New Texas Law Seeks to Ensure Donor Intent Is Followed on ‘Orphan Trusts’

Texas has adopted legislation designed to ensure that trusts continue to comply with their founders’ wishes if they pass into the hands of third parties, reports The New York Times.

The measure, signed this month by Gov. Rick Perry, bars trustees of “orphan trusts,” whose founders have died, from moving organizations out of state without judicial approval and directs courts to determine whether a move would interfere with trustees’ ability to comply with the donor’s intentions.

Charity regulators and nonprofit leaders have raised concern about the latitude banks and lawyers who take over trusts after the founder’s death have in operating the organizations and disbursing grants. In many such cases, local banks originally named as trustees have been acquired by multinational financial institutions.

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