S.B. No. 1197

	AN ACT
	relating to trusts.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Section 112.010, Property Code, is amended by
	adding Subsection (c-3) to read as follows:
	(c-3)  Notwithstanding the deadline prescribed by Subsection
	(c-2)(2) for delivering the memorandum required by that subsection,
	in the case of an interest in a trust created by reason of the death
	of a decedent who died after December 31, 2009, and before December
	17, 2010, and to which Section 37A, Probate Code, does not apply, a
	memorandum delivered under Subsection (c-2)(2) is also effective to
	disclaim an interest in the trust if delivered not later than the
	date that is nine months after December 17, 2010.  This subsection
	expires September 1, 2013.
	SECTION 2.  Section 112.038, Property Code, is amended to
	read as follows:
	Sec. 112.038.  FORFEITURE CLAUSE. A provision in a trust
	that would cause a forfeiture of or void an interest for bringing
	any court action, including contesting a trust, is unenforceable
	if:
	(1)  just [probable] cause existed [exists] for
	bringing the action; and
	(2)  the action was brought and maintained in good
	faith.
	SECTION 3.  Section 112.057, Property Code, is amended by
	adding Subsections (e) and (f) to read as follows:
	(e)  A beneficiary to whom written notice is required to be
	given under this section may waive the notice requirement in a
	writing delivered to the trustee. If all beneficiaries to whom
	notice would otherwise be required to be given under this section
	waive the notice requirement, notice is not required.
	(f)  Notice required under this section shall be given to a
	guardian of the estate, guardian ad litem, or parent of a minor or
	incapacitated beneficiary. A guardian of the estate, guardian ad
	litem, or parent of a minor or incapacitated beneficiary may waive
	the notice requirement in accordance with this section on behalf of
	the minor or incapacitated beneficiary.
	SECTION 4.  Subsection (d), Section 115.001, Property Code,
	is amended to read as follows:
	(d)  The jurisdiction of the district court is exclusive
	except for jurisdiction conferred by law on:
	(1)  a statutory probate court;
	(2)  a court that creates a trust under Section 867,
	Texas Probate Code;
	(3)  a court that creates a trust under Section
	142.005;
	(4)  a justice court under Chapter 27, Government Code;
	[or]
	(5)  a small claims court under Chapter 28, Government
	Code; or
	(6)  a county court at law.
	SECTION 5.  Section 115.002, Property Code, is amended by
	adding Subsection (c-1) to read as follows:
	(c-1)  Notwithstanding Subsections (b) and (c), if the
	settlor is deceased and an administration of the settlor's estate
	is pending in this state, an action involving the interpretation
	and administration of an inter vivos trust created by the settlor or
	a testamentary trust created by the settlor's will may be brought:
	(1)  in a county in which venue is proper under
	Subsection (b) or (c); or
	(2)  in the county in which the administration of the
	settlor's estate is pending.
	SECTION 6.  Subsection (b), Section 115.011, Property Code,
	is amended to read as follows:
	(b)  Contingent beneficiaries designated as a class are not
	necessary parties to an action under Section 115.001.  The only
	necessary parties to such an action are:
	(1)  a beneficiary of the trust on whose act or
	obligation the action is predicated;
	(2)  a beneficiary of the trust designated by name,
	other than a beneficiary whose interest has been distributed,
	extinguished, terminated, or paid [in the instrument creating the
	trust];
	(3)  a person who is actually receiving distributions
	from the trust estate at the time the action is filed; and
	(4)  the trustee, if a trustee is serving at the time
	the action is filed.
	SECTION 7.  Subsections (d) and (e), Section 116.005,
	Property Code, are amended to read as follows:
	(d)  If Subsection (c)(4), (5) [(c)(5)], (6), or (7)[, or
	(8)] applies to a trustee and there is more than one trustee, a
	cotrustee to whom the provision does not apply may make the
	adjustment unless the exercise of the power by the remaining
	trustee or trustees is not permitted by the terms of the trust.
	(e)  A trustee may release the entire power conferred by
	Subsection (a) or may release only the power to adjust from income
	to principal or the power to adjust from principal to income if the
	trustee is uncertain about whether possessing or exercising the
	power will cause a result described in Subsections (c)(1)-(5)
	[Subsection (c)(1)-(6)] or Subsection (c)(7) [(c)(8)] or if the
	trustee determines that possessing or exercising the power will or
	may deprive the trust of a tax benefit or impose a tax burden not
	described in Subsection (c). The release may be permanent or for a
	specified period, including a period measured by the life of an
	individual.
	SECTION 8.  Subsections (c) and (d), Section 116.205,
	Property Code, are amended to read as follows:
	(c)  A tax required to be paid by a trustee on the trust's
	share of an entity's taxable income must be paid [proportionately]:
	(1)  from income to the extent that receipts from the
	entity are allocated only to income; [and]
	(2)  from principal to the extent that[:
	[(A)]  receipts from the entity are allocated only
	to principal;
	(3)  proportionately from principal and income to the
	extent that receipts from the entity are allocated to both
	principal and income; and
	(4)  from principal to the extent that the tax exceeds
	the total receipts from the entity [and
	[(B)     the trust's share of the entity's taxable
	income exceeds the total receipts described in Subdivisions (1) and
	(2)(A)].
	(d)  After applying the other provisions of this section, the
	trustee shall adjust income or principal receipts to the extent
	that the trust's taxes are reduced because the trust receives a
	deduction for payments made to a beneficiary  [For purposes of this
	section, receipts allocated to principal or income must be reduced
	by the amount distributed to a beneficiary from principal or income
	for which the trust receives a deduction in calculating the tax].
	SECTION 9.  (a)  Except as otherwise expressly provided by
	the will, the trust, or this Act, the changes in law made by this Act
	apply to:
	(1)  a trust existing or created on or after September
	1, 2011;
	(2)  the estate of a decedent who dies before September
	1, 2011, if the probate or administration of the estate is pending
	as of September 1, 2011; and
	(3)  the estate of a decedent who dies on or after
	September 1, 2011.
	(b)  For a trust existing on September 1, 2011, that was
	created before that date, the changes in law made by this Act apply
	only to an act or omission relating to the trust that occurs on or
	after September 1, 2011.
	(c)  Sections 112.038, 115.002, and 115.011, Property Code,
	as amended by this Act, apply to a court action commenced on or
	after September 1, 2011. An action commenced before September 1,
	2011, is governed by the law applicable to the action immediately
	before the effective date of this Act, and that law is continued in
	effect for that purpose.
	(d)  The amendment by this Act of Section 115.001, Property
	Code, is intended to clarify rather than change existing law.
	SECTION 10.  This Act takes effect September 1, 2011.
	______________________________	______________________________
	President of the Senate	Speaker of the House
	I hereby certify that S.B. No. 1197 passed the Senate on
	May 3, 2011, by the following vote:  Yeas 31, Nays 0.
	______________________________
	Secretary of the Senate
	I hereby certify that S.B. No. 1197 passed the House on
	May 19, 2011, by the following vote:  Yeas 148, Nays 0, one
	present not voting.
	______________________________
	Chief Clerk of the House
	Approved:
	______________________________
	Date
	______________________________
	Governor