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


Office of House Bill AnalysisH.B. 628
By: Naishtat
Judicial Affairs
3/9/2001
Introduced



BACKGROUND AND PURPOSE 

Under current law,  a corporate fiduciary (trust company, state bank,
national bank) must serve as the trustee for a management trust set up for
a ward. However, the small size of these trusts often makes 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 is willing to serve, creating such trusts may be
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 to be 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.