HB 1569 – AS INTRODUCED
2006 SESSION
09/01
HOUSE BILL 1569
AN ACT relative to trust protectors, trust advisors, and directed trusts.
SPONSORS: Rep. Moran, Hills 18; Rep. Dowling, Rock 5
This bill adds definitions of trust protector, trust advisor, excluded fiduciary, and directed trust to the Uniform Trust Code and establishes the duties and powers of trust protectors and trust advisors.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
06-2918
09/01
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Six
AN ACT relative to trust protectors, trust advisors, and directed trusts.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Paragraphs; Uniform Trust Code; Definitions. Amend RSA 564-B:1-103 by inserting after paragraph (21) the following new paragraphs:
(22) “Trust advisor” means the settlor of a trust instrument or other parties whose appointment is provided in the trust instrument and whose powers are defined in RSA 564-B:7-713.
(23) “Trust protector” means any disinterested party whose appointment is provided for in the trust instrument and whose powers are defined in RSA 564-B:7-711.
(24) “Excluded fiduciary” means any fiduciary excluded from exercising certain powers under the trust instrument which powers may be exercised by the settlor, trust advisor, trust protector, or other persons designated by the instrument.
(25) “Directed trust” means a trust where either through the terms of the trust, an agreement of the qualified beneficiaries or a court order, one or more persons is given the authority to direct, consent to, or disapprove a fiduciary’s actual or proposed investment decision, distribution decision, or any other noninvestment decision of the fiduciary.
2 New Sections; Uniform Trust Code; Trust Protectors; Trust Advisors; Directed Trusts. Amend article 7 of RSA 564-B by inserting after section 7-710 the following new sections:
564-B:7-711 Trust Protector. The powers and discretions of a trust protector shall be provided in the trust instrument and may, in the best interests of the trust, be exercised or not exercised. The powers and discretions may include, but are not limited to the following:
(1) To modify or amend the trust instrument to achieve favorable tax status or because of changes in the Internal Revenue Code, state law, or the rulings, rules, and regulations implementing such changes.
(2) To amend or modify the trust instrument to take advantage of changes in the rule against perpetuities, laws governing restraints on alienation, or other state laws restricting the terms of the trust, the distribution of trust property, or the administration of the trust.
(3) To appoint a successor trust protector.
(4) To review and approve the accountings of a trustee.
(5) To change the governing law or principal place of administration of the trust.
(6) To remove and replace any trust advisor for the reasons stated in the trust instrument.
(7) To remove a trustee, cotrustee, or successor trustee, for the reasons stated in the trust instrument, and appoint a replacement.
(8) To interpret terms of the trust instrument at the request of the trustee.
(9) To advise the trustee or cotrustee on matters concerning any beneficiary.
(10) To direct, consent to, or disapprove a trustee’s or cotrustee’s action or inaction in making distributions to beneficiaries.
(11) To increase or decrease any interest of the beneficiaries to the trust, to grant a power of appointment to one or more trust beneficiaries, or to terminate or amend any power of appointment granted by the trust; however, a modification, amendment, or grant of a power of appointment may not grant a beneficial interest to any person or class of persons not specifically provided for under the trust instrument, or to the trust protector or the trust protector’s estate, or for the benefit of the creditors of the trust protector.
564-B:7-712 Trust Protector as a Fiduciary. Except as otherwise provided by the trust instrument, trust protectors are fiduciaries and the provisions of this chapter applicable to trustees shall be applicable to the trust protectors but only to the extent of the powers, duties, and discretions granted to them under the terms of the trust instrument.
564-B:7-713 Trust Advisor. The powers and discretions of a trust advisor shall be provided in the trust instrument and may, in the best interests of the trust, be exercised or not exercised in the sole and absolute discretion of the trust advisor and shall be binding on all other persons. Such powers and discretions may include, but are not limited to the following:
(1) To perform a specific duty or function that would normally be performed by the trustee, cotrustee, or trust protector.
(2) To advise the trustee or cotrustee on matters concerning any beneficiary.
(3) To direct, consent to, or disapprove a trustee’s or cotrustee’s action or inaction relating to investments of trust assets.
(4) To direct the acquisition, disposition, or retention of any trust investment.
(5) To direct, consent to, or disapprove a trustee’s or cotrustee’s action or inaction in making distributions to beneficiaries.
564-B:7-714 Trust Advisor as a Fiduciary. Except as otherwise provided by the trust instrument, trust advisors are fiduciaries and the provisions of this chapter applicable to trustees shall be applicable to the trust advisors but only to the extent of the powers, duties, and discretions granted to them under the terms of the trust instrument.
564-B:7-715 Trust Advisor and Trust Protector Subject to Court Jurisdiction. By accepting appointment to serve as a trust advisor or trust protector of a trust that is subject to the laws of this state, the trust advisor or the trust protector submits to the jurisdiction of the courts of this state even if investment advisory agreements or other related agreements provide otherwise, and the trust advisor or trust protector may be made a party to any action or proceeding if issues relate to a decision, action, or inaction of the trust advisor or trust protector.
564-B:7-716 No Duty to Review Actions of Trust Advisor or Trust Protector. Unless the trust instrument appointing, designating, or providing for a method for appointing a trust protector or trust advisor states otherwise, an excluded fiduciary is relieved of any duty or responsibility to review the actions of a duly named and appointed trust protector or trust advisor including, without limitation, any duty or responsibility to perform investment reviews and make recommendations with respect to any investments to the extent the trust advisor or trust protector had authority to direct the acquisition, disposition, or retention of any such investment.
564-B:7-717 Power of Trust Advisor and Trust Protector to Act After Death or Incapacity of Grantor. Unless the trust instrument states otherwise, the power and authority of a trust advisor or trust protector shall not lapse at the death or incapacity of the grantor.
564-B:7-718 Fiduciary’s Liability for Action or Inaction of Trust Advisor and Trust Protector. Unless the trust instrument appointing, designating, or providing for a method for appointing a trust protector or trust advisor states otherwise, the excluded fiduciary is not liable for any loss resulting from any action or inaction of the trust advisor or trust protector and any loss that results from a failure to take any action proposed by an excluded fiduciary that requires a prior authorization of the trust advisor or trust protector if that excluded fiduciary timely sought but failed to obtain that authorization.
564-B:7-719 Directed Trusts.
(a) If a trust instrument provides that a fiduciary is to follow the direction of a trust protector or trust advisor and the fiduciary acts in accordance with such direction, the fiduciary shall be treated as an excluded fiduciary under the provisions of RSA 564-B:7-716 and RSA 564-B:7-718.
(b) Where one or more persons are given authority by a trust instrument or court order to either appoint a trust protector or to direct, consent to, or disapprove a fiduciary’s actual or proposed distribution decisions or other noninvestment decisions of the fiduciary, the person or the persons appointed by them shall be considered to be trust protectors under RSA 564-B:1-103(23).
(c) Where one or more persons are given authority by a trust instrument or court order to either appoint a trust advisor or to direct, consent to, or disapprove a fiduciary’s actual or proposed investment decisions, the person or the persons appointed by them shall be considered to be trust advisors under RSA 564-B:1-103(22).
(d) If a court order provides that a fiduciary is to follow the direction of a trust protector or trust advisor and the fiduciary acts in accordance with the direction, the fiduciary shall be treated as an excluded fiduciary under the provisions of RSA 564-B:7-716 and RSA 564-B:7-718.
(e) Unless expressly prohibited by the trust instrument, the qualified beneficiaries of a trust may unanimously agree to designate in writing a trust advisor with the power to direct the fiduciary’s investment decisions, provided the trust does not have a serving trust advisor with the power. If the written designation is furnished to the fiduciary and the fiduciary acts in accordance with the direction from the designated trust advisor, the fiduciary shall be treated as an excluded fiduciary under the provisions of RSA 564-B:7-716 and RSA 564-B:7-718. The designation of a trust advisor with power to direct the fiduciary’s investment decisions may be revoked by unanimous written consent of the qualified beneficiaries and once the revocation has been delivered to the excluded fiduciary, the fiduciary is relieved of any responsibility to act upon any outstanding or future directions from such trust advisor.
(f) For purposes of this section, “investment decision” means, with respect to any property, the retention, purchase, sale, exchange, tender, or other transaction affecting the ownership of the property or rights in the property.
3 Effective Date. This act shall take effect January 1, 2007.