Texas Property Code 112.085 – Exceptions to Power of Distribution
Terms Used In Texas Property Code 112.085
- Annuity: A periodic (usually annual) payment of a fixed sum of money for either the life of the recipient or for a fixed number of years. A series of payments under a contract from an insurance company, a trust company, or an individual. Annuity payments are made at regular intervals over a period of more than one full year.
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Fiduciary: A trustee, executor, or administrator.
- Person: includes corporation, organization, government or governmental subdivision or agency, business trust, estate, trust, partnership, association, and any other legal entity. See Texas Government Code 311.005
- Trustee: A person or institution holding and administering property in trust.
An authorized trustee may not exercise a power to distribute principal of a trust under § 112.072 or 112.073 to:
(1) reduce, limit, or modify a beneficiary‘s current, vested right to:
(A) receive a mandatory distribution of income or principal;
(B) receive a mandatory annuity or unitrust interest;
(C) withdraw a percentage of the value of the trust; or
(D) withdraw a specified dollar amount from the trust;
(2) materially limit a trustee’s fiduciary duty:
(A) under the terms of the trust; or
(B) in a manner that would be prohibited by § 111.0035;
(3) decrease or indemnify against a trustee’s liability;
(4) add a provision exonerating a trustee from liability for failure to exercise reasonable care, diligence, and prudence;
(5) eliminate a provision granting another person the right to remove or replace the authorized trustee exercising the distribution power under § 112.072 or 112.073; or
(6) reduce, limit, or modify in the second trust a perpetuities provision included in the first trust, unless expressly permitted by the terms of the first trust.