82R19325 AJA-F
By: Hartnett H.B. No. 1835
Substitute the following for H.B. No. 1835:
By: Jackson C.S.H.B. No. 1835
A BILL TO BE ENTITLED
AN ACT
relating to trusts.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 112.010, Property Code, is amended by
adding Subsection (c-3) to read as follows:
(c-3) Notwithstanding the deadline prescribed by Subsection
(c-2)(2) for delivering the memorandum required by that subsection,
in the case of an interest in a trust created by reason of the death
of a decedent who died after December 31, 2009, and before December
17, 2010, and to which Section 37A, Probate Code, does not apply, a
memorandum delivered under Subsection (c-2)(2) is also effective to
disclaim an interest in the trust if delivered not later than the
date that is nine months after December 17, 2010. This subsection
expires September 1, 2013.
SECTION 2. Section 112.038, Property Code, is amended to
read as follows:
Sec. 112.038. FORFEITURE CLAUSE. 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 unenforceable
if:
(1) just [probable] cause existed [exists] for
bringing the action; and
(2) the action was brought and maintained in good
faith.
SECTION 3. Section 112.057, Property Code, is amended by
adding Subsections (e) and (f) to read as follows:
(e) A beneficiary to whom written notice is required to be
given under this section may waive the notice requirement in a
writing delivered to the trustee. If all beneficiaries to whom
notice would otherwise be required to be given under this section
waive the notice requirement, notice is not required.
(f) Notice required under this section shall be given to a
guardian of the estate, guardian ad litem, or parent of a minor or
incapacitated beneficiary. A guardian of the estate, guardian ad
litem, or parent of a minor or incapacitated beneficiary may waive
the notice requirement in accordance with this section on behalf of
the minor or incapacitated beneficiary.
SECTION 4. Section 115.001(d), Property Code, is amended to
read as follows:
(d) The jurisdiction of the district court is exclusive
except for jurisdiction conferred by law on:
(1) a statutory probate court;
(2) a court that creates a trust under Section 867,
Texas Probate Code;
(3) a court that creates a trust under Section
142.005;
(4) a justice court under Chapter 27, Government Code;
[or]
(5) a small claims court under Chapter 28, Government
Code; or
(6) a county court at law.
SECTION 5. Section 115.002, Property Code, is amended by
adding Subsection (c-1) to read as follows:
(c-1) Notwithstanding Subsections (b) and (c), if the
settlor is deceased and an administration of the settlor's estate
is pending in this state, an action involving the interpretation
and administration of an inter vivos trust created by the settlor or
a testamentary trust created by the settlor's will may be brought:
(1) in a county in which venue is proper under
Subsection (b) or (c); or
(2) in the county in which the administration of the
settlor's estate is pending.
SECTION 6. Section 115.011(b), Property Code, is amended to
read as follows:
(b) Contingent beneficiaries designated as a class are not
necessary parties to an action under Section 115.001. The only
necessary parties to such an action are:
(1) a beneficiary of the trust on whose act or
obligation the action is predicated;
(2) a beneficiary of the trust designated by name,
other than a beneficiary whose interest has been distributed,
extinguished, terminated, or paid [in the instrument creating the
trust];
(3) a person who is actually receiving distributions
from the trust estate at the time the action is filed; and
(4) the trustee, if a trustee is serving at the time
the action is filed.
SECTION 7. Sections 116.005(d) and (e), Property Code, are
amended to read as follows:
(d) If Subsection (c)(4), (5) [(c)(5)], (6), or (7)[, or
(8)] applies to a trustee and there is more than one trustee, a
cotrustee to whom the provision does not apply may make the
adjustment unless the exercise of the power by the remaining
trustee or trustees is not permitted by the terms of the trust.
(e) A trustee may release the entire power conferred by
Subsection (a) or may release only the power to adjust from income
to principal or the power to adjust from principal to income if the
trustee is uncertain about whether possessing or exercising the
power will cause a result described in Subsections (c)(1)-(5)
[Subsection (c)(1)-(6)] or Subsection (c)(7) [(c)(8)] or if the
trustee determines that possessing or exercising the power will or
may deprive the trust of a tax benefit or impose a tax burden not
described in Subsection (c). The release may be permanent or for a
specified period, including a period measured by the life of an
individual.
SECTION 8. Sections 116.205(c) and (d), Property Code, are
amended to read as follows:
(c) A tax required to be paid by a trustee on the trust's
share of an entity's taxable income must be paid [proportionately]:
(1) from income to the extent that receipts from the
entity are allocated only to income; [and]
(2) from principal to the extent that[:
[(A)] receipts from the entity are allocated only
to principal;
(3) proportionately from principal and income to the
extent that receipts from the entity are allocated to both
principal and income; and
(4) from principal to the extent that the tax exceeds
the total receipts from the entity [and
[(B) the trust's share of the entity's taxable
income exceeds the total receipts described in Subdivisions (1) and
(2)(A)].
(d) After applying the other provisions of this section, the
trustee shall adjust income or principal receipts to the extent
that the trust's taxes are reduced because the trust receives a
deduction for payments made to a beneficiary. [For purposes of this
section, receipts allocated to principal or income must be reduced
by the amount distributed to a beneficiary from principal or income
for which the trust receives a deduction in calculating the tax.]
SECTION 9. (a) Except as otherwise expressly provided by
the will, the trust, or this Act, the changes in law made by this Act
apply to:
(1) a trust existing or created on or after September
1, 2011;
(2) the estate of a decedent who dies before September
1, 2011, if the probate or administration of the estate is pending
as of September 1, 2011; and
(3) the estate of a decedent who dies on or after
September 1, 2011.
(b) For a trust existing on September 1, 2011, 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, 2011.
(c) Sections 112.038, 115.002, and 115.011, Property Code,
as amended by this Act, apply to a court action commenced on or
after September 1, 2011. An action commenced before September 1,
2011, is governed by the law applicable to the action immediately
before the effective date of this Act, and that law is continued in
effect for that purpose.
(d) The amendment by this Act of Section 115.001, Property
Code, is intended to clarify rather than change existing law.
SECTION 10. This Act takes effect September 1, 2011.