2006 Legislation
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SENATE BILL NO. 1321 – Trusts, doctrine of worthier title


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Bill Status

S1321................................................by JUDICIARY AND RULES
TRUSTS - Amends and adds to existing law relating to trusts to revise
applicability; and to provide that the doctrine of worthier title shall not
be applied.
01/30    Senate intro - 1st rdg - to printing
01/31    Rpt prt - to Jud
02/09    Rpt out - rec d/p - to 2nd rdg
02/10    2nd rdg - to 3rd rdg
02/21    3rd rdg - PASSED - 34-0-1
      AYES -- Andreason, Broadsword, Bunderson, Burkett, Burtenshaw,
      Cameron, Coiner, Compton, Corder, Darrington, Davis, Fulcher, Gannon,
      Geddes, Goedde, Hill, Jorgenson, Kelly, Keough, Langhorst, Little,
      Lodge, Malepeai, Marley, McGee, McKenzie, Pearce, Richardson,
      Schroeder, Stegner, Stennett, Sweet, Werk, Williams
      NAYS -- None
      Absent and excused -- Brandt
    Floor Sponsor - Davis
    Title apvd - to House
02/22    House intro - 1st rdg - to Jud
03/06    Rpt out - rec d/p - to 2nd rdg
03/07    2nd rdg - to 3rd rdg
03/16    3rd rdg
03/22    PASSED - 68-0-2
      AYES -- Anderson, Andrus, Barraclough, Barrett, Bastian, Bayer,
      Bedke, Bell, Bilbao, Black, Block, Boe, Bolz, Brackett, Bradford,
      Cannon, Chadderdon, Clark, Collins, Crow, Deal, Denney, Edmunson,
      Ellsworth, Eskridge, Field(18), Field(23), Garrett, Harwood, Henbest,
      Henderson, Jaquet, Kemp, Lake, LeFavour, Loertscher, Martinez,
      Mathews, McKague, Miller, Mitchell, Moyle, Nielsen, Nonini,
      Pasley-Stuart, Pence, Raybould, Ring, Ringo, Roberts, Rusche,
      Rydalch, Sali, Sayler, Schaefer, Shepherd(2), Shepherd(8), Shirley,
      Skippen, Smith(30), Smith(24), Smylie, Snodgrass, Stevenson, Trail,
      Wills, Wood, Mr. Speaker
      NAYS -- None
      Absent and excused -- Hart, McGeachin
    Floor Sponsor - Nielsen
    Title apvd - to Senate
03/23    To enrol
03/24    Rpt enrol - Pres signed - Sp signed
03/27    To Governor
03/30    Governor signed
         Session Law Chapter 250
         Effective: 07/01/06

Bill Text

  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-eighth Legislature                   Second Regular Session - 2006
                                       IN THE SENATE
                                    SENATE BILL NO. 1321
                              BY JUDICIARY AND RULES COMMITTEE
  1                                        AN ACT
  6    Be It Enacted by the Legislature of the State of Idaho:
  7        SECTION 1.  That Section 68-119, Idaho Code, be, and the  same  is  hereby
  8    amended to read as follows:
  9        68-119.  APPLICABILITY.   The   provisions   of  sections  68-114  through
 10    68-11920, Idaho Code, shall apply to all trusts, whether established  pursuant
 11    to  Idaho law or established pursuant to the law of another state or jurisdic-
 12    tion.
 13        SECTION 2.  That Chapter 1, Title 68, Idaho Code,  be,  and  the  same  is
 14    hereby  amended by the addition thereto of a NEW SECTION, to be known and des-
 15    ignated as Section 68-120, Idaho Code, and to read as follows:
 16        68-120.  DOCTRINE OF WORTHIER TITLE INAPPLICABLE. The doctrine of worthier
 17    title shall not be applied as a rule of law or as a rule of construction. Lan-
 18    guage in a governing instrument describing the beneficiaries of a  disposition
 19    as  the transferor's heirs, heirs at law, next of kin, distributees, relatives
 20    or family, or language of similar import, shall not  create  or  presumptively
 21    create a reversionary interest in the transferor.

Statement of Purpose / Fiscal Impact

                       STATEMENT OF PURPOSE

                             RS 15744

The Doctrine of Worthier Title is an ancient common law doctrine
regarding trusts.  A similar common law doctrine regarding real
estate, the Rule in Shelly's Case, was abolished by Idaho Code 55-
206 in territorial days.

The Doctrine of Worthier Title causes a trust whose grantor
intended it to be irrevocable to become legally construed as
revocable, contrary to the grantor's intent, and creates a variety
of unintended adverse legal consequences for the trust grantor and
beneficiary. Most states have provided by judicial decision or
legislative enactment that the Doctrine of Worthier Title is not
applicable or is abolished and modern legal authority supports the
proposition that the Doctrine of Worthier Title should not be
legally recognized. Idaho statutory and case law is silent on the
applicability of the Doctrine of Worthier Title.

The Doctrine of Worthier Title provides that when a trust grantor
reserves the exclusive lifetime enjoyment of trust income and
principal in the grantor and further provides that the remainder
interest in trust passes at death of the grantor to the grantor's
"heirs" (or terms to that effect), the remainder does not really
pass to the grantor's heirs, but rather passes to the estate of the
grantor and is governed either by the grantor's last will and
testament or   in the absence of such   by the laws of intestate
succession. The Doctrine of Merger provides that where a grantor
has sole and exclusive power to enjoy the lifetime estate of a
grant in trust and the right to dispose of the remainder estate,
there is no separation of estates as must be the case for an
irrevocable trust, and therefore the trust, intended to be
irrevocable, is actually revocable.

One example of practical problems that could arise is when a
grantor with severe disabilities, and lacking contractual or
donative legal capacity, has an irrevocable trust created for his
or her lifetime use by a court, guardian, parent or grandparent
under Idaho Code 68-1401 et seq., which must be irrevocable. The
Social Security Administration could hold that the grantor with
disabilities is not eligible for SSI coverage because the Doctrine
of Worthier Title renders the trust revocable, not irrevocable.

No such result has occurred in the state of Idaho to date, but
legal representatives for such grantors with severe disabilities
want to eliminate any prospect of such an outcome by making it
clear that the Doctrine of Worthier Title is not applicable in

                          FISCAL NOTE

This bill will have no fiscal impact.

Name:     Robert L. Aldridge, Trust & Estate Professionals of
          Idaho, Inc.
          Telephone:(208) 336-9880  
          Cell: (208) 631-2481

STATEMENT OF PURPOSE/FISCAL IMPACT                        S 1321   

REVISED                       REVISED                     REVISED