Texas 2023 - 88th Regular

Texas Senate Bill SB1649 Compare Versions

Version 1 (Old)

Version 2 (New)

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1	1	By: Parker S.B. No. 1649
2	2
3	3
4	4	A BILL TO BE ENTITLED
5	5	AN ACT
6	6	relating to trusts.
7	7	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
8	8	SECTION 1. Section 41.0021(a), Property Code, is amended to
9	9	read as follows:
10	10	(a) In this section, "qualifying trust" means an express
11	11	trust:
12	12	(1) in which the instrument or court order creating
13	13	the express trust, an instrument transferring property to the
14	14	trust, or any other agreement that is binding on the trustee
15	15	provides that a settlor or beneficiary of the trust has the right
16	16	to:
17	17	(A) revoke the trust without the consent of
18	18	another person other than a spouse who is also a settlor of the
19	19	trust;
20	20	(B) exercise an inter vivos general power of
21	21	appointment over the property that qualifies for the homestead
22	22	exemption, either alone or when aggregated with property subject to
23	23	an inter vivos general power of appointment held by a spouse who is
24	24	also a settlor of the trust; or
25	25	(C) use and occupy the residential property as
26	26	the settlor's or beneficiary's principal residence at no cost, or
27	27	rent free and without charge, except for [to the settlor or
28	28	beneficiary, other than payment of] taxes and other costs and
29	29	expenses specified in the instrument or court order:
30	30	(i) for the life of the settlor or
31	31	beneficiary;
32	32	(ii) for the shorter of the life of the
33	33	settlor or beneficiary or a term of years specified in the
34	34	instrument or court order; or
35	35	(iii) until the date the trust is revoked or
36	36	terminated by an instrument or court order that describes the
37	37	property with sufficient certainty to identify the property and
38	38	that is recorded in the real property records of the county in which
39	39	the property is located [and that describes the property with
40	40	sufficient certainty to identify the property]; and
41	41	(2) the trustee of which acquires the property in an
42	42	instrument of title or under a court order that:
43	43	(A) describes the property with sufficient
44	44	certainty to identify the property and the interest acquired; and
45	45	(B) is recorded in the real property records of
46	46	the county in which the property is located.
47	47	SECTION 2. Section 112.035, Property Code, is amended by
48	48	adding Subsections (f-1), (f-2), and (f-3) to read as follows:
49	49	(f-1) A beneficiary of the trust or the estate of a
50	50	beneficiary of the trust may not be considered to be a settlor
51	51	merely because the beneficiary, in any capacity:
52	52	(1) held or exercised a testamentary power of
53	53	appointment other than a general power of appointment;
54	54	(2) held a testamentary general power of appointment;
55	55	or
56	56	(3) exercised a testamentary general power of
57	57	appointment in favor of or for the benefit of the takers in default
58	58	of the appointive assets.
59	59	(f-2) If a beneficiary of the trust exercised a testamentary
60	60	general power of appointment in favor of or for the benefit of any
61	61	appointee other than the takers in default of the appointive
62	62	assets, the appointive assets are:
63	63	(1) subject to the claims of creditors of the
64	64	beneficiary, but only to the extent the beneficiary's own property
65	65	is insufficient to meet the beneficiary's debts; and
66	66	(2) unless appointed to the beneficiary's estate, not
67	67	subject to:
68	68	(A) administration as a part of the beneficiary's
69	69	estate;
70	70	(B) recovery by the personal representative of
71	71	the beneficiary's estate, except as provided by Section 2207B,
72	72	Internal Revenue Code of 1986; or
73	73	(C) the payment of taxes or administration
74	74	expenses of the beneficiary's estate.
75	75	(f-3) For the purposes of Subsections (f-1) and (f-2),
76	76	"general power of appointment" has the meaning assigned by Section
77	77	2041(b)(1), Internal Revenue Code of 1986.
78	78	SECTION 3. Sections 112.036(b) and (c), Property Code, are
79	79	amended to read as follows:
80	80	(b) For purposes of this section, the effective date [of a
81	81	trust] is the date the governing instrument creating an interest in
82	82	the trust becomes irrevocable with respect to that interest. If an
83	83	interest in one trust is distributed to another trust with a
84	84	different effective date, the effective date of that interest in
85	85	the second trust becomes the earlier of the effective dates of the
86	86	two trusts.
87	87	(c) An interest in a trust must vest, if at all:
88	88	(1) [not later than 300 years after the effective date
89	89	of the trust,] if the effective date [of the trust] is on or after
90	90	September 1, 2021, not later than the later of:
91	91	(A) 300 years after the effective date; or
92	92	(B) 21 years after some life in being at the time
93	93	of the effective date, plus a period of gestation; or
94	94	(2) if the effective date is before September 1, 2021,
95	95	except as provided by Subsection (d), not later than 21 years after
96	96	some life in being at the time of the effective date [creation of
97	97	the interest], plus a period of gestation[, if the effective date of
98	98	the trust is before September 1, 2021].
99	99	SECTION 4. Sections 112.0715(a) and (b), Property Code, are
100	100	amended to read as follows:
101	101	(a) A second trust may be created by a distribution of
102	102	principal under Section 112.072 or 112.073 to a second trust that
103	103	retains the name used by the first trust. The second trust may
104	104	retain, subject to applicable federal law, the tax identification
105	105	number of the first trust [created under the same trust instrument
106	106	as the first trust from which the principal is distributed or to a
107	107	trust created under a different trust instrument].
108	108	(b) If a second trust is created by a distribution of
109	109	principal under Section 112.072 or 112.073 to a trust that retains
110	110	[created under] the name of [same trust instrument as] the first
111	111	trust [from which the principal is distributed], the property is
112	112	not required to be retitled.
113	113	SECTION 5. Section 115.014(b), Property Code, is amended to
114	114	read as follows:
115	115	(b) At any point in a proceeding a court may appoint an
116	116	attorney ad litem to represent any interest that the court
117	117	considers necessary, including an attorney ad litem to defend an
118	118	action under Section 114.083 for a beneficiary of the trust who is a
119	119	minor or who has been adjudged incompetent, if the court determines
120	120	that representation of the interest otherwise would be inadequate.
121	121	SECTION 6. Section 112.0715(c), Property Code, is repealed.
122	122	SECTION 7. Sections 112.0715(a) and (b), Property Code, as
123	123	amended by this Act, are intended by the legislature to be a
124	124	codification of the common law of this state in effect immediately
125	125	before the effective date of this Act.
126	126	SECTION 8. Except as otherwise provided by this Act, the
127	127	changes in law made by this Act apply to a trust created before, on,
128	128	or after the effective date of this Act.
129	129	SECTION 9. This Act takes effect immediately if it receives
130	130	a vote of two-thirds of all the members elected to each house, as
131	131	provided by Section 39, Article III, Texas Constitution. If this
132	132	Act does not receive the vote necessary for immediate effect, this
133	133	Act takes effect September 1, 2023.