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CHAPTER 114. LIABILITIES, RIGHTS, AND REMEDIES OF TRUSTEES, BENEFICIARIES, AND THIRD PERSONS

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PROPERTY CODETITLE 9. TRUSTSSUBTITLE B. TEXAS TRUST CODE: CREATION, OPERATION, ANDTERMINATION OF TRUSTSCHAPTER 114. LIABILITIES, RIGHTS, AND REMEDIES OF TRUSTEES,BENEFICIARIES, AND THIRD PERSONSSUBCHAPTER A. LIABILITY OF TRUSTEESec. 114.001.LIABILITY OF TRUSTEE TO BENEFICIARY.(a)Thetrustee is accountable to a beneficiary for the trust propertyand for any profit made by the trustee through or arising out ofthe administration of the trust, even though the profit does notresult from a breach of trust; provided, however, that thetrustee is not required to return to a beneficiary the trustee'scompensation as provided by this subtitle, by the terms of thetrust instrument, or by a writing delivered to the trustee andsigned by all beneficiaries of the trust who have full legalcapacity.(b)The trustee is not liable to the beneficiary for a loss ordepreciation in value of the trust property or for a failure tomake a profit that does not result from a failure to perform theduties set forth in this subtitle or from any other breach oftrust.(c)A trustee who commits a breach of trust is chargeable withany damages resulting from such breach of trust, including butnot limited to:(1)any loss or depreciation in value of the trust estate as aresult of the breach of trust;(2)any profit made by the trustee through the breach of trust;or(3)any profit that would have accrued to the trust estate ifthere had been no breach of trust.(d)The trustee is not liable to the beneficiary for a loss ordepreciation in value of the trust property or for acting orfailing to act under Section 113.025 or under any other provisionof this subtitle if the action or failure to act relates tocompliance with an environmental law and if there is no grossnegligence or bad faith on the part of the trustee. The provisionof any instrument governing trustee liability does not increasethe liability of the trustee as provided by this section unlessthe settlor expressly makes reference to this subsection.(e)The trustee has the same protection from liability providedfor a fiduciary under 42 U.S.C. Section 9607(n).Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec. 2,eff. Jan. 1, 1984. Amended by Acts 1984, 68th Leg., 2nd C.S., ch.18, Sec. 13, eff. Oct. 2, 1984; Acts 1989, 71st Leg., ch. 341,Sec. 2, eff. Aug. 28, 1989; Acts 1993, 73rd Leg., ch. 846, Sec.30, eff. Sept. 1, 1993; Acts 1997, 75th Leg., ch. 263, Sec. 1,eff. Sept. 1, 1997; Acts 2003, 78th Leg., ch. 1103, Sec. 8, eff.Jan. 1, 2004.Sec. 114.002.LIABILITY OF SUCCESSOR TRUSTEE FOR BREACH OF TRUSTBY PREDECESSOR.A successor trustee is liable for a breach oftrust of a predecessor only if he knows or should know of asituation constituting a breach of trust committed by thepredecessor and the successor trustee:(1)improperly permits it to continue;(2)fails to make a reasonable effort to compel the predecessortrustee to deliver the trust property; or(3)fails to make a reasonable effort to compel a redress of abreach of trust committed by the predecessor trustee.Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec.2, eff. Jan. 1, 1984.Sec. 114.003.POWERS TO DIRECT.(a)The terms of a trust maygive a trustee or other person a power to direct the modificationor termination of the trust.(b)If the terms of a trust give a person the power to directcertain actions of the trustee, the trustee shall act inaccordance with the person's direction unless:(1)the direction is manifestly contrary to the terms of thetrust; or(2)the trustee knows the direction would constitute a seriousbreach of a fiduciary duty that the person holding the power todirect owes to the beneficiaries of the trust.(c)A person, other than a beneficiary, who holds a power todirect is presumptively a fiduciary required to act in good faithwith regard to the purposes of the trust and the interests of thebeneficiaries.The holder of a power to direct is liable for anyloss that results from a breach of the person's fiduciary duty.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. 19, eff. January 1, 2006.Sec. 114.004.ACTIONS TAKEN PRIOR TO KNOWLEDGE OR NOTICE OFFACTS.A trustee is not liable for a mistake of fact made beforethe trustee has actual knowledge or receives written notice ofthe happening of any event that determines or affects thedistribution of the income or principal of the trust, includingmarriage, divorce, attainment of a certain age, performance ofeducation requirements, or death.Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec.2, eff. Jan. 1, 1984.Sec. 114.005.RELEASE OF LIABILITY BY BENEFICIARY.(a)Abeneficiary who has full legal capacity and is acting on fullinformation may relieve a trustee from any duty, responsibility,restriction, or liability as to the beneficiary that wouldotherwise be imposed on the trustee by this subtitle, includingliability for past violations.(b)The release must be in writing and delivered to the trustee.Amended by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec.2, eff. Jan. 1, 1984.Amended by:Acts 2007, 80th Leg., R.S., Ch.451, Sec. 8, eff. September 1, 2007.Sec. 114.006.LIABILITY OF COTRUSTEES FOR ACTS OF OTHERCOTRUSTEES.(a)A trustee who does not join in an action of acotrustee is not liable for the cotrustee's action, unless thetrustee does not exercise reasonable care as provided bySubsection (b).(b)Each trustee shall exercise reasonable care to:(1)prevent a cotrustee from committing a serious breach oftrust; and(2)compel a cotrustee to redress a serious breach of trust.(c)Subject to Subsection (b), a dissenting trustee who joins inan action at the direction of the majority of the trustees andwho has notified any cotrustee of the dissent in writing at orbefore the time of the action is not liable for the action.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. 20, eff. January 1, 2006.Sec. 114.007.EXCULPATION OF TRUSTEE.(a)A term of a trustrelieving a trustee of liability for breach of trust isunenforceable to the extent that the term relieves a trustee ofliability for:(1)a breach of trust committed:(A)in bad faith;(B)intentionally; or(C)with reckless indifference to the interest of a beneficiary;or(2)any profit derived by the trustee from a breach of trust.(b)A term in a trust instrument relieving the trustee ofliability for a breach of trust is ineffective to the extent thatthe term is inserted in the trust instrument as a result of anabuse by the trustee of a fiduciary duty to or confidentialrelationship with the settlor.(c)This section applies only to a term of a trust that mayotherwise relieve a trustee from liability for a breach of trust.Except as provided in Section 111.0035, this section does notprohibit the settlor, by the terms of the trust, from expressly:(1)relieving the trustee from a duty or restriction imposed bythis subtitle or by common law; or(2)directing or permitting the trustee to do or not to do anaction that would otherwise violate a duty or restriction imposedby this subtitle or by common law.Added by Acts 2005, 79th Leg., Ch.148, Sec. 21, eff. January 1, 2006.Sec. 114.008.REMEDIES FOR BREACH OF TRUST.(a)To remedy abreach of trust that has occurred or might occur, the court may:(1)compel the trustee to perform the trustee's duty or duties;(2)enjoin the trustee from committing a breach of trust;(3)compel the trustee to redress a breach of trust, includingcompelling the trustee to pay money or to restore property;(4)order a trustee to account;(5)appoint a receiver to take possession of the trust propertyand administer the trust;(6)suspend the trustee;(7)remove the trustee as provided under Section 113.082;(8)reduce or deny compensation to the trustee;(9)subject to Subsection (b), void an act of the trustee,impose a lien or a constructive trust on trust property, or tracetrust property of which the trustee wrongfully disposed andrecover the property or the proceeds from the property; or(10)order any other appropriate relief.(b)Notwithstanding Subsection (a)(9), a person other than abeneficiary who, without knowledge that a trustee is exceeding orimproperly exercising the trustee's powers, in good faith assistsa trustee or in good faith and for value deals with a trustee isprotected from liability as if the trustee had or properlyexercised the power exercised by the trustee.Added by Acts 2005, 79th Leg., Ch.148, Sec. 21, eff. January 1, 2006.SUBCHAPTER B. LIABILITY OF BENEFICIARYSec. 114.031.LIABILITY OF BENEFICIARY TO TRUSTEE.(a)Abeneficiary is liable for loss to the trust if the beneficiaryhas:(1)misappropriated or otherwise wrongfully dealt with the trustproperty;(2)expressly consented to, participated in, or agreed with thetrustee to be liable for a breach of trust committed by thetrustee;(3)failed to repay an advance or loan of trust funds;(4)failed to repay a distribution or disbursement from thetrust in excess of that to which the beneficiary is entitled; or(5)breached a contract to pay money or deliver property to thetrustee to be held by the trustee as part of the trust.(b)Unless the terms of the trust provide otherwise, the trusteeis authorized to offset a liability of the beneficiary to thetrust estate against the beneficiary's interest in the trustestate, regardless of a spendthrift provision in the trust.Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec. 2,eff. Jan. 1, 1984.Sec. 114.032.LIABILITY FOR WRITTEN AGREEMENTS.(a)A writtenagreement between a trustee and a beneficiary, including arelease, consent, or other agreement relating to a trustee'sduty, power, responsibility, restriction, or liability, is finaland binding on the beneficiary and any person represented by abeneficiary as provided by this section if:(1)the instrument is signed by the beneficiary;(2)the beneficiary has legal capacity to sign the instrument;and(3)the beneficiary has full knowledge of the circumstancessurrounding the agreement.(b)A written agreement signed by a beneficiary who has thepower to revoke the trust or the power to appoint, including thepower to appoint through a power of amendment, the income orprincipal of the trust to or for the benefit of the beneficiary,the beneficiary's creditors, the beneficiary's estate, or thecreditors of the beneficiary's estate is final and binding on anyperson who takes under the power of appointment or who takes indefault if the power of appointment is not executed.(c)A written instrument is final and binding on a beneficiarywho is a minor if:(1)the minor's parent, including a parent who is also a trustbeneficiary, signs the instrument on behalf of the minor;(2)no conflict of interest exists; and(3)no guardian, including a guardian ad litem, has beenappointed to act on behalf of the minor.(d)A written instrument is final and binding on an unborn orunascertained beneficiary if a beneficiary who has an interestsubstantially identical to the interest of the unborn orunascertained beneficiary signs the instrument. For purposes ofthis subsection, an unborn or unascertained beneficiary has asubstantially identical interest only with a trust beneficiaryfrom whom the unborn or unascertained beneficiary descends.(e)This section does not apply to a written instrument thatmodifies or terminates a trust in whole or in part unless theinstrument is otherwise permitted by law.Added by Acts 1999, 76th Leg., ch. 794, Sec. 3, eff. Sept. 1,1999.SUBCHAPTER C. RIGHTS OF TRUSTEESec. 114.061.COMPENSATION.(a)Unless the terms of the trustprovide otherwise and except as provided in Subsection (b) ofthis section, the trustee is entitled to reasonable compensationfrom the trust for acting as trustee.(b)If the trustee commits a breach of trust, the court may inits discretion deny him all or part of his compensation.Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec. 2,eff. Jan. 1, 1984.Sec. 114.062.EXONERATION OR REIMBURSEMENT FOR TORT.(a)Except as provided in Subsection (b) of this section, a trusteewho incurs personal liability for a tort committed in theadministration of the trust is entitled to exoneration from thetrust property if the trustee has not paid the claim or toreimbursement from the trust property if the trustee has paid theclaim, if:(1)the trustee was properly engaged in a business activity forthe trust and the tort is a common incident of that kind ofactivity;(2)the trustee was properly engaged in a business activity forthe trust and neither the trustee nor an officer or employee ofthe trustee is guilty of actionable negligence or intentionalmisconduct in incurring the liability; or(3)the tort increased the value of the trust property.(b)A trustee who is entitled to exoneration or reimbursementunder Subdivision (3) of Subsection (a) is entitled toexoneration or reimbursement only to the extent of the increasein the value of the trust property.Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec. 2,eff. Jan. 1, 1984.Sec. 114.063.GENERAL RIGHT TO REIMBURSEMENT.(a)A trusteemay discharge or reimburse himself from trust principal or incomeor partly from both for:(1)advances made for the convenience, benefit, or protection ofthe trust or its property;(2)expenses incurred while administering or protecting thetrust or because of the trustee's holding or owning any of thetrust property; and(3)expenses incurred for any action taken under Section113.025.(b)The trustee has a lien against trust property to securereimbursement under Subsection (a).(c)A potential trustee is entitled to reimbursement from trustprincipal or income or partly from both for reasonable expensesincurred for any action taken under Section 113.025(a) if:(1)a court orders reimbursement or the potential trustee hasentered into a written agreement providing for reimbursement withthe personal representative of the estate, the trustee of thetrust, the settlor, the settlor's attorney-in-fact, the settlor'spersonal representative, or the person or entity designated inthe trust instrument or will to appoint a trustee; and(2)the potential trustee has been appointed trustee under theterms of the trust instrument or will or has received a writtenrequest to accept the trust from the settlor, the settlor'sattorney-in-fact, the settlor's personal representative, or theperson or entity designated in the trust instrument or will toappoint a trustee.Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec. 2,eff. Jan. 1, 1984. Amended by Acts 1993, 73rd Leg., ch. 846, Sec.31, eff. Sept. 1, 1993.Sec. 114.064.COSTS.(a) In any proceeding under this codethe court may make such award of costs and reasonable andnecessary attorney's fees as may seem equitable and just.Added by Acts 1985, 69th Leg., ch. 149, Sec. 4, eff. May 24,1985.SUBCHAPTER D. THIRD PERSONSSec. 114.081.PROTECTION OF PERSON DEALING WITH TRUSTEE.(a)Aperson who deals with a trustee in good faith and for fair valueactually received by the trust is not liable to the trustee orthe beneficiaries of the trust if the trustee has exceeded thetrustee's authority in dealing with the person.(b)A person other than a beneficiary is not required to inquireinto the extent of the trustee's powers or the propriety of theexercise of those powers if the person:(1)deals with the trustee in good faith; and(2)obtains:(A)a certification of trust described by Section 114.086; or(B)a copy of the trust instrument.(c)A person who in good faith delivers money or other assets toa trustee is not required to ensure the proper application of themoney or other assets.(d)A person other than a beneficiary who in good faith assistsa former trustee, or who in good faith and for value deals with aformer trustee, without knowledge that the trusteeship hasterminated, is protected from liability as if the former trusteewere still a trustee.(e)Comparable protective provisions of other laws relating tocommercial transactions or transfer of securities by fiduciariesprevail over the protection provided by this section.Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec. 2,eff. Jan. 1, 1984.Amended by:Acts 2007, 80th Leg., R.S., Ch.451, Sec. 9, eff. September 1, 2007.Sec. 114.082.CONVEYANCE BY TRUSTEE.If property is conveyed ortransferred to a trustee in trust but the conveyance or transferdoes not identify the trust or disclose the names of thebeneficiaries, the trustee may convey, transfer, or encumber thetitle of the property without subsequent question by a person whoclaims to be a beneficiary under the trust or who claims by,through, or under an undisclosed beneficiary.Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec. 2,eff. Jan. 1, 1984. Amended by Acts 1987, 70th Leg., ch. 683, Sec.4, eff. Aug. 31, 1987.Sec. 114.0821.LIABILITY OF TRUST PROPERTY.Although trustproperty is held by the trustee without identifying the trust orits beneficiaries, the trust property is not liable to satisfythe personal obligations of the trustee.Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec. 2,eff. Jan. 1, 1984. Renumbered from Sec. 114.082(b) by Acts 1987,70th Leg., ch. 683, Sec. 4, eff. Aug. 31, 1987.Sec. 114.083.RIGHTS AND LIABILITIES FOR COMMITTING TORTS.(a)A personal liability of a trustee or a predecessor trustee for atort committed in the course of the administration of the trustmay be collected from the trust property if the trustee is suedin a representative capacity and the court finds that:(1)the trustee was properly engaged in a business activity forthe trust and the tort is a common incident of that kind ofactivity;(2)the trustee was properly engaged in a business activity forthe trust and neither the trustee nor an officer or employee ofthe trustee is guilty of actionable negligence or intentionalmisconduct in incurring the liability; or(3)the tort increased the value of the trust property.(b)A trust that is liable for the trustee's tort underSubdivision (3) of Subsection (a) is liable only to the extent ofthe permanent increase in value of the trust property.(c)A plaintiff in an action against the trustee as therepresentative of the trust does not have to prove that thetrustee could have been reimbursed by the trust if the trusteehad paid the claim.(d)Subject to the rights of exoneration or reimbursement underSection 114.062, the trustee is personally liable for a tortcommitted by the trustee or by the trustee's agents or employeesin the course of their employment.Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec. 2,eff. Jan. 1, 1984.Sec. 114.084.CONTRACTS OF TRUSTEE.(a)If a trustee or apredecessor trustee makes a contract that is within his power astrustee and a cause of action arises on the contract, theplaintiff may sue the trustee in his representative capacity, anda judgment rendered in favor of the plaintiff is collectible byexecution against the trust property. The plaintiff may sue thetrustee individually if the trustee made the contract and thecontract does not exclude the trustee's personal liability.(b)The addition of "trustee" or "as trustee" after thesignature of a trustee who is party to a contract is prima facieevidence of an intent to exclude the trustee from personalliability.(c)In an action on a contract against a trustee in thetrustee's representative capacity the plaintiff does not have toprove that the trustee could have been reimbursed by the trust ifthe trustee had paid the claim.Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec. 2,eff. Jan. 1, 1984.Sec. 114.085.PARTNERSHIPS.(a)To the extent allowed by law,a trustee who takes the place of a deceased partner in a generalpartnership in accordance with the articles of partnership isliable to third persons only to the extent of the:(1)deceased partner's capital in the partnership; and(2)trust funds held by the trustee.(b)A trustee who contracts to enter a general partnership inits capacity as trustee shall limit, to the extent allowed bylaw, the trust's liability to:(1)the trust assets contributed to the partnership; and(2)other assets of the trust under the management of thecontracting trustee.(c)If another provision of this subtitle conflicts with thissection, this section controls. This section does not exonerate atrustee from liability for negligence.Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, Sec. 2,eff. Jan. 1, 1984.Sec. 114.086.CERTIFICATION OF TRUST.(a)As an alternative toproviding a copy of the trust instrument to a person other than abeneficiary, the trustee may provide to the person acertification of trust containing the following information:(1)a statement that the trust exists and the date the trustinstrument was executed;(2)the identity of the settlor;(3)the identity and mailing address of the currently actingtrustee;(4)one or more powers of the trustee or a statement that thetrust powers include at least all the powers granted a trustee bySubchapter A, Chapter 113;(5)the revocability or irrevocability of the trust and theidentity of any person holding a power to revoke the trust;(6)the authority of cotrustees to sign or otherwiseauthenticate and whether all or less than all of the cotrusteesare required in order to exercise powers of the trustee; and(7)the manner in which title to trust property should be taken.(b)A certification of trust may be signed or otherwiseauthenticated by any trustee.(c)A certification of trust must state that the trust has notbeen revoked, modified, or amended in any manner that would causethe representations contained in the certification to beincorrect.(d)A certification of trust:(1)is not required to contain the dispositive terms of a trust;and(2)may contain information in addition to the informationrequired by Subsection (a).(e)A recipient of a certification of trust may require thetrustee to furnish copies of the excerpts from the original trustinstrument and later amendments to the trust instrument thatdesignate the trustee and confer on the trustee the power to actin the pending transaction.(f)A person who acts in reliance on a certification of trustwithout knowledge that the representations contained in thecertification are incorrect is not liable to any person for theaction and may assume without inquiry the existence of the factscontained in the certification.(g)If a person has actual knowledge that the trustee is actingoutside the scope of the trust, and the actual knowledge wasacquired by the person before the person entered into thetransaction with the trustee or made a binding commitment toenter into the transaction, the transaction is not enforceableagainst the trust.(h)A person who in good faith enters into a transaction relyingon a certification of trust may enforce the transaction againstthe trust property as if the representations contained in thecertification are correct.This section does not create animplication that a person is liable for acting in reliance on acertification of trust that fails to contain all the informationrequired by Subsection (a).A person's failure to demand acertification of trust does not:(1)affect the protection provided to the person by Section114.081; or(2)create an inference as to whether the person has acted ingood faith.(i)A person making a demand for the trust instrument inaddition to a certification of trust or excerpts as described bySubsection (e) is liable for damages if the court determines thatthe person did not act in good faith in making the demand.(j)This section does not limit the right of a person to obtaina copy of the trust instrument in a judicial proceedingconcerning the trust.(k)This section does not limit the rights of a beneficiary ofthe trust against the trustee.Added by Acts 2007, 80th Leg., R.S., Ch.451, Sec. 10, eff. September 1, 2007.
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  • PROPERTY CODE

    TITLE 9. TRUSTS

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

    TERMINATION OF TRUSTS

    CHAPTER 114. LIABILITIES, RIGHTS, AND REMEDIES OF TRUSTEES,

    BENEFICIARIES, AND THIRD PERSONS

    SUBCHAPTER A. LIABILITY OF TRUSTEE

    Sec. 114.001. LIABILITY OF TRUSTEE TO BENEFICIARY. (a) The

    trustee is accountable to a beneficiary for the trust property

    and for any profit made by the trustee through or arising out of

    the administration of the trust, even though the profit does not

    result from a breach of trust; provided, however, that the

    trustee is not required to return to a beneficiary the trustee's

    compensation as provided by this subtitle, by the terms of the

    trust instrument, or by a writing delivered to the trustee and

    signed by all beneficiaries of the trust who have full legal

    capacity.

    (b) The trustee is not liable to the beneficiary for a loss or

    depreciation in value of the trust property or for a failure to

    make a profit that does not result from a failure to perform the

    duties set forth in this subtitle or from any other breach of

    trust.

    (c) A trustee who commits a breach of trust is chargeable with

    any damages resulting from such breach of trust, including but

    not limited to:

    (1) any loss or depreciation in value of the trust estate as a

    result of the breach of trust;

    (2) any profit made by the trustee through the breach of trust;

    or

    (3) any profit that would have accrued to the trust estate if

    there had been no breach of trust.

    (d) The trustee is not liable to the beneficiary for a loss or

    depreciation in value of the trust property or for acting or

    failing to act under Section 113.025 or under any other provision

    of this subtitle if the action or failure to act relates to

    compliance with an environmental law and if there is no gross

    negligence or bad faith on the part of the trustee. The provision

    of any instrument governing trustee liability does not increase

    the liability of the trustee as provided by this section unless

    the settlor expressly makes reference to this subsection.

    (e) The trustee has the same protection from liability provided

    for a fiduciary under 42 U.S.C. Section 9607(n).

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

    eff. Jan. 1, 1984. Amended by Acts 1984, 68th Leg., 2nd C.S., ch.

    18, Sec. 13, eff. Oct. 2, 1984; Acts 1989, 71st Leg., ch. 341,

    Sec. 2, eff. Aug. 28, 1989; Acts 1993, 73rd Leg., ch. 846, Sec.

    30, eff. Sept. 1, 1993; Acts 1997, 75th Leg., ch. 263, Sec. 1,

    eff. Sept. 1, 1997; Acts 2003, 78th Leg., ch. 1103, Sec. 8, eff.

    Jan. 1, 2004.

    Sec. 114.002. LIABILITY OF SUCCESSOR TRUSTEE FOR BREACH OF TRUST

    BY PREDECESSOR. A successor trustee is liable for a breach of

    trust of a predecessor only if he knows or should know of a

    situation constituting a breach of trust committed by the

    predecessor and the successor trustee:

    (1) improperly permits it to continue;

    (2) fails to make a reasonable effort to compel the predecessor

    trustee to deliver the trust property; or

    (3) fails to make a reasonable effort to compel a redress of a

    breach of trust committed by the predecessor trustee.

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

    2, eff. Jan. 1, 1984.

    Sec. 114.003. POWERS TO DIRECT. (a) The terms of a trust may

    give a trustee or other person a power to direct the modification

    or termination of the trust.

    (b) If the terms of a trust give a person the power to direct

    certain actions of the trustee, the trustee shall act in

    accordance with the person's direction unless:

    (1) the direction is manifestly contrary to the terms of the

    trust; or

    (2) the trustee knows the direction would constitute a serious

    breach of a fiduciary duty that the person holding the power to

    direct owes to the beneficiaries of the trust.

    (c) A person, other than a beneficiary, who holds a power to

    direct is presumptively a fiduciary required to act in good faith

    with regard to the purposes of the trust and the interests of the

    beneficiaries. The holder of a power to direct is liable for any

    loss that results from a breach of the person's fiduciary duty.

    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. 19, eff. January 1, 2006.

    Sec. 114.004. ACTIONS TAKEN PRIOR TO KNOWLEDGE OR NOTICE OF

    FACTS. A trustee is not liable for a mistake of fact made before

    the trustee has actual knowledge or receives written notice of

    the happening of any event that determines or affects the

    distribution of the income or principal of the trust, including

    marriage, divorce, attainment of a certain age, performance of

    education requirements, or death.

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

    2, eff. Jan. 1, 1984.

    Sec. 114.005. RELEASE OF LIABILITY BY BENEFICIARY. (a) A

    beneficiary who has full legal capacity and is acting on full

    information may relieve a trustee from any duty, responsibility,

    restriction, or liability as to the beneficiary that would

    otherwise be imposed on the trustee by this subtitle, including

    liability for past violations.

    (b) The release must be in writing and delivered to the trustee.

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

    2, eff. Jan. 1, 1984.

    Amended by:

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

    451, Sec. 8, eff. September 1, 2007.

    Sec. 114.006. LIABILITY OF COTRUSTEES FOR ACTS OF OTHER

    COTRUSTEES. (a) A trustee who does not join in an action of a

    cotrustee is not liable for the cotrustee's action, unless the

    trustee does not exercise reasonable care as provided by

    Subsection (b).

    (b) Each trustee shall exercise reasonable care to:

    (1) prevent a cotrustee from committing a serious breach of

    trust; and

    (2) compel a cotrustee to redress a serious breach of trust.

    (c) Subject to Subsection (b), a dissenting trustee who joins in

    an action at the direction of the majority of the trustees and

    who has notified any cotrustee of the dissent in writing at or

    before the time of the action is not liable for the action.

    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. 20, eff. January 1, 2006.

    Sec. 114.007. EXCULPATION OF TRUSTEE. (a) A term of a trust

    relieving a trustee of liability for breach of trust is

    unenforceable to the extent that the term relieves a trustee of

    liability for:

    (1) a breach of trust committed:

    (A) in bad faith;

    (B) intentionally; or

    (C) with reckless indifference to the interest of a beneficiary;

    or

    (2) any profit derived by the trustee from a breach of trust.

    (b) A term in a trust instrument relieving the trustee of

    liability for a breach of trust is ineffective to the extent that

    the term is inserted in the trust instrument as a result of an

    abuse by the trustee of a fiduciary duty to or confidential

    relationship with the settlor.

    (c) This section applies only to a term of a trust that may

    otherwise relieve a trustee from liability for a breach of trust.

    Except as provided in Section 111.0035, this section does not

    prohibit the settlor, by the terms of the trust, from expressly:

    (1) relieving the trustee from a duty or restriction imposed by

    this subtitle or by common law; or

    (2) directing or permitting the trustee to do or not to do an

    action that would otherwise violate a duty or restriction imposed

    by this subtitle or by common law.

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

    148, Sec. 21, eff. January 1, 2006.

    Sec. 114.008. REMEDIES FOR BREACH OF TRUST. (a) To remedy a

    breach of trust that has occurred or might occur, the court may:

    (1) compel the trustee to perform the trustee's duty or duties;

    (2) enjoin the trustee from committing a breach of trust;

    (3) compel the trustee to redress a breach of trust, including

    compelling the trustee to pay money or to restore property;

    (4) order a trustee to account;

    (5) appoint a receiver to take possession of the trust property

    and administer the trust;

    (6) suspend the trustee;

    (7) remove the trustee as provided under Section 113.082;

    (8) reduce or deny compensation to the trustee;

    (9) subject to Subsection (b), void an act of the trustee,

    impose a lien or a constructive trust on trust property, or trace

    trust property of which the trustee wrongfully disposed and

    recover the property or the proceeds from the property; or

    (10) order any other appropriate relief.

    (b) Notwithstanding Subsection (a)(9), a person other than a

    beneficiary who, without knowledge that a trustee is exceeding or

    improperly exercising the trustee's powers, in good faith assists

    a trustee or in good faith and for value deals with a trustee is

    protected from liability as if the trustee had or properly

    exercised the power exercised by the trustee.

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

    148, Sec. 21, eff. January 1, 2006.

    SUBCHAPTER B. LIABILITY OF BENEFICIARY

    Sec. 114.031. LIABILITY OF BENEFICIARY TO TRUSTEE. (a) A

    beneficiary is liable for loss to the trust if the beneficiary

    has:

    (1) misappropriated or otherwise wrongfully dealt with the trust

    property;

    (2) expressly consented to, participated in, or agreed with the

    trustee to be liable for a breach of trust committed by the

    trustee;

    (3) failed to repay an advance or loan of trust funds;

    (4) failed to repay a distribution or disbursement from the

    trust in excess of that to which the beneficiary is entitled; or

    (5) breached a contract to pay money or deliver property to the

    trustee to be held by the trustee as part of the trust.

    (b) Unless the terms of the trust provide otherwise, the trustee

    is authorized to offset a liability of the beneficiary to the

    trust estate against the beneficiary's interest in the trust

    estate, regardless of a spendthrift provision in the trust.

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

    eff. Jan. 1, 1984.

    Sec. 114.032. LIABILITY FOR WRITTEN AGREEMENTS. (a) A written

    agreement between a trustee and a beneficiary, including a

    release, consent, or other agreement relating to a trustee's

    duty, power, responsibility, restriction, or liability, is final

    and binding on the beneficiary and any person represented by a

    beneficiary as provided by this section if:

    (1) the instrument is signed by the beneficiary;

    (2) the beneficiary has legal capacity to sign the instrument;

    and

    (3) the beneficiary has full knowledge of the circumstances

    surrounding the agreement.

    (b) A written agreement signed by a beneficiary who has the

    power to revoke the trust or the power to appoint, including the

    power to appoint through a power of amendment, the income or

    principal of the trust to or for the benefit of the beneficiary,

    the beneficiary's creditors, the beneficiary's estate, or the

    creditors of the beneficiary's estate is final and binding on any

    person who takes under the power of appointment or who takes in

    default if the power of appointment is not executed.

    (c) A written instrument is final and binding on a beneficiary

    who is a minor if:

    (1) the minor's parent, including a parent who is also a trust

    beneficiary, signs the instrument on behalf of the minor;

    (2) no conflict of interest exists; and

    (3) no guardian, including a guardian ad litem, has been

    appointed to act on behalf of the minor.

    (d) A written instrument is final and binding on an unborn or

    unascertained beneficiary if a beneficiary who has an interest

    substantially identical to the interest of the unborn or

    unascertained beneficiary signs the instrument. For purposes of

    this subsection, an unborn or unascertained beneficiary has a

    substantially identical interest only with a trust beneficiary

    from whom the unborn or unascertained beneficiary descends.

    (e) This section does not apply to a written instrument that

    modifies or terminates a trust in whole or in part unless the

    instrument is otherwise permitted by law.

    Added by Acts 1999, 76th Leg., ch. 794, Sec. 3, eff. Sept. 1,

    1999.

    SUBCHAPTER C. RIGHTS OF TRUSTEE

    Sec. 114.061. COMPENSATION. (a) Unless the terms of the trust

    provide otherwise and except as provided in Subsection (b) of

    this section, the trustee is entitled to reasonable compensation

    from the trust for acting as trustee.

    (b) If the trustee commits a breach of trust, the court may in

    its discretion deny him all or part of his compensation.

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

    eff. Jan. 1, 1984.

    Sec. 114.062. EXONERATION OR REIMBURSEMENT FOR TORT. (a)

    Except as provided in Subsection (b) of this section, a trustee

    who incurs personal liability for a tort committed in the

    administration of the trust is entitled to exoneration from the

    trust property if the trustee has not paid the claim or to

    reimbursement from the trust property if the trustee has paid the

    claim, if:

    (1) the trustee was properly engaged in a business activity for

    the trust and the tort is a common incident of that kind of

    activity;

    (2) the trustee was properly engaged in a business activity for

    the trust and neither the trustee nor an officer or employee of

    the trustee is guilty of actionable negligence or intentional

    misconduct in incurring the liability; or

    (3) the tort increased the value of the trust property.

    (b) A trustee who is entitled to exoneration or reimbursement

    under Subdivision (3) of Subsection (a) is entitled to

    exoneration or reimbursement only to the extent of the increase

    in the value of the trust property.

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

    eff. Jan. 1, 1984.

    Sec. 114.063. GENERAL RIGHT TO REIMBURSEMENT. (a) A trustee

    may discharge or reimburse himself from trust principal or income

    or partly from both for:

    (1) advances made for the convenience, benefit, or protection of

    the trust or its property;

    (2) expenses incurred while administering or protecting the

    trust or because of the trustee's holding or owning any of the

    trust property; and

    (3) expenses incurred for any action taken under Section

    113.025.

    (b) The trustee has a lien against trust property to secure

    reimbursement under Subsection (a).

    (c) A potential trustee is entitled to reimbursement from trust

    principal or income or partly from both for reasonable expenses

    incurred for any action taken under Section 113.025(a) if:

    (1) a court orders reimbursement or the potential trustee has

    entered into a written agreement providing for reimbursement with

    the personal representative of the estate, the trustee of the

    trust, the settlor, the settlor's attorney-in-fact, the settlor's

    personal representative, or the person or entity designated in

    the trust instrument or will to appoint a trustee; and

    (2) the potential trustee has been appointed trustee under the

    terms of the trust instrument or will or has received a written

    request to accept the trust from the settlor, the settlor's

    attorney-in-fact, the settlor's personal representative, or the

    person or entity designated in the trust instrument or will to

    appoint a trustee.

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

    eff. Jan. 1, 1984. Amended by Acts 1993, 73rd Leg., ch. 846, Sec.

    31, eff. Sept. 1, 1993.

    Sec. 114.064. COSTS. (a) In any proceeding under this code

    the court may make such award of costs and reasonable and

    necessary attorney's fees as may seem equitable and just.

    Added by Acts 1985, 69th Leg., ch. 149, Sec. 4, eff. May 24,

    1985.

    SUBCHAPTER D. THIRD PERSONS

    Sec. 114.081. PROTECTION OF PERSON DEALING WITH TRUSTEE. (a) A

    person who deals with a trustee in good faith and for fair value

    actually received by the trust is not liable to the trustee or

    the beneficiaries of the trust if the trustee has exceeded the

    trustee's authority in dealing with the person.

    (b) A person other than a beneficiary is not required to inquire

    into the extent of the trustee's powers or the propriety of the

    exercise of those powers if the person:

    (1) deals with the trustee in good faith; and

    (2) obtains:

    (A) a certification of trust described by Section 114.086; or

    (B) a copy of the trust instrument.

    (c) A person who in good faith delivers money or other assets to

    a trustee is not required to ensure the proper application of the

    money or other assets.

    (d) A person other than a beneficiary who in good faith assists

    a former trustee, or who in good faith and for value deals with a

    former trustee, without knowledge that the trusteeship has

    terminated, is protected from liability as if the former trustee

    were still a trustee.

    (e) Comparable protective provisions of other laws relating to

    commercial transactions or transfer of securities by fiduciaries

    prevail over the protection provided by this section.

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

    eff. Jan. 1, 1984.

    Amended by:

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

    451, Sec. 9, eff. September 1, 2007.

    Sec. 114.082. CONVEYANCE BY TRUSTEE. If property is conveyed or

    transferred to a trustee in trust but the conveyance or transfer

    does not identify the trust or disclose the names of the

    beneficiaries, the trustee may convey, transfer, or encumber the

    title of the property without subsequent question by a person who

    claims to be a beneficiary under the trust or who claims by,

    through, or under an undisclosed beneficiary.

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

    eff. Jan. 1, 1984. Amended by Acts 1987, 70th Leg., ch. 683, Sec.

    4, eff. Aug. 31, 1987.

    Sec. 114.0821. LIABILITY OF TRUST PROPERTY. Although trust

    property is held by the trustee without identifying the trust or

    its beneficiaries, the trust property is not liable to satisfy

    the personal obligations of the trustee.

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

    eff. Jan. 1, 1984. Renumbered from Sec. 114.082(b) by Acts 1987,

    70th Leg., ch. 683, Sec. 4, eff. Aug. 31, 1987.

    Sec. 114.083. RIGHTS AND LIABILITIES FOR COMMITTING TORTS. (a)

    A personal liability of a trustee or a predecessor trustee for a

    tort committed in the course of the administration of the trust

    may be collected from the trust property if the trustee is sued

    in a representative capacity and the court finds that:

    (1) the trustee was properly engaged in a business activity for

    the trust and the tort is a common incident of that kind of

    activity;

    (2) the trustee was properly engaged in a business activity for

    the trust and neither the trustee nor an officer or employee of

    the trustee is guilty of actionable negligence or intentional

    misconduct in incurring the liability; or

    (3) the tort increased the value of the trust property.

    (b) A trust that is liable for the trustee's tort under

    Subdivision (3) of Subsection (a) is liable only to the extent of

    the permanent increase in value of the trust property.

    (c) A plaintiff in an action against the trustee as the

    representative of the trust does not have to prove that the

    trustee could have been reimbursed by the trust if the trustee

    had paid the claim.

    (d) Subject to the rights of exoneration or reimbursement under

    Section 114.062, the trustee is personally liable for a tort

    committed by the trustee or by the trustee's agents or employees

    in the course of their employment.

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

    eff. Jan. 1, 1984.

    Sec. 114.084. CONTRACTS OF TRUSTEE. (a) If a trustee or a

    predecessor trustee makes a contract that is within his power as

    trustee and a cause of action arises on the contract, the

    plaintiff may sue the trustee in his representative capacity, and

    a judgment rendered in favor of the plaintiff is collectible by

    execution against the trust property. The plaintiff may sue the

    trustee individually if the trustee made the contract and the

    contract does not exclude the trustee's personal liability.

    (b) The addition of "trustee" or "as trustee" after the

    signature of a trustee who is party to a contract is prima facie

    evidence of an intent to exclude the trustee from personal

    liability.

    (c) In an action on a contract against a trustee in the

    trustee's representative capacity the plaintiff does not have to

    prove that the trustee could have been reimbursed by the trust if

    the trustee had paid the claim.

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

    eff. Jan. 1, 1984.

    Sec. 114.085. PARTNERSHIPS. (a) To the extent allowed by law,

    a trustee who takes the place of a deceased partner in a general

    partnership in accordance with the articles of partnership is

    liable to third persons only to the extent of the:

    (1) deceased partner's capital in the partnership; and

    (2) trust funds held by the trustee.

    (b) A trustee who contracts to enter a general partnership in

    its capacity as trustee shall limit, to the extent allowed by

    law, the trust's liability to:

    (1) the trust assets contributed to the partnership; and

    (2) other assets of the trust under the management of the

    contracting trustee.

    (c) If another provision of this subtitle conflicts with this

    section, this section controls. This section does not exonerate a

    trustee from liability for negligence.

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

    eff. Jan. 1, 1984.

    Sec. 114.086. CERTIFICATION OF TRUST. (a) As an alternative to

    providing a copy of the trust instrument to a person other than a

    beneficiary, the trustee may provide to the person a

    certification of trust containing the following information:

    (1) a statement that the trust exists and the date the trust

    instrument was executed;

    (2) the identity of the settlor;

    (3) the identity and mailing address of the currently acting

    trustee;

    (4) one or more powers of the trustee or a statement that the

    trust powers include at least all the powers granted a trustee by

    Subchapter A, Chapter 113;

    (5) the revocability or irrevocability of the trust and the

    identity of any person holding a power to revoke the trust;

    (6) the authority of cotrustees to sign or otherwise

    authenticate and whether all or less than all of the cotrustees

    are required in order to exercise powers of the trustee; and

    (7) the manner in which title to trust property should be taken.

    (b) A certification of trust may be signed or otherwise

    authenticated by any trustee.

    (c) A certification of trust must state that the trust has not

    been revoked, modified, or amended in any manner that would cause

    the representations contained in the certification to be

    incorrect.

    (d) A certification of trust:

    (1) is not required to contain the dispositive terms of a trust;

    and

    (2) may contain information in addition to the information

    required by Subsection (a).

    (e) A recipient of a certification of trust may require the

    trustee to furnish copies of the excerpts from the original trust

    instrument and later amendments to the trust instrument that

    designate the trustee and confer on the trustee the power to act

    in the pending transaction.

    (f) A person who acts in reliance on a certification of trust

    without knowledge that the representations contained in the

    certification are incorrect is not liable to any person for the

    action and may assume without inquiry the existence of the facts

    contained in the certification.

    (g) If a person has actual knowledge that the trustee is acting

    outside the scope of the trust, and the actual knowledge was

    acquired by the person before the person entered into the

    transaction with the trustee or made a binding commitment to

    enter into the transaction, the transaction is not enforceable

    against the trust.

    (h) A person who in good faith enters into a transaction relying

    on a certification of trust may enforce the transaction against

    the trust property as if the representations contained in the

    certification are correct. This section does not create an

    implication that a person is liable for acting in reliance on a

    certification of trust that fails to contain all the information

    required by Subsection (a). A person's failure to demand a

    certification of trust does not:

    (1) affect the protection provided to the person by Section

    114.081; or

    (2) create an inference as to whether the person has acted in

    good faith.

    (i) A person making a demand for the trust instrument in

    addition to a certification of trust or excerpts as described by

    Subsection (e) is liable for damages if the court determines that

    the person did not act in good faith in making the demand.

    (j) This section does not limit the right of a person to obtain

    a copy of the trust instrument in a judicial proceeding

    concerning the trust.

    (k) This section does not limit the rights of a beneficiary of

    the trust against the trustee.

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

    451, Sec. 10, eff. September 1, 2007.

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