Senator Eliot Shapleigh - El Paso, Texas

Texas has adopted a law intended to ensure that so-called orphan trusts, which are left under the stewardship of lawyers or banks after their founders have died, continue to comply with the founders’ wishes.

The law, which was signed this month by Gov. Rick Perry, a Republican, bars trustees from moving a trust or foundation out of Texas without court approval. In many orphan trust cases, the local banks originally selected as trustees have been acquired by multinational financial institutions based out of state.

The law further directs the courts to determine whether moving a trust out of Texas would interfere with the trustee’s ability to comply with the donor’s intentions.

The trustee must also notify the state attorney general’s office, which oversees charities, of any plans to move a trust out of Texas.

State charity regulators, nonprofit leaders and others complain that with no family members to encourage compliance with the original donors’ wishes, banks and lawyers have wide latitude to change the way trusts operate and decide which charities will receive grants.

“Banks take these trusts to distant places where no voice is there to step in and express concerns,” said State Senator Eliot Shapleigh, an El Paso Democrat who wrote the law and has worked for several years to get it passed. “Assets get invested in bank stocks and other risky ventures, and the proceeds are not allocated as the testator intended.”

Jack Siegel, a charity governance expert, said the law “seems to take a good step in the right direction.”

Still, Mr. Siegel said, the best way for donors to ensure that their wishes are fulfilled after their deaths is to construct their trust documents carefully.

“It’s a problem with people who tie their money up in trusts for long periods of time,” he said. “They have good, legitimate notions of where their money should go, but don’t think much about the administration of their funds.”

Even when donors are specific, their wishes are not always followed. For instance, J. P. Morgan moved the Robert U. and Mabel O. Lipscomb Foundation to Delaware from El Paso, where it was originally under the custody of a local bank. Although the Lipscomb will directed that a third of the foundation’s assets go to the Roman Catholic Diocese of El Paso, a third to the El Paso Museum of Art and a third to organizations in El Paso that serve people with hearing and vision problems, J. P. Morgan did not always comply.

Additionally, the bank cut the amount of money given away each year so that the foundation ran afoul of tax law requiring foundations to distribute a minimum of 5 percent of their assets annually, until an article in The New York Times noted the problem in 2007. The foundation’s giving doubled after that, according to its tax forms.

Previously, J. P. Morgan defended its management of the foundation, saying it was prudent and exceeded legal requirements for distribution.

The Texas Bankers’ Association and Bank of America testified against passage of the law as it was originally written. But John Brigance, executive director of the wealth management and trust division of the association, said banks could live with the legislation.

Mr. Brigance said the law would require banks that serve as fiduciaries of trusts established in Texas to maintain trust functions in the state. Many large banks instead have consolidated trust operations in one location.

“The law is in a form we can live with, but I respectfully disagree with the premise that restricting the location of certain trust functions serves the purpose of ensuring a donor’s intentions,” he said.

Mr. Shapleigh said that he himself was somewhat disappointed with the law in its final iteration and that he believed it would take national attention to truly correct the problems.