SUBCHAPTER F. NONCHARITABLE TRUST WITHOUT ASCERTAINABLE | ||
BENEFICIARY | ||
Sec. 112.121. VALIDITY OF TRUST; APPLICABILITY. (a) A | ||
trust may be created for a noncharitable purpose without a definite | ||
or definitely ascertainable beneficiary. | ||
(b) This subchapter does not apply to a trust created under | ||
Section 112.037. | ||
Sec. 112.122. ENFORCEMENT OF TRUST. (a) A trust created | ||
under this subchapter must be enforced by one or more persons | ||
appointed in the terms of the trust to serve as a trust enforcer. | ||
(b) A trust enforcer shall enforce the purpose and terms of | ||
the trust. The trust enforcer is not a beneficiary of the trust, | ||
but has the rights of a beneficiary provided under this title and | ||
the common law of this state, or as otherwise provided by the terms | ||
of the trust. | ||
(c) A trust enforcer shall exercise any authority granted | ||
under the terms of the trust or the provisions of this section as a | ||
fiduciary owing a duty to the trust and is entitled to reasonable | ||
compensation for serving as trust enforcer. | ||
(d) A trust enforcer may consent to, waive, object to, or | ||
petition an appropriate court concerning any matter regarding the | ||
purpose or administration of the trust. | ||
(e) Except as otherwise provided by Section 112.124 or | ||
112.125 or the terms of the trust, if more than one person is acting | ||
as a trust enforcer, any action in that capacity must be decided by | ||
the majority vote of the persons acting as trust enforcers. If | ||
there are an even number of trust enforcers and a majority vote | ||
cannot be established, the decision of the trustee controls. | ||
(f) The terms of the trust may provide for the succession of | ||
a trust enforcer or a process of appointing any successor trust | ||
enforcer. | ||
(g) If no person is serving as a trust enforcer for a trust | ||
created under this subchapter, a court properly exercising | ||
jurisdiction shall appoint one or more persons to serve as the trust | ||
enforcer. | ||
Sec. 112.123. APPLICATION OR DISTRIBUTION OF TRUST | ||
PROPERTY. (a) Property of a trust created under this subchapter | ||
may be applied only to the intended purpose of the trust, except to | ||
the extent that a court finds that the value of the trust property | ||
exceeds the amount required for the intended purpose of the trust. | ||
(b) Except as provided by the terms of the trust, property | ||
found by a court not to be required for the trust's intended purpose | ||
shall be distributed: | ||
(1) as provided by the terms of the trust; or | ||
(2) if the trust does not provide for the distribution | ||
of such property, to the settlor if then living or to the settlor's | ||
successors in interest. | ||
Sec. 112.124. COMMERCIAL LEGACY TRUST. (a) In this | ||
section, "commercial legacy trust" means a trust subject to this | ||
section. A commercial legacy trust is not a business trust for | ||
purposes of Section 111.003. | ||
(b) Subject to this section, a trust may be created under | ||
this subchapter for a commercial purpose, including seeking | ||
economic and noneconomic benefits. | ||
(c) A commercial legacy trust that holds an ownership | ||
interest in a corporation, partnership, limited partnership, | ||
cooperative, limited liability company, limited liability | ||
partnership, or other business entity created to conduct business | ||
under the laws of this state must hold a controlling interest in | ||
that business entity. | ||
(d) A commercial legacy trust may have a business committee | ||
governed by Section 112.125. Each member of the business committee | ||
shall exercise authority as a fiduciary of the commercial legacy | ||
trust. A trustee of a commercial legacy trust must act in | ||
accordance with a direction from the business committee unless the | ||
action is manifestly contrary to the terms of the trust or the | ||
trustee knows that the action would constitute a breach of | ||
fiduciary duty that the business committee, the trust enforcer, or | ||
the trustee owes to the trust. | ||
(e) A trustee of a commercial legacy trust is liable only | ||
for wilful misconduct and is not liable for reliance on documents | ||
provided by the business committee or the trust enforcer. | ||
(f) Unless the terms of a commercial legacy trust provide | ||
otherwise, the trust enforcer and the business committee, acting | ||
together, may modify or terminate a commercial legacy trust by | ||
unanimous agreement of all members of the business committee and | ||
all trust enforcers. | ||
(g) On termination of a commercial legacy trust, the trustee | ||
shall distribute all remaining trust property: | ||
(1) as the terms of the trust provide; or | ||
(2) if the terms of the trust do not provide for | ||
complete distribution of the property, as a court determines to be | ||
consistent with the purposes for which the trust was created. | ||
(h) A person serving as trustee of a commercial legacy trust | ||
may not serve as a trust enforcer or a member of a business | ||
committee of that trust. A person serving as a trust enforcer of a | ||
commercial legacy trust may not serve as a member of the business | ||
committee of that trust. | ||
Sec. 112.125. BUSINESS COMMITTEE FOR COMMERCIAL LEGACY | ||
TRUST; REQUIRED REPORT. (a) In this section, "business committee" | ||
means the business committee established under Section 112.124(d) | ||
for a commercial legacy trust subject to Section 112.124. | ||
(b) The terms of a commercial legacy trust subject to | ||
Section 112.124 may appoint the initial members of the business | ||
committee and may provide for the succession of a business | ||
committee member or a process of appointing a successor business | ||
committee member. | ||
(c) A business committee must have a minimum of three | ||
members. If a vacancy on a business committee results in fewer than | ||
three members on the committee, the vacancy must be filled in the | ||
following order of priority: | ||
(1) by a person designated in the terms of the | ||
commercial legacy trust or selected through a process provided by | ||
the terms of the trust; | ||
(2) by a person appointed by the unanimous agreement | ||
of the trust enforcers; or | ||
(3) by a person appointed by a court properly | ||
exercising jurisdiction. | ||
(d) Except as provided by Subsection (e)(3) or (e)(4), | ||
Section 112.124(f), or the terms of the commercial legacy trust, | ||
any action taken by a business committee must be decided by the | ||
majority vote of business committee members. If there are an even | ||
number of business committee members and a majority vote cannot be | ||
established, the decision of the trustee controls. | ||
(e) Unless the terms of the commercial legacy trust provide | ||
otherwise, in carrying out the purposes of the trust and after | ||
reasonable written notice has been provided to the trust enforcer, | ||
a business committee may: | ||
(1) remove a trustee with or without cause; | ||
(2) appoint one or more successor trustees or | ||
cotrustees; | ||
(3) remove a trust enforcer with or without cause by | ||
the unanimous vote of all members of the business committee and all | ||
trustees; | ||
(4) remove a member of the business committee by the | ||
unanimous vote of all other members of the business committee; | ||
(5) direct distributions from the trust; and | ||
(6) with the consent of the trust enforcer and subject | ||
to the trust enforcer's revocation of consent at any time on | ||
reasonable notice, exercise any right or power belonging to the | ||
trustee, including the right to vote stock owned by the trust. | ||
(f) Unless the commercial legacy trust agreement provides | ||
otherwise, a member of a business committee may resign: | ||
(1) not earlier than the 30th day after providing | ||
written notice to all trustees, all trust enforcers, and all | ||
members of the business committee; or | ||
(2) at any time with the approval of a court properly | ||
exercising jurisdiction. | ||
(g) A member of a business committee may be removed by the | ||
unanimous vote of all trustees and trust enforcers. | ||
(h) Unless the terms of the commercial legacy trust provide | ||
otherwise, a business committee shall provide a report to the | ||
trustee and the trust enforcer at least annually. The report must | ||
show receipts, disbursements, and a detailed list of the assets and | ||
liabilities of the commercial legacy trust. A business committee | ||
shall keep the trustee and the trust enforcer reasonably informed | ||
about the administration of the commercial legacy trust, company | ||
matters, and any other material facts necessary for the trustee to | ||
comply with the trustee's duties and for the trust enforcer to | ||
protect the purpose of the trust. A report properly prepared under | ||
this subsection and provided to the trust enforcer meets the | ||
trustee's duty to provide an accounting under Section 113.151. | ||
(i) If a business committee fails to provide a report in | ||
compliance with Subsection (h), the trustee or trust enforcer may | ||
demand in writing that the business committee deliver to the trust | ||
enforcer and trustee a written statement of accounts covering all | ||
transactions since the last report prepared under Subsection (h) | ||
was provided. If the business committee does not deliver the | ||
statement on or before the 90th day after the date the business | ||
committee receives the written demand or after a longer period | ||
ordered by a court, the trustee or trust enforcer may file suit to | ||
compel the business committee to deliver the statement to the trust | ||
enforcer and trustee. If a trustee or trust enforcer is successful | ||
in the suit to compel a statement under this subsection, the court | ||
may in its discretion award all or part of the court costs and all of | ||
the prevailing party's reasonable and necessary attorney's fees and | ||
costs against the members of the business committee in their | ||
individual capacities. | ||
SECTION 2. Subchapter F, Chapter 112, Property Code, as | ||
added by this Act, applies only to a trust created on or after the | ||
effective date of this Act. | ||
SECTION 3. This Act takes effect immediately if it receives | ||
a vote of two-thirds of all the members elected to each house, as | ||
provided by Section 39, Article III, Texas Constitution. If this | ||
Act does not receive the vote necessary for immediate effect, this | ||
Act takes effect September 1, 2023. |