Texas 2011 - 82nd Regular

Texas Senate Bill SB1197 Compare Versions

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1	1	By: Rodriguez S.B. No. 1197
2	2	(Hartnett)
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to trusts.
8	8	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	9	SECTION 1. Section 112.010, Property Code, is amended by
10	10	adding Subsection (c-3) to read as follows:
11	11	(c-3) Notwithstanding the deadline prescribed by Subsection
12	12	(c-2)(2) for delivering the memorandum required by that subsection,
13	13	in the case of an interest in a trust created by reason of the death
14	14	of a decedent who died after December 31, 2009, and before December
15	15	17, 2010, and to which Section 37A, Probate Code, does not apply, a
16	16	memorandum delivered under Subsection (c-2)(2) is also effective to
17	17	disclaim an interest in the trust if delivered not later than the
18	18	date that is nine months after December 17, 2010. This subsection
19	19	expires September 1, 2013.
20	20	SECTION 2. Section 112.038, Property Code, is amended to
21	21	read as follows:
22	22	Sec. 112.038. FORFEITURE CLAUSE. A provision in a trust
23	23	that would cause a forfeiture of or void an interest for bringing
24	24	any court action, including contesting a trust, is unenforceable
25	25	if:
26	26	(1) just [probable] cause existed [exists] for
27	27	bringing the action; and
28	28	(2) the action was brought and maintained in good
29	29	faith.
30	30	SECTION 3. Section 112.057, Property Code, is amended by
31	31	adding Subsections (e) and (f) to read as follows:
32	32	(e) A beneficiary to whom written notice is required to be
33	33	given under this section may waive the notice requirement in a
34	34	writing delivered to the trustee. If all beneficiaries to whom
35	35	notice would otherwise be required to be given under this section
36	36	waive the notice requirement, notice is not required.
37	37	(f) Notice required under this section shall be given to a
38	38	guardian of the estate, guardian ad litem, or parent of a minor or
39	39	incapacitated beneficiary. A guardian of the estate, guardian ad
40	40	litem, or parent of a minor or incapacitated beneficiary may waive
41	41	the notice requirement in accordance with this section on behalf of
42	42	the minor or incapacitated beneficiary.
43	43	SECTION 4. Subsection (d), Section 115.001, Property Code,
44	44	is amended to read as follows:
45	45	(d) The jurisdiction of the district court is exclusive
46	46	except for jurisdiction conferred by law on:
47	47	(1) a statutory probate court;
48	48	(2) a court that creates a trust under Section 867,
49	49	Texas Probate Code;
50	50	(3) a court that creates a trust under Section
51	51	142.005;
52	52	(4) a justice court under Chapter 27, Government Code;
53	53	[or]
54	54	(5) a small claims court under Chapter 28, Government
55	55	Code; or
56	56	(6) a county court at law.
57	57	SECTION 5. Section 115.002, Property Code, is amended by
58	58	adding Subsection (c-1) to read as follows:
59	59	(c-1) Notwithstanding Subsections (b) and (c), if the
60	60	settlor is deceased and an administration of the settlor's estate
61	61	is pending in this state, an action involving the interpretation
62	62	and administration of an inter vivos trust created by the settlor or
63	63	a testamentary trust created by the settlor's will may be brought:
64	64	(1) in a county in which venue is proper under
65	65	Subsection (b) or (c); or
66	66	(2) in the county in which the administration of the
67	67	settlor's estate is pending.
68	68	SECTION 6. Subsection (b), Section 115.011, Property Code,
69	69	is amended to read as follows:
70	70	(b) Contingent beneficiaries designated as a class are not
71	71	necessary parties to an action under Section 115.001. The only
72	72	necessary parties to such an action are:
73	73	(1) a beneficiary of the trust on whose act or
74	74	obligation the action is predicated;
75	75	(2) a beneficiary of the trust designated by name,
76	76	other than a beneficiary whose interest has been distributed,
77	77	extinguished, terminated, or paid [in the instrument creating the
78	78	trust];
79	79	(3) a person who is actually receiving distributions
80	80	from the trust estate at the time the action is filed; and
81	81	(4) the trustee, if a trustee is serving at the time
82	82	the action is filed.
83	83	SECTION 7. Subsections (d) and (e), Section 116.005,
84	84	Property Code, are amended to read as follows:
85	85	(d) If Subsection (c)(4), (5) [(c)(5)], (6), or (7)[, or
86	86	(8)] applies to a trustee and there is more than one trustee, a
87	87	cotrustee to whom the provision does not apply may make the
88	88	adjustment unless the exercise of the power by the remaining
89	89	trustee or trustees is not permitted by the terms of the trust.
90	90	(e) A trustee may release the entire power conferred by
91	91	Subsection (a) or may release only the power to adjust from income
92	92	to principal or the power to adjust from principal to income if the
93	93	trustee is uncertain about whether possessing or exercising the
94	94	power will cause a result described in Subsections (c)(1)-(5)
95	95	[Subsection (c)(1)-(6)] or Subsection (c)(7) [(c)(8)] or if the
96	96	trustee determines that possessing or exercising the power will or
97	97	may deprive the trust of a tax benefit or impose a tax burden not
98	98	described in Subsection (c). The release may be permanent or for a
99	99	specified period, including a period measured by the life of an
100	100	individual.
101	101	SECTION 8. Subsections (c) and (d), Section 116.205,
102	102	Property Code, are amended to read as follows:
103	103	(c) A tax required to be paid by a trustee on the trust's
104	104	share of an entity's taxable income must be paid [proportionately]:
105	105	(1) from income to the extent that receipts from the
106	106	entity are allocated only to income; [and]
107	107	(2) from principal to the extent that[:
108	108	[(A)] receipts from the entity are allocated only
109	109	to principal;
110	110	(3) proportionately from principal and income to the
111	111	extent that receipts from the entity are allocated to both
112	112	principal and income; and
113	113	(4) from principal to the extent that the tax exceeds
114	114	the total receipts from the entity [and
115	115	[(B) the trust's share of the entity's taxable
116	116	income exceeds the total receipts described in Subdivisions (1) and
117	117	(2)(A)].
118	118	(d) After applying the other provisions of this section, the
119	119	trustee shall adjust income or principal receipts to the extent
120	120	that the trust's taxes are reduced because the trust receives a
121	121	deduction for payments made to a beneficiary [For purposes of this
122	122	section, receipts allocated to principal or income must be reduced
123	123	by the amount distributed to a beneficiary from principal or income
124	124	for which the trust receives a deduction in calculating the tax].
125	125	SECTION 9. (a) Except as otherwise expressly provided by
126	126	the will, the trust, or this Act, the changes in law made by this Act
127	127	apply to:
128	128	(1) a trust existing or created on or after September
129	129	1, 2011;
130	130	(2) the estate of a decedent who dies before September
131	131	1, 2011, if the probate or administration of the estate is pending
132	132	as of September 1, 2011; and
133	133	(3) the estate of a decedent who dies on or after
134	134	September 1, 2011.
135	135	(b) For a trust existing on September 1, 2011, that was
136	136	created before that date, the changes in law made by this Act apply
137	137	only to an act or omission relating to the trust that occurs on or
138	138	after September 1, 2011.
139	139	(c) Sections 112.038, 115.002, and 115.011, Property Code,
140	140	as amended by this Act, apply to a court action commenced on or
141	141	after September 1, 2011. An action commenced before September 1,
142	142	2011, is governed by the law applicable to the action immediately
143	143	before the effective date of this Act, and that law is continued in
144	144	effect for that purpose.
145	145	(d) The amendment by this Act of Section 115.001, Property
146	146	Code, is intended to clarify rather than change existing law.
147	147	SECTION 10. This Act takes effect September 1, 2011.