| 1 | 1 | | 86R2877 BEE-F |
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| 2 | 2 | | By: RodrÃguez S.B. No. 309 |
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| 3 | 3 | | |
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| 4 | 4 | | |
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| 5 | 5 | | A BILL TO BE ENTITLED |
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| 6 | 6 | | AN ACT |
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| 7 | 7 | | relating to the fiduciary status of a directed trust advisor. |
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| 8 | 8 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 9 | 9 | | SECTION 1. Section 114.0031, Property Code, is amended by |
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| 10 | 10 | | amending Subsection (e) and adding Subsection (e-1) to read as |
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| 11 | 11 | | follows: |
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| 12 | 12 | | (e) If the terms of a trust give a person the authority to |
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| 13 | 13 | | direct, consent to, or disapprove a trustee's actual or proposed |
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| 14 | 14 | | investment decisions, distribution decisions, or other decisions, |
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| 15 | 15 | | the person is [considered to be] an advisor. An advisor is [and] a |
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| 16 | 16 | | fiduciary regardless of trust terms to the contrary [when |
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| 17 | 17 | | exercising that authority] except that the trust terms may provide |
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| 18 | 18 | | that an advisor acts in a nonfiduciary capacity if: |
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| 19 | 19 | | (1) the advisor's only power is to remove and appoint |
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| 20 | 20 | | trustees, advisors, trust committee members, or other protectors; |
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| 21 | 21 | | and |
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| 22 | 22 | | (2) the advisor does not exercise that power to |
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| 23 | 23 | | appoint the advisor's self to a position described by Subdivision |
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| 24 | 24 | | (1). |
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| 25 | 25 | | (e-1) Subsection (e) does not prohibit the exercise of a |
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| 26 | 26 | | power in a nonfiduciary capacity as required by the Internal |
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| 27 | 27 | | Revenue Code for a grantor or other person to be treated as the |
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| 28 | 28 | | owner of any portion of the trust for federal income tax purposes. |
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| 29 | 29 | | SECTION 2. (a) Except as specifically provided by a trust |
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| 30 | 30 | | term in effect before September 1, 2019, the changes in law made by |
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| 31 | 31 | | this Act apply to a trust created before, on, or after September 1, |
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| 32 | 32 | | 2019, with respect to an action taken or not taken on or after |
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| 33 | 33 | | September 1, 2019, by a trustee, custodian, or other person with |
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| 34 | 34 | | respect to the trust. |
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| 35 | 35 | | (b) An action taken or not taken with respect to a trust |
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| 36 | 36 | | before September 1, 2019, is governed by the law that applied to the |
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| 37 | 37 | | action taken or not taken immediately before September 1, 2019, and |
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| 38 | 38 | | that law is continued in effect for that purpose. |
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| 39 | 39 | | SECTION 3. This Act takes effect September 1, 2019. |
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