PROPERTY CODE
CHAPTER 113. ADMINISTRATION
SUBCHAPTER A. POWERS OF TRUSTEE
§ 113.001. LIMITATION OF POWERS. A power given to a
trustee by this subchapter does not apply to a trust to the extent
that the instrument creating the trust, a subsequent court order,
or another provision of this subtitle conflicts with or limits the
power.
Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2,
eff. Jan. 1, 1984.
§ 113.002. GENERAL POWERS. Except as provided by
Section 113.001, a trustee may exercise any powers in addition to
the powers authorized by this subchapter that are necessary or
appropriate to carry out the purposes of the trust.
Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2,
eff. Jan. 1, 1984.
§ 113.004. ADDITIONS TO TRUST ASSETS. A trustee may
receive from any source additions to the assets of the trust.
Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2,
eff. Jan. 1, 1984.
§ 113.005. ACQUISITION OF UNDIVIDED INTERESTS. A
trustee may acquire all or a portion of the remaining undivided
interest in property in which the trust holds an undivided
interest.
Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2,
eff. Jan. 1, 1984.
§ 113.006. GENERAL AUTHORITY TO MANAGE AND INVEST TRUST
PROPERTY. Subject to the requirements of Chapter 117, a trustee
may manage the trust property and invest and reinvest in property of
any character on the conditions and for the lengths of time as the
trustee considers proper, notwithstanding that the time may extend
beyond the term of the trust.
Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff.
Jan. 1, 1984. Amended by Acts 2003, 78th Leg., ch. 1103, § 3,
eff. Jan. 1, 2004.
§ 113.007. TEMPORARY DEPOSITS OF FUNDS. A trustee may
deposit trust funds that are being held pending investment,
distribution, or the payment of debts in a bank that is subject to
supervision by state or federal authorities. However, a corporate
trustee depositing funds with itself is subject to the requirements
of Section 113.057 of this code.
Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2,
eff. Jan. 1, 1984; Acts 1984, 68th Leg., 2nd C.S., ch. 18, § 11,
eff. Oct. 2, 1984.
§ 113.008. BUSINESS ENTITIES. A trustee may invest in,
continue, or participate in the operation of any business or other
investment enterprise in any form, including a sole proprietorship,
partnership, limited partnership, corporation, or association, and
the trustee may effect any change in the organization of the
business or enterprise.
Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2,
eff. Jan. 1, 1984.
§ 113.009. REAL PROPERTY MANAGEMENT. A trustee may:
(1) exchange, subdivide, develop, improve, or
partition real property;
(2) make or vacate public plats;
(3) adjust boundaries;
(4) adjust differences in valuation by giving or
receiving value;
(5) dedicate real property to public use or, if the
trustee considers it in the best interest of the trust, dedicate
easements to public use without consideration;
(6) raze existing walls or buildings;
(7) erect new party walls or buildings alone or
jointly with an owner of adjacent property;
(8) make repairs; and
(9) make extraordinary alterations or additions in
structures as necessary to make property more productive.
Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2,
eff. Jan. 1, 1984.
§ 113.010. SALE OF PROPERTY. A trustee may contract to
sell, sell and convey, or grant an option to sell real or personal
property at public auction or private sale for cash or for credit or
for part cash and part credit, with or without security.
Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2,
eff. Jan. 1, 1984.
§ 113.011. LEASES. (a) A trustee may grant or take a
lease of real or personal property for any term, with or without
options to purchase and with or without covenants relating to
erection of buildings or renewals, including the lease of a right or
privilege above or below the surface of real property.
(b) A trustee may execute a lease containing terms or
options that extend beyond the duration of the trust.
Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2,
eff. Jan. 1, 1984.
§ 113.012. MINERALS. (a) A trustee may enter into
mineral transactions, including:
(1) negotiating and making oil, gas, and other mineral
leases covering any land, mineral, or royalty interest at any time
forming a part of a trust;
(2) pooling and unitizing part or all of the land,
mineral leasehold, mineral, royalty, or other interest of a trust
estate with land, mineral leasehold, mineral, royalty, or other
interest of one or more persons or entities for the purpose of
developing and producing oil, gas, or other minerals, and making
leases or assignments granting the right to pool and unitize;
(3) entering into contracts and agreements concerning
the installation and operation of plans or other facilities for the
cycling, repressuring, processing, or other treating or handling of
oil, gas, or other minerals;
(4) conducting or contracting for the conducting of
seismic evaluation operations;
(5) drilling or contracting for the drilling of wells
for oil, gas, or other minerals;
(6) contracting for and making "dry hole" and "bottom
hole" contributions of cash, leasehold interests, or other
interests towards the drilling of wells;
(7) using or contracting for the use of any method of
secondary or tertiary recovery of any mineral, including the
injection of water, gas, air, or other substances;
(8) purchasing oil, gas, or other mineral leases,
leasehold interests, or other interests for any type of
consideration, including farmout agreements requiring the drilling
or reworking of wells or participation therein;
(9) entering into farmout contracts or agreements
committing a trust estate to assign oil, gas, or other mineral
leases or interests in consideration for the drilling of wells or
other oil, gas, or mineral operations;
(10) negotiating the transfer of and transferring oil,
gas, or other mineral leases or interests for any consideration,
such as retained overriding royalty interests of any nature,
drilling or reworking commitments, or production interests; and
(11) executing and entering into contracts,
conveyances, and other agreements or transfers considered
necessary or desirable to carry out the powers granted in this
section, whether or not the action is now or subsequently
recognized or considered as a common or proper practice by those
engaged in the business of prospecting for, developing, producing,
processing, transporting, or marketing minerals, including
entering into and executing division orders, oil, gas, or other
mineral sales contracts, exploration agreements, processing
agreements, and other contracts relating to the processing,
handling, treating, transporting, and marketing of oil, gas, or
other mineral production from or accruing to a trust and receiving
and receipting for the proceeds thereof on behalf of a trust.
(b) A trustee may enter into mineral transactions that
extend beyond the term of the trust.
Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2,
eff. Jan. 1, 1984.
§ 113.013. INSURANCE. A trustee may purchase insurance
of any nature, form, or amount to protect the trust property and the
trustee.
Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2,
eff. Jan. 1, 1984.
§ 113.014. PAYMENT OF TAXES. A trustee may pay taxes
and assessments levied or assessed against the trust estate or the
trustee by governmental taxing or assessing authorities.
Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2,
eff. Jan. 1, 1984.
§ 113.015. AUTHORITY TO BORROW. A trustee may borrow
money from any source, including a trustee, purchase property on
credit, and mortgage, pledge, or in any other manner encumber all or
any part of the assets of the trust as is advisable in the judgment
of the trustee for the advantageous administration of the trust.
Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2,
eff. Jan. 1, 1984.
§ 113.016. MANAGEMENT OF SECURITIES. A trustee may:
(1) pay calls, assessments, or other charges against
or because of securities or other investments held by the trust;
(2) sell or exercise stock subscription or conversion
rights;
(3) vote corporate stock, general or limited
partnership interests, or other securities in person or by general
or limited proxy;
(4) consent directly or through a committee or other
agent to the reorganization, consolidation, merger, dissolution,
or liquidation of a corporation or other business enterprise; and
(5) participate in voting trusts and deposit stocks,
bonds, or other securities with any protective or other committee
formed by or at the instance of persons holding similar securities,
under such terms and conditions respecting the deposit thereof as
the trustee may approve; sell any stock or other securities
obtained by conversion, reorganization, consolidation, merger,
liquidation, or the exercise of subscription rights free of any
restrictions upon sale otherwise contained in the trust instrument
relative to the securities originally held; assent to corporate
sales, leases, encumbrances, and other transactions.
Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2,
eff. Jan. 1, 1984.
§ 113.017. CORPORATE STOCK OR OTHER SECURITIES HELD IN
NAME OF NOMINEE. A trustee may:
(1) hold corporate stock or other securities in the
name of a nominee;
(2) under Subchapter B, Chapter 161, or other law,
employ a bank incorporated in this state or a national bank located
in this state as custodian of any corporate stock or other
securities held in trust; and
(3) under Subchapter C, Chapter 161, or other law,
deposit or arrange for the deposit of securities with a Federal
Reserve Bank or in a clearing corporation.
Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2,
eff. Jan. 1, 1984.
§ 113.018. EMPLOYMENT OF AGENTS. A trustee may employ
attorneys, accountants, agents, including investment agents, and
brokers reasonably necessary in the administration of the trust
estate.
Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff.
Jan. 1, 1984. Amended by Acts 1999, 76th Leg., ch. 794, § 1, eff.
Sept. 1, 1999.
§ 113.019. CLAIMS. A trustee may compromise, contest,
arbitrate, or settle claims of or against the trust estate or the
trustee.
Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff.
Jan. 1, 1984.
§ 113.020. BURDENSOME OR WORTHLESS PROPERTY. A trustee
may abandon property the trustee considers burdensome or worthless.
Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff.
Jan. 1, 1984.
§ 113.021. DISTRIBUTION TO MINOR OR INCAPACITATED
BENEFICIARY. (a) A trustee may make a distribution required or
permitted to be made to any beneficiary in any of the following ways
when the beneficiary is a minor or a person who in the judgment of
the trustee is incapacitated by reason of legal incapacity or
physical or mental illness or infirmity:
(1) to the beneficiary directly;
(2) to the guardian of the beneficiary's person or
estate;
(3) by utilizing the distribution, without the
interposition of a guardian, for the health, support, maintenance,
or education of the beneficiary;
(4) to a custodian for the minor beneficiary under the
Texas Uniform Gifts to Minors Act (Chapter 141) or a uniform gifts
to minors act of another state; or
(5) by reimbursing the person who is actually taking
care of the beneficiary, even though the person is not the legal
guardian, for expenditures made by the person for the benefit of the
beneficiary.
(b) The written receipts of persons receiving distributions
under Subsection (a) of this section are full and complete
acquittances to the trustee.
Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff.
Jan. 1, 1984.
§ 113.0211. ADJUSTMENT OF CHARITABLE TRUST. (a) In
this section:
(1) "Charitable entity" has the meaning assigned by
Section 123.001(1).
(2) "Charitable trust" means a trust:
(A) the stated purpose of which is to benefit
only one or more charitable entities; and
(B) that qualifies as a charitable entity.
(b) The trustee of a charitable trust may acquire, exchange,
sell, supervise, manage, or retain any type of investment, subject
to restrictions and procedures established by the trustee and in an
amount considered appropriate by the trustee, that a prudent
investor, exercising reasonable skill, care, and caution, would
acquire or retain in light of the purposes, terms, distribution
requirements, and other circumstances of the trust. The prudence
of a trustee's actions under this subsection is judged with
reference to the investment of all of the trust assets rather than
with reference to a single trust investment.
(c) The trustee of a charitable trust may make one or more
adjustments between the principal and the income portions of a
trust to the extent that the trustee considers the adjustments
necessary:
(1) to comply with the terms of the trust, if any, that
describe the amount that may or must be distributed to a charitable
entity beneficiary by referring to the income portion of the trust;
and
(2) to administer the trust in order to carry out the
purposes of the charitable trust.
(d) The authority to make adjustments under Subsection (c)
includes the authority to allocate all or part of a capital gain to
trust income.
(e) In making adjustments under Subsection (c), the trustee
shall consider:
(1) except to the extent that the terms of the trust
clearly manifest an intention that the trustee shall or may favor
one or more charitable entity beneficiaries, the needs of a
charitable entity beneficiary, based on what is fair and reasonable
to all other charitable entity beneficiaries of the trust, if any;
and
(2) the need of the trust to maintain the purchasing
power of the trust's investments over time.
Added by Acts 2003, 78th Leg., ch. 550, § 1, eff. Sept. 1, 2003.
§ 113.022. POWER TO PROVIDE RESIDENCE AND PAY FUNERAL
EXPENSES. A trustee of a trust that is not a charitable remainder
unitrust, annuity trust, or pooled income fund that is intended to
qualify for a federal tax deduction under Section 664, Internal
Revenue Code, after giving consideration to the probable intention
of the settlor and finding that the trustee's action would be
consistent with that probable intention, may:
(1) permit real estate held in trust to be occupied by
a beneficiary who is currently eligible to receive distributions
from the trust estate;
(2) if reasonably necessary for the maintenance of a
beneficiary who is currently eligible to receive distributions from
the trust estate, invest trust funds in real property to be used for
a home by the beneficiary; and
(3) in the trustee's discretion, pay funeral expenses
of a beneficiary who at the time of the beneficiary's death was
eligible to receive distributions from the trust estate.
Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff.
Jan. 1, 1984. Amended by Acts 1985, 69th Leg., ch. 149, § 2, eff.
May 24, 1985.
§ 113.023. ANCILLARY TRUSTEE. (a) If trust property
is situated outside this state, a Texas trustee may name in writing
an individual or corporation qualified to act in the foreign
jurisdiction in connection with trust property as ancillary
trustee.
(b) Within the limits of the authority of the Texas trustee,
the ancillary trustee has the rights, powers, discretions, and
duties the Texas trustee delegates, subject to the limitations and
directions of the Texas trustee specified in the instrument
evidencing the appointment of the ancillary trustee.
(c) The Texas trustee may remove an ancillary trustee and
appoint a successor at any time as to all or part of the trust
assets.
(d) The Texas trustee may require security of the ancillary
trustee, who is answerable to the Texas trustee for all trust
property entrusted to or received by the ancillary trustee in
connection with the administration of the trust.
(e) If the law of the foreign jurisdiction requires a
certain procedure or a judicial order for the appointment of an
ancillary trustee or to authorize an ancillary trustee to act, the
Texas trustee and the ancillary trustee must satisfy the
requirements.
Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff.
Jan. 1, 1984.
§ 113.024. IMPLIED POWERS. The powers, duties, and
responsibilities under this subtitle do not exclude other implied
powers, duties, or responsibilities that are not inconsistent with
this subtitle.
Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff.
Jan. 1, 1984.
§ 113.025. POWERS OF TRUSTEE REGARDING ENVIRONMENTAL
LAWS. (a) A trustee or a potential trustee may inspect,
investigate, cause to be inspected, or cause to be investigated
trust property, property that the trustee or potential trustee has
been asked to hold, or property owned or operated by an entity in
which the trustee or potential trustee holds or has been asked to
hold any interest or for the purpose of determining the potential
application of environmental law with respect to the property.
This subsection does not grant any person the right of access to any
property. The taking of any action under this subsection with
respect to a trust or an addition to a trust is not evidence that a
person has accepted the trust or the addition to the trust.
(b) A trustee may take on behalf of the trust any action
before or after the initiation of an enforcement action or other
legal proceeding that the trustee reasonably believes will help to
prevent, abate, or otherwise remedy any actual or potential
violation of any environmental law affecting property held directly
or indirectly by the trustee.
Added by Acts 1993, 73rd Leg., ch. 846, § 29, eff. Sept. 1, 1993.
§ 113.026. AUTHORITY TO DESIGNATE NEW CHARITABLE
BENEFICIARY. (a) In this section:
(1) "Charitable entity" has the meaning assigned by
Section 123.001.
(2) "Failed charitable beneficiary" means a
charitable entity that is named as a beneficiary of a trust and
that:
(A) does not exist at the time the charitable
entity's interest in the trust becomes vested;
(B) ceases to exist during the term of the trust;
or
(C) ceases to be a charitable entity during the
term of the trust.
(b) This section applies only to an express written trust
created by an individual with a charitable entity as a beneficiary.
If the trust instrument provides a means for replacing a failed
charitable beneficiary, the trust instrument governs the
replacement of a failed charitable beneficiary, and this section
does not apply.
(c) The trustee of a trust may select one or more
replacement charitable beneficiaries for a failed charitable
beneficiary in accordance with this section.
(d) Each replacement charitable beneficiary selected under
this section by any person must:
(1) be a charitable entity and an entity described
under Sections 170(b)(1)(A), 170(c), 2055(a), and 2522(a) of the
Internal Revenue Code of 1986, as amended; and
(2) have the same or similar charitable purpose as the
failed charitable beneficiary.
(e) If the settlor of the trust is living and not
incapacitated at the time a trustee is selecting a replacement
charitable beneficiary, the trustee shall consult with the settlor
concerning the selection of one or more replacement charitable
beneficiaries.
(f) If the trustee and the settlor agree on the selection of
one or more replacement charitable beneficiaries, the trustee shall
send notice of the selection to the attorney general. If the
attorney general determines that one or more replacement charitable
beneficiaries do not have the same or similar charitable purpose as
the failed charitable beneficiary, not later than the 21st day
after the date the attorney general receives notice of the
selection, the attorney general shall request in writing that a
district court in the county in which the trust was created review
the selection. If the court agrees with the attorney general's
determination, any remaining replacement charitable beneficiary
agreed on by the trustee and the settlor is the replacement
charitable beneficiary. If there is not a remaining replacement
charitable beneficiary agreed on by the trustee and the settlor,
the court shall select one or more replacement charitable
beneficiaries. If the court finds that the attorney general's
request for a review is unreasonable, the replacement charitable
beneficiary is the charitable beneficiary agreed on by the trustee
and the settlor, and the court may require the attorney general to
pay all court costs of the parties involved. Not later than the
30th day after the date the selection is final, the trustee shall
provide to each replacement charitable beneficiary selected notice
of the selection by certified mail, return receipt requested.
(g) If the trustee and the settlor cannot agree on the
selection of a replacement charitable beneficiary, the trustee
shall send notice of that fact to the attorney general not later
than the 21st day after the date the trustee determines that an
agreement cannot be reached. The attorney general shall refer the
matter to a district court in the county in which the trust was
created. The trustee and the settlor may each recommend to the
court one or more replacement charitable beneficiaries. The court
shall select a replacement charitable beneficiary and, not later
than the 30th day after the date of the selection, provide to each
charitable beneficiary selected notice of the selection by
certified mail, return receipt requested.
Added by Acts 1999, 76th Leg., ch. 63, § 1, eff. Aug. 30, 1999.
SUBCHAPTER B. DUTIES OF TRUSTEE
§ 113.051. GENERAL DUTY. The trustee shall administer
the trust according to its terms and this subtitle. In the absence
of any contrary terms in the trust instrument or contrary
provisions of this subtitle, in administering the trust the trustee
shall perform all of the duties imposed on trustees by the common
law.
Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2,
eff. Jan. 1, 1984.
§ 113.052. LOAN OF TRUST FUNDS TO TRUSTEE. (a) Except
as provided by Subsection (b) of this section, a trustee may not
lend trust funds to:
(1) the trustee or an affiliate;
(2) a director, officer, or employee of the trustee or
an affiliate;
(3) a relative of the trustee; or
(4) the trustee's employer, employee, partner, or
other business associate.
(b) This section does not prohibit:
(1) a loan by a trustee to a beneficiary of the trust
if the loan is expressly authorized or directed by the instrument or
transaction establishing the trust; or
(2) a deposit by a corporate trustee with itself under
Section 113.057 of this Act.
Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2,
eff. Jan. 1, 1984.
§ 113.053. PURCHASE OR SALE OF TRUST PROPERTY BY
TRUSTEE. (a) Except as provided by Subsections (b), (c), (d),
(e), (f), and (g), a trustee shall not directly or indirectly buy or
sell trust property from or to:
(1) the trustee or an affiliate;
(2) a director, officer, or employee of the trustee or
an affiliate;
(3) a relative of the trustee; or
(4) the trustee's employer, partner, or other business
associate.
(b) A national banking association or a state-chartered
corporation with the right to exercise trust powers that is serving
as executor, administrator, guardian, trustee, or receiver may sell
shares of its own capital stock held by it for an estate to one or
more of its officers or directors if a court:
(1) finds that the sale is in the best interest of the
estate that owns the shares;
(2) fixes or approves the sales price of the shares and
the other terms of the sale; and
(3) enters an order authorizing and directing the
sale.
(c) If a corporate trustee, executor, administrator, or
guardian is legally authorized to retain its own capital stock in
trust, the trustee may exercise rights to purchase its own stock if
increases in the stock are offered pro rata to shareholders.
(d) If the exercise of rights or the receipt of a stock
dividend results in a fractional share holding and the acquisition
meets the investment standard required by this subchapter, the
trustee may purchase additional fractional shares to round out the
holding to a full share.
(e) A trustee may:
(1) comply with the terms of a written executory
contract signed by the settlor, including a contract for deed,
earnest money contract, buy/sell agreement, or stock purchase or
redemption agreement; and
(2) sell the stock, bonds, obligations, or other
securities of a corporation to the issuing corporation or to its
corporate affiliate if the sale is made under an agreement
described in Subdivision (1) or complies with the duties imposed by
Chapter 117.
(f) A national banking association, a state-chartered
corporation, including a state-chartered bank or trust company, a
state or federal savings and loan association that has the right to
exercise trust powers and that is serving as trustee, or such an
institution that is serving as custodian with respect to an
individual retirement account, as defined by Section 408, Internal
Revenue Code, or an employee benefit plan, as defined by Section
3(3), Employee Retirement Income Security Act of 1974 (29 U.S.C.
Section 1002(3)), regardless of whether the custodial account is,
or would otherwise be, considered a trust for purposes of this
subtitle, may:
(1) employ an affiliate or division within a financial
institution to provide brokerage, investment, administrative,
custodial, or other account services for the trust or custodial
account and charge the trust or custodial account for the services,
provided, however, nothing in this section shall allow an affiliate
or division to engage in the sale or business of insurance if not
otherwise permitted to do so; and
(2) receive compensation, directly or indirectly, on
account of the services performed by the affiliate or division
within the financial institution, whether in the form of shared
commissions, fees, or otherwise, provided that any amount charged
by the affiliate or division for the services is disclosed and does
not exceed the customary or prevailing amount that is charged by the
affiliate or division, or a comparable entity, for comparable
services rendered to a person other than the trust.
(g) In addition to other investments authorized by law for
the investment of funds held by a fiduciary or by the instrument
governing the fiduciary relationship, and notwithstanding any
other provision of law and subject to the standard contained in
Chapter 117, a bank or trust company acting as a fiduciary, agent,
or otherwise, in the exercise of its investment discretion or at the
direction of another person authorized to direct the investment of
funds held by the bank or trust company as fiduciary, may invest and
reinvest in the securities of an open-end or closed-end management
investment company or investment trust registered under the
Investment Company Act of 1940 (15 U.S.C. § 80a-1 et seq.) if the
portfolio of the investment company or investment trust consists
substantially of investments that are not prohibited by the
governing instrument. The fact that the bank or trust company or an
affiliate of the bank or trust company provides services to the
investment company or investment trust, such as those of an
investment advisor, custodian, transfer agent, registrar, sponsor,
distributor, manager, or otherwise, and receives compensation for
those services does not preclude the bank or trust company from
investing or reinvesting in the securities if the compensation is
disclosed by prospectus, account statement, or otherwise. An
executor or administrator of an estate under a dependent
administration or a guardian of an estate shall not so invest or
reinvest unless specifically authorized by the court in which such
estate or guardianship is pending.
Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff.
Jan. 1, 1984. Amended by Acts 1985, 69th Leg., ch. 974, § 1, 2,
eff. Aug. 26, 1985; Acts 1989, 71st Leg., ch. 341, § 1, eff. Aug.
28, 1989; Acts 1993, 73rd Leg., ch. 933, § 1, eff. Aug. 30, 1993;
Acts 2003, 78th Leg., ch. 1103, § 4, eff. Jan. 1, 2004.
§ 113.054. SALES FROM ONE TRUST TO ANOTHER. A trustee
of one trust may not sell property to another trust of which it is
also trustee unless the property is:
(1) a bond, note, bill, or other obligation issued or
fully guaranteed as to principal and interest by the United States;
and
(2) sold for its current market price.
Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2,
eff. Jan. 1, 1984.
§ 113.055. PURCHASE OF TRUSTEE'S SECURITIES. (a)
Except as provided by Subsection (b) of this section, a corporate
trustee may not purchase for the trust the stock, bonds,
obligations, or other securities of the trustee or an affiliate,
and a noncorporate trustee may not purchase for the trust the stock,
bonds, obligations, or other securities of a corporation with which
the trustee is connected as director, owner, manager, or any other
executive capacity.
(b) A trustee may:
(1) retain stock already owned by the trust unless the
retention does not satisfy the requirements prescribed by Chapter
117; and
(2) exercise stock rights or purchase fractional
shares under Section 113.053 of this Act.
Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff.
Jan. 1, 1984. Amended by Acts 2003, 78th Leg., ch. 1103, § 5,
eff. Jan. 1, 2004.
§ 113.056. AUTHORIZATION TO MAKE CERTAIN INVESTMENTS.
(a) Unless the terms of the trust instrument provide
otherwise, and subject to the investment standards provided by this
subtitle and any investment standards provided by the trust
instrument, the trustee may invest all or part of the trust assets
in an investment vehicle authorized for the collective investment
of trust funds pursuant to Part 9, Title 12, of the Code of Federal
Regulations.
(d) Subject to any investment standards provided by this
chapter, Chapter 117, or the trust instrument, whenever the
instrument directs, requires, authorizes, or permits investment in
obligations of the United States government, the trustee may invest
in and hold such obligations either directly or in the form of
interests in an open-end management type investment company or
investment trust registered under the Investment Company Act of
1940, 15 U.S.C. 80a-1 et seq., or in an investment vehicle
authorized for the collective investment of trust funds pursuant to
Part 9, Title 12 of the Code of Federal Regulations, so long as the
portfolio of such investment company, investment trust, or
collective investment vehicle is limited to such obligations and to
repurchase agreements fully collateralized by such obligations.
Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff.
Jan. 1, 1984. Amended by Acts 1985, 69th Leg., ch. 341, § 1, eff.
June 10, 1985; Acts 1991, 72nd Leg., ch. 876, § 1, eff. June 16,
1991; Acts 2003, 78th Leg., ch. 1103, § 6, 7, eff. Jan. 1, 2004.
§ 113.057. DEPOSITS BY CORPORATE TRUSTEE WITH
ITSELF. (a) A corporate trustee may deposit trust funds with
itself as a permanent investment if authorized by the settlor in the
instrument creating the trust or if authorized in a writing
delivered to the trustee by a beneficiary currently eligible to
receive distributions from a trust created before January 1, 1988.
(b) A corporate trustee may deposit with itself trust funds
that are being held pending investment, distribution, or payment of
debts if, except as provided by Subsection (d) of this section:
(1) it maintains under control of its trust department
as security for the deposit a separate fund of securities legal for
trust investments;
(2) the total market value of the security is at all
times at least equal to the amount of the deposit; and
(3) the separate fund is marked as such.
(c) The trustee may make periodic withdrawals from or
additions to the securities fund required by Subsection (b) of this
section as long as the required value is maintained. Income from
securities in the fund belongs to the trustee.
(d) Security for a deposit under this section is not
required for a deposit under Subsection (a) or under Subsection (b)
of this section to the extent the deposit is insured or otherwise
secured under state or federal law.
Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff.
Jan. 1, 1984. Amended by Acts 1985, 69th Leg., ch. 149, § 3, eff.
May 24, 1985.
§ 113.058. BOND. (a) A corporate trustee is not
required to provide a bond to secure performance of its duties as
trustee.
(b) Unless the instrument creating the trust provides
otherwise, a noncorporate trustee must give bond:
(1) payable to each person interested in the trust, as
their interests may appear; and
(2) conditioned on the faithful performance of the
trustee's duties.
(c) The bond must be in an amount and with the sureties
required by order of a court in a proceeding brought for this
determination.
(d) Any interested person may bring an action to increase or
decrease the amount of a bond or to substitute or add sureties.
(e) The trustee shall deposit the bond with the clerk of the
court that issued the order requiring the bond. A suit on the bond
may be maintained on a certified copy. Appropriate proof of a
recovery on a bond reduces the liability of the sureties pro tanto.
(f) Failure to comply with this section does not make void
or voidable or otherwise affect an act or transaction of a trustee
with any third person.
Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff.
Jan. 1, 1984.
§ 113.059. POWER OF SETTLOR TO ALTER TRUSTEE'S
RESPONSIBILITIES. (a) Except as provided by this section, the
settlor by provision in an instrument creating, modifying,
amending, or revoking the trust may relieve the trustee from a duty,
liability, or restriction imposed by this subtitle.
(b) A settlor may not relieve a corporate trustee from the
duties, restrictions, or liabilities of Section 113.052 or 113.053
of this Act.
(c) A settlor may not relieve the 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
the beneficiary; or
(2) any profit derived by the trustee from a breach of
trust.
(d) A provision in a trust instrument relieving the trustee
of liability for a breach of trust is ineffective to the extent that
the provision 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.
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,
§ 12, eff. Oct. 2, 1984; Acts 2003, 78th Leg., ch. 1154, § 1,
2, eff. Sept. 1, 2003.
SUBCHAPTER C. RESIGNATION OR REMOVAL OF TRUSTEE, AND AUTHORITY OF
MULTIPLE AND SUCCESSOR TRUSTEES
§ 113.081. RESIGNATION OF TRUSTEE. (a) A trustee may
resign in accordance with the terms of the trust instrument, or a
trustee may petition a court for permission to resign as trustee.
(b) The court may accept a trustee's resignation and
discharge the trustee from the trust on the terms and conditions
necessary to protect the rights of other interested persons.
Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2,
eff. Jan. 1, 1984.
§ 113.082. REMOVAL OF TRUSTEE. (a) A trustee may be
removed in accordance with the terms of the trust instrument, or, on
the petition of an interested person and after hearing, a court may,
in its discretion, remove a trustee and deny part or all of the
trustee's compensation if:
(1) the trustee materially violated or attempted to
violate the terms of the trust and the violation or attempted
violation results in a material financial loss to the trust;
(2) the trustee becomes incompetent or insolvent;
(3) the trustee fails to make an accounting that is
required by law or by the terms of the trust; or
(4) in the discretion of the court, for other cause.
(b) A beneficiary, cotrustee, or successor trustee may
treat a violation resulting in removal as a breach of trust.
(c) A trustee of a charitable trust may not be removed
solely on the grounds that the trustee exercised the trustee's
power to adjust between principal and income under Section
113.0211.
Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff.
Jan. 1, 1984. Amended by Acts 2003, 78th Leg., ch. 550, § 2, eff.
Sept. 1, 2003.
§ 113.083. APPOINTMENT OF SUCCESSOR TRUSTEE. (a) On
the death, resignation, incapacity, or removal of a sole or
surviving trustee, a successor trustee shall be selected according
to the method, if any, prescribed in the trust instrument. If for
any reason a successor is not selected under the terms of the trust
instrument, a court may and on petition of any interested person
shall appoint a successor in whom the trust shall vest.
(b) If a vacancy occurs in the number of trustees originally
appointed under a valid charitable trust agreement and the trust
agreement does not provide for filling the vacancy, the remaining
trustees may fill the vacancy by majority vote.
Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff.
Jan. 1, 1984.
§ 113.084. POWERS OF SUCCESSOR TRUSTEE. Unless
otherwise provided in the trust instrument or by order of the court
appointing a successor trustee, the successor trustee has the
rights, powers, authority, discretion, and title to trust property
conferred on the trustee.
Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff.
Jan. 1, 1984.
§ 113.085. EXERCISE OF POWERS BY MULTIPLE
TRUSTEES. Except as otherwise provided by the trust instrument or
by court order:
(1) a power vested in three or more trustees may be
exercised by a majority of the trustees; and
(2) if two or more trustees are appointed by a trust
instrument and one or more of the trustees die, resign, or are
removed, the survivor or survivors may administer the trust and
exercise the discretionary powers given to the trustees jointly.
Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff.
Jan. 1, 1984.
SUBCHAPTER E. ACCOUNTING BY TRUSTEE
§ 113.151. DEMAND FOR ACCOUNTING. (a) A beneficiary
by written demand may request the trustee to deliver to each
beneficiary of the trust a written statement of accounts covering
all transactions since the last accounting or since the creation of
the trust, whichever is later. If the trustee fails or refuses to
deliver the statement on or before the 90th day after the date the
trustee receives the demand or after a longer period ordered by a
court, any beneficiary of the trust may file suit to compel the
trustee to deliver the statement to all beneficiaries of the trust.
The court may require the trustee to deliver a written statement of
account to all beneficiaries on finding that the nature of the
beneficiary's interest in the trust or the effect of the
administration of the trust on the beneficiary's interest is
sufficient to require an accounting by the trustee. However, the
trustee is not obligated or required to account to the
beneficiaries of a trust more frequently than once every 12 months
unless a more frequent accounting is required by the court. If a
beneficiary is successful in the suit to compel a statement under
this section, the court may, in its discretion, award all or part of
the costs of court and all of the suing beneficiary's reasonable and
necessary attorney's fees and costs against the trustee in the
trustee's individual capacity or in the trustee's capacity as
trustee.
(b) An interested person may file suit to compel the trustee
to account to the interested person. The court may require the
trustee to deliver a written statement of account to the interested
person on finding that the nature of the interest in the trust of,
the claim against the trust by, or the effect of the administration
of the trust on the interested person is sufficient to require an
accounting by the trustee.
Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff.
Jan. 1, 1984. Amended by Acts 2003, 78th Leg., ch. 550, § 3, eff.
Sept. 1, 2003.
§ 113.152. CONTENTS OF ACCOUNTING. A written statement
of accounts shall show:
(1) all trust property that has come to the trustee's
knowledge or into the trustee's possession and that has not been
previously listed or inventoried as property of the trust;
(2) a complete account of receipts, disbursements, and
other transactions regarding the trust property for the period
covered by the account, including their source and nature, with
receipts of principal and income shown separately;
(3) a listing of all property being administered, with
an adequate description of each asset;
(4) the cash balance on hand and the name and location
of the depository where the balance is kept; and
(5) all known liabilities owed by the trust.
Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff.
Jan. 1, 1984.
SUBCHAPTER F. COMMON TRUST FUNDS
§ 113.171. COMMON TRUST FUNDS. (a) A bank or trust
company qualified to act as a fiduciary in this state may establish
common trust funds to provide investments to itself as a fiduciary,
including as a custodian under the Texas Uniform Gifts to Minors Act
(Chapter 141) or a uniform gifts to minors act of another state or
to itself and others as cofiduciaries.
(b) The fiduciary or cofiduciary may place investment funds
in interests in common trust funds if:
(1) the investment is not prohibited by the instrument
or order creating the fiduciary relationship; and
(2) if there are cofiduciaries, the cofiduciaries
consent to the investment.
(c) A common trust fund includes a fund:
(1) qualified for exemption from federal income
taxation as a common trust fund and maintained exclusively for
eligible fiduciary accounts; and
(2) consisting solely of assets of retirement,
pension, profit sharing, stock bonus, or other employees' trusts
that are exempt from federal income taxation.
Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff.
Jan. 1, 1984.
§ 113.172. AFFILIATED INSTITUTIONS. A bank or trust
company that is a member of an affiliated group under Section 1504,
Internal Revenue Code of 1954 (26 U.S.C. 1504), with a bank or trust
company maintaining common trust funds may participate in one or
more of the funds.
Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff.
Jan. 1, 1984.
