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.