2006 Legislation
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SENATE BILL NO. 1323 – Trusts, execution with will

SENATE BILL NO. 1323

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Bill Status



S1323................................................by JUDICIARY AND RULES
DRY TRUSTS - Amends and adds to existing law to reference trusts executed
concurrently with a will; and to set forth provisions applicable to dry
trusts.
                                                                        
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 - Sweet
    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 - 65-0-5
      AYES -- Anderson, Andrus, Barraclough, Barrett, Bastian, Bayer, Bell,
      Bilbao, Black, Block, Boe, Bolz, Brackett, Bradford, Cannon,
      Chadderdon, Clark, 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, Collins, Crow, Smith(30), Wood
    Floor Sponsor - Hart
    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 161
         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. 1323
                                                                        
                              BY JUDICIARY AND RULES COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO TRUSTS; AMENDING SECTION 15-2-511, IDAHO CODE, TO REFERENCE TRUSTS
  3        EXECUTED CONCURRENTLY WITH A WILL; AND AMENDING CHAPTER 7, TITLE 15, IDAHO
  4        CODE, BY THE ADDITION OF A NEW PART 7, CHAPTER 7, TITLE 15, IDAHO CODE, TO
  5        SET FORTH PROVISIONS APPLICABLE TO DRY TRUSTS.
                                                                        
  6    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
  7        SECTION 1.  That Section 15-2-511, Idaho Code, be, and the same is  hereby
  8    amended to read as follows:
                                                                        
  9        15-2-511.  TESTAMENTARY ADDITIONS TO TRUSTS.
 10        (1)  (a) A  will  may  validly  devise  property to the trustee of a trust
 11        established or to be established:
 12             (i)  During the testator's lifetime by the testator or by the  testa-
 13             tor and some other person or by some other person, including a funded
 14             or  unfunded  life insurance trust, although the trustor has reserved
 15             any or all rights of ownership of the insurance contracts; or
 16             (ii) At the testator's death by the testator's devise to the  trustee
 17             if  the  trust is identified in the testator's will and its terms are
 18             set forth in a  written  instrument,  other  than  a  will,  executed
 19             before,  concurrently  with, or after the execution of the testator's
 20             will or in another individual's will if  that  other  individual  has
 21             predeceased the testator, regardless of the existence, size, or char-
 22             acter of the corpus of the trust.
 23        (b)  The  devise  is not invalid because the trust is amendable or revoca-
 24        ble, or because the trust was amended after the execution of the  will  or
 25        the testator's death.
 26        (2)  Unless  the testator's will provides otherwise, property devised to a
 27    trust described in subsection (1) of this section is not held under  a  testa-
 28    mentary  trust  of the testator but it becomes a part of the trust to which it
 29    is devised and must be administered and disposed of  in  accordance  with  the
 30    provisions  of  the governing instrument setting forth the terms of the trust,
 31    including any amendments thereto made before or after  the testator's death.
 32        (3)  Unless the testator's will provides otherwise a revocation or  termi-
 33    nation of the trust before the testator's death causes the devise to lapse.
                                                                        
 34        SECTION  2.  That  Chapter  7,  Title  15, Idaho Code, be, and the same is
 35    hereby amended by the addition thereto of a NEW PART, to be known  and  desig-
 36    nated as Part 7, Chapter 7, Title 15, Idaho Code, and to read as follows:
                                                                        
 37                                       PART 7.
 38                                      DRY TRUSTS
                                                                        
 39        15-7-701.  DRY  TRUSTS. A trust shall be valid and enforceable even though
 40    it may not be funded at a given time, or from time to time, or does  not  have
                                                                        
                                           2
                                                                        
  1    any res or corpus or otherwise contain any asset of any nature.

Statement of Purpose / Fiscal Impact



                       STATEMENT OF PURPOSE 

                             RS 15746

A question has arisen in the legal and banking community as to
whether a trust can be created, or exist, without any current
assets held by the trust - commonly called a "dry trust".   Under
common law, these trusts were usually not allowed, and a trust
had to have a "corpus" or "res" at all times to be valid.
However, these types of trusts are now often created to receive
assets at a later date, often from the provisions of a Will, or
from an insurance policy or other beneficiary asset.  Idaho has
previously authorized, in section 15 2-511, set forth in Section
One of the bill, the use of these types of trusts as the
beneficiary of a bequest from a Will.   Section One adds
"concurrently with" to cover the situation where the Will and the
Trust are executed simultaneously.

However, that statute left unclear whether a dry trust could
exist under other circumstances. Dry trusts are a handy estate
planning tool, and requiring a small holding of some sort in the
trust can complicate their use, and may then require tax
reporting or accountings. Therefore, this bill, in Section Two,
clearly, under all circumstances, allows the existence of dry
trusts.


                           FISCAL NOTE

This bill will have no fiscal impact.




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


STATEMENT OF PURPOSE/FISCAL NOTE                        S 1323