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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-fiveone 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 effect38 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