Bill Text: TX HB1029 | 2015-2016 | 84th Legislature | Introduced
Bill Title: Relating to trusts.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2015-05-05 - Left pending in committee [HB1029 Detail]
Download: Texas-2015-HB1029-Introduced.html
84R1626 AJA-F | ||
By: Wray | H.B. No. 1029 |
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relating to trusts. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 42.0021(b), Property Code, is amended to | ||
read as follows: | ||
(b) Contributions to an individual retirement account, | ||
individual retirement annuity, or Roth IRA that are "excess | ||
contributions" within the meaning of Section 4973 [ |
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Revenue Code of 1986, and any accrued earnings on such excess | ||
contributions, are not exempt under this section unless otherwise | ||
exempt by law. Amounts qualifying as nontaxable rollover | ||
contributions under Section 402(a)(5), 403(a)(4), 403(b)(8), or | ||
408(d)(3) of the Internal Revenue Code of 1986 before January 1, | ||
1993, are treated as exempt amounts under Subsection (a). Amounts | ||
treated as [ |
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402A(c)(3), 402A(c)(4), or 408A, Internal Revenue Code of 1986, are | ||
treated as exempt amounts under Subsection (a). In addition, | ||
amounts qualifying as nontaxable rollover contributions under | ||
Section 402(c), 402(e)(6), 402(f), 403(a)(4), 403(a)(5), | ||
403(b)(8), 403(b)(10), 408(d)(3), or 408A of the Internal Revenue | ||
Code of 1986 on or after January 1, 1993, are treated as exempt | ||
amounts under Subsection (a). Amounts qualifying as nontaxable | ||
rollover contributions under Section 223(f)(5) of the Internal | ||
Revenue Code of 1986 on or after January 1, 2004, are treated as | ||
exempt amounts under Subsection (a). | ||
SECTION 2. Section 112.035(e), Property Code, is amended to | ||
read as follows: | ||
(e) A beneficiary of the trust may not be considered a | ||
settlor merely because of a lapse, waiver, or release of: | ||
(1) a power described by Subsection (f); or | ||
(2) the beneficiary's right to withdraw a part of the | ||
trust property to the extent that the value of the property affected | ||
by the lapse, waiver, or release in any calendar year does not | ||
exceed with respect to the contribution by each donor the greater of | ||
the amount specified in: | ||
(A) Section 2041(b)(2) or 2514(e), Internal | ||
Revenue Code of 1986; or | ||
(B) Section 2503(b), Internal Revenue Code of | ||
1986. | ||
SECTION 3. Section 112.038, Property Code, is amended to | ||
read as follows: | ||
Sec. 112.038. FORFEITURE CLAUSE. (a) A provision in a | ||
trust that would cause a forfeiture of or void an interest for | ||
bringing any court action, including contesting a trust, is | ||
enforceable unless in a court action determining whether the | ||
forfeiture clause should be enforced, the person who brought the | ||
action contrary to the forfeiture clause establishes by a | ||
preponderance of the evidence that: | ||
(1) just cause existed for bringing the action; and | ||
(2) the action was brought and maintained in good | ||
faith. | ||
(b) This section is not intended to and does not repeal any | ||
law, recognizing that forfeiture clauses generally will not be | ||
construed to prevent a beneficiary from seeking to compel a | ||
fiduciary to perform the fiduciary's duties, seeking redress | ||
against a fiduciary for a breach of the fiduciary's duties, or | ||
seeking a judicial construction of a will or trust. | ||
SECTION 4. Sections 112.054(a) and (c), Property Code, are | ||
amended to read as follows: | ||
(a) On the petition of a trustee or a beneficiary, a court | ||
may order that the trustee be changed, that the terms of the trust | ||
be modified, that the trustee be directed or permitted to do acts | ||
that are not authorized or that are forbidden by the terms of the | ||
trust, that the trustee be prohibited from performing acts required | ||
by the terms of the trust, or that the trust be terminated in whole | ||
or in part, if: | ||
(1) the purposes of the trust have been fulfilled or | ||
have become illegal or impossible to fulfill; | ||
(2) because of circumstances not known to or | ||
anticipated by the settlor, the order will further the purposes of | ||
the trust; | ||
(3) modification of administrative, nondispositive | ||
terms of the trust is necessary or appropriate to prevent waste or | ||
avoid impairment of the trust's administration; | ||
(4) the order is necessary or appropriate to achieve | ||
the settlor's tax objectives and is not contrary to the settlor's | ||
intentions; [ |
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(5) subject to Subsection (d): | ||
(A) continuance of the trust is not necessary to | ||
achieve any material purpose of the trust; or | ||
(B) the order is not inconsistent with a material | ||
purpose of the trust; or | ||
(6) the order is necessary to correct a scrivener's | ||
error in the governing document, even if unambiguous, to conform | ||
the terms to the settlor's intention if the settlor's intent with | ||
respect to the error being corrected is proved by clear and | ||
convincing evidence. | ||
(c) The court may direct that an order described by | ||
Subsection (a)(4) or (6) has retroactive effect. | ||
SECTION 5. Sections 112.071(5), (6), and (7), Property | ||
Code, are amended to read as follows: | ||
(5) "Full discretion" means a [ |
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distribute principal to or for the benefit of one or more of the | ||
beneficiaries of a trust that is not a trust with limited discretion | ||
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(6) "Limited discretion" means a [ |
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power to distribute principal to or for the benefit of one or more | ||
beneficiaries of a trust that is limited by an ascertainable | ||
standard, including the health, education, support, or maintenance | ||
of the beneficiary. | ||
(7) "Presumptive remainder beneficiary," with respect | ||
to a particular date, means a beneficiary of a trust on that date | ||
who, in the absence of notice to the trustee of the exercise of the | ||
power of appointment and assuming that any other powers of | ||
appointment under the trust are not exercised, would be eligible to | ||
receive a distribution from the trust if: | ||
(A) the trust terminated on that date; or | ||
(B) the interests of all current beneficiaries | ||
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ended on that date without causing the trust to terminate. | ||
SECTION 6. Section 112.072(a), Property Code, is amended to | ||
read as follows: | ||
(a) An authorized trustee who has the full discretion to | ||
distribute the principal of a trust may distribute all or part of | ||
the principal of that trust in favor of a trustee of a second trust | ||
for the benefit of one, [ |
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beneficiaries of the first trust [ |
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more than one, or all of the successor or presumptive remainder | ||
beneficiaries of the first trust [ |
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SECTION 7. Section 112.078, Property Code, is amended by | ||
adding Subsection (f) to read as follows: | ||
(f) This section does not limit a beneficiary's right to | ||
bring an action against a trustee for a breach of trust. | ||
SECTION 8. Section 112.085, Property Code, is amended to | ||
read as follows: | ||
Sec. 112.085. EXCEPTIONS TO POWER OF DISTRIBUTION. An | ||
authorized trustee may not exercise a power to distribute principal | ||
of a trust under Section 112.072 or 112.073 to: | ||
(1) reduce, limit, or modify a beneficiary's current, | ||
vested right to: | ||
(A) receive a mandatory distribution of income or | ||
principal; | ||
(B) receive a mandatory annuity or unitrust | ||
interest; | ||
(C) withdraw a percentage of the value of the | ||
trust; or | ||
(D) withdraw a specified dollar amount from the | ||
trust; | ||
(2) [ |
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under the trust or as described by Section 111.0035; | ||
(3) [ |
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liability; | ||
(4) add a provision exonerating [ |
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trustee from liability for failure to exercise reasonable care, | ||
diligence, and prudence; | ||
(5) eliminate a provision granting another person the | ||
right to remove or replace the authorized trustee exercising the | ||
distribution power under Section 112.072 or 112.073; or | ||
(6) reduce, limit, or modify in the second trust a | ||
perpetuities provision included in the first trust, unless | ||
expressly permitted by the terms of the first trust. | ||
SECTION 9. Section 113.018, Property Code, is amended to | ||
read as follows: | ||
Sec. 113.018. EMPLOYMENT AND APPOINTMENT OF AGENTS. (a) A | ||
trustee may employ attorneys, accountants, agents, including | ||
investment agents, and brokers reasonably necessary in the | ||
administration of the trust estate. | ||
(b) Without limiting the trustee's discretion under | ||
Subsection (a), a trustee may grant an agent powers with respect to | ||
property of the trust to act for the trustee in any lawful manner | ||
for purposes of real property transactions. | ||
(c) A trustee acting under Subsection (b) may delegate any | ||
or all of the duties and powers to: | ||
(1) execute and deliver any legal instruments relating | ||
to the sale and conveyance of the property, including affidavits, | ||
notices, disclosures, waivers, or designations or general or | ||
special warranty deeds binding the trustee with vendor's liens | ||
retained or disclaimed, as applicable, or transferred to a | ||
third-party lender; | ||
(2) accept notes, deeds of trust, or other legal | ||
instruments; | ||
(3) approve closing statements authorizing deductions | ||
from the sale price; | ||
(4) receive trustee's net sales proceeds by check | ||
payable to the trustee; | ||
(5) indemnify and hold harmless any third party who | ||
accepts and acts under a power of attorney with respect to the sale; | ||
(6) take any action, including signing any document, | ||
necessary or appropriate to sell the property and accomplish the | ||
delegated powers; | ||
(7) contract to purchase the property for any price on | ||
any terms; | ||
(8) execute, deliver, or accept any legal instruments | ||
relating to the purchase of the property or to any financing of the | ||
purchase, including deeds, notes, deeds of trust, guaranties, or | ||
closing statements; | ||
(9) approve closing statements authorizing payment of | ||
prorations and expenses; | ||
(10) pay the trustee's net purchase price from funds | ||
provided by the trustee; | ||
(11) indemnify and hold harmless any third party who | ||
accepts and acts under a power of attorney with respect to the | ||
purchase; or | ||
(12) take any action, including signing any document, | ||
necessary or appropriate to purchase the property and accomplish | ||
the delegated powers. | ||
(d) A trustee who delegates a power under Subsection (b) is | ||
liable to the beneficiaries or to the trust for an action of the | ||
agent to whom the power was delegated. | ||
(e) A delegation by the trustee under Subsection (b) must be | ||
documented in a written instrument acknowledged by the trustee | ||
before an officer authorized under the law of this state or another | ||
state to take acknowledgments to deeds of conveyance and administer | ||
oaths. A signature on a delegation by a trustee for purposes of this | ||
subsection is presumed to be genuine if the trustee acknowledges | ||
the signature in accordance with Chapter 121, Civil Practice and | ||
Remedies Code. | ||
(f) A delegation to an agent under Subsection (b) terminates | ||
six months from the date of the acknowledgment of the written | ||
delegation unless terminated earlier by: | ||
(1) the death or incapacity of the trustee; | ||
(2) the resignation or removal of the trustee; or | ||
(3) a date specified in the written delegation. | ||
(g) A person that in good faith accepts a delegation under | ||
Subsection (b) without actual knowledge that the delegation is | ||
void, invalid, or terminated, that the purported agent's authority | ||
is void, invalid, or terminated, or that the agent is exceeding or | ||
improperly exercising the agent's authority may rely on the | ||
delegation as if: | ||
(1) the delegation were genuine, valid, and still in | ||
effect; | ||
(2) the agent's authority were genuine, valid, and | ||
still in effect; and | ||
(3) the agent had not exceeded and had properly | ||
exercised the authority. | ||
(h) A trustee may delegate powers under Subsection (b) if | ||
the governing instrument does not affirmatively permit the trustee | ||
to hire agents or expressly prohibit the trustee from hiring | ||
agents. | ||
SECTION 10. Section 114.003, Property Code, is amended by | ||
amending Subsections (b) and (c) and adding Subsections (a-1), (d), | ||
(e), and (f) to read as follows: | ||
(a-1) In this section, "trust director" means any person who | ||
is not a trustee and who has, under the terms of a trust, a power to | ||
direct one or more trustees on any matter, or any cotrustee who has, | ||
under the terms of a trust, a power to direct one or more cotrustees | ||
on any matter. A person is not a trust director for purposes of this | ||
section merely by holding a general or limited power of appointment | ||
over the trust assets or, if a person is a beneficiary of the trust, | ||
merely by holding a power to prohibit the trustee from taking any | ||
action with respect to the trust. | ||
(b) If the terms of a trust give a trust director [ |
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the power to direct certain actions of a [ |
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(c), (d), (e), and (f) apply [ |
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(c) A trust director is a fiduciary of the trust subject to | ||
the same duties and standards applicable to a trustee of a trust as | ||
provided by applicable law unless the terms of the trust provide | ||
otherwise. The terms of the trust may not, however, limit the trust | ||
director's duty [ |
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good faith with regard to the purposes of the trust and the | ||
interests of the beneficiaries. The trust director is liable for | ||
any loss resulting directly or indirectly from a breach of the trust | ||
director's fiduciary duty [ |
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(d) If the terms of a trust provide that a trustee is to | ||
follow the direction of a trust director or act only with the trust | ||
director's consent or direction, the trustee is not liable for any | ||
loss resulting directly or indirectly from any act taken or not | ||
taken by the trustee pursuant to the trust director's direction or | ||
as a result of the trust director's failure to direct, consent, or | ||
act, after having been requested to do so by the trustee, if: | ||
(1) the direction is not contrary to an express | ||
prohibition or mandate in the trust instrument, which shall be | ||
evaluated exclusively on the terms of the trust and without | ||
reference to any judicial or legal standard; | ||
(2) the trustee does not act in bad faith; and | ||
(3) the trustee does not have actual knowledge that | ||
the direction would constitute fraud as applied to the fiduciary | ||
duties of the trust director. | ||
(e) Unless the terms of the trust expressly provide | ||
otherwise, a trustee does not have any duty to: | ||
(1) monitor the trust director's conduct; | ||
(2) provide the trust director with advice or consult | ||
with the trust director; | ||
(3) inform or warn the trust director or any | ||
beneficiary or third party that the trustee disagrees with any of | ||
the trust director's actions or directions; | ||
(4) take any action to prevent the trust director from | ||
giving any direction or taking any action; or | ||
(5) compel the trust director to redress the | ||
director's action or direction. | ||
(f) Absent clear evidence to the contrary, the actions of | ||
the directed trustee pertaining to matters within the scope of | ||
authority of the trust director, including confirming that the | ||
trust director's directions have been carried out and recording and | ||
reporting actions taken pursuant to the trust director's direction, | ||
are presumed to be administrative actions taken by the trustee and | ||
are not considered an undertaking by the trustee to monitor the | ||
trust director's actions or participate in actions within the scope | ||
of the trust director's authority. | ||
SECTION 11. Sections 115.002(b-1) and (b-2), Property Code, | ||
are amended to read as follows: | ||
(b-1) If there are multiple [ |
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whom is a corporate trustee and the trustees maintain a principal | ||
office in this state, an action shall be brought in the county in | ||
which: | ||
(1) the situs of administration of the trust is | ||
maintained or has been maintained at any time during the four-year | ||
period preceding the date the action is filed; or | ||
(2) the trustees maintain the principal office. | ||
(b-2) If there are multiple [ |
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whom is a corporate trustee and the trustees do not maintain a | ||
principal office in this state, an action shall be brought in the | ||
county in which: | ||
(1) the situs of administration of the trust is | ||
maintained or has been maintained at any time during the four-year | ||
period preceding the date the action is filed; or | ||
(2) any trustee resides or has resided at any time | ||
during the four-year period preceding the date the action is filed. | ||
SECTION 12. Section 181.083, Property Code, is amended by | ||
adding Subsections (c) and (d) to read as follows: | ||
(c) To the extent specified in an instrument in which a | ||
donee exercises a power, any estate or interest in real or personal | ||
property created through the exercise of the power by the donee is | ||
considered to have been created at the time of the exercise of the | ||
donee's power and not at the time of the creation of the donee's | ||
power, provided that in the instrument the donee: | ||
(1) specifically refers to Section 181.083(c), | ||
Property Code; | ||
(2) specifically asserts an intention to exercise a | ||
power of appointment by creating another power of appointment | ||
described in Section 2041(a)(3) or Section 2514(d), Internal | ||
Revenue Code of 1986; or | ||
(3) specifically asserts an intention to postpone the | ||
vesting of any estate or interest in the property that is subject to | ||
the power, or suspend the absolute ownership or power of alienation | ||
of that property, for a period ascertainable without regard to the | ||
date of the creation of the donee's power. | ||
(d) Subsection (c) applies regardless of whether the | ||
donee's power may be exercised in favor of the donee, the donee's | ||
creditors, the donee's estate, or the creditors of the donee's | ||
estate. | ||
SECTION 13. (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, 2015. | ||
(b) For a trust existing on September 1, 2015, 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, 2015. | ||
SECTION 14. This Act takes effect September 1, 2015. |