2011 Texas Statutes
ESTATES CODE
TITLE 3 - GUARDIANSHIP AND RELATED PROCEDURES
SUBTITLE H - COURT-AUTHORIZED TRUSTS AND ACCOUNTS
CHAPTER 1301 - MANAGEMENT TRUSTS

ESTATES CODE

TITLE 3. GUARDIANSHIP AND RELATED PROCEDURES

SUBTITLE H. COURT-AUTHORIZED TRUSTS AND ACCOUNTS

CHAPTER 1301. MANAGEMENT TRUSTS

SUBCHAPTER A. GENERAL PROVISIONS

Text of section effective on January 01, 2014

Sec. 1301.001.  DEFINITION.  In this chapter, "management trust" means a trust created under Section 1301.053 or 1301.054.

Added by Acts 2011, 82nd Leg., R.S., Ch. 823, Sec. 1.02, eff. January 1, 2014.

Text of section effective on January 01, 2014

Sec. 1301.002.  APPLICABILITY OF TEXAS TRUST CODE. (a)  A management trust is subject to Subtitle B, Title 9, Property Code.

(b)  To the extent of a conflict between Subtitle B, Title 9, Property Code, and a provision of this chapter or of a management trust, the provision of this chapter or of the trust controls.

Added by Acts 2011, 82nd Leg., R.S., Ch. 823, Sec. 1.02, eff. January 1, 2014.

SUBCHAPTER B. CREATION OF MANAGEMENT TRUSTS

Text of section effective on January 01, 2014

Sec. 1301.051.  ELIGIBILITY TO APPLY FOR CREATION OF TRUST.  The following persons may apply for the creation of a trust under this subchapter:

(1)  the guardian of a ward;

(2)  an attorney ad litem or guardian ad litem appointed to represent a ward or the ward's interests;

(3)  a person interested in the welfare of an alleged incapacitated person who does not have a guardian of the estate; or

(4)  an attorney ad litem or guardian ad litem appointed to represent:

(A)  an alleged incapacitated person who does not have a guardian; or

(B)  the interests of a person described by Paragraph (A).

Added by Acts 2011, 82nd Leg., R.S., Ch. 823, Sec. 1.02, eff. January 1, 2014.

Text of section effective on January 01, 2014

Sec. 1301.052.  VENUE FOR PROCEEDING INVOLVING ALLEGED INCAPACITATED PERSON. (a)  An application for the creation of a trust under Section 1301.054 for an alleged incapacitated person must be filed in the same court in which a proceeding for the appointment of a guardian for the person is pending, if any.

(b)  If a proceeding for the appointment of a guardian for an alleged incapacitated person is not pending on the date an application is filed for the creation of a trust under Section 1301.054 for the person, venue for a proceeding to create a trust must be determined in the same manner as venue for a proceeding for the appointment of a guardian is determined under  Section 610.

Added by Acts 2011, 82nd Leg., R.S., Ch. 823, Sec. 1.02, eff. January 1, 2014.

Text of section effective on January 01, 2014

Sec. 1301.053.  CREATION OF TRUST FOR WARD. (a)  On application by an appropriate person as provided by Section 1301.051, the court with jurisdiction over a guardianship may enter an order that creates for the ward's benefit a trust for the management of guardianship funds if the court finds that the creation of the trust is in the ward's best interests.

(b)  The court shall maintain a trust created under this section under the same cause number as the guardianship proceeding.

Added by Acts 2011, 82nd Leg., R.S., Ch. 823, Sec. 1.02, eff. January 1, 2014.

Text of section effective on January 01, 2014

Sec. 1301.054.  CREATION OF TRUST FOR INCAPACITATED PERSON WITHOUT GUARDIAN. (a)  On application by an appropriate person as provided by Section 1301.051 and regardless of whether an application for guardianship has been filed on the alleged incapacitated person's behalf, a proper court exercising probate jurisdiction may enter an order that creates a trust for the management of the estate of an alleged incapacitated person who does not have a guardian if the court, after a hearing, finds that:

(1)  the person is an incapacitated person; and

(2)  the creation of the trust is in the incapacitated person's best interests.

(b)  The court shall conduct the hearing to determine incapacity under Subsection (a) using the same procedures and evidentiary standards as are required in a hearing for the appointment of a guardian for a proposed ward.

(c)  The court shall appoint an attorney ad litem and, if necessary, may appoint a guardian ad litem, to represent the interests of the alleged incapacitated person in the hearing to determine incapacity under Subsection (a).

(d)  The court shall maintain a trust created under this section under the same cause number as the guardianship proceeding, if applicable.

Added by Acts 2011, 82nd Leg., R.S., Ch. 823, Sec. 1.02, eff. January 1, 2014.

Text of section effective on January 01, 2014

Sec. 1301.055.  AUTHORITY OF COURT TO APPOINT GUARDIAN INSTEAD OF CREATING TRUST.  If, after a hearing under Section 1301.054, the court finds that the person for whom the application was filed is an incapacitated person but that it is not in the person's best interests for the court to create a trust under this subchapter for the person's estate, the court may appoint a guardian of the person or estate, or both, for the incapacitated person without commencing a separate proceeding for that purpose.

Added by Acts 2011, 82nd Leg., R.S., Ch. 823, Sec. 1.02, eff. January 1, 2014.

Text of section effective on January 01, 2014

Sec. 1301.056.  CONTENTS OF ORDER CREATING TRUST.  An order creating a management trust must:

(1)  direct a person holding property that belongs to the ward or incapacitated person, as applicable, for whom the trust is created or to which the ward or incapacitated person is entitled, to deliver all or part of that property to the corporate fiduciary or other person appointed as trustee of the trust; and

(2)  include terms and limitations placed on the trust.

Added by Acts 2011, 82nd Leg., R.S., Ch. 823, Sec. 1.02, eff. January 1, 2014.

Text of section effective on January 01, 2014

Sec. 1301.057.  APPOINTMENT OF TRUSTEE. (a) In this section, "financial institution" means a financial institution, as defined by Section 201.101, Finance Code, that has trust powers and exists and does business under the laws of this state, another state, or the United States.

(b)  Except as provided by Subsection (c), the court shall appoint a financial institution to serve as trustee of a management trust.

(c)  The court may appoint a person or entity described by Subsection (d) to serve as trustee of a management trust instead of appointing a financial institution to serve in that capacity if the court finds:

(1)  that the appointment is in the best interests of the ward or incapacitated person for whom the trust is created; and

(2)  if the value of the trust's principal is more than $150,000, that the applicant for the creation of the trust, after the exercise of due diligence, has been unable to find a financial institution in the geographic area willing to serve as trustee.

(d)  The following are eligible for appointment as trustee under Subsection (c):

(1)  an individual, including an individual who is certified as a private professional guardian;

(2)  a nonprofit corporation qualified to serve as a guardian; and

(3)  a guardianship program.

Added by Acts 2011, 82nd Leg., R.S., Ch. 823, Sec. 1.02, eff. January 1, 2014.

Text of section effective on January 01, 2014

Sec. 1301.058.  BOND REQUIREMENTS FOR TRUSTEES. (a)  A trustee of a management trust that is a corporate fiduciary serves without giving a bond in accordance with the trust terms required by Section 1301.101(a)(4).

(b)  The court shall require a person, other than a corporate fiduciary, serving as trustee of a management trust to file with the county clerk a bond that:

(1)  is in an amount equal to the value of the trust's principal and projected annual income; and

(2)  meets the conditions the court determines are necessary.

Added by Acts 2011, 82nd Leg., R.S., Ch. 823, Sec. 1.02, eff. January 1, 2014.

SUBCHAPTER C. TERMS OF MANAGEMENT TRUST

Text of section effective on January 01, 2014

Sec. 1301.101.  REQUIRED TERMS. (a)  Except as provided by Subsection (c), a management trust must provide that:

(1)  the ward or incapacitated person for whom the trust is created is the sole beneficiary of the trust;

(2)  the trustee may disburse an amount of the trust's principal or income as the trustee determines is necessary to spend for the health, education, maintenance, or support of the ward or incapacitated person;

(3)  the trust income that the trustee does not disburse under Subdivision (2) must be added to the trust principal;

(4)  a trustee that is a corporate fiduciary serves without giving a bond; and

(5)  subject to the court's approval and Subsection (b), the trustee is entitled to receive reasonable compensation for services the trustee provides to the ward or incapacitated person as trustee.

(b)  A trustee's compensation under Subsection (a)(5) must be:

(1)  paid from the management trust's income, principal, or both; and

(2)  determined, paid, reduced, and eliminated in the same manner as compensation of a guardian of an estate under Subchapter A, Chapter 1155.

(c)  The court creating or modifying a management trust may omit or modify terms required by Subsection (a)(1) or (2) only if the court determines that the omission or modification:

(1)  is necessary and appropriate for the ward or incapacitated person to be eligible to receive public benefits or assistance under a state or federal program that is not otherwise available to the ward or incapacitated person; and

(2)  is in the ward's or incapacitated person's best interests.

Added by Acts 2011, 82nd Leg., R.S., Ch. 823, Sec. 1.02, eff. January 1, 2014.

Text of section effective on January 01, 2014

Sec. 1301.102.  OPTIONAL TERMS. (a)  A management trust may provide that the trustee make a distribution, payment, use, or application of trust funds for the health, education, maintenance, or support of the ward or incapacitated person for whom the trust is created or of another person whom the ward or incapacitated person is legally obligated to support:

(1)  as necessary and without the intervention of:

(A)  a guardian or other representative of the ward; or

(B)  a representative of the incapacitated person; and

(2)  to:

(A)  the ward's guardian;

(B)  a person who has physical custody of the ward or incapacitated person or of another person whom the ward or incapacitated person is legally obligated to support; or

(C)  a person providing a good or service to the ward or incapacitated person or to another person whom the ward or incapacitated person is legally obligated to support.

(b)  The court may include additional provisions in a management trust on the trust's creation or modification under this chapter if the court determines the addition does not conflict with Section 1301.101.

Added by Acts 2011, 82nd Leg., R.S., Ch. 823, Sec. 1.02, eff. January 1, 2014.

Text of section effective on January 01, 2014

Sec. 1301.103.  ENFORCEABILITY OF CERTAIN TERMS.  A provision in a management trust that relieves a trustee from a duty or liability imposed by this chapter or Subtitle B, Title 9, Property Code, 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 trust beneficiary.

Added by Acts 2011, 82nd Leg., R.S., Ch. 823, Sec. 1.02, eff. January 1, 2014.

SUBCHAPTER D. ADMINISTRATION OF MANAGEMENT TRUSTS

Text of section effective on January 01, 2014

Sec. 1301.151.  JURISDICTION OVER TRUST MATTERS.  A court that creates a management trust has the same jurisdiction to hear matters relating to the trust as the court has with respect to guardianship and other matters covered by this title.

Added by Acts 2011, 82nd Leg., R.S., Ch. 823, Sec. 1.02, eff. January 1, 2014.

Text of section effective on January 01, 2014

Sec. 1301.152.  COURT'S AUTHORITY TO DISCHARGE GUARDIAN OF ESTATE.  On or at any time after the creation of a management trust, the court may discharge the guardian of the ward's estate if the court determines that the discharge is in the ward's best interests.

Added by Acts 2011, 82nd Leg., R.S., Ch. 823, Sec. 1.02, eff. January 1, 2014.

Text of section effective on January 01, 2014

Sec. 1301.153.  INVESTMENT IN TEXAS TOMORROW FUND.  The trustee of a management trust may invest trust funds in the Texas tomorrow fund established by Subchapter F, Chapter 54, Education Code, if the trustee determines that investment is in the best interest of the ward or incapacitated person for whom the trust is created.

Added by Acts 2011, 82nd Leg., R.S., Ch. 823, Sec. 1.02, eff. January 1, 2014.

Text of section effective on January 01, 2014

Sec. 1301.154.  ANNUAL ACCOUNTING. (a) The trustee of a management trust shall prepare and file with the court an annual accounting of transactions in the trust in the same manner and form that is required of a guardian under this title.

(b)  The trustee of a management trust created for a ward shall provide a copy of the annual account to the guardian of the ward's estate or person.

(c)  The annual account is subject to court review and approval in the same manner that is required of an annual account prepared by a guardian under this title.

Added by Acts 2011, 82nd Leg., R.S., Ch. 823, Sec. 1.02, eff. January 1, 2014.

Text of section effective on January 01, 2014

Sec. 1301.155.  APPOINTMENT OF SUCCESSOR TRUSTEE.  The court may appoint a successor trustee if the trustee of a management trust resigns, becomes ineligible, or is removed.

Added by Acts 2011, 82nd Leg., R.S., Ch. 823, Sec. 1.02, eff. January 1, 2014.

Text of section effective on January 01, 2014

Sec. 1301.156.  LIABILITY OF CERTAIN PERSONS FOR CONDUCT OF TRUSTEE.  The guardian of the person or of the estate of a ward for whom a management trust is  created or the surety on the guardian's bond is not liable for an act or omission of the trustee of the trust.

Added by Acts 2011, 82nd Leg., R.S., Ch. 823, Sec. 1.02, eff. January 1, 2014.

SUBCHAPTER E. MODIFICATION, REVOCATION, OR TERMINATION OF MANAGEMENT TRUSTS

Text of section effective on January 01, 2014

Sec. 1301.201.  MODIFICATION OR REVOCATION OF TRUST. (a)  The court may modify or revoke a management trust at any time before the date of the trust's termination.

(b)  The following may not revoke a management trust:

(1)  the ward for whom the trust is created or the guardian of the ward's estate; or

(2)  the incapacitated person for whom the trust is created.

Added by Acts 2011, 82nd Leg., R.S., Ch. 823, Sec. 1.02, eff. January 1, 2014.

Text of section effective on January 01, 2014

Sec. 1301.202.  TRANSFER TO POOLED TRUST SUBACCOUNT. (a)  If the court determines that it is in the best interests of a ward or incapacitated person for whom a management trust is created, the court may order the transfer of all property in the management trust to a pooled trust subaccount established in accordance with Chapter 1302.

(b)  The transfer of property from the management trust to the pooled trust subaccount shall be treated as a continuation of the management trust and may not be treated as the establishment of a new trust for purposes of 42 U.S.C. Section 1396p(d)(4)(A) or (C) or otherwise for purposes of the ward's or incapacitated person's eligibility for medical assistance under Chapter 32, Human Resources Code.

(c)  The court may not allow termination of the management trust from which property is transferred under this section until all of the property in the management trust has been transferred to the pooled trust subaccount.

Added by Acts 2011, 82nd Leg., R.S., Ch. 823, Sec. 1.02, eff. January 1, 2014.

Text of section effective on January 01, 2014

Sec. 1301.203.  TERMINATION OF TRUST. (a)  If the ward or incapacitated person for whom a management trust is created is a minor, the trust terminates on:

(1)  the earlier of:

(A)  the ward's or incapacitated person's death; or

(B)  the ward's or incapacitated person's 18th birthday; or

(2)  the date provided by court order, which may not be later than the ward's or incapacitated person's 25th birthday.

(b)  If the ward or incapacitated person for whom a management trust is created is not a minor, the trust terminates on:

(1)  the date the court determines that continuing the trust is no longer in the ward's or incapacitated person's best interests, subject to Section 1301.202(c); or

(2)  the ward's or incapacitated person's death.

Added by Acts 2011, 82nd Leg., R.S., Ch. 823, Sec. 1.02, eff. January 1, 2014.

Text of section effective on January 01, 2014

Sec. 1301.204.  DISTRIBUTION OF TRUST PROPERTY.  Unless otherwise provided by the court, the trustee of a management trust shall:

(1)  prepare a final account in the same form and manner that is required of a guardian under Sections 1204.101 and 1204.102; and

(2)  on court approval, distribute the principal or any undistributed income of the trust to:

(A)  the ward or incapacitated person when the trust terminates on the trust's own terms;

(B)  the successor trustee on appointment of a successor trustee; or

(C)  the representative of the deceased ward's or incapacitated person's estate on the ward's or incapacitated person's death.

Added by Acts 2011, 82nd Leg., R.S., Ch. 823, Sec. 1.02, eff. January 1, 2014.