HBA-LCA H.B. 3632 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 3632
By: Naishtat
Judicial Affairs
4/21/1999
Introduced


BACKGROUND AND PURPOSE 

Under current law, a corporate trustee must be appointed to serve as
manager of certain trusts.  If no corporate trustee is willing to serve -
for example, in the case of a small trust - there is no provision that
allows a court to appoint a noncorporate trustee.  H.B. 3632 allows a court
to appoint a noncorporate trustee for the estate of a ward if no corporate
trustee is willing to serve,  the trust assets are less than $50,000, and
such an appointment is in the best interest of the ward.  This bill also
provides that such a noncorporate trustee must file a bond in the amount of
the principal of the trust and its anticipated annual interest. 

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 Section 867, Probate Code, as follows:  

Sec.  867.  CREATION OF MANAGEMENT TRUST.  (a) Requires a court, upon
creation of a trust for a ward, to appoint a trust company or a state or
national bank that has trust powers in this state to serve as trustee,
except as provided by Subsection (b). 

(b) Authorizes a court to appoint a person other than a trust company or
bank described by Subsection (a) to serve as trustee if no such trust
company or bank is willing to serve as trustee, the value of the trust's
principal is $50,000 or less, and the court determines such an appointment
to be in the ward's best interests. 

(c)  Requires the order to 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.  Makes a
conforming change.  Created from existing text. 

SECTION 2.  Amends Section 868(a), Probate Code, to establish that, except
as provided by Subsection (d), a trust created under this section must
provide that, if the trustee is a corporate fiduciary, the trustee serves
without giving bond. 

SECTION 3.  Amends Subpart N, Part 4, Chapter XIII, Probate Code, by adding
Section 868B, as follows: 

Sec.  868B.  BOND REQUIREMENT FOR CERTAIN TRUSTEES.  Requires a court to
require a person, other than a corporate fiduciary, who serves as trustee
to file with the county clerk a bond in the amount of the trust's principal
and projected annual income and with the conditions the court determines
are necessary. 

SECTION 4.  Amends Section 869A, Probate Code, to make a conforming change.

SECTION 5.  Effective date: September 1, 1999.
            Makes application of this Act prospective.

SECTION 6.  Emergency clause.