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


Office of House Bill AnalysisC.S.H.B. 628
By: Naishtat
Judicial Affairs
3/15/2001
Committee Report (Substituted)



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.  C.S.H.B. 628 authorizes a court to appoint a person other than
a financial institution as a 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     

C.S.H.B. 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 financial institution that has
trust powers to serve as trustee of the trust and sets forth exceptions. If
the value of the trust's principal is $50,000 or less, the bill authorizes
the court to appoint a person other than a financial institution to serve
as trustee of the trust if the appointment is in the best interests of the
ward.  If the value of the trust's principal is greater than $50,000, the
court is authorized to appoint a person other than a financial institution
to serve as trustee only if the court finds that no financial institution
is willing to serve as trustee and the appointment is in the best interests
of the ward The bill provides that before a court makes a finding that no
financial institution is willing to serve as trustee, the court must check
any list of corporate fiduciaries located in this state that is maintained
at the office of the presiding judge of the statutory probate courts or at
the principal office of the Texas Bankers Association.  The bill 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, rather than a company or a
state or national bank that has trust powers in this state.  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.


 COMPARISON OF ORIGINAL TO SUBSTITUTE

C.S.H.B. 628 differs from the original bill by reducing from $100,000 to
$50,000 the principal amount of a trust used in determining which type of
trustee appointment is appropriate. The substitute provides that the court
must check any list of corporate fiduciaries located in this state before
making a finding that there is no financial institution willing to serve as
trustee. The substitute adds the definition of a "financial institution."