HB542 (2005) Detail

Making technical corrections to the uniform trust code.


CHAPTER 270

HB 542 – FINAL VERSION

29Jun2005… 2100cofc

29Jun2005… 2141eba

2005 SESSION

05-0353

09/01

HOUSE BILL 542

AN ACT making technical corrections to the uniform trust code.

SPONSORS: Rep. Hunt, Ches 7

COMMITTEE: Judiciary

ANALYSIS

This bill makes technical corrections to the uniform trust code.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

29Jun2005… 2100cofc

29Jun2005… 2141eba

05-0353

09/01

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Five

AN ACT making technical corrections to the uniform trust code.

Be it Enacted by the Senate and House of Representatives in General Court convened:

270:1 Definitions; Power of Withdrawal. Amend RSA 564-B:1-103(10) to read as follows:

(10) “Power of withdrawal” means a presently exercisable general power of appointment other than a power exercisable by a trustee which is limited by an ascertainable standard related to a beneficiary-trustee’s health, education, maintenance, or support, or which is exercisable by another person only upon consent of the trustee or a person holding an adverse interest.

270:2 Definitions; Qualified Beneficiary. Amend RSA 564-B:1-103(12)(B) to read as follows:

(B) would be a distributee or permissible distributee of trust income or principal if the interests of the distributees described in subparagraph (A) terminated on that date but the termination of those interests would not cause the trust to terminate; or

270:3 Default and Mandatory Rules. Amend RSA 564-B:1-105(b)(2) to read as follows:

(2) the duty of a trustee to act in good faith and in accordance with the terms and purposes of the trust and the interests of the beneficiaries;

270:4 Default and Mandatory Rules. Amend RSA 564-B:1-105(b)(8)-(14) to read as follows:

(8) the duty under RSA 564-B:8-813[(b)(2) and (3) to notify qualified beneficiaries of an irrevocable trust who have attained 21 years of age of the existence of the trust, of the identity of the trustee, and of their right to request trustee’s reports] (c) and (d) to provide specified information to certain qualified beneficiaries and others who are treated as qualified beneficiaries of certain irrevocable trusts;

[(9) the duty under RSA 564-B:8-813(a) to respond to the request of a beneficiary of an irrevocable trust for trustee’s reports and other information reasonably related to the administration of a trust;]

[(10)] (9) the effect of an exculpatory term under RSA 564-B:10-1008;

[(11)] (10) the rights under RSA 564-B:10-1010 through RSA 564-B:10-1013 of a person other than a trustee or beneficiary;

[(12)] (11) statutory periods of limitation for commencing a judicial proceeding;

[(13)] (12) the power of the court to take such action and exercise such jurisdiction as may be necessary in the interests of justice; and

[(14)] (13) the subject-matter jurisdiction of the court and venue for commencing a proceeding as provided in RSA 564-B:2-203 and RSA 564-B:2-204.

270:5 Others Treated as Qualified Beneficiaries. RSA 564-B:1-110 is repealed and reenacted to read as follows:

564-B:1-110 Others Treated As Qualified Beneficiaries.

(a) A charitable organization expressly designated to receive distributions under the terms of a charitable trust has the rights of a qualified beneficiary under this chapter if the charitable organization, on the date the charitable organization’s qualification is being determined:

(1) is a distributee or permissible distributee of trust income or principal;

(2) would be a distributee or permissible distributee of trust income or principal upon the termination of the interests of the distributees then receiving or eligible to receive distributions; or

(3) would be a distributee or permissible distributee of trust income or principal if the trust terminated on that date.

(b) A person appointed to enforce a trust created for the care of an animal or another noncharitable purpose as provided in RSA 564-B:4-408 or RSA 564-B:4-409 has the rights of a qualified beneficiary under this chapter.

(c) The director of charitable trusts has the rights of a qualified beneficiary with respect to a charitable trust having its principal place of administration in this state if the charitable trust describes a charitable purpose but does not designate a specific charitable organization as a beneficiary for that charitable purpose and if trust income or principal, on the date the qualification is being determined:

(A) is distributable to carry out the charitable purpose;

(B) would be distributable to carry out the charitable purpose upon the termination of the interests of the distributees or permissible distributees then receiving or eligible to receive distributions; or

(C) would be distributable to carry out the charitable purpose if the trust terminated on that date.

270:6 Representation; Basic Effect. Amend RSA 564-B:3-301(d) to read as follows:

(d) [During the lifetime of the settlor, the provisions of this article shall not apply and prior law shall continue to apply in connection with a modification or termination of a trust] A settlor may not represent and bind a beneficiary under this article with respect to the termination or modification of a trust.

270:7 Representation by Fiduciaries and Parents. Amend RSA 564-B:3-303(7) to read as follows:

(7) a parent may represent and bind the parent’s minor or unborn child if neither a guardian of the estate[or] nor guardian of the person for the child has been appointed.

270:8 Requirements for Creation. Amend RSA 564-B:4-402(a)(5) to read as follows:

(5) the same person is not the sole trustee [and], the sole current beneficiary and the sole remainder beneficiary.

270:9 Modification or Termination of Trust; Proceedings for Approval or Disapproval. Amend RSA 564-B:4-410(b) to read as follows:

(b) A proceeding to approve or disapprove a proposed modification or termination under RSA 564-B:4-411 through RSA 564-B:4-416, or trust combination or division under RSA 564-B:4-417, may be commenced by a trustee or beneficiary[, and a proceeding to approve or disapprove a proposed modification or termination under RSA 564-B:4-411 may be commenced by the settler]. The settlor of a charitable trust may maintain a proceeding to modify the trust under RSA 564-B:4-413, and in such proceeding, the director of charitable trusts shall be joined as a necessary party.

270:10 Modification or Termination of Noncharitable Irrevocable Trust by Consent. Amend RSA 564-B:4-411 to read as follows:

564-B:4-411 Modification or Termination of Noncharitable Irrevocable Trust by Consent.

(a) A noncharitable irrevocable trust may be terminated upon consent of all of the beneficiaries if the court concludes that continuance of the trust is not necessary to achieve any material purpose of the trust. A noncharitable irrevocable trust may be modified upon consent of all of the beneficiaries if the court concludes that modification is not inconsistent with a material purpose of the trust.

(b) [A spendthrift provision in the terms of the trust is not presumed to constitute a material purpose of the trust.

[(c)] Upon termination of a trust under subsection (a) [or (b)], the trustee shall distribute the trust property as agreed by the beneficiaries.

[(d)] (c) If not all of the beneficiaries consent to a proposed modification or termination of the trust under subsection (a) [or (b)], the modification or termination may be approved by the court if the court is satisfied that:

(1) if all of the beneficiaries had consented, the trust could have been modified or terminated under this section; and

(2) the interests of a beneficiary who does not consent will be adequately protected.

270:11 Modification or Termination of Uneconomic Trust. Amend RSA 564-B:4-414(d) to read as follows:

(d) This section does not apply to an easement for conservation or preservation or to a fund held or created by a town or other municipality under RSA 31:19 or RSA 31:19-a.

270:12 Rights of Beneficiary’s Creditor or Assignee. Amend RSA 564-B:5-501 to read as follows:

564-B:5-501 Rights of Beneficiary’s Creditor or Assignee. To the extent a beneficiary’s interest is not [protected by] subject to a spendthrift provision, the court may authorize a creditor or assignee of the beneficiary to reach the beneficiary’s interest by attachment of present or future distributions to or for the benefit of the beneficiary or other means. The court may limit the award to such relief as is appropriate under the circumstances.

270:13 Exceptions to Spendthrift Provision. RSA 564-B:5-503(b) and (c) is repealed and reenacted to read as follows:

(b) A spendthrift provision is unenforceable against:

(1) a beneficiary’s child for whom there is a judgment or court order against the beneficiary for support;

(2) a beneficiary’s spouse or former spouse who has a judgment or court order against the beneficiary for alimony but only for and to the extent that such judgment or court order expressly specifies the alimony amount attributable to the most basic food, shelter and medical needs of the spouse or former spouse;

(3) a judgment creditor who has provided services for the protection of a beneficiary’s interest in the trust;

(4) a claim of this state or the United States to the extent a statute of this state or federal law so provides.

(c) A claimant against whom a spendthrift provision cannot be enforced may obtain from a court an order attaching present or future distributions to or for the benefit of the beneficiary. The court may limit the award to such relief as is appropriate under the circumstances.

270:14 Discretionary Trusts; Effect of Standard. Amend RSA 564-B:5-504(b)-(d) to read as follows:

(b) Except as otherwise provided in subsection (c) and (d), whether or not a trust contains a spendthrift provision, a creditor of a beneficiary may not compel a distribution that is subject to the trustee’s discretion, even if:

(1) the discretion is expressed in the form of a standard of distribution; or

(2) the trustee has abused the discretion.

(c) To the extent a trustee has not complied with a standard of distribution or has abused a discretion:

(1) a distribution may be ordered by the court to satisfy a judgment or court order against the beneficiary for support of the beneficiary’s child or for alimony for the beneficiary’s spouse, or former spouse; and

(2) the court shall direct the trustee to pay to the child, spouse, or former spouse such amount as is equitable under the circumstances but not more than the amount the trustee would have been required to distribute to or for the benefit of the beneficiary had the trustee complied with the standard or not abused the discretion[.] and with respect to alimony, only for and to the extent that the judgment or court order expressly specifies the alimony amount attributable to the most basic food, shelter, and medical needs of the spouse or former spouse.

(d) This section does not limit the right of a beneficiary to maintain a judicial proceeding against a trustee for an abuse of discretion or failure to comply with a standard for distribution.

(e) A creditor may not reach the interest of a beneficiary who is also a trustee or co-trustee, or otherwise compel a distribution, if the trustee’s discretion to make distributions for the trustee’s own benefit is limited by an ascertainable standard related to the beneficiary’s health, education, maintenance, or support.

270:15 Creditor’s Claim Against Settlor. Amend RSA 564-B:5-505(a)(3) to read as follows:

(3) After the death of a settlor, and subject to the settlor’s right to direct the source from which liabilities will be paid, the property of a trust that was revocable at the settlor’s death is subject to claims of the settlor’s creditors, costs of administration of the settlor’s estate, the expenses of the settlor’s funeral and disposal of remains to the extent the settlor’s probate estate is inadequate to satisfy those claims, costs, and expenses. This section does not apply to the proceeds and any other benefits of a policy of life or endowment insurance effected by the settlor on the settlor’s own life or on another life as provided in RSA 408:2.

270:16 Overdue Distribution. Amend RSA 564-B:5-506 to read as follows:

564-B:5-506 Overdue Distribution.

(a) In this section, “mandatory distribution” means a distribution of income or principal that the trustee is required to make to a beneficiary under the terms of the trust, including a distribution upon termination of the trust. The term excludes a distribution subject to the exercise of the trustee’s discretion regardless of whether the terms of the trust (i) include a support or other standard to guide the trustee in making distribution decisions or (ii) provide that the trustee “may” or “shall” make discretionary distributions, including distributions pursuant to a support or other standard.

(b) Whether or not a trust contains a spendthrift provision, a creditor or assignee of a beneficiary may reach a mandatory distribution of income or principal, including a distribution upon termination of the trust, if the trustee has not made the distribution to the beneficiary within a reasonable time after the designated distribution date.

270:17 Revocation or Amendment of Revocable Trust. Amend RSA 564-B:6-602(b)(3) to read as follows:

(3) upon the revocation or amendment of the trust by fewer than all of the settlors, the trustee shall promptly notify the other [settlers] settlors of the revocation or amendment.

270:18 Revocation or Amendment of Revocable Trust. Amend RSA 564-B:6-602(e) to read as follows:

(e) A settlor’s powers with respect to revocation, amendment, or distribution of trust property may be exercised by an agent under a power of attorney only to the extent expressly authorized by the terms of the trust or the power. Any such revocation or amendment by an agent under a power of attorney shall be effective only if made in a signed record and shall be effective only when sent to the trustee.

270:19 Duty to Administer, Invest and Manage Trust and Distribute Trust Property. Amend RSA 564-B:8-801 to read as follows:

564-B:8-801 Duty to Administer, Invest and Manage Trust, and Distribute Trust Property. Upon acceptance of a trusteeship, the trustee shall administer, invest and manage the trust and distribute the trust property in good faith, in accordance with its terms and purposes and the interests of the beneficiaries, and in accordance with this chapter.

270:20 Duty of Loyalty. Amend RSA 564-B:8-802(a) to read as follows:

(a) A trustee shall administer, invest and manage the trust and distribute the trust property solely in the interests of the beneficiaries.

270:21 Duty of Loyalty. Amend RSA 564-B:8-802(f) to read as follows:

(f) An investment by a trustee in securities of an investment company or investment trust to which the trustee, or its affiliate, provides services in a capacity other than as trustee is not presumed to be affected by a conflict between personal and fiduciary interests if the investment otherwise complies with the prudent investor rule of article 9. In addition to its compensation for acting as trustee, the trustee may be compensated by the investment company or investment trust for providing those services out of fees charged to the trust. If the trustee receives compensation from the investment company or investment trust for providing investment advisory or investment management services, the trustee at least annually shall notify the persons entitled under RSA [564-A:8-813] 564-B:8-813 to receive a copy of the trustee’s annual report of the rate and method by which that compensation was determined.

270:22 Prudent Administration. Amend RSA 564-B:8-804 to read as follows:

564-B:8-804 Prudent Administration. A trustee shall administer, invest, and manage the trust and distribute the trust property as a prudent person would, by considering the purposes, terms, distributional requirements, and other circumstances of the trust. In satisfying this standard, the trustee shall exercise reasonable care, skill, and caution.

270:23 Costs of Administration. Amend RSA 564-B:8-805 to read as follows:

564-B:8-805 Costs of Administration. In administering [a trust and in], investing, and managing [trust assets] the trust and distributing the trust property, the trustee may incur only costs that are reasonable in relation to the trust property, the purposes of the trust, and the skills of the trustee.

270:24 Recordkeeping and Identification of Trust Property. Amend RSA 564-B:8-810(c) to read as follows:

(c) Except as otherwise provided in subsection (d) and in RSA 564-B:8-816(a)(7)(B), a trustee shall cause the trust property to be designated so that the interest of the trust, to the extent feasible, appears in records maintained by a party other than a trustee or beneficiary.

270:25 Duty to Inform and Report. RSA 564-B:8-813 is repealed and reenacted to read as follows:

564-B:8-813 Duty To Inform And Report.

(a) Except while a trust is revocable and a settlor has capacity to revoke the trust, a trustee of a revocable trust shall provide a trustee’s report comparable to that described in subsection (d) to the distributees or permissible distributees of trust income or principal.

(b) A trustee shall keep the qualified beneficiaries of an irrevocable trust who have attained 21 years of age and those having the rights of a qualified beneficiary reasonably informed about the administration of the trust and of the material facts necessary for them to protect their interests. Unless unreasonable under the circumstances, a trustee of an irrevocable trust shall promptly respond to the request of any qualified beneficiary or one having the rights of a qualified beneficiary for information related to the administration of the trust. A trustee shall be presumed to have fulfilled the duty under this subsection if the trustee provides the information described in subsections (c) and (d). The trustee may provide any other information the trustee deems necessary or appropriate to keep beneficiaries reasonably informed.

(c) A trustee of an irrevocable trust:

(1) upon request of a qualified beneficiary who has attained 21 years of age or one who has the rights of a qualified beneficiary, shall promptly furnish to the beneficiary a copy of the trust instrument;

(2) by no later than 60 days after the later of (i) accepting a trusteeship or (ii) the death of the last surviving settlor, shall notify the qualified beneficiaries who have attained 21 years of age and those who have the rights of a qualified beneficiary of the acceptance and of the trustee’s name, address, and telephone number; and

(3) by no later than 60 days after the date the trustee acquires knowledge of the creation and initial funding of an irrevocable trust and the death of the last surviving settlor, or by no later than 60 days after the date the trustee acquires knowledge that a formerly revocable trust has become irrevocable, that the trust has been initially funded, and that the last surviving settlor has died, shall notify the qualified beneficiaries who have attained 21 years of age and those who have the rights of a qualified beneficiary of the trust’s existence, of the right to request a copy of the trust instrument, and of the right to a trustee’s report as provided in subsection (d).

(d) A trustee of an irrevocable trust shall send a report at least annually and at the termination of the trust to the distributees or permissible distributees of trust income or principal, unless the terms of the trust provide otherwise; the qualified beneficiaries who request it; those who have the rights of a qualified beneficiary who request it; and the settlor or a guardian or agent under power of attorney of a settlor who does not have the capacity described in RSA 564-B:6-601. The report shall include a report of the trust property, liabilities, receipts, and disbursements, including the source and amount of the trustee’s compensation, a listing of the trust assets, and, if feasible, their respective market values. Upon a vacancy in a trusteeship, unless a cotrustee remains in office, a report must be sent to the qualified beneficiaries who have attained 21 years of age and those who have the rights of a qualified beneficiary by the former trustee. A personal representative, conservator, guardian of the estate, or guardian of the person may send a report on behalf of a deceased or incapacitated trustee.

(e) A beneficiary may waive the right to a trustee’s report or other information otherwise required to be furnished under this section and with respect to future reports and other information, may withdraw a waiver previously given.

(f) Subsections (b), (c), and (d) of this section shall apply only to a trustee who accepts a trusteeship on or after October 1, 2004, to an irrevocable trust created on or after October 1, 2004, and to a revocable trust which became irrevocable on or after October 1, 2004.

(g) The change in the identity of a trustee, occurring as the result of a mere name change or a merger, consolidation, combination or reorganization of a corporate trustee, does not require the notice described in subsection (c)(2) of this section.

(h) In fulfilling the duty under this section to the director of charitable trusts pursuant to RSA 564-B:1-110(c), the trustee may permit the director of charitable trusts to view the trust instrument and reports upon request at the office of the trustee instead of providing a copy of the trust instrument and the reports.

(i) The trustee of an irrevocable trust shall notify the qualified beneficiaries who have attained 21 years of age and those who have the rights of a qualified beneficiary by no later than 60 days after any change in the method or rate of the trustee’s compensation.

270:26 Discretionary Powers; Tax Savings. RSA 564-B:8-814(d)(1) is repealed and reenacted to read as follows:

(1) a power held by the settlor’s spouse who is the trustee of a trust for which a marital deduction, as defined in section 2056(b)(5) or 2523(e) of the Internal Revenue Code of 1986, as in effect on the effective date of this chapter, or as later amended, was previously allowed;

270:27 General Powers of Trustee. Amend RSA 564-B:8-815 to read as follows:

564-B:8-815 General Powers of Trustee.

(a) A trustee, without authorization by the court, may exercise:

(1) powers conferred by the terms of the trust; and

(2) except as limited by the terms of the trust:

(A) all powers over the trust property which an unmarried competent owner has over individually owned property;

(B) any other powers appropriate to achieve the proper administration, investment, management, and distribution of the trust property; and

(C) any other powers conferred by this chapter or other laws of this state.

(b) The exercise of a power is subject to the fiduciary duties prescribed by this article.

(c) The powers of a trustee are subject to the provisions of RSA 564-A:3, IV.

270:28 Specific Powers of Trustee. Amend RSA 564-B:8-816(a)(14) to read as follows:

(14) pay or contest any claim, settle a claim by or against the trust[;] and release, in whole or in part, a claim belonging to the trust;

270:29 Specific Powers of Trustee. Amend RSA 564-B:8-816(a) (26) and (27) to read as follows:

(26) on termination of the trust, exercise the powers appropriate to wind up the administration of the trust and distribute the trust property to the persons entitled to it; [and]

(27) employ persons, including attorneys, auditors, investment advisors, or agents, even if they are associated with the trustee, to advise or assist the trustee in the performance of the trustee’s administrative duties and to act without independent investigation upon their recommendations[.];

(28) allocate items of income or expense to either trust income or principal, as provided by law, including creation of reserves out of income for depreciation, obsolescence, amortization, or for depletion in mineral or timber properties; and

(29) convert a trust into a unitrust as provided in RSA 564-A:3-c.

270:30 Specific Powers Of Trustee. Amend RSA 564-B:8-816(b) to read as follows:

(b) An executor or other fiduciary administering a will has all powers conferred by this section unless limited in the will, subject to the fiduciary duties prescribed by the will or by other laws of this state.

270:31 Prudent Investor Rule. Amend RSA 564-B:9-901(b) to read as follows:

(b) The prudent investor rule[, a default rule,] may be expanded, restricted, eliminated, or otherwise altered by the provisions of a trust except as provided in RSA 564-B:1-105(b)(2) and (3). A trustee is not liable to a beneficiary to the extent that the trustee acted in reasonable reliance on the provisions of the trust.

270:32 New Paragraph; Certification of Trust. Amend RSA 564-B:10-1013 by inserting after paragraph (i) the following new paragraph:

(j) Instead of the certification of trust described in subsection (a), a certificate described in RSA 564-A:7 shall protect persons dealing with a trustee in connection with the conveyance of real or personal property as provided in RSA 564-A:7. Nothing in this section is intended to expand, limit, or otherwise affect the provisions of RSA 564-A:7.

270:33 Application to Existing Relationships. Amend RSA 564-B:11-1104 to read as follows:

564-B:11-1104 Application to Existing Relationships.

(a) Except as otherwise provided in this chapter, on the effective date of this chapter:

(1) this chapter applies to all trusts created before, on, or after its effective date;

(2) this chapter applies to all judicial proceedings concerning trusts commenced on or after its effective date;

(3) this chapter applies to judicial proceedings concerning trusts commenced before its effective date unless the court finds that application of a particular provision of this chapter would substantially interfere with the effective conduct of the judicial proceedings or prejudice the rights of the parties, in which case the particular provision of this chapter does not apply and the superseded law applies;

(4) any rule of construction or presumption provided in this chapter applies to trust instruments executed before the effective date of [the] this chapter unless there is a clear indication of a contrary intent in the terms of the trust; and

(5) an act done before the effective date of [the] this chapter is not affected by this chapter.

(b) If a right is acquired, extinguished, or barred upon the expiration of a prescribed period that has commenced to run under any other statute before the effective date of [the] this chapter, that statute continues to apply to the right even if it has been repealed or superseded.

270:34 Chapter Heading Changed. The chapter heading of RSA 564-A is repealed and reenacted to read as follows:

CHAPTER 564-A

CERTAIN PROVISIONS REGARDING TRUSTS

270:35 Section Heading Changed. The section heading of RSA 564-A:3 is repealed and reenacted to read as follows:

564-A:3 Limitations on Certain Trustees Who Are Beneficiaries.

270:36 Repeal. RSA 564-A:10, relative to title, is repealed.

270:37 Effective Date. This act shall take effect 60 days after its passage.

(Approved: July 22, 2005)

(Effective Date: September 20, 2005)

Links

HB542 at GenCourtMobile

Action Dates

Date Body Type

Bill Text Revisions

HB542 Revision: 8983 Date: Jan. 21, 2010, midnight

Docket