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. (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.
(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.
(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.
(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.
§ 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.
