Text: HF00662 Text: HF00664 Text: HF00600 - HF00699 Text: HF Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 HOUSE FILE 663 1 2 1 3 AN ACT 1 4 RELATING TO THE ESTABLISHMENT OF AN IOWA TRUST CODE, AND 1 5 PROVIDING AN EFFECTIVE DATE. 1 6 1 7 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 1 8 1 9 DIVISION XX 1 10 TRUST CODE 1 11 Part 1 1 12 DEFINITIONS AND GENERAL PROVISIONS 1 13 Section 1. NEW SECTION. 633.1101 SHORT TITLE. 1 14 This division may be cited as the "Iowa Trust Code" or 1 15 "Trust Code". 1 16 Sec. 2. NEW SECTION. 633.1102 DEFINITIONS. 1 17 For purposes of this division: 1 18 1. "Beneficiary", as it relates to a trust beneficiary, 1 19 includes a person who has any present or future interest in 1 20 the trust, vested or contingent, and also includes the owner 1 21 of an interest by assignment or other transfer. 1 22 2. "Charitable trust" means a trust created for a 1 23 charitable purpose as specified in section 633.5101. 1 24 3. "Competency" means any one of the following: 1 25 a. In the case of a revocable transfer, "competency" means 1 26 the degree of understanding required to execute a will. 1 27 b. In the case of an irrevocable transfer, "competency" 1 28 means the degree of understanding required to execute a 1 29 contract. 1 30 c. In other circumstances not clearly relating to a 1 31 revocable or irrevocable transfer, "competency" means the 1 32 ability to make rational decisions regarding one's financial 1 33 affairs. 1 34 4. "Conservator" means a person appointed by a court to 1 35 manage the estate of a minor or adult individual. 2 1 5. "Court" means any Iowa district court. 2 2 6. "Fiduciary" includes a personal representative, 2 3 executor, administrator, guardian, conservator, and trustee. 2 4 7. "Guardian" means a person appointed by a court to make 2 5 decisions with respect to the support, care, education, 2 6 health, and welfare of a minor or adult individual, but 2 7 excludes one who is merely a guardian ad litem. A minor's 2 8 custodial parent shall be deemed to be the child's guardian in 2 9 the absence of a court-appointed guardian. 2 10 8. "Instrument" means a signed writing. 2 11 9. "Interested person" includes a trustee, an acting 2 12 successor trustee, a beneficiary who may receive income or 2 13 principal currently from the trust, or would receive principal 2 14 of the trust if the trust were terminated at the time relevant 2 15 to the determination, and a fiduciary representing an 2 16 interested person. The meaning as it relates to particular 2 17 persons may vary from time to time according to the particular 2 18 purpose of, and matters involved in, any proceeding. 2 19 10. "Person" means an individual or any legal or 2 20 commercial entity. 2 21 11. "Petition" includes a complaint or statement of claim. 2 22 12. "Property" means anything that may be the subject of 2 23 ownership, whether real or personal, legal or equitable, 2 24 tangible or intangible, and includes any interest in such 2 25 item, including a chose in action, claim, or beneficiary 2 26 designation under a policy of insurance, employees' trust, or 2 27 other arrangement, whether revocable or irrevocable. 2 28 13. "Settlor" means a person, including a testator, who 2 29 creates a trust. 2 30 14. "State" means a state of the United States, the 2 31 District of Columbia, the Commonwealth of Puerto Rico, or any 2 32 territory or insular possession subject to the jurisdiction of 2 33 the United States. 2 34 15. "Term" or "terms", when used in relation to a trust, 2 35 means the manifestation of the settlor's intent regarding a 3 1 trust's provisions at the time of the trust's creation or 3 2 amendment. "Term" includes those concepts expressed directly 3 3 in writing, as well as those inferred from constructional 3 4 preferences or rules. 3 5 16. "Trust" means an express trust, charitable or 3 6 noncharitable, with additions thereto, wherever and however 3 7 created, including a trust created or determined by a judgment 3 8 or decree under which the trust is to be administered in the 3 9 manner of an express trust. "Trust" does not include any of 3 10 the following: 3 11 a. A Totten trust account. 3 12 b. A custodial arrangement pursuant to the uniform 3 13 transfers to minors Act of any state. 3 14 c. A business trust that is taxed as a partnership or 3 15 corporation. 3 16 d. An investment trust subject to regulation under the 3 17 laws of this state or any other jurisdiction. 3 18 e. A common trust fund. 3 19 f. A voting trust. 3 20 g. A security arrangement. 3 21 h. A transfer in trust for purpose of suit or enforcement 3 22 of a claim or right. 3 23 i. A liquidation trust. 3 24 j. A trust for the primary purpose of paying debts, 3 25 dividends, interest, salaries, wages, profits, pensions, or 3 26 employee benefits of any kind. 3 27 k. An arrangement under which a person is a nominee or 3 28 escrow agent for another. 3 29 l. Constructive or resulting trusts. 3 30 17. "Trust company" means a person who has qualified to 3 31 engage in and conduct a trust business in this state. 3 32 18. "Trustee" includes an original, additional, or 3 33 successor trustee, whether or not appointed or confirmed by a 3 34 court. 3 35 Sec. 3. NEW SECTION. 633.1103 PER STIRPES RULE OF 4 1 DESCENT. 4 2 Unless the trust instrument provides otherwise, all gifts 4 3 to multigeneration classes shall be per stirpes. 4 4 Sec. 4. NEW SECTION. 633.1104 COMMON LAW OF TRUSTS. 4 5 Except to the extent that this division modifies the common 4 6 law governing trusts, the common law of trusts shall 4 7 supplement this trust code. 4 8 Sec. 5. NEW SECTION. 633.1105 TRUST PROVISIONS CONTROL. 4 9 The provisions of a trust shall always control and take 4 10 precedence over any section of this trust code to the 4 11 contrary. 4 12 Sec. 6. NEW SECTION. 633.1106 GENERAL RULE CONCERNING 4 13 APPLICATION OF THE IOWA TRUST CODE. 4 14 1. This trust code applies to all trusts within the scope 4 15 of this trust code, regardless of whether the trust was 4 16 created before, on, or after the effective date of this Act, 4 17 except as otherwise stated in this trust code. 4 18 2. This trust code applies to all proceedings concerning 4 19 trusts within the scope of this trust code commenced on or 4 20 after the effective date of this Act. 4 21 3. This trust code applies to all trust proceedings 4 22 commenced before the effective date of this Act unless the 4 23 court finds that application of a particular provision of this 4 24 trust code would substantially interfere with the effective 4 25 conduct of the proceedings or the rights of the parties or 4 26 other interested persons. In that case, the particular 4 27 provision of this trust code at issue shall not apply, and the 4 28 court shall apply prior law. 4 29 Sec. 7. NEW SECTION. 633.1107 SCOPE OF TRUST CODE. 4 30 This trust code is intended to apply to trusts, as defined 4 31 in section 633.1102, subsection 16, that are intentionally 4 32 created, or deemed to be intentionally created, by individuals 4 33 and other entities. 4 34 Part 2 4 35 CREATION, VALIDITY, MODIFICATION, AND TERMINATION OF 5 1 TRUSTS 5 2 Subpart 1 5 3 CREATION AND VALIDITY OF TRUSTS 5 4 Sec. 8. NEW SECTION. 633.2101 METHODS OF CREATING 5 5 TRUSTS. 5 6 A trust may be created by any of the following methods: 5 7 1. Transfer of property to another person as trustee 5 8 during the settlor's lifetime, or by will taking effect upon 5 9 the settlor's death. 5 10 2. Declaration by the owner of property that the owner 5 11 holds property as trustee. 5 12 3. Exercise of a power of appointment in favor of another 5 13 person as trustee. 5 14 4. A promise enforceable by the trustee to transfer 5 15 property to the trustee. 5 16 Sec. 9. NEW SECTION. 633.2102 REQUIREMENTS FOR VALIDITY. 5 17 1. A trust is created only if all of the following 5 18 elements are satisfied: 5 19 a. The settlor was competent and indicated an intention to 5 20 create a trust. 5 21 b. The same person is not the sole trustee and sole 5 22 beneficiary. 5 23 c. Unless the trust is a charitable trust, an honorary 5 24 trust, or a trust for the care of an animal, the trust has a 5 25 definite beneficiary or a beneficiary who will be definitely 5 26 ascertained within the period of the applicable rule against 5 27 perpetuities. 5 28 2. A definite or definitely ascertainable beneficiary 5 29 includes a beneficiary or class of beneficiaries designated 5 30 under a power to select the beneficiaries granted by the terms 5 31 of the trust to the trustee or another person. 5 32 Sec. 10. NEW SECTION. 633.2103 STATUTE OF FRAUDS. 5 33 1. A trust is enforceable when evidenced by either of the 5 34 following: 5 35 a. A written instrument signed by the trustee, or by the 6 1 trustee's agent if authorized in writing. 6 2 b. A written instrument conveying the trust property 6 3 signed by the settlor, or by the settlor's agent if authorized 6 4 in writing. 6 5 2. If an owner of property declares that property is held 6 6 upon a trust for which a written instrument is required, the 6 7 written instrument evidencing the trust must be signed by the 6 8 settlor according to one of the following: 6 9 a. Before or at the time of the declaration. 6 10 b. After the time of the declaration but before the 6 11 settlor has transferred the property. 6 12 3. If an owner of property while living transfers property 6 13 to another person to hold upon a trust for which a written 6 14 instrument is required, the written instrument evidencing the 6 15 trust must be signed according to one of the following: 6 16 a. By the settlor, concurrently with or before the 6 17 transfer. 6 18 b. By the trustee, concurrently with or before the 6 19 transfer, or after the transfer but before the trustee has 6 20 transferred the property to a third person. 6 21 Sec. 11. NEW SECTION. 633.2104 TRUST PURPOSES. 6 22 1. A trust is created only if it has a private or 6 23 charitable purpose that is not unlawful or against public 6 24 policy. 6 25 2. A trust created for a private purpose must be 6 26 administered for the benefit of its beneficiaries. 6 27 Sec. 12. NEW SECTION. 633.2105 HONORARY TRUSTS – TRUSTS 6 28 FOR PETS. 6 29 1. A trust for a lawful noncharitable purpose for which 6 30 there is no definite or definitely ascertainable beneficiary 6 31 is valid but may be performed by the trustee for only twenty- 6 32 one years, whether or not the terms of the trust contemplate a 6 33 longer duration. 6 34 2. A trust for the care of an animal living at the 6 35 settlor's death is valid. The trust terminates when no living 7 1 animal is covered by its terms. 7 2 3. A portion of the property of a trust authorized by this 7 3 section shall not be converted to any use other than its 7 4 intended use unless the terms of the trust so provide or the 7 5 court determines that the value of the trust property 7 6 substantially exceeds the amount required. 7 7 4. The intended use of a trust authorized by this section 7 8 may be enforced by a person designated for that purpose in the 7 9 terms of the trust or, if none, by a person appointed by the 7 10 court. 7 11 Sec. 13. NEW SECTION. 633.2106 RESULTING TRUSTS. 7 12 1. Where the owner of property gratuitously transfers the 7 13 property and manifests in the trust instrument an intention 7 14 that the transferee should hold the property in trust but the 7 15 trust fails, the transferee holds the trust estate as a 7 16 resulting trust for the transferor or the transferor's estate, 7 17 unless all of the following is true: 7 18 a. The transferor manifested in the trust instrument an 7 19 intention that no resulting trust should arise. 7 20 b. The intended trust fails for illegality and the policy 7 21 against unjust enrichment of the transferee is outweighed by 7 22 the policy against giving relief to a person who has entered 7 23 into an illegal transaction. 7 24 2. Where the owner of property gratuitously transfers the 7 25 property subject to a trust which is properly declared and 7 26 which has fully performed without exhausting the trust estate, 7 27 the trustee holds the surplus as a resulting trust for the 7 28 transferor or the transferor's estate, unless the transferor 7 29 manifested in the trust instrument an intention that no 7 30 resulting trust of the surplus should arise. 7 31 3. If the transferor's estate is the recipient of property 7 32 under this section and the administration of that estate has 7 33 been closed and there is no question as to the proper 7 34 recipients of the property, it is not necessary to reopen the 7 35 estate administration for the purpose of distribution. 8 1 Sec. 14. NEW SECTION. 633.2107 CONSTRUCTIVE TRUSTS. 8 2 A constructive trust arises when a person holding title to 8 3 property is subject to an equitable duty to convey the 8 4 property to another, on the ground that the person holding 8 5 title would be unjustly enriched if the person were permitted 8 6 to retain the property. 8 7 Subpart 2 8 8 MODIFICATION AND TERMINATION OF TRUSTS 8 9 Sec. 15. NEW SECTION. 633.2201 TERMINATION OR 8 10 MODIFICATION OF TRUST. 8 11 1. In addition to the methods specified in sections 8 12 633.2202 through 633.2205, a trust terminates when any of the 8 13 following occurs: 8 14 a. The term of the trust expires. 8 15 b. The trust purpose is fulfilled. 8 16 c. The trust purpose becomes unlawful or impossible to 8 17 fulfill. 8 18 d. The trust is revoked. 8 19 2. On termination of a trust, the trustee may exercise the 8 20 powers necessary to wind up the affairs of the trust and 8 21 distribute the trust property to those entitled to the trust 8 22 property. 8 23 3. For purposes of sections 633.2202 through 633.2205, a 8 24 beneficiary is limited to a person that is an eligible 8 25 recipient of income or principal, or would receive principal 8 26 or income from the trust if it were terminated. 8 27 Sec. 16. NEW SECTION. 633.2202 MODIFICATION OR 8 28 TERMINATION BY SETTLOR AND ALL BENEFICIARIES. 8 29 1. An irrevocable trust may be modified or terminated upon 8 30 the consent of the settlor and all of the beneficiaries. 8 31 2. Upon termination of the trust, the trustee shall 8 32 distribute the trust property as agreed by the settlor and all 8 33 beneficiaries, or in the absence of unanimous agreement, as 8 34 ordered by the court. 8 35 3. For purposes of this section, the consent of a person 9 1 who may bind a beneficiary or otherwise act on a beneficiary's 9 2 behalf is considered the consent of the beneficiary. 9 3 Sec. 17. NEW SECTION. 633.2203 MODIFICATION OR 9 4 TERMINATION OF IRREVOCABLE TRUST IF NO MATERIAL PURPOSE. 9 5 1. An irrevocable trust may be terminated or modified 9 6 either by the court or upon consent of all of the 9 7 beneficiaries if continuance of the trust on the same or 9 8 different terms is not necessary to carry out a material 9 9 purpose. 9 10 2. Upon petition to the court by the settlor, trustee, or 9 11 other interested person, the court may set aside an improper 9 12 termination or modification by the beneficiaries. 9 13 3. Upon termination of the trust, the trustee shall 9 14 distribute the trust property in accordance with the probable 9 15 intention of the settlor or as agreed by the beneficiaries. 9 16 4. For purposes of this section, the consent of a person 9 17 who may bind a beneficiary is considered the consent of the 9 18 beneficiary. 9 19 Sec. 18. NEW SECTION. 633.2204 NONCHARITABLE TRUST WITH 9 20 UNECONOMICALLY LOW VALUE. 9 21 1. On petition by a trustee or beneficiary, the court may 9 22 terminate or modify a noncharitable trust or appoint a new 9 23 trustee if the court determines that the value of the trust 9 24 property is insufficient to justify the cost of administration 9 25 involved and that continuation of the trust under its existing 9 26 terms would defeat or significantly impair the accomplishment 9 27 of the trust purposes. 9 28 2. Upon termination of a trust under this section, the 9 29 trustee shall distribute the trust property in accordance with 9 30 the probable intention of the settlor under the circumstances. 9 31 Sec. 19. NEW SECTION. 633.2205 REFORMATION – TAX 9 32 OBJECTIVES. 9 33 1. The terms of a trust may be reformed to conform to the 9 34 settlor's intent if the failure to conform was due to a 9 35 mistake of fact or law and the settlor's intent can be 10 1 established. 10 2 2. The terms of the trust may be construed or modified, in 10 3 a manner that does not violate the settlor's probable intent, 10 4 to achieve the settlor's tax objectives. 10 5 Sec. 20. NEW SECTION. 633.2206 COMBINATION OF TRUSTS. 10 6 1. A trustee, without approval of court, may combine two 10 7 or more trusts with substantially similar beneficial 10 8 interests. 10 9 2. On petition by a trustee or beneficiary, the court may 10 10 combine two or more trusts, whether or not the beneficial 10 11 interests are substantially similar, if the court determines 10 12 that administration as a single trust will not defeat or 10 13 significantly impair the accomplishment of the trust purposes 10 14 or the rights of the beneficiaries. 10 15 3. Where the court orders the combination of two trusts 10 16 that are not essentially identical, the court shall include in 10 17 its order a finding as to which trust provisions control. 10 18 Sec. 21. NEW SECTION. 633.2207 DIVISION OF TRUSTS. 10 19 1. Without approval of a court, a trustee may divide a 10 20 trust into two or more separate trusts with substantially 10 21 similar terms if the division will not defeat or substantially 10 22 impair the accomplishment of the trust purposes or the rights 10 23 of the beneficiaries. 10 24 2. On petition by a trustee or beneficiary, the court may 10 25 divide a trust into two or more separate trusts, whether or 10 26 not their terms are similar, if the court determines that 10 27 dividing the trust is in the best interest of the 10 28 beneficiaries and will not defeat or substantially impair the 10 29 accomplishment of the trust purposes or the rights of the 10 30 beneficiaries. 10 31 Subpart 3 10 32 SPENDTHRIFT PROTECTION 10 33 Sec. 22. NEW SECTION. 633.2301 SPENDTHRIFT PROTECTION 10 34 RECOGNIZED. 10 35 Except as otherwise provided in section 633.2302, if the 11 1 terms of the trust provide that a beneficiary's interest in 11 2 the income and principal is not subject to either voluntary or 11 3 involuntary transfer, the beneficiary's interest shall not be 11 4 transferred and is not subject to enforcement of a money 11 5 judgment until paid to the beneficiary. 11 6 Sec. 23. NEW SECTION. 633.2302 EXCEPTIONS TO SPENDTHRIFT 11 7 PROTECTION. 11 8 A term of a trust prohibiting an involuntary transfer of a 11 9 beneficiary's interest shall be invalid as against claims by 11 10 any of the following: 11 11 1. Any creditor of the beneficiary if the beneficiary is 11 12 the settlor. 11 13 2. Any creditor of the beneficiary as to a distribution to 11 14 be made upon an event terminating or partially terminating the 11 15 trust. 11 16 Sec. 24. NEW SECTION. 633.2303 SELF-SETTLED TRUSTS. 11 17 1. If a settlor is a beneficiary of a trust created by the 11 18 settlor, a transferee or creditor of the settlor may reach the 11 19 maximum amount that the trustee could pay to or for the 11 20 settlor's benefit. 11 21 2. In the case of a trust with multiple settlors, the 11 22 amount the creditor or transferee of a particular settlor may 11 23 reach shall not exceed the portion of the trust attributable 11 24 to that settlor's contribution. 11 25 Part 3 11 26 PROVISIONS RELATING TO REVOCABLE TRUSTS 11 27 Sec. 25. NEW SECTION. 633.3101 COMPETENCY TO CREATE, 11 28 REVOKE, OR MODIFY A REVOCABLE TRUST. 11 29 1. The competency necessary to create, revoke, or modify a 11 30 revocable trust that contains dispositive provisions upon the 11 31 death of the settlor is the same as the competency required to 11 32 make a will. An aggrieved person shall have all causes of 11 33 action and remedies available to the aggrieved person in 11 34 attacking the creation, revocation, or modification of a trust 11 35 as one would if attacking the propriety of the execution of a 12 1 will. 12 2 2. The level of competency required of a settlor to direct 12 3 the actions of the trustee, or to contribute property to, or 12 4 to withdraw property from, a trust is the same as that 12 5 required to create a revocable trust. 12 6 Sec. 26. NEW SECTION. 633.3102 REVOCATION OR 12 7 MODIFICATION. 12 8 1. Unless the terms of the trust expressly provide that 12 9 the trust is irrevocable, the settlor may revoke or modify the 12 10 trust. This subsection does not apply to trusts created under 12 11 instruments executed before the effective date of this Act. 12 12 2. Except as otherwise provided by the terms of the trust, 12 13 if a trust is created or funded by more than one settlor, each 12 14 settlor may revoke or modify the trust as to the portion of 12 15 the trust contributed by that settlor. 12 16 3. A trust that is revocable by the settlor may be revoked 12 17 or modified by any of the following methods: 12 18 a. By compliance with any method specified by the terms of 12 19 the trust. 12 20 b. Unless the terms of the trust expressly make the method 12 21 specified exclusive, then either of the following: 12 22 (1) By a writing, other than a will, signed by the settlor 12 23 and delivered to the trustee during the settlor's lifetime. 12 24 (2) By a later will or codicil expressly referring to the 12 25 trust and which makes a devise of the property that would 12 26 otherwise have passed by the terms of the trust. 12 27 4. Upon termination of a revocable trust, the trustee must 12 28 distribute the trust property as the settlor directs. 12 29 5. The settlor's powers with respect to revocation or 12 30 modification may be exercised by an agent under a power of 12 31 attorney only and to the extent the power of attorney 12 32 expressly so authorizes. 12 33 6. Except to the extent prohibited by the terms of the 12 34 trust, a conservator may revoke or modify a trust with the 12 35 approval of the court supervising the conservatorship. 13 1 Sec. 27. NEW SECTION. 633.3103 OTHER RIGHTS OF SETTLOR. 13 2 Except to the extent the terms of the trust otherwise 13 3 provide, while a trust is revocable and the individual holding 13 4 the power to revoke the trust is competent, all of the 13 5 following apply: 13 6 1. The holder of the power, and not the beneficiary, has 13 7 the rights afforded beneficiaries. 13 8 2. The duties of the trustee are owed to the holder of the 13 9 power. 13 10 3. The trustee shall follow a written direction given by 13 11 the holder of the power, or a person to whom the power has 13 12 been delegated in writing, without liability for so doing, so 13 13 long as the action by the delegate is authorized by the trust. 13 14 Sec. 28. NEW SECTION. 633.3104 CREDITOR CLAIMS AGAINST 13 15 REVOCABLE TRUST. 13 16 1. During the lifetime of the settlor, the trust property 13 17 of a revocable trust is subject to the claims of the settlor's 13 18 creditors to the extent of the settlor's power of revocation. 13 19 2. Following the death of a settlor, the property of a 13 20 revocable trust subject to the settlor's power of revocation 13 21 at the time of death is subject to the claims of the settlor's 13 22 creditors and costs of administration of the settlor's estate 13 23 to the extent of the value of the property over which the 13 24 settlor's power of revocation and the settlor's estate is 13 25 inadequate to satisfy those claims and costs. 13 26 Sec. 29. NEW SECTION. 633.3105 RIGHTS OF AND CREDITOR 13 27 CLAIMS AGAINST HOLDER OF GENERAL POWER OF APPOINTMENT. 13 28 1. The holder of a presently exercisable general power of 13 29 appointment over trust property has the rights of a holder of 13 30 the power to revoke a trust under section 633.3103 to the 13 31 extent of the property subject to the power. 13 32 2. Property in trust subject to a presently exercisable 13 33 general power of appointment is chargeable with the claims of 13 34 the holder's creditors and costs of administration of the 13 35 holder's estate to the same extent as if the holder was a 14 1 settlor and the power of appointment was a power of 14 2 revocation. 14 3 Sec. 30. NEW SECTION. 633.3106 CHILDREN BORN OR ADOPTED 14 4 AFTER EXECUTION OF A REVOCABLE TRUST. 14 5 When a settlor fails to provide in a revocable trust for 14 6 any of the settlor's children born to or adopted by the 14 7 settlor after the making of the trust, such child, whether 14 8 born before or after the settlor's death, shall receive a 14 9 share of the trust equal in value to that which the child 14 10 would have received under section 633.211, 633.212, or 14 11 633.219, whichever is applicable, as if the settlor had died 14 12 intestate, unless it appears from the terms of the trust or 14 13 decedent's will that such omission was intentional. 14 14 Sec. 31. NEW SECTION. 633.3107 EFFECT OF DIVORCE OR 14 15 DISSOLUTION. 14 16 1. If, after executing a revocable trust, the settlor is 14 17 divorced or the settlor's marriage is dissolved, all 14 18 provisions in the trust in favor of the settlor's spouse are 14 19 revoked by divorce or dissolution of marriage. 14 20 2. In the event the settlor and spouse remarry each other, 14 21 the provisions of the revocable trust revoked by the divorce 14 22 or dissolution of marriage shall be reinstated unless 14 23 otherwise modified by the settlor. 14 24 Sec. 32. NEW SECTION. 633.3108 LIMITATION ON CONTEST OF 14 25 REVOCABLE TRUST. 14 26 1. Unless previously barred by adjudication, consent, or 14 27 other limitation, a proceeding to contest the validity of a 14 28 revocable trust must be brought no later than one year 14 29 following the death of the settlor. 14 30 2. Unless the trustee is a party to a pending proceeding 14 31 contesting its validity, six months following the death of the 14 32 settlor, the trustee of a revocable trust may assume the 14 33 trust's validity and proceed to distribute the trust property 14 34 in accordance with the terms of the trust, without liability 14 35 for so doing. Liability for an improper distribution in such 15 1 a case is solely on the beneficiaries. 15 2 3. If notice is given pursuant to section 633.3109, the 15 3 six month period in subsection 2 is ineffectual and the 15 4 applicable time period shall be determined by section 15 5 633.3109. 15 6 Sec. 33. NEW SECTION. 633.3109 NOTICE TO CREDITORS, 15 7 HEIRS, SPOUSE, AND BENEFICIARIES. 15 8 1. As used in this section, "intestate heir" means only 15 9 such person as would, in an intestate estate, be entitled to a 15 10 share under section 633.219, subsection 1, 2, or 3. 15 11 2. A creditor of a deceased settlor of a revocable trust 15 12 must bring suit to enforce its claim against the assets of the 15 13 decedent's trust within one year of the decedent's death or be 15 14 forever barred from collection against the trust assets. If a 15 15 probate administration is commenced for the decedent and 15 16 notice is properly given pursuant to section 633.230 or 15 17 633.304, a creditor's rights shall be determined under those 15 18 sections and section 633.3104. 15 19 3. If no notice is given to creditors and heirs pursuant 15 20 to subsection 1, a creditor's rights may be established or 15 21 terminated if the trustee gives notice as follows: 15 22 a. The trustee shall publish a notice once each week for 15 23 two consecutive weeks in a daily or weekly newspaper of 15 24 general circulation published in the county in which the 15 25 settlor was domiciled. 15 26 b. If the decedent was a nonresident of the county in 15 27 which some real estate of the trust is located, and at any 15 28 time during the pendency of the trust administration the 15 29 trustee has knowledge of the name and address of a person 15 30 believed to own or possess a claim which will not, or may not, 15 31 be paid or otherwise satisfied during administration, the 15 32 trustee shall provide a notice by ordinary mail to each such 15 33 claimant at the claimant's last known address. 15 34 c. As soon as practicable, the trustee shall give a notice 15 35 by ordinary mail to the surviving spouse, the intestate heirs 16 1 of the decedent, and each beneficiary under the trust whose 16 2 identities are reasonably ascertainable, at such person's last 16 3 known addresses. 16 4 d. The notice in paragraphs "a", "b", and "c" shall 16 5 include notification of the decedent's death, and the fact 16 6 that any action to contest the validity of the trust must be 16 7 brought within the later to occur of sixty days from the date 16 8 of the second publication of the notice made pursuant to 16 9 paragraph "a" or thirty days from the date of mailing of the 16 10 notice pursuant to paragraph "b" or "c". A person who does 16 11 not make a claim within the appropriate period is forever 16 12 barred. 16 13 e. The trustee shall give notice to debtors to make 16 14 payment, and to creditors having claims against the trust 16 15 assets to mail to the trustee via certified mail, return 16 16 receipt requested, within the later to occur of sixty days 16 17 from the second publication of the notice or thirty days from 16 18 the date of mailing of the notice, or thereafter be forever 16 19 barred. 16 20 4. The notice described in subsection 3 shall be 16 21 substantially in the following form: 16 22 To all persons regarding _______________, deceased, who 16 23 died on or about _____________________, (year)____. You are 16 24 hereby notified that ____________ is the trustee of the 16 25 __________ Trust. At this time, no probate administration is 16 26 contemplated with regard to the above-referenced decedent's 16 27 estate. 16 28 Any action to contest the validity of the trust must be 16 29 brought in the District Court of ________________ County, 16 30 Iowa, within the later to occur of sixty days from the date of 16 31 second publication of this notice, or thirty days from the 16 32 date of mailing this notice to all heirs of the decedent, 16 33 spouse of the decedent, and beneficiaries under the trust 16 34 whose identities are reasonably ascertainable. Any claim not 16 35 filed within this period shall be forever barred. 17 1 Notice is further given that all persons indebted to the 17 2 decedent or to the trust are requested to make immediate 17 3 payment to the undersigned trustee. Creditors having claims 17 4 against the trust must mail them to the trustee at the address 17 5 listed below via certified mail, return receipt requested. 17 6 Unless creditor claims are mailed by the later to occur of 17 7 sixty days from the second publication of this notice or 17 8 thirty days from the date of mailing this notice, a claim 17 9 shall be forever barred, unless otherwise allowed or paid. 17 10 Dated this _______ day of ______________, (year)____. 17 11 _________________________________________ Trust 17 12 ____________________________ 17 13 Trustee 17 14 Address: ___________________ 17 15 ___________________ 17 16 Date of second publication ______ day of ____________, 17 17 (year) ____. 17 18 5. The claimant either must receive satisfaction of its 17 19 claim within sixty days of mailing its claim to the trustee, 17 20 or must file suit against the trust to enforce collection of 17 21 the creditor's claim. The trustee and creditor may agree to 17 22 extend the limitations period for filing an action to enforce 17 23 the claim. If the claimant fails to properly file its claim 17 24 within the established time period or bring an action to 17 25 enforce its claim within the established time period, the 17 26 creditor's claim shall be forever barred. 17 27 Sec. 34. NEW SECTION. 633.3110 RIGHTS OF TRUSTEE 17 28 REGARDING CLAIMS IN A PROBATE ADMINISTRATION. 17 29 1. If a probate administration has been commenced for 17 30 which a revocable trust could be held responsible for the 17 31 payment of claims, expenses, or taxes, the trustee shall be an 17 32 interested party in that probate administration. 17 33 2. The trustee shall receive notice of all potential 17 34 charges against the trust assets and must either authorize the 17 35 payments for which the trust may be found liable or be given 18 1 the opportunity to dispute or defend any such payment. 18 2 Sec. 35. NEW SECTION. 633.3111 TRUSTEE'S LIABILITY FOR 18 3 DISTRIBUTIONS. 18 4 1. A trustee who distributes trust assets without making 18 5 adequate provisions for the payment of creditor claims that 18 6 are known or reasonably ascertainable shall be jointly and 18 7 severally liable with the beneficiaries to the extent of the 18 8 distributions made. 18 9 2. A trustee shall be entitled to indemnification from the 18 10 beneficiaries for all amounts paid to creditors under this 18 11 section. 18 12 Part 4 18 13 TRUST ADMINISTRATION 18 14 Subpart 1 18 15 OFFICE OF TRUSTEE 18 16 Sec. 36. NEW SECTION. 633.4101 ACCEPTANCE OR REJECTION 18 17 OF TRUST BY TRUSTEE. 18 18 1. A person named as trustee accepts the office of trustee 18 19 by doing one of the following: 18 20 a. Signing the trust instrument, or signing a separate 18 21 written acceptance. 18 22 b. Except as provided in subsection 3, knowingly accepting 18 23 delivery of the trust property or exercising powers or 18 24 performing duties as trustee. 18 25 2. A person named as trustee who has not yet accepted the 18 26 office of trustee may in writing reject the trust. 18 27 3. If there is an immediate risk of damage to the trust 18 28 property, the person named as trustee may act to preserve the 18 29 trust property without accepting the office of trustee, if 18 30 within a reasonable time after acting, the person delivers a 18 31 written rejection of the trust to the settlor, or if the 18 32 settlor is dead or lacks capacity, to the beneficiaries 18 33 eligible to receive income or principal distributions from the 18 34 trust. 18 35 Sec. 37. NEW SECTION. 633.4102 TRUSTEE'S BOND. 19 1 1. A trustee is not required to give a bond to secure 19 2 performance of the trustee's duties unless one of the 19 3 following applies: 19 4 a. A bond is expressly required by the terms of the trust. 19 5 b. A bond is found by the court to be necessary to protect 19 6 the interests of beneficiaries, regardless of the terms of the 19 7 trust. 19 8 2. If a bond is required, it must be filed, and be in an 19 9 amount and with sureties and liabilities as the court may 19 10 order. The court may excuse a requirement of a bond, reduce 19 11 or increase the amount of a bond, release a surety, or permit 19 12 the substitution of another bond with the same or different 19 13 sureties. 19 14 3. The amount of a bond otherwise required may be reduced 19 15 by the value of trust property deposited with a financial 19 16 institution in a manner that prevents its unauthorized 19 17 disposition, and by the value of real property which the 19 18 trustee, by express limitation of power, lacks power to convey 19 19 without court authorization. 19 20 4. Except as otherwise provided by the terms of the trust 19 21 or ordered by the court, the cost of a bond is charged to the 19 22 trust. 19 23 5. A bank or trust company shall not be required to give a 19 24 bond, whether or not the terms of the trust require a bond. 19 25 Sec. 38. NEW SECTION. 633.4103 ACTIONS BY COTRUSTEES. 19 26 Unless the terms of the trust provide otherwise, the 19 27 following apply to actions of cotrustees: 19 28 1. A power held by cotrustees may be exercised by majority 19 29 action. 19 30 2. If impasse occurs due to the failure to reach a 19 31 majority decision, any trustee may petition the court to 19 32 decide the issue, or a majority of the trustees may consent to 19 33 an alternative form of dispute resolution. 19 34 3. If a vacancy occurs in the office of a cotrustee, the 19 35 remaining cotrustees may act for the trust as if they are the 20 1 only trustees. 20 2 4. If a cotrustee is unavailable to perform duties because 20 3 of absence, illness, or other temporary incapacity, the 20 4 remaining cotrustees may act for the trust, as if they were 20 5 the only trustees, if necessary to accomplish the purposes of 20 6 the trust or to avoid irreparable injury to the trust 20 7 property. 20 8 Sec. 39. NEW SECTION. 633.4104 VACANCY IN OFFICE OF 20 9 TRUSTEE. 20 10 A vacancy in the office of trustee exists if any of the 20 11 following occurs: 20 12 1. The person named as trustee rejects the trust. 20 13 2. The person named as trustee cannot be identified or 20 14 does not exist. 20 15 3. The trustee resigns or is removed. 20 16 4. The trustee dies. 20 17 5. A guardian or conservator of the trustee's person or 20 18 estate is appointed. 20 19 Sec. 40. NEW SECTION. 633.4105 FILLING VACANCY. 20 20 1. For purposes of this section, "adult beneficiaries" 20 21 shall not include either of the following: 20 22 a. Beneficiaries who are not competent and are not 20 23 represented by a guardian, conservator, or agent. 20 24 b. Beneficiaries who are not entitled or eligible to 20 25 receive trust income or a distribution of principal were the 20 26 trust to terminate at the time the agreement is made. 20 27 2. A trustee must be appointed to fill a vacancy in the 20 28 office of the trustee only if the trust has no trustee or the 20 29 terms of the trust require a vacancy in the office of 20 30 cotrustee to be filled. 20 31 3. A vacancy in the office of trustee shall be filled 20 32 according to the following: 20 33 a. By the person named in or nominated pursuant to the 20 34 method specified by the terms of the trust. 20 35 b. If the terms of the trust do not name a person or 21 1 specify a method for filling the vacancy, or if the person 21 2 named or nominated pursuant to the method specified fails to 21 3 accept, one of the following methods shall be used: 21 4 (1) By a trust company designated by agreement of the 21 5 adult beneficiaries specified in subsection 1. 21 6 (2) By majority vote of all adult beneficiaries and the 21 7 parent or legal guardian of any minor or incompetent 21 8 beneficiary. 21 9 (3) By a person appointed by the court on petition of an 21 10 interested person or of a person named as trustee by the terms 21 11 of the trust. The court, in selecting a trustee, shall 21 12 consider any nomination made by the adult beneficiaries. 21 13 Sec. 41. NEW SECTION. 633.4106 RESIGNATION OF TRUSTEE. 21 14 1. A trustee who has accepted a trust may resign by any of 21 15 the following methods: 21 16 a. As provided by the terms of the trust. 21 17 b. With the consent of the person holding the power to 21 18 revoke the trust if the holder is competent or is represented 21 19 by a guardian, conservator, or agent. 21 20 c. With the consent of the adult beneficiaries as defined 21 21 in section 633.4105, subsection 1, if the trust is irrevocable 21 22 or the holder of the power to revoke lacks competency or is 21 23 not represented by a guardian, conservator, or agent. 21 24 d. Upon written notice to the holder of the power to 21 25 revoke if the holder substantially changes the trustee's 21 26 duties and the trustee does not concur. 21 27 e. By filing a petition to resign under section 633.6202. 21 28 The resignation takes effect ninety days after the filing, or 21 29 upon approval of the petition by the court, whichever first 21 30 occurs. The court must accept the trustee's resignation but 21 31 may impose such orders and conditions as are reasonably 21 32 necessary for the protection of the trust property, including 21 33 the appointment of a receiver or temporary trustee. 21 34 2. The liability for acts or omissions of a resigning 21 35 trustee or of any sureties on the trustee's bond is not 22 1 released or affected by the trustee's resignation. 22 2 Sec. 42. NEW SECTION. 633.4107 REMOVAL OF TRUSTEE. 22 3 1. A trustee may be removed in accordance with the terms 22 4 of the trust, by the court on its own motion, or on petition 22 5 of a settlor, cotrustee, or beneficiary under section 22 6 633.6202. 22 7 2. The court may remove a trustee, or order other 22 8 appropriate relief if any of the following occurs: 22 9 a. If the trustee has committed a material breach of the 22 10 trust. 22 11 b. If the trustee is unfit to administer the trust. 22 12 c. If hostility or lack of cooperation among cotrustees 22 13 impairs the administration of the trust. 22 14 d. If the trustee's investment performance is consistently 22 15 and substantially substandard. 22 16 e. If the trustee's compensation is excessive under the 22 17 circumstances. 22 18 f. For other good cause shown. 22 19 3. If it appears to the court that trust property or the 22 20 interests of a beneficiary may suffer loss or injury pending a 22 21 final decision on a petition for removal of a trustee, the 22 22 court may suspend the powers of the trustee, compel the 22 23 trustee to surrender trust property to a cotrustee, receiver, 22 24 or temporary trustee, or order other appropriate relief. 22 25 Sec. 43. NEW SECTION. 633.4108 DELIVERY OF PROPERTY BY 22 26 FORMER TRUSTEE. 22 27 Unless a cotrustee remains in office, a former trustee, or 22 28 if the trustee's appointment terminated because of death or 22 29 disability, the former trustee's personal representative or 22 30 guardian or conservator, is responsible for and has the powers 22 31 necessary to protect the trust property and other powers 22 32 essential to the trust's administration until the property is 22 33 delivered to a successor trustee or a person appointed by the 22 34 court to receive the property. 22 35 Sec. 44. NEW SECTION. 633.4109 COMPENSATION OF TRUSTEE. 23 1 1. If the terms of the trust do not specify the trustee's 23 2 compensation, a trustee or cotrustee is entitled to 23 3 compensation that is reasonable under the circumstances. 23 4 2. If the terms of the trust specify the trustee's 23 5 compensation, the trustee is entitled to be compensated as so 23 6 provided, except that upon proper showing, the court may allow 23 7 more or less compensation in the following instances: 23 8 a. If the duties of the trustee are substantially 23 9 different from those contemplated when the trust was created. 23 10 b. If the compensation specified by the terms of the trust 23 11 would be inequitable, or unreasonably low or high. 23 12 c. In extraordinary circumstances calling for equitable 23 13 relief. 23 14 Sec. 45. NEW SECTION. 633.4110 REPAYMENT FOR 23 15 EXPENDITURES. 23 16 A trustee is entitled to be repaid out of the trust 23 17 property, with interest as appropriate, for all of the 23 18 following expenditures: 23 19 1. Expenditures that were properly incurred in the 23 20 administration of the trust. 23 21 2. To the extent that they benefited the trust, 23 22 expenditures that were not properly incurred in the 23 23 administration of the trust. 23 24 Sec. 46. NEW SECTION. 633.4111 NOTICE OF INCREASED 23 25 TRUSTEE'S FEE. 23 26 1. As used in this section, "trustee's fee" includes a 23 27 trustee's periodic base fee, rate of percentage compensation, 23 28 minimum fee, hourly rate, and transaction charge, but does not 23 29 include fees for extraordinary services. 23 30 2. A trustee shall not charge an increased trustee's fee 23 31 for administration of a trust unless the trustee first gives 23 32 at least thirty days' written notice of the increased fee to 23 33 all of the following beneficiaries: 23 34 a. Each beneficiary who is entitled to an accounting under 23 35 section 633.4213, subsection 6. 24 1 b. Each beneficiary who was given the last preceding 24 2 account. 24 3 c. Each beneficiary who has made a written request to the 24 4 trustee for notice of an increased trustee's fee, and has 24 5 given an address for receiving notice by mail. 24 6 3. If a beneficiary files a petition for review of an 24 7 increased trustee's fee or for removal of a trustee and serves 24 8 a copy of the petition on the trustee within the thirty-day 24 9 period, the increased fee does not take effect until otherwise 24 10 ordered by the court or the petition is dismissed. 24 11 Subpart 2 24 12 FIDUCIARY DUTIES OF TRUSTEE 24 13 Sec. 47. NEW SECTION. 633.4201 DUTY TO ADMINISTER TRUST 24 14 – ALTERATION BY TERMS OF TRUST. 24 15 1. On acceptance of a trust, the trustee shall administer 24 16 the trust according to the terms of the trust and according to 24 17 this trust code, except to the extent the terms of the trust 24 18 provide otherwise. 24 19 2. The terms of the trust may expand, restrict, eliminate, 24 20 or otherwise alter the duties prescribed by this trust code, 24 21 and the trustee may reasonably rely on those terms, but 24 22 nothing in this trust code authorizes a trustee to act in bad 24 23 faith or in disregard of the purposes of the trust or the 24 24 interest of the beneficiaries. 24 25 Sec. 48. NEW SECTION. 633.4202 DUTY OF LOYALTY – 24 26 IMPARTIALITY – CONFIDENTIAL RELATIONSHIP. 24 27 1. A trustee shall administer the trust solely in the 24 28 interest of the beneficiaries, and shall act with due regard 24 29 to their respective interests. 24 30 2. Any transaction involving the trust which is affected 24 31 by a substantial conflict between the trustee's fiduciary and 24 32 personal interests is voidable by a beneficiary affected by 24 33 the transaction unless one of the following applies: 24 34 a. The transaction was expressly authorized by the terms 24 35 of the trust. 25 1 b. The beneficiary consented to or affirmed the 25 2 transaction or released the trustee from liability as provided 25 3 in section 633.4506. 25 4 c. The transaction is approved by the court after notice 25 5 to interested persons. 25 6 3. A transaction affected by a substantial conflict 25 7 between personal and fiduciary interests includes any sale, 25 8 encumbrance, or other transaction involving the trust property 25 9 entered into by the trustee, the spouse, descendant, agent, or 25 10 attorney of a trustee, or corporation or other enterprise in 25 11 which the trustee has a substantial beneficial interest. 25 12 4. A transaction not involving trust property between a 25 13 trustee and a beneficiary which occurs during the existence of 25 14 the trust or while the trustee retains significant influence 25 15 over the beneficiary and from which the trustee obtains an 25 16 advantage is an abuse of a confidential relationship unless 25 17 the trustee establishes that the transaction was fair. 25 18 5. This section does not apply to any of the following: 25 19 a. An agreement between a trustee and a beneficiary 25 20 relating to the appointment of the trustee. 25 21 b. The payment of compensation to the trustee, whether by 25 22 agreement, the terms of the trust, or this trust code. 25 23 c. A transaction between a trust and another trust, 25 24 decedent's or conservatorship estate of which the trustee is a 25 25 fiduciary if the transaction is fair to the beneficiaries of 25 26 the trust. 25 27 Sec. 49. NEW SECTION. 633.4203 STANDARD OF PRUDENCE. 25 28 A trustee shall administer the trust with the reasonable 25 29 care, skill, and caution as a prudent person would, by 25 30 considering the purposes, terms, distribution requirements, 25 31 and other circumstances of the trust. 25 32 Sec. 50. NEW SECTION. 633.4204 COSTS OF ADMINISTRATION. 25 33 A trustee may only incur costs that are reasonable in 25 34 relation to the trust property, purposes, and other 25 35 circumstances of the trust. 26 1 Sec. 51. NEW SECTION. 633.4205 SPECIAL SKILLS. 26 2 A trustee who has special skills or expertise, or is named 26 3 trustee in reliance upon the trustee's representation that the 26 4 trustee has special skills or expertise, has a duty to use 26 5 those special skills or expertise. 26 6 Sec. 52. NEW SECTION. 633.4206 DELEGATION. 26 7 1. A trustee shall not delegate to an agent or cotrustee 26 8 the entire administration of the trust or the responsibility 26 9 to make or participate in the making of decisions with respect 26 10 to discretionary distributions, but a trustee may otherwise 26 11 delegate the performance of functions that a prudent trustee 26 12 of comparable skills might delegate under similar 26 13 circumstances. 26 14 2. The trustee shall exercise reasonable care, skill, and 26 15 caution in the following activities: 26 16 a. Selecting an agent. 26 17 b. Establishing the scope and terms of a delegation, 26 18 consistent with the purposes and terms of the trust. 26 19 c. Periodically reviewing an agent's overall performance 26 20 and compliance with the terms of the delegation. 26 21 d. Redressing an action or decision of an agent which 26 22 would constitute a breach of trust if performed by the 26 23 trustee. 26 24 3. A trustee who complies with the requirements of 26 25 subsections 1 and 2 is not liable to the beneficiaries or to 26 26 the trust for the decisions or actions of the agent to whom a 26 27 function was delegated. 26 28 4. In performing a delegated function, an agent shall 26 29 exercise reasonable care to comply with the terms of the 26 30 delegation. 26 31 5. By accepting the delegation of a trust function from 26 32 the trustee of a trust that is subject to the law of this 26 33 state, an agent submits to the jurisdiction of the courts of 26 34 this state. 26 35 Sec. 53. NEW SECTION. 633.4207 DIRECTORY POWERS. 27 1 1. If the terms of the trust grant a person other than the 27 2 trustee power to direct certain actions of the trustee, the 27 3 trustee shall act in accordance with the exercise of the power 27 4 unless an attempted exercise violates the terms of the trust 27 5 or the trustee is aware that the attempted exercise violates a 27 6 fiduciary duty which the person owes the beneficiaries of the 27 7 trust or the trustee believes or has reason to know that the 27 8 individual is incompetent. 27 9 2. The holder of a directory power who violates a 27 10 fiduciary duty owed to the beneficiaries is liable for any 27 11 loss which results. 27 12 Sec. 54. NEW SECTION. 633.4208 COTRUSTEES. 27 13 1. If a trust has more than one trustee, each trustee 27 14 shall perform all of the following duties: 27 15 a. Participate in the administration of the trust. 27 16 b. Take reasonable steps to prevent a cotrustee from 27 17 committing a breach of trust, and to compel a cotrustee to 27 18 redress a breach of trust. 27 19 2. A trustee who complies with subsection 1 is not liable 27 20 to the beneficiaries or to the trust for the decisions or 27 21 actions of a cotrustee. 27 22 Sec. 55. NEW SECTION. 633.4209 CONTROL AND SAFEGUARDING 27 23 OF TRUST PROPERTY. 27 24 A trustee shall take reasonable steps under the 27 25 circumstances to take control of and to safeguard the trust 27 26 property unless it is in the best interests of the trust to 27 27 abandon or refuse acceptance of the property. 27 28 Sec. 56. NEW SECTION. 633.4210 SEPARATION AND 27 29 IDENTIFICATION OF TRUST PROPERTY. 27 30 A trustee shall do all of the following: 27 31 1. Keep the trust property separate from other property of 27 32 the trustee unless the trust provides otherwise. 27 33 2. Cause the trust property to be designated in such a 27 34 manner that the interest of the trust clearly appears. 27 35 Sec. 57. NEW SECTION. 633.4211 ENFORCEMENT AND DEFENSE 28 1 OF CLAIMS AND ACTIONS. 28 2 A trustee shall take reasonable steps to enforce claims 28 3 that are part of the trust property and to defend against 28 4 actions that may result in a loss to the trust. 28 5 Sec. 58. NEW SECTION. 633.4212 PRIOR FIDUCIARIES. 28 6 A trustee shall take reasonable steps to do all of the 28 7 following: 28 8 1. Compel a former trustee or other fiduciary to deliver 28 9 trust property to the trustee. 28 10 2. Redress a breach of trust known to the trustee to have 28 11 been committed by a prior trustee or other fiduciary. 28 12 Sec. 59. NEW SECTION. 633.4213 DUTY TO INFORM AND 28 13 ACCOUNT. 28 14 1. A trustee shall keep the beneficiaries of the trust 28 15 reasonably informed of the administration of the trust. 28 16 2. Within thirty days after accepting the office of the 28 17 trustee, the trustee shall inform the beneficiaries of the 28 18 acceptance. Within thirty days after the death of a settlor 28 19 of a trust, the trustee shall inform the beneficiaries having 28 20 vested interests of their respective interests in the trust 28 21 unless the trust specifies otherwise. 28 22 3. A trustee shall inform the beneficiaries in advance of 28 23 a transaction affecting trust property comprising a 28 24 significant portion of the value of the trust and whose fair 28 25 market value is not readily ascertainable. 28 26 4. On reasonable request of a beneficiary, a trustee shall 28 27 provide the beneficiary with a copy of the trust instrument 28 28 and with information about matters of administration relevant 28 29 to the beneficiary's interest unless the trust specifies 28 30 otherwise. 28 31 5. A trustee shall prepare and send to the beneficiaries 28 32 an account of the trust property, liabilities, receipts, and 28 33 disbursements at least annually, at the termination of the 28 34 trust, and upon a change of a trustee. An accounting on 28 35 behalf of a former trustee shall be prepared by the former 29 1 trustee, or if the trustee's appointment terminated by reason 29 2 of death or incapacity, by the former trustee's personal 29 3 representative or guardian or conservator. 29 4 6. Copies of accountings and other information required 29 5 under this section need only be sent to the following 29 6 beneficiaries: 29 7 a. The beneficiaries defined in section 633.4105. 29 8 b. Each beneficiary who has delivered to the trustee or 29 9 other fiduciary a written request for a copy of the account or 29 10 other information. 29 11 7. An accounting and other information required under this 29 12 section may be waived if the person entitled to a copy 29 13 consents in writing. 29 14 Sec. 60. NEW SECTION. 633.4214 DUTIES WITH REGARD TO 29 15 DISCRETIONARY POWERS. 29 16 1. A trustee shall exercise a discretionary power within 29 17 the bounds of reasonable judgment and in accordance with 29 18 applicable fiduciary principles and the terms of the trust. 29 19 2. Notwithstanding the use of such terms as "absolute", 29 20 "sole", or "uncontrolled" in the grant of discretion, a 29 21 trustee shall act in accordance with fiduciary principles and 29 22 shall not act in bad faith or in disregard of the purposes of 29 23 the trust or the power. Absent an abuse of discretion, a 29 24 trustee's exercise of discretion is not subject to control by 29 25 a court. 29 26 Subpart 3 29 27 UNIFORM PRUDENT INVESTOR ACT 29 28 Sec. 61. NEW SECTION. 633.4301 SHORT TITLE. 29 29 This subpart may be cited as the "Uniform Prudent Investor 29 30 Act". 29 31 Sec. 62. NEW SECTION. 633.4302 STANDARD OF CARE – 29 32 PORTFOLIO STRATEGY – RISK AND RETURN OBJECTIVES. 29 33 1. A trustee shall invest and manage trust property as a 29 34 prudent investor would, by considering the purposes, terms, 29 35 distribution requirements, and other circumstances of the 30 1 trust. In satisfying this standard, the trustee shall 30 2 exercise reasonable care, skill, and caution. 30 3 2. A trustee's investment and management decisions 30 4 respecting individual assets must be evaluated not in 30 5 isolation but in the context of the trust portfolio as a whole 30 6 and as a part of an overall investment strategy having risk 30 7 and return objectives reasonably suited to the trust. 30 8 3. A trustee shall consider all of the following 30 9 circumstances, to the extent relevant to the trust or its 30 10 beneficiaries in investing and managing trust property: 30 11 a. General economic conditions. 30 12 b. The possible effect of inflation or deflation. 30 13 c. The expected tax consequences of investment decisions 30 14 or strategies. 30 15 d. The role that each investment or course of action plays 30 16 within the overall trust portfolio, which may include 30 17 financial assets, interests in closely held enterprises, 30 18 tangible and intangible personal property, and real property. 30 19 e. The expected total return from income and the 30 20 appreciation of capital. 30 21 f. Other resources of the beneficiaries. 30 22 g. Needs for liquidity, regularity of income, and 30 23 preservation or appreciation of capital. 30 24 h. An asset's special relationship or special value, if 30 25 any, to the purposes of the trust or to one or more of the 30 26 beneficiaries. 30 27 4. A trustee shall make a reasonable effort to verify 30 28 facts relevant to the investment and management of trust 30 29 property. 30 30 5. A trustee may invest in any kind of property or type of 30 31 investment consistent with the standards of this subpart. 30 32 Sec. 63. NEW SECTION. 633.4303 DIVERSIFICATION. 30 33 A trustee shall diversify the investments of the trust 30 34 unless the trustee reasonably determines that the purposes of 30 35 the trust are better served without diversifying. 31 1 Sec. 64. NEW SECTION. 633.4304 DUTIES AT INCEPTION OF 31 2 TRUSTEESHIP. 31 3 Within a reasonable time after accepting a trusteeship or 31 4 receiving trust property, a trustee shall review the trust 31 5 property and make and implement decisions concerning the 31 6 retention and disposition of assets, in order to bring the 31 7 trust portfolio into compliance with the purposes, terms, 31 8 distribution requirements, and other circumstances of the 31 9 trust, and with the requirements of this subpart. 31 10 Sec. 65. NEW SECTION. 633.4305 LOYALTY. 31 11 A trustee shall invest and manage the trust property solely 31 12 in the interest of the beneficiaries. 31 13 Sec. 66. NEW SECTION. 633.4306 IMPARTIALITY. 31 14 If a trust has two or more beneficiaries, the trustee shall 31 15 act impartially in investing and managing the trust property, 31 16 taking into account any differing interests of the 31 17 beneficiaries. 31 18 Sec. 67. NEW SECTION. 633.4307 INVESTMENT COSTS. 31 19 In investing and managing trust property, a trustee may 31 20 only incur costs that are appropriate and reasonable in 31 21 relation to the property, the purposes of the trust, and the 31 22 skills of the trustee. 31 23 Sec. 68. NEW SECTION. 633.4308 REVIEWING COMPLIANCE. 31 24 Compliance with the prudent investor rule is determined in 31 25 light of the facts and circumstances existing at the time of a 31 26 trustee's decision or action and not by hindsight. 31 27 Sec. 69. NEW SECTION. 633.4309 DELEGATION OF INVESTMENT 31 28 AND MANAGEMENT FUNCTIONS. 31 29 1. A trustee may delegate investment and management 31 30 functions that a prudent trustee of comparable skills could 31 31 properly delegate under the circumstances. The trustee shall 31 32 exercise reasonable care, skill, and caution in all of the 31 33 following activities: 31 34 a. Selecting an agent. 31 35 b. Establishing the scope and terms of the delegation, 32 1 consistent with the purposes and terms of the trust. 32 2 c. Periodically reviewing the agent's actions in order to 32 3 monitor the agent's performance and compliance with the terms 32 4 of the delegation. 32 5 2. In performing a delegated function, an agent owes a 32 6 duty to the trust to exercise reasonable care to comply with 32 7 the terms of the delegation. 32 8 3. A trustee who complies with the requirements of 32 9 subsection 1 is not liable to the beneficiaries or to the 32 10 trust for the decisions or actions of the agent to whom the 32 11 function was delegated. 32 12 4. By accepting the delegation of a trust function from 32 13 the trustee of a trust that is subject to the law of this 32 14 state, an agent submits to the jurisdiction of the courts of 32 15 this state. 32 16 Sec. 70. NEW SECTION. 633.4310 LANGUAGE INVOKING PRUDENT 32 17 INVESTOR RULE. 32 18 The following terms or comparable language in the 32 19 provisions of a trust, unless otherwise limited or modified, 32 20 authorizes any investment or strategy permitted under this 32 21 trust code: 32 22 1. Investments permissible by law for investment of trust 32 23 funds. 32 24 2. Legal investments. 32 25 3. Authorized investments. 32 26 4. Using the judgment and care under the circumstances 32 27 then prevailing that persons of prudence, discretion, and 32 28 intelligence exercise in the management of their own affairs, 32 29 not in regard to speculation but in regard to the permanent 32 30 disposition of their funds, considering the probable income as 32 31 well as the probable safety of their capital. 32 32 5. Prudent man rule. 32 33 6. Prudent trustee rule. 32 34 7. Prudent person rule. 32 35 8. Prudent investor rule. 33 1 Subpart 4 33 2 POWERS OF TRUSTEES 33 3 Sec. 71. NEW SECTION. 633.4401 GENERAL POWERS – 33 4 FIDUCIARY DUTIES. 33 5 1. A trustee, without authorization by the court, may 33 6 exercise the following powers: 33 7 a. The powers conferred by the terms of the trust. 33 8 b. Except as limited by the terms of the trust, powers 33 9 conferred by this trust code. 33 10 2. This subpart does not affect the power of the court to 33 11 relieve a trustee from restrictions in the terms of the trust 33 12 on the exercise of powers, to confer on a trustee additional 33 13 powers whether or not authorized by the terms of the trust, or 33 14 to restrict the exercise of a power otherwise given to the 33 15 trustee by the terms of the trust or this trust code. 33 16 3. The grant of a power to a trustee, whether by the terms 33 17 of the trust, this trust code, or the court, does not in 33 18 itself govern the exercise of the power. In exercising a 33 19 power, the trustee shall act in accordance with fiduciary 33 20 principles. 33 21 Sec. 72. NEW SECTION. 633.4402 SPECIFIC POWERS OF 33 22 TRUSTEES. 33 23 In addition to the powers conferred by the terms of the 33 24 trust, a trustee may perform all actions necessary to 33 25 accomplish the proper management, investment, and distribution 33 26 of the trust property, including the following powers: 33 27 1. Collect, hold, and retain trust property received from 33 28 a settlor or any other person. The property may be retained 33 29 even though it includes property in which the trustee is 33 30 personally interested. 33 31 2. Accept or refuse to accept additions to the property of 33 32 the trust from a settlor or any other person. 33 33 3. Continue or participate in the operation of a business 33 34 or other enterprise that is part of the trust property and 33 35 affect an incorporation, dissolution, or other change in the 34 1 form of the organization of the business or enterprise. 34 2 4. Deposit trust funds in an account in a financial 34 3 institution, including a financial institution operated by the 34 4 trustee. 34 5 5. Acquire or dispose of property, for cash or on credit, 34 6 at public or private sale, or by exchange. 34 7 6. Manage, control, divide, develop, improve, exchange, 34 8 partition, change the character of, or abandon trust property. 34 9 7. Encumber, mortgage, or pledge trust property for a term 34 10 within or extending beyond the term of the trust in connection 34 11 with the exercise of a power vested in the trustee. 34 12 8. Make ordinary or extraordinary repairs, alterations, or 34 13 improvements in buildings or other trust property; demolish 34 14 improvements; and raze existing or erect new party walls or 34 15 buildings. 34 16 9. Subdivide or develop land, dedicate land to public use, 34 17 make or obtain the vacation of plats and adjust boundaries, 34 18 adjust differences in valuation on exchange or partition by 34 19 giving or receiving consideration, and dedicate easements to 34 20 public use without consideration. 34 21 10. Enter into a lease for any purpose as lessor or lessee 34 22 with or without the option to purchase or renew and for a term 34 23 within or extending beyond the term of the trust. 34 24 11. Enter into a lease or arrangement for exploration and 34 25 removal of gas, oil, or other minerals or geothermal energy, 34 26 and enter into a community oil lease or a pooling or 34 27 unitization agreement. 34 28 12. Grant an option involving disposition of trust 34 29 property or take an option for the acquisition of property, 34 30 including an option that is exercisable beyond the duration of 34 31 the trust. 34 32 13. With respect to shares of stock of a domestic or 34 33 foreign corporation, any membership in a nonprofit 34 34 corporation, or other property, the trustee may do the 34 35 following: 35 1 a. Vote in person, and give proxies to exercise, any 35 2 voting rights with respect to the shares, memberships, or 35 3 property. 35 4 b. Waive notice of a meeting or give consent to the 35 5 holding of a meeting. 35 6 c. Authorize, ratify, approve, or confirm any action that 35 7 could be taken by shareholders, members, or property owners. 35 8 14. Pay calls, assessments, and any other sums chargeable 35 9 or accruing against or on account of securities. 35 10 15. Sell or exercise stock subscription or conversion 35 11 rights. 35 12 16. Consent, directly or through a committee or other 35 13 agent, to the reorganization, consolidation, merger, 35 14 dissolution, or liquidation of a corporation or other business 35 15 enterprise, and participate in voting trusts, pooling 35 16 arrangements, and foreclosures, and in connection therewith, 35 17 deposit securities with and transfer title and delegate 35 18 discretion to any protective or other committee as the trustee 35 19 considers advisable. 35 20 17. Hold a security in the name of a nominee or in other 35 21 form without disclosure of the trust so that title to the 35 22 security may pass by delivery. 35 23 18. Deposit securities in a securities' depository. 35 24 19. Insure the property of the trust against damage or 35 25 loss and insure the trustee against liability with respect to 35 26 third persons. 35 27 20. Borrow money for any trust purpose to be repaid from 35 28 trust property. 35 29 21. Pay or contest any claim; settle a claim by or against 35 30 the trust by compromise, arbitration, or otherwise; and 35 31 release, in whole or in part, a claim belonging to the trust. 35 32 22. Pay taxes, assessments, reasonable compensation of the 35 33 trustee and of employees and agents of the trust, and other 35 34 expenses incurred in the collection, care, administration, and 35 35 protection of the trust. 36 1 23. Make loans out of trust property to a beneficiary on 36 2 terms and conditions the trustee considers to be fair and 36 3 reasonable under the circumstances, and guarantee loans to the 36 4 beneficiary by encumbrances on trust property. 36 5 24. Pay an amount distributable to a beneficiary, whether 36 6 or not the beneficiary is under a legal disability, by paying 36 7 the amount to the beneficiary or by paying the amount to 36 8 another person for the use or benefit of the beneficiary. 36 9 25. Make a distribution of property and money in divided 36 10 or undivided interests, pro rata or non-pro rata, and adjust 36 11 resulting differences in valuation. 36 12 26. Employ accountants, attorneys, investment advisors, 36 13 appraisers, or other persons, even if they are associated or 36 14 affiliated with the trustee, to advise or assist the trustee 36 15 in the performance of administrative duties. 36 16 27. Expend trust funds to inspect or investigate property 36 17 that the trustee has been asked to hold, or property owned or 36 18 operated by an entity in which the trustee holds or has been 36 19 asked to hold an interest for the purpose of determining the 36 20 application of environmental law with respect to the property, 36 21 and take action to prevent, abate, or otherwise remedy any 36 22 actual or potential violation of any environmental law 36 23 affecting property held directly or indirectly by the trustee. 36 24 28. Withhold funds from distribution for the purpose of 36 25 maintaining a reserve for any valid business purpose, or as a 36 26 depletion reserve, if, in the trustee's discretion, the 36 27 failure to do so would unfairly, and materially reduce the 36 28 value of the interest of the remainder. 36 29 29. Execute and deliver instruments that are useful to 36 30 accomplish or facilitate the exercise of the trustee's powers. 36 31 30. Prosecute or defend an action, claim, or proceeding in 36 32 order to protect trust property. 36 33 Subpart 5 36 34 LIABILITY OF TRUSTEES TO BENEFICIARIES 36 35 Sec. 73. NEW SECTION. 633.4501 VIOLATIONS OF DUTIES – 37 1 BREACH OF TRUST. 37 2 1. A violation by a trustee of a duty the trustee owes a 37 3 beneficiary is a breach of trust. 37 4 2. The remedies of a beneficiary for breach of trust are 37 5 exclusively equitable and any action shall be brought in a 37 6 court of equity. 37 7 Sec. 74. NEW SECTION. 633.4502 BREACH OF TRUST – 37 8 ACTIONS. 37 9 To remedy a breach of trust which has occurred or may 37 10 occur, a beneficiary or cotrustee of the trust may request the 37 11 court to do any of the following: 37 12 1. Compel the trustee to perform the trustee's duties. 37 13 2. Enjoin the trustee from committing a breach of trust. 37 14 3. Compel the trustee to redress a breach of trust by 37 15 payment of money or otherwise. 37 16 4. Appoint a receiver or temporary trustee to take 37 17 possession of the trust property and administer the trust. 37 18 5. Remove the trustee. 37 19 6. Reduce or deny compensation to the trustee. 37 20 7. Subject to section 633.4603, nullify an act of the 37 21 trustee, impose an equitable lien or a constructive trust on 37 22 trust property, or trace trust property wrongfully disposed of 37 23 and recover the property or its proceeds. 37 24 Sec. 75. NEW SECTION. 633.4503 BREACH OF TRUST – 37 25 LIABILITY. 37 26 A beneficiary may charge a trustee who commits a breach of 37 27 trust with the amount required to restore the value of the 37 28 trust property and trust distributions to what they would have 37 29 been had the breach not occurred, or, if greater, the amount 37 30 of profit lost by reason of the breach. 37 31 Sec. 76. NEW SECTION. 633.4504 LIMITATION OF ACTION 37 32 AGAINST TRUSTEE FOLLOWING FINAL ACCOUNT. 37 33 1. Unless previously barred by adjudication, consent, or 37 34 other limitation, a claim against a trustee for breach of 37 35 trust is barred as to a beneficiary who has received a final 38 1 account or other report adequately disclosing the existence of 38 2 the claim, unless a proceeding to assert the claim is 38 3 commenced within one year after the later of the receipt of 38 4 the account or report or the termination of the trust 38 5 relationship between the trustee and beneficiary. An account 38 6 or report adequately discloses the existence of a claim if it 38 7 provides sufficient information so that the beneficiary knows 38 8 of the claim or reasonably should have inquired into its 38 9 existence. 38 10 2. For the purpose of subsection 1, a beneficiary is 38 11 deemed to have received an account or report in the following 38 12 instances: 38 13 a. In the case of an adult who is reasonably capable of 38 14 understanding the account or report, if it is received by the 38 15 adult personally. 38 16 b. In the case of an adult who is not reasonably capable 38 17 of understanding the account or report, if it is received by 38 18 the adult's legal representative, including a guardian ad 38 19 litem or other person appointed for this purpose. 38 20 c. In the case of a minor, if it is received by the 38 21 minor's guardian or conservator or, if the minor does not have 38 22 a guardian or conservator, if it is received by a parent of 38 23 the minor who does not have a conflict of interest. 38 24 3. Any claim for breach of trust against a trustee who has 38 25 presented a final report to a beneficiary more than one year 38 26 prior to the effective date of this Act shall be time barred 38 27 unless some exception stated in this section applies which 38 28 tolls the statute. Any claim arising under this section 38 29 within one year of the effective date of the Act shall be time 38 30 barred after one year unless an exception applies to toll the 38 31 statute. 38 32 Sec. 77. NEW SECTION. 633.4505 EXCULPATION OF TRUSTEE. 38 33 A provision in the terms of the trust relieving a trustee 38 34 of liability for breach of trust is unenforceable to the 38 35 extent that it does either of the following: 39 1 1. Relieves a trustee of liability for breach of trust 39 2 committed intentionally, with gross negligence, in bad faith, 39 3 or with reckless indifference to the interest of the 39 4 beneficiary, or for any profit derived by the trustee from the 39 5 breach. 39 6 2. Was inserted as the result of an abuse by the trustee 39 7 of a fiduciary or confidential relationship to the settlor. 39 8 Sec. 78. NEW SECTION. 633.4506 BENEFICIARY'S CONSENT, 39 9 RELEASE, OR AFFIRMANCE – NONLIABILITY OF TRUSTEE. 39 10 1. A beneficiary shall not hold a trustee liable for a 39 11 breach of trust if the beneficiary does any of the following: 39 12 a. Consents to the conduct constituting the breach. 39 13 b. Releases the trustee from liability for the breach. 39 14 c. Affirms the transaction constituting the breach. 39 15 2. Notwithstanding the provisions of subsection 1, a 39 16 beneficiary may hold a trustee liable for breach of trust 39 17 under either of the following circumstances: 39 18 a. The beneficiary at the time of the consent, release, or 39 19 affirmance did not know of the beneficiary's rights and of the 39 20 material facts the trustee knew or should have known and the 39 21 trustee did not reasonably believe that the beneficiary knew. 39 22 b. The consent, release, or affirmance of the beneficiary 39 23 was induced by improper conduct of the trustee. 39 24 Subpart 6 39 25 RIGHTS OF THIRD PARTIES 39 26 Sec. 79. NEW SECTION. 633.4601 PERSONAL LIABILITY – 39 27 LIMITATIONS. 39 28 1. Except as otherwise provided in the contract or in this 39 29 subpart, a trustee is not personally liable on a contract 39 30 properly entered into in the trustee's fiduciary capacity in 39 31 the course of administration of the trust unless the trustee 39 32 fails to reveal the representative capacity or identify the 39 33 trust in the contract. 39 34 2. A trustee is personally liable for obligations arising 39 35 from ownership or control of trust property or for torts 40 1 committed in the course of administering a trust only if the 40 2 trustee is personally at fault. 40 3 3. A claim based on a contract entered into by a trustee 40 4 in the trustee's representative capacity, on an obligation 40 5 arising from ownership or control of trust property, or on a 40 6 tort committed in the course of administering a trust may be 40 7 asserted against the trust by proceeding against the trustee 40 8 in the trustee's representative capacity, whether or not the 40 9 trustee is personally liable on the claim. 40 10 4. A question of liability as between the trust and the 40 11 trustee personally may be determined in a proceeding brought 40 12 under section 633.6202. 40 13 Sec. 80. NEW SECTION. 633.4602 DISSENTING COTRUSTEES. 40 14 1. A cotrustee who does not join in exercising a power is 40 15 not liable to a third party for the consequences of the 40 16 exercise of the power. 40 17 2. A dissenting cotrustee who joins in an action at the 40 18 direction of the majority cotrustees is not liable to a third 40 19 party for the action if the dissenting cotrustee expresses the 40 20 dissent in writing to any other cotrustee at or before the 40 21 action is taken. 40 22 3. This section does not excuse a cotrustee from liability 40 23 for failure to discharge a cotrustee's duties as a trustee. 40 24 Sec. 81. NEW SECTION. 633.4603 OBLIGATIONS OF THIRD 40 25 PARTIES. 40 26 1. With respect to a third party dealing with a trustee or 40 27 assisting a trustee in the conduct of a transaction, if the 40 28 third party acts in good faith and for a valuable 40 29 consideration and without knowledge that the trustee is 40 30 exceeding the trustee's powers or is improperly exercising 40 31 them, the following apply: 40 32 a. A third party is not bound to inquire as to whether a 40 33 trustee has power to act or is properly exercising a power and 40 34 may assume without inquiry the existence of a trust power and 40 35 its proper exercise. 41 1 b. A third party is fully protected in dealing with or 41 2 assisting a trustee, as if the trustee has and is properly 41 3 exercising the power the trustee purports to exercise. 41 4 2. A third party who acts in good faith is not bound to 41 5 ensure the proper application of trust property paid or 41 6 delivered to the trustee. 41 7 3. If a third party acting in good faith and for a 41 8 valuable consideration enters into a transaction with a former 41 9 trustee without knowledge that the person is no longer a 41 10 trustee, the third party is fully protected as if the former 41 11 trustee were still a trustee. 41 12 Sec. 82. NEW SECTION. 633.4604 CERTIFICATION OF TRUST. 41 13 1. A trustee may present a certification of trust to any 41 14 person in lieu of providing a copy of the trust instrument to 41 15 establish the existence or terms of the trust. 41 16 2. The certification must contain a statement that the 41 17 trust has not been revoked, modified, or amended in any manner 41 18 which would cause the representations contained in the 41 19 certification of trust to be incorrect and must contain a 41 20 statement that it is being signed by all of the currently 41 21 acting trustees of the trust and is sworn and subscribed to 41 22 under penalty of perjury before a notary public. 41 23 3. A certification of trust need not contain the 41 24 dispositive provisions of the trust which set forth the 41 25 distribution of the trust estate. 41 26 4. A person may require that the trustee offering the 41 27 certification of trust provide copies of those excerpts from 41 28 the original trust instrument and amendments to the original 41 29 trust instrument which designate the trustee and confer upon 41 30 the trustee the power to act in the pending transaction. 41 31 5. A person who acts in reliance upon a certification of 41 32 trust without knowledge that the representations contained in 41 33 the certification are incorrect is not liable to any person 41 34 for so acting and may assume without inquiry the existence of 41 35 the facts contained in the certification. Knowledge shall not 42 1 be inferred solely from the fact that a copy of all or part of 42 2 the trust instrument is held by the person relying upon the 42 3 trust certification. A transaction, and a lien created by a 42 4 transaction, entered into by the trustee and a person acting 42 5 in reliance upon a certification of trust is enforceable 42 6 against the trust assets. 42 7 6. A person making a demand for the trust instrument in 42 8 addition to a certification of trust or excerpts shall be 42 9 liable for damages, including attorney fees, incurred as a 42 10 result of the refusal to accept the certification of trust or 42 11 excerpts in lieu of the trust instrument if the court 42 12 determines that the person acted unreasonably in requesting 42 13 the trust instrument. 42 14 7. This section does not limit the rights of beneficiaries 42 15 to obtain copies of the trust instrument or rights of others 42 16 to obtain copies in a proceeding concerning the trust. 42 17 Sec. 83. NEW SECTION. 633.4605 LIABILITY FOR WRONGFUL 42 18 TAKING, CONCEALING, OR DISPOSING OF TRUST PROPERTY. 42 19 A person who, in bad faith, wrongfully takes, conceals, or 42 20 disposes of trust property is liable for twice the value of 42 21 the property, attorney fees, court costs, and where consistent 42 22 with existing law, punitive damages, recoverable in an action 42 23 by a trustee for the benefit of the trust. 42 24 Subpart 7 42 25 TRUST CONSTRUCTION 42 26 Sec. 84. NEW SECTION. 633.4701 SURVIVORSHIP WITH RESPECT 42 27 TO FUTURE INTERESTS UNDER TERMS OF TRUST – SUBSTITUTE TAKERS. 42 28 1. Unless otherwise specifically stated by the terms of 42 29 the trust, the interest of each beneficiary is contingent on 42 30 the beneficiary's surviving until the date on which the 42 31 beneficiary becomes entitled to possession or enjoyment of the 42 32 beneficiary's interest in the trust. 42 33 2. If a beneficiary dies prior to becoming entitled to 42 34 possession or enjoyment of the beneficiary's interest and the 42 35 terms of the trust provide for an alternate beneficiary who is 43 1 living on the date the interest becomes possessory, the 43 2 alternate beneficiary succeeds to the interest in accordance 43 3 with the terms of the trust. 43 4 3. If a beneficiary dies prior to becoming entitled to 43 5 possession or enjoyment of the beneficiary's interest and no 43 6 alternate beneficiary is named in the trust, and the 43 7 beneficiary has issue who are living on the date the interest 43 8 becomes possessory, the issue of the beneficiary who are 43 9 living on such date shall receive the interest of the 43 10 beneficiary. 43 11 4. If both a beneficiary of an interest and any alternate 43 12 beneficiary of that interest named in the trust die prior to 43 13 the interest becoming possessory, and the beneficiary has no 43 14 issue who are living on the date the interest becomes 43 15 possessory, the issue of the alternate beneficiary who are 43 16 living on such date shall take the interest of the 43 17 beneficiary. 43 18 5. If both the beneficiary of an interest and any 43 19 alternate beneficiary of that interest named in the trust die 43 20 prior to the interest becoming possessory, and neither the 43 21 beneficiary nor the alternate beneficiary has issue who are 43 22 living on the date the interest becomes possessory, the 43 23 beneficiary's interest shall be distributed in accordance with 43 24 section 633.2106. 43 25 Part 5 43 26 CHARITABLE TRUSTS 43 27 Sec. 85. NEW SECTION. 633.5101 CHARITABLE PURPOSES. 43 28 1. A charitable trust may be created for the relief of 43 29 poverty, the advancement of education or religion, the 43 30 promotion of health, or any other purpose the accomplishment 43 31 of which is beneficial to the community. 43 32 2. If the terms of the trust do not indicate a particular 43 33 charitable purpose or beneficiaries, the trustee may select 43 34 one or more charitable purposes or beneficiaries. 43 35 Sec. 86. NEW SECTION. 633.5102 APPLICATION OF CY-PRES. 44 1 Unless the terms of the trust provide to the contrary the 44 2 following apply: 44 3 1. A charitable trust does not fail, in whole or in part, 44 4 if a particular purpose for which the trust was created 44 5 becomes impracticable, unlawful, or impossible to fulfill. 44 6 2. If a particular charitable purpose for which a trust 44 7 was created becomes impracticable, unlawful, or impossible to 44 8 fulfill, the court may modify the terms of the trust or direct 44 9 that the property of the trust be distributed in whole or in 44 10 part in a manner best meeting the settlor's general charitable 44 11 purposes. If an administrative provision of a charitable 44 12 trust becomes impracticable, unlawful, impossible to fulfill, 44 13 or otherwise impairs the effective administration of the 44 14 trust, the court may modify the provision. 44 15 Sec. 87. NEW SECTION. 633.5103 TRUST WITH UNECONOMICALLY 44 16 LOW VALUE. 44 17 1. On petition by a trustee or other interested person, if 44 18 the court determines that the value of the trust property is 44 19 insufficient to justify the cost of administration involved, 44 20 the court may appoint a new trustee or may modify or terminate 44 21 the charitable trust. 44 22 2. Upon termination of a trust under this section, the 44 23 court shall distribute the trust property in a manner 44 24 consistent with the settlor's charitable purposes. 44 25 Sec. 88. NEW SECTION. 633.5104 INTERESTED PERSONS – 44 26 PROCEEDINGS. 44 27 The settlor, the trustee, the attorney general, and any 44 28 charitable entity or other person with a special interest in 44 29 the trust shall be interested persons in a proceeding 44 30 involving a charitable trust. 44 31 Part 6 44 32 PROCEEDINGS CONCERNING TRUSTS 44 33 Subpart 1 44 34 JURISDICTION AND VENUE 44 35 Sec. 89. NEW SECTION. 633.6101 SUBJECT MATTER 45 1 JURISDICTION. 45 2 1. The court has exclusive jurisdiction of proceedings 45 3 concerning the internal affairs of a trust. 45 4 2. The court has concurrent jurisdiction of actions and 45 5 proceedings to determine the existence of a trust, actions and 45 6 proceedings by or against creditors or debtors of trusts, and 45 7 other actions and proceedings involving trustees and third 45 8 persons. 45 9 Sec. 90. NEW SECTION. 633.6102 PRINCIPAL PLACE OF 45 10 ADMINISTRATION OF TRUST. 45 11 1. Unless otherwise designated in the terms of the trust, 45 12 the principal place of administration of a trust is the usual 45 13 place where the day-to-day activity of the trust is carried on 45 14 by the trustee or the trustee's representative who is 45 15 primarily responsible for the administration of the trust. 45 16 2. If the principal place of administration of the trust 45 17 cannot be determined under subsection 1, it must be determined 45 18 as follows: 45 19 a. If the trust has one trustee, the principal place of 45 20 administration of the trust is the trustee's residence or 45 21 usual place of business. 45 22 b. If the trust has more than one trustee, the principal 45 23 place of administration of the trust is the residence or usual 45 24 place of business of any of the cotrustees as agreed upon by 45 25 them or, if not, the residence or usual place of business of 45 26 any of the cotrustees. 45 27 Sec. 91. NEW SECTION. 633.6103 JURISDICTION OVER 45 28 TRUSTEES AND BENEFICIARIES. 45 29 1. By accepting the trusteeship of a trust having its 45 30 principal place of administration in this state, the trustee 45 31 submits personally to the jurisdiction of the court. 45 32 2. To the extent of their interests in the trust, all 45 33 beneficiaries of a trust having its principal place of 45 34 administration in this state are subject to the jurisdiction 45 35 of the court. 46 1 Sec. 92. NEW SECTION. 633.6104 COUNTY OF VENUE. 46 2 1. A proceeding may be commenced in the county in which 46 3 the trust's principal place of administration is or is to be 46 4 located and if the trust is created by will, also in the 46 5 county in which the decedent's estate is administered. 46 6 2. If a trust not created by will has no trustee, a 46 7 proceeding for appointing a trustee shall be commenced in the 46 8 county in which a beneficiary resides or the trust property, 46 9 or some portion of the trust property, is located. 46 10 3. Except as otherwise provided in subsections 1 and 2, a 46 11 proceeding shall be commenced in accordance with the rules 46 12 applicable to civil actions generally. 46 13 Sec. 93. NEW SECTION. 633.6105 TRANSFER OF JURISDICTION. 46 14 1. The court may transfer the place of administration of a 46 15 trust to or from this state or transfer some or all of the 46 16 trust property to a trustee in or outside this state if it 46 17 finds any of the following: 46 18 a. The transfer of the trust property to a trustee in this 46 19 or another jurisdiction, or the transfer of the place of 46 20 administration of the trust to this or another jurisdiction, 46 21 will promote the best interests of the trust and those 46 22 interested in it, taking into account the economical and 46 23 convenient administration of the trust and the views of the 46 24 adult beneficiaries. 46 25 b. Any new trustee to whom the trust property is to be 46 26 transferred is qualified, willing, and able to administer the 46 27 trust or trust property under the terms of the trust. 46 28 c. If the trust or any portion of the trust property is to 46 29 be transferred to another jurisdiction and if approval of the 46 30 transfer by the other court is required under the law of the 46 31 other jurisdiction, the proper court in the other jurisdiction 46 32 has approved the transfer. 46 33 2. If a transfer is ordered, the court may direct the 46 34 manner of transfer and impose terms and conditions as may be 46 35 just, including a requirement for the substitution of a 47 1 successor trustee in any pending litigation in this state. A 47 2 delivery of property in accordance with the order of the court 47 3 is a full discharge of the trustee with respect to all 47 4 property embraced in the order. 47 5 3. If the court grants a petition to transfer a trust or 47 6 trust property to this state, the court shall require the 47 7 trustee to give bond, if necessary under the law of the other 47 8 jurisdiction or of this state, and may require bond as 47 9 provided in section 633.4102. 47 10 Subpart 2 47 11 JUDICIAL PROCEEDINGS CONCERNING TRUSTS 47 12 Sec. 94. NEW SECTION. 633.6201 JUDICIAL INTERVENTION 47 13 INTERMITTENT. 47 14 The administration of trusts shall proceed expeditiously 47 15 and free of judicial intervention, except to the extent the 47 16 jurisdiction of the court is invoked by interested parties or 47 17 otherwise exercised as provided by law. 47 18 Sec. 95. NEW SECTION. 633.6202 PETITIONS – PURPOSES OF 47 19 PROCEEDINGS. 47 20 1. Except as otherwise provided in section 633.3103, a 47 21 trustee or beneficiary of a trust may petition the court 47 22 concerning the internal affairs of the trust or to determine 47 23 the existence of the trust. 47 24 2. Proceedings concerning the internal affairs of a trust 47 25 include proceedings to do any of the following: 47 26 a. Construe and determine the terms of a trust. 47 27 b. Determine the existence of any immunity, power, 47 28 privilege, duty, or right. 47 29 c. Determine the validity of a trust provision. 47 30 d. Ascertain beneficiaries and determine to whom property 47 31 shall pass or be delivered upon final or partial termination 47 32 of the trust. 47 33 e. Settle accounts and pass upon the acts of the trustee, 47 34 including the exercise of discretionary powers. 47 35 f. Instruct the trustee. 48 1 g. Compel the trustee to report information about the 48 2 trust or account to the beneficiary. 48 3 h. Grant powers to or modify powers of the trustee. 48 4 i. Fix or allow payment of the trustee's compensation or 48 5 review the reasonableness of the compensation. 48 6 j. Appoint or remove a trustee. 48 7 k. Accept the resignation of a trustee. 48 8 l. Compel redress of a breach of trust by any available 48 9 remedy. 48 10 m. Approve or direct the modification or termination of 48 11 the trust. 48 12 n. Approve or direct the combination or division of 48 13 trusts. 48 14 o. Authorize or direct transfer or a trust or trust 48 15 property to or from another jurisdiction. 48 16 p. Determine liability of a trust for debts or the 48 17 expenses of administration of the estate of a deceased 48 18 settlor. 48 19 q. Determine any other issue that will aid in the 48 20 administration of the trust. 48 21 Subpart 3 48 22 SETTLEMENT AGREEMENTS AND REPRESENTATION 48 23 Sec. 96. NEW SECTION. 633.6301 DEFINITION AND 48 24 APPLICABILITY. 48 25 1. For purposes of this subpart, "fiduciary matter" 48 26 includes any item listed in section 633.6202, subsection 2. 48 27 2. Persons interested in a fiduciary matter may approve a 48 28 judicial settlement and represent and bind other persons 48 29 interested in the fiduciary matter. 48 30 3. Except to the extent the terms of the trust indicate 48 31 that the procedures specified are not to apply, a person 48 32 interested in a fiduciary matter may approve a nonjudicial 48 33 settlement containing such terms and conditions as a court 48 34 could properly approve and represent and bind other persons 48 35 interested in the fiduciary matter. 49 1 Sec. 97. NEW SECTION. 633.6302 REPRESENTATION BY HOLDERS 49 2 OF POWERS. 49 3 1. The holders or all coholders of a power of revocation 49 4 or presently exercisable general power of appointment, 49 5 including one in the form of a power of amendment, may 49 6 represent and bind the persons whose interests, as objects, 49 7 takers in default, or otherwise, are subject to the power. 49 8 2. To the extent there is no conflict of interest between 49 9 the holders and the persons represented with respect to the 49 10 fiduciary matter, persons whose interests are subject to a 49 11 general testamentary power of appointment may be represented 49 12 and bound by the holder or holders of the power. 49 13 Sec. 98. NEW SECTION. 633.6303 REPRESENTATION BY 49 14 FIDUCIARIES AND PARENTS. 49 15 To the extent there is no conflict of interest between the 49 16 representer and those represented with respect to the 49 17 fiduciary matter, the following are permitted: 49 18 1. A conservator may represent and bind the person whose 49 19 estate the conservator controls. 49 20 2. A trustee may represent and bind the beneficiaries of 49 21 the trust. 49 22 3. A personal representative may represent and bind the 49 23 persons interested in the decedent's estate. 49 24 4. If no conservator has been appointed, a parent may 49 25 represent and bind a minor child. 49 26 Sec. 99. NEW SECTION. 633.6304 REPRESENTATION BY HOLDERS 49 27 OF SIMILAR INTERESTS. 49 28 Unless otherwise represented, a minor or an incompetent, 49 29 unborn, or unascertained person may be represented by and 49 30 bound by another person having a substantially identical 49 31 interest with respect to the fiduciary matter but only to the 49 32 extent that the person's interest is adequately represented. 49 33 Sec. 100. NEW SECTION. 633.6305 NOTICE OF JUDICIAL 49 34 SETTLEMENT. 49 35 1. Notice of a judicial settlement shall be given to every 50 1 interested person or to one who can bind an interested person 50 2 as described in sections 633.6302 and 633.6303. 50 3 2. Notice may be given to a person or to another who may 50 4 bind the person. 50 5 3. Notice is given to unborn or unascertained persons who 50 6 are not represented under sections 633.6302 and 633.6303, by 50 7 giving notice to all known persons whose interests in the 50 8 proceedings are substantially identical to those of the unborn 50 9 or unascertained persons. 50 10 Sec. 101. NEW SECTION. 633.6306 APPOINTMENT OF GUARDIAN 50 11 AD LITEM. 50 12 1. At any point in a judicial proceeding, the court may 50 13 appoint a guardian ad litem to represent and approve a 50 14 settlement on behalf of the interest of a minor, an 50 15 incapacitated, unborn, or unascertained person, or a person 50 16 whose identity or address is unknown, if the court determines 50 17 that representation of the interest otherwise would be 50 18 inadequate. 50 19 2. If not precluded by conflict of interest, a guardian ad 50 20 litem may be appointed to represent several persons or 50 21 interests. 50 22 3. The court shall set out its reasons for appointing a 50 23 guardian ad litem as a part of the record of the proceeding. 50 24 4. In approving a judicially supervised settlement, a 50 25 guardian ad litem may consider general family benefit. 50 26 Sec. 102. NEW SECTION. 633.6307 APPOINTMENT OF SPECIAL 50 27 REPRESENTATIVE. 50 28 1. In connection with a nonjudicial settlement, the court 50 29 may appoint a special representative to represent the 50 30 interests of and approve a settlement on behalf of designated 50 31 persons. 50 32 2. If not precluded by a conflict of interest, a special 50 33 representative may be appointed to represent several persons 50 34 or interests. 50 35 3. In approving a settlement, a special representative may 51 1 consider general family benefit. As a condition for approval, 51 2 a special representative may require that those represented 51 3 receive a benefit. 51 4 Sec. 103. Section 262.14, subsection 3, unnumbered 51 5 paragraph 1, Code 1999, is amended to read as follows: 51 6 Any portion of the funds may be invested by the board. In 51 7 the investment of the funds, the board shall exercise the 51 8 judgment and care, under the circumstances then prevailing, 51 9 which persons of prudence, discretion and intelligence 51 10 exercise in their own affairs as provided insection 633.123,51 11subsection 1chapter 633, division XX, part 4, subpart 3. 51 12 Sec. 104. Section 412.4, Code 1999, is amended to read as 51 13 follows: 51 14 412.4 PAYMENTS AND INVESTMENTS. 51 15 The council, board of waterworks trustees, or other board 51 16 or commission, whichever is authorized by law to manage and 51 17 operate any such waterworks, or other municipally owned and 51 18 operated public utility, shall have the right and power to 51 19 contract with any legal reserve insurance company, authorized 51 20 to conduct its business in the state, or any bank located in 51 21 Iowa having trust powers for the investment of funds 51 22 contributed to an annuity or pension system, for the payment 51 23 of the pensions or annuities provided in such pension or 51 24 annuity retirement system, and may pay the premiums or make 51 25 the contribution of such contract out of the fund provided in 51 26 section 412.2. Funds contributed to a bank pursuant to such a 51 27 contract shall be invested in the manner prescribed in section 51 28633.123 or633.123A or chapter 633, division XX, part 4, 51 29 subpart 3, and may be commingled with and invested as a part 51 30 of a common or master fund managed for the benefit of more 51 31 than one public utility. 51 32 Sec. 105. Section 633.123A, subsection 1, unnumbered 51 33 paragraph 1, Code 1999, is amended to read as follows: 51 34 Notwithstanding any other provision of law, a bank or trust 51 35 company acting as a fiduciary, in addition to other 52 1 investments authorized by law for the investment of funds by a 52 2 fiduciary or by the instrument governing the fiduciary and in 52 3 the exercise of its investment discretion or at the direction 52 4 of another person authorized to direct investment of funds 52 5 held by the fiduciary, may invest and reinvest such funds in 52 6 the securities of an open-end or closed-end management 52 7 investment company or investment trust registered under the 52 8 federal Investment Company Act of 1940, 15 U.S.C. } 80a-1 et 52 9 seq. Investment and reinvestment under this section is 52 10 allowed as long as the portfolio of such investment company or 52 11 investment trust consists substantially of investments not 52 12 otherwise prohibited by section633.123division XX, part 4, 52 13 subpart 3 of this chapter, or by the governing instrument. 52 14 Sec. 106. Section 633.348, Code 1999, is amended to read 52 15 as follows: 52 16 633.348 RIGHT TO RETAIN EXISTING PROPERTY. 52 17 Notwithstanding the provisions ofsection 633.123division 52 18 XX, part 4, subpart 3, of this chapter, any personal 52 19 representative may continue to hold any investment or property 52 20 originally received by the personal representative and also 52 21 any increase thereof. 52 22 Sec. 107. Section 633.646, subsection 5, Code 1999, is 52 23 amended to read as follows: 52 24 5. Notwithstanding the provisions ofsection 633.12352 25 division XX, part 4, subpart 3, of this chapter, to continue 52 26 to hold any investment or other property originally received 52 27 by the conservator, and also any increase thereof, pending the 52 28 timely filing of the first annual report. 52 29 Sec. 108. Section 633.123, Code 1999, is repealed. 52 30 Sec. 109. EFFECTIVE DATE. This Act takes effect July 1, 52 31 2000. 52 32 52 33 52 34 52 35 BRENT SIEGRIST 53 1 Speaker of the House 53 2 53 3 53 4 53 5 MARY E. KRAMER 53 6 President of the Senate 53 7 53 8 I hereby certify that this bill originated in the House and 53 9 is known as House File 663, Seventy-eighth General Assembly. 53 10 53 11 53 12 53 13 ELIZABETH ISAACSON 53 14 Chief Clerk of the House 53 15 Approved , 1999 53 16 53 17 53 18 53 19 THOMAS J. VILSACK 53 20 Governor
Text: HF00662 Text: HF00664 Text: HF00600 - HF00699 Text: HF Index Bills and Amendments: General Index Bill History: General Index
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