Text: HSB00670 Text: HSB00672 Text: HSB00600 - HSB00699 Text: HSB Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 Section 1. Section 249A.2, Code 2001, is amended by adding 1 2 the following new subsection: 1 3 NEW SUBSECTION. 11. "Retained life estate" means any of 1 4 the following: 1 5 a. A life estate created by the recipient or recipient's 1 6 spouse, in which either the recipient or the recipient's 1 7 spouse held any interest in the property at the time of the 1 8 creation of the life estate. 1 9 b. A life estate created for the benefit of the recipient 1 10 or the recipient's spouse in property in which either the 1 11 recipient or the recipient's spouse held any interest in the 1 12 property within five years prior to the creation of the life 1 13 estate. 1 14 Sec. 2. Section 249A.3, Code Supplement 2001, is amended 1 15 by adding the following new subsection: 1 16 NEW SUBSECTION. 14. In determining eligibility for 1 17 federal supplemental security income benefits for purposes of 1 18 medical assistance eligibility under subsection 1, paragraph 1 19 "a", and subsection 2, paragraphs "a", "b", "d", "e", "h", and 1 20 "i", the department shall increase the amount of the 1 21 supplemental security income program's nonexempt resources or 1 22 interests in resources set aside for burial expenses to 1 23 include the average statewide cost reasonably necessary for a 1 24 funeral and burial, including embalming, an inner burial 1 25 container, an outer burial container, the purchase of 1 26 interment rights, grave openings, and cemetery merchandise, 1 27 excluding travel costs for members of the family to attend the 1 28 funeral or burial, as established by the department by rule. 1 29 Sec. 3. Section 249A.5, subsection 2, paragraphs b and c, 1 30 Code 2001, are amended to read as follows: 1 31 b. If the collection of all or part of a debt is waived 1 32 pursuant to subsection 2, paragraph "a",subparagraph (1),the 1 33 amount waived shall be a debt due from the estate of the 1 34 recipient's surviving spouse,orchild who is blind or has a 1 35 disability, or the recipient of a hardship waiver under 2 1 subsection 2, paragraph "a", subparagraph (2), upon the death 2 2 ofthesuch spouse,orchild or recipient, or due from a 2 3 surviving child who was under twenty-one years of age at the 2 4 time of the recipient's death, upon the child reaching age 2 5 twenty-one, to the extent the recipient's estate is received 2 6 bythe survivingsuch spouse,orchild, or recipient. 2 7 c. For purposes of this section, the estate of a medical 2 8 assistance recipient, surviving spouse, or surviving child 2 9 includes any real property, personal property, or other asset 2 10 in which the recipient, spouse, or child had any legal title 2 11 or interest at the time of the recipient's, spouse's, or 2 12 child's death, to the extent of such interests, including but 2 13 not limited to interests in jointly held property, retained 2 14 life estates, and interests in trusts. 2 15 Sec. 4. Section 633.647, Code 2001, is amended by adding 2 16 the following new subsection: 2 17 NEW SUBSECTION. 6A. To exercise the right to disclaim on 2 18 behalf of the ward as provided in section 633.704. 2 19 Sec. 5. Section 633.704, subsection 3, paragraph c, Code 2 20 2001, is amended to read as follows: 2 21 c. DEATH OR DISABILITY OF DISCLAIMANT. If a person 2 22 eligible to disclaim dies within the time allowed for a 2 23 disclaimer, the right to disclaim continues for the time 2 24 allowed and the personal representative of the person eligible 2 25 to disclaim has the same right to disclaim as the disclaimant. 2 26 If a person entitled to disclaim is disabled, the court may 2 27 authorize or direct a conservator or guardian to exercise the 2 28 right to disclaim on behalf of the person under disability if 2 29 the court finds it is in the person's best interests pursuant 2 30 to section 633.647. 2 31 Sec. 6. Section 637.601, Code 2001, is amended by striking 2 32 the section and inserting in lieu thereof the following: 2 33 637.601 DEFINITIONS. 2 34 For purposes of this section: 2 35 1. "Disinterested person" means a person who is not a 3 1 related or subordinate party as defined in section 672(c) of 3 2 the Internal Revenue Code with respect to the person acting as 3 3 trustee of the trust and excludes the trustor of the trust and 3 4 any interested trustee. 3 5 2. "Income trust" means a trust, created by either an 3 6 inter vivos or a testamentary instrument, which directs or 3 7 permits the trustee to distribute the net income of the trust 3 8 to one or more persons, either in fixed proportions or in 3 9 amounts or proportions determined by the trustee. However, a 3 10 trust that does not meet this definition is nonetheless an 3 11 income trust if the trust is subject to taxation under section 3 12 2001 or 2501 of the Internal Revenue Code, until the 3 13 expiration of the period for filing the return, including 3 14 extensions. 3 15 3. "Interested distributee" means a person, to whom 3 16 distributions of income or principal can currently be made, 3 17 who has the power to remove the existing trustee and designate 3 18 as successor a person who may be a related or subordinate 3 19 party, as defined in section 672(c) of the Internal Revenue 3 20 Code, with respect to such distributee. 3 21 4. "Interested trustee" means any of the following: 3 22 a. An individual trustee to whom the net income or 3 23 principal of the trust can currently be distributed or would 3 24 be distributed if the trust were to terminate and be 3 25 distributed. 3 26 b. Any trustee who may be removed and replaced by an 3 27 interested distributee. 3 28 c. An individual trustee whose legal obligation to support 3 29 a beneficiary may be satisfied by distributions of income and 3 30 principal of the trust. 3 31 5. "Total return unitrust" means an income trust which has 3 32 been converted under and meets the provisions of this 3 33 subchapter. 3 34 6. "Trustee" means a person acting as trustee of the 3 35 trust, except where expressly noted otherwise, whether acting 4 1 in the trustee's discretion or on the direction of one or more 4 2 persons acting in a fiduciary capacity. 4 3 7. "Trustor" means an individual who creates an inter 4 4 vivos or a testamentary trust. 4 5 8. "Unitrust amount" means an amount computed as a 4 6 percentage of the fair market value of the trust. 4 7 Sec. 7. NEW SECTION. 637.602 TRUSTEE'S AUTHORITY TO 4 8 CONVERT. 4 9 A trustee, other than an interested trustee, or, where two 4 10 or more persons are acting as trustee, a majority of the 4 11 trustees who are not interested trustees, may, in the 4 12 trustee's sole discretion and without the approval of the 4 13 court, do any of the following subject to the requirements of 4 14 section 637.603: 4 15 1. Convert an income trust to a total return unitrust. 4 16 2. Reconvert a total return unitrust to an income trust. 4 17 3. Change the method used to determine the fair market 4 18 value of the trust. 4 19 Sec. 8. NEW SECTION. 637.603 TRUSTEE REQUIREMENTS TO 4 20 CONVERT OR CHANGE COMPUTATION METHOD. 4 21 A trustee may proceed to take action under section 637.602 4 22 if all of the following apply: 4 23 1. The trustee adopts a written policy for the trust as 4 24 follows: 4 25 a. In the case of a trust being administered as an income 4 26 trust, requiring that future distributions from the trust will 4 27 be unitrust amounts rather than net income. 4 28 b. In the case of a trust being administered as a total 4 29 return unitrust, requiring that future distributions from the 4 30 trust will be net income rather than unitrust amounts. 4 31 c. Requiring that the method used to determine the fair 4 32 market value of the trust will be changed as stated in the 4 33 policy. 4 34 2. The trustee sends written notice of the trustee's 4 35 intention to take any action described in subsection 1, along 5 1 with copies of such written policy and this subchapter, to all 5 2 of the following persons: 5 3 a. The trustor of the trust, if living. 5 4 b. All living persons who are currently receiving or 5 5 eligible to receive distributions of income of the trust. 5 6 c. All living persons who would receive principal of the 5 7 trust if the trust were to terminate at the time of the giving 5 8 of such notice, without regard to the exercise of any power of 5 9 appointment or, if the trust does not provide for its 5 10 termination, all living persons who would receive or be 5 11 eligible to receive distributions of income or principal of 5 12 the trust if the persons identified in paragraph "b" were 5 13 deceased. 5 14 d. All persons named in the governing instrument as 5 15 adviser to or protector of the trust. 5 16 3. At least one person receiving notice under subsection 5 17 2, paragraph "b" and "c", is legally competent. 5 18 4. No person receiving such notice under subsection 2, 5 19 objects, by written instrument delivered to the trustee, to 5 20 the proposed action of the trustee within sixty days of 5 21 receipt of such notice. 5 22 Sec. 9. NEW SECTION. 637.604 INTERESTED TRUSTEE'S 5 23 AUTHORITY TO CONVERT. 5 24 If there is no trustee of the trust other than an 5 25 interested trustee, the interested trustee or, where two or 5 26 more persons are acting as trustee and are interested 5 27 trustees, a majority of such interested trustees may, in the 5 28 trustee's sole discretion and without the approval of the 5 29 court, do any of the following subject to the requirements of 5 30 section 637.605: 5 31 1. Convert an income trust to a total return unitrust. 5 32 2. Reconvert a total return unitrust to an income trust. 5 33 3. Change the method used to determine the fair market 5 34 value of the trust. 5 35 Sec. 10. NEW SECTION. 637.605 INTERESTED TRUSTEE 6 1 REQUIREMENTS TO CONVERT OR CHANGE COMPUTATION METHOD. 6 2 An interested trustee may proceed to take action under 6 3 section 637.604 if all of the following apply: 6 4 1. The trustee adopts a written policy for the trust as 6 5 follows: 6 6 a. In the case of a trust being administered as an income 6 7 trust, requiring that future distributions from the trust will 6 8 be unitrust amounts rather than net income. 6 9 b. In the case of a trust being administered as a total 6 10 return unitrust, requiring that future distributions from the 6 11 trust will be net income rather than unitrust amounts. 6 12 c. Requiring that the method used to determine the fair 6 13 market value of the trust will be changed as stated in the 6 14 policy. 6 15 2. The trustee appoints a disinterested person who, in its 6 16 sole discretion, but acting in a fiduciary capacity, 6 17 determines for the trustee the method to be used in 6 18 determining the fair market value of the trust, and which 6 19 assets, if any, are to be excluded in determining the unitrust 6 20 amount. 6 21 3. The trustee sends written notice of the trustee's 6 22 intention to take any action described in subsection 1, along 6 23 with copies of such written policy, this subchapter, and the 6 24 determination of the disinterested person to all of the 6 25 following persons: 6 26 a. The trustor of the trust, if living. 6 27 b. All living persons who are currently receiving or 6 28 eligible to receive distributions of income of the trust. 6 29 c. All living persons who would receive principal of the 6 30 trust if the trust were to terminate at the time of the giving 6 31 of such notice, without regard to the exercise of any power of 6 32 appointment or, if the trust does not provide for its 6 33 termination, all living persons who would receive or be 6 34 eligible to receive distributions of income or principal of 6 35 the trust if the persons identified in paragraph "b" were 7 1 deceased. 7 2 d. All persons named in the governing instrument as 7 3 adviser to or protector of the trust. 7 4 4. At least one person receiving notice under subsection 7 5 3, paragraphs "b" and "c", is legally competent. 7 6 5. No person receiving the notice described in subsection 7 7 3 objects, by written instrument delivered to the trustee, to 7 8 the proposed action of the trustee within sixty days of 7 9 receipt of such notice. 7 10 Sec. 11. NEW SECTION. 637.606 PETITION TO COURT TO 7 11 CONVERT TRUST. 7 12 If any trustee desires to do any of the following but does 7 13 not have the ability to or elects not to do so under the 7 14 provisions of section 637.602 or 637.604, the trustee may 7 15 petition the court for such order as the trustee deems 7 16 appropriate: 7 17 1. Convert an income trust to a total return unitrust. 7 18 2. Reconvert a total return unitrust to an income trust. 7 19 3. Change the percentage used to calculate the unitrust 7 20 amount or the method used to determine the fair market value 7 21 of the trust. 7 22 If, however, there is only one trustee of such trust and 7 23 such trustee is an interested trustee or in the event there 7 24 are two or more trustees of such trust and a majority of them 7 25 are interested trustees, the court, in its own discretion or 7 26 upon the petition of such trustee or trustees or any person 7 27 interested in the trust, may appoint a disinterested person 7 28 who, acting in a fiduciary capacity, shall present such 7 29 information to the court as necessary to enable the court to 7 30 make its determinations. 7 31 Sec. 12. NEW SECTION. 637.607 VALUATION OF TRUST. 7 32 The fair market value of the trust shall be determined at 7 33 least annually, using such valuation date or dates or averages 7 34 of valuation dates as are deemed appropriate. Assets for 7 35 which a fair market value cannot be readily ascertained shall 8 1 be valued using such valuation methods as are deemed 8 2 reasonable and appropriate. Such assets may be excluded from 8 3 valuation, provided all income received with respect to such 8 4 assets is distributed to the extent distributable in 8 5 accordance with the terms of the governing instrument. 8 6 Sec. 13. NEW SECTION. 637.608 PAYOUT PERCENTAGE. 8 7 The annual unitrust payout percentage shall be four percent 8 8 unless the governing instrument specifically provides a 8 9 different percentage or the court approves a percentage of not 8 10 less than three percent or more than five percent after notice 8 11 of intent to seek a payout percentage other than four percent 8 12 has been given to all of the following persons: 8 13 1. The trustor of the trust, if living. 8 14 2. All living persons who are currently receiving or 8 15 eligible to receive distributions of income of the trust. 8 16 3. All living persons who would receive principal of the 8 17 trust if the trust were to terminate at the time of the giving 8 18 of such notice without regard to the exercise of any power of 8 19 appointment or, if the trust does not provide for its 8 20 termination, all living persons who would receive or be 8 21 eligible to receive distributions of income or principal of 8 22 the trust if the persons identified in subsection 2 were 8 23 deceased. 8 24 4. All persons named in the governing instrument as 8 25 adviser to or protector of the trust. 8 26 Sec. 14. NEW SECTION. 637.609 UNITRUST AMOUNT. 8 27 The unitrust amount shall not be less than the net income 8 28 of the trust, determined without regard to the provisions of 8 29 section 637.610 for any of the following: 8 30 1. A trust for which a marital deduction has been taken 8 31 for federal tax purposes under section 2056 or 2523 of the 8 32 Internal Revenue Code, during the lifetime of the spouse for 8 33 whom the trust was created. 8 34 2. A trust to which the generation-skipping transfer tax 8 35 due under section 2601 of the Internal Revenue Code does not 9 1 apply by reason of any effective date or transition rule. 9 2 Sec. 15. NEW SECTION. 637.610 PROCEDURE UPON CONVERSION 9 3 OF INCOME TRUST TO TOTAL RETURN UNITRUST. 9 4 Following the conversion of an income trust to a total 9 5 return unitrust, the trustee: 9 6 1. Shall treat the unitrust amount as if it were net 9 7 income of the trust for purposes of determining the amount 9 8 available, from time to time, for distribution from the trust. 9 9 2. May allocate to trust income for each taxable year of 9 10 the trust, or a portion thereof, both of the following: 9 11 a. Net short-term capital gain described in section 9 12 1222(5) of the Internal Revenue Code for such year or portion 9 13 thereof but only to the extent that the amount so allocated 9 14 together with all other amounts allocated to trust income for 9 15 such year or portion thereof, does not exceed the unitrust 9 16 amount for such year or a portion thereof. 9 17 b. Net long-term capital gain described in section 1222(7) 9 18 of the Internal Revenue Code for such year or a portion 9 19 thereof but only to the extent that the amount so allocated 9 20 together with all other amounts, including amounts described 9 21 in paragraph "a", allocated to trust income for such year, or 9 22 a portion thereof, does not exceed the unitrust amount for 9 23 such year or a portion thereof. 9 24 Sec. 16. NEW SECTION. 637.611 TOTAL RETURN UNITRUST 9 25 ADMINISTRATION. 9 26 In administering a total return unitrust, the trustee may, 9 27 in the trustee's sole discretion but subject to the provisions 9 28 of the governing instrument, determine all of the following: 9 29 1. The effective date of the conversion. 9 30 2. The timing of distributions, including provisions for 9 31 prorating a distribution for a short year in which a 9 32 beneficiary's right to payments commences or ceases. 9 33 3. Whether distributions are to be made in cash or in kind 9 34 or partly in cash and partly in kind. 9 35 4. If the trust is reconverted to an income trust, the 10 1 effective date of such reconversion. 10 2 5. Such other administrative issues as may be necessary or 10 3 appropriate to carry out the purposes of this subchapter. 10 4 Sec. 17. NEW SECTION. 637.612 PRINCIPAL DISTRIBUTIONS 10 5 SUBJECT TO GOVERNING INSTRUMENT. 10 6 Conversion to a total return unitrust under the provisions 10 7 of this subchapter shall not affect any other provision of the 10 8 governing instrument, if any, regarding distributions of 10 9 principal. 10 10 Sec. 18. NEW SECTION. 637.613 CONSTRUCTION AND 10 11 APPLICABILITY. 10 12 This subchapter shall be construed as pertaining to the 10 13 administration of a trust and shall be available to any trust 10 14 that is administered in Iowa under Iowa law unless any of the 10 15 following apply: 10 16 1. The governing instrument reflects an intention that the 10 17 current beneficiary or beneficiaries are to receive an amount 10 18 other than a reasonable current return from the trust. 10 19 2. The trust is a trust described in section 170(f)(2)(B), 10 20 664(d), 1361(d), 2702(a)(3), or 2702(b) of the Internal 10 21 Revenue Code. 10 22 3. One or more persons to whom the trustee could 10 23 distribute income have a power of withdrawal over the trust 10 24 that is not subject to an ascertainable standard under section 10 25 2041 or 2514 of the Internal Revenue Code or that can be 10 26 exercised to discharge a duty of support the person possesses. 10 27 4. The governing instrument expressly prohibits use of 10 28 this subchapter by specific reference to the subchapter. A 10 29 provision in the governing instrument that the provisions of 10 30 sections 637.601 through 637.615 or any corresponding 10 31 provision of future law shall not be used in the 10 32 administration of this trust or similar words reflecting such 10 33 intent shall be sufficient to preclude the use of this 10 34 subchapter. 10 35 Sec. 19. NEW SECTION. 637.614 GOOD FAITH ACTIONS. 11 1 Any trustee or disinterested person who in good faith takes 11 2 or fails to take any action under this subchapter shall not be 11 3 liable to any person affected by such action or inaction, 11 4 regardless of whether such person received written notice as 11 5 provided in this subchapter and regardless of whether such 11 6 person was under a legal disability at the time of the 11 7 delivery of such notice. Such person's exclusive remedy shall 11 8 be to obtain an order of the court directing the trustee to 11 9 convert an income trust to a total return unitrust, or to 11 10 reconvert a total return unitrust to an income trust. 11 11 Sec. 20. NEW SECTION. 637.615 EFFECTIVE DATE. 11 12 This subchapter takes effect upon the effective date of 11 13 this Act and applies to trusts in existence on that date or 11 14 created after that date. 11 15 SUBCHAPTER 7 11 16 MISCELLANEOUS PROVISIONS 11 17 Sec. 21. NEW SECTION. 637.701 APPLICATION OF CHAPTER TO 11 18 EXISTING TRUSTS AND ESTATES – CHAPTER PREVAILS. 11 19 This chapter applies to every trust or decedent's estate on 11 20 and after July 1, 2000, except as otherwise expressly provided 11 21 in the will, the terms of the trust, or this chapter. 11 22 Notwithstanding any Code provision to the contrary, the 11 23 provisions of this chapter shall prevail over any other 11 24 applicable Code provision. 11 25 Sec. 22. Section 633.667, Code 2001, is repealed. 11 26 Sec. 23. EFFECTIVE DATE. This Act, being deemed of 11 27 immediate importance, takes effect upon enactment. 11 28 EXPLANATION 11 29 This bill relates to a number of Code revisions involving 11 30 trusts and estates. 11 31 The bill increases the amount of nonexempt resources that a 11 32 Medicaid recipient can set aside for burial expenses to the 11 33 average statewide cost reasonably necessary for a funeral and 11 34 burial. 11 35 The bill provides that if a medical assistance debt is 12 1 waived for a surviving spouse of a deceased Medicaid 12 2 recipient, or for those dependents of the deceased Medicaid 12 3 recipient who are under the age of 21, blind, or disabled, or 12 4 a person who is the recipient of a hardship waiver, the debt 12 5 shall be due from the estate of the recipient's surviving 12 6 spouse, dependent child who is blind or has a disability, or 12 7 person who is the recipient of a hardship waiver, upon the 12 8 death of the spouse, child, or said person, or due from a 12 9 surviving child who was under the age of 21 at the time of the 12 10 recipient's death upon the child reaching the age of 21. 12 11 The bill limits estate recovery of medical assistance debts 12 12 to life estates that were created by the Medicaid recipient or 12 13 spouse. Current law allows the department of human services 12 14 to pursue recovery of medical assistance debts regardless of 12 15 the person or the entity that created them. 12 16 The bill also amends the probate code to allow a 12 17 conservator, upon court order, to exercise the right to make 12 18 disclaimers on behalf of the ward. 12 19 The bill further creates a new subchapter in Code chapter 12 20 637, "Iowa's Uniform Principal and Income Act", relating to 12 21 the total return unitrust. The purpose of the total return 12 22 unitrust is to provide the trustee of an income trust the 12 23 option to invest the trust assets in a way that provides 12 24 income for the current income beneficiaries while maximizing 12 25 the potential for long-term appreciation in trust assets 12 26 sufficient to meet the needs of the remainder beneficiaries. 12 27 The bill allows the trustee to elect to distribute annually 4 12 28 percent of the trust's assets, based upon the fair market 12 29 value of the trust, to the income beneficiaries regardless of 12 30 the net income generated. The bill allows the trustee to 12 31 elect to distribute between 3 percent and 5 percent of the 12 32 trust's assets subject to court approval. 12 33 The bill also contains provisions which require the trustee 12 34 to send written notice to certain persons in regard to any 12 35 action taken by the trustee related to the trust. 13 1 The bill applies to all trusts administered in Iowa, 13 2 regardless of whether administered by a corporation or an 13 3 individual trustee, and also applies to trusts moved into 13 4 Iowa. 13 5 The bill provides that the total return unitrust subchapter 13 6 takes effect upon the effective date of the bill and applies 13 7 to trusts in existence on that date or created after that 13 8 date. The bill itself takes effect upon enactment. 13 9 LSB 5150HC 79 13 10 rh/cf/24
Text: HSB00670 Text: HSB00672 Text: HSB00600 - HSB00699 Text: HSB Index Bills and Amendments: General Index Bill History: General Index
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