HBA-DMD, MAJ H.B. 115 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 115 By: Smith Business & Industry 2/5/1999 Introduced BACKGROUND AND PURPOSE Texas law provides that when a named charity or cause that is the beneficiary of a trust no longer exists, the Texas Attorney General must select a new charity to receive the trust benefits regardless of the wishes of the trust's settlor even if the said person is still living. H.B. 115 empowers the trustee of the trust to name a replacement charity for a failed charitable beneficiary. The bill also requires the trustee to attempt to consult with the settlor, if living, and to consider the settlor's wishes before naming a replacement charitable beneficiary. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter A, Chapter 113, Property Code, by adding Section 113.026, as follows: Sec. 113.026. AUTHORITY TO DESIGNATE NEW CHARITABLE BENEFICIARY. (a) Defines "charitable entity" and "failed charitable beneficiary." (b) Provides that if the trust instrument provides a means for replacing a failed charitable beneficiary the trust investment governs the replacement and this section does not apply. (c) Authorizes the trustee of a trust to designate one or more replacement charitable beneficiaries for a failed charitable beneficiary without obtaining judicial approval. Requires that each replacement charitable beneficiary be a charitable entity and an entity described under Section 170(b)(1)(A) (General Rule for any Charitable Contribution by an Individual), Section 170(c) (Charitable Contribution Defined), Section 2055(a) (Transfers for Public, Charitable, and Religious Uses), and Section 2522(a) (Charitable and Similar Gifts for Citizens or Residents) of the Internal Revenue Code of 1986 (26 U.S.C. Sections 170(b)(1)(A), 170(c), 2055(a), and 2522(a)). (d) Requires the trustee to attempt to consult with the settlor of the trust concerning the settlor's recommendation concerning one or more replacement charitable beneficiaries if the settlor is living and not incapacitated at the time the trustee designates a replacement charitable beneficiary. (e) Provides that if the trustee chooses the replacement charitable beneficiary recommended by the settlor under Subsection (d), the replacement is not required to have the same or similar charitable purpose as the failed charitable beneficiary, and the attorney general does not have to be notified. In all other cases, the trustee must choose one or more replacement charitable beneficiaries with the same or similar charitable purpose as the failed beneficiary and give notice of the replacement selection to the attorney general by certified mail return receipt requested. SECTION 2. Makes application of this Act retroactive. SECTION 3. Emergency clause. Effective date: upon passage.