CHAPTER 142. MANAGEMENT OF PROPERTY RECOVERED IN SUIT BY A NEXT FRIEND OR GUARDIAN AD LITEM

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Statutes > Texas > Property-code > Title-10-miscellaneous-beneficial-property-interests > Chapter-142-management-of-property-recovered-in-suit-by-a-next-friend-or-guardian-ad-litem

PROPERTY CODE

TITLE 10. MISCELLANEOUS BENEFICIAL PROPERTY INTERESTS

SUBTITLE A. PERSONS UNDER DISABILITY

CHAPTER 142. MANAGEMENT OF PROPERTY RECOVERED IN SUIT BY A NEXT

FRIEND OR GUARDIAN AD LITEM

Sec. 142.001. MANAGEMENT BY DECREE. (a) In a suit in which a

minor or incapacitated person who has no legal guardian is

represented by a next friend or an appointed guardian ad litem,

the court, on application and hearing, may provide by decree for

the investment of funds accruing to the minor or other person

under the judgment in the suit.

(b) If the decree is made during vacation, it must be recorded

in the minutes of the succeeding term of the court.

Acts 1983, 68th Leg., p. 3711, ch. 576, Sec. 1, eff. Jan. 1,

1984. Amended by Acts 1984, 68th Leg., 2nd C.S., ch. 18, Sec.

14(b), eff. Oct. 2, 1984; Acts 1999, 76th Leg., ch. 195, Sec. 2,

eff. Sept. 1, 1999.

Sec. 142.002. MANAGEMENT BY BONDED MANAGER. (a) In a suit in

which a minor or incapacitated person who has no legal guardian

is represented by a next friend or an appointed guardian ad

litem, the court in which a judgment is rendered may by an order

entered of record authorize the next friend, the guardian ad

litem, or another person to take possession of money or other

personal property recovered under the judgment for the minor or

other person represented.

(b) The next friend, guardian ad litem, or other person may not

take possession of the property until the person has executed a

bond as principal that:

(1) is in an amount at least double the value of the property

or, if a surety on the bond is a solvent surety company

authorized under the law of this state to execute the bond, is in

an amount at least equal to the value of the property;

(2) is payable to the county judge; and

(3) is conditioned on the obligation of the next friend,

guardian ad litem, or other person to use the property under the

direction of the court for the benefit of its owner and to return

the property, with interest or other increase, to the person

entitled to receive the property when ordered by the court to do

so.

Acts 1983, 68th Leg., p. 3711, ch. 576, Sec. 1, eff. Jan. 1,

1984. Amended by Acts 1984, 68th Leg., 2nd C.S., ch. 18, Sec.

14(c), eff. Oct. 2, 1984; Acts 1999, 76th Leg., ch. 195, Sec. 3,

eff. Sept. 1, 1999.

Sec. 142.003. COMPENSATION AND DUTIES OF MANAGERS. (a) A

person who manages property under Section 142.001 or 142.002 is

entitled to receive compensation as allowed by the court.

(b) The person shall make dispositions of the property as

ordered by the court and shall return the property into court on

the order of the court.

Acts 1983, 68th Leg., p. 3711, ch. 576, Sec. 1, eff. Jan. 1,

1984.

Sec. 142.004. INVESTMENT OF FUNDS. (a) In a suit in which a

minor or incapacitated person who has no legal guardian is

represented by a next friend or an appointed guardian ad litem,

any money recovered by the plaintiff, if not otherwise managed

under this chapter, may be invested:

(1) by the next friend or guardian ad litem in:

(A) the Texas tomorrow fund established by Subchapter F, Chapter

54, Education Code; or

(B) interest-bearing time deposits in a financial institution

doing business in this state and insured by the Federal Deposit

Insurance Corporation; or

(2) by the clerk of the court, on written order of the court of

proper jurisdiction, in:

(A) the Texas tomorrow fund established by Subchapter F, Chapter

54, Education Code;

(B) interest-bearing deposits in a financial institution doing

business in this state and insured by the Federal Deposit

Insurance Corporation;

(D) an eligible interlocal investment pool that meets the

requirements of Sections 2256.016, 2256.017, and 2256.019,

Government Code; or

(E) a no-load money market mutual fund, if the fund:

(i) is regulated by the Securities and Exchange Commission;

(ii) has a dollar weighted average stated maturity of 90 days or

fewer; and

(iii) includes in its investment objectives the maintenance of a

stable net asset value of $1 for each share

(b) If the money invested under this section may not be

withdrawn from the financial institution without an order of the

court, a next friend or guardian ad litem who makes the

investment is not required to execute a bond with respect to the

money.

court may:

(1) on a finding that the person entitled to receive the money

is no longer under the disability, order the funds turned over to

the person; or

(2) order management of the funds under another provision of

this chapter.

(d) Interest earned on an account invested by the clerk of the

court shall be paid in the same manner as interest earned on an

account under Chapter 117, Local Government Code.

(e) If money is invested under Subsection (a)(2)(E), the court

may waive any bonding requirement.

Acts 1983, 68th Leg., p. 3712, ch. 576, Sec. 1, eff. Jan. 1,

1984. Amended by Acts 1984, 68th Leg., 2nd C.S., ch. 18, Sec.

14(d), eff. Oct. 2, 1984; Acts 1997, 75th Leg., ch. 505, Sec. 22,

eff. Sept. 1, 1997; Acts 1999, 76th Leg., ch. 94, Sec. 1, eff.

May 17, 1999; Acts 1999, 76th Leg., ch. 195, Sec. 4, eff. Sept.

1, 1999; Acts 2001, 77th Leg., ch. 1420, Sec. 17.002, eff. Sept.

1, 2001.

Sec. 142.005. TRUST FOR PROPERTY. (a) Any court of record with

jurisdiction to hear a suit involving a beneficiary may, on

application and on a finding that the creation of a trust would

be in the best interests of the beneficiary, enter a decree in

the record directing the clerk to deliver any funds accruing to

the beneficiary under the judgment to a financial institution,

except as provided by Subsections (m) and (n).

(b) The decree shall provide for the creation of a trust for the

management of the funds for the benefit of the beneficiary and

for terms, conditions, and limitations of the trust, as

determined by the court, that are not in conflict with the

following mandatory provisions:

(1) The beneficiary shall be the sole beneficiary of the trust.

(2) The trustee may disburse amounts of the trust's principal,

income, or both as the trustee in the trustee's sole discretion

determines to be reasonably necessary for the health, education,

support, or maintenance of the beneficiary. The trustee may

conclusively presume that medicine or treatments approved by a

licensed physician are appropriate for the health of the

beneficiary.

(3) The income of the trust not disbursed under Subdivision (2)

shall be added to the principal of the trust.

(4) If the beneficiary is a minor, the trust shall terminate on

the death of the beneficiary, on the beneficiary's attaining an

age stated in the trust, or on the 25th birthday of the

beneficiary, whichever occurs first, or if the beneficiary is an

incapacitated person, the trust shall terminate on the death of

the beneficiary or when the beneficiary regains capacity.

(5) A trustee that is a financial institution shall serve

without bond.

(6) The trustee shall receive reasonable compensation paid from

trust's income, principal, or both on application to and approval

of the court.

(7) The first page of the trust instrument shall contain the

following notice:

NOTICE: THE BENEFICIARY AND CERTAIN PERSONS INTERESTED IN THE

WELFARE OF THE BENEFICIARY MAY HAVE REMEDIES UNDER SECTION

114.008 OR 142.005, PROPERTY CODE.

(1) distributions of the trust principal before the termination

of the trust may be made from time to time as the beneficiary

attains designated ages and at designated percentages of the

principal; and

(2) distributions, payments, uses, and applications of all trust

funds may be made to the legal or natural guardian of the

beneficiary or to the person having custody of the beneficiary or

may be made directly to or expended for the benefit, support, or

maintenance of the beneficiary without the intervention of any

legal guardian or other legal representative of the beneficiary.

(d) A court that creates a trust under this section has

continuing jurisdiction and supervisory power over the trust,

including the power to construe, amend, revoke, modify, or

terminate the trust. A trust created under this section is not

subject to revocation by the beneficiary or a guardian of the

beneficiary's estate. If the trust is revoked by the court

before the beneficiary is 18 years old, the court may provide for

the management of the trust principal and any undistributed

income as authorized by this chapter. If the trust is revoked by

the court after the beneficiary is 18 years old, the trust

principal and any undistributed income shall be delivered to the

beneficiary after the payment of all proper and necessary

expenses.

(e) On the termination of the trust under its terms or on the

death of the beneficiary, the trust principal and any

undistributed income shall be paid to the beneficiary or to the

representative of the estate of the deceased beneficiary.

(f) A trust established under this section prevails over any

other law concerning minors, incapacitated persons, or their

property, and the trust continues in force and effect until

terminated or revoked, notwithstanding the appointment of a

guardian of the estate of the minor or incapacitated person, or

the attainment of the age of majority by the minor.

(g) Notwithstanding any other provision of this chapter, if the

court finds that it would be in the best interests of the

beneficiary for whom a trust is established under this section,

the court may omit or modify any terms required by Subsection (b)

if the court determines that the omission or modification is

necessary or appropriate to allow the beneficiary to be eligible

to receive public benefits or assistance under a state or federal

program. This section does not require a distribution from a

trust if the distribution is discretionary under the terms of the

trust.

(h) A trust created under this section is subject to Subtitle B,

Title 9.

(i) Notwithstanding Subsection (h), this section prevails over a

provision in Subtitle B, Title 9, that is in conflict or

inconsistent with this section.

(j) A provision in a trust created under this section that

relieves a trustee from a duty, responsibility, or liability

imposed by this section or Subtitle B, Title 9, is enforceable

only if:

(1) the provision is limited to specific facts and circumstances

unique to the property of that trust and is not applicable

generally to the trust; and

(2) the court creating or modifying the trust makes a specific

finding that there is clear and convincing evidence that the

inclusion of the provision is in the best interests of the

beneficiary of the trust.

(k) In addition to ordering other appropriate remedies and

grounds, the court may appoint a guardian ad litem to investigate

and report to the court whether the trustee should be removed for

failing or refusing to make distributions for the health,

education, support, or maintenance of the beneficiary required

under the terms of the trust if the court is petitioned by:

(1) a parent of the beneficiary;

(2) a next friend of the beneficiary;

(3) a guardian of the beneficiary;

(4) a conservator of the beneficiary;

(5) a guardian ad litem for the beneficiary; or

(6) an attorney ad litem for the beneficiary.

(l) A person listed in Subsection (k) shall be reimbursed from

the trust for reasonable attorney's fees, not to exceed $1,000,

incurred in bringing the petition.

(m) If the value of the trust's principal is $50,000 or less,

the court may appoint a person other than a financial institution

to serve as trustee of the trust only if the court finds the

appointment is in the beneficiary's best interests.

(n) If the value of the trust's principal is more than $50,000,

the court may appoint a person other than a financial institution

to serve as trustee of the trust only if the court finds that:

(1) no financial institution is willing to serve as trustee; and

(2) the appointment is in the beneficiary's best interests.

(o) In this section:

(1) "Beneficiary" means:

(A) a minor or incapacitated person who:

(i) has no legal guardian; and

(ii) is represented by a next friend or an appointed guardian ad

litem; or

(B) a person with a physical disability.

(2) "Financial institution" means a financial institution, as

defined by Section 201.101, Finance Code, that has trust powers,

exists, and does business under the laws of this or another state

or the United States.

Acts 1983, 68th Leg., p. 3712, ch. 576, Sec. 1, eff. Jan. 1,

1984. Amended by Acts 1984, 68th Leg., 2nd C.S., ch. 18, Sec.

14(e), (f), eff. Oct. 2, 1984; Acts 1997, 75th Leg., ch. 128,

Sec. 1, eff. Sept. 1, 1997; Acts 2003, 78th Leg., ch. 1154, Sec.

3, eff. Sept. 1, 2003.

Amended by:

Acts 2005, 79th Leg., Ch.

148, Sec. 28, eff. January 1, 2006.

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

451, Sec. 20, eff. September 1, 2007.

Sec. 142.006. CLAIMS AGAINST PROPERTY. If any person claims an

interest in property subject to management under this chapter,

the court having authority over the property may hear evidence on

the interest and may order the claim or the portion of the claim

found to be just to be paid to the person entitled to receive it.

Acts 1983, 68th Leg., p. 3714, ch. 576, Sec. 1, eff. Jan. 1,

1984.

Sec. 142.007. INCAPACITATED PERSON. For the purposes of this

chapter, "incapacitated person" means a person who is impaired

because of mental illness, mental deficiency, physical illness or

disability, advanced age, chronic use of drugs, chronic

intoxication, or any other cause except status as a minor to the

extent that the person lacks sufficient understanding or capacity

to make or communicate responsible decisions concerning his

person.

Added by Acts 1984, 68th Leg., 2nd C.S., ch. 18, Sec. 14(g), eff.

Oct. 2, 1984.

Sec. 142.008. STRUCTURED SETTLEMENT. (a) In a suit in which a

minor or incapacitated person who has no legal guardian is

represented by a next friend or an appointed guardian ad litem,

the court, on a motion from the parties, may provide for a

structured settlement that:

(1) provides for periodic payments; and

(2) is funded by:

(A) an obligation guaranteed by the United States government; or

(B) an annuity contract that meets the requirements of Section

142.009.

(b) The person obligated to fund a structured settlement shall

provide to the court:

(1) a copy of the instrument that provides funding for the

structured settlement; or

(2) an affidavit from an independent financial consultant that

specifies the present value of the structured settlement and the

method by which the value is calculated.

solely for the benefit of the beneficiary of the structured

settlement and is not subject to the interest payment

calculations contained in Section 117.054, Local Government Code.

Added by Acts 1999, 76th Leg., ch. 195, Sec. 5, eff. Sept. 1,

1999.

Sec. 142.009. ANNUITY CONTRACT REQUIREMENTS FOR STRUCTURED

SETTLEMENT. (a) An insurance company providing an annuity

contract for a structured settlement as provided by Section

142.008 must:

(1) be licensed to write annuity contracts in this state;

(2) have a minimum of $1 million of capital and surplus; and

(3) be approved by the court and comply with any requirements

imposed by the court to ensure funding to satisfy periodic

settlement payments.

(b) In approving an insurance company under Subsection (a)(3),

the court may consider whether the company:

(1) holds an industry rating equivalent to at least two of the

following rating organizations:

(A) A. M. Best Company: A++ or A+;

(B) Duff & Phelps Credit Rating Company Insurance Company

Claims Paying Ability Rating: AA-, AA, AA+, or AAA;

Aa2, Aa1, or aaa; or

(D) Standard & Poor's Corporation Insurer Claims-Paying

Ability Rating: AA-, AA, AA+, or AAA;

(2) is an affiliate, as that term is described by Section

823.003, Insurance Code, of a liability insurance carrier

involved in the suit for which the structured settlement is

created; or

(3) is connected in any way to a person obligated to fund the

structured settlement.

Added by Acts 1999, 76th Leg., ch. 195, Sec. 5, eff. Sept. 1,

1999. Amended by Acts 2001, 77th Leg., ch. 96, Sec. 2, eff. Sept.

1, 2001; Acts 2003, 78th Leg., ch. 1276, Sec. 10A.551, eff. Sept.

1, 2003.

State Codes and Statutes

State Codes and Statutes

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State Codes and Statutes

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