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SPONSOR: |
HJC |
DATE TYPED: |
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HB |
48/HJCS |
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SHORT TITLE: |
Uniform Trust Code |
SB |
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ANALYST: |
Maloy |
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APPROPRIATION
Appropriation
Contained |
Estimated
Additional Impact |
Recurring or
Non-Rec |
Fund Affected |
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FY03 |
FY04 |
FY03 |
FY04 |
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NFI |
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NFI |
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(Parenthesis
( ) Indicate Expenditure Decreases)
Office
of the Attorney General
Synopsis of Bill
1.
House Bill 48 / HJCS enacts the Model
Uniform Trust Code, a code intended to apply to express trusts, charitable or
non-charitable, and trusts created pursuant to a state, judgment or decree that
requires the trust be administered in a manner of an express trust.
2.
The bill sets forth the following
regarding the administration of trusts:
o establishes
who may represent and bind a trust as a conservator (i.e., the individual
assigned to administer the trust);
o establishes
the vast duties and powers of a trustee and the rights and interests of
beneficiaries;
o addresses
designated jurisdiction vs. legal jurisdiction (in the absence of expressly
designated jurisdiction) regarding trust matters;
o establishes
the notice requirements, and the methods by which notice may be given to
beneficiaries and interested parties;
o establishes
the right of the New Mexico Attorney General to receive notice as a qualified
beneficiary with respect to a charitable trust having its principal place of
administration in
o sets
forth trust matters that may be resolved by a non-judicial settlement agreement,
such as “interpretation or construction of the terms of the trust, the approval of a trustee’s report or
accounting, direction to a trustee to refrain from performing a particular act
or the grant of any necessary or
desirable power to a trustee, the resignation or appointment of a trustee,
transfer of a trust’s principal place of administration, and liability of a
trustee for an action relating to the trust”;
o establishes
the roles and proceedings of the court in administration of the trust;
o establishes
the jurisdiction over and representation of the trustee and beneficiary;
o allows
representation by a holder of general testamentary power of appointment, and by
fiduciaries and parents, to the extent there is no conflict of interest;
o addresses
overdue distributions and the rights of a creditor or assignee of a beneficiary;
o makes
clear that trust property is not subject to the personal obligations of the trustee, even if the trustee becomes insolvent or
bankrupt;
o addresses
the creation, amendment and revocation of a revocable trust, as well as the
rights of the beneficiaries in light of the control of and duties of the
trustee being owned exclusively to the “settlor”;
o establishes
the trustee’s ability to accept or decline a trusteeship, and the processes
through which either is achieved;
o sets
forth the requirements for a trustee’s bond to secure performance of the trustee’s
duties, if the court finds that a bond is needed to protect the
interests of the beneficiaries, or is required by the terms of the trust;
o addresses
the processes through which co-trustees are to work in the event that a
unanimous decision is not achievable, or a co-trustee is “unavailable” to perform
his duties, or a trustee vacancy is in need of filling;
o establishes
grounds for the removal of a trustee, including a serious breach of trust, lack
of cooperation that substantially impairs the administration of the trust, unfitness,
unwillingness or persistent failure to administer the trust effectively;
o provides
for the “reasonable” compensation of the trustee(s), and reimbursement of the
trustee out of trust property, with interest as appropriate, for expenses associated
with administration of the trust;
o addresses
specifically the trustee’s duty of loyalty, to administer the trust solely in
the interest of the beneficiaries and in accordance with the terms of the trust
or orders of the court;
o addresses
in great detail the trustee’s fiduciary duties;
o establishes
that in the event there may be two or more beneficiaries, the trustee must be
fair, and that in all matters the trustee must act with prudence;
o sets
forth the trustees required skill levels, and in some instances, areas of expertise;
o establishes
the grounds and process for a trustee’s delegation of his duties and powers, in
light of a prudent trustee of comparable skill, and the requirement that the
trustee act with reasonable care, skill and caution in designating an agent to
act on his behalf under a delegation of duties and powers;
o establishes
the duty of the trustee to control and protect the trust property, and to keep
adequate records of the administration of the trust;
o makes
clear the duty of the trustee to deep qualified beneficiaries of the trust
reasonably informed about the administration of the trust, and the time frames
in which the trustee must act to provide this information;
o establishes
the trustee’s discretionary powers, if acting in good faith;
o defines
the distribution upon termination process;
o provides
a detailed breakdown of the liability of trustees and the rights of persons
dealing with trustees in the event of a breach of trust, as well as damages in
the absence of breach;
o sets
forth the limitation on personal liability of a trustee;
o establishes
the process for certification of a trust; and
o provides
miscellaneous provisions governing such technical, administrative matters as
“uniformity of application and construction” (of provisions of the Act), “electronic
records and signatures”, “severability” (of
provisions of the Act), and “application” (of the Act to trust matters
commenced prior to its adoption).
FISCAL IMPLICATIONS
HB 48 / HJCS does not have direct fiscal implications for the state. However, greater clarity and consistency in trust laws will likely make the resolution of such matters easier and more expedient for the courts.
In its analysis, the
Attorney General’s Office noted:
The Attorney General’s Office had requested certain language be added to the original HB 48 in order to clarify this office’s continued role as the State’s Charitable Registrar. This language was added in the Committee Substitute.
SJM/njw