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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.
Speaker
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
]]]] 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
2 RELATING TO TRUSTEE POWERS; AMENDING SECTION 15-7-402, IDAHO CODE, TO INCREASE
3 THE COLLECTIVE VALUE OF TRUST ASSETS ALLOWABLE FOR PURPOSES OF TERMINATION
4 AND TO MAKE A TECHNICAL CORRECTION.
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
2
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
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.
CONTACT:
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