House File 729 - Introduced HOUSE FILE BY COMMITTEE ON JUDICIARY (SUCCESSOR TO HSB 29) (COMPANION TO SF 320 BY COMMITTEE ON JUDICIARY) Passed House, Date Passed Senate, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act relating to charitable trusts by providing for filing 2 documents with the attorney general and providing for the 3 attorney general's investigative authority. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 1320HV 83 6 da/sc/5 PAG LIN 1 1 Section 1. NEW SECTION. 633A.5107 FILING REQUIREMENTS. 1 2 1. The provisions of this section apply to the following 1 3 charitable trusts administered in this state with assets in 1 4 excess of twenty=five thousand dollars: 1 5 a. A nonprofit entity as defined in section 501(c)(3) of 1 6 the Internal Revenue Code, as defined in section 422.3. 1 7 b. A charitable remainder trust as defined in section 1 8 664(d) of the Internal Revenue Code, as defined in section 1 9 422.3. 1 10 c. A charitable lead trust as defined in sections 1 11 2055(e)(2)(b) and 2522(c)(2)(b) of the Internal Revenue Code, 1 12 as defined in section 422.3. 1 13 2. a. Within sixty days from the creation of a charitable 1 14 trust, as described in subsection 1, the trustee shall 1 15 register the charitable trust with the attorney general. The 1 16 trustee shall register the charitable trust on a form provided 1 17 by the attorney general. The trustee shall also submit a copy 1 18 of the trust instrument to the attorney general as required by 1 19 the attorney general. 1 20 b. The trustee of a charitable trust, as described in 1 21 subsection 1, shall annually file a copy of the charitable 1 22 trust's annual report with the attorney general. The annual 1 23 report may be the same report submitted to the persons 1 24 specified in section 633A.4213, the charitable trust's most 1 25 recent annual federal tax filings, or an annual report 1 26 completed on a form provided by the attorney general. 1 27 c. The attorney general may require that documents be 1 28 filed electronically, including forms, trust instruments, and 1 29 reports. In addition, the attorney general may require the 1 30 use of electronic signatures as defined in section 554D.103. 1 31 3. Any document provided to the office of the attorney 1 32 general in connection with a charitable remainder trust or a 1 33 charitable lead trust, as described in subsection 1, shall not 1 34 be considered a public record pursuant to chapter 22. The 1 35 attorney general shall keep the identities and interest of the 2 1 noncharitable beneficiaries confidential except to the extent 2 2 that disclosure is required by a court. 2 3 4. The attorney general is authorized to adopt 2 4 administrative rules in accordance with the provisions of 2 5 chapter 17A for the administration and enforcement of this 2 6 chapter. 2 7 5. For a charitable trust described in subsection 1, 2 8 created prior to the effective date of this Act and still in 2 9 existence, the trustee shall register the trust with and 2 10 submit a current copy of the trust instrument and financial 2 11 report to the attorney general not later than one hundred 2 12 thirty=five days after the close of the trust's next fiscal 2 13 year following the effective date of this Act. The trustee 2 14 shall comply with the remainder of this Act as if the 2 15 charitable trust were created on or after the effective date 2 16 of this Act. 2 17 Sec. 2. NEW SECTION. 633A.5108 ROLE OF THE ATTORNEY 2 18 GENERAL. 2 19 The attorney general may investigate a charitable trust to 2 20 determine whether the charitable trust is being administered 2 21 in accordance with law and the terms and purposes of the 2 22 trust. The attorney general may apply to a district court for 2 23 such orders that are reasonable and necessary to carry out the 2 24 terms and purposes of the trust and to ensure the trust is 2 25 being administered in accordance with applicable law. 2 26 Limitation of action provisions contained in section 633A.4504 2 27 apply. 2 28 Sec. 3. Section 633.303, Code 2009, is repealed. 2 29 EXPLANATION 2 30 This bill amends Code chapter 633A, the "Iowa Trust Code", 2 31 and specifically subchapter V which governs charitable trusts, 2 32 created for beneficial purposes (the relief of poverty, the 2 33 advancement of education or religion, or the promotion of 2 34 health). 2 35 A trust may be created by a settlor who transfers property 3 1 to the trust which is administered by a trustee on behalf of a 3 2 beneficiary. A settlor may create a trust using a number of 3 3 methods including by executing a trust instrument during the 3 4 settlor's lifetime or a will that takes effect upon the 3 5 settlor's death (see Code section 633A.2101). 3 6 The bill provides that within a time certain after the 3 7 creation of a charitable trust, the trustee must register the 3 8 trust with and submit a copy of the trust instrument to the 3 9 attorney general. In addition, the trustee must annually file 3 10 an annual report with the attorney general. Documents filed 3 11 with the general assembly are confidential. The bill also 3 12 authorizes the attorney general to investigate a charitable 3 13 trust to determine whether it is administered in accordance 3 14 with the law and the terms and purposes of the trust and to 3 15 bring legal action if necessary. 3 16 The bill provides that within 135 days after the effective 3 17 date of the bill, the trustee of a charitable trust created 3 18 prior to the effective date of the bill must comply with the 3 19 registration requirements applicable to charitable trusts 3 20 created on and after that date. 3 21 The bill eliminates a provision in Code chapter 633, the 3 22 "Iowa Trust Code", which provides that when a will creating a 3 23 charitable trust has been admitted to probate, the clerk of 3 24 court must mail a copy of the will to the attorney general, 3 25 and authorizes the attorney general to conduct an 3 26 investigation to determine whether the trust is being properly 3 27 administered and to bring any necessary action in court to 3 28 ensure compliance. 3 29 LSB 1320HV 83 3 30 da/sc/5