CHAPTER 113. ADMINISTRATION - Texas Statutes

PROPERTY CODE

TITLE 9. TRUSTS

SUBTITLE B. TEXAS TRUST CODE: CREATION, OPERATION, AND

TERMINATION OF TRUSTS

CHAPTER 113. ADMINISTRATION

SUBCHAPTER A. POWERS OF TRUSTEE

Sec. 113.001. LIMITATION OF POWERS. A power given to a trustee

by this subchapter does not apply to a trust to the extent that

the instrument creating the trust, a subsequent court order, or

another provision of this subtitle conflicts with or limits the

power.

Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec.

2, eff. Jan. 1, 1984.

Sec. 113.002. GENERAL POWERS. Except as provided by Section

113.001, a trustee may exercise any powers in addition to the

powers authorized by this subchapter that are necessary or

appropriate to carry out the purposes of the trust.

Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec.

2, eff. Jan. 1, 1984.

Sec. 113.003. OPTIONS. A trustee may:

(1) grant an option involving a sale, lease, or other

disposition of trust property, including an option exercisable

beyond the duration of the trust; or

(2) acquire and exercise an option for the acquisition of

property, including an option exercisable beyond the duration of

the trust.

Added by Acts 2005, 79th Leg., Ch.

148, Sec. 10, eff. January 1, 2006.

Sec. 113.004. ADDITIONS TO TRUST ASSETS. A trustee may receive

from any source additions to the assets of the trust.

Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec.

2, eff. Jan. 1, 1984.

Sec. 113.005. ACQUISITION OF UNDIVIDED INTERESTS. A trustee may

acquire all or a portion of the remaining undivided interest in

property in which the trust holds an undivided interest.

Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec.

2, eff. Jan. 1, 1984.

Sec. 113.006. GENERAL AUTHORITY TO MANAGE AND INVEST TRUST

PROPERTY. Subject to the requirements of Chapter 117, a trustee

may manage the trust property and invest and reinvest in property

of any character on the conditions and for the lengths of time as

the trustee considers proper, notwithstanding that the time may

extend beyond the term of the trust.

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec. 2,

eff. Jan. 1, 1984. Amended by Acts 2003, 78th Leg., ch. 1103,

Sec. 3, eff. Jan. 1, 2004.

Sec. 113.007. TEMPORARY DEPOSITS OF FUNDS. A trustee may

deposit trust funds that are being held pending investment,

distribution, or the payment of debts in a bank that is subject

to supervision by state or federal authorities. However, a

corporate trustee depositing funds with itself is subject to the

requirements of Section 113.057 of this code.

Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec.

2, eff. Jan. 1, 1984; Acts 1984, 68th Leg., 2nd C.S., ch. 18,

Sec. 11, eff. Oct. 2, 1984.

Sec. 113.008. BUSINESS ENTITIES. A trustee may invest in,

continue, or participate in the operation of any business or

other investment enterprise in any form, including a sole

proprietorship, partnership, limited partnership, corporation, or

association, and the trustee may effect any change in the

organization of the business or enterprise.

Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec.

2, eff. Jan. 1, 1984.

Sec. 113.009. REAL PROPERTY MANAGEMENT. A trustee may:

(1) exchange, subdivide, develop, improve, or partition real

property;

(2) make or vacate public plats;

(3) adjust boundaries;

(4) adjust differences in valuation by giving or receiving

value;

(5) dedicate real property to public use or, if the trustee

considers it in the best interest of the trust, dedicate

easements to public use without consideration;

(6) raze existing walls or buildings;

(7) erect new party walls or buildings alone or jointly with an

owner of adjacent property;

(8) make repairs; and

(9) make extraordinary alterations or additions in structures as

necessary to make property more productive.

Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec.

2, eff. Jan. 1, 1984.

Sec. 113.010. SALE OF PROPERTY. A trustee may contract to sell,

sell and convey, or grant an option to sell real or personal

property at public auction or private sale for cash or for credit

or for part cash and part credit, with or without security.

Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec.

2, eff. Jan. 1, 1984.

Sec. 113.011. LEASES. (a) A trustee may grant or take a lease

of real or personal property for any term, with or without

options to purchase and with or without covenants relating to

erection of buildings or renewals, including the lease of a right

or privilege above or below the surface of real property.

(b) A trustee may execute a lease containing terms or options

that extend beyond the duration of the trust.

Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec.

2, eff. Jan. 1, 1984.

Sec. 113.012. MINERALS. (a) A trustee may enter into mineral

transactions, including:

(1) negotiating and making oil, gas, and other mineral leases

covering any land, mineral, or royalty interest at any time

forming a part of a trust;

(2) pooling and unitizing part or all of the land, mineral

leasehold, mineral, royalty, or other interest of a trust estate

with land, mineral leasehold, mineral, royalty, or other interest

of one or more persons or entities for the purpose of developing

and producing oil, gas, or other minerals, and making leases or

assignments granting the right to pool and unitize;

(3) entering into contracts and agreements concerning the

installation and operation of plans or other facilities for the

cycling, repressuring, processing, or other treating or handling

of oil, gas, or other minerals;

(4) conducting or contracting for the conducting of seismic

evaluation operations;

(5) drilling or contracting for the drilling of wells for oil,

gas, or other minerals;

(6) contracting for and making "dry hole" and "bottom hole"

contributions of cash, leasehold interests, or other interests

towards the drilling of wells;

(7) using or contracting for the use of any method of secondary

or tertiary recovery of any mineral, including the injection of

water, gas, air, or other substances;

(8) purchasing oil, gas, or other mineral leases, leasehold

interests, or other interests for any type of consideration,

including farmout agreements requiring the drilling or reworking

of wells or participation therein;

(9) entering into farmout contracts or agreements committing a

trust estate to assign oil, gas, or other mineral leases or

interests in consideration for the drilling of wells or other

oil, gas, or mineral operations;

(10) negotiating the transfer of and transferring oil, gas, or

other mineral leases or interests for any consideration, such as

retained overriding royalty interests of any nature, drilling or

reworking commitments, or production interests; and

(11) executing and entering into contracts, conveyances, and

other agreements or transfers considered necessary or desirable

to carry out the powers granted in this section, whether or not

the action is now or subsequently recognized or considered as a

common or proper practice by those engaged in the business of

prospecting for, developing, producing, processing, transporting,

or marketing minerals, including entering into and executing

division orders, oil, gas, or other mineral sales contracts,

exploration agreements, processing agreements, and other

contracts relating to the processing, handling, treating,

transporting, and marketing of oil, gas, or other mineral

production from or accruing to a trust and receiving and

receipting for the proceeds thereof on behalf of a trust.

(b) A trustee may enter into mineral transactions that extend

beyond the term of the trust.

Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec.

2, eff. Jan. 1, 1984.

Sec. 113.013. INSURANCE. A trustee may purchase insurance of

any nature, form, or amount to protect the trust property and the

trustee.

Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec.

2, eff. Jan. 1, 1984.

Sec. 113.014. PAYMENT OF TAXES. A trustee may pay taxes and

assessments levied or assessed against the trust estate or the

trustee by governmental taxing or assessing authorities.

Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec.

2, eff. Jan. 1, 1984.

Sec. 113.015. AUTHORITY TO BORROW. A trustee may borrow money

from any source, including a trustee, purchase property on

credit, and mortgage, pledge, or in any other manner encumber all

or any part of the assets of the trust as is advisable in the

judgment of the trustee for the advantageous administration of

the trust.

Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec.

2, eff. Jan. 1, 1984.

Sec. 113.016. MANAGEMENT OF SECURITIES. A trustee may:

(1) pay calls, assessments, or other charges against or because

of securities or other investments held by the trust;

(2) sell or exercise stock subscription or conversion rights;

(3) vote corporate stock, general or limited partnership

interests, or other securities in person or by general or limited

proxy;

(4) consent directly or through a committee or other agent to

the reorganization, consolidation, merger, dissolution, or

liquidation of a corporation or other business enterprise; and

(5) participate in voting trusts and deposit stocks, bonds, or

other securities with any protective or other committee formed by

or at the instance of persons holding similar securities, under

such terms and conditions respecting the deposit thereof as the

trustee may approve; sell any stock or other securities obtained

by conversion, reorganization, consolidation, merger,

liquidation, or the exercise of subscription rights free of any

restrictions upon sale otherwise contained in the trust

instrument relative to the securities originally held; assent to

corporate sales, leases, encumbrances, and other transactions.

Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec.

2, eff. Jan. 1, 1984.

Sec. 113.017. CORPORATE STOCK OR OTHER SECURITIES HELD IN NAME

OF NOMINEE. A trustee may:

(1) hold corporate stock or other securities in the name of a

nominee;

(2) under Subchapter B, Chapter 161, or other law, employ a bank

incorporated in this state or a national bank located in this

state as custodian of any corporate stock or other securities

held in trust; and

(3) under Subchapter C, Chapter 161, or other law, deposit or

arrange for the deposit of securities with a Federal Reserve Bank

or in a clearing corporation.

Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec.

2, eff. Jan. 1, 1984.

Sec. 113.018. EMPLOYMENT OF AGENTS. A trustee may employ

attorneys, accountants, agents, including investment agents, and

brokers reasonably necessary in the administration of the trust

estate.

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec. 2,

eff. Jan. 1, 1984. Amended by Acts 1999, 76th Leg., ch. 794, Sec.

1, eff. Sept. 1, 1999.

Sec. 113.019. CLAIMS. A trustee may compromise, contest,

arbitrate, or settle claims of or against the trust estate or the

trustee.

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec. 2,

eff. Jan. 1, 1984.

Sec. 113.020. BURDENSOME OR WORTHLESS PROPERTY. A trustee may

abandon property the trustee considers burdensome or worthless.

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec. 2,

eff. Jan. 1, 1984.

Sec. 113.021. DISTRIBUTION TO MINOR OR INCAPACITATED

BENEFICIARY. (a) A trustee may make a distribution required or

permitted to be made to any beneficiary in any of the following

ways when the beneficiary is a minor or a person who in the

judgment of the trustee is incapacitated by reason of legal

incapacity or physical or mental illness or infirmity:

(1) to the beneficiary directly;

(2) to the guardian of the beneficiary's person or estate;

(3) by utilizing the distribution, without the interposition of

a guardian, for the health, support, maintenance, or education of

the beneficiary;

(4) to a custodian for the minor beneficiary under the Texas

Uniform Transfers to Minors Act (Chapter 141) or a uniform gifts

or transfers to minors act of another state;

(5) by reimbursing the person who is actually taking care of the

beneficiary, even though the person is not the legal guardian,

for expenditures made by the person for the benefit of the

beneficiary; or

(6) by managing the distribution as a separate fund on the

beneficiary's behalf, subject to the beneficiary's continuing

right to withdraw the distribution.

(b) The written receipts of persons receiving distributions

under Subsection (a) of this section are full and complete

acquittances to the trustee.

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec. 2,

eff. Jan. 1, 1984.

Amended by:

Acts 2005, 79th Leg., Ch.

148, Sec. 11, eff. January 1, 2006.

Sec. 113.0211. ADJUSTMENT OF CHARITABLE TRUST. (a) In this

section:

(1) "Charitable entity" has the meaning assigned by Section

123.001(1).

(2) "Charitable trust" means a trust:

(A) the stated purpose of which is to benefit only one or more

charitable entities; and

(B) that qualifies as a charitable entity.

(b) The trustee of a charitable trust may acquire, exchange,

sell, supervise, manage, or retain any type of investment,

subject to restrictions and procedures established by the trustee

and in an amount considered appropriate by the trustee, that a

prudent investor, exercising reasonable skill, care, and caution,

would acquire or retain in light of the purposes, terms,

distribution requirements, and other circumstances of the trust.

The prudence of a trustee's actions under this subsection is

judged with reference to the investment of all of the trust

assets rather than with reference to a single trust investment.

(c) The trustee of a charitable trust may make one or more

adjustments between the principal and the income portions of a

trust to the extent that the trustee considers the adjustments

necessary:

(1) to comply with the terms of the trust, if any, that describe

the amount that may or must be distributed to a charitable entity

beneficiary by referring to the income portion of the trust; and

(2) to administer the trust in order to carry out the purposes

of the charitable trust.

(d) The authority to make adjustments under Subsection (c)

includes the authority to allocate all or part of a capital gain

to trust income.

(e) In making adjustments under Subsection (c), the trustee

shall consider:

(1) except to the extent that the terms of the trust clearly

manifest an intention that the trustee shall or may favor one or

more charitable entity beneficiaries, the needs of a charitable

entity beneficiary, based on what is fair and reasonable to all

other charitable entity beneficiaries of the trust, if any; and

(2) the need of the trust to maintain the purchasing power of

the trust's investments over time.

Added by Acts 2003, 78th Leg., ch. 550, Sec. 1, eff. Sept. 1,

2003.

Sec. 113.022. POWER TO PROVIDE RESIDENCE AND PAY FUNERAL

EXPENSES. A trustee of a trust that is not a charitable

remainder unitrust, annuity trust, or pooled income fund that is

intended to qualify for a federal tax deduction under Section

664, Internal Revenue Code, after giving consideration to the

probable intention of the settlor and finding that the trustee's

action would be consistent with that probable intention, may:

(1) permit real estate held in trust to be occupied by a

beneficiary who is currently eligible to receive distributions

from the trust estate;

(2) if reasonably necessary for the maintenance of a beneficiary

who is currently eligible to receive distributions from the trust

estate, invest trust funds in real property to be used for a home

by the beneficiary; and

(3) in the trustee's discretion, pay funeral expenses of a

beneficiary who at the time of the beneficiary's death was

eligible to receive distributions from the trust estate.

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec. 2,

eff. Jan. 1, 1984. Amended by Acts 1985, 69th Leg., ch. 149, Sec.

2, eff. May 24, 1985.

Sec. 113.023. ANCILLARY TRUSTEE. (a) If trust property is

situated outside this state, a Texas trustee may name in writing

an individual or corporation qualified to act in the foreign

jurisdiction in connection with trust property as ancillary

trustee.

(b) Within the limits of the authority of the Texas trustee, the

ancillary trustee has the rights, powers, discretions, and duties

the Texas trustee delegates, subject to the limitations and

directions of the Texas trustee specified in the instrument

evidencing the appointment of the ancillary trustee.

(c) The Texas trustee may remove an ancillary trustee and

appoint a successor at any time as to all or part of the trust

assets.

(d) The Texas trustee may require security of the ancillary

trustee, who is answerable to the Texas trustee for all trust

property entrusted to or received by the ancillary trustee in

connection with the administration of the trust.

(e) If the law of the foreign jurisdiction requires a certain

procedure or a judicial order for the appointment of an ancillary

trustee or to authorize an ancillary trustee to act, the Texas

trustee and the ancillary trustee must satisfy the requirements.

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec. 2,

eff. Jan. 1, 1984.

Sec. 113.024. IMPLIED POWERS. The powers, duties, and

responsibilities under this subtitle do not exclude other implied

powers, duties, or responsibilities that are not inconsistent

with this subtitle.

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec. 2,

eff. Jan. 1, 1984.

Sec. 113.025. POWERS OF TRUSTEE REGARDING ENVIRONMENTAL LAWS.

(a) A trustee or a potential trustee may inspect, investigate,

cause to be inspected, or cause to be investigated trust

property, property that the trustee or potential trustee has been

asked to hold, or property owned or operated by an entity in

which the trustee or potential trustee holds or has been asked to

hold any interest or for the purpose of determining the potential

application of environmental law with respect to the property.

This subsection does not grant any person the right of access to

any property. The taking of any action under this subsection with

respect to a trust or an addition to a trust is not evidence that

a person has accepted the trust or the addition to the trust.

(b) A trustee may take on behalf of the trust any action before

or after the initiation of an enforcement action or other legal

proceeding that the trustee reasonably believes will help to

prevent, abate, or otherwise remedy any actual or potential

violation of any environmental law affecting property held

directly or indirectly by the trustee.

Added by Acts 1993, 73rd Leg., ch. 846, Sec. 29, eff. Sept. 1,

1993.

Sec. 113.026. AUTHORITY TO DESIGNATE NEW CHARITABLE BENEFICIARY.

(a) In this section:

(1) "Charitable entity" has the meaning assigned by Section

123.001.

(2) "Failed charitable beneficiary" means a charitable entity

that is named as a beneficiary of a trust and that:

(A) does not exist at the time the charitable entity's interest

in the trust becomes vested;

(B) ceases to exist during the term of the trust; or

(C) ceases to be a charitable entity during the term of the

trust.

(b) This section applies only to an express written trust

created by an individual with a charitable entity as a

beneficiary. If the trust instrument provides a means for

replacing a failed charitable beneficiary, the trust instrument

governs the replacement of a failed charitable beneficiary, and

this section does not apply.

(c) The trustee of a trust may select one or more replacement

charitable beneficiaries for a failed charitable beneficiary in

accordance with this section.

(d) Each replacement charitable beneficiary selected under this

section by any person must:

(1) be a charitable entity and an entity described under

Sections 170(b)(1)(A), 170(c), 2055(a), and 2522(a) of the

Internal Revenue Code of 1986, as amended; and

(2) have the same or similar charitable purpose as the failed

charitable beneficiary.

(e) If the settlor of the trust is living and not incapacitated

at the time a trustee is selecting a replacement charitable

beneficiary, the trustee shall consult with the settlor

concerning the selection of one or more replacement charitable

beneficiaries.

(f) If the trustee and the settlor agree on the selection of one

or more replacement charitable beneficiaries, the trustee shall

send notice of the selection to the attorney general. If the

attorney general determines that one or more replacement

charitable beneficiaries do not have the same or similar

charitable purpose as the failed charitable beneficiary, not

later than the 21st day after the date the attorney general

receives notice of the selection, the attorney general shall

request in writing that a district court in the county in which

the trust was created review the selection. If the court agrees

with the attorney general's determination, any remaining

replacement charitable beneficiary agreed on by the trustee and

the settlor is the replacement charitable beneficiary. If there

is not a remaining replacement charitable beneficiary agreed on

by the trustee and the settlor, the court shall select one or

more replacement charitable beneficiaries. If the court finds

that the attorney general's request for a review is unreasonable,

the replacement charitable beneficiary is the charitable

beneficiary agreed on by the trustee and the settlor, and the

court may require the attorney general to pay all court costs of

the parties involved. Not later than the 30th day after the date

the selection is final, the trustee shall provide to each

replacement charitable beneficiary selected notice of the

selection by certified mail, return receipt requested.

(g) If the trustee and the settlor cannot agree on the selection

of a replacement charitable beneficiary, the trustee shall send

notice of that fact to the attorney general not later than the

21st day after the date the trustee determines that an agreement

cannot be reached. The attorney general shall refer the matter to

a district court in the county in which the trust was created.

The trustee and the settlor may each recommend to the court one

or more replacement charitable beneficiaries. The court shall

select a replacement charitable beneficiary and, not later than

the 30th day after the date of the selection, provide to each

charitable beneficiary selected notice of the selection by

certified mail, return receipt requested.

Added by Acts 1999, 76th Leg., ch. 63, Sec. 1, eff. Aug. 30,

1999.

Sec. 113.027. DISTRIBUTIONS GENERALLY. When distributing trust

property or dividing or terminating a trust, a trustee may:

(1) make distributions in divided or undivided interests;

(2) allocate particular assets in proportionate or

disproportionate shares;

(3) value the trust property for the purposes of acting under

Subdivision (1) or (2); and

(4) adjust the distribution, division, or termination for

resulting differences in valuation.

Added by Acts 2005, 79th Leg., Ch.

148, Sec. 12, eff. January 1, 2006.

Sec. 113.028. CERTAIN CLAIMS AND CAUSES OF ACTION PROHIBITED.

(a) A trustee may not prosecute or assert a claim for damages in

a cause of action against a party who is not a beneficiary of the

trust if each beneficiary of the trust provides written notice to

the trustee of the beneficiary's opposition to the trustee's

prosecuting or asserting the claim in the cause of action.

(b) This section does not apply to a cause of action that is

prosecuted by a trustee in the trustee's individual capacity.

(c) The trustee is not liable for failing to prosecute or assert

a claim in a cause of action if prohibited by the beneficiaries

under Subsection (a).

Added by Acts 2005, 79th Leg., Ch.

765, Sec. 3, eff. June 17, 2005.

Text of section as added by Acts 2009, 81st Leg., R.S., Ch.

672, Sec. 3

For text of section as added by Acts 2009, 81st Leg., R.S., Ch.

754, Sec. 1, see other Sec. 113.029.

Sec. 113.029. DISCRETIONARY POWERS; TAX SAVINGS. (a)

Notwithstanding the breadth of discretion granted to a trustee in

the terms of the trust, including the use of terms such as

"absolute," "sole," or "uncontrolled," the trustee shall exercise

a discretionary power in good faith and in accordance with the

terms and purposes of the trust and the interests of the

beneficiaries.

(b) Subject to Subsection (d), and unless the terms of the trust

expressly indicate that a requirement provided by this subsection

does not apply:

(1) a person, other than a settlor, who is a beneficiary and

trustee of a trust that confers on the trustee a power to make

discretionary distributions to or for the trustee's personal

benefit may exercise the power only in accordance with an

ascertainable standard relating to the trustee's individual

health, education, support, or maintenance within the meaning of

Section 2041(b)(1)(A) or 2514(c)(1), Internal Revenue Code of

1986; and

(2) a trustee may not exercise a power to make discretionary

distributions to satisfy a legal obligation of support that the

trustee personally owes another person.

(c) A power the exercise of which is limited or prohibited by

Subsection (b) may be exercised by a majority of the remaining

trustees whose exercise of the power is not limited or prohibited

by Subsection (b). If the power of all trustees is limited or

prohibited by Subsection (b), the court may appoint a special

fiduciary with authority to exercise the power.

(d) Subsection (b) does not apply to:

(1) a power held by the settlor's spouse who is the trustee of a

trust for which a marital deduction, as defined by Section

2056(b)(5) or 2523(e), Internal Revenue Code of 1986, was

previously allowed;

(2) any trust during any period that the trust may be revoked or

amended by its settlor; or

(3) a trust if contributions to the trust qualify for the annual

exclusion under Section 2503(c), Internal Revenue Code of 1986.

Added by Acts 2009, 81st Leg., R.S., Ch.

672, Sec. 3, eff. September 1, 2009.

Text of section as added by Acts 2009, 81st Leg., R.S., Ch.

754, Sec. 1

For text of section as added by Acts 2009, 81st Leg., R.S., Ch.

672, Sec. 3, see other Sec. 113.029.

Sec. 113.029. RELOCATION OF ADMINISTRATION OF CHARITABLE TRUST.

(a) In this section:

(1) "Charitable entity" has the meaning assigned by Section

123.001.

(2) "Charitable trust" means a trust:

(A) the stated purpose of which is to benefit only one or more

charitable entities; and

(B) that qualifies as a charitable entity.

(3) "Trust administration" means the grant-making function of

the trust.

(b) Except as provided by this section or specifically

authorized by the terms of a trust, the trustee of a charitable

trust may not change the location in which the trust

administration takes place from a location in this state to a

location outside this state.

(c) If the trustee decides to change the location in which the

trust is administered from a location in this state to a location

outside this state, the trustee shall:

(1) if the settlor is living and not incapacitated:

(A) consult the settlor concerning the selection of a new

location for the administration of the trust; and

(B) submit the selection to the attorney general; or

(2) if the settlor is not living or is incapacitated:

(A) propose a new location; and

(B) submit the proposal to the attorney general.

(d) The trustee may file an action in the district court or

statutory probate court in which the trust was created seeking a

court order authorizing the trustee to change the location in

which the trust is administered to a location outside this state.

The court may exercise its equitable powers to effectuate the

original purpose of the trust.

(e) Except as provided by Subsection (b), the location in which

the administration of the trust takes place may not be changed to

a location outside this state unless:

(1) the charitable purposes of the trust would not be impaired

if the trust administration is moved; and

(2) a district court or statutory probate court authorizes the

relocation.

(f) The attorney general may bring an action to enforce the

provisions of this section. If a trustee of a charitable trust

fails to comply with the provisions of this section, the district

court or statutory probate court in the county in which the trust

administration was originally located may remove the trustee and

appoint a new trustee. Costs of a proceeding to remove a

trustee, including reasonable attorney's fees, may be assessed

against the removed trustee. This provision is in addition to

and does not supersede the provisions of Chapter 123.

(g) This section does not affect a trustee's authority to sell

real estate owned by a charitable trust.

Added by Acts 2009, 81st Leg., R.S., Ch.

754, Sec. 1, eff. September 1, 2009.

SUBCHAPTER B. DUTIES OF TRUSTEE

Sec. 113.051. GENERAL DUTY. The trustee shall administer the

trust in good faith according to its terms and this subtitle. In

the absence of any contrary terms in the trust instrument or

contrary provisions of this subtitle, in administering the trust

the trustee shall perform all of the duties imposed on trustees

by the common law.

Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec.

2, eff. Jan. 1, 1984.

Amended by:

Acts 2005, 79th Leg., Ch.

148, Sec. 13, eff. January 1, 2006.

Sec. 113.052. LOAN OF TRUST FUNDS TO TRUSTEE. (a) Except as

provided by Subsection (b) of this section, a trustee may not

lend trust funds to:

(1) the trustee or an affiliate;

(2) a director, officer, or employee of the trustee or an

affiliate;

(3) a relative of the trustee; or

(4) the trustee's employer, employee, partner, or other business

associate.

(b) This section does not prohibit:

(1) a loan by a trustee to a beneficiary of the trust if the

loan is expressly authorized or directed by the instrument or

transaction establishing the trust; or

(2) a deposit by a corporate trustee with itself under Section

113.057 of this Act.

Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec.

2, eff. Jan. 1, 1984.

Sec. 113.053. PURCHASE OR SALE OF TRUST PROPERTY BY TRUSTEE.

(a) Except as provided by Subsections (b), (c), (d), (e), (f),

and (g), a trustee shall not directly or indirectly buy or sell

trust property from or to:

(1) the trustee or an affiliate;

(2) a director, officer, or employee of the trustee or an

affiliate;

(3) a relative of the trustee; or

(4) the trustee's employer, partner, or other business

associate.

(b) A national banking association or a state-chartered

corporation with the right to exercise trust powers that is

serving as executor, administrator, guardian, trustee, or

receiver may sell shares of its own capital stock held by it for

an estate to one or more of its officers or directors if a court:

(1) finds that the sale is in the best interest of the estate

that owns the shares;

(2) fixes or approves the sales price of the shares and the

other terms of the sale; and

(3) enters an order authorizing and directing the sale.

(c) If a corporate trustee, executor, administrator, or guardian

is legally authorized to retain its own capital stock in trust,

the trustee may exercise rights to purchase its own stock if

increases in the stock are offered pro rata to shareholders.

(d) If the exercise of rights or the receipt of a stock dividend

results in a fractional share holding and the acquisition meets

the investment standard required by this subchapter, the trustee

may purchase additional fractional shares to round out the

holding to a full share.

(e) A trustee may:

(1) comply with the terms of a written executory contract signed

by the settlor, including a contract for deed, earnest money

contract, buy/sell agreement, or stock purchase or redemption

agreement; and

(2) sell the stock, bonds, obligations, or other securities of a

corporation to the issuing corporation or to its corporate

affiliate if the sale is made under an agreement described in

Subdivision (1) or complies with the duties imposed by Chapter

117.

(f) A national banking association, a state-chartered

corporation, including a state-chartered bank or trust company, a

state or federal savings and loan association that has the right

to exercise trust powers and that is serving as trustee, or such

an institution that is serving as custodian with respect to an

individual retirement account, as defined by Section 408,

Internal Revenue Code, or an employee benefit plan, as defined by

Section 3(3), Employee Retirement Income Security Act of 1974 (29

U.S.C. Section 1002(3)), regardless of whether the custodial

account is, or would otherwise be, considered a trust for

purposes of this subtitle, may:

(1) employ an affiliate or division within a financial

institution to provide brokerage, investment, administrative,

custodial, or other account services for the trust or custodial

account and charge the trust or custodial account for the

services, provided, however, nothing in this section shall allow

an affiliate or division to engage in the sale or business of

insurance if not otherwise permitted to do so; and

(2) receive compensation, directly or indirectly, on account of

the services performed by the affiliate or division within the

financial institution, whether in the form of shared commissions,

fees, or otherwise, provided that any amount charged by the

affiliate or division for the services is disclosed and does not

exceed the customary or prevailing amount that is charged by the

affiliate or division, or a comparable entity, for comparable

services rendered to a person other than the trust.

(g) In addition to other investments authorized by law for the

investment of funds held by a fiduciary or by the instrument

governing the fiduciary relationship, and notwithstanding any

other provision of law and subject to the standard contained in

Chapter 117, a bank or trust company acting as a fiduciary,

agent, or otherwise, in the exercise of its investment discretion

or at the direction of another person authorized to direct the

investment of funds held by the bank or trust company as

fiduciary, may invest and reinvest in the securities of an

open-end or closed-end management investment company or

investment trust registered under the Investment Company Act of

1940 (15 U.S.C. Sec. 80a-1 et seq.) if the portfolio of the

investment company or investment trust consists substantially of

investments that are not prohibited by the governing instrument.

The fact that the bank or trust company or an affiliate of the

bank or trust company provides services to the investment company

or investment trust, such as those of an investment advisor,

custodian, transfer agent, registrar, sponsor, distributor,

manager, or otherwise, and receives compensation for those

services does not preclude the bank or trust company from

investing or reinvesting in the securities if the compensation is

disclosed by prospectus, account statement, or otherwise. An

executor or administrator of an estate under a dependent

administration or a guardian of an estate shall not so invest or

reinvest unless specifically authorized by the court in which

such estate or guardianship is pending.

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec. 2,

eff. Jan. 1, 1984. Amended by Acts 1985, 69th Leg., ch. 974, Sec.

1, 2, eff. Aug. 26, 1985; Acts 1989, 71st Leg., ch. 341, Sec. 1,

eff. Aug. 28, 1989; Acts 1993, 73rd Leg., ch. 933, Sec. 1, eff.

Aug. 30, 1993; Acts 2003, 78th Leg., ch. 1103, Sec. 4, eff. Jan.

1, 2004.

Sec. 113.054. SALES FROM ONE TRUST TO ANOTHER. A trustee of one

trust may not sell property to another trust of which it is also

trustee unless the property is:

(1) a bond, note, bill, or other obligation issued or fully

guaranteed as to principal and interest by the United States; and

(2) sold for its current market price.

Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec.

2, eff. Jan. 1, 1984.

Sec. 113.055. PURCHASE OF TRUSTEE'S SECURITIES. (a) Except as

provided by Subsection (b) of this section, a corporate trustee

may not purchase for the trust the stock, bonds, obligations, or

other securities of the trustee or an affiliate, and a

noncorporate trustee may not purchase for the trust the stock,

bonds, obligations, or other securities of a corporation with

which the trustee is connected as director, owner, manager, or

any other executive capacity.

(b) A trustee may:

(1) retain stock already owned by the trust unless the retention

does not satisfy the requirements prescribed by Chapter 117; and

(2) exercise stock rights or purchase fractional shares under

Section 113.053 of this Act.

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec. 2,

eff. Jan. 1, 1984. Amended by Acts 2003, 78th Leg., ch. 1103,

Sec. 5, eff. Jan. 1, 2004.

Sec. 113.056. AUTHORIZATION TO MAKE CERTAIN INVESTMENTS. (a)

Unless the terms of the trust instrument provide otherwise, and

subject to the investment standards provided by this subtitle and

any investment standards provided by the trust instrument, the

trustee may invest all or part of the trust assets in an

investment vehicle authorized for the collective investment of

trust funds pursuant to Part 9, Title 12, of the Code of Federal

Regulations.

(d) Subject to any investment standards provided by this

chapter, Chapter 117, or the trust instrument, whenever the

instrument directs, requires, authorizes, or permits investment

in obligations of the United States government, the trustee may

invest in and hold such obligations either directly or in the

form of interests in an open-end management type investment

company or investment trust registered under the Investment

Company Act of 1940, 15 U.S.C. 80a-1 et seq., or in an investment

vehicle authorized for the collective investment of trust funds

pursuant to Part 9, Title 12 of the Code of Federal Regulations,

so long as the portfolio of such investment company, investment

trust, or collective investment vehicle is limited to such

obligations and to repurchase agreements fully collateralized by

such obligations.

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec. 2,

eff. Jan. 1, 1984. Amended by Acts 1985, 69th Leg., ch. 341, Sec.

1, eff. June 10, 1985; Acts 1991, 72nd Leg., ch. 876, Sec. 1,

eff. June 16, 1991; Acts 2003, 78th Leg., ch. 1103, Sec. 6, 7,

eff. Jan. 1, 2004.

Sec. 113.057. DEPOSITS BY CORPORATE TRUSTEE WITH ITSELF. (a) A

corporate trustee may deposit trust funds with itself as a

permanent investment if authorized by the settlor in the

instrument creating the trust or if authorized in a writing

delivered to the trustee by a beneficiary currently eligible to

receive distributions from a trust created before January 1,

1988.

(b) A corporate trustee may deposit with itself trust funds that

are being held pending investment, distribution, or payment of

debts if, except as provided by Subsection (d) of this section:

(1) it maintains under control of its trust department as

security for the deposit a separate fund of securities legal for

trust investments;

(2) the total market value of the security is at all times at

least equal to the amount of the deposit; and

(3) the separate fund is marked as such.

(c) The trustee may make periodic withdrawals from or additions

to the securities fund required by Subsection (b) of this section

as long as the required value is maintained. Income from

securities in the fund belongs to the trustee.

(d) Security for a deposit under this section is not required

for a deposit under Subsection (a) or under Subsection (b) of

this section to the extent the deposit is insured or otherwise

secured under state or federal law.

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec. 2,

eff. Jan. 1, 1984. Amended by Acts 1985, 69th Leg., ch. 149, Sec.

3, eff. May 24, 1985.

Sec. 113.058. BOND. (a) A corporate trustee is not required to

provide a bond to secure performance of its duties as trustee.

(b) Unless the instrument creating the trust provides otherwise,

a noncorporate trustee must give bond:

(1) payable to the trust estate of the trust, the registry of

the court, or each person interested in the trust, as their

interests may appear; and

(2) conditioned on the faithful performance of the trustee's

duties.

(c) The bond must be in an amount and with the sureties required

by order of a court in a proceeding brought for this

determination.

(d) Any interested person may bring an action to increase or

decrease the amount of a bond, require a bond, or substitute or

add sureties. Notwithstanding Subsection (b), for cause shown, a

court may require a bond even if the instrument creating the

trust provides otherwise.

(e) The trustee shall deposit the bond with the clerk of the

court that issued the order requiring the bond. A suit on the

bond may be maintained on a certified copy. Appropriate proof of

a recovery on a bond reduces the liability of the sureties pro

tanto.

(f) Failure to comply with this section does not make void or

voidable or otherwise affect an act or transaction of a trustee

with any third person.

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec. 2,

eff. Jan. 1, 1984.

Amended by:

Acts 2005, 79th Leg., Ch.

148, Sec. 14, eff. January 1, 2006.

Acts 2007, 80th Leg., R.S., Ch.

451, Sec. 6, eff. September 1, 2007.

SUBCHAPTER C. RESIGNATION OR REMOVAL OF TRUSTEE, AND AUTHORITY OF

MULTIPLE AND SUCCESSOR TRUSTEES

Sec. 113.081. RESIGNATION OF TRUSTEE. (a) A trustee may resign

in accordance with the terms of the trust instrument, or a

trustee may petition a court for permission to resign as trustee.

(b) The court may accept a trustee's resignation and discharge

the trustee from the trust on the terms and conditions necessary

to protect the rights of other interested persons.

Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec.

2, eff. Jan. 1, 1984.

Sec. 113.082. REMOVAL OF TRUSTEE. (a) A trustee may be removed

in accordance with the terms of the trust instrument, or, on the

petition of an interested person and after hearing, a court may,

in its discretion, remove a trustee and deny part or all of the

trustee's compensation if:

(1) the trustee materially violated or attempted to violate the

terms of the trust and the violation or attempted violation

results in a material financial loss to the trust;

(2) the trustee becomes incapacitated or insolvent;

(3) the trustee fails to make an accounting that is required by

law or by the terms of the trust; or

(4) the court finds other cause for removal.

(b) A beneficiary, cotrustee, or successor trustee may treat a

violation resulting in removal as a breach of trust.

(c) A trustee of a charitable trust may not be removed solely on

the grounds that the trustee exercised the trustee's power to

adjust between principal and income under Section 113.0211.

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec. 2,

eff. Jan. 1, 1984. Amended by Acts 2003, 78th Leg., ch. 550, Sec.

2, eff. Sept. 1, 2003.

Amended by:

Acts 2005, 79th Leg., Ch.

148, Sec. 16, eff. January 1, 2006.

Sec. 113.083. APPOINTMENT OF SUCCESSOR TRUSTEE. (a) On the

death, resignation, incapacity, or removal of a sole or surviving

trustee, a successor trustee shall be selected according to the

method, if any, prescribed in the trust instrument. If for any

reason a successor is not selected under the terms of the trust

instrument, a court may and on petition of any interested person

shall appoint a successor in whom the trust shall vest.

(b) If a vacancy occurs in the number of trustees originally

appointed under a valid charitable trust agreement and the trust

agreement does not provide for filling the vacancy, the remaining

trustees may fill the vacancy by majority vote.

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec. 2,

eff. Jan. 1, 1984.

Sec. 113.084. POWERS OF SUCCESSOR TRUSTEE. Unless otherwise

provided in the trust instrument or by order of the court

appointing a successor trustee, the successor trustee has the

rights, powers, authority, discretion, and title to trust

property conferred on the trustee.

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec. 2,

eff. Jan. 1, 1984.

Sec. 113.085. EXERCISE OF POWERS BY MULTIPLE TRUSTEES. (a)

Cotrustees may act by majority decision.

(b) If a vacancy occurs in a cotrusteeship, the remaining

cotrustees may act for the trust.

(c) A cotrustee shall participate in the performance of a

trustee's function unless the cotrustee:

(1) is unavailable to perform the function because of absence,

illness, suspension under this code or other law,

disqualification, if any, under this code, disqualification under

other law, or other temporary incapacity; or

(2) has delegated the performance of the function to another

trustee in accordance with the terms of the trust or applicable

law, has communicated the delegation to all other cotrustees, and

has filed the delegation in the records of the trust.

(d) If a cotrustee is unavailable to participate in the

performance of a trustee's function for a reason described by

Subsection (c)(1) and prompt action is necessary to achieve the

efficient administration or purposes of the trust or to avoid

injury to the trust property or a beneficiary, the remaining

cotrustee or a majority of the remaining cotrustees may act for

the trust.

(e) A trustee may delegate to a cotrustee the performance of a

trustee's function unless the settlor specifically directs that

the function be performed jointly. Unless a cotrustee's

delegation under this subsection is irrevocable, the cotrustee

making the delegation may revoke the delegation.

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec. 2,

eff. Jan. 1, 1984.

Amended by:

Acts 2005, 79th Leg., Ch.

148, Sec. 17, eff. January 1, 2006.

Acts 2007, 80th Leg., R.S., Ch.

451, Sec. 7, eff. September 1, 2007.

Acts 2009, 81st Leg., R.S., Ch.

973, Sec. 1, eff. September 1, 2009.

SUBCHAPTER E. ACCOUNTING BY TRUSTEE

Sec. 113.151. DEMAND FOR ACCOUNTING. (a) A beneficiary by

written demand may request the trustee to deliver to each

beneficiary of the trust a written statement of accounts covering

all transactions since the last accounting or since the creation

of the trust, whichever is later. If the trustee fails or refuses

to deliver the statement on or before the 90th day after the date

the trustee receives the demand or after a longer period ordered

by a court, any beneficiary of the trust may file suit to compel

the trustee to deliver the statement to all beneficiaries of the

trust. The court may require the trustee to deliver a written

statement of account to all beneficiaries on finding that the

nature of the beneficiary's interest in the trust or the effect

of the administration of the trust on the beneficiary's interest

is sufficient to require an accounting by the trustee. However,

the trustee is not obligated or required to account to the

beneficiaries of a trust more frequently than once every 12

months unless a more frequent accounting is required by the

court. If a beneficiary is successful in the suit to compel a

statement under this section, the court may, in its discretion,

award all or part of the costs of court and all of the suing

beneficiary's reasonable and necessary attorney's fees and costs

against the trustee in the trustee's individual capacity or in

the trustee's capacity as trustee.

(b) An interested person may file suit to compel the trustee to

account to the interested person. The court may require the

trustee to deliver a written statement of account to the

interested person on finding that the nature of the interest in

the trust of, the claim against the trust by, or the effect of

the administration of the trust on the interested person is

sufficient to require an accounting by the trustee.

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec. 2,

eff. Jan. 1, 1984. Amended by Acts 2003, 78th Leg., ch. 550, Sec.

3, eff. Sept. 1, 2003.

Sec. 113.152. CONTENTS OF ACCOUNTING. A written statement of

accounts shall show:

(1) all trust property that has come to the trustee's knowledge

or into the trustee's possession and that has not been previously

listed or inventoried as property of the trust;

(2) a complete account of receipts, disbursements, and other

transactions regarding the trust property for the period covered

by the account, including their source and nature, with receipts

of principal and income shown separately;

(3) a listing of all property being administered, with an

adequate description of each asset;

(4) the cash balance on hand and the name and location of the

depository where the balance is kept; and

(5) all known liabilities owed by the trust.

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec. 2,

eff. Jan. 1, 1984.

SUBCHAPTER F. COMMON TRUST FUNDS

Sec. 113.171. COMMON TRUST FUNDS. (a) A bank or trust company

qualified to act as a fiduciary in this state may establish

common trust funds to provide investments to itself as a

fiduciary, including as a custodian under the Texas Uniform

Transfers to Minors Act (Chapter 141) or a uniform gifts or

transfers to minors act of another state or to itself and others

as cofiduciaries.

(b) The fiduciary or cofiduciary may place investment funds in

interests in common trust funds if:

(1) the investment is not prohibited by the instrument or order

creating the fiduciary relationship; and

(2) if there are cofiduciaries, the cofiduciaries consent to the

investment.

(c) A common trust fund includes a fund:

(1) qualified for exemption from federal income taxation as a

common trust fund and maintained exclusively for eligible

fiduciary accounts; and

(2) consisting solely of assets of retirement, pension, profit

sharing, stock bonus, or other employees' trusts that are exempt

from federal income taxation.

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec. 2,

eff. Jan. 1, 1984.

Amended by:

Acts 2005, 79th Leg., Ch.

148, Sec. 18, eff. January 1, 2006.

Sec. 113.172. AFFILIATED INSTITUTIONS. A bank or trust company

that is a member of an affiliated group under Section 1504,

Internal Revenue Code of 1954 (26 U.S.C. 1504), with a bank or

trust company maintaining common trust funds may participate in

one or more of the funds.

Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec. 2,

eff. Jan. 1, 1984.