ÿWPCÝ  †%јpe1NJñ÷Þùþ*#ÔÁY\¿õ<À­”@±+†ɘZþ‡ºú^XgÌ"X/‘B¼ÕÀž'™§OvÆtâ8Õ1 3¾ÖÓPi ¬èÁ&O¨ç»7?L³ÞžTL·\LƆaœinaëô‡‰`Íæ’ÍàbØÞ›]ª§¦?ÖçŠv ¿J;¨jгî+æ+÷H9yè¸r_ #lš…­é“:ìâìÎscóip¢Fø A™ëÊÊ_´\‰4’i”€$ÍûAo¾wÅä…8»µ©~˜JE6ÿgöø§Á^H]‘ÎàVÞ5^K‹Åt÷ ó‚ÛRžö¾mÊu‰Û®ºai|¸  Øæ6xËy}^º& ¡o«w\6‡XúTbÍXF{-ÈtT®ØjÍoŽÝn¶GD÷Ñ™;©¯×T #8RáŒQRÓÌ”+‘ù“h³²ÛIY’®b£Q>y&Â…ùÞ¿ªz0ô&âØ—²Ç|”¿˜’fµüÜ*…]çZÙ<¾ôjþsÛ„‡@L!­qÅ?ý>„‚ݱ#†s¤CmRœíÜ4¾x jŽð«Û×_[EZÐ Â"|ÐèŠCMýF0ã,º5ˆÞ¸÷asGã¿y÷b#Á\UN %k 0(q ™ wŸ 4£ · NÆ ^ È Ô mÖ fí aï DA fD aF fZ a\ fp ar f† aˆ fœ až b² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² ² B À ˜Brother MFC-P2000 series,È,,,,,È0(ÖÃ9 Z ‹6Times New Roman RegularX($¡¡HZ='Ôô|xizA'L ÿU‹ÿÀÀÀ8ýTABLE Aaaaa5 Shadow!dZdZ8ýTABLE A8ýTABLE A8ýTABLE A8ýTABLE A8ýTABLE APage ù dÝ ƒ!ÝÝ  ÝÔ_ÔÑ€ÑÑ8€rXXdìdÈ8Ñà@HHìàòòò ò1999€CHANGES€TO€THE€TEXAS€TRUST€CODEó óóóˆÐ ° Ðà@ŠŠìàò òòòAmendments€Made€By€the€76th€Texas€Legislature€(1999)óóó óˆÐ ` ÐÔ€ô€\òXXÔà@j j ìàExplanation€of€Legislative€Changes€ðð€1999€by€Glenn€M.€KarischˆÐ (x ÐÌà@..ìàò òSECTIONS€WHICH€WERE€AMENDEDˆÐ ° ÐÌSec.113.018.Employment€of€Agents.Ð 4 „ ÐSec.113.026.Authority€to€Designate€New€Charitable€Beneficiary.€[NEW]Ð ö F ÐSec.113.060.Authority€to€Delegate€Investment€Decisions.€[NEW]Ð ¸  ÐSec.113.1021.Allocation€of€Principal€and€Income€in€Charitable€Trusts.€[NEW]Ð z Ê  ÐSec.114.032.Liability€for€Written€Agreements.€[NEW]Ð < Œ  ÐSec.115.002.Venue.ó óÐ þ N  ÐÌò òSec.113.018.EMPLOYMENT€OF€AGENTS.ó óÐ „Ô  ÐÌà  àA€trustee€may€employ€attorneys,€accountants,€agents,€òòò òincluding€investment€agents,óó€ó óand€brokers€reasonablyÐ  Z  Ðnecessary€in€the€administration€of€the€trust€estate.€Ð Ð  ÐÌòòAdded€by€Acts€1983,€68th€Leg.,€Ch.€567,€Art.€2,€Sec.€2,€eff.€Jan.€1,€1984.óó€€òòò òAmended€by€Acts€1999,€76th€Leg.,€Ch.Ð X¨ Ð___€[HB€1475],€eff.€Sept.€1,€1999.óóó óÐ n ÐÌÔ*’ƒaddd Xdd Xdd X°(#°(#’ÔÔ,xdd ÔÔ+  ÔÐ ¤ô¤ô €€ Ðà@[[ìàò òExplanation€of€1999€Amendmentó óˆÐ X ÐÌHB€1475€added€new€Section€113.060€(see€below)€regarding€the€authority€of€a€trustee€to€delegate€investmentÐ ŽÞ Ðdecisions.€€This€change€to€Section€113.018€was€made€to€make€it€consistent€with€new€Section€113.060€and€to€makeÐ R¢ Ðclear€that€investment€agents€are€permissible.Ðf  ÐÌòòò òSec.113.026.AUTHORITY€TO€DESIGNATE€NEW€CHARITABLE€BENEFICIARY.Ð (x ÐÌà  à(a)€€In€this€section:óóÐ ¬ü ÐÌà  àà ` àòò(1)"Charitable€entity"€has€the€meaning€assigned€by€Section€123.001.óó€Ð 0€ ÐÌà  àà ` àòò(2)"Failed€charitable€beneficiary"€means€a€charitable€entity€that€is€named€as€a€beneficiaryÐ ´! Ðof€a€trust€and€that:óóÐ v Æ" ÐÌà  àà ` àà ¸ àòò(A)does€not€exist€at€the€time€the€charitable€entity's€interest€in€the€trust€becomesÐ ú!J$ Ðvested;óóÐ ¼" % ÐÌà  àà ` àà ¸ àòò(B)ceases€to€exist€during€the€term€of€the€trust;€oróóÐ @$' ÐÌà  àà ` àà ¸ àòò(C)ceases€to€be€a€charitable€entity€during€the€term€of€the€trust.óó€Ð Ä%!) ÐÌà  àòò(b)This€section€applies€only€to€an€express€written€trust€created€by€an€individual€with€a€charitableÐ H'˜"+ Ðentity€as€a€beneficiary.€If€the€trust€instrument€provides€a€means€for€replacing€a€failed€charitable€beneficiary,Ð  (Z#, Ðthe€trust€instrument€governs€the€replacement€of€a€failed€charitable€beneficiary,€and€this€section€does€notÐ Ì($- Ðapply.óó€Ð Ž)Þ$. ÐÌà  àòò(c)The€trustee€of€a€trust€may€select€one€or€more€replacement€charitable€beneficiaries€for€a€failedÐ +b&0 Ðcharitable€beneficiary€in€accordance€with€this€section.óó€Ð Ô+$'1 Їà  àòò(d)Each€replacement€charitable€beneficiary€selected€under€this€section€by€any€person€must:óóÐ ° ÐÌà  àà ` àòò(1)be€a€charitable€entity€and€an€entity€described€under€Sections€170(b)(1)(A),€170(c),Ð 4„ Ð2055(a),€and€2522(a)€of€the€Internal€Revenue€Code€of€1986,€as€amended;€andóóÐ öF ÐÌà  àà ` àòò(2)have€the€same€or€similar€charitable€purpose€as€the€failed€charitable€beneficiary.óó€Ð zÊ ÐÌà  àòò(e)If€the€settlor€of€the€trust€is€living€and€not€incapacitated€at€the€time€a€trustee€is€selecting€aÐ þ N Ðreplacement€charitable€beneficiary,€the€trustee€shall€consult€with€the€settlor€concerning€the€selection€of€one€orÐ À  Ðmore€replacement€charitable€beneficiaries.óó€Ð ‚ Ò  ÐÌà  àòò(f)If€the€trustee€and€the€settlor€agree€on€the€selection€of€one€or€more€replacement€charitableÐ  V  Ðbeneficiaries,€the€trustee€shall€send€notice€of€the€selection€to€the€attorney€general.€€If€the€attorney€generalÐ È   Ðdetermines€that€one€or€more€replacement€charitable€beneficiaries€do€not€have€the€same€or€similar€charitableÐ ŠÚ  Ðpurpose€as€the€failed€charitable€beneficiary,€not€later€than€the€21st€day€after€the€date€the€attorney€generalÐ Lœ  Ðreceives€notice€of€the€selection,€the€attorney€general€shall€request€in€writing€that€a€district€court€in€the€countyÐ ^  Ðin€which€the€trust€was€created€review€the€selection.€€If€the€court€agrees€with€the€attorney€general'sÐ Ð  Ðdetermination,€any€remaining€replacement€charitable€beneficiary€agreed€on€by€the€trustee€and€the€settlor€isÐ ’â  Ðthe€replacement€charitable€beneficiary.€€If€there€is€not€a€remaining€replacement€charitable€beneficiary€agreedÐ T¤  Ðon€by€the€trustee€and€the€settlor,€the€court€shall€select€one€or€more€replacement€charitable€beneficiaries.€€IfÐ f Ðthe€court€finds€that€the€attorney€general's€request€for€a€review€is€unreasonable,€the€replacement€charitableÐ Ø( Ðbeneficiary€is€the€charitable€beneficiary€agreed€on€by€the€trustee€and€the€settlor,€and€the€court€may€requireÐ šê Ðthe€attorney€general€to€pay€all€court€costs€of€the€parties€involved.€€Not€later€than€the€30th€day€after€the€dateÐ \¬ Ðthe€selection€is€final,€the€trustee€shall€provide€to€each€replacement€charitable€beneficiary€selected€notice€of€theÐ n Ðselection€by€certified€mail,€return€receipt€requested.óó€Ð à0 ÐÌà  àòò(g)If€the€trustee€and€the€settlor€cannot€agree€on€the€selection€of€a€replacement€charitableÐ d´ Ðbeneficiary,€the€trustee€shall€send€notice€of€that€fact€to€the€attorney€general€not€later€than€the€21st€day€afterÐ &v Ðthe€date€the€trustee€determines€that€an€agreement€cannot€be€reached.€€The€attorney€general€shall€refer€theÐ è8 Ðmatter€to€a€district€court€in€the€county€in€which€the€trust€was€€created.€€The€trustee€and€the€settlor€may€eachÐ ªú Ðrecommend€to€the€court€one€or€more€replacement€charitable€beneficiaries.€€The€court€shall€select€aÐ l¼ Ðreplacement€charitable€beneficiary€and,€not€later€than€the€30th€day€after€the€date€of€the€selection,€provide€toÐ .~ Ðeach€charitable€beneficiary€selected€notice€of€the€selection€by€certified€mail,€return€receipt€requested.óó€ó óÐ ð@  ÐÌòòò òAdded€by€Acts€1999,€76th€Leg.,€Ch.€___€[HB€115],€eff.€Aug.€30,€1999.óóó óÐ vÆ" Ðòòò òóóó óÌÔ*lƒaddxdd xa°(#°(#lÔÔ,xdd ÔÔ+  ÔÐ üL$üL €€ Ðà@[[ìàò òExplanation€of€1999€Amendmentó óˆÐ ` °% ÐÌHB€115€is€the€result€of€a€disgruntled€settlor€who€became€so€fed€up€with€having€the€attorney€general€a€party€to€aÐ æ!6' Ðsuit€to€name€a€new€charity€to€replace€a€failed€one€that€he€tried€twice€(once,€unsuccessfully,€in€1997€and€again,Ð ª"ú( Ðsuccessfully,€in€1999)€to€get€the€Legislature€to€pass€a€law€changing€the€rules.€€Unfortunately,€the€problem€is€soÐ n#¾) Ðobscure€that€it€is€unlikely€that€this€new€Section€113.060€will€have€much€applicability.Ð 2$‚* ÐÌIf€a€trust€names€a€charity€as€a€beneficiary€and€that€charity€ceases€to€exist,€something€must€be€done€to€designate€aÐ º% !, Ðnew€charity.€€In€a€well„drafted€trust,€the€possibility€of€the€failure€of€the€named€charity€can€be€anticipated€and€aÐ ~&Î!- Ðprocedure€for€choosing€a€new€charity€can€be€included.€€(Usually€the€trust€instrument€provides€for€the€trustee€toÐ B'’". Ðchoose€a€€new€beneficiary€using€whatever€criteria€the€settlor€cares€to€name.)€€If€the€trust€is€silent,€however,€underÐ (V#/ Ðprior€law€a€judicial€proceeding€was€needed€and€the€attorney€general€was€a€necessary€party.€€The€AG€sought€toÐ Ê($0 Ðassure€that€the€new€charity€had€the€same€or€similar€purpose€as€the€old€charity.Ð Ž)Þ$1 ÐÌThe€new€statute€basically€gives€the€attorney€general€notice€and€the€opportunity€to€pass€on€triggering€a€judicialÐ +f&3 Ðproceeding€if€the€AG€is€satisfied€with€the€entity€picked€by€the€trustee.€€It€also€provides€that€the€trustee€is€to€consultÐ Ú+*'4 Ðwith€the€settlor€if€the€settlor€is€still€living.€€In€a€weird€twist,€the€statute€provides€that€the€attorney€general€can€beÐ d Ðstuck€with€attorneys€fees€if€the€AG€unnecessarily€drags€the€trust€through€the€courthouse.Ð Ø( ÐÌThe€usefulness€of€HB€115€is€further€limited€by€its€effective€date€provision€ð!ð€it€applies€only€to€trusts€created€on€orÐ `° Ðafter€August€30,€1999,€so€it€cannot€be€used€with€respect€to€old€trusts.Ð$t  ÐÌà  àòòò òSec.113.060.AUTHORITY€TO€DELEGATE€INVESTMENT€DECISIONS.Ð 6 † ÐÌà  à(a)€€In€this€section,€"beneficiary"€means:óóÐ º  ÐÌà  àà ` àòò(1)a€person€entitled€to€a€distribution;óóÐ > Ž  ÐÌà  àà ` àòò(2)a€person€who€would€be€entitled€to€a€distribution€if€the€trust€terminated;€andóóÐ Â  ÐÌà  àà ` àòò(3)a€charitable€entity€as€defined€by€Section€123.001€that€has€an€interest€in€the€trust.óó€Ð F–  ÐÌà  àòò(b)A€trustee€may€employ€and€delegate€investment€decisions€to€an€investment€agent.€€Except€asÐ Ê  Ðprovided€by€Subsection€(c),€the€trustee€is€responsible€for€the€investment€decisions€of€the€agent.óó€Ð ŒÜ  ÐÌà  àòò(c)A€trustee€is€not€responsible€for€investment€decisions€made€by€an€investment€agent€employed€asÐ ` Ðprovided€by€this€section€if:óóÐ Ò" ÐÌà  àà ` àòò(1)the€trustee€exercises€the€judgment€and€care€under€the€circumstances€then€prevailing€thatÐ V¦ Ða€person€of€ordinary€prudence,€discretion,€and€intelligence€would€exercise€in€the€management€of€the€person'sÐ h Ðown€funds€in€selecting€the€investment€agent€and€in€establishing€the€scope€and€terms€of€the€delegation;óóÐ Ú* ÐÌà  àà ` àòò(2)the€trustee€investigates€the€credentials€of€the€investment€agent,€including:óóÐ ^® ÐÌà  àà ` àà ¸ àòò(A)reviewing€the€agent's€experience,€performance€history,€and€financial€stability;óóÐ â2 Ðà  àà ` àà ¸ àòò(B)verifying€the€agent's€professional€license€and€registration,€if€any;€andóóÐ ¤ô ÐÌà  àà ` àà ¸ àòò(C)establishing€that€the€agent€is€insured€or€bonded;óóÐ (x ÐÌà  àà ` àòò(3)the€investment€agent€is€subject€to€the€jurisdiction€of€the€courts€of€this€state;óóÐ ¬ü! ÐÌà  àà ` àòò(4)under€the€terms€of€the€delegation€agreement,€the€investment€agent:óóÐ 0 €# ÐÌà  àà ` àà ¸ àòò(A)is€subject€to€the€standard€of€trust€management€and€investment€prescribed€byÐ ´!% ÐSection€113.056;€andóóÐ v"Æ& ÐÌà  àà ` àà ¸ àòò(B)assumes€liability€for€the€failure€to€follow€that€standard;€andóóÐ ú#J( ÐÌà  àà ` àòò(5)the€trustee€periodically€reviews€the€investment€decisions€made€by€the€investment€agent€toÐ ~%Î * Ðensure€compliance€with€the€investment€strategy€prescribed€by€the€trustee€for€the€trust.óó€Ð @&!+ ÐÌà  àòò(d)Not€later€than€the€30th€day€before€the€date€a€trustee€€enters€into€an€agreement€to€delegateÐ Ä'#- Ðinvestment€decisions€to€an€investment€agent€under€this€section,€the€trustee€shall€send€written€notice€to€eachÐ †(Ö#. Ðbeneficiary€of€the€trust€informing€the€beneficiary€of€the€intended€delegation€and€identifying€the€investmentÐ H)˜$/ Ðagent.€€If€a€beneficiary€is€a€minor€or€is€incapacitated,€the€notice€required€by€this€subsection€must€be€providedÐ  *Z%0 Ðto€the€beneficiary's€legal€guardian.óó€ó óÐ Ì*&1 ÐÌòòò òAdded€by€Acts€1999,€76th€Leg.,€Ch.€___€[HB€1475],€eff.€Sept.€1,€1999.óóó óÐ R,¢'3 Ðòòò òóóó óÌÔ*lƒaddxdd xa°(#°(#lÔÔ,xdd ÔÔ+  ÔÐ tÄtÄ €€ Ðà@[[ìàò òExplanation€of€1999€Amendmentó óˆÐ Ø( ÐÌNew€section€113.060€is€the€result€of€compromise€between€the€banking/trustee€lobby€and€the€probate€lawyersððÐ ^® Ðlobby.€€Like€many€compromises,€one€can€look€at€it€two€ways€ð!ð€as€the€proverbial€glass€that€is€half€empty€or€halfÐ "r Ðfull.Ð æ6 ÐÌOne€the€plus€side,€it€permits€trustees€to€delegate€the€authority€to€make€investment€decisions€to€an€agent€whileÐ n ¾ Ðproviding€protection€for€beneficiaries.€€Corporate€trustees€have€been€after€the€ability€to€do€this€for€at€least€twoÐ 2 ‚  Ðsessions.€€They€view€the€ability€to€delegate€investment€decisions€as€necessary€in€their€competition€with€otherÐ ö F  Ðdisciplines€in€the€financial€services€industry.€€Probate€lawyers€have€resisted€the€move€out€of€a€fear€that€theÐ º   Ðbeneficiary€would€be€left€with€no€one€to€sue€if€the€investment€decisions€turned€out€to€be€poorly€made.€€NewÐ ~ Î  Ðsection€113.060€makes€it€possible€for€investment€decisions€to€be€delegated€but€requires€the€trustee€to€stay€on€theÐ B’  Ðhook€for€investment€decisions€or€to€follow€a€detailed€procedure€to€assure€that€the€beneficiary€has€recourse€againstÐ V  Ðthe€agent€to€whom€the€authority€is€delegated.Ð Ê  ÐÌOn€the€minus€side,€it€is€difficult€to€imagine€many€corporate€trustees€availing€themselves€of€the€mechanism€in€theÐ R¢  Ðstatute€for€getting€off€the€hook.€€These€requirements€are€difficult€to€meet.€€For€example,€the€investment€agent€mustÐ f  Ðagree€to€subject€itself€to€the€jurisdiction€of€the€courts€of€this€state€and€subject€itself€to€the€standard€of€trustÐ Ú* Ðmanagement€and€investment€set€forth€in€the€Trust€Code.Ð žî ÐÌFor€this€reason,€it€seems€unlikely€that€the€new€section€will€come€in€to€play€very€often.Ð&v  ÐÌà  àòòò òSec.113.1021.ALLOCATION€OF€PRINCIPAL€AND€INCOME€IN€CHARITABLE€TRUSTS.€Ð 8ˆ ÐÌà  à(a)Unless€otherwise€provided€by€the€trust€instrument,€an€increase€in€the€value€of€the€followingÐ ¼  Ðobligations€over€the€value€at€the€time€the€obligation€was€acquired€by€the€trust€is€income:óóÐ ~Î ÐÌà  àà ` àòò(1)a€deferred€annuity€before€Ô_ÔannuitizationÔ_Ô;€andóóÐ R ÐÌà  àà ` àòò(2)a€life€insurance€contract€before€the€death€of€the€insured.óó€Ð †Ö ÐÌà  àòò(b)For€purposes€of€this€section€and€unless€otherwise€provided€by€the€trust€instrument,€the€increaseÐ  Z  Ðin€value€of€an€obligation€described€by€Subsection€(a)€is€available€for€distribution€only€when€the€trusteeÐ Ì! Ðreceives€cash€on€account€of€the€obligation.€€If€the€obligation€is€surrendered€or€partially€liquidated,€the€cashÐ ŽÞ" Ðreceived€must€be€attributed€first€to€the€increase.€€Notwithstanding€Section€113.103,€the€increase€in€the€value€ofÐ P  # Ðthe€obligation€is€available€for€distribution€to€the€income€beneficiary€who€is€the€income€beneficiary€when€theÐ !b$ Ðcash€is€received€and,€if€different,€not€to€the€income€beneficiary€who€was€the€income€beneficiary€at€the€time€theÐ Ô!$% Ðincome€accrued.óó€Ð –"æ& ÐÌà  àòò(c)Section€113.109€applies€to€the€allocation€of€principal€and€income€for€a€deferred€annuity€afterÐ $j( ÐÔ_ÔannuitizationÔ_Ô.óó€ó óÐ Ü$, ) ÐÌòòò òAdded€by€Acts€1999,€76th€Leg.,€Ch.€___€[HB€1475],€eff.€Sept.€1,€1999.óóó óÐ b&²!+ ÐÌÔ*lƒ addxdd xa°(#°(#lÔÔ,xdd ÔÔ+  ÔÐ è'8#-è'8# €€ Ðà@[[ìàò òExplanation€of€1999€Amendmentó óˆÐ L(œ#. ÐÌThis€new€section€was€pushed€through€by€the€insurance€lobby€to€address€a€very€narrow€issue€ð!ð€permitting€theÐ Ò)"%0 Ðtrustees€of€poorly€drafted€net€income€makeup€charitable€remainder€Ô_ÔunitrustsÔ_Ô€(ð ðÔ_ÔNIMCRUTsÔ_Ôðð)€to€take€advantage€ofÐ –*æ%1 Ðaggressive€allocation€strategies€which€have€been€targeted€by€the€Internal€Revenue€Service€as€abusive€but€that,€asÐ Z+ª&2 Ðof€May€1999,€has€not€been€prohibited.€€Unfortunately,€the€insurance€lobby€had€the€clout€to€push€through€(over€theÐ ,n'3 Ðobjection€of€probate€lawyers)€a€broadly€applicable€statute€which€may€have€unintended€adverse€consequences€forÐ d Ðother€types€of€trusts.Ð Ø( ÐÌSome€planners€advocate€the€use€of€Ô_ÔNIMCRUTsÔ_Ô€as€ð ðspigotðð€trusts,€where€the€trustee€(usually€the€Ô_ÔnoncharitableÔ_ÔÐ `° Ðbeneficiary€who€set€up€the€trust)€can€turn€the€income€distributions€to€the€Ô_ÔnoncharitableÔ_Ô€beneficiary€(usuallyÐ $t Ðhimself€or€herself)€on€and€off€as€his€or€her€income€needs€dictate.€€A€Ô_ÔNIMCRUTÔ_Ô€which€invests€in€a€deferredÐ è8 Ðannuity€is€particularly€attractive€for€this€purpose,€since€no€income€is€generated€unless€and€until€the€trustee€decidesÐ ¬ ü Ðto€pull€income€out.€€Drafters€of€Ô_ÔNIMCRUTsÔ_Ô€can€and€should€put€provisions€in€the€trust€instrument€permitting€thisÐ p À Ðtype€of€allocation€if€this€aggressive€technique€is€desired.€€The€insurance€lobby€wanted€the€aggressive€approach€toÐ 4 „  Ðbe€the€default€rule€for€òòallóó€trusts€ð!ð€including€other€charitable€trusts€and€even€Ô_ÔnoncharitableÔ_Ô€trusts.€€The€TexasÐ ø H  ÐAcademy€of€Probate€and€Trust€Lawyers€and€I€wanted€to€limit€the€rule€to€Ô_ÔNIMCRUTSÔ_Ô€and€to€make€it€an€opt„inÐ ¼   Ðrule€rather€than€a€default€rule.€€The€only€compromise€we€were€able€to€achieve€was€the€inclusion€of€the€wordÐ € Ð  Ðð ðCharitableðð€in€the€title€to€the€section.€€It€is€clear€that€the€legislative€intent€was€to€limit€this€rule€to€charitableÐ D”  Ðtrusts,€and€the€section€title€makes€it€clear€it€was€intended€to€be€limited€to€charitable€trusts,€but€note€that€the€text€ofÐ X  Ðthe€section€itself€does€not€so€limit€the€rule.Ð Ì  ÐÌThe€insurance€lobby€also€wanted€this€rule€to€apply€to€existing€trusts€so€that€this€aggressive€technique€could€beÐ T¤  Ðused€even€with€respect€to€existing€trusts.€€Therefore,€the€new€rule€applies€to€ð ðprincipal€and€income€subject€toÐ h  Ðallocationðð€on€or€after€September€1,€1999.ÐÜ,  ÐÌà  àòòò òSec.114.032.LIABILITY€FOR€WRITTEN€AGREEMENTS.Ð î> ÐÌà  à(a)€€A€written€agreement€between€a€trustee€and€a€beneficiary,€including€a€release,€consent,€or€otherÐ r Ðagreement€relating€to€a€trustee's€duty,€power,€responsibility,€restriction,€or€liability,€is€final€and€binding€onÐ 4„ Ðthe€beneficiary€and€any€person€represented€by€a€beneficiary€as€provided€by€this€section€if:óóÐ öF ÐÌà  àà ` àòò(1)the€instrument€is€signed€by€the€beneficiary;óóÐ zÊ ÐÌà  àà ` àòò(2)the€beneficiary€has€legal€capacity€to€sign€the€instrument;€andóóÐ þN ÐÌà  àà ` àòò(3)the€beneficiary€has€full€knowledge€of€the€circumstances€surrounding€the€agreement.óó€Ð ‚Ò ÐÌà  àòò(b)A€written€agreement€signed€by€a€beneficiary€who€has€the€power€to€revoke€the€trust€or€the€powerÐ V  Ðto€appoint,€including€the€power€to€appoint€through€a€power€of€amendment,€the€income€or€principal€of€theÐ È! Ðtrust€to€or€for€the€benefit€of€the€beneficiary,€the€beneficiary's€creditors,€the€beneficiary's€estate,€or€theÐ ŠÚ" Ðcreditors€of€the€beneficiary's€estate€is€final€and€binding€on€any€person€who€takes€under€the€power€ofÐ L œ# Ðappointment€or€who€takes€in€default€if€the€power€of€appointment€is€not€executed.óó€Ð !^$ ÐÌà  àòò(c)A€written€instrument€is€final€and€binding€on€a€beneficiary€who€is€a€minor€if:óóÐ ’"â& ÐÌà  àà ` àòò(1)the€minor's€parent,€including€a€parent€who€is€also€a€trust€beneficiary,€signs€theÐ $f( Ðinstrument€on€behalf€of€the€minor;óóÐ Ø$( ) ÐÌà  àà ` àòò(2)no€conflict€of€interest€exists;€andóóÐ \&¬!+ ÐÌà  àà ` àòò(3)no€guardian,€including€a€guardian€ad€litem,€has€been€appointed€to€act€on€behalf€of€theÐ à'0#- Ðminor.óó€Ð ¢(ò#. ÐÌà  àòò(d)A€written€instrument€is€final€and€binding€on€an€unborn€or€Ô_ÔunascertainedÔ_Ô€beneficiary€if€aÐ &*v%0 Ðbeneficiary€who€has€an€interest€substantially€identical€to€the€interest€of€the€unborn€or€Ô_ÔunascertainedÔ_ÔÐ è*8&1 Ðbeneficiary€signs€the€instrument.€€For€purposes€of€this€subsection,€an€unborn€or€Ô_ÔunascertainedÔ_Ô€beneficiary€hasÐ ª+ú&2 Ða€substantially€identical€interest€only€with€a€trust€beneficiary€from€whom€the€unborn€or€Ô_ÔunascertainedÔ_ÔÐ ° Ðbeneficiary€descends.óó€Ð r ÐÌà  àòò(e)This€section€does€not€apply€to€a€written€instrument€that€modifies€or€terminates€a€trust€in€whole€orÐ öF Ðin€part€unless€the€instrument€is€otherwise€permitted€by€law.óó€ó óÐ ¸ ÐÌòòò òAdded€by€Acts€1999,€76th€Leg.,€Ch.€___€[HB€1475],€eff.€Sept.€1,€1999.óóó óÐ > Ž Ðòòò òóóó óÌÔ*lƒaddxdd x a°(#°(#lÔÔ,xdd ÔÔ+  ÔÐ Ä Ä  €€ Ðà@[[ìàò òExplanation€of€1999€Amendmentó óˆÐ ( x  ÐÌNew€Section€114.032€imports€the€ð ðvirtual€representationðð€concept€from€the€litigation€context€and€makes€itÐ ® þ  Ðapplicable€in€a€contractual€setting.€€Trustees€occasionally€find€themselves€wanted€to€agree€with€the€beneficiariesÐ r   Ðof€the€trust€(for€example,€to€deviate€slightly€from€the€trust€instrument€or€to€excuse€minor€violations€of€the€trustÐ 6†  Ðinstrument).€€Under€prior€law,€these€agreements€may€be€binding€on€the€adult€beneficiaries€of€the€trust,€but€thereÐ úJ  Ðwas€no€way€to€make€them€binding€on€the€minor,€incapacitated€or€unborn€future€beneficiaries€of€the€trust.€€NewÐ ¾  ÐSection€114.032€permits€adult€beneficiaries€to€bind€their€minor€children€if€no€conflict€of€interest€exists€and€to€bindÐ ‚Ò  Ðunborn€and€Ô_ÔunascertainedÔ_Ô€beneficiaries€if€their€interests€are€ð ðsubstantially€identical.ððÐ F–  ÐÌThis€statute€should€be€very€useful€if€a€trustee€discovers€a€minor€transgression,€takes€corrective€action,€discloses€itÐ Î Ðto€the€beneficiary€and€wants€to€be€assured€that€a€minor€or€unborn€beneficiary€will€not€some€day€question€theÐ ’â Ðmethod€in€which€the€transgression€was€corrected.€€Because€the€statute€expressly€does€not€apply€to€trustÐ V¦ Ðmodifications€or€terminations,€it€may€not€be€helpful€where€major€departures€from€the€trust€instrument€are€planned.Ð j ÐÌNote€that€a€full€disclosure€of€material€facts€is€necessary€for€the€new€procedure€to€work.Ð ¢ò ÐÌThe€new€statute€applies€to€written€agreements€entered€into€on€or€after€September€1,€1999,€even€if€the€trustÐ *z Ðinstrument€was€executed€before€that€date.Ðî>  ÐÌà  àSec.115.002.VENUE.€Ð P ÐÌà  à(a)€€The€venue€of€an€action€under€Section€115.001€of€this€Act€is€determined€according€to€this€section.€Ð ˆØ ÐÌà  à(b)If€there€is€a€single,€Ô_ÔnoncorporateÔ_Ô€trustee,€òòò òan€action€shall€be€broughtóó€[ò òvenue€isó ó]ó ó€in€the€county€in€whichòòò ò:óóÐ `  ÐÌà  àà ` àòò(1)the€trustee€resides€or€has€resided€at€any€time€during€the€four-year€period€preceding€theÐ ˜è" Ðdate€the€action€is€filed;€oróóÐ Z ª# ÐÌà  àà ` àòò(2)the€situs€of€administration€of€the€trust€is€maintained€or€has€been€maintained€at€any€timeÐ Þ!.% Ðduring€the€four-year€period€preceding€the€date€the€action€is€filedóó€[ò òthe€trustee's€residence€is€locatedó ó]ó ó.€Ð  "ð& ÐÌà  à(c)If€òòò òthere€are€multiple€trustees€or€a€corporateóó€[ò òanyó ó]ó ó€trusteeòòò ò,€an€action€shall€be€broughtóó€[ò òis€aÐ *$z( Ðcorporation,€venue€isó ó]ó ó€in€the€county€in€which€the€òòò òsitus€of€administration€of€the€trust€is€maintained€or€has€beenÐ ð$@ ) Ðmaintained€at€any€time€during€the€four-year€period€preceding€the€date€the€action€is€filed,€provided€that€anÐ ¶%!* Ðaction€against€a€corporate€trustee€as€defendant€may€be€brought€in€the€county€in€which€the€corporate€trusteeÐ x&È!+ Ðmaintains€its€principal€office€in€this€stateóó€[ò òcorporation's€principal€office€is€located,€or,€if€two€or€moreÐ :'Š", Ðcorporations€are€trustees€of€the€trust,€venue€is€in€the€county€in€which€the€principal€office€of€any€of€theÐ ü'L#- Ðcorporations€is€locatedó ó]ó ó.€Ð ¾($. ÐÌà  à(d)òòò òFor€just€and€reasonable€cause,€including€the€location€of€the€records€and€the€convenience€of€theÐ H*˜%0 Ðparties€and€witnesses,€the€court€may€transfer€an€action€from€a€county€of€proper€venue€under€this€section€toÐ +^&1 Ðanother€county€of€proper€venue:óóÐ Ð+ '2 Їà  àà ` àòò(1)on€motion€of€a€defendant€or€joined€party,€filed€concurrently€with€or€before€the€filing€ofÐ ° Ðthe€answer€or€other€initial€responsive€pleading,€and€served€in€accordance€with€law;€oróóÐ r ÐÌà  àà ` àòò(2)on€motion€of€an€intervening€party,€filed€not€later€than€the€20th€day€after€the€court€signsÐ öF Ðthe€order€allowing€the€intervention,€and€served€in€accordance€with€law.óó€Ð ¸ ÐÌà  àòò(e)Notwithstanding€any€other€provision€of€this€section,€on€agreement€by€all€parties€the€court€mayÐ < Œ Ðtransfer€an€action€from€a€county€of€proper€venue€under€this€section€to€any€other€county.óó€Ð þ N ÐÌà  àòò(f)For€the€purposes€of€this€section:óóÐ ‚ Ò  ÐÌà  àà ` àòò(1)"Corporate€trustee"€means€an€entity€organized€as€a€financial€institution€or€aÐ  V  Ðcorporation€with€the€authority€to€act€in€a€fiduciary€capacity.óó€Ð È   ÐÌà  àà ` àòò(2)"Principal€office"€means€an€office€of€a€corporate€trustee€in€this€state€where€the€decisionÐ Lœ  Ðmakers€for€the€corporate€trustee€within€this€state€conduct€the€daily€affairs€of€the€corporate€trustee.€€The€mereÐ ^  Ðpresence€of€an€agent€or€representative€of€the€corporate€trustee€does€not€establish€a€principal€office.€€TheÐ Ð  Ðprincipal€office€of€the€corporate€trustee€may€also€be€but€is€not€necessarily€the€same€as€the€situs€ofÐ ’â  Ðadministration€of€the€trust.óó€Ð T¤  ÐÌà  àà ` àòò(3)"Situs€of€administration"€means€the€location€in€this€state€where€the€trustee€maintains€theÐ Ø( Ðoffice€that€is€primarily€responsible€for€dealing€with€the€settlor€and€beneficiaries€of€the€trust.€The€situs€ofÐ šê Ðadministration€may€also€be€but€is€not€necessarily€the€same€as€the€principal€office€of€a€corporate€trustee.óó€€[ò òIfÐ \¬ Ðthere€are€two€or€more€trustees,€none€of€which€is€a€corporation,€venue€is€in€the€county€in€which€the€principalÐ n Ðoffice€of€the€trust€is€maintained.ó ó]€ó óÐ à0 ÐÌòòAdded€by€Acts€1983,€68th€Leg.,€Ch.€576,€Sec.€2,€eff.€Jan.€1,€1984.€€Amended€by€Acts€1983,€68th€Leg.,€Ch.€567,€Art.Ð f¶ Ð2,€Sec.€2,€eff.€Jan.€1,€1984.óó€€òòò òAmended€by€Acts€1999,€76th€Leg.,€Ch.€___€[HB€2317],€eff.€Sept.€1,€1999.€€Amended€byÐ *z ÐActs€1999,€76th€Leg.,€Ch.€___€[HB€2066],€eff.€Sept.€1,€1999.óóó óÐ ð@ Ðòòò òóóó óÌÔ*lƒaddxdd xa°(#°(#lÔÔ,xdd ÔÔ+  ÔÐ vÆvÆ €€ Ðà@[[ìàò òExplanation€of€1999€Amendmentó óˆÐ Ú* ÐÌHB€2066€(the€interstate€banking€bill)€and€HB€2317€(a€standalone€venue€bill)€made€identical€changes€to€the€venueÐ `°! Ðsection€of€the€Trust€Code.€€The€principal€change€is€the€introduction€of€the€ð ðsitus€of€administrationðð€issue€in€trustÐ $t" Ðvenue.Ð è8# ÐÌUnder€prior€law,€a€corporate€trustee€had€the€right€to€insist€on€being€sued€in€the€county€where€its€principal€officeÐ p À% Ðwas€located.€€This€rule€made€sense€when€banks€were€not€permitted€to€have€offices€in€more€than€one€county.€€InÐ 4!„& Ðtodayððs€banking€environment,€however,€this€meant€that€suits€which€arose€far€away€from€a€bankððs€ð ðprincipalÐ ø!H' Ðofficeðð€might€end€up€being€tried€in€Dallas€or€Houston.Ð ¼" ( ÐÌAs€part€of€the€compromise€needed€to€get€the€interstate€banking€bill€through€the€Legislature,€the€bank€and€trustÐ D$”* Ðcompany€lobby€agreed€to€these€new€rules.Ð %X + ÐÌThe€key€concept€is€ð ðsitus€of€administration.ðð€€Although€it€remains€to€be€seen€precisely€how€this€term€will€beÐ &à!- Ðinterpreted,€it€is€likely€that€venue€will€be€placed€in€the€county€where€the€bank€has€a€location€and€at€which€it€metÐ T'¤". Ðwith€the€settlor€or€the€beneficiary€rather€than€in€the€county€where€it€handles€the€electronic€transfer€aspects€of€trustÐ (h#/ Ðadministration.ÐÜ(,$0  Ð