Texas 2023 - 88th Regular

Texas House Bill HB2196 Compare Versions

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Version 2 (New)

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1	1	H.B. No. 2196
2	2
3	3
4	4	AN ACT
5	5	relating to trusts.
6	6	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
7	7	SECTION 1. Section 41.0021(a), Property Code, is amended to
8	8	read as follows:
9	9	(a) In this section, "qualifying trust" means an express
10	10	trust:
11	11	(1) in which the instrument or court order creating
12	12	the express trust, an instrument transferring property to the
13	13	trust, or any other agreement that is binding on the trustee
14	14	provides that a settlor or beneficiary of the trust has the right
15	15	to:
16	16	(A) revoke the trust without the consent of
17	17	another person other than a spouse who is also a settlor of the
18	18	trust;
19	19	(B) exercise an inter vivos general power of
20	20	appointment over the property that qualifies for the homestead
21	21	exemption, either alone or when aggregated with property subject to
22	22	an inter vivos general power of appointment held by a spouse who is
23	23	also a settlor of the trust; or
24	24	(C) use and occupy the residential property as
25	25	the settlor's or beneficiary's principal residence at no cost, or
26	26	rent free and without charge, except for [to the settlor or
27	27	beneficiary, other than payment of] taxes and other costs and
28	28	expenses specified in the instrument or court order:
29	29	(i) for the life of the settlor or
30	30	beneficiary;
31	31	(ii) for the shorter of the life of the
32	32	settlor or beneficiary or a term of years specified in the
33	33	instrument or court order; or
34	34	(iii) until the date the trust is revoked or
35	35	terminated by an instrument or court order that describes the
36	36	property with sufficient certainty to identify the property and
37	37	that is recorded in the real property records of the county in which
38	38	the property is located [and that describes the property with
39	39	sufficient certainty to identify the property]; and
40	40	(2) the trustee of which acquires the property in an
41	41	instrument of title or under a court order that:
42	42	(A) describes the property with sufficient
43	43	certainty to identify the property and the interest acquired; and
44	44	(B) is recorded in the real property records of
45	45	the county in which the property is located.
46	46	SECTION 2. Section 112.035, Property Code, is amended by
47	47	adding Subsections (f-1), (f-2), and (f-3) to read as follows:
48	48	(f-1) A beneficiary of the trust or the estate of a
49	49	beneficiary of the trust may not be considered to be a settlor
50	50	merely because the beneficiary, in any capacity:
51	51	(1) held or exercised a testamentary power of
52	52	appointment other than a general power of appointment;
53	53	(2) held a testamentary general power of appointment;
54	54	or
55	55	(3) exercised a testamentary general power of
56	56	appointment in favor of or for the benefit of the takers in default
57	57	of the appointive assets.
58	58	(f-2) If a beneficiary of the trust exercised a testamentary
59	59	general power of appointment in favor of or for the benefit of any
60	60	appointee other than the takers in default of the appointive
61	61	assets, the appointive assets are:
62	62	(1) subject to the claims of creditors of the
63	63	beneficiary, but only to the extent the beneficiary's own property
64	64	is insufficient to meet the beneficiary's debts; and
65	65	(2) unless appointed to the beneficiary's estate, not
66	66	subject to:
67	67	(A) administration as a part of the beneficiary's
68	68	estate;
69	69	(B) recovery by the personal representative of
70	70	the beneficiary's estate, except as provided by Section 2207B,
71	71	Internal Revenue Code of 1986; or
72	72	(C) the payment of taxes or administration
73	73	expenses of the beneficiary's estate.
74	74	(f-3) For the purposes of Subsections (f-1) and (f-2),
75	75	"general power of appointment" has the meaning assigned by Section
76	76	2041(b)(1), Internal Revenue Code of 1986.
77	77	SECTION 3. Sections 112.036(b) and (c), Property Code, are
78	78	amended to read as follows:
79	79	(b) For purposes of this section, the effective date [of a
80	80	trust] is the date the governing instrument creating an interest in
81	81	the trust becomes irrevocable with respect to that interest. If an
82	82	interest in one trust is distributed to another trust with a
83	83	different effective date, the effective date of that interest in
84	84	the second trust becomes the earlier of the effective dates of the
85	85	two trusts.
86	86	(c) An interest in a trust must vest, if at all:
87	87	(1) [not later than 300 years after the effective date
88	88	of the trust,] if the effective date [of the trust] is on or after
89	89	September 1, 2021, not later than the later of:
90	90	(A) 300 years after the effective date; or
91	91	(B) 21 years after some life in being at the time
92	92	of the effective date, plus a period of gestation; or
93	93	(2) if the effective date is before September 1, 2021,
94	94	except as provided by Subsection (d), not later than 21 years after
95	95	some life in being at the time of the effective date [creation of
96	96	the interest], plus a period of gestation [, if the effective date
97	97	of the trust is before September 1, 2021].
98	98	SECTION 4. Sections 112.0715(a) and (b), Property Code, are
99	99	amended to read as follows:
100	100	(a) A second trust may be created by a distribution of
101	101	principal under Section 112.072 or 112.073 to a second trust that
102	102	retains the name used by the first trust. The second trust may
103	103	retain, subject to applicable federal law, the tax identification
104	104	number of the first trust [created under the same trust instrument
105	105	as the first trust from which the principal is distributed or to a
106	106	trust created under a different trust instrument].
107	107	(b) If a second trust is created by a distribution of
108	108	principal under Section 112.072 or 112.073 to a trust that retains
109	109	[created under] the name of [same trust instrument as] the first
110	110	trust [from which the principal is distributed], the property is
111	111	not required to be retitled.
112	112	SECTION 5. Section 115.014(b), Property Code, is amended to
113	113	read as follows:
114	114	(b) At any point in a proceeding a court may appoint an
115	115	attorney ad litem to represent any interest that the court
116	116	considers necessary, including an attorney ad litem to defend an
117	117	action under Section 114.083 for a beneficiary of the trust who is a
118	118	minor or who has been adjudged incompetent, if the court determines
119	119	that representation of the interest otherwise would be inadequate.
120	120	SECTION 6. Section 112.0715(c), Property Code, is repealed.
121	121	SECTION 7. Sections 112.0715(a) and (b), Property Code, as
122	122	amended by this Act, are intended by the legislature to be a
123	123	codification of the common law of this state in effect immediately
124	124	before the effective date of this Act.
125	125	SECTION 8. Except as otherwise provided by this Act, the
126	126	changes in law made by this Act apply to a trust created before, on,
127	127	or after the effective date of this Act.
128	128	SECTION 9. This Act takes effect immediately if it receives
129	129	a vote of two-thirds of all the members elected to each house, as
130	130	provided by Section 39, Article III, Texas Constitution. If this
131	131	Act does not receive the vote necessary for immediate effect, this
132	132	Act takes effect September 1, 2023.
133	133	______________________________ ______________________________
134	134	President of the Senate Speaker of the House
135	135	I certify that H.B. No. 2196 was passed by the House on April
136	136	21, 2023, by the following vote: Yeas 141, Nays 0, 1 present, not
137	137	voting.
138	138	______________________________
139	139	Chief Clerk of the House
140	140	I certify that H.B. No. 2196 was passed by the Senate on May
141	141	17, 2023, by the following vote: Yeas 31, Nays 0.
142	142	______________________________
143	143	Secretary of the Senate
144	144	APPROVED: _____________________
145	145	Date
146	146	_____________________
147	147	Governor