ÿWPC8 øV?ÏšW%×Rü¢Aü†¶†2ñÐ8:#Ýw|L3bVÎùEjg˜ø›xÁ,7ºž2%(:´¹jÍvdB¢Ucϲ $½2%®Ãê‚v‰òð¾‰Ôšl P¨I(|Ŭ’Cþ°CúÚÑ@q¸v³ÑÅ~ŸFHwí›íµÅ ÛZ÷©ßPáxβÇÊÁß­°_:+ô®ÍAiE{¸$.ÎëÕÜ´•o&Ý[Ô[Ù@a¡Š¨…=(žÚ!½ös-´£Ên¿ ü€7 Í^7P‡f6g‰¢P¢~‡¸\ó7VFwšQ 쾸4nÂÐßòí圂êHm‚ƒõ~ÕÛ¹¦'‹hyÞ?£þü®¤<1ËF ¸_™1Ä †ëQWöä{ºÿߘ”’­^€d®Än³K#Ïoš^(4øq»q‘nYòÜ&™«—= ¸e*dëÄ3¦Ÿ¸²ŽÃ¦1±MÙ1¡$úÿ|ò޾ìõ©ÿ³V½õ|ÙÖ)ñÞ$ICDà…2sïi@xNÅ Ûs˜V$›ÚÀ î‘_ÏC¼=>J‚g ¹»@ƒg²(ÄbÌëšw"Ú¾à«H1;4`Õ¯'ÿ…PøÜ«êE5¿Bɶ]$\óÖSÉa#ÁNU#N %] 0:c U> 1uÛ 72P f‚ Æ„ 0ßJ 0K) D+t AŸ ^ < wH 4L ` 1_o Î mÐ Öç 0V½ 0A 0#TT 0h¨  B!a>>>>>>>>> (RR  zzzzzzzzzz 4šššš 4ÎÎÎ f <hh :¤¤¤¤¤ ,ÞÞ 0  8:: 8r 8ªªªªªªªª 0Nââââââ 00˜\\BARNES01\SHARP AR-407 PS0&Öd9 Z‹6Times New Roman RegularX(üœ$¡¡ÔUSUS.,Ô&Öd9 Z‹&Times New Roman3#37=CIQYag­­1.a.i.(1)(a)(i)1)a)i)8ALevel 1Level 2Level 3Level 4Level 5(·3ád$££Ý ƒM!ÝÔUSUS.,ÔÓK€ (€X°KÓÔ‡X&dXXVXÔÔ‡X&dXX]X&dÔÝ  Ý( ±þ$’’ò òFigure€Ú  Ú1Ú  Úó ó'ÈÈÈÈdxd  I&mage <=8ÿÿÿÿÿÿÿÿÿÿCÿÿ HKKKK=“d. ˆZ;.ê:i¢×+003|x3‡û37;?CGKOS°°ÿU‹ÿÀÀÀ ÌÝ ƒ½Þ)ÝÔUSUS.,ÔÝ  ÝÔ_Ôò òÔ‡ôLòXXÔ2003€Legislative€Previewà€R!R!þ (#àPage€Ú  Ú1Ú  ÚÔ#†XªDXòôL@#Ôó ó(.3½Þ$©©Ý ƒüœ!ÝÔUSUS.,ÔÝ  Ý(Vm$˜˜Ìà0  àà ° à(,!ù$™™à0  àà0` (#(#àà  à(@›‚$ššà0  àà0` (#(#àà0¸ ` (#` (#àà ` à dTABLE AØžTrust Law ChangesàVThe Two UPIAsðHThe Rap Against the RAPðHOther Trust Law Changes° Inventory, Monthly Allowance and Investment PlanGIn-Patient Psychiatric CareGOther Guardianship ChangesØžProbate Law ChangesðHPowers of AppointmentGContracts Affecting WillsGAdemption by SatisfactionGOther Probate Law Changes(›$——ÔÿÔòòÔÿÔóó(S:SÒw$´´Ó5€°5ÓÓ xð°œXÓà…… (àÔ2‡ûÔððÔ3  Ôà0   àÓ5€°5ÓÓ xð°œXÓÝ ƒüœ!ÝÔUSUS.,ÔÝ  ÝÔ_ÔÑe°ÑÔ‡°v,°XXÔò òÓ  ÓÖ€ÿÿÖÑ  Ñ2003€Legislative€Previewó óÔ#†XªDX°°v,K#ÔÐ ° ÐÌò òBy€Glenn€M.€Ô_ÔKarischÔ_ÔÐ pÀ ÐBarnes€&€Ô_ÔKarischÔ_Ô,€P.€C.Ð \¬ Ð2901„D€Bee€Caves€RoadÐ H ˜ ÐAustin,€Texas€78746Ð 4 „ Ðwww.texasprobate.comó óòòÐ  p ÐÓmÓÓ  ÓÐ ÐóóÔ‡„Ï©„XXªDÔò òContentsó óÔ#†XªDX„„Ï©4#ÔÐ & v ÐÓÓÌÓ€Ý ÓÔ_ÔÓ  ÓÝ‚VmÿÝÌÝ  ÝÝ‚VmÖÝà0  àà ° àÝ  ÝIntroductionà‚#Ä"Ä"J(#.ˆˆ(#(##à1݃VmÖòÝŒˆÐ ^®  ÐŒÝ  ÝÝ‚VmÿÝÌÝ  ÝÝ‚Vm’Ýà0  àà ° àÝ  ÝTrust€Law€Changesà‚#Ä"Ä"J(#.Æ Æ (#(##à2݃Vm’®ÝŒˆÐ 6†  ÐŒÝ  ÝÝ‚!ùÿÝÝ  ÝÝ‚!ùSÝà0  àà0` (#(#àà  àÝ  ÝThe€Two€UPIAsà‚#Ä"Ä"J(#., , ` (#` (##à2݃!ùSnÝŒˆÐ "r ÐŒÝ  ÝÝ‚›‚ÿÝÝ  ÝÝ‚›‚#Ýà0  àà0` (#(#àà0¸ ` (#` (#àà ` àÝ  ÝUniform€Prudent€Investor€Actà‚#Ä"Ä"J(#.¾¾0¸ (#¸ (##à2݃›‚#>ÝŒˆÐ ^ ÐŒÝ  ÝÝ‚›‚ÿÝÝ  ÝÝ‚›‚Ýà0  àà0` (#(#àà0¸ ` (#` (#àà ` àÝ  ÝUniform€Principal€and€Income€Actà‚#Ä"Ä"J(#.<<4¸ (#¸ (##à6݃›‚1ÝŒˆÐ úJ ÐŒÝ  ÝÝ‚!ùÿÝÝ  ÝÝ‚!ù Ýà0  àà0` (#(#àà  àÝ  ÝThe€Rap€Against€the€RAPà‚#Ä"Ä"J(#...&` (#` (##à9݃!ù (ÝŒˆÐ æ6 ÐŒÝ  ÝÝ‚!ùÿÝÝ  ÝÝ‚!ùçÝà0  àà0` (#(#àà  àÝ  ÝTrustee€Accountings€and€Removalà‚#`"`"I(#.ÖÖ.` (#` (##à10݃!ùçÝŒˆÐ Ò" ÐŒÝ  ÝÝ‚›‚ÿÝÝ  ÝÝ‚›‚ÊÝà0  àà0` (#(#àà0¸ ` (#` (#àà ` àÝ  ÝTexas€Trust€Code€ðð113.151(a)à‚#`"`"I(#.êê0¸ (#¸ (##à10݃›‚ÊåÝŒˆÐ ¾ ÐŒÝ  ÝÝ‚›‚ÿÝÝ  ÝÝ‚›‚Á Ýà0  àà0` (#(#àà0¸ ` (#` (#àà ` àÝ  ÝTexas€Trust€Code€ðð113.082(a)à‚#`"`"I(#.êê0¸ (#¸ (##à10݃›‚Á Ü ÝŒˆÐ ªú ÐŒÝ  ÝÝ‚!ùÿÝÝ  ÝÝ‚!ù¸ Ýà0  àà0` (#(#àà  àÝ  ÝThe€Sizzle€of€òòGrizzleóóà‚#`"`"I(#.¨ ¨ $` (#` (##à10݃!ù¸ Ó ÝŒˆÐ –æ ÐŒÝ  ÝÝ‚VmÿÝÌÝ  ÝÝ‚Vm— Ýà0  àà ° àÝ  ÝGuardianship€Law€Changesà‚#`"`"I(#.T T "(#(##à12݃Vm— ³ ÝŒˆÐ n¾ ÐŒÝ  ÝÝ‚!ùÿÝÝ  ÝÝ‚!ù` Ýà0  àà0` (#(#àà  àÝ  ÝInventory,€Monthly€Allowance€and€Investment€Planà‚#`"`"I(#.66?` (#` (##à12݃!ù` { ÝŒˆÐ Zª ÐŒÝ  ÝÝ‚!ùÿÝÝ  ÝÝ‚!ùT Ýà0  àà0` (#(#àà  àÝ  ÝIn„Patient€Psychiatric€Careà‚#`"`"I(#.ff*` (#` (##à13݃!ùT o ÝŒˆÐ F– ÐŒÝ  ÝÝ‚!ùÿÝÝ  ÝÝ‚!ù3Ýà0  àà0` (#(#àà  àÝ  ÝOther€Guardianship€Changesà‚#`"`"I(#.)` (#` (##à14݃!ù3NÝŒˆÐ 2‚ ÐŒÝ  ÝÝ‚VmÿÝÌÝ  ÝÝ‚VmÝà0  àà ° àÝ  ÝPowers€of€Attorneyà‚#`"`"I(#.Æ Æ (#(##à15݃Vm-ÝŒˆÐ  Z ÐŒÝ  ÝÝ‚VmÿÝÌÝ  ÝÝ‚VmÔÝà0  àà ° àÝ  ÝProbate€Law€Changesà‚#`"`"I(#.‚ ‚ (#(##à18݃VmÔðÝŒˆÐ â!2 ÐŒÝ  ÝÝ‚!ùÿÝÝ  ÝÝ‚!ù˜Ýà0  àà0` (#(#àà  àÝ  ÝPowers€of€Appointmentà‚#`"`"I(#.~~$` (#` (##à18݃!ù˜³ÝŒˆÐ Î" ÐŒÝ  ÝÝ‚!ùÿÝÝ  ÝÝ‚!ùqÝà0  àà0` (#(#àà  àÝ  ÝContracts€Affecting€Willsà‚#`"`"I(#.(` (#` (##à18݃!ùqŒÝŒˆÐ º#   ÐŒÝ  ÝÝ‚!ùÿÝÝ  ÝÝ‚!ùNÝà0  àà0` (#(#àà  àÝ  ÝAdemption€by€Satisfactionà‚#`"`"I(#.bb(` (#` (##à19݃!ùNiÝŒˆÐ ¦$ö! ÐŒÝ  ÝÝ‚!ùÿÝÝ  ÝÝ‚!ù+Ýà0  àà0` (#(#àà  àÝ  ÝOther€Probate€Law€Changesà‚#`"`"I(#.ÒÒ(` (#` (##à19݃!ù+FÝŒˆÐ ’%â " ÐŒÝ  ÝÓ ÊÓÔ_ÔÌÓ  ÓÔ‡„Ï©„XXªDÔò òÔ  ÔIntroductionÔ#†XªDX„„Ï©5#ÔÔ Ý WÔó óÐ j'º"$ ÐÓ)ÓÌThis€paper€represents€my€opinions€about€legislation€and€does€not€reflect€the€opinion€of€anyÐ ¶)%& Ðperson€or€group.€€Most€of€this€material€comes€from€my€web€site,€www.texasprobate.com,€where€IÐ ¢*ò%' Ðfollow€probate,€guardianship€and€trust€legislation€fairly€closely.€€You€can€get€up„to„dateÐ Ž+Þ&( Ðinformation€by€going€to€that€site.Ð z,Ê') ÐÐ f-¶(* ÐWhile€unpredictable€things€happen€in€every€legislative€session,€at€this€writing€(in€late€FebruaryÐ ° Ð2003)€it€appears€that€there€will€be€four€key€issues€affecting€probate,€guardianship,€estate€planningÐ œì Ðand€trust€law€in€the€78th€Texas€Legislature:Ð ˆØ Ѐ€Ð tÄ Ðò òððà0  àSignificant€Trust€Code€Changes€€€--ó óÔ_Ôð  ðÔ_Ô€Texas€versions€of€the€Uniform€Prudent€InvestorÐ `° ÐAct€of€1994€and€the€Uniform€Principal€and€Income€Act€of€1997€will€be€Ô_Ôconsidered.ð  ðÔ_Ô€IfÐ P   Ðadopted,€this€will€change€the€default€investment€standards€and€the€default€income€andÐ < Œ Ðprincipal€allocation€rules€for€Texas€trusts,€beginning€January€1,€2004.Ô_Ôð  ðÔ_Ô€Also,€anotherÐ ( x Ðattempt€to€repeal€the€rule€against€perpetuities€(or,€more€specifically,€to€extend€it€to€1,000Ð  d Ðyears),€has€been€filed.Ð P (#(# Ѐ€Ð ì <  Ðò òððà0  àChanges€for€Guardians€of€the€Estate€--€ó óProposed€legislation€intended€to€getÐ Ø(  Ðguardianships€of€the€estate€off€on€the€right€foot€will€shorten€the€deadline€for€filing€anÐ È  Ðinventory€in€a€guardianship€from€90€days€to€30€days€(unless€extended€by€the€court),Ð ´  Ðrequire€the€guardian€to€file€an€application€for€a€monthly€allowance€within€30€days€ofÐ  ð  Ðappointment€and€require€the€guardian€to€file€an€investment€plan€within€one€year€ofÐ ŒÜ  Ðappointment.ÐxÈ(#(# Ѐ€Ð d´ Ðò òððà0  àPowers€of€Attorney€--ó ó€Legislation€which€would€change€the€Statutory€Durable€Power€ofÐ P  ÐAttorney€form€and€affect€the€duties€and€liabilities€of€an€agent€under€a€power€of€attorneyÐ @ Ðhas€been€filed€and€will€be€an€interesting€issue€to€watch.Ð,|(#(# ÐÌò òððà0  àA€Response€to€òòÔ_ÔTCBÔ_Ô€v.€Grizzleóó?ó ó€ð!ð€The€Legislature€may€be€asked€to€respond€to€òòTexasÐ T ÐCommerce€Bank€v.€Grizzle,€óówhich€was€decided€by€the€Texas€Supreme€Court€onÐ ôD ÐDecember€31,€2002.€€This€legislation€could€affect€exculpatory€provisions€in€trusts,€as€wellÐ à0 Ðas€the€permissible€terms€of€trusts€created€under€Section€142.005€of€the€Property€Code€orÐ Ì ÐSection€867€of€the€Probate€Code.и(#(# ÐÌOf€course,€there€will€be€many,€many€other€proposed€changes,€some€big€and€some€Ô_Ôsmall.ð  ðÔ_Ô€ThisÐ à Ðpaper€covers€several€of€which€the€author€is€aware.Ð |Ì ÐÌò òòòÔ% ‡, ÔÓ  ÓóóÔ‡„Ï©„XXªDÔÔ  ÔTrust€Law€ChangesÔ Ý !ÔÔ#†XªDX„„Ï©`!#ÔòòÔ%†,D!Ôóóó óÐ T!¤ ÐÌÓQ!ÓÓ  Óò òòòÔ% ‡. ÔóóÔ‡¼æ0»XXªDÔÔ  ÔThe€Two€UPIAsÔ Ý T"ÔÔ#†XªDX»¼æ05"#ÔòòÔ%†.%"Ôóóó óÐ  #ð! ÐÌÓ  ÓThe€Uniform€Prudent€Investor€Act€of€1994€and€the€Uniform€Principal€and€Income€Act€of€1997Ð  %ð # Ðwould€affect€how€trustees€manage€trust€investments€and€how€they€and€their€accountants€allocateÐ Œ&Ü!$ Ðreceipts€and€disbursements€between€principal€and€income.Ð x'È"% ÐÌÓ  Óò òÔ  ÔUniform€Prudent€Investor€ActÔ Ý $Ôó óÐ P) $' ÐÓ$ÓÌSB€575,€filed€by€Senator€Chris€Harris,€R-Arlington,€would€enact€the€Uniform€Prudent€InvestorÐ (+x&) ÐAct€in€Texas.€€This€bill€is€part€of€the€legislative€package€of€the€Real€Estate,€Probate€and€TrustÐ ,d'* ÐLaw€Section€of€the€State€Bar€of€Texas€(Ô_ÔREPTLÔ_Ô).€€It€goes€hand-in-hand€with€SB€573,€alsoÐ ° Ðsponsored€by€Sen.€Harris,€which€would€enact€the€Uniform€Principal€and€Income€Act€(discussedÐ œì Ðbelow).Ð ˆØ ÐÌA€substantial€majority€of€states€have€adopted€versions€of€the€Uniform€Prudent€Investor€Act€ofÐ `° Ð1994.€€Based€on€the€Restatement€(3rd)€of€Trusts:€Prudent€Investor€Rule€(1992)€promulgated€byÐ L œ Ðthe€American€Law€Institute,€this€"Ô_ÔUPIAÔ_Ô"€modernizes€the€investment€standard€for€trusts€which€doÐ 8 ˆ Ðnot€specify€another€standard.Ð $ t ÐÌCurrently,€the€default€investment€standard€applicable€to€Texas€trusts€is€found€in€Texas€TrustÐ ü L  ÐCode€ðð€113.056(a):Ð è 8  ÐÌà8  à.€.€.€[A]€trustee€shall€exercise€the€judgment€and€care€under€the€circumstances€thenÐ À  Ðprevailing€that€persons€of€ordinary€prudence,€discretion,€and€intelligence€exerciseÐ ¬ü  Ðin€the€management€of€their€own€affairs,€not€in€regard€to€speculation€but€in€regardÐ ˜è  Ðto€the€permanent€disposition€of€their€funds,€considering€the€probable€income€fromÐ „Ô  Ðas€well€as€the€probable€increase€in€value€and€the€safety€of€their€capital.€€InÐ pÀ Ðdetermining€whether€a€trustee€has€exercised€prudence€with€respect€to€anÐ \¬ Ðinvestment€decision,€such€determination€shall€be€made€taking€into€considerationÐ H˜ Ðthe€investment€of€all€of€the€assets€of€the€trust€.€.€.€over€which€the€trustee€hadÐ 4„ Ðmanagement€and€control,€rather€than€a€consideration€as€to€the€prudence€of€theÐ  p Ðsingle€investment€of€the€trust.€.€.€.Ð \Ð Ð  ÐÌThis€is€a€Ô_ÔTexanizationÔ_Ô€of€the€prudent€man€rule€(or,€to€be€more€politically€correct,€the€prudentÐ ä4 Ðperson€rule)€first€espoused€in€Harvard€College€v.€Ô_ÔAmoryÔ_Ô,€26€Mass.€(9€Pick.)€446,€461€(1830)Ð Ð  Ð(trustees€should€"observe€how€men€of€prudence,€discretion€and€intelligence€manage€their€ownÐ ¼  Ðaffairs,€not€in€regard€to€speculation,€but€in€regard€to€the€permanent€disposition€of€their€funds,Ð ¨ø Ðconsidering€the€probable€income,€as€well€as€the€probable€safety€of€the€capital€to€be€invested")€andÐ ”ä Ðlater€included€in€a€slightly€different€form€in€the€Model€Prudent€Man€Rule€Statute€(1942)€and€theÐ €Ð ÐRestatement€(2nd)€of€Trusts€(1959).€€Texas€added€the€last€sentence€quoted€above€in€1991€to€makeÐ l¼ Ðthe€standard€of€prudence€applicable€to€investments€as€a€whole€rather€than€each€separateÐ X ¨ Ðinvestment.Ð D!” ÐÌÔ_ÔREPTLÔ_Ô€recently€concluded€a€multi-year€study€of€the€new€Uniform€Trust€Code.€€It€concluded€thatÐ #l! Ðthe€Uniform€Trust€Code€as€a€whole€is€not€an€improvement€over€the€current€Texas€Trust€Code.€Ð $X" ÐHowever,€it€concluded€that€one€part€of€the€Ô_ÔUTCÔ_Ô€Ô_Ô--Ô_Ô€the€Uniform€Prudent€Investor€Act€--€should€beÐ ô$D # Ðadopted,€with€a€few€Texas-oriented€changes.Ð à%0!$ ÐÌThe€proposed€Texas€Uniform€Prudent€Investor€Act€replaces€the€prudent€person€rule€with€theÐ ¸'#& Ðprudent€investor€rule.€€The€key€objectives€of€the€Act€are:Ð ¤(ô#' ÐÌððà0  àThe€standard€of€prudence€is€applied€to€any€investment€as€part€of€the€total€portfolio,€ratherÐ |*Ì%) Ðthan€to€individual€investments.€€Ô_ÔUPIAÔ_Ô€ððð  ð2(b)€[SB€575's€ðð116.004(b)].€€(This€is€similar€toÐ h+¸&* Ðthe€1991€amendment€to€Section€113.056.)ÐT,¤'+(#(# Їððà0  àThe€tradeoff€in€all€investing€between€risk€and€return€is€identified€as€the€fiduciaryððs€centralÐ ° Ðconsideration.€Ô_ÔUPIAÔ_Ô€ððð  ð2(b)€[SB€575's€ðð116.004(b)].Мì(#(# ÐÌððà0  àAll€categoric€restrictions€on€types€of€investments€have€been€abrogated;€the€trustee€canÐ tÄ Ðinvest€in€anything€that€plays€an€appropriate€role€in€achieving€the€risk/return€objectives€ofÐ `° Ðthe€trust€and€that€meets€the€other€requirements€of€prudent€investing.€Ô_ÔUPIAÔ_Ô€ððð  ð2(e)€[SBÐ L œ Ð575's€ðð116.004(e)]..€€(Note,€however,€that€several€self-dealing€prohibitions€remain€(e.g.,Ð 8 ˆ ÐTexas€Trust€Code€ðððð€113.052,€113.053,€113.054,€113.055€and€113.057).)Ð$ t(#(# ÐÌððà0  àThe€long€familiar€requirement€that€fiduciaries€diversify€their€investments€has€beenÐ ü L  Ðintegrated€into€the€definition€of€prudent€investing.€Ô_ÔUPIAÔ_Ô€ððð  ð3€[SB€575's€ðð116.005].Ðè 8 (#(# ÐÌMost€of€these€objectives€are€reflected€in€Section€2€of€Ô_ÔUPIAÔ_Ô,€which€is€SB€575's€ðð116.004:Ð À  ÐÌà8  àSTANDARD€OF€CARE;€PORTFOLIO€STRATEGY;€RISK€AND€RETURNÐ ˜è  ÐOBJECTIVES.Ð„Ô Ð Ð  ÐÌà8  à(a)€A€trustee€shall€invest€and€manage€trust€assets€as€a€prudent€investor€would,€byÐ \¬ Ðconsidering€the€purposes,€terms,€distribution€requirements,€and€otherÐ H˜ Ðcircumstances€of€the€trust.€In€satisfying€this€standard,€the€trustee€shall€exerciseÐ 4„ Ðreasonable€care,€skill,€and€caution.Ð pÐ Ð  ÐÌà8  à(b)€A€trusteeððs€investment€and€management€decisions€respecting€individual€assetsÐ øH Ðmust€be€evaluated€not€in€isolation€but€in€the€context€of€the€trust€portfolio€as€aÐ ä4 Ðwhole€and€as€a€part€of€an€overall€investment€strategy€having€risk€and€returnÐ Ð  Ðobjectives€reasonably€suited€to€the€trust.м Ð Ð  ÐÌà8  à(c)€Among€circumstances€that€a€trustee€shall€consider€in€investing€and€managingÐ ”ä Ðtrust€assets€are€such€of€the€following€as€are€relevant€to€the€trust€or€itsÐ €Ð Ðbeneficiaries:Ðl¼Ð Ð  ÐÌà8  àà8` Ð Ð à(1)€general€economic€conditions;ÐD!”` x` x ÐÌà8  àà8` Ð Ð à(2)€the€possible€effect€of€inflation€or€deflation;Ð#l!` x` x ÐÌà8  àà8` Ð Ð à(3)€the€expected€tax€consequences€of€investment€decisions€orÐ ô$D # Ðstrategies;Ðà%0!$` x` x ÐÌà8  àà8` Ð Ð à(4)€the€role€that€each€investment€or€course€of€action€plays€withinÐ ¸'#& Ðthe€overall€trust€portfolio,€which€may€include€financial€assets,Ð ¤(ô#' Ðinterests€in€closely€held€enterprises,€tangible€and€intangibleÐ )à$( Ðpersonal€property,€and€real€property;Ð|*Ì%)` x` x ÐÌà8  àà8` Ð Ð à(5)€the€expected€total€return€from€income€and€the€appreciation€ofÐ T,¤'+ Ðcapital;а` x` x ÐÌà8  àà8` Ð Ð à(6)€other€resources€of€the€beneficiaries;ЈØ` x` x ÐÌà8  àà8` Ð Ð à(7)€needs€for€liquidity,€regularity€of€income,€and€preservation€orÐ `° Ðappreciation€of€capital;€andÐL œ` x` x ÐÌà8  àà8` Ð Ð à(8)€an€assetððs€special€relationship€or€special€value,€if€any,€to€theÐ $ t Ðpurposes€of€the€trust€or€to€one€or€more€of€the€beneficiaries.Ð `` x` x ÐÌà8  à(d)€A€trustee€shall€make€a€reasonable€effort€to€verify€facts€relevant€to€theÐ è 8  Ðinvestment€and€management€of€trust€assets.ÐÔ$ Ð Ð  ÐÌà8  à(e)€Except€as€otherwise€provided€by€and€subject€to€this€subtitle,€a€trustee€mayÐ ¬ü  Ðinvest€in€any€kind€of€property€or€type€of€investment€consistent€with€the€standardsÐ ˜è  Ðof€this€chapter.Ð„Ô Ð Ð  ÐÌà8  à(f)€A€trustee€who€has€special€skills€or€expertise,€or€is€named€trustee€in€relianceÐ \¬ Ðupon€the€trusteeððs€representation€that€the€trustee€has€special€skills€or€expertise,€hasÐ H˜ Ða€duty€to€use€those€special€skills€or€expertise.Ð4„Ð Ð  ÐÌSB€575€varies€very€little€from€the€uniform€version€of€the€Act.€€One€variation€is€that€the€TexasÐ  \ Ðversion€€retains€with€very€few€changes€the€current€provision€regarding€a€trustee's€delegation€ofÐ øH Ðinvestment€decisions€(Texas€Trust€Code€ðð113.060)€rather€than€the€more€generous€(from€theÐ ä4 Ðtrustee's€perspective)€provisions€of€€Section€9€of€the€Uniform€Act.€€Ô_ÔREPTLÔ_Ô€believed€that€theÐ Ð  Ðuniform€version€could€leave€beneficiaries€without€an€adequate€remedy€for€breaches€of€trust€byÐ ¼  Ðagents€of€the€trustee.Ð ¨ø ÐIf€SB€575€is€adopted,€trustees€will€have€an€affirmative€duty€to€diversify€investments€(new€SectionÐ ”ä Ð116.005)€and€an€affirmative€duty€to€review€the€trust€assets€and€to€make€and€implement€decisionsÐ €Ð Ðconcerning€the€retention€and€disposition€of€assets€in€order€to€bring€them€in€compliance€with€theÐ l¼ Ðprudent€investor€rule€(new€Section€116.006).€€Gone€will€be€the€old€Texas€provision€permittingÐ X ¨ Ðretention€of€trust€assets€held€at€the€inception€of€the€trust€without€liability€for€diversification€(seeÐ D!” ÐTexas€Trust€Code€ðð113.003).Ð 0"€  ÐÌLike€most€of€the€current€Texas€Trust€Code,€the€Uniform€Prudent€Investor€Act€imposes€defaultÐ $X" Ðrules€--€rules€which€apply€if€the€trust€instrument€is€silent.€€Ô_ÔSettlorsÔ_Ô€of€trusts€may€override€theseÐ ô$D # Ðnew€rules€and€impose€whatever€standards€they€wish,€within€the€limits€of€public€policy,€statutesÐ à%0!$ Ðand€the€common€law.Ð Ì&"% ÐÔ_ÔREPTLÔ_Ô's€version€of€the€act€provided€for€the€Uniform€Prudent€Investor€Act€to€become€effectiveÐ ¸'#& Ðon€January€1,€2004,€so€attorneys€and€trustees€would€have€a€little€more€time€to€prepare€for€theÐ ¤(ô#' Ðchanges€and€so€that€it€would€be€coordinated€with€the€effective€date€of€the€Uniform€Principal€andÐ )à$( ÐIncome€Act.€€However,€SB€575€as€filed€provides€for€a€September€1,€2003,€effective€date.€Ð |*Ì%) ÐHopefully€this€will€be€fixed€prior€to€enactment.Ð h+¸&* ÐÐ T,¤'+ ÐThe€Uniform€Prudent€Investor€Act€will€apply€not€only€to€trusts€created€after€that€date,€but€also€toÐ ° Ðthe€actions€of€trustees€of€existing€trusts€which€occur€after€that€date.Ð œì ÐÌHere€are€a€few€things€that€I€would€fix€in€SB€575€as€filed,€if€given€a€chance:Ð tÄ ÐÌððà0  àChange€the€effective€date€to€January€1,€2004.ÐL œ(#(# ÐÌððà0  àSB€575€makes€the€Uniform€Prudent€Investor€Act€new€Chapter€116€of€the€Trust€Code.€€SBÐ $ t Ð573€makes€the€Uniform€Principal€and€Income€Act€new€Chapter€116€of€the€Trust€Code.€Ð  ` ÐOne€of€these€needs€to€change,€and€I€think€it€would€be€easy€to€make€the€Uniform€PrudentÐ ü L  ÐInvestor€Act€Chapter€117.Ðè 8 (#(# ÐÌððà0  àMake€Section€113.060(c)(4)(A)€as€amended€by€the€Act€read€"is€subject€to€the€standard€ofÐ À  Ðtrust€management€and€investment€applicable€to€the€trust"€rather€than€"is€subject€to€theÐ ¬ü  Ðstandard€of€trust€management€and€investment€applicable€to€the€trustee€of€the€trust€asÐ ˜è  Ðprescribed€by€Chapter€116€[Section€113.056],"€which€is€what€SB€575€as€filed€says.€€TheÐ „Ô  Ðreason€for€this€change€is€that,€in€the€case€of€a€trustee€delegating€investment€authority€to€anÐ pÀ Ðagent,€the€agent€needs€to€agree€to€apply€the€investment€standard€applicable€to€the€trust,Ð \¬ Ðwhether€it€is€the€"default"€rule€under€the€Trust€Code€or€the€investment€standard€stated€inÐ H˜ Ðthe€trust€instrument.€€The€former€language€quoted€above€makes€this€clear,€while€theÐ 4„ Ðversion€of€SB€575€as€originally€filed€does€not.Ð p(#(# ÐÌððà0  àMost€of€the€cross-references€in€other€statues€which€used€to€refer€to€the€investmentÐ øH Ðstandard€in€Section€113.056€of€the€Trust€Code€should€point€to€Chapter€116€as€a€whole€andÐ ä4 Ðnot€just€to€Section€116.004,€which€is€the€way€most€of€them€are€handled€in€SB€575€asÐ Ð  Ðfiled.€€Pointing€just€to€Section€116.004€could€be€seen€as€leaving€out€key€parts€of€theÐ ¼  Ðprudent€investor€act€--€diversification,€duties€at€the€inception€of€trusteeship,€impartiality,Ð ¨ø Ðinvestment€costs,€etc.Дä(#(# ÐÌÓ  Óò òÔ  ÔUniform€Principal€and€Income€ActÔ ll¸XÔó óÐ l¼ ÐÌÓ©XÓSB€573,€filed€€by€Senator€Chris€Harris,€R-Arlington,€would€enact€the€Uniform€Principal€andÐ D!” ÐIncome€Act€in€Texas.€€This€is€part€of€the€legislative€package€of€the€Real€Estate,€Probate€and€TrustÐ 0"€  ÐLaw€Section€of€the€State€Bar€of€Texas€(Ô_ÔREPTLÔ_Ô).€€Together€with€its€sister€bill,€SB€575,€it€couldÐ #l! Ðchange€the€way€trustees€manage€trust€investments€and€the€way€trustees€allocate€receipts€andÐ $X" Ðdisbursements€between€principal€and€income€in€Texas.Ð ô$D # ÐÌIf€the€Uniform€Prudent€Investor€Act€(SB€575)€is€enacted,€the€freedom€to€invest€in€a€wide€varietyÐ Ì&"% Ðof€investments€granted€by€the€prudent€investor€rule€creates€a€serious€accounting€problem€for€theÐ ¸'#& Ðtrustee:€€If€the€risk/return€analysis€makes€it€prudent€to€invest€primarily€in€growth-orientedÐ ¤(ô#' Ðlow-income-producing€assets,€how€can€the€interests€of€the€income€beneficiary€be€protected?€Ð )à$( ÐHarken€back€to€yesteryear€when€a€trustee€free€to€invest€in€growth€stocks€could€generate€an€annualÐ |*Ì%) Ðreturn€of€20%€or€more,€but€a€trustee€bound€to€generate€income€could€hope€for€no€more€than€aÐ h+¸&* Ð5-6%€return.€€Does€the€trustee€have€to€forego€these€gains€(and€incur€the€wrath€of€the€remainderÐ T,¤'+ Ðbeneficiaries)€in€order€to€assure€the€income€beneficiary€a€reasonable€return?Ð ° ÐÌUnder€the€Uniform€Principal€and€Income€Act€of€1997€(SB€573),€the€answer€is€no,€at€least€is€someÐ ˆØ Ðcases.€€€Section€104€of€this€"Ô_ÔUPIAÔ_Ô"€(Section€116.005€of€SB€573)€permits€the€trustee€to€adjustÐ tÄ Ðbetween€principal€and€income€to€the€extent€the€trustee€considers€necessary€if€the€trustee€isÐ `° Ðfollowing€the€prudent€investor€rule€and€cannot€otherwise€balance€the€interests€of€the€incomeÐ L œ Ðbeneficiary€and€the€remainder€beneficiaries€fairly.€€There€are€restrictions€on€this€power€to€adjustÐ 8 ˆ Ðif€the€trustee€also€is€a€beneficiary€or€if€marital€deduction€trust€(Ô_ÔQTIPÔ_Ô)€considerations€are€involved,Ð $ t Ðbut€Section€104/€Section€116.005€--€the€heart€of€the€new€principal€and€income€act€--€will€permitÐ  ` Ðthe€adjustment€in€many€cases.Ð ü L  ÐÌÔ_ÔREPTLÔ_Ô€considers€the€Uniform€Principal€and€Income€Act€to€be€a€necessary€adjunct€to€theÐ Ô$  ÐUniform€Prudent€Investor€Act€--€if€the€Legislature€is€going€to€adopt€the€prudent€investor€rule,€itÐ À  Ðalso€needs€to€adopt€accounting€rules€to€assure€that€the€relative€rights€of€the€beneficiaries€areÐ ¬ü  Ðprotected.€€Therefore,€Ô_ÔREPTLÔ_Ô€also€is€proposing€the€adoption€of€a€Texas€version€of€this€uniformÐ ˜è  Ðact.Ð „Ô  ÐÌSeveral€states€have€considered€addressing€the€need€to€adjust€between€income€and€principal€whichÐ \¬ Ðarises€under€the€prudent€investor€rule€by€allowing€trustees€to€convert€income-only€trusts€intoÐ H˜ ÐÔ_ÔunitrustsÔ_Ô.€€Ô_ÔREPTLÔ_Ô€considered€this€approach€and€rejected€it€for€now.€€The€Ô_ÔunitrustÔ_Ô€conversionÐ 4„ Ðstatutes€are€evolving.€€Eventually€there€may€be€a€generally€accepted,€fair€way€to€permit€trustees€toÐ  p Ðconvert€income-only€trusts€into€Ô_ÔunitrustsÔ_Ô,€but€the€current€attempts€in€other€states€seem€flawed€inÐ  \ Ðthat€they€are€overly€complicated€or€likely€to€be€unfair€to€beneficiaries.€€Similarly,€Ô_ÔREPTLÔ_Ô€rejectedÐ øH Ðproposed€Section€105€(added€to€the€uniform€act€by€the€National€Conference€of€CommissionersÐ ä4 Ðon€Uniform€State€Laws€after€adoption€of€the€1997€version€of€Ô_ÔUPIAÔ_Ô)€as€being€unnecessary€andÐ Ð  Ðinappropriate.Ð ¼  ÐÌWhile€the€Ô_ÔunitrustÔ_Ô€conversion€concept€was€left€out,€SB€573€includes€a€provision€which€permits€aÐ ”ä ÐÔ_ÔsettlorÔ_Ô€to€draft€a€non-charitable€Ô_ÔunitrustÔ_Ô.€€This€provision€is€intended€to€take€advantage€ofÐ €Ð ÐProposed€Treasury€Regulation€1.643(b)-1,€66€Fed.€Reg.€10396€(February€15,€2001),€whichÐ l¼ Ðprovides€that€amounts€allocated€between€income€and€principal€pursuant€to€applicable€local€lawÐ X ¨ Ðwill€be€respected€if€local€law€provides€for€a€reasonable€apportionment€between€the€income€andÐ D!” Ðremainder€beneficiaries€of€the€total€return€of€the€trust.€Under€the€proposed€regulation,€a€state€lawÐ 0"€  Ðthat€provides€for€the€income€beneficiary€to€receive€each€year€a€Ô_ÔunitrustÔ_Ô€amount€of€between€3%Ð #l! Ðand€5%€of€the€annual€fair€market€value€of€the€trust€assets€is€a€reasonable€apportionment€of€theÐ $X" Ðtotal€return€of€the€trust.€€If€enacted,€Section€116.006€of€SB€573€€would€provide€support€in€TexasÐ ô$D # Ðlaw€for€a€Ô_ÔsettlorÔ_Ô€who€wishes€to€create€a€non-charitable€Ô_ÔunitrustÔ_Ô€paying€a€Ô_ÔunitrustÔ_Ô€amount€ofÐ à%0!$ Ðbetween€3%€and€5%€by€defining€such€amount€as€"income"€for€state€fiduciary€accountingÐ Ì&"% Ðpurposes.€€If€the€proposed€regulation€becomes€final,€this€should€make€it€unnecessary€for€a€Ô_ÔsettlorÔ_ÔÐ ¸'#& Ðto€provide€for€the€payment€of€the€greater€of€the€Ô_ÔunitrustÔ_Ô€amount€or€actual€income€in€order€to€meetÐ ¤(ô#' Ðtax€requirements€for€a€trust€which€requires€the€distribution€of€all€income€to€a€beneficiary€(forÐ )à$( Ðexample,€a€marital€deduction€(Ô_ÔQTIPÔ_Ô)€trust).€€The€provision€does€not€require€that€trust€income€beÐ |*Ì%) Ðdefined€in€terms€of€a€Ô_ÔunitrustÔ_Ô€percentage,€nor€does€it€provide€a€means€for€converting€anÐ h+¸&* Ðall-income€trust€into€a€Ô_ÔunitrustÔ_Ô.€€Because€other€rules€apply€to€charitable€Ô_ÔunitrustsÔ_Ô,€this€proposalÐ T,¤'+ Ðdoes€not€apply€to€them.Ð ° ÐÌSB€573€comprehensively€treats€the€subject€of€allocating€receipts€and€disbursements€betweenÐ ˆØ Ðprincipal€and€income€and,€therefore,€replaces€Ô_ÔSubchapterÔ_Ô€D€of€Chapter€113€of€the€Texas€TrustÐ tÄ ÐCode€(ðððð113.101€--€113.111).€€So,€if€the€two€Ô_ÔUPIAsÔ_Ô€are€enacted€by€the€Legislature,€trustees,€theirÐ `° Ðlawyers€and€their€accountants€will€have€to€learn€some€new€rules.Ð L œ ÐÌÌIn€general,€SB€573€follows€the€uniform€act's€allocation€rules.€€However,€it€varied€from€theÐ  ` Ðuniform€version€in€these€two€key€areas:Ð ü L  ÐÌððà0  àOil,€Gas€and€Mineral€Income€--€How€could€a€bunch€of€Yankee€lawyers€expect€to€draft€aÐ Ô$  Ðrule€about€allocating€oil,€gas€and€mineral€receipts€which€Texans€could€embrace€andÐ À  Ðapprove?€€The€uniform€act's€rule€on€oil,€gas€and€mineral€receipts€was€that€90%€wereÐ ¬ü  Ðprincipal€and€only€10%€were€income.€€This€is€a€far€cry€from€Texas's€current€rule,€which€inÐ ˜è  Ðgeneral€is€that€27ðð€%€of€gross€proceeds€is€principal€and€the€rest€(72ðð%)€is€incomeÐ „Ô  Ð(Texas€Trust€Code€ðð113.107).€€SB€573's€proposed€Texas€version€(Section€116.174)Ð pÀ Ðprovides€that€the€trustee€must€allocate€these€receipts€"equitably."€€It€further€provides€thatÐ \¬ Ðan€Ô_Ôallocationð  ðisÔ_Ô€presumed€to€be€equitable€if€the€amount€allocated€to€principal€equals€theÐ H˜ Ðamount€allowed€as€a€deduction€by€the€Internal€Revenue€Code€for€depletion€of€the€interest.€Ð 4„ ÐPerhaps€most€importantly,€the€Texas€version€includes€a€grandfather€provision€for€existingÐ  p Ðtrusts€--€if€oil€and€gas€receipts€were€being€allocated€under€the€old€27ðð€/€72ðð€%€rule,€theÐ  \ Ðtrustee€can€keep€using€that€allocation€formula.ÐøH(#(# ÐÌððà0  àRetirement€Plans€--€Similarly,€the€uniform€act's€rule€on€distributions€from€IRAs€and€otherÐ Ð  Ðretirement€plans€was€that€90%€of€each€distribution€was€principal€and€10%€was€income.€€ItÐ ¼  Ðis€rare€for€the€IRA€or€retirement€plan€to€be€in€an€income-only€trust€(although€it€is€notÐ ¨ø Ðunheard€of€for€the€IRA€to€be€placed€in€a€marital€deduction€(Ô_ÔQTIPÔ_Ô)€trust€Ô_ÔbenefitingÔ_Ô€theÐ ”ä Ðsecond€spouse€for€life€with€remainder€to€children€of€the€first€marriage),€but€in€cases€whereÐ €Ð Ðthis€happens€the€uniform€act€would€provide€very€little€for€the€income€beneficiary.€€TheÐ l¼ Ðcurrent€Texas€provision€(Texas€Trust€Code€ðð113.109)€is€fairer€to€the€income€beneficiary,Ð X ¨ Ðbut€its€approach€(5%€of€the€inventory€value€of€the€deferred€payment€right)€Ô_ÔissÔ_Ô€confusing,Ð D!” Ðdifficult€to€apply€and€does€not€adequately€take€into€account€changes€in€the€value€of€theÐ 0"€  Ðunderlying€asset.€€SB€573's€proposed€Texas€version€(Section€116.172)€contains€a€uniqueÐ #l! ÐTexas€provision€which€borrows€from€Ô_ÔunitrustÔ_Ô€principles:€€a€payment€is€income€to€theÐ $X" Ðextent€of€4%€of€the€asset's€value€and€is€principal€to€the€extent€it€exceeds€4%€of€the€asset'sÐ ô$D # Ðvalue.Ðà%0!$(#(# ÐÌLike€the€Texas€Uniform€Prudent€Investor€Act,€the€Texas€Uniform€Principal€and€Income€Act€is€aÐ ¸'#& Ðdefault€statute€--€if€the€trust€instrument€is€silent,€its€rules€apply,€but€if€the€trust€instrumentÐ ¤(ô#' Ðspecifies€other€rules,€those€other€rules€apply.€€SB€573€will€become€effective€(if€enacted)€onÐ )à$( ÐJanuary€1,€2004,€and€apply€to€existing€as€well€as€new€trusts.€€There€are€some€grandfatherÐ |*Ì%) Ðprovisions€(the€most€significant€being€the€one€that€applies€to€mineral€interests),€but€in€general€theÐ h+¸&* Ðaccounting€rules€for€existing€trusts€will€change€on€January€1,€2004,€if€the€Act€passes.Ð T,¤'+ ЇNote€that€both€SB€573€and€SB€575€as€filed€purport€to€add€Chapter€116€to€the€Texas€Trust€Code.Ð ° ÐOne€of€them€will€have€to€be€changed€to€Chapter€117.€Probably€the€Uniform€Prudent€Investor€ActÐ œì Ð(SB€575)€will€be€changed.€Ð ˆØ ÐÌÓ  Óò òÔ% ‡8 ÔÔ‡¼æ0»XXªDÔÔ  ÔThe€Rap€Against€the€RAPÔ €t:„ÔÔ#†XªDX»¼æ0„#ÔÔ%†8„Ôó óÐ `° ÐÌÓ  ÓIn€2001€the€Trust€Division€of€the€Texas€Bankers€Association€(TBA)€tried€unsuccessfully€toÐ ` ° Ðdramatically€increase€the€length€of€time€non-charitable€trusts€in€Texas€may€Ô_Ôlast.ð  ðÔ_Ô€While€it€didn'tÐ L œ Ðpropose€an€outright€repeal€of€the€rule€against€perpetuities€(RAP),€it€proposed€extending€the€limitÐ 8 ˆ Ðto€1,000€Ô_Ôyears.ð  ðÔ_Ô€This€1,000-year€limit€was€carved€back€to€360€years€in€order€to€eliminate€some€ofÐ $ t  Ðthe€opposition€to€the€proposal,€and€the€proposal€passed€the€Senate,€but€it€could€not€get€out€of€theÐ `  ÐCalendars€Committee€in€the€House.Ð üL  ÐÌThe€TBA€is€back€again€this€session.€€Ô_ÔSJRÔ_Ô€26,€filed€by€Senator€John€Ô_ÔCaronaÔ_Ô,€R-Dallas,€wouldÐ Ô$  Ðeliminate€the€constitutional€prohibition€against€perpetual€trusts€in€Texas.€€SB€534,€also€filed€byÐ À  ÐSenator€Ô_ÔCaronaÔ_Ô,€would€make€related€statutory€changes€enabling€trusts€in€Texas€to€last€1,000Ð ¬ü  Ðyears.€€As€a€practical€matter,€these€two€pieces€of€legislation€are€intended€to€abolish€the€ruleÐ ˜è Ðagainst€perpetuities€in€Texas€as€it€applies€to€trusts.Ð „Ô ÐÌThese€bills€are€the€same€as€Ô_ÔSJRÔ_Ô€26€€(coincidentally€the€same€bill€number€in€2001€and€2003)€andÐ \¬ ÐSB€698€Senator€Ô_ÔCaronaÔ_Ô€filed€in€the€77th€Texas€Legislature€in€2001.€€Those€bills€passed€theÐ H˜ ÐSenate€(SB€698€was€amended€to€fix€some€of€the€language€and€to€shorten€the€maximum€durationÐ 4„ Ðof€trusts€to€360€years)€but€failed€to€clear€the€Calendars€Committee€in€the€House€and,€thus,€did€notÐ  p Ðbecome€law.€€It€is€interesting€that€Senator€Ô_ÔCaronaÔ_Ô€chose€to€start€with€the€original,€1,000-yearÐ  \ Ðversion€of€the€statute€rather€than€the€360-year€version€which€passed€the€Senate€last€time.Ð øH ÐÌI€believe€that€the€TBA's€support€for€this€legislation€centers€on€two€propositions:€€(1)€TexansÐ Ð  Ðought€to€be€able€to€do€with€their€property€what€they€want,€and€if€they€want€to€create€a€trust€thatÐ ¼  Ðlasts€for€1,000€years,€they€ought€to€be€able€to€do€so;€and€(2)€other€states€have€repealed€the€ruleÐ ¨ø Ðagainst€perpetuities€and€if€Texas€does€not,€its€banks€and€trust€companies€will€be€at€a€competitiveÐ ”ä Ðdisadvantage€and€property€which€should€be€managed€here€in€Texas€will€go€to€be€managed€inÐ € Ð Ðother€states.Ð l!¼ ÐÌSteve€Saunders,€an€Austin€attorney,€led€the€opposition€to€the€TBA€legislation€last€session.€€He€isÐ D#”! Ðdoing€the€same€this€session.€€His€opposition€to€these€measures€is€on€policy€grounds.€€Iððve€askedÐ 0$€" ÐSteve€to€give€me€a€copy€of€his€position€paper€on€this€subject,€and€Iððll€put€it€on€my€web€siteÐ %l # Ð(www.texasprobate.com)€when€it€becomes€available.Ð &X!$ ÐÌIf€these€bills€pass,€the€Legislature€should€take€a€look€at€some€of€the€changes€that€were€made€inÐ à'0#& Ðthe€Senate€before€it€passed€of€SB€698€last€session.€€The€obvious€change€is€shortening€the€timeÐ Ì($' Ðperiod€from€1,000€years€to€360€years.€€Regardless€of€the€time€period€used,€the€2001€bill€wasÐ ¸)%( Ðimproved€after€it€was€filed,€and€the€Legislature€should€include€those€improvements€in€the€finalÐ ¤*ô%) Ðversion€of€SB€534.Ð +à&* ÐÐ |,Ì'+ ÐÓ  Óòòò òÔ% ‡< ÔÔ  ÔTrustee€Accountings€and€RemovalÔ O“ÔÔ%†<B“Ôó óóóÐ ° ÐÌÓ  ÓSB€574,€filed€by€Senator€Chris€Harris,€R-Arlington,€would€make€two€Trust€Code€changes€--€oneÐ ´ Ðaffecting€trustee€accountings€and€one€affecting€trustee€removal.€€This€is€part€of€the€legislativeÐ  ð Ðpackage€of€the€Real€Estate,€Probate€and€Trust€Law€Section€of€the€State€Bar€of€Texas€(Ô_ÔREPTLÔ_Ô).Ð ŒÜ ÐÌÓ  Óò òÔ  ÔTexas€Trust€Code€ðð113.151(a)Ô O•Ôó óÐ d ´ ÐÌÓ  ÓThe€Texas€Probate€Code€imposes€a€60-day€deadline€on€independent€executors€for€responding€to€aÐ < Œ Ðbeneficiaryððs€accounting€demand.€See€Tex.€Prob.€Code€ðð€149A(b).€While€the€accounting€demandÐ ( x  Ðprovision€in€the€Texas€Trust€Code€is€similar€to€the€Probate€Code€provision€applicable€toÐ d  Ðindependent€executors,€there€currently€is€no€clear€deadline€for€a€trusteeððs€response€to€anÐ P  Ðaccounting€demand.€SB€574€would€amend€Section€113.151(a)€of€the€Texas€Trust€Code€to€requireÐ ì<  Ðthe€trustee€to€make€the€accounting€within€60€days€after€receipt€of€the€demand€or€such€longerÐ Ø(  Ðperiod€ordered€by€a€court.€SB€574€also€would€amend€Section€113.151(a)€to€make€it€clear€that€theÐ Ä  Ðcourt€in€its€discretion€may€award€costs€and€legal€fees€against€the€trustee€individually€if€aÐ ° Ðbeneficiary€successfully€brings€a€suit€to€compel€an€accounting.Ð œì ÐÌÓ  Óò òÔ  ÔTexas€Trust€Code€ðð113.082(a)Ô ¤™Ôó óÐ tÄ ÐÓ  ÓÌThere€is€a€problem€with€the€way€SB€574€as€filed€would€amend€Section€113.082(a)€of€the€TexasÐ Lœ ÐTrust€Code€regarding€trustee€removal.€€Ô_ÔREPTLÔ_Ô€proposed€amending€this€section€to€make€it€clearÐ 8ˆ Ðthat€the€court€"may€in€its€discretion"€remove€a€trustee€for€one€of€the€reasons€stated€in€that€section.Ð $t ÐJudicial€decisions€have€called€into€question€whether€"may"€(without€"in€its€discretion")€in€theÐ ` Ðcurrent€statute€really€means€"shall."€€€See€Akin€v.€Dahl,€661€S.€W.€2d€911,€913€(Tex.€1983),€andÐ üL ÐLee€v.€Lee,€47€S.€W.€3d€767,€785-6€(Tex.€App.€ð!ð€Houston€[14th€Dist.]€2001).€Ô_ÔREPTLÔ_Ô€wanted€toÐ è8 Ðmake€it€clear€that€"may"€really€meant€"may,"€so€it€proposed€sticking€in€the€"in€its€discretion"Ð Ô$ Ðlanguage.€€Unfortunately,€when€the€Legislative€Council€got€hold€of€this€proposal,€it€apparentlyÐ À Ðdecided€that€"in€its€discretion"€was€superfluous,€so€it€eliminated€it€in€the€version€given€to€SenatorÐ ¬ü ÐHarris€to€file.€€I€would€agree€that€it€ought€to€be€superfluous,€but€hopefully€these€words€will€beÐ ˜è Ðstuck€back€in€the€statute€to€make€this€point€clear,€in€light€of€court€decisions.Ð „ Ô ÐÌSB€574€also€would€amend€Section€113.082(a)€to€make€the€failure€to€make€an€accounting€which€isÐ \"¬  Ðrequired€by€law€or€by€the€terms€of€the€trust€an€express€basis€for€removal€of€a€trustee.€While€theÐ H#˜! Ðcourt€has€the€discretion€to€remove€a€trustee€for€failing€to€account€under€the€catch-all€"otherÐ 4$„" Ðcause"€currently€in€the€Trust€Code€(Section€113.082(a)(4)),€the€importance€of€making€requiredÐ  %p # Ðaccountings€justifies€including€it€among€the€specific€bases€for€removal.€Also,€this€change€mirrorsÐ  &\!$ Ðthe€approach€used€for€independent€executors€in€Section€149C€of€the€Texas€Probate€Code.Ð ø&H"% ÐÌà@ýý ìàò òÔ€¼æ0»XXªDÔÔ  ÔThe€Sizzle€of€òòGrizzleÔ "¢Ôóóó óˆÐ Ð( $' ÐÌÔ€XªDX»¼æ0ÔOn€December€31,€2002,€the€Texas€Supreme€Court€issued€its€opinion€in€òòTexas€Commerce€Bank,Ð ö*F&) ÐN.€A.€v.€Grizzle,óó€___€S.€W.€3d€____€(Tex.€2002€[Docket€No.€01„0211]).€€The€òòGrizzleóó€case€takes€aÐ â+2'* Ðvery€broad€view€of€Section€113.059€of€the€Texas€Trust€Code€which,€if€taken€to€its€logicalÐ ° Ðconclusion,€could€mean€that€the€Ô_ÔsettlorÔ_Ô€of€a€trust€could€override€all€statutory€and€common€lawÐ œì Ðtrustee€duties,€so€long€as€he€or€she€did€not€attempt€to€relieve€a€òòcorporateóó€trustee€from€theÐ ˆØ Ðprohibited€actions€in€Section€113.052€and€113.053.€€For€example,€the€òòGrizzleóó€opinion€leavesÐ tÄ Ðopen€the€door€to€a€trustee€being€exculpated€for€actions€taken€in€bad€faith€or€with€recklessÐ `° Ðindifference€and€to€flatly€refusing€to€give€any€kind€of€accounting,€if€the€trust€instrument€backsÐ L œ Ðhim€or€her€up.€€Reasonable€minds€differ€about€whether€òòGrizzleóó€can€be€read€to€reach€this€far.€€ForÐ 8 ˆ Ðexample,€Professor€Gerry€Ô_ÔBeyerÔ_Ô,€in€his€case€update€on€òòGrizzle,óó€doesnððt€see€this€as€a€likely€result.€Ð $ t ÐòòSeeóó€www.professorbeyer.com.€€Ð  ` ÐÌThe€òòGrizzleóó€case€also€raises€questions€about€the€propriety€of€including€exculpation€clauses€inÐ è 8  Ðtrusts€created€by€courts€under€Section€142.005€of€the€Property€Code€and€Section€867€of€theÐ Ô$  ÐProbate€Code.Ð À  ÐÌIn€fairly€direct€terms,€the€Supreme€Court€invites€the€Legislature€to€fix€Section€113.059€if€itsÐ ˜è  Ðinterpretation€does€not€reflect€Legislative€intent:€€Ð „Ô  ÐÌà8  à[Ô_ÔT]heÔ_Ô€State's€public€policy€is€reflected€in€its€statutes.€€And€the€Legislature€hasÐ \¬ Ðspoken€on€self„dealing€and€exculpatory€clauses€in€the€Trust€Code.€€TheÐ H˜ ÐLegislature€has€expressly€authorized€the€use€of€exculpatory€clauses,€stating€thatÐ 4„ Ðthey€can€relieve€a€corporate€trustee€from€liability€except€for€certain€narrow€typesÐ  p Ðof€self„dealing€not€at€issue€here.€.€.€.€€We€recognize€that€the€Trust€Code€authorizesÐ  \ Ða€Ô_ÔsettlorÔ_Ô€to€exonerate€a€corporate€trustee€from€almost€all€liability€for€self„dealing,Ð øH Ðand€that€this€broad€authority€can€lead€to€harsh€results.€€But€we€presume€theÐ ä4 ÐLegislature€was€aware€of€this€when€it€enacted€the€Texas€Trust€Act€in€1943€„„€theÐ Ð  Ðpredecessor€to€the€Texas€Trust€Code€„„€and€when€it€subsequently€enacted€the€TrustÐ ¼  ÐCode€effective€January€1,€1984.€€When€the€Texas€Trust€Act€came€into€being,€theÐ ¨ø ÐRestatement€of€Trusts€Sec.€222€had€been€written;€and€when€the€LegislatureÐ ”ä Ðenacted€the€Texas€Trust€Code,€the€Restatement€(Second)€of€Trusts€Sec.€222€hadÐ €Ð Ðbeen€written.€.€.€.€€Yet,€in€addressing€self„dealing,€the€Legislature€chose€„„€in€theÐ l¼ Ð1943€Trust€Act,€in€the€1983€Trust€Code,€and€again€in€the€current€Trust€Code€„„Ð X ¨ Ðonly€to€prohibit€[certain€narrow€action].€€We€therefore€conclude€that€public€policy,Ð D!” Ðas€expressed€by€the€Legislature€in€the€Trust€Code,€does€not€preclude€a€Ô_ÔsettlorÔ_Ô€fromÐ 0"€  Ðrelieving€a€corporate€trustee€from€liability€for€self„dealing,€except€for€what€isÐ #l! Ðspecified€in€sections€113.052€and€113.053.Ð$X"Ð Ð  ÐÌÓ<(Ü Ü4Œ ä <”ìDœôL¤°œX<Ó[Footnotes€omitted.]€Ð à%0!$ ÐÌThe€Legislature€may€be€asked€to€respond€to€òòGrizzleóó€in€at€least€two€areas:Ð ¸'#& ÐÌà  à1.à ` àClarifying€that€Section€113.059€of€the€Trust€Code€does€òònotóó€mean€that€anÐ )à$( Ðexculpation€provision€which€purports€to€protect€a€trustee€from€gross€negligence€or€willfulÐ |*Ì%) Ðmisconduct€is€enforceable.€€The€Legislature€may€wish€to€go€further€than€that,€but€it€should€atÐ h+¸&* Ðleast€make€this€clear.Ð T,¤'+ Їà  à2.à ` àMaking€it€difficult€or€impossible€for€courts€to€stick€exculpation€clauses€in€trustsÐ ° Ðcreated€under€Section€142.005€of€the€Texas€Property€Code€of€Section€867€of€the€Texas€ProbateÐ œì ÐCode.€€These€types€of€court„created€trusts€are€for€the€protection€of€minors€and€incapacitatedÐ ˆØ Ðpersons€and€there€is€no€public€policy€reason€why€the€courts€should€routinely€stick€exculpationÐ tÄ Ðprovisions€in€them.Ð `° ÐÌà@ã ã ìàÔ‡„Ï©„XXªDÔò òÔ  ÔGuardianship€Law€ChangesÔ utqµÔó óÔ#†XªDX„„Ï©Oµ#ԈР8 ˆ ÐÌÓ  Óò òÔ  ÔÔ‡¼æ0»XXªDÔInventory,€Monthly€Allowance€and€Investment€PlanÔ#†XªDX»¼æ0¶#ÔÔ €tõµÔó óÐ „ Ô ÐÌÓ  Óòòò òÔ% ‡? ÔÔ%†?²¶Ôó óóóApproached€logically,€it€is€clear€that,€when€a€person€first€becomes€guardian€of€the€estate€of€aÐ „Ô  Ðward,€he€or€she€has€to€do€certain€things€to€fulfill€the€fiduciary€duties€owed€to€the€Ô_Ôward.ð  ðÔ_Ô€At€aÐ pÀ  Ðminimum,€the€new€guardian€needs€to€figure€out€what€the€assets€of€the€ward€are,€what€it's€going€toÐ \¬  Ðtake€to€care€for€the€ward,€and€what€assets€should€be€retained€and€what€assets€should€be€sold€andÐ H˜  Ðreinvested€in€order€to€properly€care€for€the€ward's€Ô_Ôestate.ð  ðÔ_Ô€In€some€cases,€however,€guardians€don'tÐ 4„  Ðget€off€on€the€right€Ô_Ôfoot.ð  ðÔ_Ô€They€step€into€their€role€as€guardian€without€giving€conscious€thoughtÐ  p Ðto€some€or€all€of€these€Ô_Ôresponsibilities.ð  ðÔ_Ô€Of€course,€their€attorneys€can€and€should€help€them€getÐ  \ Ðon€the€right€Ô_Ôpath.ð  ðÔ_Ô€However,€the€current€Probate€Code€scheme€for€commencement€of€aÐ øH Ðguardianship€--€which€is€modeled€after€the€scheme€for€decedent's€estates€--€does€not€do€much€toÐ ä4 ÐÔ_Ôhelp.ð  ðÔ_Ô€Currently,€the€deadline€for€filing€an€inventory€is€90€days€after€letters€of€guardianship€areÐ Ð  ÐÔ_Ôissued.ð  ðÔ_Ô€Ninety€days€may€be€an€appropriate€time€in€a€decedent's€estate,€where€the€subject€of€theÐ ¼  Ðestate€proceeding€is€dead€and€needs€no€immediate€care,€but€it€may€be€too€long€to€wait€to€get€onÐ ¨ø Ðtrack€with€caring€for€the€Ô_Ôward.ð  ðÔ_Ô€Also,€there€currently€is€no€requirement€for€the€guardian€to€goÐ ”ä Ðthrough€the€ward's€investments€and€report€to€the€court€on€what€should€be€sold€and€what€should€beÐ €Ð ÐÔ_Ôretained.ð  ðÔ_Ô€True,€annual€accounts€are€due€each€year€and€there€are€procedures€in€the€Probate€CodeÐ l¼ Ðfor€the€sale€of€assets€with€permission€of€the€court,€but€the€Probate€Code€does€not€make€clear€theÐ X¨ Ðguardian's€duty€to€evaluate€the€assets€of€the€ward€and€make€determinations€regarding€theÐ D” Ðappropriateness€of€investments€given€the€condition€and€need€of€the€ward.Ð 0€ ÐÌÔ_ÔREPTLÔ_Ô€proposes€overhauling€the€procedure€for€new€guardians€of€the€Ô_Ôestate.ð  ðÔ_Ô€Under€the€Ô_ÔREPTLÔ_ÔÐ  X Ðproposal,€Texas€Probate€Code€ðð729(a)€would€be€amended€to€shorten€the€deadline€for€filing€theÐ ô D Ðinventory,€appraisement€and€list€of€claims€in€a€guardianship€of€the€estate€from€90€days€to€30€days,Ð à!0 Ðunless€a€longer€period€is€granted€by€the€Ô_Ôcourt.ð  ðÔ_Ô€This€will€require€the€guardian€to€jump€to€Ô_Ôit.ð  ðÔ_Ô€InÐ Ì"  Ðmany€cases,€it€will€require€the€guardian€to€ask€for€an€extension€of€the€deadline.Ð ¸#! ÐÌThe€reason€the€Ô_ÔREPTLÔ_Ô€proposal€advances€the€inventory€deadline€is€that€Ô_ÔREPTLÔ_Ô€also€proposesÐ %à # Ðamending€Section€777€of€the€Probate€Code€to€require€the€filing€of€an€application€for€setting€aÐ |&Ì!$ Ðmonthly€allowance€within€30€days€of€the€date€letters€are€granted,€unless€that€deadline€isÐ h'¸"% ÐÔ_Ôextended.ð  ðÔ_Ô€(The€amendment€also€anticipates€that€the€request€for€the€monthly€allowance€may€beÐ T(¤#& Ðincluded€in€the€original€guardianship€application,€since€in€many€cases€the€applicant€knows€whatÐ @)$' Ðis€in€the€ward's€estate€at€that€time€and€has€a€pretty€good€idea€of€what€expenditures€will€be.)Ô_Ôð  ðÔ_ÔÐ ,*|%( ÐSection€777€has€long€been€a€trap€for€unwary€Ô_Ôguardians.ð  ðÔ_Ô€It€currently€provides€that€the€guardianÐ +h&) Ðcannot€expend€òòcorpus€óóof€the€ward's€estate€for€the€ward's€care€without€court€permission,€andÐ ,T'* Ðguardians€who€violate€this€rule€--€even€in€good€faith€--€are€limited€to€$5,000€per€year€inÐ ° Ðreimbursements€(except€for€payments€to€nursing€homes).Ô_Ôð  ðÔ_Ô€Thus,€under€the€current€statute€aÐ œì Ðguardian€can€be€appointed€and€think€that€he€or€she€is€absolutely€doing€the€right€thing€to€pay€forÐ ˆØ Ðthe€care€of€the€ward,€but€if€the€cost€of€that€care€exceeds€the€income€of€the€estate€by€more€thanÐ tÄ Ð$5,000,€the€guardian€can€(must?)€be€held€personally€Ô_Ôliable.ð  ðÔ_Ô€Ô_ÔREPTLÔ_Ô's€proposed€amendment€toÐ `° ÐSection€777€closes€that€trap€in€two€Ô_Ôways.ð  ðÔ_Ô€First,€if€the€guardian€is€required€to€address€the€monthlyÐ L œ Ðallowance€issue€within€30€days€of€appointment,€he€or€she€is€likely€to€get€the€appropriate€courtÐ 8 ˆ Ðpermission€to€expend€corpus€if€Ô_Ônecessary.ð  ðÔ_Ô€Second,€the€proposed€amendment€eliminates€theÐ $ t Ð$5,000€rule,€but€requires€the€guardian€to€prove€by€clear€and€convincing€evidence€that€any€fundsÐ  ` Ðexpended€over€and€above€the€monthly€allowance€are€reasonable€and€proper€and€would€have€beenÐ ü L  Ðapproved€by€the€court.Ð è 8  ÐÌThe€third€part€of€Ô_ÔREPTLÔ_Ô's€proposal€involves€the€investment€of€the€ward's€Ô_Ôestate.ð  ðÔ_Ô€Section€857Ð À  Ðwould€be€amended€to€permit€the€guardian€to€retain€without€liability€any€asset€of€the€ward's€estateÐ ¬ü  Ðfor€a€period€of€one€year€after€Ô_Ôqualifying.ð  ðÔ_Ô€Under€Section€858,€within€12€months€of€qualifying€asÐ ˜è  Ðguardian€of€the€estate,€the€guardian€is€required€to€file€an€investment€plan€or€apply€to€the€court€forÐ „Ô  Ðrelief€from€the€duty€to€invest€the€ward's€Ô_Ôassets.ð  ðÔ_Ô€(As€this€was€written,€a€change€was€beingÐ pÀ Ðconsidered€to€extend€this€deadline€from€12€months€after€qualifying€as€guardian€to€the€due€date€ofÐ \¬ Ðthe€first€annual€account,€so€that€the€financial€tasks€of€preparing€the€first€annual€account€and€theÐ H˜ Ðinvestment€plan€could€be€coordinated.)Ô_Ôð  ðÔ_Ô€Section€859€would€allow€the€guardian€(with€courtÐ 4„ Ðpermission)€to€delegate€investment€authority,€in€a€provision€which€is€similar€to€the€delegationÐ  p Ðprovision€in€the€Texas€Trust€Code€(Section€113.060).Ô_Ôð  ðÔ_Ô€Assuming€that€the€guardian€does€notÐ  \ Ðdelegate€investment€authority,€the€investment€plan€tells€the€court€which€assets€the€guardian€thinksÐ øH Ðshould€be€sold,€which€assets€should€be€retained€and€how€the€guardian€proposes€to€invest€theÐ ä4 ÐÔ_Ôassets.ð  ðÔ_Ô€The€Ô_ÔREPTLÔ_Ô€proposal€retains€the€safe-harbor€guardianship€investments€found€in€SectionÐ Ð  Ð855€of€the€current€law€--€FDIC-insured€accounts,€U.€S.€government€obligations,€etc.€--€althoughÐ ¼  Ðin€the€reorganization€of€the€sections€under€the€Ô_ÔREPTLÔ_Ô€proposal€the€list€of€these€safe-harborÐ ¨ø Ðinvestments€moves€to€Section€856.Ô_Ôð  ðÔ_Ô€Thus,€just€because€the€guardian€is€required€to€file€anÐ ”ä Ðinvestment€plan€doesn't€mean€that€he€or€she€has€to€become€a€stock€wiz.Ð €Ð ÐÌIf€these€measures€pass,€guardians€of€the€estate€and€their€lawyers€will€have€more€work€to€do€at€theÐ X ¨ Ðoutset€of€guardianships,€but€hopefully€they€will€spend€less€time€explaining€to€the€court€why€theyÐ D!” Ðfailed€to€do€something€when€the€ox€is€in€the€Ô_Ôditch.ð  ðÔ_Ô€On€the€other€hand,€the€guardianship€processÐ 0"€  Ðalready€is€complex€and€costly,€and€this€is€likely€to€make€it€still€more€complex€and€costly.Ð #l! ÐÌà@ŽŽìàò òÔ€¼æ0»XXªDÔÔ  ÔIn„Patient€Psychiatric€CareÔ €t×Ôó óÔ€XªDX»¼æ0ԈРô$D # ÐÌò òòòÔ% ‡E ÔÔ%†EØÔóóó óCurrently€Section€767(4)€of€the€Texas€Probate€Code€gives€the€guardian€of€the€person€the€powerÐ ô&D"% Ðto€consent€to€medical,€psychiatric,€and€surgical€treatment€"other€than€the€in-patient€psychiatricÐ à'0#& Ðcommitment€of€the€ward."Ô_Ôð  ðÔ_Ô€Similarly,€Section€770(b)€of€the€Probate€Code€prohibits€the€guardianÐ Ì($' Ðfrom€"voluntarily€Ô_Ôadmit[tingÔ_Ô]€an€incapacitated€person€to€a€public€or€private€in‑patientÐ ¸)%( Ðpsychiatric€facility."Ô_Ôð  ðÔ_Ô€The€only€way€to€get€a€ward€who€does€not€want€to€go€to€an€in-patientÐ ¤*ô%) Ðpsychiatric€facility€into€that€facility€is€under€the€mental€health€commitment€Ô_Ôprocedures.ð  ðÔ_ԀР+à&* ÐÐ |,Ì'+ ÐIt€is€frustrating€for€the€guardian€of€the€person€of€a€ward€who€periodically€needs€in-patientÐ ° Ðtreatment€not€to€be€able€to€obtain€that€treatment€for€the€ward€without€resorting€to€theÐ œì Ðcommitment€Ô_Ôprocedures.ð  ðÔ_Ô€On€the€other€hand,€the€civil€rights€of€the€ward€are€at€Ô_Ôstake.ð  ðÔ_Ô€This€is€aÐ ˆØ Ðhot-button€issue€for€advocates€of€the€rights€of€the€mentally€ill.Ð tÄ ÐÌÔ_ÔRETPLÔ_Ô€proposes€a€new€procedure€under€new€Sections€573.003€and€573.004€of€the€Texas€HealthÐ L œ Ðand€Safety€Ô_ÔCode.ð  ðÔ_Ô€Under€this€procedure,€in€lieu€of€an€application€for€emergency€detention€underÐ 8 ˆ Ðeither€Section€573.002€or€573.011,€a€guardian€of€the€person€of€an€adult€incapacitated€individual,Ð $ t Ðòòwho€has€previously€received€court-ordered€inpatient€mental€health€services,óó€acting€under€currentÐ  ` Ðletters€of€guardianship€may€transport€his€ward€to€an€inpatient€mental€health€facility€if€the€ward€isÐ ü L  Ðmentally€ill€and€because€of€that€mental€illness€there€is€a€substantial€risk€of€serious€harm€to€theÐ è 8  Ðward€or€to€others€unless€the€ward€is€immediately€Ô_Ôrestrained.ò òð  ðó óImmediatelyÔ_Ô€after€transporting€theÐ Ô$  Ðward,€the€guardian€would€be€required€to€file€an€application€for€detention.Ð Ä  ÐÌÓ  Óòòò òÔ% ‡G ÔÔ  ÔOther€Guardianship€ChangesÔ in—áÔÔ%†GŠáÔó óóóÐ œì  ÐÌÓ  ÓIn€the€past€three€sessions,€the€majority€of€probate,€trust€and€estate€planning€legislation€has€beenÐ  ð Ðguardianship-related,€and€this€session€promises€to€continue€that€Ô_Ôtrend.ð  ðÔ_Ô€Here€are€otherÐ ŒÜ Ðguardianship€proposals€included€in€the€Ô_ÔREPTLÔ_Ô€Ô_Ôpackage.ð  ðÔ_Ô€Interested€parties€other€than€Ô_ÔREPTLÔ_ÔÐ xÈ Ðpush€for€guardianship€changes,€so€there€probably€will€be€many€more€proposals€than€those€listedÐ d´ Ðbelow.Ð P  ÐÌò òJurisdictional€changes€--€ó óSome€proposals€will€tinker€with€Probate€Code€Sections€606,€607€andÐ (x Ð608€this€session€as€prior€changes€to€the€jurisdiction€of€probate€courts€are€corrected€or€Ô_Ôexpanded.ð  ðÔ_ÔÐ h ÐNone€of€these€are€likely€to€be€earth-shattering,€but€they€may€affect€the€filing€of€cases€in€statutoryÐ T Ðprobate€courts€or€the€transfer€of€cases€to€statutory€probate€courts.Ð ð@ ÐÌò òGuardianship€applications€and€citations€--€ó óÔ_ÔREPTLÔ_Ô€proposes€changing€Probate€Code€SectionÐ È Ð682€to€require€the€guardianship€application€to€give€the€names€and€addresses€of€the€ward's€next€ofÐ ¸ Ðkin€if€known€and€if€the€ward's€spouse,€parents€and€siblings€and€children€are€all€Ô_Ôdeceased.ð  ðÔ_Ô€TheÐ ¤ô Ðproposal€also€would€amend€Section€633€to€provide€that€the€applicant€(not€the€clerk)€must€mailÐ  à Ðnotice€to€various€persons€related€to€or€interested€in€the€ward,€and€it€adds€the€next€of€kin€fromÐ |!Ì ÐSection€682€to€the€list€of€persons€entitled€to€Ô_Ônotice.ð  ðÔ_Ô€Ô_ÔREPTLÔ_Ô€also€proposes€amending€SectionÐ h"¸  Ð665B€to€authorize€the€court€to€pay€from€the€ward's€estate€the€attorneys'€fees€of€persons€who€applyÐ T#¤! Ðfor€a€guardianship€and€ask€for€someone€other€than€themselves€to€be€appointed€Ô_Ôguardian.ð  ðÔ_ÔÐ @$" ÐCurrently€Section€665B€permits€payment€of€attorneys'€fees€only€for€persons€who€apply€to€haveÐ ,%| # Ðthemselves€appointed€guardian.€Ô_ÔREPTLÔ_Ô€also€proposes€amending€Section€687(c)€to€permitÐ &h!$ Ðdeterminations€of€incapacity€for€mentally€retarded€persons€to€be€based€on€MH-Ô_ÔMRÔ_Ô€reports€noÐ 'T"% Ðmore€than€24€months€old,€rather€than€6€months€old€as€is€currently€the€Ô_Ôcase.ð  ðÔ_Ô€No€change€isÐ ð'@#& Ðproposed€for€the€physician's€certificate€requirement€for€proposed€wards€who€are€not€mentallyÐ Ü(,$' Ðretarded,€so€the€current€120-day€requirement€would€remain€for€them.Ð È)%( ÐÌò òBonds€of€Guardians€of€the€Person€--ó ó€Ô_ÔREPTLÔ_Ô€proposes€amending€Section€702(b)€to€give€theÐ  +ð&* Ðcourt€the€discretion€not€to€require€a€bond€of€a€guardian€òòof€the€person€onlyóó€if€that€person€is€theÐ ,à'+ Ðparent€or€sibling€of€the€ward€who€in€the€opinion€of€the€Court€has€demonstrated€a€history€ofÐ ° Ðconsistent€attentiveness€and€responsibility€towards€the€ward.Ð œì ÐÌò òQualifying€Income€Trusts€--€ó óÔ_ÔREPTLÔ_Ô€proposes€amending€Sections€767€and€774€to€permit€aÐ tÄ Ðguardian€to€establish€a€Qualified€Income€Trust€pursuant€to€Section€42€Ô_ÔUSCAÔ_Ô€ðð1396p(d)(4)(B)€forÐ d´ Ðthe€sole€purpose€of€qualifying€the€ward€for€government€benefits€and€direct€the€wardððs€income€toÐ P   Ðbe€paid€directly€to€such€Qualified€Income€Trust€upon€application€and€order€of€the€court.Ð < Œ ÐÌò òNo€Guardian€Required€When€There's€an€867€Trust€--€ó óÔ_ÔREPTLÔ_Ô€proposes€eliminating€theÐ  d Ðrequirement€in€Section€868A€that€either€a€guardian€of€the€estate€or€guardian€of€the€person€remainÐ  T  Ðwhen€the€court€has€authorized€the€creation€of€a€guardianship€management€trust€under€Section€867Ð ð @  Ðof€the€Probate€Code.Ð Ü,  ÐÌò òOther€Cleanups€--€ó óÔ_ÔREPTLÔ_Ô€proposes€amending€Section€745(c)€of€the€Probate€Code€to€clarify€thatÐ ´  Ðthe€guardianship€of€the€estate€of€a€minor€ward€may€be€terminated€if€it€falls€below€$100,000€inÐ ¤ô  Ðassets,€and€the€assets€then€can€be€held€by€the€county€Ô_Ôclerk.ð  ðÔ_Ô€Conflicting€legislation€in€2001€madeÐ à  Ðit€unclear€if€the€limit€was€$50,000€or€$100,000.Ô_Ôð  ðÔ_Ô€Also,€Ô_ÔREPTLÔ_Ô€proposes€additions€to€Section€883Ð |Ì Ð(regarding€the€management€of€community€property€when€one€spouse€is€incapacitated)€to€make€itÐ h¸ Ðclear€that€creditors'€rights€are€not€affected,€that€no€partition€of€community€property€occurs€andÐ T¤ Ðthat€the€property€managed€by€the€guardian€is€the€sole€management€community€property€of€theÐ @ Ðincapacitated€spouse€while€the€property€managed€by€the€non-incapacitated€spouse€is€the€soleÐ ,| Ðmanagement€community€property€of€that€spouse€(in€cases€where€management€of€the€communityÐ h Ðproperty€is€divided€between€the€spouse€and€a€guardian).Ð T ÐÌò òInterference€with€a€Guardian's€Ô_ÔPossessoryÔ_Ô€Right€--€ó óÔ_ÔREPTLÔ_Ô€proposes€adding€Section€25.10€toÐ Ü, Ðthe€Penal€Code€to€make€it€a€crime€to€interfere€with€a€guardian€of€the€person's€Ô_ÔpossessoryÔ_Ô€rightÐ Ì Ðover€a€ward.Ð ¸ ÐÌÓ  ÓÔ‡„Ï©„XXªDÔò òÔ  ÔPowers€of€AttorneyÔ t€hùÔó óòòÔ#†XªDX„Ï©Fù#ÔóóÐ à ÐÓ  ÓÌHB€710,€sponsored€by€Rep.€Ô_ÔSenfroniaÔ_Ô€Thompson,€would€make€significant€changes€to€theÐ Ü , Ðstatutory€durable€power€of€attorney€form€and€to€the€laws€governing€powers€of€attorney.Ð È! ÐÌIn€2001,€Rep.€Thompson€authored€HB€1883.€The€version€that€passed€the€House€that€year€wouldÐ  #ð! Ðhave€made€dramatic€changes€to€power€of€attorney€practice.€Due€largely€to€opposition€fromÐ Œ$Ü" Ðprobate€lawyers€and€banks,€HB€1883€was€trimmed€back€to€address€agent€accounting€issues,€butÐ x%È # Ðno€form€changes€were€made.€Rep.€Thompson,€former€chair€of€the€House€Judicial€AffairsÐ d&´!$ ÐCommittee,€has€been€conducting€hearings€during€the€period€between€sessions€on€the€power€ofÐ P' "% Ðattorney€issue,€and€HB€710€apparently€is€the€result.Ð <(Œ#& ÐÌFollowing€is€a€table€comparing€the€version€of€HB€1883€that€passed€the€House€last€session€andÐ *d%( ÐHB€710€as€introduced€by€Rep.€Thompson:òòò òÐ +P&) ÐÐ ì+<'* ÐÓ  ÓComparison€of€Power€of€Attorney€Legislationó óóóòòÐ ° ÐóóÌÔ*’ƒ"#° îdd Xdd Xdd X°(#°(#’ÔÔ,SddÔÔ,'dd ÔÔ,–dd ÔÔ,h dd ÔÔ+  Ô€€€€€Ð )´´ €€„„)Ðòòòòò òIssueó óóóóó€€€€Ð 'h" „„'Ðòòòòò ò€€€2003's€HB€710Ð h Ѐ€€€as€Introducedó óóóóó€€€€Ð 'Ð " „„'Ðòòòòò ò€2001's€HB€1883€asÐ h ÐPassed€by€the€Houseó óóóóó€€Ð 'Ð " „„'Ðòòòòò òCommentsó óóóóó€€€€€€€€Ð ,"h"  „„,Ðòò€€€€Power€of€attorney€mustÐ P    Ðbe€witnessedóóÐ ' Z " „„'ÐòòYes,€2€witnessesóóÐ 'P   " „„'ÐòòYes,€1€witnessóóÐ 'P   " „„'Ðð  ð€€€€€€€€Ð 'P    „„'ÐòòAbsolute€prohibition€ofÐ X ¨ Ðself-dealingóó€€€€Ð ' b" „„'ÐòòYesó󀀀Р'X ¨" „„'Ðòòóó€€€Ô‡ôLòXXªDÔNo€Ô#†XªDXòôLÑ#ÔÐ 'X ¨" „„'ÐòòThis€apparently€is€intended€to€beÐ X ¨ Ðnonwaivable,€since€it€is€€in€the€statuteÐ  b Ðand€not€just€in€the€statutory€form.€ThisÐ Ì  Ðwould€appear€to€€prohibit€gifts€to€theÐ † Ö Ðagent,€even€if€he/she€is€receiving€onlyÐ @  Ðhis/her€per€stirpes€share€of€annualÐ úJ  Ðexclusion€gifts.€€Other€self-dealingÐ ´  Ðtransactions€which€may€be€consideredÐ n¾  Ðprohibited:€€Ð (x  Ðððà0 | àShared€living€expenses€if€theÐ â2  Ðprincipal€lives€with€agentМì |Ä"|Ä" Ѐ€€€€€Ð V¦ Ðððà0 | àPayment€of€allowance€toÐ ` Ðagent€for€recurring€itemsÐÊ|Ä"|Ä" Ѐ€€€€€Ð „Ô  Ðððà0 | àReimbursement€of€agent€forÐ >Ž! Ðpurchase€of€things€for€€€€€€Ð øH" Ðprincipal€€€€€€€€óó€€€€€€€€Ð 1'²#|Ä"|Ä" „„1Ðòò€€€€Agent€subject€to€TexasÐ 2‚$ ÐTrust€Code€trusteeÐ ì<% Ðstandards€in€€managingÐ ¦ö& Ðpropertyóó€€€€Ð '`°'" „„'ÐòòYesóó€€€€Ð '2‚(" „„'ÐòòNoóó€€€€Ð '2‚)" „„'ÐòòThis€apparently€is€intended€to€beÐ 2‚* Ðnonwaivable,€since€it€is€in€the€statuteÐ ì<+ Ðand€not€just€in€the€statutory€form.€TheÐ ¦ö, Ðtrustee€standard€may€be€appropriateÐ `°- Ðfor€some€things,€but€it€could€be€aÐ j. Ðproblem€for€others.€For€€€€€example,€ifÐ Ô$/ Ðthe€agent€just€does€one€thing€for€theÐ ŽÞ0 Ðprincipal,€is€he/she€€liable€for€applyingÐ H˜1 Ðthe€trustee€standard€to€all€of€theÐ R2 Ðprincipalððs€assets?€€€When€does€theÐ ¼ 3 Ðtrustee€standard€start€applying?€If€theÐ v Æ4 ÐUniform€Prudent€€Investor€Act€passes,Ð 0!€5 Ðwill€the€agent€be€obligated€to€sellÐ ê!:6 Ðassets€of€the€principal€which€the€agentÐ ¤"ô7 Ðbelieves€are€inappropriate?óó€Ð '^#®8 „„'Ðòò€€€€Specific€powersÐ Þ$. 9 Ðinitialed,€not€crossed€outó󀀀Р˜%è : ÐÐ '„&Ô!;" „„'ÐòòYesóó€€€€Ð 'Þ$. <" „„'ÐòòYesóó€€€€Ð 'Þ$. =" „„'Ðð  ð€€€€€€€Ð 'Þ$. > „„'ÐòòSeparate€power€as€toÐ (T#? Ðtransactions€involvingÐ ¾($@ Ðhomesteadóó€€€€Ð 'x)È$A" „„'ÐòòYesóó€€€€Ð '(T#B" „„'ÐòòYesóó€€€€Ð '(T#C" „„'Ðð  ð€€€€€€€€Ð '(T#D „„'ÐòòDefault€$50,000Ð ø*H&E Ðtransaction€limit€unlessÐ ²+'F Ðspecific€option€chosenóó€€€€Ð 'l,¼'G" „„'ÐòòYesóó€€€€Ð 'ø*H&H" „„'ÐòòNoóó€€€€Ð 'ø*H&I" „„'Ðð  ð€€€€€€€€â âÐ 'ø*H&J „„'ÐòòNo€ð ðall€of€the€aboveððÐ Ld Ðâ âoptionóó€€€€Ð '" „„'ÐòòYes€(i.e.,€there€is€noÐ Ld Ðð ðall€of€the€aboveððÐ  Ðoption)óó€€€€Ð 'ÀØ" „„'ÐòòNo€(i.e.,€there€was€anÐ Ld Ðð ðall€of€the€aboveððÐ  Ðoption)óó€€€€Ð 'ÀØ" „„'ÐòòThis€may€serve€the€purpose€of€theÐ Ld  Ðproponents€of€the€bill,€in€that€theÐ   Ðprincipal€will€have€to€initial€in€16Ð ÀØ  Ðdifferent€places€in€order€to€grant€theÐ z ’  Ðbroadest€authority.€The€principal€willÐ 4 L  Ðhave€ample€opportunity€€to€questionÐ î  Ðhimself/herself€about€the€propriety€ofÐ ¨ À Ðauthorizing€the€agent€to€do€certainÐ b z Ðthings.€Of€course,€it€certainly€wouldÐ  4 Ðmake€executing€statutory€€durableÐ Ö î ÐPOAs€a€nuisance€in€the€vast€majorityÐ ¨ Ðof€cases€where€the€principal€is€goingÐ Jb Ðto€want€the€agent€to€have€the€broadestÐ   Ðpossible€authority.óó€€€€€€€€Ð '¾Ö  „„'ÐòòPossible€to€make€statutoryÐ >V  Ðdurable€POA€a€generalÐ ø  Ðpower€of€€€€€attorneyÐ ²Ê  Ðwithout€adding€languageó󀀀Рl„  ÐÐ 'Xp" „„'Ðòò€€€€Yes,€although€youÐ >V  Ðmust€initial€in€15Ð ø  Ðplaces€to€do€so.óó€€€€Ð '²Ê " „„'ÐòòNoóó€€€€Ð '>V " „„'Ðð  ð€€€€€€€€Ð '>V  „„'ÐòòOpportunity€on€statutoryÐ Øð! Ðform€to€designate€personsÐ ’ª" Ðwho€can€€€€€demandÐ Ld# Ðaccounting.óó€€€€Ð '$" „„'ÐòòYesóó€€€€Ð 'Øð%" „„'ÐòòNoóó€€€€Ð 'Øð&" „„'Ðð  ð€€€€€€€€Ð 'Øð' „„'ÐòòRequired€powers€ofÐ †ž( Ðattorney€to€be€recordedó󀀀Р'@X)" „„'ÐòòNoóó€€€€Ð '†ž*" „„'ÐòòYesóó€€€€Ð '†ž+" „„'Ðð  ð€€€€€€€€Ð '†ž, „„'ÐòòRequired€recording€andÐ ÀØ- Ðnotice€to€agent€in€order€toÐ z’. Ðrevokeóó€€€€Ð '4L/" „„'ÐòòNoóó€€€€Ð 'ÀØ0" „„'ÐòòYesóó€€€€Ð 'ÀØ1" „„'Ðð  ð€€€€€€€€Ð 'ÀØ2 „„'Ðòò11-day€waiting€period€forÐ ´Ì3 Ðreal€estate€transactionsó󀀀Р'n †4" „„'ÐòòNoóó€€€€Ð '´Ì5" „„'ÐòòYesóó€€€€Ð '´Ì6" „„'Ðð  ð€€€€€€€€Ð '´Ì7 „„'ÐòòRequired€disclosureÐ î!8 Ðstatement€to€be€signed€byÐ ¨"À9 Ðprincipal€€€€€prior€toÐ b#z: Ðsigning€statutory€durableÐ $4; ÐPOAóó€€€€Ð 'Ö$î<" „„'ÐòòNoóó€€€€Ð 'î!=" „„'ÐòòYesóó€€€€Ð 'î!>" „„'ÐÔ_Ôð  ðÔ_Ô€€Ð"î!? "ÐÓ  ÓÌThere€are€some€problems€with€HB€710,€but€not€as€many€as€were€in€the€House€version€of€HBÐ Þ&ö@ Ð1883€last€session.€The€good€news€is€that€there€is€time€this€session€to€work€with€the€proponents€ofÐ Ê'â A ÐHB€710€to€come€up€with€a€bill€that€meets€most€of€their€objectives€without€ruining€powers€ofÐ ¶(Î!B Ðattorney€as€an€estate€planning€option€for€the€vast€majority€of€people.€€Last€session€the€billÐ ¢)º"C Ðappeared€out€of€nowhere€as€a€floor€amendment€in€the€House€late€in€the€session,€and€there€wasÐ Ž*¦#D Ðlittle€time€to€do€anything.Ð z+’$E ÐÐ f,~%F ÐÓ  Óò òòòÔ% ‡L ÔóóÔ‡„Ï©„XXªDÔÔ  ÔProbate€Law€ChangesÔ t€¿ÔÔ#†XªDX„„Ï© #ÔòòÔ%†LÔóóó óÐ ° ÐÌò òòòÔ% ‡N ÔÔ‡¼æ0»ÐXªDÔóóÔ  ÔPowers€of€AppointmentÔ t€zÔòòÔ#†XªDXH¼æ0X#ÔÔ%†NKÔóóó óÐ üL ÐÓ  ÓÐ ÐSB€576€and€SB€577,€filed€by€Senator€Chris€Harris,€R„Arlington,€make€two€changes€Ô_ÔwhiichÔ_Ô€affectÐ üL Ðpowers€of€Ô_Ôappointment.ð  ðÔ_Ô€First,€SB€577€proposes€adding€Section€58c€to€the€Probate€Code,Ð è 8 Ðproviding€that€a€residuary€clause€in€a€will,€or€a€will€making€general€disposition€of€all€of€theÐ Ô $ Ðtestator's€property,€does€not€exercise€a€power€of€appointment€held€by€a€testator€unless€specificÐ À  Ðreference€is€made€to€the€power€or€there€is€some€other€indication€of€intention€to€include€theÐ ¬ ü Ðproperty€subject€to€the€Ô_Ôpower.ð  ðÔ_Ô€Second,€SB€576€proposes€adding€Section€181.081€to€the€TexasÐ ˜ è  ÐProperty€Code,€providing€that,€unless€contrary€intent€is€evidenced€by€the€Ô_Ôinstrument,ð  ðÔ_Ô€a€doneeÐ „Ô  Ðwho€holds€a€power€of€appointment€may€(1)€make€appointments€of€present€or€future€interests€orÐ pÀ  Ðboth;€(2)€make€appointments€with€conditions€and€limitations;€(3)€make€appointments€withÐ \¬  Ðrestraints€on€alienation€upon€the€appointed€interests;€(4)€make€appointments€of€interests€to€aÐ H˜  Ðtrustee€for€the€benefit€of€one€or€more€objects€of€the€power;€(5)€make€appointments€that€create€inÐ 4„  Ðthe€object€of€the€power€additional€powers€of€appointment€to€permissible€objects€of€the€power€ofÐ  p Ðappointment€pursuant€to€which€such€powers€are€created;€(6)€if€the€donee€could€appoint€outrightÐ  \ Ðto€the€object€of€a€power,€make€appointments€that€create€in€the€object€of€the€power€additionalÐ øH Ðpowers€of€appointment€and€such€powers€of€appointment€may€be€exercisable€in€favor€of€suchÐ ä4 Ðpersons€or€entities€as€the€person€creating€such€power€may€direct,€even€thought€the€objects€of€suchÐ Ð  Ðpowers€of€appointment€may€not€have€been€permissible€objects€of€the€power€of€appointmentÐ ¼  Ðpursuant€to€which€such€powers€are€created;€and€(7)€make€appointments€that€create€any€rightÐ ¨ø Ðexisting€under€common€Ô_Ôlaw.ð  ðÔ_Ô€Most€or€all€of€these€points€are€covered€in€well-drafted€instruments,Ð ”ä Ðand€to€a€large€extent€this€may€just€be€a€restatement€of€the€common€Ô_Ôlaw.ð  ðÔ_Ô€In€fact,€the€effective€dateÐ €Ð Ðprovisions€state€that€these€are€merely€clarifications€of€existing€Ô_Ôlaw.ð  ðÔ_Ô€In€any€event,€if€the€proposalsÐ l¼ Ðpass,€these€issues€will€be€addressed€with€statutory€certainty.Ð X¨ ÐÌÓ  Óòòò òÔ% ‡O ÔÔ‡¼æ0»ÐXªDÔóóÔ  ÔContracts€Affecting€WillsÔ t€+ÔòòÔ#†XªDXH¼æ0á*#ÔÔ%†OÔ*Ôó óóóÐ 0€ ÐÌÓ  ÓIn€1979,€the€Texas€Legislature€added€Section€59A€to€the€Probate€Ô_ÔCode.ð  ðÔ_Ô€This€legislation€wasÐ 0 € Ðintended€to€deal€with€two€Ô_Ôproblems:ð  ðÔ_Ô€First,€and€foremost,€was€the€problem€of€joint€Ô_Ôwills.ð  ðÔ_Ô€TheÐ !l Ðpractice€of€having€a€husband€and€wife€sign€a€joint€will€has€mostly€died€out,€but€it€used€to€be€quiteÐ "X ÐÔ_Ôcommon.ð  ðÔ_Ô€These€wills€led€to€litigation€over€whether€the€joint€will€was€contractual€--€whether€theÐ ô"D  Ðsurviving€spouse€was€free€to€adopt€a€different€Ô_ÔdispositiveÔ_Ô€plan€or€was€stuck€with€the€one€in€theÐ à#0! Ðjoint€Ô_Ôwill.ð  ðÔ_Ô€Section€59A€requires€a€joint€will€to€say€that€it€is€contractual,€and€its€enactment€in€1979Ð Ì$ " Ðhas€effectively€eliminated€litigation€in€this€Ô_Ôarea.ð  ðÔ_Ô€Second€was€the€problem€of€Ô_ÔcaregiverÔ_ÔÐ ¸%!# ÐÔ_Ôarrangements:ð  ðÔ_Ô€an€alleged€oral€agreement€that€"if€you€move€in€and€take€care€of€me€until€I€die,€IÐ ¤&ô!$ Ðpromise€to€leave€you€my€house."Ô_Ôð  ðÔ_Ô€òòSee€óóÔ_ÔJohansonÔ_Ô's€Texas€Probate€Code€Annotated€(2002),Ð 'à"% ÐCommentary€to€Section€59A.Ð |(Ì#& ÐÌSection€59A€was€modeled€after€Section€2-514€of€the€Uniform€Probate€Code,€but€it€left€out€aÐ T*¤%( Ðsignificant€Ô_Ôprovision:ð  ðÔ_Ô€that€a€contract€to€make€a€will€or€not€to€revoke€a€will€could€be€included€in€aÐ @+&) Ðwriting€signed€by€the€decedent€and€evidencing€a€contract€but€not€contained€in€the€will€Ô_Ôitself.ð  ðÔ_Ô€TheÐ ,,|'* Ðwidespread€use€of€marital€property€agreements€which€has€sprung€up€in€Texas€since€1979€hasÐ ° Ðillustrated€the€need€for€this€addition€to€Section€59A.ð  ð€It€is€common€for€a€testamentary€conveyanceÐ œì Ðto€be€a€material€part€of€a€pre-marital€or€post-marital€Ô_Ôagreement.ð  ðÔ_Ô€Many€practitioners€andÐ ˆØ Ðcommentators€believe€that€these€provisions€are€enforceable€even€with€Section€59A€reading€theÐ tÄ Ðway€it€reads,€but€the€absence€of€a€clear€provision€in€Section€59A€results€in€confusion€andÐ `° Ðunnecessary€litigation.Ð L œ ÐÌSB€577,€filed€by€Senator€Chris€Harris,€R„Arlington,€proposes€amending€Section€59A€to€provideÐ $ t Ðthat€a€contract€to€make€a€will€or€not€to€revoke€a€will€can€be€established€by€"provisions€of€aÐ  ` Ðwritten€contract€that€is€binding€and€enforceable."Ô_Ôð  ðÔ_Ô€Hopefully€this€will€pick€up€marital€agreement,Ð ü L  Ðbusiness€succession€agreements,€etc.Ð è 8  ÐÌÔ_ÔREPTLÔ_Ô€tried€to€make€a€similar€change€in€2001,€but€opposition€by€Judge€Guy€Herman€of€TravisÐ À  ÐCounty€Probate€Court€No.€1€derailed€the€Ô_Ôeffort.ð  ðÔ_Ô€Ô_ÔREPTLÔ_Ô€and€Judge€Herman€agreed€onÐ ¬ü  Ðcompromise€language€which€Judge€Herman€said€he€would€not€oppose€if€the€Ô_ÔREPTLÔ_Ô€wentÐ ˜è  Ðforward€with€it€in€2001,€but€Ô_ÔREPTLÔ_Ô€decided€that€the€compromise€language€was€confusing€andÐ „Ô  Ðill-advised,€so€it€waited€until€2003€and€plans€to€try€again€with€a€cleaner,€Uniform€ProbateÐ pÀ ÐCode-based€approach.Ð \¬ ÐÌÓ  Óòòò òÔ% ‡Q ÔÔ‡¼æ0»ÐXªDÔóóÔ  ÔÔ_ÔAdemptionÔ_Ô€by€SatisfactionÔ t€b:ÔòòÔ#†XªDXH¼æ0@:#ÔÔ%†Q3:Ôó óóóÐ 4„ ÐÌÓ  ÓSection€44€of€the€Texas€Probate€Code€deals€with€the€issue€of€an€intestate€donor€giving€property€toÐ 4„ Ðan€heir€in€advance€of€his€or€her€death€by€providing€that€these€gifts€are€treated€as€advancementsÐ  p Ðand€deducted€from€the€heir's€share€only€if€the€decedent€declared€in€a€contemporaneous€writing€orÐ  \ Ðthe€heir€acknowledged€in€writing€that€the€gift€was€an€advancement€or€otherwise€was€to€be€takenÐ øH Ðinto€account€in€determining€intestate€Ô_Ôshares.ð  ðÔ_Ô€This€section€does€not€deal€with€the€same€issue€as€itÐ ä4 Ðrelates€to€a€donor€with€a€Ô_Ôwill.ð  ðÔ_Ô€SB€577,€filed€by€Senator€Chris€Harris,€R„Arlington,€proposesÐ Ð  Ðadoption€of€Section€37C,€which€would€provide€that€a€lifetime€gift€is€treated€as€a€satisfaction€of€aÐ ¼  Ðdevise€if€the€will€provides€for€deduction€of€the€lifetime€gift,€or€the€testator€declares€in€aÐ ¨ø Ðcontemporaneous€writing€that€the€gift€is€to€be€deducted€from€the€devise€or€is€in€satisfaction€of€theÐ ”ä Ðdevise,€or€the€devisee€acknowledges€in€writing€that€the€gift€is€in€satisfaction€of€the€devise.Ð € Ð ÐÌÓ  Óòòò òÔ% ‡R ÔÔ  ÔOther€Probate€Law€ChangesÔ t€@ÔÔ%†R@Ôó óóóÐ X"¨  ÐÓ  ÓÌÔ_ÔREPTLÔ_Ô€proposes€making€several€other€minor€changes€to€the€decedent's€estates€portion€of€theÐ \$¬" ÐProbate€Ô_ÔCode.ð  ðÔ_Ô€Ô_ÔREPTLÔ_Ô€proposes€a€further€clean-up€of€probate€jurisdiction€with€an€amendment€toÐ H%˜ # ÐSection€5A(b).Ô_Ôð  ðÔ_Ô€It€also€proposes€minor€changes€to€Sections€67,€84,€245,€322A€and€378B.Ð 4&„!$ ÐÌÓ  ÓòòCopyright€2003€by€Glenn€M.€Ô_ÔKarischÔ_Ô,€All€Rights€Reserved.