HBA-CBW H.B. 628 77(R)BILL ANALYSIS


Office of House Bill AnalysisH.B. 628
By: Naishtat
Judicial Affairs
7/18/2001
Enrolled



BACKGROUND AND PURPOSE 

Prior to the 77th Legislature,  a corporate fiduciary (trust company, state
bank, national bank) was required to serve as the trustee for a management
trust set up for a ward. However, the small size of these trusts often made
it difficult to find a corporate fiduciary who is willing to serve as
trustee.  Without provisions allowing the court to appoint a noncorporate
trustee when no corporate trustee was willing to serve, creating such
trusts was difficult.  House Bill 628 authorizes a court to appoint a
noncorporate trustee under certain conditions and requires a noncorporate
trustee to file a bond in the amount of the principal of the trust with the
county clerk's office. 

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. 

ANALYSIS     

House Bill 628 amends the Texas Probate Code to authorize the court on
application by the incapacitated person's guardian ad litem to create a
trust to manage the funds of the incapacitated person's estate if the court
finds it in that person's  best interest. 

The bill requires the court to appoint a trust company or a state or
national bank that has trust powers in this state to serve as trustee of
the trust and sets forth exceptions. If the value of the trust's principal
is $100,000 or less, the bill authorizes the court to appoint a person
other than a trust company or a state or national bank to serve as trustee
of the trust and the court determines the appointment to be in the best
interests of the ward .  If the value of the trust's principal is greater
than $100,000, the court is authorized to appoint a person other than a
trust company or state or national bank to serve as trustee only if  no
trust company or state or national bank is willing to serve as trustee and
the court determines the appointment is in the best interests of the ward.
The bill requires that the order direct the guardian or another person to
deliver all or part of the assets of the guardianship to a person or
corporate fiduciary appointed by the court as trustee of the trust.  The
bill requires the court to require a person other than a corporate
fiduciary serving as trustee to file with the county clerk a bond in an
amount equal to the value of the trust's principal and projected annual
income and with the conditions the court determines are necessary.  The
bill modifies provisions relating to the terms of a management trust to
provide that if the trustee is a corporate fiduciary, the trustee serves
without giving a bond. 

EFFECTIVE DATE

September 1, 2001.