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XXXÔà@4 4 |àò òComparison€of€Court€Created€Trusts€with€Legal€Guardianships€and€Guardianship€Court€Trustsó ó€ˆà€//o81àÔ‡¡ô~¦ õ X¡X!ÔÔ#†ôÅæ õ õ¡ô~¦G#ÔÔ‡¢ô~¦ õ õôÅæÔPage€Ú  Ú28Ú  Ú' [  `DDutch Roman 12ptASCII FW, Land' [  `DDutch Roman 10ptASCII FW, Land yÝ ƒPÿÿ(ÝÝ  ÝÔ_ÔÒÀ°ÒÒX°ÒÒ(XÀ81À81(ÒÌÌà@¼¼ ˆàòòCourt€Created€Trusts€Pursuant€to€Powers€of€CourtˆÐ ˆØ Ðà@ËˈàUnder€Common€Law,€Equity,€and/or€Property€Code€ðð€142.005óóˆÐ tÄ ÐÌÌà@,,Gp&àòòLegal€Guardianships/ðð€867€Management€Trustóó EÝ ƒ!K”)ÝÓiU°X°` ¸ °pÈ xÐ (#€%Ø'0*ˆ,à.813è5@8˜:ð<H? A°œXiÓÓ  ÓÝ  ÝÔ_ÔÔ‡¡X! XXXÔÒÀ°ÒÒX°Òà  àà p àà È àà À àà ( àà € àà Ø àà 0 àAPPENDIX€C( [  `DDutch Roman 08ptASCII FW, Land Ñ À ÑÑ à Ñ' [  `DDutch Roman 06ptASCII FW, Land gÝ ƒ!K”)ÝÓiU°X°` ¸ °pÈ xÐ (#€%Ø'0*ˆ,à.813è5@8˜:ð<H? A°œXiÓÓ  ÓÝ  ÝÔ‡ôÅæ õXXÔÔ‡©ô9oõ õôÅæÔ____________________________________________________________________________________________Questionnaireà€¾,¾,¾,à.àPage€Ú  Ú34Ú  Ú' [  `DDutch Roman 10ptASCII FW, Port Ñ ° ÑÑ X Ñ' [  `DDutch Roman 12ptASCII FW, Port¶€Å$¬ ÐÏ îDDЀÐÏ€ýŒµ$Àóˆ ‚<¿ˆ(ÿU‹ÿÀÀÀÝ ƒ,Ê!ÝÑ  ÑÓiU°X°` ¸ °pÈ xÐ (#€%Ø'0*ˆ,à.813è5@8˜:ð<H? A°œXiÓÓ  ÓÝ  ÝÔ_ÔÌÌÌÌÌÌÌÌÌÔ_Ôññà  àà ` àà ¸ àà ° àññÔ_ÔÌÌà@Ç Ç ìàÔ€¼35»XXÔCourt€Created€Section€867€TrustsˆÐ Ô$  Ðà@³³$ìàÔ€Xú>X»¼35Ôðð€1998€Kathleen€Ford€BayˆÐ æ6  Ðà@%ìàÔ_ÔHilgersÔ_Ô€&€Watkins,€P.C.ˆÌà@ÃÃ#ìà98€San€Ô_ÔJacintoÔ_Ô,€Suite€1300ˆÌà@­­'ìàAustin,€Texas€78701ˆÌà@ÿÿ(ìàTel.€512„476„4716ˆÌà@îî(ìàFax.€512„476„5139ˆÌà@‘‘$ìàEmail.€hilgers@hwlaw.comˆÌà@‚‚%ìàÔ_ÔWebpageÔ_Ô.€www.hwlaw.comˆÌÌÌÌÌÌÌÌÌÌà@00%ìàòòPersonal€Trust€SeminaróóˆÐ ’â Ðà@œœ#ìàFinancial€Services€DivisionˆÌà@­­$ìàTexas€Bankers€AssociationˆÌà@&ìàWyndham€Ô_ÔAnatoleÔ_Ô€HotelˆÌà@ÌÌ*ìàDallas,€TexasˆÌà@$ìàFriday,€February€6,€1998ˆÌÌÌÌÌÌÌThis€paper€was€prepared€for€the€Texas€Bankers€Association€and€is€made€available€for€purposes€ofÏresearch€only.€€No€advice€or€warranty€is€intended.€€Consult€your€own€attorney€for€advice.ÌÌÐ  f-¶(, ÐÔ_ÔÙÙØØÖ€ ÿÿÖÌà@W W ìàò òCOURT€CREATED€SECTION€867€TRUSTSó óˆÐ œì ÐÓ€"Ý ÓÓ  ÓÌà8  àà ° àò òI.à  àòòThe€Statute€„„€Overview€and€1997€Amendmentsóóó óà‚#`"`"Q(#.ÚÚ;Ð Ð #à€€1ˆÐ tÄ ÐÌà8  àà ° àò òII.à  àòòThe€Statute€„„€Literally,€Turn€to€Appendix€Aó óóóà‚#`"`"Q(#.ìì<Ð Ð #à€€3ˆÐ P   ÐÌà8  àà ° àò òIII.à  àòòLet's€Look€at€a€ðð€867€Trust,€Turn€to€Appendix€Bóóó óà‚#`"`"Q(#.88?Ð Ð #à€€3ˆÐ , | ÐÌà8  àà ° àò òIV.à  àòòWould€You€Rather€be€the€Guardian€of€the€Ward's€Estate,€the€Trustee€of€a€ðð€867Ð  X  ÐTrust,€or€the€Trustee€of€a€ðð€142€Trust?€Turn€to€Appendix€Cóóó óÐô D Ð Ð  ÐÌAppendix€C€is€a€Chart€that€compares€ðð€142€trusts€to€Guardianships€and€ðð€867€Management€Trusts.¼à‚`"`"Q(#.°° à€€3ˆÌÌà8  àà ° àò òV.ó óà  àò òòòThe€Fun€Stuff€„„€What€are€Courts€Doing€with€ðð€867€Trusts?€€Turn€to€AppendixÐ à  ÐDóóó óà‚#`"`"Q(#.˜˜Ð Ð #à€€3ˆÐ |Ì ÐÌà8  àà ° àò òVI.à  àòòIn€Closingóóó óà‚#`"`"Q(#.~ ~ Ð Ð #à€€4ˆÐ X¨ ÐÌò òà8  àà ° àVII.à  àòòPost„Script:€The€ARC€of€Texas€Master€Pooled€Trustó óóóà‚#`"`"Q(#.xxAÐ Ð #à€€5ˆÐ 4„ ÐÓ ¸ÓÓ€(Ý ÓÓ  ÓÓ - ÓÌÌÌòòAppendicesóóÐ è8 ÐÌAà  àCopy€of€Texas€Probate€Code,€ðððð€867€„€873.Ð À Ѐ€ÌBà  àðð€867€Trust€With€CommentaryÐ ˜è ÐÌCà  àComparison€Chart€for€Court„Created€TrustsÐ p À ÐÌDà0  àTexas€Probate€Code€ðð€867€Management€Trusts:€€ò òReport€on€ó óA€Questionnaire€to€ProbateÐ H"˜  ÐJudges€on€Creation€and€AdministrationÐ (#(# ÐÌEà0  àBill€Analysis€by€Senate€Research€Staff,€May€13,€1997,€including€witness€list:€€Glenn€KarischÐ %` # Ð(another€one€of€your€speakers€today)€spoke€at€2:15€on€May€14th,€also€including€witness€listÏfor€House€Committee,€and€Glenn€Karisch€spoke€againÐ (#(# ÐÌÌÐ  ¬)ü$( ÐÙÙØØÌà@W W ìàò òCOURT€CREATED€SECTION€867€TRUSTSó óˆÐ œì Ðà@³³$ìàðð€1998€Kathleen€Ford€BayˆÌÌà  àGoal€for€the€Day.€€During€your€tenure€as€trust€officers,€you€will€have€(and€probably€alreadyÏhave€had)€many€opportunities€to€review€proposed€ðð€867€trusts€before€their€adoption€by€the€Court€andÏto€deal€with€their€day„to„day€administration.€€The€goal€for€the€day€is€to€review€the€statutory€historyÏof€ðð€867€and€relate€to€you€the€impressions€of€probate€judges€around€the€state€who€are€creating€andÏoverseeing€the€administration€of€these€trusts€so€that€you€will€be€able€to€identify€ðð867€trust€issuesÏquickly.ÌÌà  àHousekeeping€Note.€€All€statutory€citations€are€to€the€Texas€Probate€Code€unless€otherwiseÏnoted.ÌÌÔ  Ôò òI.à  àòòThe€Statute€„„€Overview€and€1997€Amendmentsóóó óÔ bÔÐ ˜è  ÐÌà  àSection€867€Trusts€first€appeared€in€1993.€€The€Texas€Legislature€added€ðð€867€in€Acts€1993,Ï73rd€Legislature,€ch.€857,€ðð€1,€effective€September€1,€1993.€€Subpart€N€("Management€Trusts"),€PartÏ2€("Guardianship€Proceedings€and€Matters"),€Chapter€XII€("Guardianship"),€of€The€Texas€ProbateÏCode€has€been€amended€twice€since€then,€first€in€1995€by€Acts€1995,€74th€Leg.,€ch.€1039,€ðð€57,Ïeffective€September€1,€1995,€and€most€recently€in€1997,€by€Acts€1997,€75th€Leg.,€ch.€1375,€ðð€1,Ïeffective€September€1,€1997.ÌÌà  àSections€7€and€8€of€the€1997€Act,€75th€Leg.,€ch.€1375,€make€it€clear€that€a€trust€may€beÏcreated€under€ðð€867€regardless€of€when€the€guardianship€was€initially€created€and€that€the€newÏchanges,€discussed€below,€apply€to€all€ðð€867€trusts€regardless€of€the€dates€on€which€the€trusts€wereÏcreated.ÌÌà  àNew€Changes.€€Tedious€as€it€may€at€first€appear€to€be,€to€fully€understand€ðð€867€we€are€goingÏto€need€to€go€over€and€analyze€the€statute€so€that€you€„„€the€trust€officers€who€must€review,€makeÏcomments€upon,€and€accept€being€appointed€as€Trustee€„„€will€be€able€to€recognize€quicklyÏmandatory€and€permissive€language€for€such€trusts.€€For€those€of€you€who€are€already€administeringÏsuch€trusts,€here€is€a€quick€summary€of€the€1997€changes:ÌÌà0  àððà0` (#(#àA€ward's€attorney€ad€litem€may€now€apply€to€have€a€ðð€867€trust€created.€Previously,Ð $X" Ðonly€a€court„appointed€guardian€of€the€ward€could€apply.€€Ð ` (#` (# ÐÌà0  àððà0` (#(#àThe€order€creating€the€ðð€867€trust€shall€direct€"the€guardian€òòor€another€personóó€toÐ Ì&"% Ðdeliver€all€or€part€of€the€assets€of€the€guardianship"€to€the€trust.€€Subpart€N€as€a€wholeÏseems€to€contemplate€that€there€will€always€be€a€formal€guardian€of€the€personÏappointed,€although€this€is€not€explicitly€so€stated.€It€may€well€be€that€in€some€casesÏno€guardianship€will€need€to€be€established€prior€to€the€creation€of€the€trust;€forÐ |*Ì%) Ðexample,€a€minor€child€may€have€assets€but€not€need€a€formal€appointment€of€his€orÏher€parents€as€guardians€of€the€person€and€a€ðð€867€trust€can€be€created€without€thereÏbeing€a€court„appointed€guardian;€however,€a€guardianship€proceeding€would€needÏto€be€pending€so€that€an€attorney€ad€litem€could€be€appointed.€€Then,€once€the€trustÏis€created€the€Court€can€determine€that€it€is€not€necessary€to€appoint€a€guardian€of€theÏestate€or€person.Ð ` (#` (# ÐÌà  àððà0 ` àSection€867(a)€has€been€restructured€somewhat€to€clarify€that€the€trust€may€provideÐ $ t Ðthat€the€trustee€may€make€distributions€for€the€health,€education,€support,€orÏmaintenance€of€both€the€ward€and€any€person€whom€the€ward€is€legally€obligated€toÏsupport,€by€making€such€distributions€to€the€following€persons:Ð ` (#` (# ÐÌà  àà ` àà0 ¸ àðð€€the€ward's€guardian;ÐÀ ¸ (#¸ (# ÐÌà  àà ` àà0 ¸ àðð€€a€person€who€has€physical€custody€of€the€ward€or€another€person€whomÐ ˜è  Ðthe€ward€is€legally€obligated€to€support;€orÐ ¸ (#¸ (# ÐÌà0  àà0` (#(#àà0¸ ` (#` (#àðð€€a€person€providing€a€good€or€service€to€the€ward€or€another€person€whomÐ \¬ Ðthe€ward€is€legally€obligated€to€support.Ð ¸ (#¸ (# ÐÌNote,€it€is€unlikely€that€you€will€see€such€language€in€trusts€created€for€minor€beneficiaries,€who€haveÏno€legal€obligation€to€support€anyone€but€whose€parents€have,€instead,€an€obligation€to€support€them.ÌÌà0  àððà0` (#(#àA€ðð€867€trust€can€be€a€"special€needs"€trust€so€as€to€qualify,€or€continue€to€qualify,Ð ä4 Ðthe€beneficiary€for€"public€benefits€or€assistance,"€like€Medicaid.€€The€Court€mustÏmake€a€specific€finding€that€a€"special€needs"€trust€is€warranted€and€in€theÏbeneficiary's€"best€interests."€€(Basically,€"special€needs"€means€that€language€isÏincluded€in€the€trust€so€that€its€corpus€will€not€be€counted€as€an€asset€of€theÏbeneficiary's€and€that€distributions€will€not€generally€be€made€for€food,€clothing,€orÏshelter€of€the€beneficiary€because€such€distributions€count€as€"income"€in€the€monthÏmade.€€See€Ron€Cresswell's€outline€on€"special€needs"€trusts.)Ð ` (#` (# ÐÌà0  àððà0` (#(#àOnce€a€trust€is€created,€the€Court€may€discharge€the€guardian€of€the€ward's€estate€onlyÐ 0"€  Ðif€a€guardian€of€the€ward's€person€remains,€upon€a€finding€that€doing€so€is€in€theÏward's€"best€interests."€€Tex.€Probate€Code€ðð€868A.€€It€is€this€section€which€impliesÏthat€the€ward€will€always€have€a€guardian€of€the€person.€€The€definition€of€"guardian"Ïcontained€in€ðð€601(10)€does€not€include€the€parent€as€a€"natural"€guardian.Ð ` (#` (# ÐÌà0  àððà0` (#(#àThe€Texas€Trust€Code€applies.€If€there€is€a€conflict€between€it€and€the€Probate€CodeÐ ¸'#& ÐSections€governing€management€trusts,€then€the€Probate€Code€controls.€ðð869B(a)€&Ï(b).€€Previously,€the€statute€provided€that€the€trust€"may"€provide€that€the€ðð€867Ïtrustee€has€the€powers€of€a€trustee€under€the€Trust€Code,€which€led€to€musings€onÐ |*Ì%) Ðwhether€or€not€the€Texas€Trust€Code€otherwise€applied€to€ðð€867€trusts.€€For€anÏexample€of€a€conflict€between€the€Trust€Code€and€the€ðð€867€òòet€seq.óó,€note€that€venueÐ œì Ðfor€any€action€involving€a€trust€is,€under€the€Trust€Code,€where€the€corporation'sÏprincipal€office€is€located.€€However,€if€the€corporate€Trustee€is€in€Houston€and€theÏguardianship€is€in€Smith€County,€venue€will€not€be€in€Harris€County;€the€SmithÏCounty€court€will€retain€jurisdiction€over€the€ðð€867€trust.€€ðððð€869B€and€869C.€€TheÏTexas€Trust€Code€is€really€Subtitle€B€of€Title€9€of€the€Texas€Property€Code.Ð ` (#` (# ÐÌà  àððà0 ` àA€ðð€867€trust€for€an€incapacitated€person€other€than€a€minor€will€end€either€on€theÐ  ` Ðdeath€of€the€ward€or€the€date€the€Court€determines€that€continuing€the€trust€is€noÏlonger€òòin€the€ward's€best€interestsóó.€€This€is€a€change€from€the€previous€languageÐ è 8  Ðwhich€provided€that€the€Court€could€terminate€the€trust€if€it€deemed€that€the€trust€wasÏòòno€longer€necessary€for€the€wardóó.€€ÐÀ ` (#` (# ÐÌò òÔ  ÔII.à  àòòThe€Statute€„„€Literally,€Turn€to€Appendix€AÔ ¿*Ôóóó óÐ ˜è  ÐÌYou€need€to€know€how€the€statute€reads,€so€turn€to€Appendix€A€for€a€copy.ÌÌÌÔ  Ôò òIII.à  àòòLet's€Look€at€a€ðð€867€Trust,€Turn€to€Appendix€Bóóó óÔ ƒ+ÔÐ 4„ ÐÌÔ  Ôò òIV.à  àòòWould€You€Rather€be€the€Guardian€of€the€Ward's€Estate,€the€Trustee€of€a€ðð€867€Trust,Ð  \ Ðor€the€Trustee€of€a€ðð€142€Trust?€Turn€to€Appendix€Cóóó óÐ øH ÐÌAppendix€C€is€a€Chart€that€compares€ðð€142€trusts€to€Guardianships€and€ðð€867€Management€Trusts.Ô ,Ô€ÌÌÔ  Ôò òV.ó óà  àò òòòThe€Fun€Stuff€„„€What€are€Courts€Doing€with€ðð€867€Trusts?€€Turn€to€Appendix€Dóóó óÔ ]-ÔÐ ¨ø ÐÌIn€preparation€for€this€talk,€I€developed,€òòwith€the€aid€of€The€Honorable€Guy€Herman,€Probate€Judge,Ð €Ð ÐProbate€Court€Number€One€of€Travis€County,€Texas,€for€which€I€am€immensely€gratefulóó,€aÐ l¼ Ðquestionnaire€and€sent€it€to€all€the€probate€judges€that€I€was€able€to€identify€„€123€of€them.€€I€receivedÏresponses€from€33.€€The€questionnaire€along€with€a€summary€of€responses€is€attached€as€AppendixÏD.ÌÌÔ  Ôò òVI.à  àòòIn€Closingóóó óÔ ¹/ÔÐ $X" ÐÌà  àWhen€you€review€a€proposed€ðð€867€trust€„„€and€you€will€get€to€review€it€for€otherwise€youÏcannot€sign€it€and€even€if€a€Court€appoints€you€without€your€knowledge€you€can€always€petition€toÏamend€and€restate€the€trust€in€the€form€you€want€„„€you€will€want€to€check€the€trust€to€make€sure€thatÏall€mandatory€provisions€required€by€the€Texas€Probate€Code€appear€in€it€and€you€will€also€want€toÏrequest€that€the€draftsman€include€other€provisions,€such€as€the€ones€mentioned€in€this€Outline.€€IfÏthe€trust€agreement€does€not€allow€you€to€take€commissions€periodically€and€requires€that€you€firstÐ |*Ì%) Ðapply€to€the€Court€for€approval,€then€make€sure€your€administrative€people€get€it€set€up€right€in€theÏcomputer!€€A€few€years€ago,€the€administrative€people€accidentally€set€up€a€guardianship€as€a€trustÏand€not€only€were€commissions€paid€without€court€approval€but€distributions€were€made€per€theÏstandards€set€forth€in€the€computer€without€checking€the€actual€file.€€Distributions€exceeded€theÏ$5,000€"safe€harbor"€threshold€of€ðð€776(b)€and€the€corporate€fiduciary€was€surcharged€for€the€excess.€ÏWith€an€867€management€trust€that€is€treated€as€a€guardianship€for€compensation€purposes,€it€willÏbe€even€easier€for€the€computer€to€be€set€up€wrong€and€commissions€paid€out€under€the€fiduciary'sÏfee€schedule€instead€of€in€accordance€with€guardianship€rates.ÌÌà  àYou€will€need€to€account€to€the€Court€and€to€the€Guardian€of€the€person€and/or€estate€of€theÏbeneficiary€every€year.ÌÌà  àAn€867€management€trust€is€a€"grantor"€trust€for€federal€income€tax€purposes.€€Rev.€Rul.€83„¼25,€1983„1€C.B.€116€addresses€this€issue.€€There€the€National€Office€of€the€Internal€Revenue€ServiceÏconcludes€that€what€are€apparently€ðð€142€trusts€under€Texas€law€are€"grantor"€trusts€for€income€taxÏpurposes.€€Around€1990,€before€the€income€tax€rates€became€so€compressed€for€complex€and€simpleÏtrusts,€I€did€an€informal€survey€of€bank€and€trust€company€trust€departments€in€Texas€and€out€of€20Ïlearned€that€half€were€treating€court„created€trusts€as€"grantor"€trusts€and€half€were€treating€them€asÏ"complex"€trusts.€€I€have€not€updated€that€survey;€however,€most€of€the€bank€and€trust€company€trustÏdepartments€for€whom€I€do€work€now€have€indicated€that€they€are€treating€such€trusts€as€"grantor"Ïtrusts.€€If€you€treat€a€court„created€trust€as€a€grantor€trust,€you€may€want€to€take€steps€to€make€it€clearÏto€the€parents€that€an€income€tax€return€will€need€to€be€filed€in€the€child/beneficiary's€name€reportingÏall€of€the€trust's€income.€€Some€trust€departments€with€whom€I€work€have€even€taken€the€extra€stepÏof€helping€the€parents€find€an€accountant€and/or€attorney€who€can€help€them€prepare€each€year'sÏincome€tax€return€or€arranged€directly€for€an€accountant€and/or€attorney€to€prepare€the€return.€€TheÏbank€may€even€want€to€make€quarterly€estimated€tax€payments€for€the€individual€beneficiary€fromÏthe€Trust.€€(I€had€one€situation€recently€where€the€parent€did€not€realize€that€she€was€supposed€to€beÏfiling€income€tax€returns€for€her€child€each€year.€€By€the€time€the€Internal€Revenue€Service€contactedÏher€and€the€Trustee€referred€her€to€me,€significant€interest€was€due;€we€have€asked€that€penalties€beÏwaived.€€The€Trustee€had€òònotóó€been€making€quarterly€estimated€tax€payments€and€had€even€filed€aÐ l¼ Ðreturn€for€the€child€for€one€of€the€years€in€question.)ÌÌà  àAnd€finally€for€those€of€you€who€are€excited€about€ðð€867€trusts€and€want€to€read€the€BillÏAnalysis€prepared€by€the€Senate€Research€Center€of€the€Texas€Legislature€prior€to€the€recentÏamendments,€see€Appendix€E.€ÌÌò òÔ  ÔVII.à  àòòPost„Script:€The€ARC€of€Texas€Master€Pooled€TrustÔ P>Ôóóó óÐ à%0!$ ÐÌà  àPeriodically,€you€will€be€contacted€by€attorneys€and€families€with€the€request€that€your€bankÏor€trust€company€serve€as€Trustee€of€a€sum€that€is€really€too€small,€in€your€view,€for€you€toÏeconomically€and€realistically€manage.€€Most€banks€and€trust€companies€take€on€some€of€theseÏsmaller€trusts€as€a€community€pro€bono€project,€but€you€cannot€take€on€all€that€are€offered€to€you.€Ð |*Ì%) ÐFor€disabled€beneficiaries,€there€is€now€another€alternative€that€is€available:€The€ARC€of€TexasÏMaster€Pooled€Trust.€€Separate€accounts/trusts€come€in€two€flavors€under€the€ARC:€(1)€a€"specialÏneeds"€trust€which€contains€Medicaid€reimbursement€language,€with€the€anticipation€that€theÏbeneficiary's€property€will€fund€such€a€separate€account,€and€(2)€a€trust€created€by€parents€orÏgrandparents€that€need€not€be€used€to€reimburse€Medicaid€at€the€beneficiary's€death.ÌÌFor€further€information,€contact:ÌÌThe€Arc€of€Texas€Master€Pooled€Trust€Ì1600€W.€38th€St.,€Suite€200€ÌAustin,€Texas€78731ÌAttn:€Lisa€RiversÌ(800)€252„9729€ÌorÌ(512)€454„6694ÌFax:€(512)€454„4956ÌÌFounders€Trust€CompanyÌATTN:€Cynthia€WilliamsÌVice„President€and€Trust€OfficerÌ111€Congress,€Suite€330ÌAustin,€Texas€78701Ì(512)€344„7000/320„5939ÌFax:€(512)€479„3299/345„5461Ìà  àÌ€Ô_ÔÐ  ¼  ÐAppendicesÌÌAà  àCopy€of€Texas€Probate€Code,€ðððð€867€„€873.Ð ˆØ Ѐ€ÌBà  àðð€867€Trust€With€CommentaryÐ `° ÐÌCà  àComparison€Chart€for€Court„Created€TrustsÐ 8 ˆ ÐÌDà0  àTexas€Probate€Code€ðð€867€Management€Trusts:€€ò òReport€on€ó óA€Questionnaire€to€ProbateÐ  ` ÐJudges€on€Creation€and€AdministrationÐ (#(# ÐÌEà0  àBill€Analysis€by€Senate€Research€Staff,€May€13,€1997,€including€witness€list:€€Glenn€KarischÐ Ø(  Ð(another€one€of€your€speakers€today)€spoke€at€2:15€on€May€14th,€also€including€witness€listÏfor€House€Committee,€and€Glenn€Karisch€spoke€again.€€This€analysis€can€be€located€atÏwww.capitol.state.tx.us.€€At€screen€choose€View€Individual€Bill€Information,€then€enter€billÏnumber€(HB1314);€select€text€at€information€type€and€submit.Ð (#(# ÐÌÌ€€à  à€€€Ð  Lœ Ðà@ŸŸ+ìàAPPENDIX€AˆÌÌà  àWestlaw€customers€may€access€WESTLAW€and€the€statute€for€a€fee€atÏÔ_ÔURLWESTDOC.comÔ_Ô.€€[Westlaw€allowed€me€to€attach€a€copy€of€its€printed€version€of€the€statute€toÏthe€hard€copy€of€my€speech,€for€which€I€am€grateful.]ÌÌÐ  8 ˆ ÐÖ€› ØÖÑ =€ Ñà@ ìàForm€of€ðð€867€Trust€for€a€Minor,€Plain€Vanilla€(Not€"Special€Needs")ˆÌà@G G ìà1998€Kathleen€Ford€Bay,€Not€CopyrightedˆÌÌà@¥¥+ìàAPPENDIX€BˆÌÌÌà@ø ø ìàTHE€òò€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€óó€ðð867€TRUSTˆÐ 8 ˆ ÐÌÌà@––'ìàAGREEMENT€OF€TRUSTˆÌÌà@'ìàFOR€THE€BENEFIT€OFˆÌÌà@ìàòò€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€óóˆÐ ¬ü  ÐÌÌÌà@ttìàòò€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€óó,ˆÐ \¬ ÐÌà  àà ` àà ¸ àà ° àà  àTRUSTEEÌÌÌÌ„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„ÌÌÌÌÌà@Í Í #ìàAS€ADOPTED€BY€DECREE€OF€THEˆÌÌà@D D ìàòò€€€€€€óó€COURT€OF€òò€€€€€€€óó€COUNTY,€TEXAS,ˆÐ X ¨ ÐÌà@'ìàCAUSE€NO.€òò€€€€€€€€óóˆÐ 0"€  ÐÌà@Æ Æ ìàENTERED€ON€THE€òò€€€€€€óó€DAY€OF€òò€€€€€€€€€€€€€€€óó,€1998.ˆÐ $X" Ðà@ìì0ìàˆÌà@‹‹$ìàEXHIBIT€A€TO€COURT€ORDERˆÌÌÌÌCaveat:€Use€form€at€your€own€risk.€€No€advice€or€warranty€is€intended€or€made.ÌÌÌÌÐ @-(,=  ЇÌà@òò(ìàTABLE€OF€CONTENTSˆÌÌÓ€Ks€ÓÓ  ÓÌà8  àà ° à1.à  àòòTrusteeóóà‚#`"`"Q(#.^ ^ Ð Ð #à€€3ˆÐ `° ÐÌà8  àà ° à2.à  àòòBeneficiaryóóà‚#`"`"Q(#.¢ ¢ Ð Ð #à€€4ˆÐ 8 ˆ ÐÌà8  àà ° à3.à  àòòTrust€Estateóóà‚#`"`"Q(#.È È Ð Ð #à€€4ˆÐ  ` ÐÌà8  àà ° à4.à  àòòDistributions€from€the€Trust;€Undistributed€Income€to€be€Added€to€Principalóóà‚#`"`"Q(#.àà[Ð Ð #à€€4ˆÐ è 8  ÐÌà8  àà ° à5.à  àòòTerminationóóà‚#`"`"Q(#.ä ä Ð Ð #à€€6ˆÐ À  ÐÌà8  àà ° à6.à  àòòÔ_ÔRevocabilityÔ_Ôóóà‚#`"`"Q(#. Ð Ð #à€€8ˆÐ ˜è  ÐÌà8  àà ° à7.à  àòòSpendthrift€Provisionóóà‚#`"`"Q(#.¾ ¾ %Ð Ð #à€€9ˆÐ pÀ ÐÌà8  àà ° à8.à  àòòTrustee's€Investment€Authorityóóà‚#`"`"Q(#.ªª.Ð Ð #à€€9ˆÐ H˜ ÐÌà8  àà ° à9.à  àòòTrustee's€Compensation€and€Expensesóóà‚#."."Q(#.üü3Ð Ð #à€10ˆÐ  p ÐÌà8  àà ° à10.à  àòòAdministrative€Provisionsóóà‚#."."Q(#.88)Ð Ð #à€11ˆÐ øH ÐÌà8  àà ° à11.à  àòòMiscellaneousóóà‚#."."Q(#.Š Š Ð Ð #à€12ˆÐ Ð  Ðà8  àà0` Ð Ð àà  à(a)à ` àòòBooks€and€Records,€Informal€Accountingsóóà‚#."."Q(#.¬¬=` Ð ` Ð #à€12ˆÐ ¼  Ðà8  àà0` Ð Ð àà  à(b)à ` àòòTrustee's€Apparent€Authorityóóà‚#."."Q(#.tt2` Ð ` Ð #à€13ˆÐ ¨ø Ðà8  àà0` Ð Ð àà  à(c)à ` àòòPermission€of€Court€Needed€to€Resignóóà‚#."."Q(#.hh:` Ð ` Ð #à€13ˆÐ ”ä Ðà8  àà0` Ð Ð àà  à(d)à ` àòòHeadings€for€Convenienceóóà‚#."."Q(#.®®.` Ð ` Ð #à€14ˆÐ €Ð ÐÌà8  àà ° à12.à  àòòInception€of€the€Trustóóà‚#."."Q(#.Ì Ì &Ð Ð #à€14ˆÐ X ¨ ÐÌà8  àà ° à13.à  àòòDefinitionsóóà‚#."."Q(#.Œ Œ Ð Ð #à€14ˆÐ 0"€  Ðà8  àà0` Ð Ð àà  à(a)à ` àòòTrust€Estateóóà‚#."."Q(#. "` Ð ` Ð #à€14ˆÐ #l! Ðà8  àà0` Ð Ð àà  à(b)à ` àòòCodesóóà‚#."."Q(#.T T ` Ð ` Ð #à€15ˆÐ $X" Ðà8  àà0` Ð Ð àà0¸ ` Ð ` Ð àà ` à(Ô_ÔiÔ_Ô)à0¸ ¸ Ð ¸ Ð àà0°¸ Ð ¸ Ð àòòInternal€Revenue€Codeóóà‚#."."Q(#.ÜÜD°Ð °Ð #à€15ˆÐ ô$D # Ðà8  àà0` Ð Ð àà0¸ ` Ð ` Ð àà ` à(ii)à0¸ ¸ Ð ¸ Ð àà0°¸ Ð ¸ Ð àòòTexas€Trust€Codeóóà‚#."."Q(#.>>?°Ð °Ð #à€15ˆÐ à%0!$ Ðà8  àà0` Ð Ð àà0¸ ` Ð ` Ð àà ` à(iii)à0¸ ¸ Ð ¸ Ð àòòTexas€Property€Codeóóà‚#."."Q(#.JJ/¸ Ð ¸ Ð #à€15ˆÐ Ì&"% Ðà8  àà0` Ð Ð àà0¸ ` Ð ` Ð àà ` à(iv)à0¸ ¸ Ð ¸ Ð àòòTexas€Probate€Codeóóà‚#."."Q(#..¸ Ð ¸ Ð #à€15ˆÐ ¸'#& Ðà8  àà0` Ð Ð àà  à(c)à ` àòòTrusteeóóà‚#."."Q(#.¶ ¶ ` Ð ` Ð #à€15ˆÐ ¤(ô#' Ðà8  àà0` Ð Ð àà  à(d)à ` àòòBeneficiaryóóà‚#."."Q(#.ú ú !` Ð ` Ð #à€16ˆÐ )à$( Ðà8  àà0` Ð Ð àà  à(e)à ` àòòCourtóóà‚#."."Q(#.( ( ` Ð ` Ð #à€16ˆÐ |*Ì%) Ðà8  àà0` Ð Ð àà  à(f)à ` àòòOther€Termsóóà‚#."."Q(#.V V !` Ð ` Ð #à€16ˆÐ h+¸&* ÐÓ NÓÐ  ° ÐÌà@ß ß ìàòòTHE€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€ðð€867€TRUSTóóˆÐ œì ÐÌÓÓÌà  àThis€instrument€establishes€the€terms€of€a€management€trust€("the€Trust")€created€for€theÏbenefit€of€òò€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€óó,€a€minor,€pursuant€to€the€Order€of€the€òò€€€€€€€€óó€Court€of€òò€€€€€Ð $ t Ѐ€óó€County,€Texas€("the€Probate€Court")€under€the€authority€of€the€TEX.€PROB.€CODE€ANN.€ðð€867Ð ü L  Ð(Vernon€Supp.€1998).ÌòòA€minor€is€by€definition€"incapacitated."€€If€the€beneficiary€is€an€adult,€change€language€to€"anÐ ¬ü  ÐÔ_ÔincapitatedÔ_Ô€person."óóÐ „Ô  Ðà  àÔ  ÔÝ ‚·¤ ÝÝ  ÝÝ‚·¤^`Ýà0 ` àà0¸ ` (#` (#àÔ2#ÔÚ  ÚiÚ  Ú.Ô3  Ôà0°¸ (#¸ (#àÝ  Ýà  àòòTrusteeóóÔ Q`Ô.€€The€trustee€of€the€Trust€is€and€shallÐ \¬ Ðbe€òò€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€óó€(the€"Trustee"),Ð 4„ Ðand€its€successors€and€assigns€by€merger€orÏotherwise.€€Ýƒ·¤^`‰`݌Р°(#°(# ÐŒÝ  ÝÓÓòòThe€Trustee€must€be€a€"trust€company€or€a€state€or€national€bank€that€has€trust€powers"€in€Texas.€Ð ¼  Ððð€867.€€Mandatory€Provision.ÓÓÌóóUpon€approval€of€an€accounting,€the€Guardian€of€the€Estate€of€òò€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€óó€shallÐ €Ð Ðdeposit€into€the€Trust€as€its€corpus€those€funds€which€the€Court€shall€direct€and€the€Trustee's€dutiesÏshall€commence€in€accordance€with€the€terms€hereof.€€ÌÓÓòòIf€the€Trust's€funds€are€coming€from€a€person€other€than€the€Guardian€of€the€Estate,€then€the€aboveÐ $X" Ðlanguage€will€need€to€be€modified.€€Also,€Court€may€not€require€the€above€language€as€the€statuteÏsimply€states€that€the€"order€shall€direct€the€guardian€or€another€person€to€deliver€all€or€part€of€theÏassets€of€the€guardianship"€to€the€Trustee.€€Make€sure€the€person€who€is€to€deliver€assets€to€the€TrustÏis€a€party€to€Court€proceedings€so€he/she/it€will€be€bound€by€the€Court€order.óóÓÓÐ ¸'#& ÐNo€bond€or€other€security€is€required€of€the€Trustee€or€of€any€successor€trustee.ÌÓÓòòThis€provision€is€required€by€ðð€868(4).€€Mandatory€Provision.óóÓÓÐ h+¸&* Ðà  àÔ  ÔÝ ‚·¤ ÝÝ  ÝÝ‚·¤UgÝà0 ` àà0¸ ` (#` (#àÔ2#ÔÚ  ÚiiÚ  Ú.Ô3  Ôà0°¸ (#¸ (#àÝ  Ýà  àòòBeneficiaryóóÔ HgÔ.€€The€sole€and€only€beneficiary€ofÐ ° Ðthe€Trust€is€òò€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€óó€(theÐ ˆØ Ð"Beneficiary"),€who€was€born€on€òò€€€€€€€€€€€€€€€€€€€€€€€€€óó.€Ð `° ÐHer€social€security€number€is€òò€€€€€€€€€€€€€€€€€€€€€€€€€óó.݃·¤Ug€gÝŒÐ8 ˆ°(#°(# ÐŒÝ  ÝÓÓòòThe€ward€must€be€the€only€beneficiary€of€the€Trust.€€Mandatory€Provision.€€As€Trustee,€you€areÐ  ` Ðgoing€to€need€to€know€the€beneficiary's€date€of€birth€and€social€security€number€and€you€will€neverÏlose€the€Trust€Agreement,€so€you€mind€as€well€ask€that€they€be€included€in€the€Trust.€€(Even€if€youÏlose€your€copy,€you€can€always€get€another€copy€from€the€Court.)ÓÓóóÐ Ô$  Ðà  àÔ  ÔÝ ‚·¤ ÝÝ  ÝÝ‚·¤qkÝà0 ` àà0¸ ` (#` (#àÔ2#ÔÚ  ÚiiiÚ  Ú.Ô3  Ôà0°¸ (#¸ (#àÝ  Ýà  àòòTrust€EstateóóÔ dkÔ.€€The€Trust€shall€be€funded€withÐ ¬ü  Ðall€assets€received€from€the€Guardian€of€the€EstateÏof€òò€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€óó€and€any€interestÐ \¬ Ðearned€thereon€which€is€or€has€been€ordered€to€beÏpaid€to€the€Trustee€by€the€Guardian€of€theÏBeneficiary's€Estate.€€Such€assets€shall€constituteÏthe€initial€principal€of€the€Trust.݃·¤qkœk݌Р°(#°(# ÐŒÝ  ÝÓÓòòAgain,€if€assets€are€coming€from€a€person€other€than€the€Guardian€of€the€Estate,€language€shouldÐ ”ä Ðbe€changed€accordingly.€€Further,€you€may€want€to€refer€to€a€Schedule€A€and€actually€list€the€assetsÏthat€are€coming€into€the€Trust€there.ÓÓóóÐ l¼ Ðà  àÔ  ÔÝ ‚·¤ ÝÝ  ÝÝ‚·¤_oÝà0 ` àà0¸ ` (#` (#àÔ2#ÔÚ  ÚivÚ  Ú.Ô3  Ôà0°¸ (#¸ (#àÝ  Ýà  àòòDistributions€from€the€Trust;€UndistributedÐ D!” ÐIncome€to€be€Added€to€PrincipalÔ RoÔóó.€€The€Trustee€mayÐ #l! Ðpay€to€or€apply€for€the€benefit€of€the€BeneficiaryÏsuch€amounts€out€of€the€net€income€and€principalÏ(if€income€is€insufficient)€of€the€Trust€as€areÏreasonably€necessary€in€the€sole€discretion€of€theÐ |*Ì%) ÐTrustee€to€provide€for€the€health,€education,Ïsupport,€and€maintenance€of€the€Beneficiary.݃·¤_oŠo݌Р°(#°(# ÐŒÝ  ÝÓÓòòThis€language€restates€ðð€868(2).€€Mandatory€Provision.€óóÓÓÐ `° Ðà  àAny€income€of€the€trust€that€the€Trustee€does€not€distribute€shall€be€added€to€the€principalÏof€the€trust.ÌÓÓòòThis€language€is€required€by€ðð€868(3).€€Mandatory€Provision.óóÓÓÐ è 8  ЀÌà  àIn€making€any€discretionary€payments€to€the€Beneficiary,€the€Trustee€shall€consider€(Ô_ÔiÔ_Ô)€theÏstandard€of€living€to€which€the€Beneficiary€shall€have€been€accustomed€prior€to€the€creation€of€theÏTrust;€(ii)€any€known€resources€of€the€Beneficiary;€(iii)€the€ability€of€any€person€who€is€legallyÏobligated€to€support€the€Beneficiary€to€do€so;€(iv)€the€ability€of€the€Beneficiary€to€earn€funds€for€theÏBeneficiary's€own€support€and€maintenance€except€while€obtaining€an€education;€and€(v)€any€presentÏor€future€Texas€Probate€Code€provisions€governing€the€use€and€expenditure€of€funds€held€inÏmanagement€trusts;€provided,€that€in€making€such€distributions€the€Trustee€shall€consider€specificallyÏthe€obligation€of€the€Beneficiary's€parents€to€support€him€while€he€is€a€minor€and€the€income€andÏassets€of€the€parents€that€are€available€for€the€Beneficiary's€support,€and€also€whether€or€not€theÏparents€are€adequately€fulfilling€their€support€obligation.ÌÓÓòòThis€is€not€a€mandatory€provision,€but€it€is€one€that€delineates€the€duties€of€the€Trustee€more€clearlyÐ $X" Ðand€one€that€you€can€point€to€if€the€family€tries€to€look€to€the€Trust€for€the€sole€support€of€the€child.€ÏIt€is€unclear€whether€or€not€the€Trustee,€if€it€fulfills€the€support€obligation€of€the€parents,€can€recoverÏfor€the€Trust€the€amount€so€spent.€€If€this€becomes€a€problem€with€any€of€your€trusts,€you€will€needÏto€seek€legal€advice€and€perhaps€seek€the€court's€direction€and€order€that€parents€provide€a€specificÏâ âamount€of€support.€€Tex.€Family€Code€ðð€154.001.óóÓÓÐ ¤(ô#' Ðà  àThe€Trustee€may€make€any€distribution€required€or€permitted€hereunder,€without€theÏâ âintervention€of€any€guardian€or€other€legal€representative,€in€any€of€the€following€ways:Ìà  à(Ô_ÔiÔ_Ô)€to€the€Beneficiary€directly€where€ordered€by€the€Probate€Court€or€when€the€BeneficiaryÏis€eighteen€(18)€or€older€(and€de€Ô_ÔminimisÔ_Ô€amounts€of€under€Fifty€Dollars€($50)€may€be€made€to€theÏbeneficiary€while€she€is€under€eighteen€(18)€for€spending€money€on€class€trips€and€the€like);ÌÓÓòòðð€868(b)€contains€so„called€facility€of€payment€provisions;€this€is€not€one€of€the€mandatory€orÐ è 8  Ðpermissible€provisions€specified€in€the€statute.€€However,€ðð€868(e)€provides€that€the€court€mayÏinclude€additional€provisions€in€a€Trust€if€it€concludes€that€the€addition€does€not€conflict€with€theÏmandatory€provisions€required€by€ðð€868(a).€€This€is€a€useful€provision€and€you€may€want€to€ask€thatÏit€be€included.óóÓÓÐ ˜è  Ðà  à(ii)€to€the€legal€Guardian€of€the€Beneficiary's€person;ÌÓÓòòðð868(b)(2)€provides€that€distributions€can€be€made€to€the€ward's€Guardian.€€When€there€is€aÐ H˜ Ðmanagement€trust,€there€will€rarely€be€a€Guardian€of€the€Estate,€so€the€provision€allowsÏdistributions€to€be€made€to€the€Guardian€of€the€Beneficiary's€person.€Specified€Permissive€Provision.ÓÓÌóóà  à(iii)€to€any€person€furnishing€care,€education,€support,€or€maintenance€to€the€Beneficiary;€andÐ øH ÐÓÓòòðð€867(b)(2)€actually€is€narrower€than€the€above€language€and€provides€that€a€distribution€may€beÐ Ð  Ðmade€to€"a€person€who€has€physical€custody€of€the€ward."€The€statute€may€be€too€narrow;€thus,€youÏmay€want€the€authority€of€the€Trustee€to€be€broadened€as€provided€above.€€Permissive€per€ðð€868(e).óó€ÓÓÐ ¨ø ÐÌà  à(iv)€by€utilizing€any€distribution€directly€for€the€Beneficiary's€benefit.ÌÓÓòòðð€867(b)(3)€is€essentially€the€same€as€the€above€language€and€reads€as€follows:€"a€person€providingÐ 0"€  Ða€good€or€service€to€the€ward."óóÓÓÐ #l! Ðà  àÔ  ÔÝ ‚·¤ ÝÝ  ÝÝ‚·¤ƒÝà0 ` àà0¸ ` (#` (#àÔ2#ÔÚ  ÚvÚ  Ú.Ô3  Ôà0°¸ (#¸ (#àÝ  Ýà  àòòTerminationóóÔ ƒÔ.€€The€Trust€shall€terminate€uponÐ ô$D # Ðthe€earliest€to€occur€of€the€following:݃·¤ƒ@ƒÝŒÐ °(#°(# ÐŒÝ  Ýà  à(Ô_ÔiÔ_Ô)€pursuant€to€an€order€of€the€Probate€Court,€when€the€Beneficiary€attains€the€age€of€twenty„¼five€(25)€years,€Ð |*Ì%) Ðà  à(ii)€the€Beneficiary's€death€prior€to€attaining€such€age,€andÌÓÓòò(Ô_ÔiÔ_Ô)€and€(ii)€above€are€set€forth€in€ðð€870,€provided€that€a€trust€for€a€minor€will€terminate€at€age€18Ð ˆØ Ðunless€the€Court€has€extended€it€in€the€Court€order€and€the€Court€order€may€include€a€date€that€isÏnot€later€than€the€ward's€25th€birthday.€€Mandatory€Provisions€where€beneficiary€is€a€minor.€WhatÏif€you€anticipate€at€the€beginning€of€the€Trust€that€the€beneficiary's€injury€or€condition€is€such€thatÏthe€beneficiary€will€never€have€capacity?€€Can€the€Trust€be€drafted€to€provide€that€it€will€notÏterminate€at€age€25€unless€the€beneficiary€is€not€under€a€disability,€and€then€define€disability?€€ððÏ868(e)€provides€that€the€Trust€may€include€any€provisions€that€do€not€violate€the€mandatoryÏprovisions€of€ðð€868(a)€and€including€an€extension€provision€certainly€does€òònotóó€violate€ðð868(a).€Ð ü L  ÐHowever,€ðð€870(a)(2)€provides€that€the€Court€order€cannot€extend€the€Trust€beyond€the€ward's€25thÏbirthday.€€Hmm;€would€a€Court€actually€sign€an€order€at€the€beginning€of€the€Trust€that€allows€itÏto€be€automatically€extended€beyond€25€if€the€beneficiary€is€still€under€a€disability?ÌÌà  àAs€a€practical€matter,€even€if€there€is€not€a€Guardian€of€the€person€while€the€minor€is€underÏ18,€when€the€minor€reaches€age€18€there€will€probably€be€a€proceeding€to€appoint€a€Guardian€ofÏthe€adult€incapacitated€person.€€A€Guardian€will€be€needed€for€medical€reasons,€if€nothing€else.€€AsÏpart€of€that€proceeding,€the€ðð€867€trust€can€be€modified€to€show€that€it€now€applies€to€an€adultÏincapacitated€person€and€provide€that€it€will€continue€until€the€death€of€the€beneficiary€or€until€theÏCourt€determines€that€continuing€the€trust€is€no€longer€in€the€beneficiary's€best€interests.ÓÓÌóóà  à(iii)€distribution€of€the€entire€corpus€of€the€Trust€pursuant€to€the€terms€of€this€instrument.Ð  \ ÐÓÓòòThis€provision€does€not€appear€in€the€statute,€but€is€intuitively€obvious.óó€ÓÓÐ ä4 ÐÌUpon€termination,€the€Trustee€shall€pay€all€of€the€then€remaining€Trust€Estate€of€the€Trust€to€theÏBeneficiary€free€of€any€further€trust€or,€if€the€Beneficiary€is€then€deceased,€to€the€personalÏrepresentative€of€the€Beneficiary's€estate.ÌÓÓòòðð€873€mandates€the€above€language.€€There€is€similar€language€in€Tex.€Property€Code€ðð€142.005(e).€Ð #l! ÐDistrict€Courts€have€allowed€the€following€language€to€be€substituted.€€If€there€would€not€otherwiseÏbe€a€"probate€estate"€but€for€the€distribution€of€the€Trust€to€an€administrators,€this€provision€canÏexpedite€the€closing€of€the€trust€and€save€expenses:ÌÌà0  à"òòDistribution€Where€Beneficiary€Dies€Before€Terminationóó:€If€the€Beneficiary€dies€prior€toÐ ¸'#& Ðbecoming€entitled€to€receive€the€entire€Trust€Estate€under€the€foregoing€provisions€of€thisÏSection,€then€upon€the€Beneficiary's€death€the€Trust€Estate€shall€be€paid€over€to€such€personÏor€persons€or€corporation€or€corporations,€to€such€extent,€in€such€amounts€or€proportions,Ïand€in€such€lawful€interests€or€estates,€whether€absolute€or€in€trust,€as€the€Beneficiary€mayÐ h+¸&* Ðdirect€by€a€specific€reference€to€this€power€in€the€Beneficiary's€Last€Will.€If€there€is€noÏspecific€direction€in€the€Beneficiary's€Will,€then€the€Trust€Estate€shall€be€paid€to€theÏbeneficiaries€of€the€Beneficiary's€residuary€estate€upon€the€same€terms€and€conditions€asÏprovided€in€the€Will,€unless€the€Beneficiary€has€stated€in€such€Will€that€the€power€ofÏappointment€is€not€being€exercised.€Ð (#(# Ðà  àÌà0  à"If€the€Beneficiary€does€not€have€a€Will,€or€has€provided€in€the€Will€that€the€Beneficiary€doesÏnot€intend€to€exercise€this€power€of€appointment€over€the€Trust€Estate,€then€upon€theÏBeneficiary's€death,€the€Trust€Estate€shall€be€paid€over€to€the€heirs-at-law€of€the€BeneficiaryÏpursuant€to€Section€38€of€the€Texas€Probate€Code€as€now€in€effect€or€as€it€may€hereafter€beÏamended.€However,€if€the€Beneficiary€at€the€time€of€death€is€a€resident€of€a€State€other€thanÏTexas€and€does€not€have€a€Will,€or€if€the€Beneficiary€has€a€Will€it€states€that€the€BeneficiaryÏis€not€exercising€the€power€of€appointment,€then€the€Trust€Estate€shall€be€distributed€to€theÏBeneficiary's€heirs-at-law€determined€in€accordance€with€the€statutes€of€the€State€where€theÏBeneficiary€is€a€resident€at€the€time€of€death.€In€such€a€case,€the€Trustee,€in€its€soleÏdiscretion,€may:Ð (#(# ÐÌà0  àà ` à"(1)à ¸ àrequire€a€determination€of€Ô_ÔheirshipÔ_Ô€proceeding€in€a€Probate€Court€or€otherÐ \¬ Ðcourt€that€would€have€jurisdiction€over€the€Beneficiary's€estate,Ð (#(# ÐÌà0  àà ` à"(2)à ¸ àascertain€independently€who€are€the€heirs€of€the€Beneficiary,€orÐ p(#(# ÐÌà0  àà ` à"(3)à ¸ àdistribute€the€Trust€Estate€to€the€court„appointed€personal€representa‚tive€ofÐ øH Ðthe€Beneficiary's€estate.€Ð (#(# ÐÌà0  à"The€purpose€of€this€provision€is€to€expedite€the€distribution€of€the€Trust€Estate€if€theÏBeneficiary€dies€before€its€termination€either€without€a€Will€or€with€a€Will€in€which€theÏBeneficiary€states€that€the€power€of€appointment€is€not€being€exercised,€to€avoid€theÏadditional€costs€that€would€result€from€having€an€administration€of€an€intestate€estate€inÏaddition€to€any€proceedings€needed€to€close€the€administration€of€the€Trust€Estate,€to€allowÏthe€Trustee€to€pay€the€Trust€Estate€directly€to€the€Beneficiary's€heirs-at-law€without€the€needÏto€have€an€administrator€of€the€Beneficiary's€estate€appointed,€and€to€avoid€having€toÏtransfer€the€Trust€Estate€to€an€Executor€if€there€is€a€Will€in€which€the€Beneficiary€has€statedÏthat€the€power€of€appointment€is€not€being€exercised.€In€fulfilling€its€responsibilities€underÏthis€paragraph,€the€Trustee€shall€be€liable€to€the€Beneficiary€and€the€Beneficiary's€heirs€onlyÏfor€gross€negligence,€gross€misconduct,€or€fraud.€The€Trustee€shall€not€be€liable€to€anÏunknown€creditor€of€the€Beneficiary€or€of€the€Beneficiary's€estate€if€the€Trustee,€beforeÏdistributing€the€Beneficiary's€share€of€the€Trust€Estate€directly€to€the€Beneficiary's€heirs,€firstÏhas€a€notice€to€creditors€published€in€the€form€prescribed€by€the€applicable€state€probate€lawÏfor€probate€estates,€and€then€waits€thirty€(30)€days€to€see€if€any€claims€are€filed.€€The€TrusteeÏhas€complete€authority€to€negotiate€payment€of€claims.€€After€thirty€(30)€days€the€TrusteeÏâ âmay€make€distributions€to€the€heirs€without€liability€to€any€unknown€creditors.€€For€purposesÐ |*Ì%) Ðof€Section€873€of€the€Probate€Code,€the€Trustee€shall€be€the€'personal€representative'€of€theÏBeneficiary's€estate€under€the€circumstances€set€forth€above."óóÓÓÐœì(#(# Ðâ âà  àÔ  ÔÝ ‚·¤ ÝÝ  ÝÝ‚·¤Ñ Ýà0 ` àà0¸ ` (#` (#àÔ2#ÔÚ  ÚviÚ  Ú.Ô3  Ôà0°¸ (#¸ (#àÝ  Ýà  àòòÔ_ÔRevocabilityÔ_ÔóóÔ Ä Ô.€€This€Trust€shall€not€be€revoked,Ð tÄ Ðaltered,€or€amended€by€the€Beneficiary€or€anyÏguardian€or€other€legal€representative€of€theÏBeneficiary,€but€it€shall€remain€subject€toÏamendment,€modification,€or€revocation€by€theÏCourt€at€any€time€prior€to€the€termination€of€theÏTrust.€€If€the€Court€revokes€the€Trust€prior€to€theÏBeneficiary€attaining€the€age€of€eighteen€(18)Ïyears,€the€Court€may€enter€such€further€orÏadditional€orders€concerning€the€Trust€Estate€asÏmay€be€authorized€by€the€Texas€Probate€Code,€asÏthen€in€effect.€€If€the€Court€revokes€the€Trust€afterÏthe€Beneficiary€attains€the€age€of€eighteen€(18)Ïyears,€the€Trust€Estate€shall€be€paid€and€deliveredÏto€the€Beneficiary,€free€of€trust.݃·¤Ñ ü ÝŒÐ °(#°(# ÐŒÝ  ÝÓÓòòSee€ðð€869.óóÓÓÐ #l! Ðà  àÔ  ÔÝ ‚·¤ ÝÝ  ÝÝ‚·¤9¥Ýà0 ` àà0¸ ` (#` (#àÔ2#ÔÚ  ÚviiÚ  Ú.Ô3  Ôà0°¸ (#¸ (#àÝ  Ýà  àòòSpendthrift€ProvisionóóÔ ,¥Ô.€€Prior€to€the€actualÐ ô$D # Ðreceipt€of€any€distribution€of€any€portion€of€theÏTrust€Estate€by€the€Beneficiary,€and€to€the€fullestÏextent€allowed€by€law,€no€property€(whetherÐ |*Ì%) Ðincome€or€principal)€of€the€Trust€shall€be€subject€toÏanticipation€or€assignment€by€the€Beneficiary,€or€toÏattachment€by€or€the€interference€or€control€of€anyÏcreditor€or€assignee€of€the€Beneficiary,€or€be€takenÏor€reached€by€a€legal€or€equitable€process€inÏsatisfaction€of€any€debt€or€liability€of€theÏBeneficiary.€€Any€attempted€transfer€orÏencumbrance€of€any€interest€in€the€Trust€Estate€byÏthe€Beneficiary€prior€to€the€actual€distributionÏthereof€to€the€Beneficiary€shall€be€wholly€void.݃·¤9¥d¥ÝŒÐ °(#°(# ÐŒÝ  ÝÓÓòòI€have€never€seen€a€court„created€trust€that€does€not€include€a€spendthrift€provision.€€How€effectiveÐ  p Ðis€such€a€provision?€€I€do€not€know;€to€my€knowledge€there€are€no€Texas€cases€that€discuss€theÏviability€of€a€spendthrift€provision€in€a€court„created€trust€that€is€being€funded€with€monies€thatÏbelong€to€the€beneficiary.€€See€Tex.€Trust€Code€ðð€112.035(d)€and€ðð€111.004(14).€At€the€Seminar€byÏthe€Texas€Bankers€Association,€Financial€Services€Division,€on€February€6,€1998,€Glenn€M.€KarischÏnoted€that€his€firm,€Ikard€&€Golden,€P.C.,€is€currently€involved€in€a€case€where€the€spendthriftÏprovision's€protection€is€at€issue.€€So,€there€may€soon€be€a€Texas€case€on€this€issue.óó€€ÓÓ€Check€with€Mr.Ð ¨ø ÐKarisch.ÌÌ€à  àÔ  ÔÝ ‚·¤ ÝÝ  ÝÝ‚·¤H¬Ýà0 ` àà0¸ ` (#` (#àÔ2#ÔÚ  ÚviiiÚ  Ú.Ô3  Ôà0°¸ (#¸ (#àÝ  Ýà  àòòTrustee's€Investment€AuthorityóóÔ ;¬Ô.€€The€TrusteeÐ 0"€  Ðshall€invest€the€Trust€Estate€in€accordance€with€theÏstandards€set€forth€in€Tex.€Trust€Code€ðð€113€andÏthe€Trustee€may€also€invest€all€or€any€part€of€theÏTrust€Estate€in€one€or€more€common€trust€fundsÏnow€or€hereafter€established€by€the€TrusteeÐ h+¸&* Ðpursuant€to€Tex.€Property€Code€ðððð€113.171€and€Ï113.172.݃·¤H¬s¬ÝŒÐ °(#°(# ÐŒÝ  ÝÓÓòòSince€ðð€868(e)€allows€the€Court€to€include€additional€provisions,€an€investment€provision€whichÐ `° Ðspecifically€refers€to€common€trust€funds€may€be€helpful.€€I€have€also€used€the€following€language:ÌÌà0  à"Nothing€herein€shall€be€deemed€to€allow€the€Trustee€to€deviate€from€the€prudent€person€ruleÏof€investments€as€set€forth€in€the€Texas€Trust€Code;€provided,€however,€that€the€CourtÏrecognizes€specifically€that€as€a€corporate€trustee€the€Trustee€for€the€sake€of€economy€andÏpracticality€often€places€the€assets€of€trusts€that€are€less€than€a€certain€minimum€amount€(forÏexample,€$200,000)€in€its€own€common€trust€funds,€in€various€families€of€mutual€fund„typeÏinvestments,€and€partially€or€wholly€in€certificates€of€deposit€and€treasury€bills.€The€CourtÏspecifically€acknowledges€this€practice€and€approves€of€it,€both€when€the€Trust€is€under€thatÏminimum€amount€and€also€to€diversify€investments€when€the€Trust€is€over€that€minimumÏamount."ÓÓÐ (#(# Ðóóà  àÔ  ÔÝ ‚·¤ ÝÝ  ÝÝ‚·¤³Ýà0 ` àà0¸ ` (#` (#àÔ2#ÔÚ  ÚixÚ  Ú.Ô3  Ôà0°¸ (#¸ (#àÝ  Ýà  àòòTrustee's€Compensation€and€ExpensesóóÔ ö²Ô.€€TheÐ \¬ ÐTrustee€shall€be€entitled€to€receive€for€the€Trustee'sÏservices€hereunder€a€fair€and€reasonableÏcompensation€determined€in€accordance€withÏSection€868€of€the€Texas€Probate€Code.݃·¤³.³ÝŒÐ °(#°(# ÐŒÝ  ÝÓÓòòðð€868(a)(5)€provides€that€the€Trustee's€"reasonable€compensation"€is€to€be€determined€in€the€sameÐ ”ä Ðmanner€as€compensation€of€a€Guardian€of€an€estate€under€ðð€665.€€Under€that€provision,€a€GuardianÏis€entitled€to€a€fee€of€5%€of€the€gross€income€and€5%€of€all€money€paid€out,€but€"money€paid€out"Ïdoes€not€include€any€money€loaned,€invested,€or€paid€over€on€the€settlement€of€the€guardianship€orÏa€tax„motivated€gift€made€by€the€beneficiary.€€Further,€if€the€fee€is€"unreasonably€low"€the€CourtÏmay€increase€it.€€This€requires€an€application€to€the€Court€and€a€showing€that€the€servicesÏperformed€by€the€Trustee€warrant€additional€compensation.€Mandatory€Provision€for€compensation.€ÏSee€ðð€666€for€reimbursement€provision€re€guardians.óó€ÓÓ€€€Ð $X" Ðà  àThe€Trustee€shall€also€be€reimbursed€for€all€reasonable€expenses€incurred€by€the€Trustee€inÏconnection€with€the€Trust.ÌÓÓòòGeneral€trust€practice€dictates€that€the€Trust€bears€the€costs€of€expenses,€not€the€Trustee.€€If€theÐ )à$( ÐTrustee€has€advanced€its€own€funds€to€pay€for€a€Trust€expense,€it€should€be€reimbursed.óóÓÓÐ |*Ì%) Ðà  àThe€manner€in€which€fees€are€to€be€calculated€hereunder€has€been€approved€by€the€ProbateÏCourt€at€the€inception€of€the€Trust,€and€the€Trustee€may€pay€itself€such€fees€and€on€a€periodic€basis,Ïbut€the€Probate€Court€may€review€such€fees€and€also€expenses€at€any€time€on€the€Probate€Court'sÏown€motion€or€at€the€instance€of€the€Trustee€or€any€other€party€interested€in€the€welfare€of€theÏBeneficiary,€and€upon€a€hearing€of€the€matter,€the€Probate€Court€shall€take€any€action€with€respectÏto€such€fees€and€expenses€as€the€Probate€Court€may€deem€appropriate.€€The€Trustee€expressly€agreesÏto€reimburse€to€the€Trust€any€fees€previously€paid€to€the€Trustee€by€the€Trust€in€the€event€the€ProbateÏCourt€orders€the€Trustee€to€do€so.ÌÓÓòòThe€above€provision€is,€arguably,€in€"conflict"€with€ðð€868(a)(5)€which€provides€as€follows:€€"theÐ pÀ Ðtrustee,€ò òon€annual€application€to€the€courtó ó€and€subject€to€the€court's€approval,€is€entitled€to€receiveÐ \¬ Ðreasonable€compensation€for€services€that€the€trustee€provided€to€the€ward€as€the€ward's€trustee."Ï(Emphasis€added.)€€Nevertheless,€Courts€are€aware€that€it€can€be€quite€costly€to€the€Trust€to€hire€anÏattorney€every€year€just€to€apply€to€have€the€Trustee's€fee€approved.€€Most€Courts€also€require€anÏaccounting€in€order€to€approve€the€fee.€€A€common€practice€that€appears€to€be€developing€is€to€allowÏthe€Trustee€to€pay€itself€without€prior€Court€approval,€but€also€to€require€that€the€Trustee€annuallyÏsubmit€to€the€court€the€transaction€statements€for€the€Trust€and€also€to€explicitly€provide€in€the€TrustÏdocument€that€the€Court€still€has€the€authority€to€revisit€the€compensation€taken€and€require€theÏTrustee€to€reimburse€the€Trust€if€the€Court€deems€it€necessary.€€Most€trust€departments€seem€to€beÏset€up€to€take€commissions€automatically€on€a€monthly€or€quarterly€basis€and€if€the€Court€willÏinclude€the€language€above,€they€can€continue€this€practice.€€This€provision€also€allows€the€TrusteeÏto€be€paid€currently€rather€than€having€to€wait€in€some€instances€for€more€than€a€year€to€be€paidóó.ÓÓÐ €Ð Ðà  àÔ  ÔÝ ‚·¤ ÝÝ  ÝÝ‚·¤GÂÝà0 ` àà0¸ ` (#` (#àÔ2#ÔÚ  ÚxÚ  Ú.Ô3  Ôà0°¸ (#¸ (#àÝ  Ýà  àòòAdministrative€ProvisionsóóÔ :ÂÔ.€€In€theÐ X ¨ Ðadministration€of€the€Trust,€the€Trustee€shall€beÏauthorized€and€empowered:݃·¤GÂrÂ݌Р°(#°(# ÐŒÝ  Ýà  àà ` à(Ô_ÔiÔ_Ô)€€€€To€exercise€all€of€the€powers€now€or€hereafter€granted€to€trustees€of€expressÏtrusts€by€the€Texas€Trust€Code,€except€in€any€instance€in€which€the€Texas€Trust€Code€or€such€otherÏâ âstatutory€provision€may€conflict€with€the€express€provisions€of€this€Agreement€of€Trust,€or€theÐ )à$( Ðprovisions€contained€in€Sections€867€through€873€of€the€Texas€Probate€Code,€in€which€case€theÏprovisions€of€this€Agreement€of€Trust€and€the€Texas€Probate€Code€shall€control.Ìâ âà  àà ` à(ii)€€€€To€adjust,€compromise,€abandon,€sue€on,€or€defend,€and€otherwise€deal€with€andÏsettle€all€claims€in€favor€of€or€against€the€Trust.€€To€engage€and€retain€attorneys€or€accountants€at€anyÏtime€when€it€may€be€reasonably€necessary€to€do€so€in€order€to€provide€for€the€prudent€managementÏand€preservation€of€the€Trust.Ìà  àà ` à(iii)à ¸ à€€€To€continue€to€act€as€Trustee€of€the€Trust€regardless€of€any€change€of€nameÐ À  Ðof€the€Trustee€and€regardless€of€any€reorganization,€merger,€or€consolidation€of€the€Trustee.ÌÓÓòòAgain,€since€ðð€868(e)€allows€the€addition€of€such€provisions,€consider€adding€them.óóÓÓÐ pÀ Ðà  àÔ  ÔÝ ‚·¤ ÝÝ  ÝÝ‚·¤êÈÝà0 ` àà0¸ ` (#` (#àÔ2#ÔÚ  ÚxiÚ  Ú.Ô3  Ôà0°¸ (#¸ (#àÝ  Ýà  àòòMiscellaneousóóÔ ÝÈÔ.€€The€Trust€shall€also€be€heldÐ H˜ Ðand€administered€pursuant€to€the€following€termsÏand€conditions:݃·¤êÈÉ݌Р°(#°(# ÐŒÝ  Ýà  àà ` àÔ  Ô(a)à ¸ àòòBooks€and€Records,€Informal€AccountingsóóÔ ŽÊÔ.€€The€Trustee€shall€keep€books€ofÐ Ð  Ðaccount€respecting€the€Trust€and€all€transactions€involving€the€Trust,€and€shall€furnish,€at€leastÏannually,€an€informal€accounting€to€the€Guardian€of€the€Beneficiary's€person€or€estate€and€to€theÏProbate€Court€which€shall€consist€of€the€Trustee's€transaction€statements€for€the€Trust€showingÏreceipts€and€disbursements€of€income€and€corpus€of€the€Trust€and€a€list€of€assets€held€in€the€Trust.€ÏThe€Trustee€shall€also€furnish€such€additional€statements€and/or€reports,€documents,€or€informationÏto€the€Probate€Court€upon€the€request€of€the€Probate€Court.ÌÓÓòòThis€is€the€quid€pro€quo€provision€that€Courts€require€if€they€release€the€Trustee€from€the€necessityÐ ¸'#& Ðof€applying€to€the€Court€before€taking€any€compensation.€€You€may€still€wish€to€use€an€attorney€toÏsubmit€the€informal€accounting,€but€I€know€of€no€Court€that€requires€that€you€do€so.€€NOTE,Ïhowever,€that€if€you€are€applying€to€the€Court€rather€than€simply€sending€the€Court€the€transactionÏstatements,€you€must€have€an€attorney€to€represent€you.€€Rule€7€of€the€Texas€Rules€of€Court€has€beenÐ h+¸&* Ðconstrued€to€mean€that€a€corporation€cannot€represent€itself€pro€se€in€Court.€€òòDell€Dev.€Corp.€v.Ð ° ÐBest€Industries€Uniform€Supply€Co.,€Inc.óó,€743€S.W.2d€302€(Ô_ÔCtÔ_Ô.€App.€„„€Houston€[14th€Ô_ÔDistÔ_Ô.]€1987,Ð œì Ðwrit€denied).€€Most€Courts€require€that€an€officer€of€the€corporation€verify€that€the€transactionÏstatements€„„the€"informal€accounting"„„€are€true€and€correct.ÌÌðð€871(a)€requires€that€the€Trustee€file€with€the€Court€"an€annual€accounting€of€transactions€in€theÏtrust€in€the€same€manner€and€form€that€is€required€of€a€guardian€under€this€chapter."€€Many€CourtsÏnow€allow€informal€accountings€as€described€above.€ðð€871(b)€requires€the€Trustee€to€send€a€copyÏof€this€accounting€to€the€Guardian€of€the€ward€as€well.€€ðð€871(c)€provides€that€the€annual€accountingÏis€subject€to€Court€"review€and€approval€in€the€same€manner€that€is€required€of€an€annual€accountÏprepared€by€a€guardian€under€this€chapter."€€Under€ðð€741,€the€Trustee€must€submit€the€accounting€„Ïbe€it€informal€or€formal€„€not€later€than€the€60th€day€after€the€expiration€of€12€months€from€the€dateÏof€appointment,€unless€extended.€€The€informal€accounting€should,€under€ðð€741,€be€verified€underÏoath.€€Under€ðð€742,€after€the€accounting€has€been€on€file€for€10€days,€the€judge€shall€consider€it€andÏ"may€continue€the€hearing€on€the€account€until€the€judge€is€fully€advised€as€to€all€items€of€theÏaccount."€€Thus,€there€is€no€necessity€that€each€year's€annual€accounting€be€approved€by€CourtÏorder,€but€when€the€Trust€terminates€a€full€accounting€will€need€to€be€done.€€You€may€also€want€toÏconsider€requesting€every€5€years€that€your€actions€and€inactions€for€that€period€be€approved€inÏorder€to€limit€liability€while€at€the€same€time€saving€Court€costs,€including€attorneys'€fees.€ðð€873.ÓÓÌóóà  àà ` àÔ  Ô(b)à ¸ àòòTrustee's€Apparent€AuthorityóóÔ õÖÔ.€€No€person€or€entity€dealing€with€the€TrusteeÐ  p Ðhereunder€shall€be€obligated€to€see€to€the€application€of€any€money€or€property€paid€or€delivered€toÏthe€Trustee,€and€no€such€person€or€entity€shall€be€obligated€to€inquire€into€the€expediency€orÏpropriety€of€any€transaction€of€the€authority€of€the€Trustee€to€enter€into€and€consummate€the€sameÏupon€such€terms€as€the€Trustee€may€deem€reasonably€appropriate.ÌÓÓòòðð€868(e)€allows€the€inclusion€of€additional€language€not€set€forth€in€the€statute.€€The€above€provisionÐ X ¨ Ðis€one€that€typically€is€included€in€Trust€Agreements.ÓÓÌóóà  àà ` àÔ  Ô(c)à ¸ àòòPermission€of€Court€Needed€to€ResignóóÔ çÙÔ.€€The€Trustee€may€not€resign€as€TrusteeÐ #l! Ðand€a€Trustee€may€not€be€substituted€in€place€of€the€present€Trustee€of€the€Trust€without€receivingÏprior€authority€from€the€Court€to€do€so;€however,€no€court€order€is€needed€if€the€successor€TrusteeÏis€a€successor€or€assign€of€òò€€€€€€€€€€€€€€€€€€€€€€€€€óó's€by€merger€or€otherwise.Ð ¤(ô#' ÐÓÓòòSee€ðð€869A.óóÓÓÐ |*Ì%) Ðà  àà ` àÔ  Ô(d)à ¸ àòòHeadings€for€ConvenienceóóÔ ÜÔ.€€The€headings€appearing€in€this€Agreement€are€forÐ ° Ðconvenience€only€and€do€not€purport€to€define€or€limit€the€scope€or€intent€of€the€provisions€to€whichÏthey€refer.Ìà  àÔ  ÔÝ ‚·¤ ÝÝ  ÝÝ‚·¤0ÝÝà0 ` àà0¸ ` (#` (#àÔ2#ÔÚ  ÚxiiÚ  Ú.Ô3  Ôà0°¸ (#¸ (#àÝ  Ýà  àòòInception€of€the€TrustóóÔ #ÝÔ.€€This€Trust€shallÐ 8 ˆ Ðbecome€effective€upon€(Ô_ÔiÔ_Ô)€the€effective€date€of€theÏCourt€order€which€authorizes€the€creation€of€thisÏTrust;€(ii)€the€transfer€of€the€above€stated€sum€ofÏmoney€to€the€Trustee;€(iii)€the€Trustee's€acceptanceÏof€the€Trust€which€shall€be€evidenced€by€theÏsignature€below€of€the€appropriate€officer€of€theÏTrustee;€and€(iv)€the€filing€of€one€of€the€two€(2)Ïoriginals€of€this€document€in€the€guardianshipÏproceedings.€€This€Trust€is€created€by€operation€ofÏlaw€as€it€is€implemented€herein€by€the€Court€and,Ïto€the€extent€permitted€by€law,€neither€theÏBeneficiary's€Guardian€nor€the€Court€is€the€grantorÏof€this€Trust€within€the€meaning€of€the€InternalÏRevenue€Code.݃·¤0Ý[Ý݌Р°(#°(# ÐŒÝ  ÝÓÓòòSince€ðð€868(e)€allows€the€addition€of€various€provisions,€you€may€want€to€consider€adding€aÐ à%0!$ Ðprovision€similar€to€the€one€above.óóÓÓÐ Ì&"% Ðâ âà  àÔ  Ô13.à ` àòòDefinitionsóóÔ âÔ.Ð ¤(ô#' Ðà  àÔ  Ô(a)à ` àòòTrust€EstateóóÔ yâÔ:€€The€term€"Trust€Estate"€means€all€assets,€however€and€wheneverÐ ° Ðâ âacquired,€which€may€belong€to€the€Trust€hereunder€at€any€designated€time.€That€term€shall€includeÏincome€earned€after€the€termination€of€the€Trust€Estate€and€prior€to€the€actual€final€distribution€fromÏsuch€Trust€Estate.Ó{^°X°` Ê ¯ hÀpÈ xÐ (#€%Ø'0*ˆ,à.813è5@8˜:ð<H? A°…X°“X{ÓÌÔ& 8 Ôà  àÔ  Ô(b)à ` àòòCodesóóÔ ˆäÔ:Ð  ` Ðà0  àà0` (#(#àÔ  Ô(Ô_ÔiÔ_Ô)à0Ê ` (#` (#àà0¯ Ê (#Ê (#àòòInternal€Revenue€CodeóóÔ öäÔ:€The€term€"Internal€Revenue€Code"€means€theÐ è 8  ÐInternal€Revenue€Code€of€1986,€as€amended,€and€as€it€may€be€amendedÏfrom€time€to€time€after€the€date€of€this€Trust€Agreement.Ð ¯ (#¯ (# Ðà  àà ` àÔ  Ô(ii)à0 Ê àà0¯ Ê (#Ê (#àòòTexas€Trust€CodeóóÔ gæÔ:€The€term€"Texas€Trust€Code"€means€the€Texas€Ô'8  päÔTrustÐ pÀ ÐCode,€contained€in€the€Texas€Property€Code,€sections€111.001€throughÏ115.017,€as€now€in€effect€and€as€it€may€be€amended€from€time€to€time.Ð ¯ (#¯ (# Ðà  àà ` àÔ  Ô(iii)à0 Ê àòòTexas€Property€CodeÔ ÓçÔóó:€The€term€"Texas€Property€Code"€means€the€TexasÐ øH ÐProperty€Code,€as€now€in€effect€and€as€it€may€be€amended€from€time€to€time.Ð Ê (#Ê (# Ðà  àà ` àÔ  Ô(iv)à0 Ê àòòTexas€Probate€CodeÔ ÚèÔóó:€The€term€"Texas€Probate€Code"€means€the€Texas€ProbateÐ ¨ø ÐCode,€as€now€in€effect€and€as€it€may€be€amended€from€time€to€time.Ð Ê (#Ê (# Ðà  àÔ  Ô(c)à ` àòòTrusteeóóÔ ÑéÔ:€The€terms€"Trustee"€and€"Trustees"€and€the€pronoun€"it"€in€reference€to€suchÐ X ¨ Ðterms€always€refer€to€the€institution€then€holding€a€trusteeship€of€any€Trust€under€this€TrustÏAgreement.€Such€terms€also€refer€to€any€successor€or€alternate,€including€corporations€which€succeedÏanother€by€merger,€conversion,€consolidation,€change€of€name€or€otherwise,€and€the€appointment€ofÏa€corporate€Trustee€shall€be€deemed€to€include€appointment€of€its€corporate€successor€or€alternate.Ïâ âAll€successor€or€substitute€Trustees€shall€have€the€same€powers,€authorities,€obligations€andÐ )à$( Ðlimitations€as€the€original€Trustee€unless€other€provisions€of€this€Trust€Agreement€specificallyÏprovide€to€the€contrary.Ìâ âÌà  àÔ  Ô(d)à ` àòòBeneficiaryóóÔ íÔ:€Unless€the€context€indicates€otherwise,€the€term€"Beneficiary"€shall€meanÐ 8 ˆ Ðòò€€€€€€€€€€€€€€€€€€€€óó.Ð  ` ÐÌà  àÔ  Ô(e)à ` àòòCourtóóÔ àíÔ:€The€term€"Court"€shall€mean,€initially,€the€òò€€€€€€€€€€€óó€Court€of€òò€€€€€€€€€€€€€€€€€€óó€County,Ð À  ÐTexas;€"Court"€shall€also€mean€such€other€Texas€court€where€guardianship€proceedings€for€òò€€€€€€€€€€Ð ˜è  Ѐ€€€€€€€€óó€are€transferred.€€Pursuant€to€Section€869C€of€the€Texas€Probate€Court,€the€Court€havingÐ pÀ Ðjurisdiction€over€the€guardianship€of€the€Beneficiary€also€has€jurisdiction€over€the€Trust.ÌÌ€à  àÔ  Ô(f)à ` àòòOther€TermsóóÔ ôïÔ:€Any€term€or€word€which€is€not€defined€in€this€Agreement€shall€haveÐ øH Ðthe€meaning€given€it€in€the€Texas€Trust€Code€and€the€Texas€Probate€Code€and€if€not€therein€definedÏshall€have€the€meaning€generally€accorded€it€in€legal€usage€as€interpreted€in€good€faith€by€theÏTrustee.ÌÓÓòòðð€868(e)€allows€the€inclusion€of€additional€provisions€and€the€ones€above€may€be€ones€you€wouldÐ X ¨ Ðlike€to€have€included.óóÓÓÐ D!” ÐÌà  àIN€WITNESS€WHEREOF,€the€Trustee€has€executed€this€Declaration€of€Trust€in€duplicate,Ïone€original€to€be€placed€in€the€Court€records€and€the€other€to€be€held€by€the€Trustee,€and€theÏâ âTrustee,€acting€by€and€through€the€undersigned€duly€authorized€officer,€hereby€accepts€all€the€rights,Ð ¤(ô#' Ðpowers,€privileges,€duties,€and€responsibilities€of€a€trustee€under€this€Trust€Agreement€and€agreesÏto€exercise€and€perform€the€same€in€accordance€with€the€Trust€Agreement.Ìâ âÓÓÌà  àà ` àà Ê àà ¯ àòò€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€óóÐ L œ ÐÌÌÌà  àà ` àà Ê àà ¯ àBy:òò€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€óóÐ ü L  Ðà  àà ` àà Ê àà ¯ à€€€€òò€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€óóÐ è 8  Ðà  àà ` àà Ê àà ¯ à€€€€Vice€President€and€Trust€OfficerÌÌòòI€have€found€it€useful€to€have€two€original€trust€documents€signed,€one€to€stay€with€the€Court€andÐ ¬ü  Ðthe€other€to€go€with€the€Trustee.€€The€corporate€Trustee€generally€wants€an€"original"€and€withoutÏcreating€duplicate€originals€to€begin€with,€a€certified€copy€will€be€needed,€and€those€can€get€costly.óóÐ „Ô  ÐÐ  pÀ ÐÌTHE€STATE€OF€TEXASà  àððÐ œì Ðà  àà ` àà Ê àà ¯ àà  àððÌCOUNTY€OF€TRAVISà ¯ àððÐ tÄ ÐÌÌà  àBefore€me,€the€undersigned€authority,€on€this€òò€€€€€óó€day€of€òò€€€€€€€€€€€€€€€€€€€€óó,€òò€€€19xx€€óó,€personallyÐ 8 ˆ Ðappeared€òò€€€€€€€€€€€€€€€€€€€€€€€€€óó,€òòGive€Titleóó,€of€òò€€€€€€€€€€€€€€€€€€óó,€a€national€banking€association€authorized€toÐ $ t Ðdo€business€in€Texas€[a€trust€company€with€trust€powers€in€Texas],€the€persons€whose€name€isÏsubscribed€to€the€foregoing€instrument,€and€acknowledged€to€me€that€as€such€officer€executed€theÏforegoing€instrument€for€the€purposes€and€consideration€therein€expressed.ÌÌà  àà ` àà Ê àà ¯ àòò€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€óóÐ À  Ðà  àà ` àà Ê àà ¯ àNOTARY€PUBLIC,€STATE€OF€TEXASÌ(SEAL)à ` àà Ê àà ¯ àPrinted€name:òò€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€óóÐ ˜è  Ðà  àà ` àà Ê àà ¯ àMy€commission€expires:òò€€€€€€€€€€€€€€€€€€€€€€€€€€€€€Ð „Ô  ÐÌóóÔ‡,uÑ,XXú>ÔÔ‡/,¬,,,uÑÔg:\dwarwick\kfb\office\speeches\142trust\tba.98\867Form€Ô"(US ú/ú/ú, ú:!ú&ú(ÔÔ ƒ0tyÔ6/5/98,€11:05AMÔ!  Ô€Ô_ÔehgÔ_ÔÔ#†/Xƒ#X,/,¬Lü#ÔÔ#†Xú>XX/Xƒ#kü#ÔÐ \¬ ÐÌÌÌÌÌà  àà ` àà Ê àà ¯ àà  àà h àà À àÌÑÑÐ Zª ÐÑTROäØ'3Xà3Ø' LetterØ'3 Letter Landscapeÿ3Ø'TÑÑ °ÑÖ€ ÿÿÖÖ€£ÿÿÖÒÀ°ÒÒX°ÒÔ‡¡X! XXXú>ÔÓ  Óò òÖ€¤›ìÖÑ  r ÑCOMPARISON€OF€COURT€CREATED€TRUSTSÐ ° ÐÓ  Óà@* * !|àWITH€LEGAL€GUARDIANSHIPS€AND€GUARDIANSHIP€COURT€ðð€867€TRUSTSó ó€ˆÐ ¢ò ÐÔ‡¡ô~¦ õ X¡X!ÔÔ#†ôÅæ õ õ¡ô~¦¸ÿ#ÔÔ‡¢ô~¦ õ õôÅæÔà@ÄÄ%|àðð€1998€Kathleen€Ford€Bay€and€Amy€Peterson€Ô_ÔBloomquistÔ_ԈР”ä Ðà@!!4|àÔ_ÔHilgersÔ_Ô€&€Watkins,€P.C.Ô#†¢XâX õ¢ô~¦¶#ÔÔ‡¢…bX¢XâÔÔ#†tj¢…bø#ÔÔ‡¥…btjԈРZª Ðà@110|àSan€Ô_ÔJacintoÔ_Ô€Center,€Suite€1300ˆÌà@ÇÇ3|à98€San€Ô_ÔJacintoÔ_Ô€BoulevardˆÌà@ââ9|àP.O.€Box€2063ˆÌà@225|àAustin,€Texas€€78768ˆÌà@ÁÁ4|àTelephone:€512„476„4716ˆÌà@¹¹3|àÔ_ÔTelecopierÔ_Ô:€512„476„5139ˆÌà@3|àEmail:€hilgers@hwlaw.comˆÌÑ€¦ÑÔ#†¥XâX¥…b#ÔÔ‡¥ô9oõX¥XâÔÔ#†ôÅæ õõ¥ô9oD#ÔÔ‡¢ô~¦ õ õôÅæÔÌÒ(XÀ81À81(Òà@ÈÈ ˆàòòCourt€Created€Trusts€Pursuant€to€Powers€of€CourtˆÐ 8 ˆ  Ðà@ˆàUnder€Common€Law,€Equity,€and/or€Property€Code€ðð€142.005óóˆÐ þ N  Ðà@++Cp&àòò(a)€Legal€Guardianships/€(b)€ðð€867€Management€TrustóóˆÐ 8 ˆ  Ð(1)à  àòòCan€Last€Longeróó:€Until€25€or€if€beneficiary€is€incapacitated,€for€life.Ð ŠÚ  ÐTex.€Prop.€Code€ðð€142.005(b)(4).ÌÌTrust€may€provide€that€distributions€from€principal€may€be€made€as€beneficiaryÏreaches€certain€ages;€for€example,€Ô_Ô1/2Ô_Ô€at€21,€rest€at€25.€Tex.€Prop.€Code€ððÏ142.005(c).ÌÌòòóóWith€the€court's€approval,€choose€any€age€between€18€and€25€for€the€trust'sÐ ôD Ðfinal€payout€and,€if€the€beneficiary€is€incapacitated,€the€trust€can€last€for€life.ÏThe€court€must€approve€the€termination€age.Ð €Ð Ð(1)à  à(a)€òòLegal€Guardianshipsóó:€òòEnds€at€18óó€or,€if€beneficiary€is€incapacitated,Ð ŠÚ  Ðthe€guardianship€will€continue€for€life.€However,€if€guardianship€begins€whileÏchild€is€under€18€there€will€have€to€be€a€court€finding€of€incapacity€once€theÏchild€is€no€longer€a€minor.€(Family€Code€ðð€11.01(a)€defines€a€minor€as€a€personÏunder€18).ÌÌà  à(b)€òòManagement€Trustóó:€òòCan€Last€Longeróó:€Until€25€if€court€approves,Ð .~ Ðor,€if€beneficiary€is€incapacitated,€until€Court€decides€a€guardianship€is€noÏlonger€necessary.€Tex.€Prob.€Code€ðð€870.€(Travis€County€Probate€Court€willÏnot€approve€extension€until€age€25€unless€the€minor€is€old€enough€to€give€his€orÏher€approval;€at€least€one€Harris€County€Probate€Judge€will€not€extend€beyondÏage€of€majority).€€Note,€there€must€be€a€guardianship€established€before€theÏcourt€can€create€a€Management€Trust,€thus€creating€more€expense€than€whenÏthe€Court€simply€creates€a€ðð€142€trust.€Management€trusts€are€created€byÏprobate€courts€„„€"court€in€which€guardianship€proceedings€is€pending,"€notÏdistrict€courts.ÌÐ ê:& Ð(2)à  àòòMore€types€of€investmentsóó€with€potential€for€growth,€including€in€theÐ vÆ& Ðstock€market;€investments€must€be€made€under€the€prudent€person€rule.€Tex.ÏTrust€Code€ðð€113.056.ÌòòóóÐ È) Ð(2)à  à(a)€òòLegal€Guardianshipsóó:€òòInvestments€limitedóó€to€really€safe€things€likeÐ vÆ) Ðtreasury€bills,€and€CDs€with€a€maturity€of€1€year€or€less:€bonds€or€otherÏobligations€of€U.S.,€tax„supported€bonds€of€any€county,€district,€politicalÏsubdivision,€or€incorporated€city€or€town€in€Texas;€provided€that€such€bondsÏmust€have€the€following€restrictions:€the€net€funded€debt€of€said€issuing€unitÏshall€not€be€greater€than€10%€of€the€assessed€value€of€taxable€property€therein;Ïin€the€case€of€cities€and€towns,€less€that€part€of€the€debt€incurred€for€acquisitionÐ"j/  ÐѦÑâ ¦âÑÀ°ÑÑà Ñâ ¦âÑ  Ñor€improvement€of€revenue„producing€utilities,€the€revenues€of€which€are€notÏpledged€to€support€other€obligations;€provided,€however,€that€these€restrictionsÏshall€not€apply€to€bonds€issued€for€road€purposes€under€the€Texas€Constitution,ÏArt.€III,€sec.€52,€where€supported€by€a€tax€unlimited€as€to€rate€or€amount;Ïshares€or€share€accounts€in€any€federal€savings€and€loan€domiciled€in€TexasÏwhere€the€account€is€insured€by€the€FDIC;€in€shares€or€share€accounts€of€anyÏTexas€building€and€loan€association,€provided€the€account€is€insured€by€theÏFDIC;€in€collateral€bonds€of€companies€incorporated€in€Texas€having€paid€inÏcapital€of€$1€million€or€more,€if€such€bonds€are€a€direct€obligation€of€the€issuingÏcompany€and€are€specifically€insured€by€first€mortgage€real€estate€notes€or€otherÏsecurities€pledged€with€a€trustee;€and€in€interest„bearing€time€deposits€whichÏmay€be€withdrawn€on€or€before€a€year€after€demand€in€any€bank€doing€businessÏin€Texas,€if€deposit€is€Ô_ÔF.D.I.C.Ô_Ô€insured.€Tex.€Prob.€Code€ðð€855.ÌÌPolicies€of€life,€term€or€endowment€insurance,€annuity€contracts,€or€both,Ïissued€by€a€life€insurance€company€licensed€by€the€Texas€State€Board€ofÏInsurance€or€administered€by€the€VA€may,€with€prior€court€permission,€beÏpurchased€by€the€guardian.€Tex.€Prob.€Code€ðð€857.ÌÌà  à(b)€òòManagement€Trustóó:€òòPresumably,€more€types€of€investmentsóó€withÐ ô² Ðpotential€for€growth,€including€in€the€stock€market;€investments€must€be€madeÏunder€the€prudent€person€rule.€Tex.€Trust€Code€ðð€113.056.ÌÌà  à(c)€òòOther€Investments:óó€€Guardian€may€apply€to€court€to€invest€in€TexasÐ  Ê ÐTomorrow€Fund€or€other€investments€not€specifically€covered.€€TrustÏinstrument€may€contain€specific€directions€Ô_ÔreinvestmentsÔ_Ô.Ð ˜V Ð(3)à  àòòMore€flexibility€and€thus€more€quickly€responsive€to€needs€ofÐ $â Ðbeneficiaryóó:€Trustee€does€not€need€court€permission€to€make€distributions€toÐ ê¨ Ðbeneficiary€for€health,€education,€maintenance,€and€support.€Tex.€Trust€Code€ððÏ113.021;€Tex.€Prop.€Code€ðð€142.005(b)(2).Ð v4 Ð(3)à  àòò(a)€Legal€Guardianshipsóó:€òòCourt€permission€neededóó€on€many€mattersÐ $â Ðwhich€slows€down€response€time€in€meeting€needs€of€the€beneficiary.€€WhileÏthe€court€will€usually€order€a€periodic€allowance€to€the€guardian,€courtÏpermission€is€needed€for€any€special€or€additional€distributions€and€going€toÏcourt€costs€time€and€money€(legal€fees)€which€can€be€avoided€with€a€trust.€Also,Ïguardian€needs€permission€to€sell€properties€and€make€investments€other€thanÏthose€on€the€"list"€above.€Tex.€Prob.€Code€ðð€857.€(The€court€may€appoint€an€adÏlitem€to€represent€the€beneficiary€before€granting€requests.)ÌÐ T#$ Ðà  à(b)€òòManagement€Trustóó:€òòMore€flexibility€and€thus€more€quicklyÐ B Ðresponsive€to€needs€of€beneficiaryóó:€Trustee€does€not€need€court€permission€toÐ  Æ Ðmake€distributions€to€beneficiary€for€health,€education,€maintenance,€andÏsupport.€Tex.€Prob.€Code€ðð€868(a)(2).Ð ” R ÐÔ& R Ô(4)à  àòòNo€bondóó:€The€Trustee€is€a€bank€or€trust€company€and€no€bond€isÐ  Þ Ðneeded.€This€avoids€the€expense€of€the€cost€of€the€bond€being€paid€from€theÏmoney€set€aside€in€trust€for€the€beneficiary.€Tex.€Trust€Code€ðð€113.058(a).Ô'R áÔÐ ¬ j Ð(4)à  àòò(a)€Legal€Guardianshipsóó:€òòBond€Required€for€Individual€Guardianóó:€TheÐ  Þ Ðyearly€cost€in€1998€for€bonds€on€the€following€amounts€being€held€for€aÏbeneficiary€or€ward€are:ÌÌ$€€€50,000à‚ô-ô-j81.nnLà€$€€295/yearˆÐ 8ö  Ð$€€€75,000à‚H.H.k81.nnLà€€€395/yearˆÐ þ¼  Ð$€€100,000à‚H.H.k81.Là€€€495/yearˆÐ Ä‚  Ð$€€150,000à‚H.H.k81.Là€€€695/yearˆÐ ŠH  Ð$€€200,000à‚H.H.k81.Là€€€895/yearˆÐ P  Ð$€€500,000à‚ . .k81.Là€1,645/yearˆÐ Ô  Ð$€€700,000à‚î-î-j81.Là€€1,845/yearˆÐ Üš  Ð$1,000,000à‚î-î-j81.¸¸Là€€2,145/yearˆÐ ¢`  ÐÌTex.€Prob.€Code€ðð€194.€Corporate€guardians€need€not€post€a€bond,€Tex.€Prob.ÏCode€ðð€195(b);€however,€most€banks€and€trust€companies€will€not€serve€asÏguardian€unless€the€ward's€estate€is€at€least€$100,000.ÌÌà  à(b)€òòManagement€Trustóó:€òòNo€bondóó:€The€Trustee€is€a€bank€or€trustÐ F Ðcompany€and€no€bond€is€needed.€This€avoids€the€expense€of€the€cost€of€theÏbond€being€paid€from€the€money€set€aside€in€trust€for€the€beneficiary.€Tex.ÏProb.€Code€ðððð€867,€868(a)(4).Ð ˜V ÐÒ1XX ÀPÀP1ÒÔ& ö Ô(5)à  àòòCompensationóó:€Trustee€receives€"reasonable€compensation"€which€isÐ $â Ðusually€determined€in€accordance€with€the€Trustee's€fee€schedule.€Tex.€TrustÏCode€ðð€114.061.€Tex.€Prop.€Code€ðð€142.005(b)(6)€provides€that€the€TrusteeÏwill€receive€reasonable€compensation€"on€application€and€approval€of€theÏcourt;"€Texas€District€Courts€typically€will€pre„approve€the€method€ofÏdetermining€compensation,€adopting€the€corporate€Trustee's€fee€schedule€andÏdirecting€that€a€copy€of€the€calculation€be€provided€to€the€beneficiary€and/orÏfamily€members.ÌÔ'ö$^#ÔÐ T#! Ðòòóó(5)à  àòòCompensationóó:€òò(a)€Legal€Guardianshipsóó:€Ð $â! ÐÌ„„à0  àNo€fee€on€receipt.аn#8181 Є„à0  à5%€on€gross€income;€andÐv4$8181 Є„à0  à5%€on€all€money€paid€out,€on€a€finding€by€the€court€that€the€guardianÐ < ú% Ðhas€taken€care€of€and€managed€estate€in€compliance€with€the€TexasÏProbate€Code.Ð 8181 Є„à0  àif€fee€is€an€unreasonably€low€amount,€court€may€increase€it.€€Tex.Ð Ž"L( ÐProb.€Code€ðð€665.Ð T#)8181 Їà  à(b)€òòManagement€Trustóó:€òòSame€as€that€of€a€Guardianóó.€Tex.€Prob.Ð B Ððð868(a)(5)(B).ÌÐ Î Œ ÐÒ1XX ÀPÀP1ÒÔ&  Ô(6)à  àòòAmendment€process€allows€flexibilityóó:€Court€may€amend,€modify,€orÐ ” R Ðrevoke€trust€prior€to€its€termination.€Even€though€there's€a€cost€associated€withÏgoing€to€court,€if€circumstances€change€the€trust€can€be€changed.€Tex.€TrustÏCode€ðð€112.054.Ô'” à(ÔÐ æ ¤ ÐÔ& Æ Ô(6)à  àòò(a)€Legal€Guardianshipsóó:€òòNo€way€to€amend,€must€follow€guardianshipÔ'Æ” 0*ÔÐ ” R Ðstatutesóó.Ð Z  ÐÌà  à(b)€òòManagement€Trustóó:€òòAmendment€process€allows€flexibilityóó:€CourtÐ æ ¤ Ðmay€amend,€modify,€or€revoke€trust€prior€to€its€termination.€Even€thoughÏthere's€a€cost€associated€with€going€to€court,€if€circumstances€change€the€trustÏcan€be€changed.€Tex.€Prob.€Code€ðð€869(a).Ð 8ö  Ð(7)à  àòòPayment€at€death€before€trust€ends€„„€May€be€able€to€avoid€anÐ Ä‚  Ðadministration€if€beneficiary€has€no€Willóó:€The€statute€provides€that€if€theÐ ŠH  Ðbeneficiary€dies€before€the€trust€ends,€it€shall€be€paid€to€the€"representative€ofÏthe€estate€of€the€beneficiary."€Tex.€Prop.€Code€ðð€142.005(e).€In€order€to€avoidÏthe€need€for€and€cost€of€a€determination€of€Ô_ÔheirshipÔ_Ô€proceeding,€Texas€districtÏcourts€have€created€trusts€where€the€beneficiary€is€given€a€general€power€ofÏappointment,€and,€if€not€exercised,€trust€property€is€paid€over€to€the€court„¼appointed€personal€representative,€if€any,€and€if€none,€to€the€heirs€of€theÏbeneficiary€under€the€intestacy€statutes,€with€the€Trustee€in€such€case€serving€asÏthe€"representative€of€the€estate".€Trustee€can€determine€if€an€administrationÏand€Ô_ÔheirshipÔ_Ô€proceeding€are€necessary.€An€affidavit€of€Ô_ÔheirshipÔ_Ô,€if€on€file€for€atÏleast€5€years,€is€prima€facie€evidence€and€can€be€done€at€the€time€the€trust€isÏestablished.€Tex.€Prob.€Code€ðð€52.Ð  Ê Ð(7)à  àòò(a)€Legal€Guardianshipsóó:€òòPayment€at€death€while€guardianship€inÐ Ä‚ Ðeffectóó:€Generally,€a€proceeding€to€declare€Ô_ÔheirshipÔ_Ô€will€be€needed€and€perhapsÐ ŠH  Ðan€administration.€Tex.€Prob.€Code€ðððð€48,€145(e).€The€Probate€Court€mayÏrequire€that€an€òòadóó€òòlitemóó€be€appointed€in€guardianship€proceedings.€See€generallyÐ Ô  ÐProb.€Code€ðððð€53(b),€113A,€Tex.€Rules€of€Civil€Procedure,€Rule€173.ÌÌà  à(b)€òòManagement€Trustóó:€òòPayment€at€death€before€trust€ends€„„€May€beÐ h&  Ðable€to€avoid€an€administration€if€beneficiary€has€no€Willóó:€The€statute€providesÐ .ì  Ðthat€if€the€beneficiary€dies€before€the€trust€ends,€it€shall€be€paid€to€theÏ"representative€of€the€deceased€ward's€estate."€Tex.€Prob.€Code€ðð€873.€€ItÏdoesn't€hurt€to€ask€if€court€will€allow€a€provision€like€the€one€listed€under€ððÏ142.Ð F" ÐÒ1XX ÀPÀP1ÒÌ(8)€òòFormal€Accounting€Generally€Not€Needed;€Less€Costlyóó:€Trustee€willÐ ^# Ðprovide€the€beneficiary€of€a€trust€and€other€persons€specified€by€the€court€withÏan€annual€statement€of€the€trust's€income,€distributions,€and€investments,€andÏcalculation€of€its€compensation.€This€avoids€the€need€to€hire€an€attorney€and€fileÏa€petition€each€year€to€have€the€court€approve€the€trustee's€investments€andÏactions,€and€compensation.ÌÌÌÌÐ T#, ÐÌ(8)€òòà  à(a)€Legal€guardianshipsóó:€accounting€can€be€costly:€the€guardian€of€theÐ ^- Ðestate€(property)€of€a€minor€or€incompetent€person€òòmustóó€file€with€the€court€anÐ $â. Ðaccounting€each€year.€Thus,€attorneys'€fees€and€court€costs€cannot€be€avoided.€ÌÌà  à(b)€òòManagement€trustóó:€accounting€can€be€costly:€the€trustee€of€the€trustÐ v41 Ðstill€òòmustóó,€in€most€courts,€file€an€accounting€each€year,€including€a€calculationÐ < ú2 Ðof€its€compensation.€Thus,€annual€attorneys'€fees€and€court€costs€may€not€beÏable€to€be€avoided.€€See€if€transaction€statements€can€be€used€in€lieu€of€a€formalÏaccounting.€€Tex.€Prob.€ðð€871(a).Ð Ž"L5 ÐÒ1XXÀPÀP1Ò(9)€òòSpecial€Needs€Trustsóó:€Ð B Ð(9)à  àòòSpecial€Needs€Trustsóó:€€Ð B ÐÐ  Æ ÐÒ(XÀPÀP(Òà@££<|àNote:€ˆÐ ” R ÐÌà8  àà8pà.à.àà8Ú pˆ,pˆ,àà8¿ Ú +Ú +àà8 ¿ 9)¿ 9)àSome€beneficiaries€may€be€disabled€and,€as€a€result,€receiving€SSI€and/or€Medicaid.€€The€TexasÏLegislature€in€1997€added€both€to€the€Property€Code€and€Probate€Code€provisions€making€it€clearÏthat€the€Court€may€create€a€trust€which€limits€the€Trustee's€discretion€for€making€distributions€thatÏcould€adversely€affect€public€benefits.Ð  Ø' Ø' Ðâ âÐ 8ö ÐÔ_ÔññÖ€ òÖññññÖ€£ºÖññÔ_ÔÔ81ª&ê"ÀÔÔ#†¢XâX õ¢ô~¦7#ÔÔ‡¢,Mø,X¢XâÔÔ#†,uÑ,,¢,Møy#ÔÔ‡§,Mø,,,uÑÔññññÖ€£ºÖññññI:\forms\business\bestate.Pln\50irrtrs\other.142\Trust„ch.96€Ô#†,uÑ,,§,Mø4=#ÔÔ#†Xú>X,,uÑò<#ÔññÔ81ª&hª&hÔññññÔ‡,uÑ,XXú>ÔÔ‡/Xƒ#XXXú>Ôg:\dwarwick\kfb\office\speeches\142trust\tba.98\Apññññpendix.Gk€Ô">US ú/ú/ú, ú:!ú&úUS ú/ú/ú, ú:!ú&ú>ÔÔ ƒ0Ý Ô6/5/98,€11:04AMÔ!  Ô€ehgññÐ  ª&ê" Ðâ âññÖ€¨¤êÖññññà  àññññÌà@//:|àAPPENDIX€DˆÌÌà@ØØ+|àTEXAS€PROBATE€CODE€ðð867€MANAGEMENT€TRUSTSˆÌÑ€ªÑà@;|àò òREPORT€ONó óˆÐ p° Ðà@---|àA€QUESTIONNAIRE€TO€PROBATE€JUDGES€ON€ˆÌà@&&-|àòò€€€€€CREATION€AND€ADMINISTRATION€€€€€óóˆÐ L Œ Ðà@CC3|àðð€1998€Kathleen€Ford€BayˆÌò òReport€Date:€1/19/98ó óÐ $ d ÐÌòòBackgroundóóÐ  @  ÐÌà  àThe€1993€Texas€Legislature€granted€courts€where€guardianship€proceedings€are€pending€statutory€authority€to€create€a€trust€for€the€ward'sÏbenefit€"if€the€court€finds€that€the€creation€of€the€trust€in€the€ward's€best€interests."€€The€Trustee€of€a€ðð867€Management€Trust€must€be€"a€trustÏcompany€or€state€or€national€bank€that€has€trust€powers"€in€Texas.ÌÌà  àIn€February€1998,€I€have€the€honor€and€pleasure€of€speaking€to€trust€officers€who€are€members€of€the€Financial€Services€(Trust)€DivisionÏof€the€Texas€Bankers€Association.€€My€topic€is€ðð867€Management€Trusts.€€Rather€than€listening€to€me€describe€the€statute€„€which€they€can€allÏread€„€it€will€be€more€useful€to€these€trust€officers€for€me€to€talk€about€how€you€the€probate€judges€view€ðð867€Management€Trusts,€whether€youÏare€creating€many€of€them,€and€what€problems,€if€any,€you€have€encountered€in€their€"administration."ÌÌà  àI€respectfully€request€that€you€answer€the€following€questions€and€return€this€Questionnaire€to€me€in€the€self„addressed,€stamped€envelopeÏand€I€thank€you€for€taking€the€time€to€do€so.ÌÌòòKey:€€Although€34€courts€responded,€every€judge€did€not€answer€every€question.€€Neither€of€the€statutory€probate€courts€in€Ô_ÔBexarÔ_Ô€County€responded€in€writing,€but€Judge€PollyÐ è( ÐSpencer€responded€at€the€February€1998€seminar;€2€Dallas€County€probate€courts€responded;€2€Harris€County€probate€courts,€the€Denton€County€probate€court,€1€TarrantÏCounty,€and€the€Travis€County€Probate€Court€responded.óóÐ l¬ ÐÌòòð&ðóóà  àIf€you€would€like€a€copy€of€my€speech,€please€check€this€box€and€I€will€send€it€to€you.Ð Z ÐÌ1.à  àòòCreatingóóà Ú à(a)à0 ¿ àòòðð867€Management€Ô_ÔTrustsóó.HaveÔ_Ô€you€ordered€the€creation€of€an€ðð867€Management€Trust?à€–*–*_81¿ 81¿ 81àòòð&ð€€€€€€€€€€€€€€€€€€€€€ð&ðóóˆÐ (h Ðà  àà p àà Ú àà ¿ àà àà x àà Ð àà ( àà € àà Ø àYesà€D0D0t81àNoˆÐ J Š ÐÌÓÓà  àIf€Yes,€approximately€how€many?€_________________Ð ""b! ÐѪ%Ñâ ªâÑ°ÀÑÑXàÑâ ªâÑ  Ñà  àIf€No,€under€what€circumstances€would€you€as€judge€of€the€court€create€one?Ìà0  à________________________________________________________________________òòóóЈØ8181 Ðòò0:à  à€14€courts€responding€have€never€ordered€a€ðð€867€trust.Ð `° Ð1„10:à  à€13€courts€responding€have€ordered€between€1€and€10€ðð€867€trusts.Ð D ” Ð11„20:€€3€courts€responding€have€ordered€between€11€and€20€ðð€867€trusts.ÌÌ20„30:à p à€€3€courts€responding€have€ordered€approximately€20€to€30€ðð€867€trusts.ÓÓÐ ð@  Ðà0  àà0p8181àProbate€Court€Number€2€of€Tarrant€County€(Judge€Pat€Ô_ÔFerchillÔ_Ô),€Probate€Court€Number€3€of€Harris€County€(Judge€JimÏÔ_ÔScanlanÔ_Ô),€and€Probate€Court€of€Galveston€County€(Judge€Jerome€Jones)€Ð p81p81 ÐOverÌ€50:à0  à€€1€court€responding€„„€Travis€County€Probate€Court€Number€One€(Judge€Guyи8181 Ðà0  à€€€€€Herman)€has€ordered€over€50€ðð€867€trustsÐ 8181 ÐÌCourts€which€have€not€yet€ordered€the€creation€of€an€867€trust€indicated€generally€a€willingness€to€do€so,€with€the€following€comments:ÌÌà0  à"In€situations€where€the€ward€or€those€concerned€are€at€odds€with€each€other;€where€the€guardian€has€little€or€no€investmentÏexperience;€where€the€guardian€wants€the€expertise€offered€by€the€proposed€trustee."Ð 8181 ÐÌà0  àWhere€the€estate€is€large,€it€is€better€to€use€a€professional€fiduciary.Ð 8181 ÐÌHowever,€one€court€expressed€concern€about€the€cost€of€using€a€professional€fiduciary:ÌÌà0  à"Families€have€indicated€that€they€do€not€want€to€pay€the€high€fees€charged€by€trust€departments."Ð 8181 ÐÌHmm.€€You€need€to€find€a€clear€and€concise€way€of€explaining€how€your€expertise€benefits€the€estate€and€that€the€fees€are,€therefore,Ïreasonable€when€the€services€offered€and€performance€achieved€are€compared€to€a€simple€guardianship€estate.Ìóó€à0  à€ÐØ"( 8181 Ðà  àà p àà Ú à(b)à0 ¿ àòòCourt„Created,€Non€ðð867€Trustsóó.€€Have€you€ever€exercised€the€powers€of€your€court€at€equity€and/or€under€common€lawÐ ° Ðto€create€a€trust€for€the€ward's€estate€that€was€not€a€ðð867€Management€Trust?à $ àòòð&ðóóà è& àà€r0r0u81¿ 81¿ 81àòòð&ðóóˆÐ œì Ðà  àà p àà Ú àà ¿ àà àà x àà Ð àà ( àYesà € àà Ø àà 0 àà ˆ à€€€€€NoÐ ¾ ÐòòÌ10:à0  àYesÐœì8181 Ð23:à  àNoÐ Ž Þ ÐóóÌÓÓà  àIf€Yes,€describe€the€circumstances.ÌÓÓà0  àòòMiller€Trust:€1;€for€tax€reasons:€1;€In€PI€Suits€and€guardianship€matters:€1;€Medical€Needs:€1;€"I€created€special€needs€trusts€underÐ D ”  Ða€common€law€court€of€equity€theory€prior€to€the€amendments€to€ðð€867€authorizing€such€type€of€trusts€to€be€created€under€ðð€867."óóÐ6† 8181 ÐÌà  àà p àà Ú à(c)à0 ¿ àòòProperty€Code€ðð142€Trustsóó.€€If€a€guardianship€proceeding€is€pending€and€a€personal€injury€award€is€made€to€the€ward,Ð d  Ðdo€you€have€a€preference€for€a€ðð142€or€ðð867€Trust?Ð ¿ 81¿ 81 Ðà  àà p àà Ú àà ¿ àà àà x àòòð&ðóóà Ð àà€r0r0u81àòòð&ðóóˆÐ ì<  Ðà  àà p àà Ú àà ¿ àà àà x àYesà€D0D0t81àNoˆÐ ^ ÐÓÓòòóóÌà0  àWhat€is€your€preference€and€why?€òòÔ  Ôà€11u818181àóó.ˆÐ Ò" ÐÓÓà  àòòThis€question€proved€to€be€confusing€in€a€way€that€I€had€not€anticipated€and€I€need€to€rewrite€it,€if€I€ever€redo€the€survey.€€Many€ofÐ ªú Ðthe€judges€answering€it€obviously€thought€that€they€were€being€asked€if€they€preferred€a€court„created€trust€to€a€guardianship€and€theÏoverwhelming€majority€of€these€answered€that€they€prefer€a€court„created€trust€and€would€decide€on€the€type€based€upon€the€circumstancesÏand€what€they€determine€will€provide€and€safest€and€best€investment€opportunities.€€There€was€one€court€which€prefers€a€guardianshipÏbecause€of€the€"tight€controls"€and€the€avoidance€of€any€possibility€of€waste€by€the€Trustee.€€The€judge€there,€after€questioning€theÏproposed€Trustee€in€a€recent€case,€obviously€concluded€that€the€Trustee€would€allow€distributions€that€the€judge€would€not€and€thereforeÏthe€judge€did€not€want€the€assets€to€be€managed€through€a€trust.€€Other€judges€read€the€question€as€it€was€intended:€if€you€have€anÏopportunity€to€create€either€a€ðð€867€trust€or€a€ðð€142€trust,€which€one€would€you€create?ÌóóÌòòà  àOf€these,€only€3€preferred€a€ðð€142€trust,€on€the€grounds€that€it€is€more€flexible€and€less€expensive€than€an€867€management€trust.€€15Ð & v Ðpreferred€a€ðð€867€trust€because€of€oversight€and€control:ÌÌà0  à"...€because€there€is€court€oversight€with€regard€to€an€annual€accounting;€lower€fee"Ðü"L 8181 Їà0  à"...€court€has€more€control;€the€statute€is€clearer"Ð 8181 ÐÌà0  à"...€more€supervision,€responsible€reporting"Ð 8181 ÐÌà0  à"I€have€a€preference€for€ðð€867€trusts€because€of€the€required€monitoring,€the€fee€statute,€and€the€ability€to€take€into€account€theÏduties€and€relationship€of€parent€and€child€in€reference€to€the€circumstances€of€the€case."Ð 8181 ÐÌ2€judges€specifically€noted€that€their€reading€of€Property€Code€ðð€142€is€that€if€there€is€a€guardianship€pending,€the€court€does€not€have€theÏpower€under€ðð€142€to€create€a€trust.ÌÌóóÌÌÌà  àÌà  à2.à p àòòTrustee's€Compensationóó.Ð Ô$  ÐÌà  à(a)à0 p àDo€you€allow€the€corporate€Trustee€of€an€ðð867€Management€Trust€to€receive€fees€in€accordance€with€its€standard€fee€schedule€forÐ ¬ü Ðserving€as€a€Trustee,€even€though€this€may€exceed€a€guardian's€standard€5%€fee€on€gross€income€and€5%€fee€on€money€paid€out?à @ˆ0 àà @ˆ0 à¼òòð&ðóóà Ú àà ¿ àà àòòð&ðóóà x àà Ð àЄÔp81p81 Ðà  àà p àà Ú àà ¿ àà àà x àññññññÔ#†/Xƒ#X,/,¬T?#ÔññññññÔ‡ôÅæ õXXú>ÔññññññÔ#†ôÅæ õõ/ô[O?#ÔññññññÔ‡©ô9oõ õôÅæÔà Ð àYes,€allow€fee€per€à Ø àNo,€limit€to€5%€of€grossÐ ¦ö Ðà  àà p àà Ú àà ¿ àà àà x àà Ð àTrustee's€Scheduleà Ø àincome,€5%€moniesÐ l¼ Ðà  àà p àà Ú àà ¿ àà àà x àà Ð àof€Ratesà € àà Ø àpaid€out,€unlessÐ 2‚ ÐÔ   ``Ôthat€is€an€unreasonably€low€Ô   €ø€øÔamountÐ øH ÐÔ#†©XâXõ©ô9od#ÔÔ#†Xú>XX©Xârd#ÔÔ‡«XâXXXú>ÔÓ{[°X° ¸ hÀpÈ xÐ (#€%Ø'0*ˆ,à.813è5@8˜:ð<H? A°„XÊ ¯ –X{ÓÌòò€6:à0  àCorporate€Trustee€can€receive€fees€in€accordance€with€its€fee€schedule;€1€of€these€noted€that€the€increased€fees€would€be€allowed€"on€aÐ ¨ø Ðfinding€regarding€services€and€reasonable€fees€under€the€circumstances."€€One€of€the€Harris€County€Probate€Courts€indicated€it€wouldÏallow€fees€per€the€Trustee's€fee€schedules.Ð 8181 ÐÌ22:à0  àFees€will€be€limited€to€5%€of€gross€income€and€5%€on€monies€paid€out,€unless€that€is€unreasonably€low:€€"depends€on€the€size€of€theÐ P  Ðestate€and€work€done"€or€"If€statutory€fee€is€inadequate€additional€fee€may€be€awarded€after€evidentiary€hearing€supporting€it.€€It€mayÏequal€standard€fee€schedule."Ð 8181 ÐóóÌà  à(b)à ° à(1)à0 È àAt€creation€of€the€ðð867€Trust,€will€you€pre„approve€the€Trustee's€compensation€and€allow€the€Trustee€to€pay€itselfÐ ø!H  Ðmonthly€or€quarterly?Ðâ"2!È 81È 81 Ðà  àà ° àà È àà àà x àà Ð àà ( àà € àòòð&ðóóà Ø àà 0 àòòð&ðóóà ˆ àà à àÐ ° Ðà  àà ° àà È àà àà x àà Ð àà ( àà € àÔ‡«ô9oõX«XâÔÔ#†ôÅæ õõ«ô9oÁf#ÔÔ‡©ô9oõ õôÅæÔYes,à Ø àà 0 àNo,€do€notÐ Ê Ðà  àà ° àà È àà àà x àà Ð àà ( àà € àÔ_ÔpreapproveÔ_Ôà 0 àÔ_ÔpreapproveÔ_ÔÐ à ÐÔ#†©XâXõ©ô9o:l#ÔÔ#†Xú>XX©Xâ|l#ÔÔ‡«XâXXXú>ÔÌòò€7:à0  àWill€Ô_ÔpreapproveÔ_Ô€the€Trustee's€compensation€and€allow€monthly€or€quarterly€payments€of€compensation.€€A€Tarrant€County€ProbateÐ @ ÐCourt€is€one€of€these.€€Ð 8181 ÐÌ19:à0  àWill€not€Ô_ÔpreapproveÔ_Ô€compensation.€€However,€one€judge€indicated€that€he€would€not€Ðþ N8181 Ðà  àÔ_ÔpreapproveÔ_Ô€compensation€in€the€Trust's€first€year,€but€might€thereafter.€Ìóóà0  àòòCome€in€after€1st€6€months;€after€2€years€pay€on€regular€basis,€so€long€as€not€grossly€disproportionate€compared€to€prior€years€andÐ Ò "  Ðfinalize€at€end€of€year.Ð 8181 ÐóóÌà  àà ° à(2)à0 È àDo€you€require€the€Trustee€to€account€to€court€before€it€can€be€paid€any€compensation€for€the€preceding€year?Ðà È 81È 81 Ðà  àà ° àà È àà àà x àà Ð àà ( àà € àòòð&ðóóà Ø àà€x0x0u81àòòð&ðóóˆÐ zÊ  Ðà  àà ° àà È àà àà x àà Ð àà ( àà € àYesà Ø àà 0 àà ˆ àà à à€€€€€NoÐ ”ä  ÐÌòò22:à0  àTrustee€must€account€to€Court€before€it€can€receive€compensation€for€the€preceding€year.€€2€Dallas€probate€courts,€2€Harris€Ðh¸8181 ÐÌ€4:à0  àTrustee€need€not€account€to€court€before€it€can€be€paid€compensation€for€the€previous€year€and€one€of€the€Tarrant€County€ProbateÐ <Œ ÐCourts€so€stated.€€Ð 8181 Ðà0  àAfter€2€years€may€let€you€take€on€monthly€basis€subject€to€finalization€at€end.Ð 8181 ÐÌIt€is€clear€that€each€judge€will€need€to€be€asked€specifically€whether€or€not€he/she€will€approve€commissions€being€taken€on€a€regular€basisÏand,€if€so,€that€protocol€should€be€included€in€the€trust€instrument.ÌóóÌà  àà ° à(3)à0 È àòòAnnual€Accountingóó.ТòÈ 81È 81 Ðà  àà ° àà0 È àDo€you€require€the€Trustee€to€file€an€annual€accounting€for€the€ðð867€Trust?à $ àà è& àà @) àà ˜+ àòòð&ðóóà ð- àà€x0x0u81È 81È 81àòòð&ðóóˆÐ ŒÜ Ðà  àà ° àà È àà àà x àà Ð àà ( àà € àYesà Ø àà€@0@0t81àNoˆÐ ¦ö ÐòòÌ26:à0  àAn€annual€accounting€must€be€filed.ÐzÊ8181 ÐÌ€2:à  àAn€annual€accounting€need€not€be€filed.Ð N!ž ÐÐ 8"ˆ  Ѐ6:à0  àEither€did€not€answer€or€indicated€that€since€they€had€not€yet€created€an€867€trust,€they€had€not€yet€confronted€this€issue€and€thoughtÐ ° Ðthat€they€probably€would€require€an€annual€accounting.Ð 8181 ÐóóÌÌà0  àIf€Yes,€will€you€accept€an€"informal"€accounting€which€consists€of€the€transaction€à08"8181àstatements€generated€by€the€Trustee,€ratherÐ X¨ Ðthan€requiring€a€formal€accounting?Ð 8"818"81 Ðà  àà ° àà È àà àà x àà Ð àà ( àà € àòòð&ðóóà Ø àà 0 àà ˆ àòòð&ðóóà à àà 8" àÐ , | Ðà  àà ° àà È àà àà x àà Ð àà ( àà € àYes,€informalà 0 àNo,€formalÐ F – ÐÌòò14:à0  àWill€require€a€formal€accounting,€although€1€of€these€indicated€that€it€allows€transaction€statements€generated€by€the€Trustee€to€beÐ  j  Ð"incorporated€by€reference."€€One€of€the€Harris€County€Probate€Courts,€the€Dallas€County€Probate€Courts€that€responded,€bothÏTarrant€County€Probate€Courts€that€responded,€and€the€Travis€County€Probate€Court€all€require€formal€accountings.Ð 8181 ÐÌ11:à  àWill€allow€informal€accountings,€but€they€must€be€verified.Ð Â  ÐÌNote,€if€the€transaction€statements€indicate€all€transactions€during€the€accounting€period,€show€the€calculation€of€the€Trustee's€fees,€and€listÏproperty€on€hand€at€the€beginning€of€the€accounting€period€and€on€hand€at€the€end€(even€if€these€are€additional€sheets€to€the€transactionÏstatements),€you€are€more€likely€to€be€able€to€convince€a€judge€and€his/her€staff€to€accept€an€"informal"€or€a€hybrid€informal€accounting€withÏsome€separate€schedules€that€show€the€calculation€of€commissions.€€You're€going€to€have€to€ask,€however.ÌóóÌà  àà ° à(4)à0 È àòòSpecific€Termsóó.€€Other€than€the€provisions€set€forth€in€ðð867€itself,€are€there€specific€provisions€that€you€want€includedÐ (x Ðin€ðð867€Management€Trusts€that€are€created€by€order€of€your€Court?Ð È 81È 81 Ðà  àà ° àà È àà àà x àà Ð àà ( àà € àòòð&ðóóà Ø àà€x0x0u81àòòð&ðóóññññññÓà‚ÓññññññˆÐ üL Ðà  àà ° àà È àà àà x àà Ð àà ( àà € àYesà Ø àà€@0@0t81àNoˆÐ f ÐÌIf€yes,€please€attach€such€provisions€or€a€copy€of€an€ðð867€Trust€in€which€they€appear.ÌÌòòMost€respondents€did€not€answer€this€question.€€Ð ¾ ÐÌ€4:à0  àSaid€that€there€are€specific€terms€they€require.€€One€of€these€requires€the€bank€to€agree€to€venue€in€the€County.€€Ð’â8181 Ðâ âÐ | Ì Ðà0  à"I€would€be€willing€to€have€statute€provide€for€less€formal€accountings€or€optional€formal€accountings.€€Bank€should€be€able€to€fileÏcomputer„generated€reports.€€Fee€could€be€pre„approved€up€to€three€years€with€ad€litem's€concurrence."€€Probate€Court€Number€2,ÏTarrant€County.Ð 8181 Ðâ âÌà0  àJudge€Steve€M.€King€of€Probate€Court€Number€1,€Tarrant€County,€has€both€a€required€form€of€trust€and€accounting.€€Judge€Robert€E.ÏPrice€of€Probate€Court€Number€2,€Dallas€County,€provided€a€sample€order€and€trust.Ð 8181 ÐóóÌà  àà ° à(5)à0 È àThe€space€below€is€provided€for€any€additional€comments€you€would€like€to€make,€including€problems€you€haveÐ  f Ðencountered€with€their€creation€and€ongoing€administration€of€ðð867€Trusts.Ð È 81È 81 ÐÌòòà0  àððà ° àCan€an€867€trust€invest€in€the€Texas€Tomorrow€Fund?ÐÔ $ 8181 ÐÌà  àððà0 ° à"867€should€provide€method€to€hold€ward's€funds€for€a€few€years€beyond€18th€birthday€to€ensure€mature€use€of€funds€but€feesÐ ¨ø  Ðshould€not€be€at€general€corporate€rate€for€smaller€amounts€of€money.€€For€minors,€I€would€reduce€the€work€load€on€trustee€byÏlimiting€powers€of€distribution€to€avoid€constant€hounding€by€an€18€year€old€desperate€for€a€new€pickup€truck."Ð °81°81 ÐÌà0  àððà0°8181àThe€only€problem€encountered€is€the€"Bank€Trust€Departments€are€not€eager€to€accept€unless€over€200,000."ÐP °81°81 ÐÌà0  àððà0°8181à"We€like€to€see€the€maximum€age€of€25€years€set.€€If€Ward€over€18€is€asking€for€early€distribution€(before€age€25)€we€require€aÐ $t Ðhearing."Ð °81°81 ÐÌà0  àððà0°8181à"Problems€regarding€the€ðð€867€management€trust:€€(1)€maintenance€and€management€of€unproductive€property€that€should€beÐ â2 Ðdisposed€of€and€the€high€fees€associated€with€maintaining€it.€€(2)€Judge€feels€867€trust€should€terminate€when€minor€reaches€18€orÏmajority,€òònotóó€when€they€turn€25;€feels€it's€unconstitutional€[to€extend€beyond€18th€birthday]."ж°81°81 Ðóó€Ð  ð ÐññññññÓà‚Óññññññà0  à"Specific€provisions€should:Ð 8181 ÐÌà0  à"(1)€Require€accountings€to€comply€with€ðð741,€et€seq.Ð 8181 ÐÌà0  à"(2)€Require€court€approval€of€final€account€before€any€distribution€on€