By: Carona S.B. No. 778
(In the Senate - Filed February 22, 2013; February 26, 2013,
read first time and referred to Committee on Jurisprudence;
April 8, 2013, reported adversely, with favorable Committee
Substitute by the following vote: Yeas 5, Nays 1; April 8, 2013,
sent to printer.)
COMMITTEE SUBSTITUTE FOR S.B. No. 778 By: Carona
A BILL TO BE ENTITLED
AN ACT
relating to trusts.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subsection (f), Section 113.053, 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) unless the instrument governing the fiduciary
relationship expressly prohibits the purchase or charge, purchase
insurance underwritten or otherwise distributed by an affiliate, a
division within the financial institution, or a syndicate or
selling group that includes the financial institution or an
affiliate and charge the trust or custodial account for the
insurance premium, provided that the insurance product and premium
are the same or similar to a product and premium offered by
organizations that are not an affiliate, a division within the
financial institution, or a syndicate or selling group that
includes the financial institution or an affiliate; 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, or syndicate or selling group that includes the
financial institution or an affiliate, whether in the form of
shared commissions, fees, or otherwise, provided that any amount
charged by the affiliate, [or] division, or syndicate or selling
group that includes the financial institution or an affiliate 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, or syndicate or selling group that
includes the financial institution or an affiliate, 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 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) one-half of the regular compensation of the
trustee and of any person providing investment advisory or
custodial services to the trustee unless, consistent with the
trustee's fiduciary duties, the trustee determines that a different
portion, none, or all of the compensation should be allocated to
income;
(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.
SECTION 3. Subsection (a), Section 116.202, Property Code,
is amended to read as follows:
(a) A trustee shall make the following disbursements from
principal:
(1) the remaining one-half of the disbursements
described in Section [Sections] 116.201(1) unless, consistent with
the trustee's fiduciary duties, the trustee determines that a
different portion, none, or all of those disbursements should be
allocated to income, in which case that portion of the
disbursements that are not allocated to income shall be allocated
to principal;
(1-a) the remaining one-half of the disbursements
described in Section 116.201(2) [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(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.
SECTION 4. (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 5. This Act takes effect September 1, 2013.
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