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.  PERSON OTHER THAN TRUSTEE IN CONTROL.  If a 
trust instrument reserves or vests authority in any person to the 
exclusion of the trustee, including the settlor, an advisory or 
investment committee, or one or more cotrustees, to direct the 
making or retention of an investment or to perform any other act in 
the management or administration of the trust, the excluded trustee 
or cotrustee is not liable for a loss resulting from the exercise of 
the authority in regard to the investments, management, or 
administration of the trust.

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


	§ 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.  POWER EXERCISED BY MAJORITY.  (a)  A trustee 
who does not join in exercising a power held by three or more 
cotrustees is not liable to a beneficiary of the trust or to others 
for the consequences of the exercise nor is a dissenting trustee 
liable for the consequences of an act in which the trustee joins at 
the direction of the majority trustees if the trustee expressed the 
dissent in writing to any of the cotrustees at or before the time of 
joinder.
	(b)  This section does not excuse a cotrustee from liability 
for failure to discharge the cotrustee's duties as a trustee.

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

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.