2006 Legislation
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SENATE BILL NO. 1324 – Trust assets, value allowable


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Bill Status

S1324................................................by JUDICIARY AND RULES
TRUST ASSETS - Amends existing law relating to trustee powers to increase
the collective value of trust assets allowable for purposes of termination.
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
02/17    3rd rdg - PASSED - 33-0-2
      AYES -- Andreason, Brandt, Broadsword, Bunderson, Burkett,
      Burtenshaw, Cameron, Coiner, Compton, Corder, Darrington, Davis,
      Gannon, Geddes, Goedde, Hill, Kelly, Keough, Langhorst, Little,
      Lodge, Malepeai, Marley, McGee, McKenzie, Pearce, Richardson,
      Schroeder, Stegner, Stennett, Sweet, Werk, Williams
      NAYS -- None
      Absent and excused -- Fulcher, Jorgenson
    Floor Sponsor - Richardson
    Title apvd - to House
02/20    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 - PASSED - 66-0-4
      AYES -- Anderson, Andrus, Barraclough, Barrett, Bastian, Bayer, Bell,
      Bilbao, Black, Block, Boe, Bolz, Brackett, Bradford, Cannon,
      Chadderdon, Clark, Collins, Deal, Denney, Edmunson, Ellsworth,
      Eskridge, Field(18), Field(23), Garrett, Hart, Harwood, Henbest,
      Henderson, Jaquet, Kemp, Lake, LeFavour, Loertscher, Martinez,
      Mathews, McGeachin, 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(24), Smylie, Snodgrass, Stevenson, Trail, Wills, Mr.
      NAYS -- None
      Absent and excused -- Bedke, Crow, Smith(30), Wood
    Floor Sponsor - Harwood
    Title apvd - to Senate
03/17    To enrol
03/20    Rpt enrol - Pres signed - Sp signed
03/21    To Governor
03/22    Governor signed
         Session Law Chapter 162
         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. 1324
                              BY JUDICIARY AND RULES COMMITTEE
  1                                        AN ACT
  5    Be It Enacted by the Legislature of the State of Idaho:
  6        SECTION 1.  That Section 15-7-402, Idaho Code, be, and the same is  hereby
  7    amended to read as follows:
  8        15-7-402.  ADDITIONAL  POWERS.  In  addition to the powers provided for in
  9    section 15-7-401, Idaho Code, a trustee shall have the following powers:
 10        (1)  To sever any trust estate on a fractional share basis into two (2) or
 11    more separate trusts for any reason.
 12        (2)  To divide a trust into two (2) or more single trusts  or  consolidate
 13    two (2) or more trusts into a single trust, upon those terms and conditions as
 14    it  considers appropriate, provided that the trustee make a written determina-
 15    tion that: (a) division or consolidation is not inconsistent with  the  intent
 16    of  the  trustor  with  regard to any trust to be consolidated or divided; (b)
 17    division or consolidation would facilitate administration of the  trusts;  and
 18    (c) division or consolidation would be in the best interests of all beneficia-
 19    ries  and  not materially impair their respective interests. The trustee shall
 20    give written notice of the proposed division or consolidation by personal ser-
 21    vice or by certified mail to all interested persons of every trust affected by
 22    the division or consolidation and to any trustee of such trust(s) who does not
 23    join in the notice. The notice shall: (i) state the name and  mailing  address
 24    of  the trustee; (ii) include a copy of the governing instrument of each trust
 25    to be divided or consolidated; (iii) include a statement of assets and liabil-
 26    ities of each trust to be divided or consolidated, dated  within  ninety  (90)
 27    days  of  the  notice; (iv) fully describe the terms and manner of division or
 28    consolidation; and (v) state the reasons supporting the proposed  division  or
 29    consolidation.  The notice shall advise the recipient of the right to petition
 30    for a judicial determination of the proposed division or consolidation as pro-
 31    vided in subsection (3) of this section. The notice shall include  a  form  on
 32    which  consent  or  objection to the proposed division or consolidation may be
 33    indicated. If the trustee receives written consent to the proposed division or
 34    consolidation from all persons entitled to notice, the trustee may  divide  or
 35    consolidate  the trusts as provided in the notice. Any person dealing with the
 36    trustee of the resulting divided or consolidated trust is entitled to rely  on
 37    the  authority  of  that trustee to act and is not obliged to inquire into the
 38    validity or propriety of the division or consolidation under this section.
 39        (3)  Any interested person may petition the court of the county  in  which
 40    the  principal  place  of  administration  of  a trust is located for an order
 41    dividing one (1) or more trusts or consolidating two (2) or  more  trusts.  If
 42    nonjudicial  consolidation  has  been  commenced pursuant to subsection (2) of
 43    this section, a petition may be filed under this section  unless  the  trustee
  1    has  received all necessary consents. The principal place of administration of
  2    the trust is the trustee's usual place of business where the records  pertain-
  3    ing  to  the  trust are kept, or the trustee's residence if the trustee has no
  4    such place of business. At the conclusion of the hearing, if the  court  finds
  5    that  the requirements of subsections (2)(a), (b) and (c) of this section have
  6    been satisfied, it may direct division of one (1) or more trusts or consolida-
  7    tion  of two (2) or more trusts on such terms and conditions  as  appropriate.
  8    The  court, in its discretion, may provide for payment from one (1) or more of
  9    the trusts of reasonable fees and expenses for any party to the proceeding.
 10        (4)  If the net fair market value of the assets of a trust, taken  collec-
 11    tively,  is  less  than twenty-five one hundred thousand dollars ($25100,000),
 12    the trustee may terminate the trust by the following procedure:
 13        (a)  The trustee shall determine a plan for distribution that  agrees,  as
 14        nearly as possible, with the trust's dispositive plan;
 15        (b)  The  trustee shall give notice, in writing, to all interested persons
 16        of its intent to distribute the assets in accordance with the plan  unless
 17        an  interested person objects in writing within thirty (30) days after the
 18        date of the notice, containing also in such notice a statement of the pro-
 19        visions of paragraph (e) of this subsection;
 20        (c)  If no written objection is received by the trustee within thirty (30)
 21        days after the date of the written notice to all interested  persons,  the
 22        trustee  shall  proceed  to distribute the trust assets in accordance with
 23        the plan;
 24        (d)  If the trustee receives a written objection to the plan within thirty
 25        (30) days after the date of the notice, the trustee shall  not  distribute
 26        the  assets  of  the  trust,  but may then petition the court for an order
 27        authorizing distribution in accordance with the plan, and the court  shall
 28        have  plenary  authority to approve, modify, or reject the trustee's peti-
 29        tion;
 30        (e)  For purposes of the thirty (30) day provisions  of  this  subsection,
 31        the  "date  of  notice"  shall  be  the later of the date set forth in the
 32        notice (if any) or the date of actual mailing, if  mailed,  or  of  actual
 33        delivery,  if  delivered  in person to the interested person, and provided
 34        further that an objection in writing is timely  if  mailed  within  thirty
 35        (30)  days  to  the  trustee, with the burden of proof of the date of such
 36        mailing to be on the interested person.
 37        The existence of a spendthrift  or  similar  provision  shall  not  effect
 38    affect  the trustee's powers under this subsection unless the trust instrument
 39    specifically provides that the trustee shall not have the power  to  terminate
 40    the trust.
 41        (5)  This section applies to all trusts whenever created.

Statement of Purpose / Fiscal Impact

                       STATEMENT OF PURPOSE

                            RS: 15747

The administration costs of trust management are increasing
greatly.  Therefore, the level at which a small trust becomes
inefficient to manage is likewise increasing.  This bill therefore
raises the level at which a trustee may terminate a trust to one
hundred thousand dollars.  There are substantial protections built
into the statute as to how such termination must be pursued, and
the trust document can also set different limits, or even prevent
termination at any level of assets.  This will give more
flexibility to terminate a trust when its costs of administration
are becoming too high to justify continuation of the trust, while
still keeping all the existing protections.

                          FISCAL NOTE

This bill will have no fiscal impact.

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

STATEMENT OF PURPOSE/FISCAL NOTE                        S 1324