88R2814 ATP-F
By: Allison H.B. No. 2333
A BILL TO BE ENTITLED
AN ACT
relating to noncharitable trusts without an ascertainable
beneficiary.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 112, Property Code, is amended by adding
Subchapter F to read as follows:
SUBCHAPTER F. NONCHARITABLE TRUST WITHOUT ASCERTAINABLE
BENEFICIARY
Sec. 112.121. VALIDITY OF TRUST; APPLICABILITY. (a) A
trust may be created for a noncharitable purpose without a definite
or definitely ascertainable beneficiary.
(b) This subchapter does not apply to a trust created under
Section 112.037.
Sec. 112.122. ENFORCEMENT OF TRUST. (a) A trust created
under this subchapter must be enforced by one or more persons
appointed in the terms of the trust to serve as a trust enforcer.
(b) A trust enforcer shall enforce the purpose and terms of
the trust. The trust enforcer is not a beneficiary of the trust,
but has the rights of a beneficiary provided under this title and
the common law of this state, or as otherwise provided by the terms
of the trust.
(c) A trust enforcer shall exercise any authority granted
under the terms of the trust or the provisions of this section as a
fiduciary owing a duty to the trust and is entitled to reasonable
compensation for serving as trust enforcer.
(d) A trust enforcer may consent to, waive, object to, or
petition an appropriate court concerning any matter regarding the
purpose or administration of the trust.
(e) Except as otherwise provided by Section 112.124 or
112.125 or the terms of the trust, if more than one person is acting
as a trust enforcer, any action in that capacity must be decided by
the majority vote of the persons acting as trust enforcers. If
there are an even number of trust enforcers and a majority vote
cannot be established, the decision of the trustee controls.
(f) The terms of the trust may provide for the succession of
a trust enforcer or a process of appointing any successor trust
enforcer.
(g) If no person is serving as a trust enforcer for a trust
created under this subchapter, a court properly exercising
jurisdiction shall appoint one or more persons to serve as the trust
enforcer.
Sec. 112.123. APPLICATION OR DISTRIBUTION OF TRUST
PROPERTY. (a) Property of a trust created under this subchapter
may be applied only to the intended purpose of the trust, except to
the extent that a court finds that the value of the trust property
exceeds the amount required for the intended purpose of the trust.
(b) Except as provided by the terms of the trust, property
found by a court not to be required for the trust's intended purpose
shall be distributed:
(1) as provided by the terms of the trust; or
(2) if the trust does not provide for the distribution
of such property, to the settlor if then living or to the settlor's
successors in interest.
Sec. 112.124. COMMERCIAL LEGACY TRUST. (a) In this
section, "commercial legacy trust" means a trust subject to this
section. A commercial legacy trust is not a business trust for
purposes of Section 111.003.
(b) Subject to this section, a trust may be created under
this subchapter for a commercial purpose, including seeking
economic and noneconomic benefits.
(c) A commercial legacy trust that holds an ownership
interest in a corporation, partnership, limited partnership,
cooperative, limited liability company, limited liability
partnership, or other business entity created to conduct business
under the laws of this state must hold a controlling interest in
that business entity.
(d) A commercial legacy trust may have a business committee
governed by Section 112.125. Each member of the business committee
shall exercise authority as a fiduciary of the commercial legacy
trust. A trustee of a commercial legacy trust must act in
accordance with a direction from the business committee unless the
action is manifestly contrary to the terms of the trust or the
trustee knows that the action would constitute a breach of
fiduciary duty that the business committee, the trust enforcer, or
the trustee owes to the trust.
(e) A trustee of a commercial legacy trust is liable only
for wilful misconduct and is not liable for reliance on documents
provided by the business committee or the trust enforcer.
(f) Unless the terms of a commercial legacy trust provide
otherwise, the trust enforcer and the business committee, acting
together, may modify or terminate a commercial legacy trust by
unanimous agreement of all members of the business committee and
all trust enforcers.
(g) On termination of a commercial legacy trust, the trustee
shall distribute all remaining trust property:
(1) as the terms of the trust provide; or
(2) if the terms of the trust do not provide for
complete distribution of the property, as a court determines to be
consistent with the purposes for which the trust was created.
(h) A person serving as trustee of a commercial legacy trust
may not serve as a trust enforcer or a member of a business
committee of that trust. A person serving as a trust enforcer of a
commercial legacy trust may not serve as a member of the business
committee of that trust.
Sec. 112.125. BUSINESS COMMITTEE FOR COMMERCIAL LEGACY
TRUST; REQUIRED REPORT. (a) In this section, "business committee"
means the business committee established under Section 112.124(d)
for a commercial legacy trust subject to Section 112.124.
(b) The terms of a commercial legacy trust subject to
Section 112.124 may appoint the initial members of the business
committee and may provide for the succession of a business
committee member or a process of appointing a successor business
committee member.
(c) A business committee must have a minimum of three
members. If a vacancy on a business committee results in fewer than
three members on the committee, the vacancy must be filled in the
following order of priority:
(1) by a person designated in the terms of the
commercial legacy trust or selected through a process provided by
the terms of the trust;
(2) by a person appointed by the unanimous agreement
of the trust enforcers; or
(3) by a person appointed by a court properly
exercising jurisdiction.
(d) Except as provided by Subsection (e)(3) or (e)(4),
Section 112.124(f), or the terms of the commercial legacy trust,
any action taken by a business committee must be decided by the
majority vote of business committee members. If there are an even
number of business committee members and a majority vote cannot be
established, the decision of the trustee controls.
(e) Unless the terms of the commercial legacy trust provide
otherwise, in carrying out the purposes of the trust and after
reasonable written notice has been provided to the trust enforcer,
a business committee may:
(1) remove a trustee with or without cause;
(2) appoint one or more successor trustees or
cotrustees;
(3) remove a trust enforcer with or without cause by
the unanimous vote of all members of the business committee and all
trustees;
(4) remove a member of the business committee by the
unanimous vote of all other members of the business committee;
(5) direct distributions from the trust; and
(6) with the consent of the trust enforcer and subject
to the trust enforcer's revocation of consent at any time on
reasonable notice, exercise any right or power belonging to the
trustee, including the right to vote stock owned by the trust.
(f) Unless the commercial legacy trust agreement provides
otherwise, a member of a business committee may resign:
(1) not earlier than the 30th day after providing
written notice to all trustees, all trust enforcers, and all
members of the business committee; or
(2) at any time with the approval of a court properly
exercising jurisdiction.
(g) A member of a business committee may be removed by the
unanimous vote of all trustees and trust enforcers.
(h) Unless the terms of the commercial legacy trust provide
otherwise, a business committee shall provide a report to the
trustee and the trust enforcer at least annually. The report must
show receipts, disbursements, and a detailed list of the assets and
liabilities of the commercial legacy trust. A business committee
shall keep the trustee and the trust enforcer reasonably informed
about the administration of the commercial legacy trust, company
matters, and any other material facts necessary for the trustee to
comply with the trustee's duties and for the trust enforcer to
protect the purpose of the trust. A report properly prepared under
this subsection and provided to the trust enforcer meets the
trustee's duty to provide an accounting under Section 113.151.
(i) If a business committee fails to provide a report in
compliance with Subsection (h), the trustee or trust enforcer may
demand in writing that the business committee deliver to the trust
enforcer and trustee a written statement of accounts covering all
transactions since the last report prepared under Subsection (h)
was provided. If the business committee does not deliver the
statement on or before the 90th day after the date the business
committee receives the written demand or after a longer period
ordered by a court, the trustee or trust enforcer may file suit to
compel the business committee to deliver the statement to the trust
enforcer and trustee. If a trustee or trust enforcer is successful
in the suit to compel a statement under this subsection, the court
may in its discretion award all or part of the court costs and all of
the prevailing party's reasonable and necessary attorney's fees and
costs against the members of the business committee in their
individual capacities.
SECTION 2. Subchapter F, Chapter 112, Property Code, as
added by this Act, applies only to a trust created on or after the
effective date of this Act.
SECTION 3. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2023.