TRUSTS
OKLAHOMA 2024 SESSION LAW SERVICE Fifty-Ninth Legislature, 2024 Second Regular Session
2024 Okla. Sess. Law Serv. Ch. 369 (H.B. 3962) (WEST)
OKLAHOMA 2024 SESSION LAW SERVICE
Fifty-Ninth Legislature, 2024 Second Regular Session
CHAPTER 369
H.B. No. 3962
TRUSTS
An Act relating to trusts; creating the Oklahoma Trust Reform Act of 2024; providing short title; creating the Oklahoma Uniform Directed Trust Act of 2024; providing short title; defining terms; providing for applicability; providing for principal place of administration; providing for when common law and principals of equity control; providing for exclusions; providing the powers of a trust director; providing limitations on trust director; providing duties and liabilities of a trust director; providing duties and liabilities of directed trustees; providing a duty to provide certain information to a trust director or trustee; providing that there is no duty to monitor, inform, or advise; providing application to cotrustee; providing limitation of action against a trust director; providing defenses for a suit against a trust director; providing jurisdiction over a trust director; providing that unless the term of a trust provides otherwise, the rules applicable to a trustee shall apply to a trust director in certain matters; providing relation to electronic signature laws; creating the Oklahoma Qualified Dispositions into Trust Act; providing short title; defining terms; defining trust instrument; defining qualified person; providing requirements to be considered a qualified person; providing for persons and entities not to be considered a qualified person; providing for the appointment, removal, or replacement of cotrustee, trust advisor, or trust protector; providing who may serve as an investment trust advisor; providing that a transferor may not serve as a fiduciary; providing for successor qualified person; providing for disposition to more than one trustee; providing that for dispositions to more than one trustee, a qualified disposition may not be treated as other than a qualified disposition solely because not all of the trustees are qualified persons; providing powers and rights of a transferor and its effect on a qualified disposition; limiting actions of creditors to transfers with the intent to defraud; providing requirements for bringing claims with respect to qualified disposition of a transferor's assets; providing for disposition by transferor who is a trustee; prohibiting certain actions against a trustee, advisor, or trust preparer; prohibiting certain action against trustee, advisor, or preparer of trust; providing court jurisdiction; providing for the collection of attorney fees and costs in certain circumstances; providing for when multiple qualified dispositions in same trust instrument; providing certain exceptions to application of this act under certain events and circumstances; providing for avoidance of a qualified disposition; providing for discretionary interest; providing that the rules against perpetuities shall not apply to trusts; providing intent to allow trust to have perpetual durations; providing for nonjudicial settlement agreements for trusts; providing when nonjudicial settlement agreements are valid; clarifying what matters may be solved by a nonjudicial settlement agreement; providing for court approval of nonjudicial settlement agreements; amending 60 O.S. 2021, Sections 175.24, 175.47, and 175.57, which relate to powers of trustee, power of alienation, and breach of trust; authorizing payment of certain costs and fees by trustee; providing for creation of attorney-client relationship under certain circumstances; providing exception; providing for confidentiality of certain communications; authorizing perpetual duration of certain trusts; defining term; establishing requirements for approval of certain accountings; providing limitation on certain action; updating statutory language; making language gender neutral; providing for noncodification; providing for codification; and providing an effective date.
SUBJECT: Trusts
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. NEW LAW A new section of law not to be codified in the Oklahoma Statutes reads as follows:
This act shall be known and may be cited as the “Oklahoma Trust Reform Act of 2024”.
SECTION 2. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1201 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1201 >>
Sections 2 through 18 of this act shall be known and may be cited as the “Oklahoma Uniform Directed Trust Act of 2024”.
SECTION 3. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1202 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1202 >>
As used in the Oklahoma Uniform Directed Trust Act of 2024:
1. “Breach of trust” means a violation by a trust director or trustee of a duty imposed on that director or trustee by the terms of the trust, this act, or laws of this state other than this act pertaining to trusts;
2. “Directed trust” means a trust for which the terms of the trust grant a power of direction;
3. “Directed trustee” means a trustee that is subject to a trust director's power of direction;
4. “Person” means an individual, estate, business or nonprofit entity, public corporation, ‎government or governmental subdivision, agency, or instrumentality, or other legal entity;
5. “Power of direction” means a power over a trust granted to a person by the terms of the trust to the extent the power is exercisable while the person is not serving as a trustee. The term includes a power over the investment, management, or distribution of trust property or other matters of trust administration. The term excludes the powers described in subsection B of Section 6 of this act;
6. “Settlor” means a person, including a testator, that creates or contributes property to a trust. If more than one person creates or contributes property to a trust, each person is a settlor of the portion of the trust property attributable to that person's contribution except to the extent another person has the power to revoke or withdraw that portion;
7. “State” means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any other territory or possession subject to the jurisdiction of the United ‎States;
8. “Terms of a trust” means:
a. except as otherwise provided in subparagraph b of this paragraph, the manifestation of the settlor's intent regarding a trust's provisions as:
(1) expressed in the trust instrument, or
(2) established by other evidence that would be admissible in a judicial proceeding, or
b. the trust's provisions as established, determined, or amended by:
(1) a trustee or trust director in accordance with applicable law, or
(2) a court order;
9. “Trust director” means a person that is granted a power of direction by the terms of a trust to the extent the power is exercisable while the person is not serving as a trustee. The person is a trust director whether or not the terms of the trust refer to the person as a trust director and whether or not the person is a beneficiary or settlor of the trust; and
10. “Trustee” means an original, additional, and successor trustee, and a cotrustee.
SECTION 4. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1203 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1203 >>
A. This act applies to a trust, whenever created, that has its principal place of administration in this state and is subject to the following rules:
1. If the trust was created before the effective date of this act, this act applies only to a decision or action occurring on or after the effective date of this act; and
2. If the principal place of administration of the trust is changed to this state on or after the effective date of this act, this act applies only to a decision or action occurring on or after the date of the change.
B. Without precluding other means to establish a sufficient connection with the designated jurisdiction in a directed trust, the terms of the trust which designate the principal place of ‎administration of the trust are valid and controlling if:
1. A trustee's principal place of business is located in or a trustee is a resident of the designated jurisdiction;
2. A trust director's principal place of business is located in or a trust director is a resident of the ;designated jurisdiction; or
3. All or part of the administration occurs in the designated jurisdiction.
SECTION 5. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1204 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1204 >>
The common law and principles of equity supplement this act, except to the extent modified by this act or by other laws of this state other than this act.
SECTION 6. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1205 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1205 >>
A. In this section, “power of appointment” means a power that enables a person acting in a nonfiduciary capacity to designate a recipient of an ownership interest in or another power of appointment over trust property.
B. This act does not apply to a:
1. Power of appointment;
2. Power to appoint or remove a trustee or trust director;
3. Power of a settlor over a trust to the extent the settlor has a power to revoke the trust;
4. Power of a beneficiary over a trust to the extent the exercise or nonexercise of the power affects the beneficial interest of:
a. the beneficiary, or
b. another beneficiary represented by the beneficiary with respect to the exercise or nonexercise of the power; or
5. Power over a trust, if:
a. the terms of the trust provide that the power is held in a nonfiduciary capacity, and
b. the power must be held in a nonfiduciary capacity to achieve the settlor's tax objectives under the United States Internal Revenue Code of 1986, as amended, and regulations issued ‎thereunder, as amended.
C. Unless the terms of a trust provide otherwise, a power granted to a person to designate a recipient of an ownership interest in, or power of appointment over trust property which is exercisable while the person is not serving as a trustee is a power of appointment and not a power of direction.
SECTION 7. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1206 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1206 >>
A. Subject to Section 8 of this act, the terms of a trust may grant a power of direction to a trust director.
B. Unless the terms of a trust provide otherwise:
1. A trust director may exercise any further power appropriate to the exercise or nonexercise of a power of direction granted to the director under subsection A of this section; and
2. Trust directors with joint powers must act by majority decision.
SECTION 8. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1207 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1207 >>
A trust director is subject to the same rules as a trustee in a like position and under similar circumstances in the exercise or nonexercise of a power of direction or further power under paragraph 1 of subsection B of Section 7 of this act regarding:
1. A payback provision in the terms of a trust necessary to comply with the reimbursement requirements of Medicaid law in Section 1917 of the Social Security Act, 42 U.S.C., Section 1396p(d)(4)(A), as amended, and regulations issued thereunder, as amended; and
2. A charitable interest in the trust, including providing notice regarding the interest to the Attorney General.
SECTION 9. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1208 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1208 >>
A. Subject to subsection B of this section, with respect to a power of direction or further power under paragraph 1 of subsection B of Section 7 of this act:
1. A trust director has the same fiduciary duty and liability in the exercise or nonexercise of the power:
a. if the power is held individually, as a sole trustee in a like position and under similar circumstances, or
b. if the power is held jointly with a trustee or another trust director, as a cotrustee in a like position and under similar circumstances; and
2. The terms of the trust may vary the director's duty or liability to the same extent the terms of the trust could vary the duty or liability of a trustee in a like position and under similar circumstances.
B. Unless the terms of a trust provide otherwise, if a trust director is licensed, certified, or otherwise authorized or permitted by law other than this act to provide health care in the ordinary course of the director's business or practice of a profession, to the extent the director acts in that capacity, the director has no duty or liability under this act.
C. The terms of a trust may impose a duty or liability on a trust director in addition to the duties and liabilities under this section.
SECTION 10. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1209 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1209 >>
A. Subject to subsection B of this section, a directed trustee shall take reasonable action to comply with a trust director's exercise or nonexercise of a power of direction or further power under paragraph 1 of subsection B of Section 7 of this act, and the trustee is not liable for the action.
B. A directed trustee must not comply with a trust director's exercise or nonexercise of a power of direction or further power under paragraph 1 of subsection B of Section 7 of this act to the extent that by complying, the trustee would engage in willful misconduct.
C. An exercise of a power of direction under which a trust director may release a trustee or another trust director from liability for breach of trust is not effective if:
1. The breach involved the trustee's or other director's willful misconduct;
2. The release was induced by improper conduct of the trustee or other director in procuring the release; or
3. At the time of the release, the trust director did not know the material facts relating to the breach.
D. A directed trustee that has reasonable doubt about its duty under this section may petition the district court for instructions.
E. The terms of a trust may impose a duty or liability on a directed trustee in addition to the duties ;and liabilities under this section.
SECTION 11. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1210 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1210 >>
A. Subject to Section 12 of this act, a trustee shall provide information to a trust director to the extent the information is reasonably related both to:
1. The powers or duties of the trustee; and
2. The powers or duties of the director.
B. Subject to Section 12 of this act, a trust director shall provide information to a trustee or another trust director to the extent the information is reasonably related both to:
1. The powers or duties of the director; and
2. The powers or duties of the trustee or other director.
C. A trustee that acts in reliance on information provided by a trust director is not liable for a breach of trust to the extent the breach resulted from the reliance, unless by so acting, the trustee engages in willful misconduct.
D. A trust director that acts in reliance on information provided by a trustee or another trust director is not liable for a breach of trust to the extent the breach resulted from the reliance, unless by so acting, the trust director engages in willful misconduct.
SECTION 12. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1211 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1211 >>
A. Unless the terms of a trust provide otherwise:
1. A trustee does not have a duty to:
a. monitor a trust director, or
b. inform or give advice to a settlor, beneficiary, trustee, or trust director concerning an instance in which the trustee might have acted differently than the director; and
2. By taking an action described in paragraph 1 of this subsection, a trustee does not assume the duty excluded by paragraph 1 of this subsection.
B. Unless the terms of a trust provide otherwise
1. A trust director does not have a duty to:
a. monitor a trustee or another trust director, or
b. inform or give advice to a settlor, beneficiary, trustee, or another trust director concerning an instance in which the director might have acted differently than a trustee or another trust director; and
2. By taking an action described in paragraph 1 of this subsection, a trust director does not assume the duty excluded by paragraph 1 of this subsection.
SECTION 13. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1212 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1212 >>
The terms of a trust may relieve a cotrustee from duty and liability with respect to another cotrustee's exercise or nonexercise of a power of the other cotrustee to the same extent that in a directed trust a directed trustee is relieved from duty and liability with respect to a trust director's power of direction under Sections 10 through 12 of this act.
SECTION 14. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1213 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1213 >>
A. An action against a trust director for breach of trust must be commenced within the same limitation period for an action for breach of trust against a trustee in a like position and under similar circumstances.
B. A report or accounting has the same effect on the limitation period for an action against a trust director for breach of trust that the report or accounting would have in an action for breach of trust against a trustee in a like position and under similar circumstances.
SECTION 15. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1214 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1214 >>
In an action against a trust director for breach of trust, the director may assert the same defenses a trustee in a like position and under similar circumstances could assert in an action for breach of trust against the trustee.
SECTION 16. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1215 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1215 >>
A. By accepting appointment as a trust director of a trust subject to this act, the director submits to personal jurisdiction of the courts of this state regarding any matter related to a power or duty of the director.
B. This section does not preclude other methods of obtaining jurisdiction over a trust director.
SECTION 17. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1216 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1216 >>
Unless the terms of a trust provide otherwise, the rules applicable to a trustee apply to a trust director regarding the following matters:
1. Acceptance;
2. Giving of bond to secure performance;
3. Reasonable compensation;
4. Resignation;
5. Removal; and
6. Vacancy and appointment of a successor.
SECTION 18. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1217 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1217 >>
This act modifies, limits, or supersedes the Electronic Signatures in Global and National Commerce Act, 15 U.S.C., Section 7001 et seq., but does not modify, limit, or supersede Section 101(c) of that act, 15 U.S.C., Section 7001(c), or authorize electronic delivery of any of the notices described in Section 103(b) of that act, 15 U.S.C., Section 7003(b).
SECTION 19. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1301 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1301 >>
Sections 19 through 37 of this act shall be known and may be cited as the “Oklahoma Qualified Dispositions into Trust Act”.
SECTION 20. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1302 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1302 >>
A. As used in the Oklahoma Qualified Dispositions into Trust Act:
1. “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;
2. “Creditor” means, with respect to a transferor, a person who has a claim;
3. “Debt” means liability on a claim;
4. “Disposition” means a transfer, conveyance, or assignment 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 does not include the release or relinquishment of an interest in property that theretofore was the subject of a qualified disposition;
5. “Property” means real property, personal property, and interests in real or personal property;
6. “Qualified disposition” means a disposition by or from a transferor to a qualified person or qualified persons, without consideration or for less than fair market value, by means of a trust instrument;
7. “Spouse” and “former spouse” mean only persons to whom the transferor was married at, or before, the time the qualified disposition was made; and
8. “Transferor” means any person as an owner of property or 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.
B. The terms transferor and beneficiary may be any individual, corporation, partnership, limited liability company, association, joint stock company, business trust, trust, unincorporated organization, or two or more persons having a joint or common interest.
SECTION 21. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1303 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1303 >>
A. For the purposes of the Oklahoma Qualified Dispositions into Trust Act, a trust instrument is an instrument appointing a qualified person or qualified persons for the property that is the subject of a disposition, which instrument:
1. Expressly incorporates the law of this state to govern the validity, construction, and administration of the trust;
2. Is irrevocable, but a trust instrument may not be deemed revocable on account of its inclusion of one or more of the following:
a. a transferor's power to veto a distribution from the trust,
b. an inter vivos power of appointment, other than an inter vivos power exercisable solely by the transferor in favor of the transferor, the transferor's creditors, the transferor's estate, or the creditors of the transferor's estate,
c. a testamentary power of appointment,
d. the transferor's potential or actual receipt of income, including rights to such income retained in the trust instrument,
e. the transferor's potential or actual receipt of income or principal from a charitable remainder unitrust or charitable remainder annuity trust as such terms are defined in Section 664 of the Internal Revenue Code of 1986, 26 U.S.C., Section 664, as of January 1, 2009,
f. the transferor's receipt each year of a percentage of the value as determined from time to time pursuant to the trust instrument, but not exceeding the amount that may be defined as income under Section 643(b) of the Internal Revenue Code of 1986, 26 U.S.C., Section 643(b), as of January 1, 2009,
g. the transferor's receipt each year of a percentage of the value as determined from time to time pursuant to the trust instrument, but not exceeding the amount that may be defined as income under Section 664 of the Internal Revenue Code of 1986, 26 U.S.C., Section 643(b), as of January 1, 2009,
h. the transferor's potential or actual receipt or use of principal if the potential or actual receipt or use of principal would be the result of a qualified person, including a qualified person acting at the direction of a trust advisor described in this act, acting either in the qualified person's sole discretion or pursuant to an ascertainable standard contained in the trust instrument,
i. the transferor's right to remove a trustee, protector, or trust advisor and to appoint a new trustee, protector, or trust advisor, other than a trustee who is a related or subordinate party with respect to the transferor within the meaning of Section 672(c) of the Internal Revenue Code of 1986, 26 U.S.C., Section 672(c), as of January 1, 2009,
j. the transferor's potential or actual use of real property held under a qualified personal residence trust within the meaning of such term as described in the regulations promulgated under Section 2702(c) of the Internal Revenue Code of 1986, 26 U.S.C., Section 2702(c), as of January 1, 2009,
k. a pour-back provision that pours back to the transferor's will or revocable trust all or part of the trust assets,
l. the transferor's potential or actual receipt of income or principal to pay, in whole or in part, income taxes due on income of the trust if the potential or actual receipt of income or principal is pursuant to a provision in the trust instrument that expressly provides for the payment of the taxes and if the potential or actual receipt of income or principal would be the result of a qualified person's acting in the qualified person's discretion or pursuant to a mandatory direction in the trust instrument or acting at the direction of a trust advisor described in Section 24 of this act,
m. the ability, whether pursuant to discretion, direction, or the grantor's exercise of a testamentary power of appointment, of a qualified person to pay, after the death of the transferor, all or any part of the debts of the transferor outstanding at the time of the transferor's death, the expenses of administering the transferor's estate, or any estate or inheritance tax imposed on or with respect to the transferor's estate,
n. a transferor's service as a noncontrolling member of a distribution committee that functions as a distribution trust advisor, which is a fiduciary given authority by the instrument to exercise all or any portions of the powers and discretions over any discretionary distributions of income or principal, or
o. a transferor's enjoyment of a power to reacquire the trust corpus by substituting other property of an equivalent value within the meaning of Section 675(4)(C) of the Internal Revenue Code of 1986, 26 U.S.C., Section 675(4)(C), as of January 1, 2021, and
3. Provides that the interest of the transferor or other beneficiary in the trust property or the income from the trust property may not be transferred, assigned, pledged, or mortgaged, whether voluntarily or involuntarily, before the qualified person distributes the property or income from the property to the beneficiary, and such provision of the trust instrument constitutes a restriction on the transfer 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 of January 1, 2009.
B. A disposition by a trustee that is not a qualified person to a trustee that is a qualified person may not be treated as other than a qualified disposition solely because the trust instrument fails to meet the requirements of paragraph 1 of subsection A of this section.
SECTION 22. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1304 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1304 >>
A. For the purposes of the Oklahoma Qualified Dispositions into Trust Act, a qualified person is:
1. An individual who, except for brief intervals, military service, attendance at an educational or training institution, or for absences for good cause shown, resides in this state, whose true and permanent home is in this state, who does not have a present intention of moving from this state, and who has the intention of returning to this state when away;
2. A trust company that is organized under state law or under federal law and that has its principal place of business in this state; or
3. A bank or savings association that possesses and exercises trust powers, has its principal place of business in this state, and the deposits of which are insured by the Federal Deposit Insurance Corporation.
B. A qualified person must meet the requirements as provided in Section 23 of this act.
SECTION 23. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1305 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1305 >>
A. Except as expressly provided by the terms of a governing instrument or by a court order, a general law or a state jurisdiction provision stating that the laws of this state govern is valid, effective, and conclusive for the trust if all of the following are true:
1. Some or all of the trust assets are deposited in this state or physical evidence of such assets is held in this state and the trust is being administered by a qualified person. “Deposited in this state” includes being held in a checking account, time deposit, certificate of deposit, brokerage account, trust company fiduciary account, or other similar account or deposit that is located in this state, including Oklahoma investments;
2. A trustee is a qualified person who is designated as a trustee under the governing instrument or a successor trusteeship, or designated by a court having jurisdiction over the trust; and
3. The administration, including physically maintaining trust records in this state, and preparing or arranging for the preparation of, on an exclusive basis or a nonexclusive basis, an income tax return that must be filed by the trust, occurs wholly or partly in this state.
B. The courts of this state have jurisdiction over a trust created in a foreign jurisdiction if the administration of the trust meets the criteria of paragraphs 1 through 3 of subsection A of this section.
C. Nothing in this section may be construed to be the exclusive means of providing a valid effective and conclusive state jurisdiction provision.
SECTION 24. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1306 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1306 >>
Neither the transferor nor any other natural person who is a nonresident of this state nor an entity that is not authorized by the laws of this state to act as a trustee or whose activities are not subject to supervision as provided in Section 22 of this act may be considered a qualified person. However, nothing in this act precludes a transferor from appointing, removing, or replacing one or more cotrustees, trust advisors, or trust protectors, regardless of whether or not such trust advisor or trust protector is a fiduciary.
SECTION 25. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1307 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1307 >>
Any person may serve as an investment trust advisor, notwithstanding that the person is the transferor of the qualified disposition, but a transferor may not otherwise serve as a fiduciary under a trust instrument except as stated in paragraph 2 of subsection A of Section 21 of this act. While serving as an investment trust advisor of the trust, the person may have all powers authorized by statute or by the trust instrument, including the power to vote by proxy any stock owned by the trust.
SECTION 26. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1308 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1308 >>
If a qualified person of a trust ceases to meet the requirements of Section 22 of this act and there remains no trustee that meets such requirements, such qualified person shall be deemed to have resigned as of the time of such cessation, and thereupon the successor qualified person provided for in the trust instrument shall become a qualified person of the trust, or in the absence of any successor qualified person provided for in the trust instrument, the circuit court shall, upon application of any interested party, appoint a successor qualified person.
SECTION 27. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1309 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1309 >>
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 persons.
SECTION 28. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1310 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1310 >>
A qualified disposition is subject to Sections 29 through 34 of this act, notwithstanding a transferor's retention of any or all of the powers and rights described in paragraph 2 of subsection A of Section 21 of this act and the transferor's service as a trust advisor pursuant to Section 25 of this act. The transferor has only such powers and rights as are conferred by the trust instrument. Except as permitted by Sections 21 and 25 of this act, 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.
SECTION 29. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1311 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1311 >>
Notwithstanding any other provision of law, except as set forth in Section 30 of this act, 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 the settlor's transfer of property was made with the intent to defraud that specific creditor. This protection, however, only applies to qualified dispositions up to, but not exceeding, Ten Million Dollars ($10,000,000.00).
SECTION 30. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1312 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1312 >>
A. A cause of action or claim for relief with respect to a qualified disposition of a transferor's assets under Section 29 of this act is extinguished unless the action under Section 29 of this act may only be brought by a creditor of the transferor who meets one of the following requirements:
1. Is a creditor of the settlor before the settlor's assets are transferred to the trust; or
2. Becomes a creditor subsequent to the transfer into trust, and the asset was listed on a financial statement provided to a bank or financial institution by or on behalf of the transferor for the purpose of obtaining credit as a borrower, guarantor, surety, pledgor, or otherwise.
B. Any action under Section 29 of this act may be filed at any time, but in any event not later than five (5) years after the creditor has obtained a final, unappealable judgment against the transferor. In such action, the creditor may proceed against the transferred property or recover the value thereof in an amount up to the amount of such judgment against the transferor.
C. This section and Sections 29, 31, 32, and 33 of this act are inseparably interwoven with substantive rights that a deprivation of legal rights would result if another jurisdiction's laws and regulations to the contrary are applied to a claim or cause of action described therein.
SECTION 31. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1313 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1313 >>
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 act, the property that is the subject of the qualified disposition was originally transferred to the transferor, or any predecessor trustee, making the qualified disposition in a form that meets the requirements of paragraphs 2 and 3 of subsection A of Section 21 of this act. Further, the provisions of this section shall apply to determine the date the transfer is deemed to have been made, notwithstanding that the original transfer was to a trust originally within or outside of the jurisdiction of Oklahoma.
If property transferred to a spendthrift trust is conveyed to the settlor or to a beneficiary for the purpose of obtaining a loan secured by a mortgage or deed of trust on the property and then reconveyed to the trust within one hundred eighty (180) days of recording the mortgage or deed of trust, the transfer is disregarded and the reconveyance relates back to the date the property was originally transferred to the trust. The mortgage or deed of trust on the property is enforceable against the trust.
SECTION 32. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1314 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1314 >>
Notwithstanding any law to the contrary, a creditor, including a creditor whose claim arose before or after a qualified disposition, or any other person has only such rights with respect to a qualified disposition as are provided in Sections 29 through 36 of this act, and no such creditor nor any other person has any claim or cause of action against the trustee or advisor, described in Section 24 of this act, 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. In addition to the provisions of Section 37 of this act, at no time is a qualified person personally liable to a creditor of a transferor or any other person for distributions made by the qualified person, before the creditor or person notified the qualified person, in writing, that a claim or cause of action existed. This applies regardless of whether the distributions are made to or for the benefit of the transferor or a beneficiary during the period in which a creditor or other person could make a claim as provided in Section 30 of this act.
SECTION 33. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1315 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1315 >>
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 against the trustee or advisor, described in Section 24 of this act, 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 Sections 29 through 32 of this act. A court of this state has exclusive jurisdiction over an action brought under a claim for relief that is based on a transfer of property to a trust that is the subject of this section. A court of this state may award attorney fees and costs to the prevailing party in such an action. In any action described in this section, the burden to prove the matter by clear and convincing evidence is upon the creditor.
SECTION 34. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1316 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1316 >>
If more than one qualified disposition is made by means of the same trust instrument:
1. 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 Section 30 of this act; and
2. Any distribution to a beneficiary is deemed to have been made from the latest such qualified disposition.
SECTION 35. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1317 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1317 >>
A. Notwithstanding the provisions of Sections 29 through 34 of this act, but subject to subsection B of this section, the Oklahoma Qualified Dispositions into Trust Act does not apply in any respect to any person to whom at the time of transfer the transferor is indebted on account of an agreement or order of court for the payment of support or alimony in favor of the transferor's spouse, former spouse, or children, or for a division or distribution of property in favor of the transferor's spouse or former spouse, to the extent of the debt.
B. If the transferor is married at the time of the transfer, the provisions of Sections 29 through 34 of this act, apply to:
1. Any of the transferor's separate property transferred to the trust; and
2. Any marital property transferred to the trust if the spouse or former spouse was provided with notice in the form set forth in subsection C of this section, or executed a written consent to the transfer after being provided the information set forth in the notice.
C. For purposes of the application of this section, a notice of transfer of property to a trust pursuant to the Oklahoma Qualified Dispositions into Trust Act:
1. Shall also contain the following language in capital letters, at or near the top of the notice: YOUR SPOUSE IS CREATING A PERMANENT TRUST INTO WHICH PROPERTY IS BEING TRANSFERRED. YOUR RIGHTS TO THIS PROPERTY MAY BE AFFECTED DURING YOUR MARRIAGE, UPON DIVORCE (INCLUDING THE PAYMENT OF CHILD SUPPORT OR ALIMONY OR A DIVISION OR DISTRIBUTION OF PROPERTY IN A DIVORCE), OR AT THE DEATH OF YOUR SPOUSE. YOU HAVE A VERY LIMITED PERIOD OF TIME TO OBJECT TO THE TRANSFER OF PROPERTY INTO THIS TRUST. YOU MAY, UPON REQUEST TO THE TRUSTEE AT THE ADDRESS BELOW, BE FURNISHED A COPY OF THE TRUST DOCUMENT. IF YOU HAVE ANY QUESTIONS, YOU SHOULD IMMEDIATELY SEEK INDEPENDENT LEGAL ADVICE. IF YOU FAIL TO OBJECT WITHIN THE REQUIRED TIME PERIOD, YOU WILL HAVE CONSENTED TO THE TRANSFER OF PROPERTY INTO THIS TRUST;
2. Shall contain a description of the property being transferred to the trust and the name of the trust;
3. May require that any person who is eligible to receive information pursuant to this section be bound by the duty of confidentiality that binds the trustee before receiving such information from the trustee; and
4. Shall be provided by the transferor, the transferor's agent, the trustee, or other fiduciary of the trust.
D. If a notice is provided under this section before the property is transferred, the period to commence an action under Section 30 of this act shall commence running on the date of the transfer. If a notice is provided after the date the property is transferred, the period to commence an action pursuant to Section 30 of this act commences running on the date the notice is provided.
E. The exception contained in subsection A of this section does not apply to any claim for forced heirship or legitime.
SECTION 36. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1318 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1318 >>
A qualified disposition is avoided only to the extent necessary to satisfy the transferor's debt to the creditor at whose insistence the disposition had been avoided, together with such costs, including attorney fees, as the court may allow. If any qualified disposition is avoided as provided in this section, then:
1. If the court is satisfied that a qualified person has not acted in bad faith in accepting or administering the property that is the subject of the qualified disposition:
a. such qualified person 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 fees, properly incurred by such qualified person in the defense of the action or proceedings to avoid the qualified disposition. It is presumed that such qualified person 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 person, and of any predecessor qualified person that has not acted in bad faith; and
2. 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 person or qualified persons 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.
SECTION 37. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1319 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1319 >>
A. The following provisions apply only to discretionary interests:
1. A discretionary interest is neither a property interest nor an enforceable right. It is a mere expectancy;
2. No creditor may force a distribution with regard to a discretionary interest. No creditor may require the trustee to exercise the trustee's discretion to make a distribution with regard to a discretionary interest; and
3. A court may review a trustee's distribution discretion only if the trustee:
a. acts dishonestly,
b. acts with an improper motive, or
c. fails, if under a duty to do so, to act.
B. A reasonableness standard may not be applied to the exercise of discretion by the trustee with regard to a discretionary interest. Other than for the circumstances listed in this section, a court has no jurisdiction to review the trustee's discretion or to force a distribution.
C. Absent express language to the contrary, in the event that the distribution language in a discretionary interest permits unequal distributions between beneficiaries or distributions to the exclusion of other beneficiaries, the trustee may distribute all of the accumulated, accrued, or undistributed income and principal to one beneficiary in the trustee's discretion.
D. Regardless of whether a beneficiary has any outstanding creditors, a trustee of a discretionary interest may directly pay any expense on behalf of such beneficiary and may exhaust the income and principal of the trust for the benefit of such beneficiary. No trustee is liable to any creditor for paying the expenses of a beneficiary of a discretionary interest.
SECTION 38. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1401 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1401 >>
For all trusts created under this title, the rules against perpetuities shall not apply, it being the intent that trusts created in this state may have perpetual duration if a timing provision or limit is not specified in the trust document.
SECTION 39. NEW LAW A new section of law to be codified in the Oklahoma Statutes as Section 1402 of Title 60, unless there is created a duplication in numbering, reads as follows:
<< OK ST T. 60 § 1402 >>
A. Except as otherwise provided in subsection B of this section, the trustee and the qualified beneficiaries may enter into a binding nonjudicial settlement agreement with respect to any matter involving a trust.
B. A nonjudicial settlement agreement is valid only to the extent it does not violate a material purpose of the trust and includes terms and conditions that could be properly approved by the court under this act or other applicable law.
C. Matters that may be resolved by a nonjudicial settlement agreement include, but are not limited to:
1. The interpretation or construction of the terms of the trust;
2. The approval of a trustee's report or accounting;
3. Direction to a trustee to refrain from performing a particular act or the grant to a trustee of any necessary or desirable power;
4. The resignation or appointment of a trustee and the determination of a trustee's compensation;
5. Transfer of a trust's principal place of administration;
6. Liability of a trustee for an action relating to the trust;
7. The extent or waiver of bond of a trustee;
8. The governing law of the trust;
9. The criteria for distribution to a beneficiary where the trustee is given discretion;
10. The resignation, appointment, and establishment of the powers and duties of trust protectors or trust advisors; and
11. The approval of an investment decision, delegation, policy, plan, or program.
D. Any qualified beneficiary or trustee may request the court to approve a nonjudicial settlement agreement, to determine whether the representation was adequate, and to determine whether the agreement contains terms and conditions the court could have properly approved.
<< OK ST T. 60 § 175.24 >>
SECTION 40. AMENDATORY 60 O.S. 2021, Section 175.24, is amended to read as follows:
Section 175.24. A. In the absence of contrary or limiting provisions in the trust agreement or a subsequent order or decree of a court of competent jurisdiction, the trustee of an express trust is authorized:
1. To exchange, reexchange, subdivide, develop, improve, dedicate to public use, make or vacate public plats, adjust boundaries, or partition real property, and to adjust differences in valuation by giving or receiving money or money's worth. Easements may be dedicated to public use without consideration if deemed by the trustee to be for the best interest of the trust;
2. To grant options and to sell real or personal property at public auction or at private sale for cash, or upon credit secured by lien upon the property sold or upon such property or a part thereof or other property;
3. To grant or take leases of real property and of all rights and privileges above or below the surface of real property for any term or terms, including exploration for and removal of oil, gas, and other minerals, with or without options of purchase, and with or without covenants as to erection of buildings or as to renewals thereof, though through the term of the lease or renewals thereof, or of such options extend beyond the term of the trust;
4. To raze existing party walls or buildings or erect new party walls or buildings alone or jointly with owners of adjacent property. To make ordinary repairs and in addition thereto such extraordinary alterations in buildings or other structures which are necessary to make the property productive. To effect and keep in force, fire, rent, title, liability, casualty, or other insurance of any nature, in any form and in any amount;
5. To compromise, contest, arbitrate, or settle any and all claims of or against the trust estate or the trustee as such. To abandon property deemed by the trustee burdensome or valueless;
6. To pay calls, assessments, and any other sums chargeable or accruing against, or on account of shares of stock or other securities in the hands of the trustee where such payment may be legally enforceable against the trustee or any property of the trust, or the trustee deems payment expedient and for the best interest of the trust. To sell or exercise stock subscription or conversion rights, participate in foreclosures, reorganizations, consolidations, mergers, liquidations, pooling agreements and voting trusts; to assent to corporate sales, leases, and encumbrances, and in general, except as limited by the particular trust agreement, have and exercise all powers of an absolute owner in respect of such securities. In the exercise of the foregoing powers the trustee shall be authorized, where he or she deems such course expedient, to deposit stocks, bonds, or other securities with any protective or other committee formed by or at the instance of persons holding similar securities, under such terms and conditions respecting the deposit thereof as the trustee may approve. Any stock or other securities obtained by conversion, reorganization, consolidation, merger, liquidation, or the exercise of subscription rights shall be free, unless the trust agreement provides otherwise, from any restrictions on sale or otherwise contained in the trust agreement relative to the securities originally held;
7. To make such investment directly or in the form of securities of, or other interests in, any open-end or closed-end management type investment company or investment trust registered under the Investment Company Act of 1940, 15 U.S.C.A., Section 80a–1 et seq.; provided, that the portfolio of such investment company or investment trust is limited to United States Government government obligations and to repurchase agreements fully collateralized by such United States Government government obligations, and provided further, that any such investment company or investment trust shall take delivery of such collateral, either directly or through an authorized custodian;
8. To borrow money or create an indebtedness or obligation including any bond indebtedness or obligation, except as limited by the provisions of the Oklahoma Trust Act;, and generally to execute any deed or other instrument and to do all things in relation to such trust necessary or desirable for carrying out any of the above powers or incident to the purposes of such trust; and
9. To employ attorneys, accountants, agents, and brokers reasonably necessary in the administration of the trust estate; permit real estate held in trust to be occupied by a surviving spouse or minor child of the trustor and, where reasonably necessary for the maintenance of the surviving wife spouse or minor child or children, invest trust funds in real property to be used for a home by such beneficiary; make any contracts pertaining to oil, gas, or other natural resources as are customary in the community where the real property held in trust is situated; in the trustee's discretion pay funeral expenses of any beneficiary actually receiving benefits from the trust estate at the time of the death of the beneficiary.
B. 1. In the exercise of its authority under paragraph 9 of subsection A of this section, a trustee may pay, from the assets of the trust, reasonable compensation and costs incurred in connection with employment of attorneys, accountants, agents, and brokers reasonably necessary in the administration of the trust estate.
2. In the event of any legal proceeding regarding the trust, a trustee may pay the costs or attorney fees incurred in any proceeding from the assets of the trust without the approval of any person and without court authorization unless otherwise ordered by the court in such legal proceeding.
3. Unless expressly provided otherwise in a written employment agreement, the creation of an attorney-client relationship between an attorney and a person serving as a fiduciary shall not impose upon the attorney any duties or obligations to other persons interested in the estate, trust estate, or other fiduciary property, even though fiduciary funds may be used to compensate the attorney for legal services rendered to the fiduciary. This paragraph is intended to be declaratory of the common law and governs relationships in existence between attorneys and persons serving as fiduciaries and any such relationship hereafter created.
4. Whenever an attorney-client relationship exists between an attorney and a fiduciary, communications between the attorney and the fiduciary shall be subject to attorney-client privilege unless waived by the fiduciary, even though fiduciary funds may be used to compensate the attorney for legal services rendered to the fiduciary. The existence of a fiduciary relationship between a fiduciary and a beneficiary does not constitute or give rise to any waiver of the privilege for communications between the attorney and the fiduciary.
C. The following rules of administration shall be applicable to all express trusts but such rules shall not be exclusive of those otherwise imposed by law unless contrary to these rules:
1. Where a trustee is authorized to sell or dispose of land, such authority shall include the right to sell or dispose of part thereof, whether the division is horizontal, vertical, or made in any other way, or undivided interests therein;
2. Where a trustee is authorized by the trust agreement creating the trust or by law to pay or apply capital money subject to the trust for any purpose or in any manner, the trustee shall have and shall be deemed always to have had power to raise the money required by selling, converting, calling in, or mortgaging or otherwise encumbering all or any part of the trust property for the time being in possession;
3. A trustee shall have a lien and may be reimbursed with interest for, or pay or discharge out of the trust property, either principal or income or both, all advances made for the benefit or protection of the trust or its property and all expenses, losses, and liabilities, not resulting from the negligence of the trustee, incurred in or about the execution or protection of the trust or because of the trustee holding or ownership of any property subject thereto; and
4. When the happening of any event, including marriage, divorce, attainment of a certain age, performance of educational requirements, death, or any other event, affects distribution of income or principal of trust estates, the trustees shall not be liable for mistakes of fact prior to the actual knowledge or written notice of such fact.
<< OK ST T. 60 § 175.47 >>
SECTION 41. AMENDATORY 60 O.S. 2021, Section 175.47, is amended to read as follows:
Section 175.47. A. Except as otherwise provided in subsection B of this section, the absolute power of alienation of real and personal property, or either of them, shall not be suspended by any limitations or conditions whatever for a longer period than during the continuance of a life or lives of the beneficiaries in being at the creation of the estate and twenty-one (21) years thereafter. The absolute power of alienation is not suspended if there is any person in being who, alone or in combination with one or more others, has the power to sell, exchange, or otherwise convey the real or personal property. If the terms of a trust do not suspend the absolute power of alienation of any trust property beyond the term permitted in this subsection, the trust may exist in perpetuity.
B. The provisions of this section shall not apply when property is given, granted, bequeathed, or devised to:
1. A charitable use;
2. Literary, educational, scientific, religious, or charitable corporations for their sole use and benefit;
3. Any cemetery corporation, society or association;
4. The Department of Mental Health and Substance Abuse Services as provided in Section 2–111 of Title 43A of the Oklahoma Statutes; or
5. Gifts absolute, limited, or in trust, for the advancement of medical science to an incorporated state society of physicians and surgeons.
C. Except as provided in this section, the common law rule against perpetuities shall not apply to a trust subject to the trust laws of this state. A trust created in this state or subject to the trust laws of this state may have a perpetual duration if a timing provision or limit is not specified in the trust document.
<< OK ST T. 60 § 175.57 >>
SECTION 42. AMENDATORY 60 O.S. 2021, Section 175.57, is amended to read as follows:
Section 175.57. A. A violation by a trustee of a duty the trustee owes a beneficiary is a breach of trust.
B. To remedy a breach of trust that has occurred or may occur, the court may:
1. Compel the trustee to perform the trustee's duties;
2. Enjoin the trustee from committing a breach of trust;
3. Compel the trustee to redress a breach of trust by payment of money or otherwise;
4. Order a trustee to account;
5. Appoint a receiver or temporary trustee to take possession of the trust property and administer the trust;
6. Suspend or remove the trustee;
7. Reduce or deny compensation to the trustee;
8. Subject to subsection I of this section, void an act of the trustee, impose an equitable lien or a constructive trust on trust property, or trace trust property wrongfully disposed of and recover the property or its proceeds; or
9. Grant any other appropriate remedy.
C. A beneficiary may charge a trustee who commits a breach of trust with the amount required to restore the value of the trust property and trust distributions to what they would have been had the breach not occurred, or, if greater, the profit that the trustee made by reason of the breach.
D. In a judicial proceeding involving a trust, the court may in its discretion, as justice and equity may require, award costs and expenses, including reasonable attorney's attorney fees, to any party, to be paid by another party or from the trust which is the subject of the controversy.
E. 1. Unless previously barred by adjudication, consent, or other limitation, a claim against a trustee for breach of trust is barred as to a beneficiary who has received from the trustee a report or other statement adequately disclosing the existence of the claim unless:
2. For any trust that is before a district court under subsection A of Section 175.23 of this title, the trustee may submit an accounting and seek approval of the accounting by the court. Such accounting and the final approval by a district court, whether or not such accounting is contested, shall be conclusive against all persons interested in the trust, and the trustee, absent fraud, intentional misrepresentation, or material omission, shall be released and discharged from any and all liability as to all matters set forth in the accounting.
3. If a trust is not before a district court under subsection A of Section 175.23 of this title and if no objection has been made by a beneficiary who is an eligible distributee or permissible distributee of the trust's income or principal within one hundred eighty (180) days after a copy of the trustee's accounting has been provided to such beneficiaries together with written notice of the provisions of this section, the distribution beneficiary is deemed to have approved such accounting of the trustee, and the trustee, absent fraud, intentional misrepresentation, or material omission, shall be released and discharged from any and all liability to all beneficiaries of the trust as to all matters set forth in such accounting.
4. If paragraphs 2 and 3 of this subsection do not apply, absent fraud, intentional misrepresentation, or material omission, an action to recover for breach of trust against a trustee who is a resident of this state or who has its principal place of business in this state, or an officer, director, or employee of such trustee may be commenced only within two (2) years of a trustee's accounting for the period of the breach. In the case of fraud, intentional misrepresentation, or material omission, the limitation period shall not commence until discovery of the breach of trust.
a. in the case of an adult, if it is received by the adult personally, or if the adult lacks capacity, if it is received by the adult's conservator, guardian, or agent with authority, or
b. in the case of a minor, if it is received by the minor's guardian or conservator or, if the minor does not have a guardian or conservator, if it is received by a parent of the minor who does not have a conflict of interest.
F. 1. A term of the trust relieving a trustee of liability for breach of trust is unenforceable to the extent that it:
a. relieves a trustee of liability for breach of trust committed in bad faith or with reckless indifference to the purposes of the trust or the interest of the beneficiaries, or
b. was inserted as the result of an abuse by the trustee of a fiduciary or confidential relationship to the settlor.
2. An exculpatory term drafted by or on behalf of the trustee is presumed to have been inserted as a result of an abuse of a fiduciary or confidential relationship unless the trustee proves that the exculpatory term is fair under the circumstances and that its existence and contents were adequately communicated to the settlor.
G. A beneficiary may not hold a trustee liable for a breach of trust if the beneficiary, while having capacity, consented to the conduct constituting the breach, released the trustee from liability for the breach, or ratified the transaction constituting the breach, unless:
1. The beneficiary at the time of the consent, release, or ratification did not know of the beneficiary's rights and of the material facts that the trustee knew, or with the exercise of reasonable inquiry, the beneficiary should have known, and that the trustee did not reasonably believe that the beneficiary knew; or
2. The consent, release, or ratification of the beneficiary was induced by improper conduct of the trustee.
H. 1. Except as otherwise agreed, a trustee is not personally liable on a contract properly entered into in the trustee's fiduciary capacity in the course of administration of the trust if the trustee in the contract discloses the fiduciary capacity.
2. A trustee is personally liable for obligations arising from ownership or control of trust property, or for torts committed in the course of administering a trust, only if the trustee is personally at fault, whether negligently or intentionally.
3. A trustee who does not join in exercising a power held by three or more trustees is not liable to third persons for the consequences of the exercise of the power. A dissenting trustee who joins in an action at the direction of the majority cotrustees is not liable to third persons for the action if the dissenting trustee expressed the dissent in writing to any other cotrustee at or before the time the action was taken.
4. A claim based on a contract entered into by a trustee in the trustee's fiduciary capacity, on an obligation arising from ownership or control of trust property, or on a tort committed in the course of administering a trust, may be asserted against the trust in a judicial proceeding against the trustee in the trustee's fiduciary capacity, whether or not the trustee is personally liable on the claim.
I. 1. A person who in good faith assists a trustee or who in good faith and for value deals with a trustee without knowledge that the trustee is exceeding or improperly exercising the trustee's powers is protected from liability as if the trustee properly exercised the power.
2. Dealing in good faith with another person with knowledge that the other person is a trustee does not place a third person on notice to inquire into the extent of the trustee's powers or the propriety of their his or her exercise.
3. A person who in good faith deals with another person with knowledge that the other person is a trustee is not solely on that account placed on notice to inquire into the extent of the trustee's powers or the propriety of their his or her exercise or to see to the proper application of assets of the trust paid or delivered to a trustee.
4. A person who in good faith assists a former trustee or who for value and in good faith deals with a former trustee without knowledge that the person is no longer a trustee is protected from liability as if the former trustee were still a trustee.
5. The protection provided by this section to persons assisting or dealing with a trustee is secondary to that provided under comparable provisions of other laws relating to commercial transactions or to the transfer of securities by fiduciaries.
SECTION 43. This act shall become effective November 1, 2024.
Approved May 31, 2024.
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