Texas Health and Safety Code 712.0353 – Determination of Fair Market Value
(a) The trustee of a total return fund, or of a net income fund seeking to convert to a total return fund, shall determine for the corporation, in the trustee’s sole discretion and in accordance with this section, the average fair market value of the fund at the beginning of each fiscal year.
(b) The trustee shall derive the average fair market value of the fund at least annually by averaging the fair market value of fund assets, determined on an asset-by-asset basis, as of the beginning of the current fiscal year and in each of the two previous years, or for the entire term of the trust with less than two previous years, using the valuation date or averages of valuation dates as the trustee considers appropriate. The trustee shall exclude from the fair market value calculation any asset described in Section 712.030(b) and any asset for which the trustee is not able to reasonably ascertain a fair market value. In determining the average fair market value, the trustee shall adjust the fair market value for each year used in the calculation as follows:
(1) for assets added to the fund during the years used to determine the average, the trustee shall add the amount of each addition to all years in which the addition is not included; and
(2) for assets withdrawn from the fund during the years used to determine the average, other than in satisfaction of permissible distributions, the trustee shall subtract the amount of each withdrawal from all years in which the withdrawal is not included.
Terms Used In Texas Health and Safety Code 712.0353
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Fair market value: The price at which an asset would change hands in a transaction between a willing, informed buyer and a willing, informed seller.
- Fiduciary: A trustee, executor, or administrator.
- Fiscal year: The fiscal year is the accounting period for the government. For the federal government, this begins on October 1 and ends on September 30. The fiscal year is designated by the calendar year in which it ends; for example, fiscal year 2006 begins on October 1, 2005 and ends on September 30, 2006.
- Trustee: A person or institution holding and administering property in trust.
- Written: includes any representation of words, letters, symbols, or figures. See Texas Government Code 311.005
- Year: means 12 consecutive months. See Texas Government Code 311.005
(c) Before the 31st day after the beginning of each fiscal year, the trustee of a total return fund shall send written notice to the commissioner and to the corporation of the trustee’s determination of the current fair market value of the fund as of the beginning of the current fiscal year and the average fair market value of the fund for determining permissible distributions for the fiscal year, with identification and explanation of any asset excluded from the determination. If the trustee alters the methodology of determining fair market value in a manner that changes the fair market value of the fund during a fiscal year, the trustee shall send written notice to the commissioner and to the corporation of the revised current and average fair market value of the fund and the reason for the revision before the first distribution is made based on the revised average fair market value.
(d) This section does not alter or otherwise affect a fiduciary duty under other law to evaluate and monitor the fair market value of assets held in trust.