83R7165 NC-F
By: Carona S.B. No. 778
A BILL TO BE ENTITLED
AN ACT
relating to trusts.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 113.053(f), 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) purchase insurance underwritten or otherwise
distributed by an affiliate, a division within the financial
institution, or a syndicate or a selling group that includes the
financial institution or an affiliate and charge the trust or
custodial account for the services, unless the instrument governing
the fiduciary relationship expressly prohibits the purchase or
charge; 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, syndicate, or selling group, whether in the form of
shared commissions, fees, or otherwise, provided that any amount
charged by the affiliate, [or] division, syndicate, or selling
group 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, syndicate, or selling group, 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) 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) except as provided by Subsection (b) or (c),
one-half of the regular compensation of the trustee and of any
person providing investment advisory or custodial services to the
trustee;
(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.
(b) If the trust is a revocable living trust, all of the
trustee's compensation for services performed may be charged
against income during the lifetime of the grantor, unless otherwise
directed by the grantor.
(c) If charging a part or all of the trustee's compensation
to income, in the judgment of the trustee, is impracticable because
of the lack of sufficient income or is inadvisable because of a
desire to provide increased income to the beneficiary, the trustee
may pay part or all of the compensation out of principal. The
decision of the trustee to pay a larger portion or all of the
trustee's compensation out of the principal is conclusive.
SECTION 3. Section 116.202, Property Code, is amended by
amending Subsection (a) and adding Subsection (c) to read as
follows:
(a) A trustee shall make the following disbursements from
principal:
(1) except as provided by Subsection (c), the
remaining part [one-half] of the disbursements described in
Sections 116.201(a)(1) [116.201(1)] 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(a)(4) [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.
(c) If charging a part or all of the trustee's compensation
to principal, in the judgment of the trustee, is impracticable
because of the lack of sufficient cash and readily marketable
assets or is inadvisable because of the nature of the principal
assets, the trustee may determine to pay part or all of the
compensation out of income. The decision of the trustee to pay a
larger portion or all of the trustee's compensation out of income is
conclusive, and the income of the trust is not entitled to
reimbursement from principal.
SECTION 4. Section 117.005, Property Code, is amended to
read as follows:
Sec. 117.005. DIVERSIFICATION. (a) Except as provided by
Subsection (b), a [A] trustee shall diversify the investments of
the trust unless the trustee reasonably determines that, because of
special circumstances, the purposes of the trust are better served
without diversifying.
(b) If trust assets include farm or ranch property, a
closely held family business, life insurance, or interests in
timber, oil, gas, or minerals, the trustee may elect to retain the
assets unless otherwise directed by a majority of adult trust
beneficiaries. A trustee's exercise of discretion to retain the
assets is not a breach of the trustee's duty to diversify
investments.
SECTION 5. (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 6. This Act takes effect September 1, 2013.