USA – TEXAS Trends and Developments Contributed by: Perrin Clark and Meredith McIver, Ytterberg Deery Knull LLP
(5) include copies of the agreements of the first trust and the proposed second trust; (6) be given not later than the 30th day before the proposed date of [decanting] to the second trust; and (7) be sent by registered or certified mail, return receipt requested, or delivered in person, unless the notice is waived in writing by the person to whom notice is required to be given”. The trustee also has the right to petition the court to approve, modify or deny the exercise of the trustee’s power to decant, including if the beneficiary objects or otherwise; provided that the trustee is required to so petition the court if the trustee receives a timely objection from the Texas Attorney General. Private trust companies Law and practice in Texas with respect to the use of private trust companies (typically chartered as “exempt” trust companies by the Texas Department of Banking) has continued to develop over the past decade. The increasing popularity of private trust companies with wealthy families is due partly to the tremendous intergenerational transfer of wealth that is ongoing in the United States and in Texas. Wealthy families with significant trust planning often desire a tailored trustee solution. In addition, a private trust company can serve as an alternative strategy to the typical family office. The regulatory environment in Texas continues to be favourable to and supportive of private trust companies. Chartering and use of Tex - as private trust companies by wealthy families has become more common. The increasing use of Texas private trust companies is due partly to the continued modernisation of Texas trust law with, for example, the addition of trust protector and adviser roles with respect to directed trusts, and the extension of the general vesting period to 300 years with respect to the rule against perpetuities. These changes have made Texas a more attractive jurisdiction for both trust planning and private trust companies. However, even some Texas families still choose to create their private trust companies in jurisdictions that have well- developed and flexible private trust company laws, such as Nevada and Wyoming, or in jurisdictions that
have more recently adopted laws favourable to private trust companies, such as Tennessee. Remote notarisation In 2017, Texas adopted a new statute allowing online notarisation of electronic signatures. Online notari - sation of ink signatures became authorised in Texas in 2023. Online notarisation, or remote notarisation, means notarisation performed by means of two-way video and audio conference technology. Although the requirements and procedures for online notarisation are more burdensome than in-person notarisation, it is becoming more routinely used in Texas. Rule against perpetuities In 2021, Texas adopted a new statute with respect to the rule against perpetuities. With respect to an inter - est in trust created before 1 September 2021, such interest must vest not later than 21 years after some life in being at the time of the creation of the interest, plus a period of gestation. With respect to an interest in trust created on or after 1 September 2021, such interest must vest not later than the later of (i) 300 years after the creation of the interest; or (ii) 21 years after some life in being at the time of the creation of the interest, plus a period of gestation. Notwithstand - ing the foregoing, a trust may not direct the retention of, or prevent the sale of, a real property asset for a period longer than 100 years. For these purposes, an interest in trust is treated as created on the date the governing instrument creating such interest becomes irrevocable with respect to the interest (referred to in the statute as the “effective date”). Generally, an inter - est vests when it must be distributed from the trust to the beneficiary or when it otherwise becomes fixed and inalienable with respect to the beneficiary. Some commentators have suggested that this new statute may violate the Texas Constitution’s prohibition of per - petuities; however, it has yet to be tested in the courts. Nevertheless, with this new statute, Texas has joined the ranks of jurisdictions with significantly longer peri - ods for required vesting. Purpose trusts In 2023, Texas adopted a new statute authorising the creation of non-charitable trusts for a stated purpose, rather than for one or more ascertainable beneficiar - ies (referred to as “purpose trusts”). Purpose trusts
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