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A BILL TO BE ENTITLED
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AN ACT
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relating to persons authorized to direct, consent to, or disapprove |
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a trustee's decisions. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter A, Chapter 114, Property Code, is |
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amended by adding Section 114.0031 to read as follows: |
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Sec. 114.0031. DIRECTED TRUSTS; ADVISORS. (a) In this |
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section: |
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(1) "Advisor" includes protector. |
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(2) "Investment decision" means, with respect to any |
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investment, the retention, purchase, sale, exchange, tender, or |
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other transaction affecting the ownership of the investment or |
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rights in the investment and, with respect to a nonpublicly traded |
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investment, the valuation of the investment. |
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(b) For purposes of this section, an advisor with authority |
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with respect to investment decisions is an investment advisor. |
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(c) A protector has all the power and authority granted to |
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the protector by the trust terms, which may include: |
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(1) the power to remove and appoint trustees, |
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advisors, trust committee members, and other protectors; |
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(2) the power to modify or amend the trust terms to |
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achieve favorable tax status or to facilitate the efficient |
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administration of the trust; and |
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(3) the power to modify, expand, or restrict the terms |
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of a power of appointment granted to a beneficiary by the trust |
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terms. |
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(d) If the terms of a trust give a person the authority to |
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direct, consent to, or disapprove a trustee's actual or proposed |
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investment decisions, distribution decisions, or other decisions, |
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the person is considered to be an advisor and a fiduciary when |
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exercising that authority except that the trust terms may provide |
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that an advisor acts in a nonfiduciary capacity. |
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(e) A trustee who acts in accordance with the direction of |
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an advisor, as prescribed by the trust terms, is not liable, except |
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in cases of wilful misconduct on the part of the trustee so |
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directed, for any loss resulting directly or indirectly from that |
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act. |
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(f) If the trust terms provide that a trustee must make |
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decisions with the consent of an advisor, the trustee is not liable, |
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except in cases of wilful misconduct or gross negligence on the part |
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of the trustee, for any loss resulting directly or indirectly from |
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any act taken or not taken as a result of the advisor's failure to |
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provide the required consent after having been requested to do so by |
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the trustee. |
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(g) If the trust terms provide that a trustee must act in |
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accordance with the direction of an advisor with respect to |
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investment decisions, distribution decisions, or other decisions |
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of the trustee, the trustee does not, except to the extent the trust |
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terms provide otherwise, have the duty to: |
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(1) monitor the conduct of the advisor; |
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(2) provide advice to the advisor or consult with the |
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advisor; or |
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(3) communicate with or warn or apprise any |
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beneficiary or third party concerning instances in which the |
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trustee would or might have exercised the trustee's own discretion |
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in a manner different from the manner directed by the advisor. |
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(h) Absent clear and convincing evidence to the contrary, |
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the actions of a trustee pertaining to matters within the scope of |
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the advisor's authority, such as confirming that the advisor's |
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directions have been carried out and recording and reporting |
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actions taken at the advisor's direction, are presumed to be |
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administrative actions taken by the trustee solely to allow the |
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trustee to perform those duties assigned to the trustee under the |
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trust terms, and such administrative actions are not considered to |
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constitute an undertaking by the trustee to monitor the advisor or |
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otherwise participate in actions within the scope of the advisor's |
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authority. |
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SECTION 2. Section 114.003, Property Code, is repealed. |
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SECTION 3. (a) Except as specifically provided by a trust |
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term in effect before the effective date of this Act, Section |
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114.0031, Property Code, as added by this Act, applies to a trust |
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created before, on, or after the effective date of this Act with |
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respect to an action taken or not taken on or after September 1, |
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2015, by a trustee or by an advisor described by Section 114.0031, |
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Property Code, as added by this Act. |
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(b) Except as specifically provided by a trust term in |
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effect before the effective date of this Act, the repeal by this Act |
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of Section 114.003, Property Code, applies to a trust created |
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before, on, or after the effective date of this Act with respect to |
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an action taken or not taken on or after September 1, 2015, by a |
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trustee or other person with respect to the trust. An action taken |
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or not taken with respect to a trust before September 1, 2015, is |
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governed by the law that applied to the action taken or not taken |
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immediately before the effective date of this Act, and that law is |
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continued in effect for that purpose. |
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SECTION 4. This Act takes effect immediately if it receives |
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a vote of two-thirds of all the members elected to each house, as |
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provided by Section 39, Article III, Texas Constitution. If this |
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Act does not receive the vote necessary for immediate effect, this |
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Act takes effect September 1, 2015. |