H.B. No. 1314

SECTION 867 GUARDIANSHIP MANAGEMENT TRUSTS

Effective Date: September 1, 1997

AN ACT

relating to a trust created for the management of a ward's assets.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1.  Section 867, Texas Probate Code, is amended to read as follows:

Sec. 867.  CREATION OF MANAGEMENT TRUST. On application by the guardian of a ward or by a ward's attorney ad litem at any time after the date of the attorney's appointment under Section 646 of this code, the court in which the guardianship proceeding is pending may enter an order that creates for the ward's benefit a trust for the management of guardianship funds if the court finds that the creation of the trust is in the ward's best interests. The order shall direct the guardian or another person to deliver all or part of the assets of the guardianship to a trust company or a state or national bank that has trust powers in this state. The order shall include terms, conditions, and limitations placed on the trust. The court shall maintain the trust under the same cause number as the guardianship proceeding.

SECTION 2.  Section 868, Texas Probate Code, is amended by amending Subsections (a) and (b) and adding Subsections (d) and (e) to read as follows:

(a)  Except as provided by Subsection (d) of this section, a [A] trust created under Section 867 of this code must provide that:

(1)  the ward is the sole beneficiary of the trust;

(2)  the trustee may disburse an amount of the trust's principal or income as the trustee determines is necessary to expend for the health, education, support, or maintenance of the ward;

(3)  the income of the trust that the trustee does not disburse under Subdivision (2) of this subsection must be added to the principal of the trust;

(4)  the trustee serves without giving a bond; and

(5)  the trustee, on annual application to the court and subject to the court's approval, is entitled to receive reasonable compensation for services that the trustee provided to the ward as the ward's trustee that is:

(A)  to be paid from the trust's income, principal, or both; and

(B)  determined in the same manner as compensation of a guardian of an estate under Section 665 of this code.

(b)  The trust may provide that a trustee make a distribution, payment, use, or application of trust funds for the health, education, support, or maintenance of the ward or of another person whom the ward is legally obligated to support, as necessary and without the intervention of a guardian or other representative of the ward, to:

(1)  the ward's guardian; [or to]

(2)  a person who has physical custody of the ward [for the health, education, support, or maintenance of the ward] or [of] another person whom the ward is legally obligated to support; or

(3)  a person providing a good or service to the ward or another person whom the ward is legally obligated to support.

(d)  When creating or modifying a trust, the court may omit or modify terms required by Subsection (a)(1) or (2) of this section only if the court determines that the omission or modification:

(1)  is necessary and appropriate for the ward to be eligible to receive public benefits or assistance under a state or federal program that is not otherwise available to the ward; and

(2)  is in the ward's best interests.

(e)  The court may include additional provisions in a trust created or modified under this section if the court determines an addition does not conflict with Subsection (a) and, if appropriate, Subsection (d) of this section.

SECTION 3.  Subpart N, Part 4, Chapter XIII, Texas Probate Code, is amended by adding Sections 868A, 869B, and 869C to read as follows:

Sec. 868A.  DISCHARGE OF GUARDIAN OF ESTATE AND CONTINUATION OF TRUST. On or at any time after the creation of a trust under this subpart, the court may discharge the guardian of the ward's estate only if a guardian of the ward's person remains and the court determines that the discharge is in the ward's best interests.

Sec. 869B.  APPLICABILITY OF TEXAS TRUST CODE. (a)  A trust created under Section 867 of this code is subject to Subtitle B, Title 9, Property Code.

(b)  To the extent of a conflict between Subtitle B, Title 9, Property Code, and a provision of this subpart or of the trust, the provision of the subpart or trust controls.

Sec. 869C.  JURISDICTION OVER TRUST MATTERS. A court that creates a trust under Section 867 of this code has the same jurisdiction to hear matters relating to the trust as the court has with respect to the guardianship and other matters covered by this chapter.

SECTION 4.  Section 870(b), Texas Probate Code, is amended to read as follows:

(b)  If the ward is an incapacitated person other than a minor, the trust terminates on the date the court determines that continuing the trust [a guardianship] is no longer in the ward's best interests [necessary for the ward] or on the death of the ward.

SECTION 5.  Section 115.001(d), Property Code, is amended to read as follows:

(d)  The jurisdiction of the district court over proceedings concerning trusts is exclusive except for jurisdiction conferred by law on a statutory probate court or a court that creates a trust under Section 867, Texas Probate Code.

SECTION 6.  Section 868(c), Texas Probate Code, is repealed.

SECTION 7.  (a)  A trust may be created under Section 867, Texas Probate Code, as amended by this Act, regardless of the date on which the guardianship was created.

(b)  A trust otherwise valid under Section 867, Texas Probate Code, is not invalid solely because it was created for a guardianship that was in existence before September 1, 1993, and those trusts are validated as of the date of the creation of the trust.

SECTION 8.  This Act takes effect September 1, 1997, and applies to all trusts created under Section 867, Texas Probate Code, as amended by this Act, regardless of the date on which the trusts were created.

SECTION 9.  The importance of this legislation and the crowded condition of the calendars in both houses create an emergency and an imperative public necessity that the constitutional rule requiring bills to be read on three several days in each house be suspended, and this rule is hereby suspended.


Courtesy of Glenn M. Karisch, Ikard & Golden, P. C., Austin, Texas. This page was last revised on May 28, 1997.