Important new legislation went into effect on September 1, 2017 that changes how many financial institutions must provide account information to clients. The main portions of the Texas Estates Code impacted by this new law are found in Sections 113.052 and 113.053 of Title 2, Subtitle C, Chapter 113 entitled “Multiple Party Accounts.” These new amendments will specifically require financial institutions to draft new forms and handle disclosures differently whenever they open or modify accounts on their customers’ behalf.
These changes are perhaps best understood by first generally describing how the impacted forms were drafted and handled prior to this new 2017 legislation – and then contrasting those older requirements with the new ones passed during the 85th legislative session.
Relevant Form Provisions/Disclosures Prior to SB 714 – and After Its Passage
Prior to the recent changes made to Texas Estates Code Title 2, Subtitle C, Chapter 113 Sections 113.052 and 115.053, financial institutions were required to either use a model form for helping customer choose the type of accounts they wanted – or one that varied in accordance with the terms set forth in Section 113.053(b).
- How documents had to be repeatedly initialed. The earlier approach made it necessary for customers to initial the right-hand side of each required disclosure in the model account form. Now that SB 714’s amendments have gone into effect, financial institutions only need to provide a single acknowledgement for customers to sign at the bottom of newly drafted model account forms (although customers must still initial to the left of the description of the specific account that they are choosing to open or modify).
- A fully separate document for disclosures is no longer necessary. In the past, financial institutions that varied the model form also had to provide specific disclosures in a separate document. SB 714’s provisions have amended the Texas Estates Code so that financial institutions using a variation of the model form can now provide all required disclosures within other documents – so long as the disclosures required by Section 113.052 are the very first provisions set forth in those documents.
- The forms must no longer use a specific enlarged font size. Prior to the new changes passed during the 85th Legislative Session, financial institutions that varied the model forms had to use a specific 14-point boldfaced type. This requirement involving the font is no longer in effect.
- Disclosures must no longer be presented in Spanish. Before September 1, 2017, if discussions concerning the account occurred in Spanish, then the disclosures had to be provided in Spanish.
- There’s no longer a requirement to describe accounts that aren’t available. In the past, financial institutions had to provide disclosures that pertained to accounts they were not currently offering to customers. This requirement has been rescinded.
- New exclusions now apply to some “legal entity” customers. These cover legal representatives for other parties and specific types of government entities.
Should your financial institution need legal advice on how to properly draft new forms to comply with the newly amended portions of the Texas Estate Code referenced above, we hope you’ll contact one of our Murray Lobb attorneys at your earliest convenience.