AI-assisted research summary: A trustee of a charitable trust may manage investments and make principal-income adjustments, but must do so under stated conditions and consider beneficiary needs and preservation of purchasing power.
Sec. 113.0211. ADJUSTMENT OF CHARITABLE TRUST. (a) In this section: (1) "Charitable entity" has the meaning assigned by Section 123.001(1). (2) "Charitable trust" means a trust: (A) the stated purpose of which is to benefit only one or more charitable entities; and (B) that qualifies as a charitable entity. (b) The trustee of a charitable trust may acquire, exchange, sell, supervise, manage, or retain any type of investment, subject to restrictions and procedures established by the trustee and in an amount considered appropriate by the trustee, that a prudent investor, exercising reasonable skill, care, and caution, would acquire or retain in light of the purposes, terms, distribution requirements, and other circumstances of the trust. The prudence of a trustee's actions under this subsection is judged with reference to the investment of all of the trust assets rather than with reference to a single trust investment. (c) The trustee of a charitable trust may make one or more adjustments between the principal and the income portions of a trust to the extent that the trustee considers the adjustments necessary: (1) to comply with the terms of the trust, if any, that describe the amount that may or must be distributed to a charitable entity beneficiary by referring to the income portion of the trust; and (2) to administer the trust in order to carry out the purposes of the charitable trust. (d) The authority to make adjustments under Subsection (c) includes the authority to allocate all or part of a capital gain to trust income. (e) In making adjustments under Subsection (c), the trustee shall consider: (1) except to the extent that the terms of the trust clearly manifest an intention that the trustee shall or may favor one or more charitable entity beneficiaries, the needs of a charitable entity beneficiary, based on what is fair and reasonable to all other charitable entity beneficiaries of the trust, if any; and (2) the need of the trust to maintain the purchasing power of the trust's investments over time. Added by Acts 2003, 78th Leg., ch. 550, Sec. 1, eff. Sept. 1, 2003.