Texas Property Code

§ 116.005 — TRUSTEE'S POWER TO ADJUST

PR § 116.005Title 9. TRUSTS · Part B. TEXAS TRUST CODE: CREATION, OPERATION, AND TERMINATION OF TRUSTS · Ch. 116. UNIFORM PRINCIPAL AND INCOME ACT · Art. A. DEFINITIONS, FIDUCIARY DUTIES, AND OTHER MISCELLANEOUS PROVISIONS

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(a)A trustee may adjust between principal and income to the extent the trustee considers necessary if the trustee invests and manages trust assets as a prudent investor, the terms of the trust describe the amount that may or must be distributed to a beneficiary by referring to the trust's income, and the trustee determines, after applying the rules in Section 116.004(a), that the trustee is unable to comply with Section 116.004(b). The power to adjust conferred by this subsection includes the power to allocate all or part of a capital gain to trust income.

(b)In deciding whether and to what extent to exercise the power conferred by Subsection (a), a trustee shall consider all factors relevant to the trust and its beneficiaries, including the following factors to the extent they are relevant:

(1)the nature, purpose, and expected duration of the trust;

(2)the intent of the settlor;

(3)the identity and circumstances of the beneficiaries;

(4)the needs for liquidity, regularity of income, and preservation and appreciation of capital;

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Legislative history

Acts 2005, 79th Leg., Ch. 148 (H.B. 1190), Sec. 25, eff. January 1, 2006. Acts 2011, 82nd Leg., R.S., Ch. 91 (S.B. 1303), Sec. 21.002, eff. September 1, 2011. Acts 2011, 82nd Leg., R.S., Ch. 657 (S.B. 1197), Sec. 7, eff. September 1, 2011.