CHAPTER 374
SB 465 – FINAL VERSION
03/20/08 0892s
16Apr2008… 1312h
14May2008… 1698h
06/05/08 2175eba
2008 SESSION
08/09
SENATE BILL 465
AN ACT relative to the laws regulating trusts and trust companies in New Hampshire.
SPONSORS: Sen. D'Allesandro, Dist 20; Sen. Odell, Dist 8; Sen. Hassan, Dist 23; Sen. Clegg, Dist 14; Rep. Reardon, Merr 11; Rep. Moran, Hills 18; Rep. Hunt, Ches 7
COMMITTEE: Commerce, Labor and Consumer Protection
This bill makes certain changes to the law regulating trusts and trust companies.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
03/20/08 0892s
16Apr2008… 1312h
14May2008… 1698h
06/05/08 2175eba
08-2686
08/09
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Eight
AN ACT relative to the laws regulating trusts and trust companies in New Hampshire.
Be it Enacted by the Senate and House of Representatives in General Court convened:
374:1 Purpose. The general court finds:
I. The market for trusts and fiduciary services across the nation is a rapidly growing sector of the nation’s economy.
II. New Hampshire is uniquely positioned to provide the most attractive legal and financial environment for individuals and families seeking to establish and locate their trusts and investment assets.
III. This act will serve to continue New Hampshire’s firm commitment to be the best and most attractive legal environment in the nation for trusts and fiduciary services, an environment that will continue to attract to our state good-paying jobs for trust and investment management, legal and accounting professionals, and other professionals to provide the support and infrastructure required to service this growing sector of the nation’s economy.
374:2 Uniform Trust Code; Definitions. Amend RSA 564-B:1-103(22) to read as follows:
(22) “Ascertainable standard” means a standard related to an individual’s health, education, support, or maintenance within the meaning of section 2041(b)(1)(A) or 2514(c)(1) of the Internal Revenue Code [of 1986, as in effect on the effective date of this chapter, or as later amended].
374:3 Uniform Trust Code; Definitions. RSA 564-B:1-103(24) is repealed and reenacted to read as follows:
(24) “Excluded fiduciary” means any trustee, trust advisor, or trust protector to the extent that, under the terms of the trust, an agreement of the qualified beneficiaries, or court order, (i) the trustee, trust advisor, or trust protector is excluded from exercising a power, or is relieved of a duty, and (ii) the power or duty is granted or reserved to another person.
374:4 Uniform Trust Code; Definitions. RSA 564-B:1-103(27)-(28) are repealed and reenacted to read as follows:
(27) “Trust advisor” means any person described in RSA 564-B:12-1201(a).
(28) “Trust protector” means any person described in RSA 564-B:12-1201(a).
374:5 Uniform Trust Code; Definitions. Amend RSA 564-B:1-103 by inserting after paragraph (28) the following new paragraph:
(29) “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended and as in effect from time to time.
374:6 Uniform Trust Code; Nonjudicial Settlement Agreements. Amend RSA 564-B:1-111(a) to read as follows:
(a) For purposes of this section, “interested persons” means persons, other than the settlor, whose consent would be required in order to achieve a binding settlement were the settlement to be approved by a court.
374:7 Uniform Trust Code; Representation by Fiduciaries and Parents. RSA 564-B:3-303(7) is repealed and reenacted to read as follows:
(7) a parent may represent and bind (i) the parent’s minor, incapacitated or unborn child if neither a guardian of the estate nor guardian of the person for the child has been appointed and (ii) a minor, incapacitated or unborn descendent of such child if neither a guardian of the estate of the descendent nor a guardian of the person of the descendent has been appointed.
374:8 Uniform Trust Code; Noncharitable Trust Without an Ascertainable Beneficiary. Amend RSA 564-B:4-409 to read as follows:
564-B:4-409 Noncharitable Trust Without Ascertainable Beneficiary. Except as otherwise provided in RSA 564-B:4-408 or by another statute, the following rules apply:
(1) A trust may be created for a noncharitable purpose without a definite or definitely ascertainable beneficiary or for a noncharitable but otherwise valid purpose [to be selected by the trustee].
(2) A trust authorized by this section may be enforced by a trustee, a trust advisor, a trust protector, a person appointed [in] under the terms of the trust or, if no person is so appointed, by a person appointed by the court.
(3) [Property of a trust authorized by this section may be applied only to its intended use,] Except to the extent the court determines that the value of the trust property exceeds the amount required for the intended use, property of a trust authorized by this section may be applied only to its intended use, including appointing trust property to or for the benefit of an existing or new trust whose purposes are limited to one or more purposes of the original trust. Except as otherwise provided [in] by the terms of the trust, property not required for the intended use must be distributed to the settlor, if then living, otherwise to the settlor’s successors in interest.
374:9 New Section; Uniform Trust Code; Trustee’s Authority to Decant Trust. Amend RSA 564-B by inserting after section 4-417 the following new section:
564-B:4-418 Trustee’s Authority to Decant Trust.
(a) Unless the terms of the trust expressly provide otherwise, a trustee with the discretion to make distributions to or for the benefit of one or more beneficiaries of a trust (the “first trust”) may exercise that discretion by appointing the property subject to that authority in favor of another trust for the benefit of one or more of those beneficiaries (the “second trust”).
(b) Notwithstanding the provisions of paragraph (a), the trustee may not decant property of the first trust in favor of the second trust under any of the following circumstances:
(1) the second trust includes a beneficiary that is not a beneficiary of the first trust. For purposes of this subparagraph, a permissible appointee of a power of appointment held by a beneficiary of the second trust is not considered to be a beneficiary of the second trust;
(2) the exercise of the power to decant will reduce any current fixed income interest, annuity interest, or unitrust interest of a beneficiary of the first trust;
(3) a contribution to the first trust qualified for a marital or charitable deduction for federal or state income, gift, or estate tax purposes or qualified for a gift tax exclusion for federal or state gift tax purposes, while the terms of the second trust include a provision which, if included in the terms of the first trust, would have prevented the first trust from qualifying for the deduction or exclusion;
(4) the property is subject to a presently exercisable power of withdrawal held by a beneficiary of the first trust; or
(5) under the terms of the second trust:
(A) discretionary distributions may be made to a beneficiary or among a group of beneficiaries of the first trust;
(B) the distributions are not limited by an ascertainable standard; and
(C) the beneficiary or group of beneficiaries has the power to remove and replace the trustee of the second trust with the beneficiary or a member of the group of beneficiaries or with a trustee that is related or subordinate to the beneficiary or a member of the group of beneficiaries (as defined in section 672(c) of the Internal Revenue Code).
(c) Notwithstanding the provisions of paragraph (a), a trustee who is a beneficiary of the first trust may not exercise the authority to appoint property of the first trust in favor of the second trust under any of the following circumstances:
(1) under the terms of the first trust or pursuant to the law governing the administration of the first trust:
(A) such trustee of the first trust does not have the discretion to make or participate in making distributions to himself or herself;
(B) such trustee’s discretion to make or participate in making distributions to himself or herself is limited by an ascertainable standard; or
(C) such trustee’s discretion to make or participate in making distributions to himself or herself is exercisable only with the consent of a cotrustee or another person holding an adverse interest; while under the terms of the second trust, such trustee’s discretion to make or participate in making distributions to himself or herself is not limited by an ascertainable standard and is exercisable without the consent of a cotrustee or another person holding an adverse interest; or
(2) under the terms of the first trust or pursuant to the law governing the administration of the first trust, such trustee of the first trust does not have the discretion to make or participate in making distributions in a manner that will discharge such trustee’s legal support obligations, while under the terms of the second trust, such trustee’s discretion is not so limited.
(d) The trustee of the first trust shall notify in writing the director of charitable trusts of a proposed appointment in favor of a second trust at least 30 days in advance of the proposed appointment if, at the time the appointment is being proposed:
(1) at least one charitable organization has the rights of a qualified beneficiary of the first trust; or
(2) the director of charitable trusts has the rights of a qualified beneficiary of the first trust.
(e) This section does not abrogate the trustee’s duty under RSA 564-B:8-801.
(f) This section does not impose on a trustee a duty to exercise a power to decant in favor of another trust or to consider exercising a power to decant in favor of another trust.
(g) A power to decant is not a power to amend the trust. Accordingly, a trustee is not prohibited from decanting property in favor of another trust solely because the first trust is irrevocable or the terms of the first trust provide that it may not be amended.
(h) A trustee’s authority to decant property to another trust under this section is not limited or prohibited by a spendthrift provision in the first trust.
374:10 Uniform Trust Code; Creditor’s Claim Against Settlor; Additional Exclusion for Certain Irrevocable Trusts. Amend RSA 564-B:5-505(a)(2) to read as follows:
(2) With respect to an irrevocable trust, a creditor or assignee of the settlor may reach the maximum amount that can be distributed to or for the settlor’s benefit. If a trust has more than one settlor, the amount the creditor or assignee of a particular settlor may reach may not exceed the settlor’s interest in the portion of the trust attributable to that settlor’s contribution. This subparagraph shall not apply to:
(A) an irrevocable “special needs trust” established for a disabled person as described in 42 U.S.C. 1396p(d)(4) or similar federal law governing the transfer to such a trust[.}; or
(B) an irrevocable trust solely because of the existence or exercise of a discretionary power granted to the trustee by the terms of the trust, court order, agreement of the qualified beneficiaries or any other provision of law (or the existence or exercise of a discretionary power granted to a trust advisor or trust protector by the terms of the trust, court order, agreement of the qualified beneficiaries, or any other provision of law, to direct the trustee) to pay directly to the taxing authorities or to reimburse the settlor for any tax on trust income or principal which is payable by the settlor under the law imposing such tax.
374:11 Uniform Trust Code; Additional Exclusion for Certain Irrevocable Trusts. Amend RSA 564 B:5-505(b)(2) to read as follows:
(2) upon the lapse, release, or waiver of the power, the holder is treated as the settlor of the trust only to the extent the value of the property affected by the lapse, release, or waiver exceeds the greater of:
(A) the amount specified in section 2041(b)(2) or 2514(e) of the Internal Revenue Code [of 1986], or
(B) The amount specified in section 2503(b) of the Internal Revenue Code [of 1986, in each case as in effect on the effective date of this chapter, or as later amended].
374:12 New Paragraph; Uniform Trust Code; Creditor’s Claim Against Settlor. Amend RSA 564-B:5-505 by inserting after paragraph (b) the following new paragraph:
(c) Nothing in this section shall limit the application of the Qualified Dispositions in Trust Act set forth in RSA 564-D.
374:13 Uniform Trust Code; Directed Trusts. RSA 564-B:7-711 is repealed and reenacted to read as follows:
564-B:7-711 Directed Trusts. If the terms of the trust, an agreement of the qualified beneficiaries, or a court order requires a trustee, trust advisor, or trust protector to follow the direction of a trust advisor or trust protector and the trustee, trust advisor, or trust protector acts in accordance with such direction, then the trustee, trust advisor, or trust protector shall be treated as an excluded fiduciary.
374:14 Uniform Trust Code; Trustee Duty to Inform. Amend RSA 564-B:8-813(b) to read as follows:
(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. A trustee shall be presumed to have fulfilled this duty if the trustee provides the information described in paragraphs (c) and (d). 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] A trustee may provide any other information the trustee deems necessary or appropriate to keep beneficiaries reasonably informed.
374:15 Uniform Trust Code; Trustee’s Discretionary Power. RSA 564-B:8-814(b)-(d) are repealed and reenacted to read as follows:
(b) Subject to the provisions of paragraph (a), if a distribution to or for the benefit of a beneficiary is subject to the exercise of the trustee’s discretion, whether or not the terms of a trust include a standard to guide the trustee in making distribution decisions, then the beneficiary’s interest is neither a property interest nor an enforceable right, but a mere expectancy.
(c) Subject to the provisions of paragraph (a), unless the terms of the trust expressly provide otherwise, if the terms of a trust permit distributions among a class of beneficiaries, distributions to or for the benefit of whom are subject to the exercise of the trustee’s discretion without a standard to guide the trustee in making distribution decisions, then the trustee may make distributions unequally among the beneficiaries and may make distributions entirely to one beneficiary to the exclusion of the other beneficiaries.
(d) Subject to paragraph (f), and unless the terms of the trust expressly indicate that a rule in this paragraph does not apply:
(1) a person other than a settlor who is a beneficiary and trustee of a trust that confers on the trustee a power to make discretionary distributions to or for the trustee’s personal benefit may exercise the power only in accordance with an ascertainable standard; and
(2) a trustee may not exercise a power to make discretionary distributions to satisfy a legal obligation of support that the trustee personally owes another person.
(e) A power whose exercise is limited or prohibited by paragraph (d) may be exercised by a majority of the remaining trustees whose exercise of the power is not so limited or prohibited. If the power of all trustees is so limited or prohibited, the court may appoint a special trustee with authority to exercise the power.
(f) Paragraph (d) does not apply to:
(1) a power held by the settlor’s spouse who is the trustee of a trust for which a marital deduction was previously allowed under section 2056(b)(5) or 2523(e) of the Internal Revenue Code;
(2) any trust during any period that the trust may be revoked or amended by its settlor; or
(3) a trust if contributions to the trust qualify for the annual exclusion under section 2503(c) of the Internal Revenue Code.
374:16 Uniform Trust Code; Powers to Direct Trustee. RSA 564-B:8-808 is repealed and reenacted to read as follows:
564-B:8-808 Powers to Direct.
(a) While a trust is revocable, the trustee may follow a direction of the settlor that is contrary to the terms of the trust.
(b) If the terms of a trust, an agreement of the qualified beneficiaries, or a court order, confer upon a person (other than the settlor of a revocable trust) the power to direct certain actions of the trustee, then the trustee shall act in accordance with an exercise of the power.
(c) The terms of a trust may confer upon a trustee or other person a power to direct the modification or termination of the trust.
(d) A person who holds a power to direct is a trust advisor, except to the extent that the person is a beneficiary of the trust and, under such power, the person may direct the trustee to make distributions.
374:17 New Section; Uniform Trust Code; Governing Law. Amend RSA 564-B by inserting after section 9-906 the following new section:
564-B:9-907 The provisions of article 9 of this code shall be construed as pertaining to the administration of a trust and as applicable to any trust that is administered in this state or that is governed by the laws of this state.
374:18 Uniform Trust Code; Trust Advisors and Trust Protectors. Article 12 of RSA 564-B is repealed and reenacted to read as follows:
ARTICLE 12
TRUST PROTECTORS AND TRUST ADVISORS
564-B:12-1201 Powers of Trust Advisors and Trust Protectors.
(a) A trust protector or trust advisor is any person, other than a trustee, who under the terms of the trust, an agreement of the qualified beneficiaries, or a court order has a power or duty with respect to a trust, including, without limitation, one or more of the following powers:
(1) the power to modify or amend the trust instrument to achieve favorable tax status or respond to changes in any applicable federal, state, or other tax law affecting the trust, including (without limitation) any rulings, regulations, or other guidance implementing or interpreting such laws;
(2) the power 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) the power to appoint a successor trust protector or trust advisor;
(4) the power to review and approve a trustee’s trust reports or accountings;
(5) the power to change the governing law or principal place of administration of the trust;
(6) the power to remove and replace any trust advisor or trust protector for the reasons stated in the trust instrument;
(7) the power to remove a trustee, cotrustee, or successor trustee, for the reasons stated in the trust instrument, and appoint a successor;
(8) the power to consent to a trustee’s or cotrustee’s action or inaction in making distributions to beneficiaries;
(9) the power to increase or decrease any interest of the beneficiaries in the trust, to grant a power of appointment to one or more trust beneficiaries, or to terminate or amend any power of appointment granted in the trust; however, a modification, amendment or grant of a power of appointment may not grant a beneficial interest in a charitable trust with only charitable beneficiaries to any non-charitable interest or purpose and may not grant a beneficial interest in any trust to the trust protector or trust advisor, or to the estate or for the benefit of the creditors of such trust protector or such trust advisor;
(10) the power to perform a specific duty or function that would normally be required of a trustee or cotrustee;
(11) the power to advise the trustee or cotrustee concerning any beneficiary;
(12) the power to consent to a trustee’s or cotrustee’s action or inaction relating to investments of trust assets; and
(13) the power to direct the acquisition, disposition, or retention of any trust investment.
(b) The exercise of a power by a trust advisor or a trust protector shall be exercised in the sole and absolute discretion of the trust advisor or trust protector and shall be binding on all other persons.
564-B:12-1202 Trust Advisors and Trust Protectors as Fiduciaries.
(a) A trust advisor or trust protector, other than a beneficiary, is a fiduciary with respect to each power granted to such trust advisor or trust protector. In exercising any power or refraining from exercising any power, a trust advisor or trust protector shall act in good faith and in accordance with the terms and purposes of the trust and the interests of the beneficiaries.
(b) A trust advisor or trust protector is an excluded fiduciary with respect to each power granted or reserved exclusively to any one or more other trustees, trust advisors, or trust protectors.
564-B:12-1203 Trust Advisor and Trust Protector Subject to Court Jurisdiction. By accepting appointment to serve as a trust advisor or trust protector, the trust advisor or the trust protector submits personally 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 relating to a decision, action, or inaction of the trust advisor or trust protector.
564-B:12-1204 No Duty to Review Actions of Trustee, Trust Advisor, or Trust Protector.
(a) Whenever, pursuant to the terms of a trust, an agreement of the qualified beneficiaries, or a court order, an excluded fiduciary is to follow the direction of a trustee, trust advisor, or trust protector with respect to investment decisions, distribution decisions, or other decisions of the non-excluded fiduciary, then, except to the extent that the terms of the trust, the agreement of the qualified beneficiaries, or the court order provide otherwise, the excluded fiduciary shall have no duty to:
(1) monitor the conduct of the trustee, trust advisor, or trust protector;
(2) provide advice to the trustee, trust advisor, or trust protector or consult with the trustee, trust advisor, or trust protector; or
(3) communicate with or warn or apprise any beneficiary or third party concerning instances in which the excluded fiduciary would or might have exercised the excluded fiduciary’s own discretion in a manner different from the manner directed by the trustee, trust advisor, or trust protector.
(b) Absent clear and convincing evidence to the contrary, the actions of the excluded fiduciary pertaining to matters within the scope of the trustee, trust advisor, or trust protector’s authority (such as confirming that the trustee, trust advisor, or trust protector’s directions have been carried out and recording and reporting actions taken at the trustee, trust advisor, or trust protector’s direction or other information pursuant to RSA 564-B:8-813), shall be presumed to be administrative actions taken by the excluded fiduciary solely to allow the excluded fiduciary to perform those duties assigned to the excluded fiduciary under the terms of the trust, the agreement of the qualified beneficiaries, or the court order, and such administrative actions shall not be deemed to constitute an undertaking by the excluded fiduciary to monitor the trustee, trust advisor, or trust protector or otherwise participate in actions within the scope of the trustee, trust advisor, or trust protector’s authority.
564-B:12-1205 Fiduciary’s Liability for Action or Inaction of Trustee, Trust Advisor, and Trust Protector. An excluded fiduciary is not liable for (i) any loss resulting from any action or inaction of a trustee, trust advisor, or trust protector or (ii) any loss that results from the failure of a trustee, trust advisor, or trust protector to take any action proposed by the excluded fiduciary where such action requires the authorization of the trustee, trust advisor, or trust protector, provided that an excluded fiduciary who had a duty to propose such action timely sought but failed to obtain the authorization.
374:19 Uniform Principal and Income Act; Trustee Notice. Amend RSA 564-C:1-104(h)(1) to read as follows:
(1) The trustee shall mail notice of the proposed action to all qualified beneficiaries (as defined in RSA 564-B:1-103(12)) [who are adults] of the trust who have attained 21 years of age and to those persons who have the rights of a qualified beneficiary with respect to the trust under RSA 564-B:1-110. Notice may be given to any other beneficiary. Notice of the proposed action need not be given to any person who consents in writing to the proposed action. The consent may be executed at any time before or after the proposed action is taken.
374:20 Uniform Principal and Income Act; Trustee Notice. Amend RSA 564-C:1-104(h)(4)-(5) to read as follows:
(4) If a trustee does not receive a written objection to the proposed action from the beneficiary or the person who has the rights of a qualified beneficiary within the applicable period, the trustee is not liable for the action to a beneficiary if:
(A) notice is mailed to [the] such beneficiary[,] (or a person who may represent and bind the beneficiary under the provisions of article 3 of RSA 564-B) or [the] such person [who has the rights of a qualified beneficiary] at the address determined by the trustee after reasonable diligence;
(B) [the] such beneficiary (or a person who may represent and bind the beneficiary under the provisions of article 3 of RSA 564-B) or [the] such person [who has the rights of a qualified beneficiary] receives actual notice; or
(C) [the] such beneficiary (or a person who may represent and bind the beneficiary under the provisions of article 3 of RSA 564-B) or [the] such person [who has the rights of a qualified beneficiary] consents in writing to the proposed action either before or after the action is taken.
(5) If the trustee receives a written objection within the applicable time period, either the trustee, a beneficiary or a person who has the rights of a qualified beneficiary may petition the court to have the proposed action performed as proposed, performed with modifications, or denied. In the proceeding, a beneficiary objecting to the proposed action or a person who has the rights of a qualified beneficiary objecting to the proposed action has the burden of proof as to whether the trustee’s proposed action should not be performed. A beneficiary who has not objected or a person who has the rights of a qualified beneficiary who has not objected is not estopped from opposing the proposed action in the proceeding. If the trustee decides not to implement the proposed action, the trustee shall notify the qualified beneficiaries of the trust [who are adults] who have attained 21 years of age and those persons who have the rights of a qualified beneficiary of the decision not to take the action and the reasons for the decision, and the trustee’s decision not to implement the proposed action does not itself give rise to liability to any current or future beneficiary. A beneficiary or a person who has the rights of a qualified beneficiary may petition the court to have the action performed and has the burden of proof as to whether it should be performed.
374:21 Uniform Principal and Income Act; Distributions. Amend RSA 564-C:2-201(3) to read as follows:
(3) A fiduciary shall distribute to a beneficiary who receives a pecuniary amount outright the interest or any other amount provided by the will or the terms of the trust from net income determined under subsection (2) or from principal to the extent that net income is insufficient. If a beneficiary is to receive a pecuniary amount outright and no interest or other amount is provided for by the will or by the terms of the trust [then,] and if the pecuniary amount is not distributed to the beneficiary within one year of the date of death of the testator or the date the income interest ends, then the fiduciary shall distribute to the beneficiary interest at the rate prescribed in RSA 336:1, II on any amount that remains undistributed after such one-year anniversary until such pecuniary amount is distributed in full.
374:22 Uniform Principal and Income Act; Trustee Notice. Amend RSA 564-C:5-501(a) to read as follows:
(a) Except as otherwise ordered by a court, so much of the compensation of the trustee and of any person providing investment advisory or custodial services to the trustee, and so much of the expenses for accounting, judicial proceedings, or other matters that involve the income and remainder interests as shall be determined by the trustee.
374:23 Uniform Principal and Income Act; Trustee Notice. Amend RSA 564-C:5-502(a)(1) to read as follows:
(1) [the remaining 1/2 of the disbursements described in RSA 564-C:5-501(1) and (2) except as otherwise ordered by court] Such of the disbursements described in paragraph (a) of RSA 564-C:5-501 as are not charged to income;
374:24 Uniform Principal and Income Act; Trustee Notice. Amend RSA 564-C:6-602(b) to read as follows:
(b) Except as otherwise provided in this chapter, on the effective date of this chapter, the chapter shall apply:
(1) to every inter vivos trust created on or after the effective date of this chapter except as otherwise expressly provided in the terms of the trust or in this chapter;
(2) to any inter vivos trust created before the effective date of this chapter upon the election of the trustee to apply this chapter made in writing and delivered to the beneficiaries then entitled to receive income and principal from the trust;
(3) to any estate [existing] or testamentary trust of a decedent who dies on or after the effective date of this chapter; and
(4) to any other estate or testamentary trust upon the approval by a court of competent jurisdiction, upon either (A) a petition filed by an interested person or (B) the court on its own motion.
374:25 Repeal. RSA 564-A:3-c, relative to the power to convert to unitrusts, is repealed.
374:26 New Section; Uniform Principal and Income Act; Trustee’s Power to Convert to Unitrust. Amend RSA 564-C by inserting after section 1-105 the following new section:
564-C:1-106 Trustee’s Power to Convert to Unitrust.
(a) Unless expressly prohibited by the terms of the trust, a trustee may convert a trust into a unitrust as described in this section if all of the following apply:
(1) The trustee determines that the conversion will enable the trustee to better carry out the intent of the settlor or testator and the purposes of the trust.
(2) The trustee gives written notice of the trustee’s intention to convert the trust into a unitrust and of how the unitrust will operate, including what initial decisions the trustee will make under this section, to all the sui juris beneficiaries who:
(A) are currently eligible to receive income from the trust;
(B) would be eligible, if a power of appointment were not exercised, to receive income from the trust if the interest of all the beneficiaries eligible to receive income under subparagraph (a)(2)(A) were to terminate immediately before the giving of notice; and
(C) would receive, if no powers of appointment were exercised, a distribution of principal if the trust were to terminate immediately prior to the giving of notice.
(3) There is at least one sui juris beneficiary under subparagraph (a)(2)(A) and at least one sui juris beneficiary under subparagraph (a)(2)(B).
(4) No sui juris beneficiary objects to the conversion to a unitrust in a writing delivered to the trustee within 60 days of the mailing of the notice under subparagraph (a)(2).
(b)(1) The trustee may petition the court to approve the conversion to a unitrust if any of the following apply:
(A) A beneficiary timely objects to the conversion to a unitrust.
(B) There are no sui juris beneficiaries under subparagraph (a)(2)(A).
(C) There are no sui juris beneficiaries under subparagraph (a)(2)(C).
(2) A beneficiary may request a trustee to convert to a unitrust. If the trustee does not convert, the beneficiary may petition the court to order the conversion.
(3) The court shall approve the conversion or direct the requested conversion if the court concludes that the conversion will enable the trustee to better carry out the intent of the settlor or testator and the purposes of the trust.
(c) In deciding whether to exercise the power conferred by paragraph (a), a trustee may consider, among other things, all of the following:
(1) the size of the trust;
(2) the nature and estimated duration of the trust;
(3) the liquidity and distribution requirements of the trust;
(4) the needs for regular distributions and preservation and appreciation of capital;
(5) the expected tax consequences of the conversion;
(6) the assets held in the trust; the extent to which they consist of financial assets; interests in closely held enterprises, tangible and intangible personal property or real property; and the extent to which an asset is used by a beneficiary;
(7) to the extent reasonably known to the trustee, the needs of the beneficiaries for present and future distributions authorized or required by the terms of the trust;
(8) whether and to what extent the terms of the trust gives the trustee the power to invade principal or accumulate income or prohibits the trustee from invading principal or accumulating income and the extent to which the trustee has exercised a power from time to time to invade principal or accumulate income; and
(9) the actual and anticipated effect of economic conditions on principal and income and effects of inflation and deflation.
(d) After a trust is converted to a unitrust, all of the following apply:
(1) The trustee shall follow an investment policy seeking a total return for the investments held by the trust, whether the return is to be derived:
(A) from appreciation of capital;
(B) from earnings and distributions from capital; or
(C) from both.
(2) The trustee shall make regular distributions in accordance with the governing instrument construed in accordance with the provisions of this section.
(3) Under the terms of the trust, the term “income” shall mean an annual distribution (the unitrust distribution) equal to not less than 3 percent nor more than 5 percent (the payout percentage) of the net fair market value of the trust’s assets as determined at the end of the calendar year, whether such assets would be considered income or principal under other provisions of this chapter, averaged over the lesser of:
(A) The 3 preceding years; or
(B) The period during which the trust has been in existence.
(e) The trustee may in the trustee’s discretion from time to time determine all of the following:
(1) The effective date of a conversion to a unitrust.
(2) The provisions for prorating a unitrust distribution for a short year in which a beneficiary’s right to payments commences or ceases.
(3) The frequency of unitrust distributions during the year.
(4) The effect of other payments from or contributions to the trust on the trust’s valuation.
(5) How frequently to value nonliquid assets and whether to estimate their value.
(6) Whether to omit from the calculations trust property occupied or possessed by a beneficiary.
(7) Any other matters necessary for the proper functioning of the unitrust.
(f)(1) Expenses which would be deducted from income if the trust were not a unitrust may not be deducted from the unitrust distribution.
(2) Unless otherwise provided by the governing instrument, the unitrust distribution shall be paid from net income, as such term would be determined if the trust were not a unitrust. To the extent net income is insufficient, the unitrust distribution shall be paid from net realized short-term capital gains. To the extent income and net realized short-term capital gains are insufficient, the unitrust distribution shall be paid from net realized long-term capital gains. To the extent income and net realized short-term and long-term capital gains are insufficient, the unitrust distribution shall be paid from the principal of the trust.
(g) The trustee or, if the trustee declines to do so, a beneficiary may petition the court to:
(1) select a payout percentage different than 3 to 5 percent;
(2) provide for a distribution of net income, as would be determined if the trust were not a unitrust, in excess of the unitrust distribution if such distribution is necessary to preserve a tax benefit;
(3) average the valuation of the trust’s net assets over a period other than 3 years; or
(4) Reconvert from a unitrust.
(h) A conversion to a unitrust does not affect a term of the trust directing or authorizing the trustee to distribute principal or authorizing a beneficiary to withdraw a portion or all of the principal.
(i) A trustee may not convert a trust into a unitrust in any of the following circumstances:
(1) If payment of the unitrust distribution would change the amount payable to a beneficiary as a fixed annuity or a fixed fraction of the value of the trust assets.
(2) If the unitrust distribution would be made from any amount which is permanently set aside for charitable purposes under the terms of the trust and for which a federal estate or gift tax deduction has been taken, unless both income and principal are so set aside.
(3) If:
(A) Possessing or exercising the power to convert would cause an individual to be treated as the owner of all or part of the trust for federal income tax purposes; and
(B) The individual would not be treated as the owner if the trustee did not possess the power to convert.
(4) If:
(A) possessing or exercising the power to convert would cause all or part of the trust assets to be subject to federal estate or gift tax with respect to an individual; and
(B) the assets would not be subject to federal estate or gift tax with respect to the individual if the trustee did not possess the power to convert.
(5) If the conversion would result in the disallowance of a federal estate tax or gift tax marital deduction which would be allowed if the trustee did not have the power to convert.
(6) If the trustee is a beneficiary of the trust.
(j)(1) If subparagraph (i)(3), (i)(4), or (i)(5) applies to a trustee and there is more than one trustee, a cotrustee to whom the provision does not apply may convert the trust, unless the exercise of the power by the remaining trustee or trustees is prohibited by the terms of the trust.
(2) If subparagraph (i)(3), (i)(4), or (i)(5) applies to all the trustees, the trustees may petition the court to direct a conversion.
(k) A trustee may permanently release the power conferred by paragraph (a) or may release the power conferred by paragraph (a) for a specified period including a period measured by the life of an individual to convert to a unitrust if any of the following apply:
(1) The trustee is uncertain about whether possessing or exercising the power will cause a result described in subparagraph (i)(3), (i)(4), or (i)(5).
(2) The trustee determines that possessing or exercising the power will or may deprive the trust of a tax benefit or impose a tax burden not described in paragraph (i).
(l) The provisions of RSA 564-B:3-304 shall apply with respect to beneficiaries other than sui juris beneficiaries.
(m) Any trustee or disinterested person who in good faith takes or fails to take any action under this section shall not be liable to any person affected by such action or inaction, regardless of whether such person received written notice as provided in this section and regardless of whether such person was under a legal disability at the time of the delivery of such notice. Such person’s exclusive remedy shall be to obtain an order of the court directing the trustee to convert an income trust to a unitrust, to reconvert from a unitrust to an income trust, or to change the percentage used to calculate the unitrust amount.
(n) This section shall be construed as pertaining to the administration of a trust and shall be available to any trust that is administered in New Hampshire or that is governed by the laws of this section unless:
(1) the terms of the trust reflect an intention that the current beneficiary or beneficiaries are to receive an amount other than a reasonable current return from the trust;
(2) the trust is a trust having a guaranteed annuity interest or fixed percentage interest as described in section 170(f)(2)(B) of the Internal Revenue Code, a pooled income fund (within the meaning of section 642(c)(5) of the Internal Revenue Code), a charitable remainder trust (within the meaning of section 664(d) of the Internal Revenue Code), a qualified subchapter S trust (within the meaning of section 1361(c) of the Internal Revenue Code), a personal residence trust (within the meaning of section 2702(a)(3)(A) of the Internal Revenue Code), or a trust in which one or more settlors retained a qualified interest (within the meaning of section 2702(b) of the Internal Revenue Code);
(3) one or more persons to whom the trustee could distribute income have a power of withdrawal over the trust that is not subject to an ascertainable standard or that can be exercised to discharge a duty of support he or she possesses; or
(4) the terms of the trust expressly prohibit the use of this section by specific reference to the chapter or expressly states the settlor’s intent that net income not be calculated as a unitrust amount.
374:27 New Chapter; Qualified Dispositions in Trust Act. Amend RSA by inserting after chapter 564-C the following new chapter:
CHAPTER 564-D
QUALIFIED DISPOSITIONS IN TRUST ACT
564-D:1 Definitions.
I. “Claim” means a right to payment, whether or not the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.
II. “Creditor” means, with respect to a transferor, a person who has a claim.
III. “Debt” means liability on a claim.
IV. “Disposition,” means a conveyance, assignment or any other transfer of property, including a change in the legal ownership of property occurring upon the substitution of one trustee for another or the addition of one or more new trustees, or the exercise of a power so as to cause a transfer of property to a trustee or trustees. The term “disposition” shall not include the release or relinquishment of an interest in property that theretofore was the subject of a qualified disposition.
V. “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended and as in effect from time to time.
VI. “Property” means real property, personal property, and interests in real or personal property.
VII. “Qualified disposition” means a disposition by or from a transferor to a qualified trustee or qualified trustees, with or without consideration, by means of a trust instrument.
VIII. “Spouse” and “former spouse” means only persons to whom the transferor was married at, or before, the time the qualified disposition is made.
IX. “Transferor” means any person as an owner of property; as a holder of a power of appointment which authorizes the holder to appoint in favor of the holder, the holder’s creditors, the holder’s estate, or the creditors of the holder’s estate; or as a trustee, directly or indirectly, who makes a disposition or causes a disposition to be made.
564-D:2 Trust Instrument Defined.
I. For the purposes of this chapter, a trust instrument is a trust instrument (within the meaning of RSA 564-B:1-103(20)) that appoints a qualified trustee for the property that is the subject of a disposition and meets the following requirements:
(a) The trust instrument expressly incorporates the law of this state to govern the validity, construction, and administration of the trust;
(b) The trust instrument is irrevocable; and
(c) The trust instrument provides that the interest of the transferor or other beneficiary in the trust property or the income therefrom may not be transferred, assigned, pledged, or mortgaged, whether voluntarily or involuntarily, before the qualified trustee or qualified trustees actually distribute the property or income therefrom to the beneficiary, and such provision of the trust instrument shall be deemed to be a restriction on the transfer, assignment, pledge, or mortgage of the transferor’s beneficial interest in the trust that is enforceable under applicable nonbankruptcy law within the meaning of section 541(c)(2) of the Bankruptcy Code (11 U.S.C. section 541(c)(2)) as it exists as of the time such restriction is established.
II. For purposes of subparagraph I(b), a trust instrument shall not be deemed revocable on account of the inclusion of any one or more of the following rights, powers, and interests:
(a) A transferor’s power to veto a distribution from the trust;
(b) A power of appointment, other than a power to appoint to the transferor, the transferor’s creditors, the transferor’s estate, or the creditors of the transferor’s estate, exercisable by will or other written instrument of the transferor effective only upon the transferor’s death;
(c) The transferor’s potential or actual receipt of income, including rights to such income retained in the trust instrument;
(d) The transferor’s potential or actual receipt of income or principal from a charitable remainder unitrust or charitable remainder annuity trust (each within the meaning of section 664(d) of the Internal Revenue Code) and the transferor’s right, at any time, and from time to time, to release, in writing delivered to the qualified trustee, all or any part of the transferor’s retained interest in such trust, in favor of one or more charitable organizations that have a remainder interest in such trust at the time of such release;
(e) The transferor’s receipt each year of a percentage, not to exceed 5 percent, specified in the trust instrument of the initial value of the trust assets or their value determined from time to time pursuant to the trust instrument;
(f) The transferor’s potential or actual receipt or use of principal if such potential or actual receipt or use of principal would be the result of a qualified trustee or qualified trustees, including a qualified trustee or qualified trustees acting at the direction of a trust advisor described in RSA 564-D:4, acting either in such qualified trustee’s or qualified trustees’ sole discretion or pursuant to an ascertainable standard contained in the trust instrument;
(g) The transferor’s right to remove a trustee or trust advisor and to appoint a new trustee or trust advisor, other than a person who is a related or subordinate party with respect to the transferor (within the meaning of section 672(c) of the Internal Revenue Code);
(h) The transferor’s potential or actual use of real property held under a personal residence trust (within the meaning of such term as described in section 2702(c) of the Internal Revenue Code);
(i) The transferor’s potential or actual receipt or use of a qualified annuity interest (within the meaning of such term described in section 2702 of the Internal Revenue Code); and
(j) The ability, whether pursuant to discretion or direction, of a qualified trustee to pay, after the transferor’s death, all or any part of the transferor’s debts outstanding at the time of the transferor’s death, the expenses of administering the transferor’s estate, or any estate inheritance tax imposed on or with respect to the transferor’s estate.
III. For purposes of subparagraph I(b), a trust instrument shall not be deemed revocable on account of the transferor’s potential or actual receipt of income or principal to pay, in whole or in part, income taxes due on trust income if such receipt of income or principal is pursuant to a provision in the trust instrument that expressly provides for the payment of such taxes and such receipt of income or principal results from (i) the qualified trustee’s acting in such qualified trustee’s discretion or (ii) the qualified trustee acting at the direction of a trust advisor who is acting in such trust advisor’s discretion. Any distribution to pay income taxes made under discretion included in a trust instrument pursuant to subparagraphs II(c), (f), and (i) may be made by direct payment to the taxing authorities.
IV. A disposition by a trustee that is not a qualified trustee to a trustee that is a qualified trustee may not be treated as other than a qualified disposition solely because the trust instrument fails to meet the requirements of subparagraph I(a).
564-D:3 Qualified Trustee Defined. For the purposes of this chapter, a qualified trustee is any person, other than the transferor, who in the case of a natural person, is a resident of this state or who, in all other cases, is a state or federally chartered bank or trust company having a place of business in New Hampshire, is authorized to engage in a trust business in this state, and maintains or arranges for custody in this state of some or all of the property that is the subject of the qualified disposition, maintains records in this state for the trust on an exclusive or nonexclusive basis, prepares or arranges for the preparation in this state of fiduciary income tax returns for the trust, or otherwise materially participates in this state in the administration of the trust.
564-D:4 Persons Not Eligible to be Considered a Qualified Trustee; Appointment of Trust Advisors. Neither the transferor nor any other natural person who is a nonresident of this state nor an entity that is not authorized by the law of this state to act as a trustee or whose activities are not subject to supervision as provided in RSA 564-D:3 may be considered a qualified trustee. However, nothing in this chapter precludes a transferor from appointing one or more trust advisors (whether or not such trust advisors would meet the requirements imposed by RSA 564-D:3), including, but not limited to:
I. Trust advisors who have authority under the terms of the trust instrument to remove and appoint qualified trustees or trust advisors; and
II. Trust advisors who have authority under the terms of the trust instrument to direct, consent to, or disapprove distribution from the trust. For purposes of this section, the term trust advisor includes a trust advisor as described in RSA 564-B:1-103(27), a trust protector as described in RSA 564-B:1-103(28), or any other person who, in addition to a qualified trustee, holds one or more trust powers.
564-D:5 Transferor May Serve as Trust Advisor. Any individual, including the transferor of the qualified disposition, may serve as a trust advisor as described in RSA 564-D:4. However, if such transferor serves as the trust advisor, his or her rights and powers as a trust advisor shall be limited to the right to disapprove distributions from the trust and the right to consent to a trustee’s action or inaction relating to the investment of trust assets.
564-D:6 Successor Qualified Trustee. If a qualified trustee of a trust ceases to meet the requirements of RSA 564-D:3, and there remains no trustee that meets such requirements, such formerly qualified trustee shall be deemed to have resigned as of the time of such cessation, and thereupon the successor qualified trustee provided for in the trust instrument shall become a qualified trustee of the trust, effective upon such successor qualified trustee’s acceptance of the office of trustee, or, if such named successor qualified trustee is unable or unwilling to accept such office, or if the trust instrument does not provide for any successor qualified trustee, the probate court shall, upon application of any interested party, appoint a successor qualified trustee.
564-D:7 Disposition to More Than One Trustee. In the case of a disposition to more than one trustee, a disposition that is otherwise a qualified disposition may not be treated as other than a qualified disposition solely because not all of the trustees are qualified trustees.
564-D:8 Transferor’s Powers and Rights. A qualified disposition is subject to RSA 564-D:9 to RSA 564-D:14, inclusive, notwithstanding a transferor’s retention of any or all of the powers and rights described in RSA 564-D:2, II or the transferor’s service as trust advisor pursuant to RSA 564-D:5. The transferor has only such powers and rights as are conferred by the trust instrument. Except as permitted by RSA 564-D:2 and RSA 564-D:5, a transferor has no rights or authority with respect to the property that is the subject of a qualified disposition or the income therefrom, and any agreement or understanding purporting to grant or permit the retention of any greater rights or authority is void.
564-D:9 Restrictions on Attachment or Other Provisional Remedy Against Property. Notwithstanding any other provision of law, no action of any kind, including an action to enforce a judgment entered by a court or other body having adjudicative authority, may be brought at law or in equity for an attachment or other provisional remedy against property that is the subject of a qualified disposition or for avoidance of a qualified disposition unless such action is brought pursuant to the provisions of RSA 545-A, the Uniform Fraudulent Transfer Act, or RSA 564-D:15.
564-D:10 Extinguishment of Creditor’s Claim. A creditor’s claim under RSA 564-D:9 is extinguished unless:
I. The creditor’s claim arose before the qualified disposition was made and the action is brought within the limitations period of RSA 545-A, the Uniform Fraudulent Transfer Act, in effect on the date of the qualified disposition; or
II. Notwithstanding the provisions of RSA 545-A, the Uniform Fraudulent Transfer Act, the creditor’s claim arose on or after the date of the qualified disposition, and the action is brought within 4 years after such date.
564-D:11 Qualified Disposition Made by Transferor Who is Trustee. A qualified disposition that is made by means of a disposition by a transferor who is a trustee is deemed to have been made as of the time, whether before, on, or after the effective date of this chapter, the property that is the subject of the qualified disposition was originally transferred to the transferor (or any predecessor trustee), in a form that meets the requirements of RSA 564-D:2, I(b), I(c), and II.
564-D:12 Creditor’s Rights With Respect to a Qualified Disposition. Notwithstanding any law to the contrary, a creditor, including a creditor whose claim arose before, at the time of or after a qualified disposition, or any other person has only such rights with respect to a qualified disposition as are provided in RSA 564-D:9 to RSA 564-D:16, inclusive, and no such creditor nor any other person has any claim or cause of action against the trustee, or an advisor described in RSA 564-D:4, of a trust that is the subject of a qualified disposition, or against any person involved in the counseling, drafting, preparation, execution, or funding of a trust that is the subject of a qualified disposition.
564-D:13 Actions Against Trustee of Trust that is the Subject of a Qualified Disposition Barred. Notwithstanding any other provision of law, no action of any kind, including an action to enforce a judgment entered by a court or other body having adjudicative authority, may be brought at law or in equity by a creditor against the trustee, or advisor described in RSA 564-D:4, of a trust that is the subject of a qualified disposition, or against any person involved in the counseling, drafting, preparation, execution, or funding of a trust that is the subject of a qualified disposition, if, as of the date such action is brought, an action by a creditor with respect to such qualified disposition would be barred under RSA 564-D:9 to RSA 564-D:12, inclusive.
564-D:14 More Than One Qualified Disposition is Made by Means of Same Trust Instrument. If more than one qualified disposition is made by means of the same trust instrument:
I. The making of a subsequent qualified disposition shall be disregarded in determining whether a creditor’s claim with respect to a prior qualified disposition is extinguished as provided in RSA 564-D:10;
II. With respect to each subsequent qualified disposition, the limitations period with respect to actions brought under RSA 545-A, the Uniform Fraudulent Transfer Act, shall commence on the date such qualified disposition is made; and
III. Any distribution to a beneficiary is deemed to have been made from the latest such qualified disposition.
564-D:15 Persons Exempt From Application of Qualified Disposition Provisions.
I. Notwithstanding the provisions of RSA 564-D:9 to RSA 564-D:14, inclusive, this chapter does not apply in any respect:
(a) To any person to whom the transferor is indebted on account of an antenuptial agreement or an agreement or order of court for the payment of support or alimony in favor of such transferor’s spouse, former spouse, or children, or for a division or distribution of property in favor of such transferor’s spouse or former spouse, but only to the extent of such debt; or
(b) To any person who suffers death, personal injury, or property damage on or before the date of a qualified disposition by a transferor, which death, personal injury, or property damage is at any time determined to have been caused in whole or in part by the act or omission of either such transferor or by another person for whom such transferor is or was vicariously liable.
II. Paragraph I shall not apply to any claim for forced heirship or legitime or the elective share of the transferor’s surviving spouse, unless the transferor made the qualified disposition for the purpose of defeating the surviving spouse’s elective share rights.
564-D:16 Avoidance of Qualified Disposition. A qualified disposition is avoided only to the extent necessary to satisfy the transferor’s debt to the creditor at whose instance the disposition had been avoided, together with such costs, including attorney’s fees, as the court may allow. If any qualified disposition is avoided as provided in this section, then:
I. If the court is satisfied that a qualified trustee has not acted in bad faith in accepting or administering the property that is the subject of the qualified disposition:
(a) Such qualified trustee has a first and paramount lien against the property that is the subject of the qualified disposition in an amount equal to the entire cost, including attorney’s fees, properly incurred by such qualified trustee in the defense of the action or proceedings to avoid the qualified disposition. It is presumed that such qualified trustee did not act in bad faith merely by accepting such property; and
(b) The qualified disposition is avoided subject to the proper fees, costs, preexisting rights, claims, and interests of such qualified trustee, and of any predecessor qualified trustee that has not acted in bad faith; and
II. If the court is satisfied that a beneficiary of a trust has not acted in bad faith, the avoidance of the qualified disposition is subject to the right of such beneficiary to retain any distribution made upon the exercise of a trust power or discretion vested in the qualified trustee or qualified trustees of such trust, which power or discretion was properly exercised prior to the creditor’s commencement of an action to avoid the qualified disposition. It is presumed that the beneficiary, including a beneficiary who is also a transferor of the trust, did not act in bad faith merely by creating the trust or by accepting a distribution made in accordance with the terms of the trust.
564-D:17 Applicability. This chapter shall apply to qualified dispositions and dispositions by transferors who are trustees made after January 1, 2009.
564-D:18 Short Title. This chapter shall be known and may be referred to as the “Qualified Dispositions in Trust Act.”
374:28 Uniform Trust Code; Representation; Reference Change. Amend RSA 564-B:3-304 to read as follows:
564-B:3-304 Representation by Person Having Substantially Identical Interest. Unless otherwise represented, a minor, incapacitated, or unborn individual, or a person whose identity or location is unknown and not reasonably ascertainable, may be represented by and bound by another having a substantially identical interest with respect to the particular question or dispute, but only to the extent there is no conflict of interest between the representative and the person represented. Nothing in this section shall expand or limit the virtual representation of sui juris beneficiaries for purposes of RSA [564-A:3-c] 564-C:1-106.
374:29 Uniform Trust Code; Duties and Powers of Trustee; Reference Change. Amend RSA 564-B:8-816(a)(29) to read as follows:
(29) convert a trust into a unitrust as provided in RSA [564-A:3-c] 564-C:1-106.
374:30 Uniform Principal and Income Act; Definitions; Reference Change. Amend RSA 564-C:1-102(8) to read as follows:
(8) “Net income” means the total receipts allocated to income during an accounting period minus the disbursements made from income during the period, plus or minus transfers under this chapter to or from income during the period. During any period in which the trust is being administered as a unitrust, either pursuant to the powers conferred by RSA [564-A:3-c] 564-C:1-106 or pursuant to the terms of the will or the trust, “net income” means the unitrust amount, if the unitrust amount is no less than 2 percent and no more than 8 percent of the fair market value of the trust assets whether determined annually or averaged on a multiple year basis.
374:31 Uniform Principal and Income Act; Fiduciary Duties; Reference Change. Amend RSA 564-C:1-103(b) to read as follows:
(b) In exercising the power to adjust under RSA 564-C:1-104(a), the power to convert into a unitrust or reconvert or change the unitrust payout percentage pursuant to RSA [564-A:3-c] 564-C:1-106 or a discretionary power of administration regarding a matter within the scope of this chapter, whether granted by the terms of a trust, a will, this chapter or other applicable law, a fiduciary shall administer a trust or estate impartially, based on what is fair and reasonable to all of the beneficiaries, except to the extent that the terms of the trust or the will express an intention that the fiduciary shall or may favor one or more of the beneficiaries. The exercise of discretion by a fiduciary in accordance with this chapter is presumed to be fair and reasonable to all of the beneficiaries.
374:32 Uniform Principal and Income Act; Trustee’s Power to Adjust; Reference Change. Amend RSA 564-C:1-104(c)(8) to read as follows:
(8) if the trust is being administered as a unitrust pursuant to the trustee’s exercise of the power to convert to a unitrust provided in RSA [564-A:3-c] 564-C:1-106 or pursuant to the terms of the will or the terms of the trust.
374:33 Effective Date. This act shall take effect 60 days after its passage.
Approved: July 11, 2008
Effective Date: September 9, 2008