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."