2005 Texas Property Code CHAPTER 114. LIABILITIES, RIGHTS, AND REMEDIES OF TRUSTEES, BENEFICIARIES, AND THIRD PERSONS

PROPERTY CODE

CHAPTER 114. LIABILITIES, RIGHTS, AND REMEDIES OF TRUSTEES, 
BENEFICIARIES, AND THIRD PERSONS

SUBCHAPTER A. LIABILITY OF TRUSTEE


	§ 114.001. LIABILITY OF TRUSTEE TO BENEFICIARY.  (a) The 
trustee is accountable to a beneficiary for the trust property and 
for any profit made by the trustee through or arising out of the 
administration of the trust, even though the profit does not result 
from a breach of trust;  provided, however, that the trustee is not 
required to return to a beneficiary the trustee's compensation as 
provided by this subtitle, by the terms of the trust instrument, or 
by a writing delivered to the trustee and signed by all 
beneficiaries of the trust who have full legal capacity.
	(b)  The trustee is not liable to the beneficiary for a loss 
or depreciation in value of the trust property or for a failure to 
make a profit that does not result from a failure to perform the 
duties set forth in this subtitle or from any other breach of trust.
	(c)  A trustee who commits a breach of trust is chargeable 
with any damages resulting from such breach of trust, including but 
not limited to:
		(1)  any loss or depreciation in value of the trust 
estate as a result of the breach of trust;
		(2)  any profit made by the trustee through the breach 
of trust;  or        
		(3)  any profit that would have accrued to the trust 
estate if there had been no breach of trust.
	(d)  The trustee is not liable to the beneficiary for a loss 
or depreciation in value of the trust property or for acting or 
failing to act under Section 113.025 or under any other provision of 
this subtitle if the action or failure to act relates to compliance 
with an environmental law and if there is no gross negligence or bad 
faith on the part of the trustee.  The provision of any instrument 
governing trustee liability does not increase the liability of the 
trustee as provided by this section unless the settlor expressly 
makes reference to this subsection.
	(e)  The trustee has the same protection from liability 
provided for a fiduciary under 42 U.S.C. Section 9607(n).

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff. 
Jan. 1, 1984.  Amended by Acts 1984, 68th Leg., 2nd C.S., ch. 18, 
§ 13, eff. Oct. 2, 1984;  Acts 1989, 71st Leg., ch. 341, § 2, 
eff. Aug. 28, 1989;  Acts 1993, 73rd Leg., ch. 846, § 30, eff. 
Sept. 1, 1993;  Acts 1997, 75th Leg., ch. 263, § 1, eff. Sept. 1, 
1997;  Acts 2003, 78th Leg., ch. 1103, § 8, eff. Jan. 1, 2004.


	§ 114.002. LIABILITY OF SUCCESSOR TRUSTEE FOR BREACH OF 
TRUST BY PREDECESSOR.  A successor trustee is liable for a breach 
of trust of a predecessor only if he knows or should know of a 
situation constituting a breach of trust committed by the 
predecessor and the successor trustee:
		(1)  improperly permits it to continue;                                       
		(2)  fails to make a reasonable effort to compel the 
predecessor trustee to deliver the trust property;  or
		(3)  fails to make a reasonable effort to compel a 
redress of a breach of trust committed by the predecessor trustee.

Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, 
eff. Jan. 1, 1984.


	§ 114.003. POWERS TO DIRECT.  (a)  The terms of a trust 
may give a trustee or other person a power to direct the 
modification or termination of the trust.
	(b)  If the terms of a trust give a person the power to direct 
certain actions of the trustee, the trustee shall act in accordance 
with the person's direction unless:
		(1)  the direction is manifestly contrary to the terms 
of the trust;  or    
		(2)  the trustee knows the direction would constitute a 
serious breach of a fiduciary duty that the person holding the power 
to direct owes to the beneficiaries of the trust.
	(c)  A person, other than a beneficiary, who holds a power to 
direct is presumptively a fiduciary required to act in good faith 
with regard to the purposes of the trust and the interests of the 
beneficiaries.  The holder of a power to direct is liable for any 
loss that results from a breach of the person's fiduciary duty.

Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, 
eff. Jan. 1, 1984;  Acts 2005, 79th Leg., ch. 148, § 19, eff. Jan. 
1, 2006.


	§ 114.004. ACTIONS TAKEN PRIOR TO KNOWLEDGE OR NOTICE OF 
FACTS.  A trustee is not liable for a mistake of fact made before 
the trustee has actual knowledge or receives written notice of the 
happening of any event that determines or affects the distribution 
of the income or principal of the trust, including marriage, 
divorce, attainment of a certain age, performance of education 
requirements, or death.

Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, 
eff. Jan. 1, 1984.


	§ 114.005. RELEASE OF LIABILITY BY BENEFICIARY.  (a) A 
beneficiary who has full legal capacity and is acting on full 
information may relieve a trustee from any duty, responsibility, 
restriction, or liability as to the beneficiary that would 
otherwise be imposed on the trustee by this subtitle, including 
liability for past violations, except as to the duties, 
restrictions, and liabilities imposed on corporate trustees by 
Section 113.052 or 113.053 of this subtitle.
	(b)  The release must be in writing and delivered to the 
trustee.            

Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, 
eff. Jan. 1, 1984.


	§ 114.006. LIABILITY OF COTRUSTEES FOR ACTS OF OTHER 
COTRUSTEES.  (a)  A trustee who does not join in an action of a 
cotrustee is not liable for the cotrustee's action, unless the 
trustee does not exercise reasonable care as provided by Subsection 
(b).
	(b)  Each trustee shall exercise reasonable care to:                           
		(1)  prevent a cotrustee from committing a serious 
breach of trust;  and    
		(2)  compel a cotrustee to redress a serious breach of 
trust.               
	(c)  Subject to Subsection (b), a dissenting trustee who 
joins in an action at the direction of the majority of the trustees 
and who has notified any cotrustee of the dissent in writing at or 
before the time of the action is not liable for the action.

Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, 
eff. Jan. 1, 1984;  Acts 2005, 79th Leg., ch. 148, § 20, eff. Jan. 
1, 2006.


	§ 114.007. EXCULPATION OF TRUSTEE.  (a)  A term of a trust 
relieving a trustee of liability for breach of trust is 
unenforceable to the extent that the term relieves a trustee of 
liability for:
		(1)  a breach of trust committed:                                             
			(A)  in bad faith;                                                           
			(B)  intentionally;  or                                                      
			(C)  with reckless indifference to the interest of 
a beneficiary;  or      
		(2)  any profit derived by the trustee from a breach of 
trust.              
	(b)  A term in a trust instrument relieving the trustee of 
liability for a breach of trust is ineffective to the extent that 
the term is inserted in the trust instrument as a result of an abuse 
by the trustee of a fiduciary duty to or confidential relationship 
with the settlor.
	(c)  This section applies only to a term of a trust that may 
otherwise relieve a trustee from liability for a breach of trust.  
Except as provided in Section 111.0035, this section does not 
prohibit the settlor, by the terms of the trust, from expressly:
		(1)  relieving the trustee from a duty or restriction 
imposed by this subtitle or by common law;  or
		(2)  directing or permitting the trustee to do or not to 
do an action that would otherwise violate a duty or restriction 
imposed by this subtitle or by common law.

Added by Acts 2005, 79th Leg., ch. 148, § 21, eff. Jan. 1, 2006.           


	§ 114.008. REMEDIES FOR BREACH OF TRUST.  (a)  To remedy a 
breach of trust that has occurred or might occur, the court may:
		(1)  compel the trustee to perform the trustee's duty or 
duties;            
		(2)  enjoin the trustee from committing a breach of 
trust;                  
		(3)  compel the trustee to redress a breach of trust, 
including compelling the trustee to pay money or to restore 
property;
		(4)  order a trustee to account;                                              
		(5)  appoint a receiver to take possession of the trust 
property and administer the trust;
		(6)  suspend the trustee;                                                     
		(7)  remove the trustee as provided under Section 
113.082;                  
		(8)  reduce or deny compensation to the trustee;                              
		(9)  subject to Subsection (b), void an act of the 
trustee, impose a lien or a constructive trust on trust property, or 
trace trust property of which the trustee wrongfully disposed and 
recover the property or the proceeds from the property;  or
		(10)  order any other appropriate relief.                                     
	(b)  Notwithstanding Subsection (a)(9), a person other than 
a beneficiary who, without knowledge that a trustee is exceeding or 
improperly exercising the trustee's powers, in good faith assists a 
trustee or in good faith and for value deals with a trustee is 
protected from liability as if the trustee had or properly 
exercised the power exercised by the trustee.

Added by Acts 2005, 79th Leg., ch. 148, § 21, eff. Jan. 1, 2006.           

SUBCHAPTER B. LIABILITY OF BENEFICIARY


	§ 114.031. LIABILITY OF BENEFICIARY TO TRUSTEE.  (a) A 
beneficiary is liable for loss to the trust if the beneficiary has:
		(1)  misappropriated or otherwise wrongfully dealt 
with the trust property; 
		(2)  expressly consented to, participated in, or agreed 
with the trustee to be liable for a breach of trust committed by the 
trustee;
		(3)  failed to repay an advance or loan of trust funds;                       
		(4)  failed to repay a distribution or disbursement 
from the trust in excess of that to which the beneficiary is 
entitled;  or
		(5)  breached a contract to pay money or deliver 
property to the trustee to be held by the trustee as part of the 
trust.
	(b)  Unless the terms of the trust provide otherwise, the 
trustee is authorized to offset a liability of the beneficiary to 
the trust estate against the beneficiary's interest in the trust 
estate, regardless of a spendthrift provision in the trust.

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff. 
Jan. 1, 1984.


	§ 114.032. LIABILITY FOR WRITTEN AGREEMENTS.  (a) A 
written agreement between a trustee and a beneficiary, including a 
release, consent, or other agreement relating to a trustee's duty, 
power, responsibility, restriction, or liability, is final and 
binding on the beneficiary and any person represented by a 
beneficiary as provided by this section if:
		(1)  the instrument is signed by the beneficiary;                             
		(2)  the beneficiary has legal capacity to sign the 
instrument;  and        
		(3)  the beneficiary has full knowledge of the 
circumstances surrounding the agreement.
	(b)  A written agreement signed by a beneficiary who has the 
power to revoke the trust or the power to appoint, including the 
power to appoint through a power of amendment, the income or 
principal of the trust to or for the benefit of the beneficiary, the 
beneficiary's creditors, the beneficiary's estate, or the creditors 
of the beneficiary's estate is final and binding on any person who 
takes under the power of appointment or who takes in default if the 
power of appointment is not executed.
	(c)  A written instrument is final and binding on a 
beneficiary who is a minor if:
		(1)  the minor's parent, including a parent who is also 
a trust beneficiary, signs the instrument on behalf of the minor;
		(2)  no conflict of interest exists;  and                                     
		(3)  no guardian, including a guardian ad litem, has 
been appointed to act on behalf of the minor.
	(d)  A written instrument is final and binding on an unborn 
or unascertained beneficiary if a beneficiary who has an interest 
substantially identical to the interest of the unborn or 
unascertained beneficiary signs the instrument.  For purposes of 
this subsection, an unborn or unascertained beneficiary has a 
substantially identical interest only with a trust beneficiary from 
whom the unborn or unascertained beneficiary descends.
	(e)  This section does not apply to a written instrument that 
modifies or terminates a trust in whole or in part unless the 
instrument is otherwise permitted by law.

Added by Acts 1999, 76th Leg., ch. 794, § 3, eff. Sept. 1, 1999.           

SUBCHAPTER C. RIGHTS OF TRUSTEE


	§ 114.061. COMPENSATION.  (a) Unless the terms of the 
trust provide otherwise and except as provided in Subsection (b) of 
this section, the trustee is entitled to reasonable compensation 
from the trust for acting as trustee.
	(b)  If the trustee commits a breach of trust, the court may 
in its discretion deny him all or part of his compensation.

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff. 
Jan. 1, 1984.


	§ 114.062. EXONERATION OR REIMBURSEMENT FOR TORT.  (a) 
Except as provided in Subsection (b) of this section, a trustee who 
incurs personal liability for a tort committed in the 
administration of the trust is entitled to exoneration from the 
trust property if the trustee has not paid the claim or to 
reimbursement from the trust property if the trustee has paid the 
claim, if:
		(1)  the trustee was properly engaged in a business 
activity for the trust and the tort is a common incident of that 
kind of activity;
		(2)  the trustee was properly engaged in a business 
activity for the trust and neither the trustee nor an officer or 
employee of the trustee is guilty of actionable negligence or 
intentional misconduct in incurring the liability;  or
		(3)  the tort increased the value of the trust 
property.                    
	(b)  A trustee who is entitled to exoneration or 
reimbursement under Subdivision (3) of Subsection (a) is entitled 
to exoneration or reimbursement only to the extent of the increase 
in the value of the trust property.

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff. 
Jan. 1, 1984.


	§ 114.063. GENERAL RIGHT TO REIMBURSEMENT.  (a) A trustee 
may discharge or reimburse himself from trust principal or income 
or partly from both for:
		(1)  advances made for the convenience, benefit, or 
protection of the trust or its property;
		(2)  expenses incurred while administering or 
protecting the trust or because of the trustee's holding or owning 
any of the trust property;  and
		(3)  expenses incurred for any action taken under 
Section 113.025.          
	(b)  The trustee has a lien against trust property to secure 
reimbursement under Subsection (a).
	(c)  A potential trustee is entitled to reimbursement from 
trust principal or income or partly from both for reasonable 
expenses incurred for any action taken under Section 113.025(a) if:
		(1)  a court orders reimbursement or the potential 
trustee has entered into a written agreement providing for 
reimbursement with the personal representative of the estate, the 
trustee of the trust, the settlor, the settlor's attorney-in-fact, 
the settlor's personal representative, or the person or entity 
designated in the trust instrument or will to appoint a trustee;  
and
		(2)  the potential trustee has been appointed trustee 
under the terms of the trust instrument or will or has received a 
written request to accept the trust from the settlor, the settlor's 
attorney-in-fact, the settlor's personal representative, or the 
person or entity designated in the trust instrument or will to 
appoint a trustee.

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff. 
Jan. 1, 1984.  Amended by Acts 1993, 73rd Leg., ch. 846, § 31, 
eff. Sept. 1, 1993.


	§ 114.064. COSTS.  (a)  In any proceeding under this code 
the court may make such award of costs and reasonable and necessary 
attorney's fees as may seem equitable and just.

Added by Acts 1985, 69th Leg., ch. 149, § 4, eff. May 24, 1985.            

SUBCHAPTER D. THIRD PERSONS


	§ 114.081. PAYMENT OF MONEY TO TRUSTEE.  (a) A person who 
actually and in good faith pays to a trustee money that the trustee 
is authorized to receive is not responsible for the proper 
application of the money according to the trust.
	(b)  A right or title derived from the trustee in 
consideration of the monetary payment under Subsection (a) of this 
section may not be impeached or questioned because of the trustee's 
misapplication of the money.

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff. 
Jan. 1, 1984.


	§ 114.082. CONVEYANCE BY TRUSTEE.  If property is 
conveyed or transferred to a trustee in trust but the conveyance or 
transfer does not identify the trust or disclose the names of the 
beneficiaries, the trustee may convey, transfer, or encumber the 
title of the property without subsequent question by a person who 
claims to be a beneficiary under the trust or who claims by, 
through, or under an undisclosed beneficiary.

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff. 
Jan. 1, 1984.  Amended by Acts 1987, 70th Leg., ch. 683, § 4, eff. 
Aug. 31, 1987.


	§ 114.0821. LIABILITY OF TRUST PROPERTY.  Although trust 
property is held by the trustee without identifying the trust or its 
beneficiaries, the trust property is not liable to satisfy the 
personal obligations of the trustee.

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff. 
Jan. 1, 1984.  Renumbered from § 114.082(b) by Acts 1987, 70th 
Leg., ch. 683, § 4, eff. Aug. 31, 1987.


	§ 114.083. RIGHTS AND LIABILITIES FOR COMMITTING 
TORTS.  (a) A personal liability of a trustee or a predecessor 
trustee for a tort committed in the course of the administration of 
the trust may be collected from the trust property if the trustee is 
sued in a representative capacity and the court finds that:
		(1)  the trustee was properly engaged in a business 
activity for the trust and the tort is a common incident of that 
kind of activity;
		(2)  the trustee was properly engaged in a business 
activity for the trust and neither the trustee nor an officer or 
employee of the trustee is guilty of actionable negligence or 
intentional misconduct in incurring the liability;  or
		(3)  the tort increased the value of the trust 
property.                    
	(b)  A trust that is liable for the trustee's tort under 
Subdivision (3) of Subsection (a) is liable only to the extent of 
the permanent increase in value of the trust property.
	(c)  A plaintiff in an action against the trustee as the 
representative of the trust does not have to prove that the trustee 
could have been reimbursed by the trust if the trustee had paid the 
claim.
	(d)  Subject to the rights of exoneration or reimbursement 
under Section 114.062, the trustee is personally liable for a tort 
committed by the trustee or by the trustee's agents or employees in 
the course of their employment.

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff. 
Jan. 1, 1984.


	§ 114.084. CONTRACTS OF TRUSTEE.  (a) If a trustee or a 
predecessor trustee makes a contract that is within his power as 
trustee and a cause of action arises on the contract, the plaintiff 
may sue the trustee in his representative capacity, and a judgment 
rendered in favor of the plaintiff is collectible by execution 
against the trust property.  The plaintiff may sue the trustee 
individually if the trustee made the contract and the contract does 
not exclude the trustee's personal liability.
	(b)  The addition of "trustee" or "as trustee" after the 
signature of a trustee who is party to a contract is prima facie 
evidence of an intent to exclude the trustee from personal 
liability.
	(c)  In an action on a contract against a trustee in the 
trustee's representative capacity the plaintiff does not have to 
prove that the trustee could have been reimbursed by the trust if 
the trustee had paid the claim.

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff. 
Jan. 1, 1984.


	§ 114.085. PARTNERSHIPS.  (a) To the extent allowed by 
law, a trustee who takes the place of a deceased partner in a 
general partnership in accordance with the articles of partnership 
is liable to third persons only to the extent of the:
		(1)  deceased partner's capital in the partnership;  
and                    
		(2)  trust funds held by the trustee.                                         
	(b)  A trustee who contracts to enter a general partnership 
in its capacity as trustee shall limit, to the extent allowed by 
law, the trust's liability to:
		(1)  the trust assets contributed to the partnership;  
and                  
		(2)  other assets of the trust under the management of 
the contracting trustee.
	(c)  If another provision of this subtitle conflicts with 
this section, this section controls.  This section does not 
exonerate a trustee from liability for negligence.

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff. 
Jan. 1, 1984.