Proposed Texas Bill Relating To Beneficiary’s Approval Of Trustee’s Accounting 2021

House Bill 653 is making its way through the legislative process in Texas and would amend the Texas Property Code in September 2021 to create a presumption that a beneficiary of a trust has approved a trustee accounting if the beneficiary does not object to it before the 180th day after it is delivered to the beneficiary’s last known address.  In the absence of fraud, intentional misrepresentation or material omission, the trustee would be released from liability relating to all matters in an accounting that is presumptively approved by the beneficiary.

Proposed Texas Trustee Accounting Law Would Take Effect On September 1, 2021

The bill provides that:

SECTION 1.  Subchapter E, Chapter 113, Property Code, is amended by adding Section 113.153 to read as follows:

Sec. 113.153.  BENEFICIARY’S APPROVAL OF ACCOUNTING.  (a)   This section does not apply to a trust that is under judicial supervision.  (b)  If a beneficiary does not object to a trustee’s accounting before the 180th day after the date a copy of the accounting has been delivered to the last known address of the beneficiary:  (1)  the beneficiary is considered to have approved the accounting; and (2)  absent fraud, intentional misrepresentation, or material omission, the trustee is released from liability relating to all matters in the accounting.

SECTION 2.  Section 113.153, Property Code, as added by this Act, applies only to an accounting delivered on or after the effective date of this Act.

SECTION 3.  This Act takes effect September 1, 2021.

The proposed Texas law is similar to provisions in the Uniform Trust Code and in other states, such as Florida and Virginia, and the District of Columbia that provide a presumptive approval of a trustee’s accounting if no objection is made within a certain time limit.

The Uniform Trust Code and Beneficiary Approval Of Trustee Accountings

The Uniform Trust Code § 1005 provides that:

(a) A beneficiary may not commence a proceeding against a trustee for breach of trust more than one year after the date the beneficiary or a representative of the beneficiary was sent a report that adequately disclosed the existence of a potential claim for breach of trust and informed the beneficiary of the time allowed for commencing a proceeding.

(b) A report adequately discloses the existence of a potential claim for breach of trust if it provides sufficient information so that the beneficiary or representative knows of the potential claim or should have inquired into its existence.

Other States And Beneficiary Approval Of Trustee Accountings

The Virginia and District of Columbia statutes mirror the time period for objection set forth in the Uniform Trust Code.

The Florida Trust Code, section 736.1008, governs limitations on proceedings against trustees.  The statute gives a beneficiary six months from the receipt of a trust limitation notice to challenge a trust accounting under Florida law. We have written about the deadline to challenge a trust accounting in Florida here.

If the Texas bill makes it through all of the stages of the legislative process, the bill would take effect on September 1, 2021, and Texas trust litigators will no doubt be prepared to make objections to a trustee accounting within the 180-day time limit.

 

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