Text: HF02530 Text: HF02532 Text: HF02500 - HF02599 Text: HF Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 HOUSE FILE 2531 1 2 1 3 AN ACT 1 4 MAKING CERTAIN AMENDMENTS TO THE IOWA TRUST CODE. 1 5 1 6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 1 7 1 8 Section 1. Section 633.1102, Code 2001, is amended by 1 9 adding the following new subsection: 1 10 NEW SUBSECTION. 12A. "Qualified beneficiary" means a 1 11 beneficiary who, on the date the beneficiary's qualification 1 12 is determined, is any of the following: 1 13 a. Eligible to receive distributions of income or 1 14 principal from the trust. 1 15 b. Would receive property from the trust upon immediate 1 16 termination of the trust. 1 17 Sec. 2. Section 633.2102, Code 2001, is amended to read as 1 18 follows: 1 19 633.2102 REQUIREMENTS FOR VALIDITY. 1 20 1. A trust is created only if all of the following 1 21 elements are satisfied: 1 22 a. The settlor was competent and indicated an intention to 1 23 create a trust. 1 24 b. The same person is not the sole trustee and sole 1 25 beneficiary. 1 26 c.Unless the trust is a charitable trust, an honorary1 27trust, or a trust for the care of an animal, the trust has a1 28definite beneficiary or a beneficiary who will be definitely1 29ascertained within the period of the applicable rule against1 30perpetuities.The trust has a definite beneficiary or a 1 31 beneficiary who will be definitely ascertained within the 1 32 period of the applicable rule against perpetuities, unless the 1 33 trust is a charitable trust, an honorary trust, or a trust for 1 34 pets. 1 35 2. A definite or definitely ascertainable beneficiary 2 1 includes a beneficiary or class of beneficiaries designated 2 2 under a power to select the beneficiaries granted by the terms 2 3 of the trust to the trustee or another person. If the power 2 4 is not exercised within a reasonable time, the power fails and 2 5 the property passes to the person or persons who would have 2 6 taken the property had the power not been conferred. 2 7 Sec. 3. Section 633.2201, subsection 3, Code 2001, is 2 8 amended by striking the subsection. 2 9 Sec. 4. Section 633.2205, subsection 2, Code 2001, is 2 10 amended to read as follows: 2 11 2. Upon termination of a trust under this section, the 2 12 trustee shall distribute the trust property in accordance with 2 13 the probable intention of the settlor under the circumstances. 2 14 Extrinsic evidence is admissible for the purpose of 2 15 ascertaining the probable intention of the settlor. 2 16 Sec. 5. Section 633.2206, subsection 1, Code 2001, is 2 17 amended by striking the subsection and inserting in lieu 2 18 thereof the following: 2 19 1. The court may reform the terms of the trust, even if 2 20 unambiguous, to conform to the settlor's intent if it is 2 21 proved by clear and convincing evidence that the settlor's 2 22 intent and the terms of the trust were affected by a mistake 2 23 of fact or law whether expressed or induced. 2 24 Sec. 6. Section 633.4105, subsection 2, paragraph b, 2 25 subparagraphs (1) and (2), Code 2001, are amended to read as 2 26 follows: 2 27 (1) By majority vote of alladultqualified beneficiaries, 2 28 who are adults, and the representative of any minor or 2 29 incompetent qualified beneficiary, as defined by section 2 30 633.6303. 2 31 (2) By a person appointed by the court on petition of an 2 32 interested person or of a person named as trustee by the terms 2 33 of the trust. The court, in selecting a trustee, shall 2 34 consider any nomination made by the adult beneficiaries and 2 35 representatives of any minor and incompetent beneficiaries. 3 1 Sec. 7. Section 633.4105, subsection 3, Code 2001, is 3 2 amended by striking the subsection. 3 3 Sec. 8. Section 633.4106, subsection 1, paragraph c, Code 3 4 2001, is amended to read as follows: 3 5 c. With the consent of theadultqualified beneficiaries 3 6as defined in section 633.4105, subsection 1,who are adults 3 7 if the trust is irrevocable or the holder of the power to 3 8 revoke lacks competency or is not represented by a guardian, 3 9 conservator, or agent. 3 10 Sec. 9. Section 633.4111, subsection 2, paragraph a, Code 3 11 2001, is amended to read as follows: 3 12 a. Each qualified beneficiarywho is entitled to an3 13accounting under section 633.4213, subsection 6. 3 14 Sec. 10. Section 633.4202, subsections 2, 3, and 5, Code 3 15 2001, are amended to read as follows: 3 16 2. Any transaction involving the trust which is affected 3 17 by asubstantialmaterial conflict between the trustee's 3 18 fiduciary and personal interests is voidable by a beneficiary 3 19 affected by the transaction unless one of the following 3 20 applies: 3 21 a. The transaction was expressly authorized by the terms 3 22 of the trust. 3 23 b. The beneficiary consented to or affirmed the 3 24 transaction or released the trustee from liability as provided 3 25 in section 633.4506. 3 26 c. The transaction is approved by the court after notice 3 27 to interested persons. 3 28 3. A transaction affected by asubstantialmaterial 3 29 conflict between personal and fiduciary interests includes any 3 30 sale, encumbrance, or other transaction involving the trust 3 31 property entered into by the trustee, the spouse, descendant, 3 32 agent, or attorney of a trustee, or corporation or other 3 33 enterprise in which the trustee has a substantial beneficial 3 34 interest. 3 35 5. This section does not apply to any of the following: 4 1 a. An agreement between a trustee and a beneficiary 4 2 relating to the appointment of the trustee. 4 3 b. The payment of compensation to the trustee, whether by 4 4 agreement, the terms of the trust, or this trust code. 4 5 c. A transaction between a trust and another trust, 4 6 decedent's or conservatorship estate of which the trustee is a 4 7 fiduciary if the transaction is fair to the beneficiaries of 4 8 the trust. 4 9 d. An investment by a trustee in securities of an 4 10 investment company or investment trust to which the trustee, 4 11 or its affiliate, provides services in a capacity other than 4 12 as trustee if the investment complies with the prudent 4 13 investor rule. The trustee may be compensated by the 4 14 investment company or investment trust for providing services 4 15 from fees charged to the trust if the trustee provides annual 4 16 notice and a copy of the trustee's annual report, including 4 17 the rate and method by which the trustee's compensation was 4 18 determined, to the persons specified in section 633.4213. 4 19 e. A deposit of trust money in a regulated financial 4 20 service institution operated by the trustee. 4 21 Sec. 11. Section 633.4211, Code 2001, is amended to read 4 22 as follows: 4 23 633.4211 ENFORCEMENT AND DEFENSE OF CLAIMS AND ACTIONS. 4 24 A trustee shall take reasonable steps to enforce claims 4 25that are part of the trust propertyof the trust, to defend 4 26 claims against the trust, and to defend against actions that 4 27 may result in a loss to the trust. 4 28 Sec. 12. Section 633.4213, Code Supplement 2001, is 4 29 amended by striking the section and inserting in lieu thereof 4 30 the following: 4 31 633.4213 DUTY TO INFORM AND ACCOUNT. 4 32 A trustee shall keep the qualified beneficiaries of the 4 33 trust reasonably informed about the administration of the 4 34 trust and the material facts necessary to protect the 4 35 beneficiaries' interests. 5 1 1. The trustee shall inform each qualified beneficiary of 5 2 their right to receive an annual accounting and a copy of the 5 3 trust instrument. The trustee shall also inform each 5 4 qualified beneficiary about the process necessary to obtain an 5 5 annual accounting or a copy of the trust instrument, if not 5 6 provided. The trustee shall further inform the beneficiary 5 7 whether the beneficiary will, or will not, receive an annual 5 8 accounting if the beneficiary fails to take any action. If a 5 9 beneficiary has previously been provided the notice required 5 10 by this section, additional notice shall not be required due 5 11 to a change of trustees or a change in the composition of the 5 12 qualified beneficiaries. 5 13 2. The trustee shall provide the notice required in 5 14 subsection 1 to each qualified beneficiary within a reasonable 5 15 time following any of the following events: 5 16 a. The commencement of the trust administration. 5 17 b. The trustee becoming aware that there is a new 5 18 qualified beneficiary or a representative of any minor or 5 19 incompetent beneficiary. 5 20 c. The trust becoming irrevocable. 5 21 d. The time that no person, except the trustee, has the 5 22 right to change the beneficiaries of the trust. 5 23 3. A trustee of an irrevocable trust shall provide 5 24 annually to each adult beneficiary and the representative of 5 25 any minor or incompetent beneficiary who may receive a 5 26 distribution of income or principal during the accounting time 5 27 period, an accounting, unless an accounting has been waived 5 28 specifically for a particular accounting time period. 5 29 4. This section does not apply to any trust where the 5 30 grantor has retained the right, or has transferred the right, 5 31 to change the beneficiaries of the trust. 5 32 5. The only consequence to a trustee's failure to provide 5 33 a required accounting or notice is that the trustee shall not 5 34 be able to rely upon the statute of limitations under section 5 35 633.4504. If the trustee has refused, after a reasonable 6 1 request, to provide an accounting to a qualified beneficiary, 6 2 the court may assess costs, including attorney fees, against 6 3 the trustee personally. 6 4 6. The format and content of an accounting required by 6 5 this section shall be within the discretion of the trustee, if 6 6 sufficient to reasonably inform the beneficiary of the 6 7 condition and activities of the trust during the accounting 6 8 period. 6 9 7. This section applies to any trust created on or after 6 10 July 1, 2002, unless the trustor has specifically waived the 6 11 requirements of this section in the trust instrument. Waiver 6 12 of this section shall not bar any beneficiary's common-law 6 13 right to an accounting, and shall not provide any immunity to 6 14 a trustee, acting under the terms of the trust, for liability 6 15 to any beneficiary who discovers facts giving rise to a cause 6 16 of action against the trustee. 6 17 Sec. 13. Section 633.4214, Code 2001, is amended by adding 6 18 the following new subsections: 6 19 NEW SUBSECTION. 3. Subject to paragraph "c" and unless 6 20 the terms of the trust expressly indicate that a rule in this 6 21 subsection does not apply, all of the following shall apply: 6 22 a. A person other than a settlor who is a beneficiary and 6 23 trustee of a trust that confers on the trustee the power to 6 24 make discretionary distributions to or for the trustee's 6 25 personal benefit may exercise the power only in accordance 6 26 with an ascertainable standard relating to the trustee's 6 27 individual health, education, support, or maintenance within 6 28 the meaning of section 2041(b)(1)(A) or 2514(c)(1) of the 6 29 Internal Revenue Code of 1986. 6 30 b. A trustee shall not exercise a power to make 6 31 discretionary distributions to satisfy a legal obligation of 6 32 support that the trustee personally owes to another person. 6 33 c. This subsection does not apply to the following: 6 34 (1) A power held by the settlor's spouse who is the 6 35 trustee of a trust for which a marital deduction, as defined 7 1 in section 2056(b)(5) or 2523(e) of the Internal Revenue Code 7 2 of 1986, that was previously allowed. 7 3 (2) A trust that may be revoked or amended by the settlor. 7 4 (3) A trust, if contributions to the trust which qualify 7 5 for an annual exclusion under section 2503(c) of the Internal 7 6 Revenue Code of 1986. 7 7 NEW SUBSECTION. 4. A power whose exercise is limited or 7 8 prohibited by subsection 3 may be exercised by a majority of 7 9 the remaining trustees whose exercise of the power is not so 7 10 limited or prohibited. If the power of all trustees is so 7 11 limited or prohibited, the court may appoint a special 7 12 fiduciary with authority to exercise the power. 7 13 Sec. 14. Section 633.4402, subsections 3, 6, 16, 25, and 7 14 27, Code 2001, are amended to read as follows: 7 15 3.Continue or participate in the operation of a business7 16or other enterprise that is part of the trust property and7 17affect an incorporation, dissolution, or other change in the7 18form of the organization of the business or enterprise.With 7 19 respect to an interest in a proprietorship, partnership, 7 20 limited liability company, business trust, corporation, or 7 21 other form of business or enterprise, continue or participate 7 22 in the operation of a business or other enterprise that is 7 23 part of the trust and take any action that may be taken by 7 24 shareholders, members, or property owners, including merging, 7 25 dissolving, or otherwise changing the form of a business 7 26 organization and contributing additional capital. 7 27 6. Manage, control, divide, develop, improve, exchange, 7 28 partition, change the character of, or abandon trust property. 7 29 Consent, directly or through a committee or other agent, to 7 30 the reorganization, consolidation, merger, dissolution, or 7 31 liquidation of a corporation or other business enterprise, and 7 32 participate in voting trusts, pooling arrangements, and 7 33 foreclosures, and in connection therewith, deposit securities 7 34 with and transfer title and delegate discretion to any 7 35 protective or other committee as the trustee considers 8 1 advisable. 8 2 16.Consent, directly or through a committee or other8 3agent, to the reorganization, consolidation, merger,8 4dissolution, or liquidation of a corporation or other business8 5enterprise, and participate in voting trusts, pooling8 6arrangements, and foreclosures, and in connection therewith,8 7deposit securities with and transfer title and delegate8 8discretion to any protective or other committee as the trustee8 9considers advisable.Select a mode of payment under any 8 10 employee benefit or retirement plan, annuity, or life 8 11 insurance payable to the trustee, and exercise rights 8 12 thereunder, including the right to indemnification for 8 13 expenses and against liabilities, and take appropriate action 8 14 to collect proceeds. 8 15 25.Make a distribution of property and money in divided8 16or undivided interests, pro rata or non-pro rata, and adjust8 17resulting differences in valuation.Upon distribution of 8 18 trust property or the division or termination of a trust, make 8 19 distribution in divided or undivided interests, allocate 8 20 particular assets in proportionate or disproportionate shares, 8 21 value the trust property for those purposes, and adjust for 8 22 resulting differences in valuation. 8 23 27.Expend trust funds to inspect or investigate property8 24that the trustee has been asked to hold, or property owned or8 25operated by an entity in which the trustee holds or has been8 26asked to hold an interest for the purpose of determining the8 27application of environmental law with respect to the property,8 28and take action to prevent, abate, or otherwise remedy any8 29actual or potential violation of any environmental law8 30affecting property held directly or indirectly by the trustee.8 31 With respect to any actual or potential violation of any 8 32 environmental law affecting property held directly or 8 33 indirectly by the trustee, a trustee shall do all of the 8 34 following: 8 35 a. Inspect or investigate property the trustee holds or 9 1 has been asked to hold or property owned or operated by an 9 2 organization in which the trustee holds an interest in or has 9 3 been asked to hold an interest in, and expend trust funds 9 4 therefore, for the purpose of determining any potential 9 5 environmental law violations with respect to the property. 9 6 b. Take action to prevent, abate, or otherwise remedy any 9 7 actual or potential violation of any environmental law 9 8 affecting property held directly or indirectly by the trustee, 9 9 whether taken before or after the assertion of a claim or the 9 10 initiation of governmental enforcement. 9 11 c. Decline to accept property into trust or disclaim any 9 12 power with respect to property that is or may be burdened with 9 13 liability for violation of any environmental law. 9 14 d. Negotiate claims against the trust which may be 9 15 asserted for an alleged violation of environmental law. 9 16 e. Pay the expense of any inspection, review, abatement, 9 17 or remedial action to comply with environmental law. 9 18 Sec. 15. Section 633.4402, Code 2001, is amended by adding 9 19 the following new subsections: 9 20 NEW SUBSECTION. 31. Resolve a dispute concerning the 9 21 interpretation of the trust or its administration by 9 22 mediation, arbitration, or other procedure for alternative 9 23 dispute resolution. 9 24 NEW SUBSECTION. 32. Upon termination of the trust, 9 25 exercise the powers necessary to conclude the administration 9 26 of the trust and distribute the trust property to the person 9 27 or persons entitled to the trust property. 9 28 Sec. 16. Section 633.4502, Code 2001, is amended by adding 9 29 the following new subsection: 9 30 NEW SUBSECTION. 8. Order any other appropriate relief. 9 31 Sec. 17. Section 633.4506, subsection 2, Code 2001, is 9 32 amended to read as follows: 9 33 2.Notwithstanding the provisions of subsection 1, aA 9 34 beneficiary may hold a trustee liable for breach of trust 9 35under either of the following circumstancesdespite a consent, 10 1 release, or affirmance by the beneficiary, if, at the time of 10 2 the consent, release, or affirmance, all of the following 10 3 applied: 10 4 a. The beneficiaryat the time of the consent, release, or10 5affirmance did not know of the beneficiary's rights and of the10 6material facts the trustee knew or should have known and the10 7trustee did not reasonably believe that the beneficiary knew10 8 did not know of the beneficiary's rights. 10 9 b. Theconsent, release, or affirmance of the beneficiary10 10was induced by improper conduct of the trusteebeneficiary did 10 11 not know the material facts known to the trustee or which the 10 12 trustee should have known. 10 13 c. The trustee did not reasonably believe that the 10 14 beneficiary knew the beneficiary's rights or that the 10 15 beneficiary knew material facts known to the trustee or which 10 16 the trustee should have known. 10 17 Sec. 18. Section 633.4506, Code 2001, is amended by adding 10 18 the following new subsection: 10 19 NEW SUBSECTION. 3. A beneficiary may hold a trustee 10 20 liable for breach of a trust, despite a consent, release, or 10 21 affirmance by the beneficiary, if the consent, release, or 10 22 affirmance was induced by improper conduct of the trustee. 10 23 Sec. 19. Section 633.4601, subsection 2, Code 2001, is 10 24 amended to read as follows: 10 25 2. A trustee is personally liable for obligations arising 10 26 from ownership or control of trust propertyor, including 10 27 liability for environmental law violations, and for torts 10 28 committed in the course of administering a trust only if the 10 29 trustee is personally at fault. 10 30 Sec. 20. Section 633.6101, Code 2001, is amended by 10 31 striking the section and inserting in lieu thereof the 10 32 following: 10 33 633.6101 SUBJECT MATTER JURISDICTION. 10 34 The district court has exclusive jurisdiction of 10 35 proceedings concerning the internal affairs of a trust and of 11 1 actions and proceedings to determine the existence of a trust, 11 2 actions and proceedings by or against creditors or debtors of 11 3 a trust, and other actions and proceedings involving a trust 11 4 and third persons. 11 5 Sec. 21. Section 633.6105, Code 2001, is amended by 11 6 striking the section and inserting in lieu thereof the 11 7 following: 11 8 633.6105 TRANSFER OF JURISDICTION. 11 9 1. The court may transfer the place of administration of a 11 10 trust to or from this state or transfer some or all of the 11 11 trust property to a trustee in or outside this state if it 11 12 finds that the transfer of the trust property to a trustee in 11 13 this or another jurisdiction, or the transfer of the place of 11 14 administration of a trust to this or another jurisdiction, 11 15 will promote the best interests of the trust and those 11 16 interested in it, taking into account the economical and 11 17 convenient administration of the trust and the views of the 11 18 qualified beneficiaries. 11 19 2. A new trustee to whom the trust property is to be 11 20 transferred shall be qualified, willing, and able to 11 21 administer the trust or trust property under the terms of the 11 22 trust. 11 23 3. If the trust or any portion of the trust property is 11 24 transferred to another jurisdiction and if approval of the 11 25 transfer by the other court is required under the law of the 11 26 other jurisdiction, the proper court in the other jurisdiction 11 27 must have approved the transfer in order for the transfer to 11 28 be effective. 11 29 4. If a transfer is ordered, the court may direct the 11 30 manner of transfer and impose terms and conditions as may be 11 31 just, including a requirement for the substitution of a 11 32 successor trustee in any pending litigation in this state. A 11 33 delivery of property in accordance with the order of the court 11 34 is a full discharge of the trustee with respect to all 11 35 property specified in the order. 12 1 5. If the court grants a petition to transfer a trust or 12 2 trust property to this state, the court shall require the 12 3 trustee to give a bond, if necessary under the law of the 12 4 other jurisdiction or of this state, and may require bond as 12 5 provided in section 633.4102. 12 6 Sec. 22. Section 633.6301, Code 2001, is amended by adding 12 7 the following new subsections: 12 8 NEW SUBSECTION. 4. Notice to a person who may represent 12 9 and bind another person under this chapter has the same effect 12 10 as if notice were given directly to the person represented. 12 11 NEW SUBSECTION. 5. The consent of a person who may 12 12 represent and bind another person under this chapter is 12 13 binding on the person represented unless the person 12 14 represented objects to the representation before the consent 12 15 would otherwise have become effective. 12 16 Sec. 23. NEW SECTION. 633.7101 DIVISION PREVAILS. 12 17 Notwithstanding any Code provision to the contrary, the 12 18 provisions of this Division XX shall prevail over any other 12 19 applicable Code provision. 12 20 12 21 12 22 12 23 BRENT SIEGRIST 12 24 Speaker of the House 12 25 12 26 12 27 12 28 MARY E. KRAMER 12 29 President of the Senate 12 30 12 31 I hereby certify that this bill originated in the House and 12 32 is known as House File 2531, Seventy-ninth General Assembly. 12 33 12 34 12 35 13 1 MARGARET THOMSON 13 2 Chief Clerk of the House 13 3 Approved , 2002 13 4 13 5 13 6 13 7 THOMAS J. VILSACK 13 8 Governor
Text: HF02530 Text: HF02532 Text: HF02500 - HF02599 Text: HF Index Bills and Amendments: General Index Bill History: General Index
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