Bill Text: TX HB2196 | 2023-2024 | 88th Legislature | Comm Sub

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Relating to trusts.

Spectrum: Partisan Bill (Republican 2-0)

Status: (Passed) 2023-06-09 - Effective immediately [HB2196 Detail]

Download: Texas-2023-HB2196-Comm_Sub.html

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88R19575 KBB-F
By: Smithee H.B. No. 2196
Substitute the following for H.B. No. 2196:
By: Schofield C.S.H.B. No. 2196

A BILL TO BE ENTITLED
AN ACT
relating to trusts.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 41.0021(a), Property Code, is amended to
read as follows:
(a) In this section, "qualifying trust" means an express
trust:
(1) in which the instrument or court order creating
the express trust, an instrument transferring property to the
trust, or any other agreement that is binding on the trustee
provides that a settlor or beneficiary of the trust has the right
to:
(A) revoke the trust without the consent of
another person other than a spouse who is also a settlor of the
trust;
(B) exercise an inter vivos general power of
appointment over the property that qualifies for the homestead
exemption, either alone or when aggregated with property subject to
an inter vivos general power of appointment held by a spouse who is
also a settlor of the trust; or
(C) use and occupy the residential property as
the settlor's or beneficiary's principal residence at no cost, or
rent free and without charge, except for [to the settlor or
beneficiary, other than payment of] taxes and other costs and
expenses specified in the instrument or court order:
(i) for the life of the settlor or
beneficiary;
(ii) for the shorter of the life of the
settlor or beneficiary or a term of years specified in the
instrument or court order; or
(iii) until the date the trust is revoked or
terminated by an instrument or court order that describes the
property with sufficient certainty to identify the property and
that is recorded in the real property records of the county in which
the property is located [and that describes the property with
sufficient certainty to identify the property]; and
(2) the trustee of which acquires the property in an
instrument of title or under a court order that:
(A) describes the property with sufficient
certainty to identify the property and the interest acquired; and
(B) is recorded in the real property records of
the county in which the property is located.
SECTION 2. Section 112.035, Property Code, is amended by
adding Subsections (f-1), (f-2), and (f-3) to read as follows:
(f-1) A beneficiary of the trust or the estate of a
beneficiary of the trust may not be considered to be a settlor
merely because the beneficiary, in any capacity:
(1) held or exercised a testamentary power of
appointment other than a general power of appointment;
(2) held a testamentary general power of appointment;
or
(3) exercised a testamentary general power of
appointment in favor of or for the benefit of the takers in default
of the appointive assets.
(f-2) If a beneficiary of the trust exercised a testamentary
general power of appointment in favor of or for the benefit of any
appointee other than the takers in default of the appointive
assets, the appointive assets are:
(1) subject to the claims of creditors of the
beneficiary, but only to the extent the beneficiary's own property
is insufficient to meet the beneficiary's debts; and
(2) unless appointed to the beneficiary's estate, not
subject to:
(A) administration as a part of the beneficiary's
estate;
(B) recovery by the personal representative of
the beneficiary's estate, except as provided by Section 2207B,
Internal Revenue Code of 1986; or
(C) the payment of taxes or administration
expenses of the beneficiary's estate.
(f-3) For the purposes of Subsections (f-1) and (f-2),
"general power of appointment" has the meaning assigned by Section
2041(b)(1), Internal Revenue Code of 1986.
SECTION 3. Sections 112.036(b) and (c), Property Code, are
amended to read as follows:
(b) For purposes of this section, the effective date [of a
trust] is the date the governing instrument creating an interest in
the trust becomes irrevocable with respect to that interest. If an
interest in one trust is distributed to another trust with a
different effective date, the effective date of that interest in
the second trust becomes the earlier of the effective dates of the
two trusts.
(c) An interest in a trust must vest, if at all:
(1) [not later than 300 years after the effective date
of the trust,] if the effective date [of the trust] is on or after
September 1, 2021, not later than the later of:
(A) 300 years after the effective date; or
(B) 21 years after some life in being at the time
of the effective date, plus a period of gestation; or
(2) if the effective date is before September 1, 2021,
except as provided by Subsection (d), not later than 21 years after
some life in being at the time of the effective date [creation of
the interest], plus a period of gestation [, if the effective date
of the trust is before September 1, 2021].
SECTION 4. Sections 112.0715(a) and (b), Property Code, are
amended to read as follows:
(a) A second trust may be created by a distribution of
principal under Section 112.072 or 112.073 to a second trust that
retains the name used by the first trust. The second trust may
retain, subject to applicable federal law, the tax identification
number of the first trust [created under the same trust instrument
as the first trust from which the principal is distributed or to a
trust created under a different trust instrument].
(b) If a second trust is created by a distribution of
principal under Section 112.072 or 112.073 to a trust that retains
[created under] the name of [same trust instrument as] the first
trust [from which the principal is distributed], the property is
not required to be retitled.
SECTION 5. Section 115.014(b), Property Code, is amended to
read as follows:
(b) At any point in a proceeding a court may appoint an
attorney ad litem to represent any interest that the court
considers necessary, including an attorney ad litem to defend an
action under Section 114.083 for a beneficiary of the trust who is a
minor or who has been adjudged incompetent, if the court determines
that representation of the interest otherwise would be inadequate.
SECTION 6. Section 112.0715(c), Property Code, is repealed.
SECTION 7. Sections 112.0715(a) and (b), Property Code, as
amended by this Act, are intended by the legislature to be a
codification of the common law of this state in effect immediately
before the effective date of this Act.
SECTION 8. Except as otherwise provided by this Act, the
changes in law made by this Act apply to a trust created before, on,
or after the effective date of this Act.
SECTION 9. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2023.