H.B. No. 2393

	AN ACT
	relating to the investment and management of assets held in a
	prepaid funeral benefits trust.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Sections 154.255 and 154.256, Finance Code, are
	amended to read as follows:
	Sec. 154.255.  STANDARD OF DUTY OF DEPOSITORY.  A depository
	described by Section 154.253(a)(1) shall be held to the standard of
	duty of a fiduciary in holding, investing, or disbursing the money.
	Sec. 154.256.  STANDARD OF DUTY [CARE] OF TRUSTEE. A trustee
	described by Section 154.253(a)(2) shall be held to the standard of
	duty of a trustee under the Texas Trust Code (Subtitle B, Title 9,
	Property Code), provided that the provisions of the Texas Trust
	Code may not be expanded, restricted, eliminated, or otherwise
	altered by the provisions of the trust instrument in a manner that
	is inconsistent with the purposes, terms, distribution
	requirements, and other circumstances of a trust established under
	this chapter.  In[, in] administering assets held in a prepaid
	funeral benefits trust, a trustee shall consider the trust
	beneficiaries to include the following two classes of persons to
	the extent of any beneficial interest:
	(1)  funeral providers or other persons entitled to
	payment after delivering a contracted funeral for which funds have
	been deposited in trust; and
	(2)  purchasers of or beneficiaries designated in
	prepaid funeral benefits contracts for which funds have been
	deposited in trust who:
	(A)  are entitled to receive a contracted funeral;
	or
	(B)  have the right to cancel a contract under
	Section 154.155 if not waived under Section 154.156 [shall exercise
	the judgment and care under the circumstances that a person of
	ordinary prudence, discretion, and intelligence exercises in the
	management of the person's own affairs, not in regard to
	speculation but in regard to the permanent disposition of the
	person's money, considering:
	[(1)     the probable income from and probable increase in
	value of the person's capital;
	[(2)  the safety of the person's capital; and
	[(3)     the investment of all the assets of the trust the
	trustee has the power to administer rather than the prudence of a
	single investment of the trust].
	SECTION 2.  The heading to Section 154.258, Finance Code, is
	amended to read as follows:
	Sec. 154.258.  INVESTMENT AND MANAGEMENT OF TRUST ASSETS
	[PERMITTED INVESTMENTS].
	SECTION 3.  Sections 154.258(a) and (b), Finance Code, are
	amended to read as follows:
	(a)  The trustee of a prepaid funeral benefits trust shall
	invest and manage trust assets in accordance with the Uniform
	Prudent Investor Act (Chapter 117, Property Code), in a manner
	consistent with the requirements of this chapter and the purposes,
	terms, distribution requirements, and other circumstances of the
	trust [Money in a prepaid funeral benefits trust may be invested
	only in:
	[(1)     demand deposits, savings accounts, certificates
	of deposit, or other accounts issued by financial institutions if
	the amounts deposited in those accounts are fully covered by
	federal deposit insurance or otherwise fully secured by a separate
	fund of securities in the manner provided by Section 184.301,
	Finance Code, and rules adopted under that section;
	[(2)     bonds, evidences of indebtedness, or obligations
	of the United States or an instrumentality of the United States;
	[(3)     bonds, evidences of indebtedness, or obligations
	the principal and interest of which are guaranteed by the full faith
	and credit of the United States;
	[(4)     bonds of a state or local government that are
	exempt from federal income taxation and that are rated:
	[(A)     "Aa" or better by Moody's bond rating
	service; or
	[(B)     "AA" or better by Standard and Poor's bond
	rating service;
	[(5)     bonds, evidences of indebtedness, or obligations
	of corporations organized under state or federal law and that are
	rated:
	[(A)     "A" or better by Moody's bond rating
	service; or
	[(B)     "A" or better by Standard and Poor's bond
	rating service;
	[(6)     notes, evidences of indebtedness, or
	participation in notes or evidences of indebtedness, secured by a
	first lien on real property located in the United States, if the
	amount of each obligation does not exceed 90 percent of the value of
	the real property securing that obligation;
	[(7)     common stock of a corporation that is organized
	under state or federal law and:
	[(A)  has a net worth of at least $1 million; or
	[(B)     will have a net worth of at least $1 million
	after completion of a securities offering to which the trust is
	subscribing;
	[(8)     preferred stock of a corporation organized under
	state or federal law and that is rated:
	[(A)     "Baa" or better by Moody's bond rating
	service; or
	[(B)     "BBB" or better by Standard and Poor's bond
	rating service;
	[(9)     investments not covered by this subsection,
	including real property, oil and gas interests, and limited
	partnerships;
	[(10)     mutual funds, collective investment funds, or
	similar participative investment funds, the assets of which are
	invested only in investments that are permitted under this section
	and that, if aggregated with other investments, meet the percentage
	limitations specified by this section; and
	[(11)     other investments the department approves in
	writing].
	(b)  The commission may adopt reasonable rules to administer
	and clarify law regarding the investment and management of prepaid
	funeral benefits trust funds, provided that the rules are
	consistent with the Uniform Prudent Investor Act (Chapter 117,
	Property Code), the requirements of this chapter, and the purposes,
	terms, distribution requirements, and other circumstances of a
	prepaid funeral benefits trust, including rules to:
	(1)  define trust and investment terms;
	(2)  specify standards applicable to the written
	investment plan required by Section 154.257; and
	(3)  establish guidelines, rebuttable presumptions, or
	safe harbor provisions with respect to suitable investments and
	investment strategies for a prepaid funeral benefits trust.  [Not
	more than 70 percent of the money related to a single permit holder
	may be invested in investments described by Subsection (a)(5), (6),
	(7), or (8).]
	SECTION 4.  The following provisions are repealed:
	(1)  Sections 154.258(c), (d), and (e), Finance Code;
	and
	(2)  Section 154.259, Finance Code.
	SECTION 5.  This Act takes effect September 1, 2007.
	______________________________	______________________________
	President of the Senate	Speaker of the House
	I certify that H.B. No. 2393 was passed by the House on April
	27, 2007, by the following vote:  Yeas 133, Nays 0, 2 present, not
	voting.
	______________________________
	Chief Clerk of the House
	I certify that H.B. No. 2393 was passed by the Senate on May
	17, 2007, by the following vote:  Yeas 31, Nays 0.
	______________________________
	Secretary of the Senate
	APPROVED:  _____________________
	Date
	_____________________
	Governor