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

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