2005 Texas Property Code CHAPTER 142. MANAGEMENT OF PROPERTY RECOVERED IN SUIT BY A NEXT FRIEND OR GUARDIAN AD LITEM

PROPERTY CODE

CHAPTER 142. MANAGEMENT OF PROPERTY RECOVERED IN SUIT BY A NEXT 
FRIEND OR GUARDIAN AD LITEM


	§ 142.001. MANAGEMENT BY DECREE.  (a) In a suit in which a 
minor or incapacitated person who has no legal guardian is 
represented by a next friend or an appointed guardian ad litem, the 
court, on application and hearing, may provide by decree for the 
investment of funds accruing to the minor or other person under the 
judgment in the suit.
	(b)  If the decree is made during vacation, it must be 
recorded in the minutes of the succeeding term of the court.

Acts 1983, 68th Leg., p. 3711, ch. 576, § 1, eff. Jan. 1, 1984.  
Amended by Acts 1984, 68th Leg., 2nd C.S., ch. 18, § 14(b), eff. 
Oct. 2, 1984;  Acts 1999, 76th Leg., ch. 195, § 2, eff. Sept. 1, 
1999.


	§ 142.002. MANAGEMENT BY BONDED MANAGER.  (a) In a suit in 
which a minor or incapacitated person who has no legal guardian is 
represented by a next friend or an appointed guardian ad litem, the 
court in which a judgment is rendered may by an order entered of 
record authorize the next friend, the guardian ad litem, or another 
person to take possession of money or other personal property 
recovered under the judgment for the minor or other person 
represented.
	(b)  The next friend, guardian ad litem, or other person may 
not take possession of the property until the person has executed a 
bond as principal that:
		(1)  is in an amount at least double the value of the 
property or, if a surety on the bond is a solvent surety company 
authorized under the law of this state to execute the bond, is in an 
amount at least equal to the value of the property;
		(2)  is payable to the county judge;  and                                     
		(3)  is conditioned on the obligation of the next 
friend, guardian ad litem, or other person to use the property under 
the direction of the court for the benefit of its owner and to 
return the property, with interest or other increase, to the person 
entitled to receive the property when ordered by the court to do so.

Acts 1983, 68th Leg., p. 3711, ch. 576, § 1, eff. Jan. 1, 1984.  
Amended by Acts 1984, 68th Leg., 2nd C.S., ch. 18, § 14(c), eff. 
Oct. 2, 1984;  Acts 1999, 76th Leg., ch. 195, § 3, eff. Sept. 1, 
1999.


	§ 142.003. COMPENSATION AND DUTIES OF MANAGERS.  (a) A 
person who manages property under Section 142.001 or 142.002 is 
entitled to receive compensation as allowed by the court.
	(b)  The person shall make dispositions of the property as 
ordered by the court and shall return the property into court on the 
order of the court.

Acts 1983, 68th Leg., p. 3711, ch. 576, § 1, eff. Jan. 1, 1984.            


	§ 142.004. INVESTMENT OF FUNDS.  (a) In a suit in which a 
minor or incapacitated person who has no legal guardian is 
represented by a next friend or an appointed guardian ad litem, any 
money recovered by the plaintiff, if not otherwise managed under 
this chapter, may be invested:
		(1)  by the next friend or guardian ad litem in:                              
			(A)  the Texas tomorrow fund established by 
Subchapter F, Chapter 54, Education Code;  or
			(B)  interest-bearing time deposits in a 
financial institution doing business in this state and insured by 
the Federal Deposit Insurance Corporation;  or
		(2)  by the clerk of the court, on written order of the 
court of proper jurisdiction, in:
			(A)  the Texas tomorrow fund established by 
Subchapter F, Chapter 54, Education Code;
			(B)  interest-bearing deposits in a financial 
institution doing business in this state and insured by the Federal 
Deposit Insurance Corporation;
			(C)  United States treasury bills;                                           
			(D)  an eligible interlocal investment pool that 
meets the requirements of Sections 2256.016, 2256.017, and 
2256.019, Government Code;  or
			(E)  a no-load money market mutual fund, if the 
fund:                      
				(i)  is regulated by the Securities and 
Exchange Commission;              
				(ii)  has a dollar weighted average stated 
maturity of 90 days or fewer;  and
				(iii)  includes in its investment objectives 
the maintenance of a stable net asset value of $1 for each share
	(b)  If the money invested under this section may not be 
withdrawn from the financial institution without an order of the 
court, a next friend or guardian ad litem who makes the investment 
is not required to execute a bond with respect to the money.
	(c)  When money invested under this section is withdrawn, the 
court may:     
		(1)  on a finding that the person entitled to receive 
the money is no longer under the disability, order the funds turned 
over to the person;  or
		(2)  order management of the funds under another 
provision of this chapter. 
	(d)  Interest earned on an account invested by the clerk of 
the court shall be paid in the same manner as interest earned on an 
account under Chapter 117, Local Government Code.
	(e)  If money is invested under Subsection (a)(2)(E), the 
court may waive any bonding requirement.

Acts 1983, 68th Leg., p. 3712, ch. 576, § 1, eff. Jan. 1, 1984.  
Amended by Acts 1984, 68th Leg., 2nd C.S., ch. 18, § 14(d), eff. 
Oct. 2, 1984;  Acts 1997, 75th Leg., ch. 505, § 22, eff. Sept. 1, 
1997;  Acts 1999, 76th Leg., ch. 94, § 1, eff. May 17, 1999;  Acts 
1999, 76th Leg., ch. 195, § 4, eff. Sept. 1, 1999;  Acts 2001, 
77th Leg., ch. 1420, § 17.002, eff. Sept. 1, 2001.


	§ 142.005. TRUST FOR PROPERTY.                                              

Text of subsec. (a) effective until January 1, 2006
	(a)  In a suit in which a minor who has no legal guardian or 
an incapacitated person is represented by a next friend or an 
appointed guardian ad litem, the court may, on application by the 
next friend or the guardian ad litem and on a finding that the 
creation of a trust would be in the best interests of the minor or 
incapacitated person, enter a decree in the record directing the 
clerk to deliver any funds accruing to the minor or incapacitated 
person under the judgment to a trust company or a state or national 
bank having trust powers in this state.

Text of subsec. (a) effective January 1, 2006
	(a)  In a suit in which a minor who has no legal guardian or 
an incapacitated person is represented by a next friend or an 
appointed guardian ad litem, any court of record with jurisdiction 
to hear the suit may, on application by the next friend or the 
guardian ad litem and on a finding that the creation of a trust 
would be in the best interests of the minor or incapacitated person, 
enter a decree in the record directing the clerk to deliver any 
funds accruing to the minor or incapacitated person under the 
judgment to a trust company or a state or national bank having trust 
powers in this state.
	(b)  The decree shall provide for the creation of a trust for 
the management of the funds for the benefit of the minor or 
incapacitated person and for terms, conditions, and limitations of 
the trust, as determined by the court, that are not in conflict with 
the following mandatory provisions:
		(1)  the minor or incapacitated person is the sole 
beneficiary of the trust;
		(2)  the trustee may disburse amounts of the trust's 
principal, income, or both as the trustee in his sole discretion 
determines to be reasonably necessary for the health, education, 
support, or maintenance of the beneficiary;
		(3)  the income of the trust not disbursed under 
Subdivision (2) is added to the principal of the trust;
		(4)  if the beneficiary is a minor, the trust 
terminates on the death of the beneficiary, on the beneficiary's 
attaining an age stated in the trust, or on the 25th birthday of the 
beneficiary, whichever occurs first, or if the beneficiary is an 
incapacitated person, the trust terminates on the death of the 
beneficiary or when the beneficiary regains capacity;
		(5)  the trustee serves without bond;  and                                    
		(6)  the trustee receives reasonable compensation paid 
from trust's income, principal, or both on application to and 
approval of the court.
	(c)  A trust established under this section may provide that:                  
		(1)  distributions of the trust principal before the 
termination of the trust may be made from time to time as the 
beneficiary attains designated ages and at designated percentages 
of the principal;  and
		(2)  distributions, payments, uses, and applications 
of all trust funds may be made to the legal or natural guardian of 
the beneficiary or to the person having custody of the beneficiary 
or may be made directly to or expended for the benefit, support, or 
maintenance of the beneficiary without the intervention of any 
legal guardian or other legal representative of the beneficiary.

Text of subsec. (d) effective until January 1, 2006
	(d)  A trust created under this section may be amended, 
modified, or revoked by the court at any time before its 
termination, but is not subject to revocation by the beneficiary or 
a guardian of the beneficiary's estate.  If the trust is revoked by 
the court before the beneficiary is 18 years old, the court may 
provide for the management of the trust principal and any 
undistributed income as authorized by this chapter.  If the trust is 
revoked by the court after the beneficiary is 18 years old, the 
trust principal and any undistributed income shall be delivered to 
the beneficiary after the payment of all proper and necessary 
expenses.

Text of subsec. (d) effective January 1, 2006
	(d)  A court that creates a trust under this section has 
continuing jurisdiction and supervisory power over the trust, 
including the power to construe, amend, revoke, modify, or 
terminate the trust.  A trust created under this section is not 
subject to revocation by the beneficiary or a guardian of the 
beneficiary's estate.  If the trust is revoked by the court before 
the beneficiary is 18 years old, the court may provide for the 
management of the trust principal and any undistributed income as 
authorized by this chapter.  If the trust is revoked by the court 
after the beneficiary is 18 years old, the trust principal and any 
undistributed income shall be delivered to the beneficiary after 
the payment of all proper and necessary expenses.
	(e)  On the termination of the trust under its terms or on the 
death of the beneficiary, the trust principal and any undistributed 
income shall be paid to the beneficiary or to the representative of 
the estate of the deceased beneficiary.
	(f)  A trust established under this section prevails over any 
other law concerning minors, incapacitated persons, or their 
property, and the trust continues in force and effect until 
terminated or revoked, notwithstanding the appointment of a 
guardian of the estate of the minor or incapacitated person, or the 
attainment of the age of majority by the minor.
	(g)  Notwithstanding any other provision of this chapter, if 
the court finds that it would be in the best interests of the minor 
or incapacitated person for whom a trust is created under this 
section, the trust may contain provisions determined by the court 
to be necessary to establish a special needs trust as specified 
under 42 U.S.C. Section 1396p(d)(4)(A).
	(h)  A trust created under this section is subject to 
Subtitle B, Title 9.   
	(i)  Notwithstanding Subsection (h), this section prevails 
over a provision in Subtitle B, Title 9, that is in conflict or 
inconsistent with this section.
	(j)  A provision in a trust created under this section that 
relieves a trustee from a duty, responsibility, or liability 
imposed by this section or Subtitle B, Title 9, is enforceable only 
if:
		(1)  the provision is limited to specific facts and 
circumstances unique to the property of that trust and is not 
applicable generally to the trust;  and
		(2)  the court creating or modifying the trust makes a 
specific finding that there is clear and convincing evidence that 
the inclusion of the provision is in the best interests of the 
beneficiary of the trust.

Acts 1983, 68th Leg., p. 3712, ch. 576, § 1, eff. Jan. 1, 1984.  
Amended by Acts 1984, 68th Leg., 2nd C.S., ch. 18, § 14(e), (f), 
eff. Oct. 2, 1984;  Acts 1997, 75th Leg., ch. 128, § 1, eff. Sept. 
1, 1997;  Acts 2003, 78th Leg., ch. 1154, § 3, eff. Sept. 1, 2003;  
Acts 2005, 79th Leg., ch. 148, § 28, eff. Jan. 1, 2006.


	§ 142.006. CLAIMS AGAINST PROPERTY.  If any person claims 
an interest in property subject to management under this chapter, 
the court having authority over the property may hear evidence on 
the interest and may order the claim or the portion of the claim 
found to be just to be paid to the person entitled to receive it.

Acts 1983, 68th Leg., p. 3714, ch. 576, § 1, eff. Jan. 1, 1984.            


	§ 142.007. INCAPACITATED PERSON.  For the purposes of 
this chapter, "incapacitated person" means a person who is impaired 
because of mental illness, mental deficiency, physical illness or 
disability, advanced age, chronic use of drugs, chronic 
intoxication, or any other cause except status as a minor to the 
extent that the person lacks sufficient understanding or capacity 
to make or communicate responsible decisions concerning his person.

Added by Acts 1984, 68th Leg., 2nd C.S., ch. 18, § 14(g), eff. 
Oct. 2, 1984.


	§ 142.008. STRUCTURED SETTLEMENT.  (a) In a suit in which 
a minor or incapacitated person who has no legal guardian is 
represented by a next friend or an appointed guardian ad litem, the 
court, on a motion from the parties, may provide for a structured 
settlement that:
		(1)  provides for periodic payments;  and                                     
		(2)  is funded by:                                                            
			(A)  an obligation guaranteed by the United States 
government;  or         
			(B)  an annuity contract that meets the 
requirements of Section 142.009.   
	(b)  The person obligated to fund a structured settlement 
shall provide to the court:
		(1)  a copy of the instrument that provides funding for 
the structured settlement;  or
		(2)  an affidavit from an independent financial 
consultant that specifies the present value of the structured 
settlement and the method by which the value is calculated.
	(c)  A structured settlement provided for under this section 
is solely for the benefit of the beneficiary of the structured 
settlement and is not subject to the interest payment calculations 
contained in Section 117.054, Local Government Code.

Added by Acts 1999, 76th Leg., ch. 195, § 5, eff. Sept. 1, 1999.           


	§ 142.009. ANNUITY CONTRACT REQUIREMENTS FOR STRUCTURED 
SETTLEMENT.  (a) An insurance company providing an annuity 
contract for a structured settlement as provided by Section 142.008 
must:
		(1)  be licensed to write annuity contracts in this 
state;                  
		(2)  have a minimum of $1 million of capital and 
surplus;  and              
		(3)  be approved by the court and comply with any 
requirements imposed by the court to ensure funding to satisfy 
periodic settlement payments.
	(b)  In approving an insurance company under Subsection 
(a)(3), the court may consider whether the company:
		(1)  holds an industry rating equivalent to at least 
two of the following rating organizations:
			(A)  A. M. Best Company:  A++ or A+;                                         
			(B)  Duff & Phelps Credit Rating Company Insurance 
Company Claims Paying Ability Rating:  AA-, AA, AA+, or AAA;
			(C)  Moody's Investors Service Claims Paying 
Ability Rating:  Aa3, Aa2, Aa1, or aaa;  or
			(D)  Standard & Poor's Corporation Insurer 
Claims-Paying Ability Rating:  AA-, AA, AA+, or AAA;
		(2)  is an affiliate, as that term is described by 
Section 823.003, Insurance Code, of a liability insurance carrier 
involved in the suit for which the structured settlement is 
created;  or
		(3)  is connected in any way to a person obligated to 
fund the structured settlement.

Added by Acts 1999, 76th Leg., ch. 195, § 5, eff. Sept. 1, 1999.  
Amended by Acts 2001, 77th Leg., ch. 96, § 2, eff. Sept. 1, 2001;  
Acts 2003, 78th Leg., ch. 1276, § 10A.551, eff. Sept. 1, 2003.