Uniform Trust Code

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Transcript of Uniform Trust Code

UNIFORM TRUST CODE(Last Revised or Amended in 2005) drafted by the NATIONAL CONFERENCE OF COMMISSIONERS ON UNIFORM STATE LAWS

and by it APPROVED AND RECOMMENDED FOR ENACTMENT IN ALL THE STATES at its MEETING IN ITS ONE-HUNDRED-AND-THIRTEENTH YEAR PORTLAND, OREGON JULY 30 - AUGUST 6, 2004WITH PREFATORY NOTE AND COMMENTS

Copyright 2005 By National Conference of Commissioners on Uniform State Laws

February 26, 2008

ABOUT NCCUSL The National Conference of Commissioners on Uniform State Laws (NCCUSL), now in its 114th year, provides states with non-partisan, well-conceived and well-drafted legislation that brings clarity and stability to critical areas of state statutory law. Conference members must be lawyers, qualified to practice law. They are practicing lawyers, judges, legislators and legislative staff and law professors, who have been appointed by state governments as well as the District of Columbia, Puerto Rico and the U.S. Virgin Islands to research, draft and promote enactment of uniform state laws in areas of state law where uniformity is desirable and practical. NCCUSL strengthens the federal system by providing rules and procedures that are consistent from state to state but that also reflect the diverse experience of the states. NCCUSL statutes are representative of state experience, because the organization is made up of representatives from each state, appointed by state government. NCCUSL keeps state law up-to-date by addressing important and timely legal issues. NCCUSLs efforts reduce the need for individuals and businesses to deal with different laws as they move and do business in different states. NCCUSLs work facilitates economic development and provides a legal platform for foreign entities to deal with U.S. citizens and businesses. NCCUSL Commissioners donate thousands of hours of their time and legal and drafting expertise every year as a public service, and receive no salary or compensation for their work. NCCUSLs deliberative and uniquely open drafting process draws on the expertise of commissioners, but also utilizes input from legal experts, and advisors and observers representing the views of other legal organizations or interests that will be subject to the proposed laws. NCCUSL is a state-supported organization that represents true value for the states, providing services that most states could not otherwise afford or duplicate.

DRAFTING COMMITTEE TO AMEND UNIFORM TRUST CODE MAURICE A. HARTNETT, III, Delaware Supreme Court, 144 Cooper Road, Dover, DE 19901, Chair FRANK W. DAYKIN, 4745 Giles Way, Carson City, NV 89704, Committee Member and Committee on Style Liaison E. EDWIN ECK, II, University of Montana, School of Law, Missoula, MT 59812 JOHN H. LANGBEIN, Yale Law School, P.O. Box 208215, New Haven, CT 06520 GLEE S. SMITH, P.O. Box 360, 111 E. 8th, Larned, KS 67550 NATHANIEL STERLING, Law Revision Commission, Suite D-1, 4000 Middlefield Road, Palo Alto, CA 94303 RICHARD V. WELLMAN, University of Georgia, School of Law, Athens, GA 30602 DAVID M. ENGLISH, University of Missouri School of Law, Missouri and Conley Avenues, Columbia, MO 65211, Reporter EX OFFICIO FRED H. MILLER, University of Oklahoma, College of Law, 300 Timberdell Rd., Room 3056, Norman, OK 73019, President REX BLACKBURN, 1673 West Shoreline Dr., Suite 200, P.O. Box 7808, Boise, ID 83702, Division Chair AMERICAN BAR ASSOCIATION ADVISOR JOSEPH KARTIGANER, 812 Fifth Ave., New York, NY 10021, American Bar Association Advisor EXECUTIVE DIRECTOR WILLIAM H. HENNING, University of Alabama School of Law, Box 870382, Tuscaloosa, AL 35487-0382, Executive Director WILLIAM J. PIERCE, 1505 Roxbury Rd., Ann Arbor, MI 48104, Executive Director Emeritus

Copies of this Code may be obtained from: NATIONAL CONFERENCE OF COMMISSIONERS ON UNIFORM STATE LAWS 211 E. Ontario Street, Suite 1300 Chicago, Illinois 60611 312/915-0195 www.nccusl.org

UNIFORM TRUST CODE

TABLE OF CONTENTS PREFATORY NOTE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE 1 GENERAL PROVISIONS AND DEFINITIONS SECTION 101. SECTION 102. SECTION 103. SECTION 104. SECTION 105. SECTION 106. SECTION 107. SECTION 108. SECTION 109. SECTION 110. SECTION 111. SECTION 112. SHORT TITLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 SCOPE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 KNOWLEDGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 DEFAULT AND MANDATORY RULES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 COMMON LAW OF TRUSTS; PRINCIPLES OF EQUITY . . . . . . . . . . . . . 27 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 PRINCIPAL PLACE OF ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . 29 METHODS AND WAIVER OF NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 OTHERS TREATED AS QUALIFIED BENEFICIARIES . . . . . . . . . . . . . . . 33 NONJUDICIAL SETTLEMENT AGREEMENTS . . . . . . . . . . . . . . . . . . . . . 36 RULES OF CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 ARTICLE 2 JUDICIAL PROCEEDINGS SECTION 201. SECTION 202. SECTION 203. SECTION 204. ROLE OF COURT IN ADMINISTRATION OF TRUST . . . . . . . . . . . . . . . . 40 JURISDICTION OVER TRUSTEE AND BENEFICIARY . . . . . . . . . . . . . . . 41 SUBJECT-MATTER JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 VENUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 ARTICLE 3 REPRESENTATION SECTION 301. REPRESENTATION: BASIC EFFECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 SECTION 302. REPRESENTATION BY HOLDER OF GENERAL TESTAMENTARY POWER OF APPOINTMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 SECTION 303. REPRESENTATION BY FIDUCIARIES AND PARENTS . . . . . . . . . . . . . . 46 SECTION 304. REPRESENTATION BY PERSON HAVING SUBSTANTIALLY IDENTICAL INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 SECTION 305. APPOINTMENT OF REPRESENTATIVE . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 ARTICLE 4 CREATION, VALIDITY, MODIFICATION, AND TERMINATION OF TRUST SECTION 401. METHODS OF CREATING TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

SECTION 402. REQUIREMENTS FOR CREATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 SECTION 403. TRUSTS CREATED IN OTHER JURISDICTIONS . . . . . . . . . . . . . . . . . . . . 55 SECTION 404. TRUST PURPOSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 SECTION 405. CHARITABLE PURPOSES; ENFORCEMENT . . . . . . . . . . . . . . . . . . . . . . . 57 SECTION 406. CREATION OF TRUST INDUCED BY FRAUD, DURESS, OR UNDUE INFLUENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 SECTION 407. EVIDENCE OF ORAL TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 SECTION 408. TRUST FOR CARE OF ANIMAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 SECTION 409. NONCHARITABLE TRUST WITHOUT ASCERTAINABLE BENEFICIARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 SECTION 410. MODIFICATION OR TERMINATION OF TRUST; PROCEEDINGS FOR APPROVAL OR DISAPPROVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 SECTION 411. MODIFICATION OR TERMINATION OF NONCHARITABLE IRREVOCABLE TRUST BY CONSENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 SECTION 412. MODIFICATION OR TERMINATION BECAUSE OF UNANTICIPATED CIRCUMSTANCES OR INABILITY TO ADMINISTER TRUST EFFECTIVELY . . . . . . 70 SECTION 413. CY PRES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 SECTION 414. MODIFICATION OR TERMINATION OF UNECONOMIC TRUST . . . . . . 73 SECTION 415. REFORMATION TO CORRECT MISTAKES . . . . . . . . . . . . . . . . . . . . . . . . 75 SECTION 416. MODIFICATION TO ACHIEVE SETTLORS TAX OBJECTIVES . . . . . . . 76 SECTION 417. COMBINATION AND DIVISION OF TRUSTS . . . . . . . . . . . . . . . . . . . . . . . 76 ARTICLE 5 CREDITORS CLAIMS; SPENDTHRIFT AND DISCRETIONARY TRUSTS SECTION 501. SECTION 502. SECTION 503. SECTION 504. SECTION 505. SECTION 506. SECTION 507. RIGHTS OF BENEFICIARYS CREDITOR OR ASSIGNEE . . . . . . . . . . . . 79 SPENDTHRIFT PROVISION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 EXCEPTIONS TO SPENDTHRIFT PROVISION . . . . . . . . . . . . . . . . . . . . . 82 DISCRETIONARY TRUSTS; EFFECT OF STANDARD . . . . . . . . . . . . . . . 85 CREDITORS CLAIM AGAINST SETTLOR . . . . . . . . . . . . . . . . . . . . . . . . . 88 OVERDUE DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 PERSONAL OBLIGATIONS OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . 92 ARTICLE 6 REVOCABLE TRUSTS SECTION 601. CAPACITY OF SETTLOR OF REVOCABLE TRUST . . . . . . . . . . . . . . . . . 94 SECTION 602. REVOCATION OR AMENDMENT OF REVOCABLE TRUST . . . . . . . . . . 95 SECTION 603. SETTLORS POWERS; POWERS OF WITHDRAWAL . . . . . . . . . . . . . . . 101 SECTION 604. LIMITATION ON ACTION CONTESTING VALIDITY OF REVOCABLE TRUST; DISTRIBUTION OF TRUST PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 ARTICLE 7 OFFICE OF TRUSTEE S