PROPERTY CODE
SUBTITLE C. MISCELLANEOUS TRUSTS
CHAPTER 121. EMPLOYEES' TRUSTS
SUBCHAPTER A. PENSION TRUSTS
§ 121.001. PENSION TRUSTS. (a) For the purposes of
this subchapter, a pension trust is an express trust:
(1) containing or relating to property;
(2) created by an employer as part of a stock-bonus
plan, pension plan, disability or death benefit plan, or
profit-sharing plan for the benefit of some or all of the employer's
employees;
(3) to which contributions are made by the employer,
by some or all of the employees, or by both; and
(4) created for the principal purpose of distributing
to the employees, or the successor to their beneficial interest in
the trust, the principal or income, or both, of the property held in
trust.
(b) This subchapter applies to a pension trust regardless of
when the trust was created.
Acts 1983, 68th Leg., p. 3691, ch. 576, § 1, eff. Jan. 1, 1984.
§ 121.002. EMPLOYEES OF CONTROLLED CORPORATIONS. For
the purposes of this subchapter, the relationship of employer and
employee exists between a corporation and its own employees, and
between a corporation and the employees of each other corporation
that it controls, by which it is controlled, or with which it is
under common control through the exercise by one or more persons of
a majority of voting rights in one or more corporations.
Acts 1983, 68th Leg., p. 3691, ch. 576, § 1, eff. Jan. 1, 1984.
§ 121.003. APPLICATION OF TEXAS TRUST ACT. The Texas
Trust Act (Chapters 111 through 115) applies to a pension trust.
Acts 1983, 68th Leg., p. 3691, ch. 576, § 1, eff. Jan. 1, 1984.
§ 121.004. RULE AGAINST PERPETUITIES. A pension trust
may continue for as long as is necessary to accomplish the purposes
of the trust and is not invalid under the rule against perpetuities
or any other law restricting or limiting the duration of a trust.
Acts 1983, 68th Leg., p. 3691, ch. 576, § 1, eff. Jan. 1, 1984.
§ 121.005. ACCUMULATION OF INCOME. Notwithstanding any
law limiting the time during which trust income may be accumulated,
the income of a pension trust may be accumulated under the terms of
the trust for as long as is necessary to accomplish the purposes of
the trust.
Acts 1983, 68th Leg., p. 3692, ch. 576, § 1, eff. Jan. 1, 1984.
SUBCHAPTER B. DEATH BENEFITS UNDER EMPLOYEES' TRUSTS
§ 121.051. DEFINITIONS. (a) In this subchapter:
(1) "Death benefit" means a benefit of any kind,
including the proceeds of a life insurance policy or any other
payment, in cash or property, under an employees' trust or a
retirement account, a contract purchased by an employees' trust or
a retirement account, or a retirement-annuity contract that is
payable because of an employee's, participant's, or beneficiary's
death to or for the benefit of the employee's, participant's, or
beneficiary's beneficiary.
(2) "Employee" means a person covered by an employees'
trust or a retirement account that provides a death benefit or a
person whose interest in an employees' trust or a retirement
account has not been fully distributed.
(3) "Employees' trust" means:
(A) a trust forming a part of a stock-bonus,
pension, or profit-sharing plan under Section 401, Internal Revenue
Code of 1954 (26 U.S.C.A. § 401 (1986));
(B) a pension trust under Chapter 111; and
(C) an employer-sponsored benefit plan or
program, or any other retirement savings arrangement, including a
pension plan created under Section 3, Employee Retirement Income
Security Act of 1974 (29 U.S.C.A. § 1002 (1986)), regardless of
whether the plan, program, or arrangement is funded through a
trust.
(4) "Individual retirement account" means a trust,
custodial arrangement, or annuity under Section 408(a) or (b),
Internal Revenue Code of 1954 (26 U.S.C.A. § 408 (1986)).
(5) "Participant" means a person covered by an
employees' trust or a retirement account that provides a death
benefit or a person whose interest in an employees' trust or a
retirement account has not been fully distributed.
(6) "Retirement account" means a retirement-annuity
contract, an individual retirement account, a simplified employee
pension, or any other retirement savings arrangement.
(7) "Retirement-annuity contract" means an annuity
contract under Section 403, Internal Revenue Code of 1954 (26
U.S.C.A. § 403 (1986)).
(8) "Simplified employee pension" means a trust,
custodial arrangement, or annuity under Section 408, Internal
Revenue Code of 1954 (26 U.S.C.A. § 408 (1986)).
(9) "Trust" and "trustee" have the meanings assigned
by the Texas Trust Code (Chapters 111 through 115), except that
"trust" includes any trust, regardless of when it is created.
(b) References to specific provisions of the Internal
Revenue Code of 1954 (26 U.S.C.A.) include corresponding provisions
of any subsequent federal tax laws.
Acts 1983, 68th Leg., p. 3692, ch. 576, § 1, eff. Jan. 1, 1984.
Amended by Acts 1987, 70th Leg., ch. 741, § 3, eff. Aug. 31,
1987.
§ 121.052. PAYMENT OF DEATH BENEFIT TO TRUSTEE. (a) A
death benefit is payable to a trustee of a trust evidenced by a
written instrument or declaration existing on the date of an
employee's or participant's death, or to a trustee named or to be
named as trustee of a trust created under an employee's or
participant's will, if the trustee is designated as beneficiary
under the plan containing the employees' trust or under the
retirement account.
(b) A trustee of a testamentary trust may be designated
under Subsection (a) prior to the execution of the will.
(c) A death benefit under a will is not payable until the
will is probated.
(d) The trustee shall hold, administer, and dispose of a
death benefit payable under this section in accordance with the
terms of the trust on the date of the employee's death.
(e) A death benefit is payable to a trustee of a trust
created by the will of a person other than the employee if:
(1) the will has been probated at the time of the
employee's death; and
(2) the death benefit is payable to the trustee to be
held, administered, and disposed of in accordance with the terms of
the testamentary trust.
Acts 1983, 68th Leg., p. 3693, ch. 576, § 1, eff. Jan. 1, 1984.
Amended by Acts 1987, 70th Leg., ch. 741, § 4, eff. Aug. 31,
1987.
§ 121.053. VALIDITY OF TRUST DECLARATION. The validity
of a trust agreement or declaration is not affected by:
(1) the absence of a corpus other than the right of the
trustee to receive a death benefit as beneficiary;
(2) the employee's reservation of the right to
designate another beneficiary of the death benefit; or
(3) the existence of authority to amend, modify,
revoke, or terminate the agreement or declaration.
Acts 1983, 68th Leg., p. 3693, ch. 576, § 1, eff. Jan. 1, 1984.
§ 121.054. UNCLAIMED BENEFITS. If a trustee does not
claim a death benefit on or before the first anniversary of the
employee's or participant's death or if satisfactory evidence is
provided to a trustee, custodian, other fiduciary, or other obligor
of the employees' trust, contract purchased by the employees'
trust, or the retirement account before the first anniversary of
the employee's or participant's death that there is or will be no
trustee to receive the death benefit, the death benefit shall be
paid:
(1) according to the beneficiary designation under the
plan, trust, contract, or arrangement providing the death benefit
under the employees' trust or retirement account; or
(2) if there is no designation in the employees' trust
or retirement account, to the personal representative of the
deceased employee's or participant's estate.
Acts 1983, 68th Leg., p. 3693, ch. 576, § 1, eff. Jan. 1, 1984.
Amended by Acts 1987, 70th Leg., ch. 741, § 5, eff. Aug. 31,
1987.
§ 121.055. EXEMPTION FROM TAXES AND DEBTS. Unless the
trust agreement, declaration of trust, or will provides otherwise,
a death benefit payable to a trustee under this subchapter is not:
(1) part of the deceased employee's estate;
(2) subject to the debts of the deceased employee or
the employee's estate, or to other charges enforceable against the
estate; or
(3) subject to the payment of taxes enforceable
against the deceased employee's estate to a greater extent than if
the death benefit is payable, free of trust, to a beneficiary other
than the executor or administrator of the estate of the employee.
Acts 1983, 68th Leg., p. 3694, ch. 576, § 1, eff. Jan. 1, 1984.
§ 121.056. COMMINGLING OF ASSETS. A trustee who
receives a death benefit under this subchapter may commingle the
property with other assets accepted by the trustee and held in
trust, either before or after the death benefit is received.
Acts 1983, 68th Leg., p. 3694, ch. 576, § 1, eff. Jan. 1, 1984.
§ 121.057. PRIOR DESIGNATIONS NOT AFFECTED. This
subchapter does not affect the validity of a beneficiary
designation made by an employee before April 3, 1975, that names a
trustee as beneficiary of a death benefit.
Acts 1983, 68th Leg., p. 3694, ch. 576, § 1, eff. Jan. 1, 1984.
§ 121.058. CONSTRUCTION. (a) This subchapter is
intended to be declaratory of the common law of this state.
(b) A court shall liberally construe this subchapter to
effect the intent that a death benefit received by a trustee under
this subchapter is not subject to the obligations of the employee or
the employee's estate unless the trust receiving the benefit
expressly provides otherwise.
(c) A death benefit shall not be included in property
administered as part of a testator's estate or in an inventory filed
with the county court because of a reference in a will to the death
benefit or because of the naming of the trustee of a testamentary
trust.
Acts 1983, 68th Leg., p. 3694, ch. 576, § 1, eff. Jan. 1, 1984.
