SB0101

SENATE BILL 101

53rd legislature - STATE OF NEW MEXICO - second session, 2018

INTRODUCED BY

Stuart Ingle

FOR THE COURTS, CORRECTIONS AND JUSTICE COMMITTEE

AN ACT

RELATING TO PROPERTY; ENACTING THE UNIFORM DIRECTED TRUST ACT; MAKING CONFORMING AND TECHNICAL AMENDMENTS TO THE UNIFORM TRUST DECANTING ACT AND THE UNIFORM TRUST CODE; REPEALING SECTION 46A-8-808 NMSA 1978 (BEING LAWS 2003, CHAPTER 122, SECTION 8-808).

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1. [NEW MATERIAL] SHORT TITLE.--Sections 1 through 18 of this act may be cited as the "Uniform Directed Trust Act".

SECTION 2. [NEW MATERIAL] DEFINITIONS.--As used in the Uniform Directed Trust Act:

A. "breach of trust" includes a violation by a trust director or trustee of a duty imposed on that director or trustee by the terms of the trust, by the Uniform Directed Trust Act or by another law of New Mexico pertaining to trusts;

B. "directed trust" means a trust for which the terms of the trust grant a power of direction;

C. "directed trustee" means a trustee that is subject to a trust director's power of direction;

D. "person" means an individual; estate; business or nonprofit entity; public corporation; government; governmental subdivision, agency or instrumentality; or other legal entity;

E. "power of direction":

(1) means a power over a trust granted to a person by the terms of the trust to the extent the power is exercisable while the person is not serving as a trustee;

(2) includes a power over the investment, management or distribution of trust property or other matters of trust administration; and

(3) excludes the powers described in Subsection B of Section 5 of the Uniform Directed Trust Act;

F. "settlor" means a person, including a testator, that creates, or contributes property to, a trust. If more than one person creates or contributes property to a trust, each person is a settlor of the portion of the trust property attributable to that person's contribution except to the extent another person has the power to revoke or withdraw that portion;

G. "state" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands or any other territory or possession subject to the jurisdiction of the United States;

H. "terms of a trust" means:

(1) except as otherwise provided in Paragraph (2) of this subsection, the manifestation of the settlor's intent regarding a trust's provisions as:

(a) expressed in the trust instrument; or

(b) established by other evidence that would be admissible in a judicial proceeding; or

(2) the trust's provisions as established, determined or amended by:

(a) a trustee or trust director in accordance with applicable law;

(b) court order; or

I. "trust director" means a person that is granted a power of direction by the terms of a trust to the extent the power is exercisable while the person is not serving as a trustee. The person is a trust director whether or not the terms of the trust refer to the person as a trust director and whether or not the person is a beneficiary or settlor of the trust; and

J. "trustee" includes an original, additional and successor trustee and a cotrustee.

SECTION 3. [NEW MATERIAL] APPLICATION--PRINCIPAL PLACE OF ADMINISTRATION.--

A. The Uniform Directed Trust Act applies to a trust, whenever created, that has its principal place of administration in New Mexico, subject to the following rules:

(1) if the trust was created before January 1, 2019, that act applies only to a decision or action occurring on or after that date; and

(2) if the principal place of administration of the trust is changed to New Mexico on or after January 1, 2019, that act applies only to a decision or action occurring on or after the date of the change.

B. Without precluding other means to establish a sufficient connection with the designated jurisdiction in a directed trust, the terms of the trust that designate the principal place of administration of the trust are valid and controlling if:

(1) a trustee's principal place of business is located in, or a trustee is a resident of, the designated jurisdiction;

(2) a trust director's principal place of business is located in, or a trust director is a resident of, the designated jurisdiction; or

(3) all or part of the administration occurs in the designated jurisdiction.

SECTION 4. [NEW MATERIAL] COMMON LAW AND PRINCIPLES OF EQUITY.--The common law and principles of equity supplement the Uniform Directed Trust Act, except to the extent modified by that act or another law of New Mexico.

SECTION 5. [NEW MATERIAL] EXCLUSIONS.--

A. As used in this section, "power of appointment" means a power that enables a person acting in a nonfiduciary capacity to designate a recipient of an ownership interest in, or another power of appointment over, trust property.

B. The Uniform Directed Trust Act does not apply to a:

(1) power of appointment;

(2) power to appoint or remove a trustee or trust director;

(3) power of a settlor over a trust to the extent the settlor has a power to revoke the trust;

(4) power of a beneficiary over a trust to the extent the exercise or nonexercise of the power affects the beneficial interest of:

(a) the beneficiary; or

(b) another beneficiary represented by the beneficiary under Sections 46A-3-301 through 46A-3-305 NMSA 1978 with respect to the exercise or nonexercise of the power; or

(5) power over a trust if:

(a) the terms of the trust provide that the power is held in a nonfiduciary capacity; and

(b) the power must be held in a nonfiduciary capacity to achieve the settlor's tax objectives under the United States Internal Revenue Code of 1986, as amended, and regulations issued thereunder, as amended.

C. Unless the terms of a trust provide otherwise, a power granted to a person to designate a recipient of an ownership interest in, or power of appointment over, trust property that is exercisable while the person is not serving as a trustee is a power of appointment and not a power of direction.

SECTION 6. [NEW MATERIAL] POWERS OF TRUST DIRECTOR.--

A. Subject to Section 7 of the Uniform Directed Trust Act, the terms of a trust may grant a power of direction to a trust director.

B. Unless the terms of a trust provide otherwise:

(1) a trust director may exercise any further power appropriate to the exercise or nonexercise of a power of direction granted to the director under Subsection A of this section; and

(2) trust directors with joint powers shall act by majority decision.

SECTION 7. [NEW MATERIAL] LIMITATIONS ON TRUST

DIRECTOR.--A trust director is subject to the same rules as a trustee in a like position and under similar circumstances in the exercise or nonexercise of a power of direction or further power under Paragraph (1) of Subsection B of Section 6 of the Uniform Directed Trust Act regarding:

A. a payback provision in the terms of the trust necessary to comply with the reimbursement requirements of medicaid law in Section 1917 of the Social Security Act, 42 U.S.C. Section 1396p(d)(4)(A), as amended, and regulations issued thereunder, as amended; and

B. a charitable interest in the trust, including notice regarding the interest to the attorney general.

SECTION 8. [NEW MATERIAL] DUTY AND LIABILITY OF TRUST DIRECTOR.--

A. Subject to Subsection B of this section, with respect to a power of direction or a further power under Paragraph (1) of Subsection B of Section 6 of the Uniform Directed Trust Act:

(1) a trust director has the same fiduciary duty and liability in the exercise or nonexercise of the power:

(a) if the power is held individually, as a sole trustee in a like position and under similar circumstances; or

(b) if the power is held jointly with a trustee or another trust director, as a cotrustee in a like position and under similar circumstances; and

(2) the terms of the trust may vary the director's duty or liability to the same extent the terms of the trust could vary the duty or liability of a trustee in a like position and under similar circumstances.

B. Unless the terms of a trust provide otherwise, if a trust director is licensed, certified or otherwise authorized or permitted by law other than the Uniform Directed Trust Act to provide health care in the ordinary course of the director's business or practice of a profession, to the extent the director acts in that capacity, the director has no duty or liability under that act.

C. The terms of a trust may impose a duty or liability on a trust director in addition to the duties and liabilities imposed by the Uniform Directed Trust Act.

SECTION 9. [NEW MATERIAL] DUTY AND LIABILITY OF DIRECTED TRUSTEE.--

A. Subject to Subsection B of this section, a directed trustee shall take reasonable action to comply with a trust director's exercise or nonexercise of a power of direction or further power under Paragraph (1) of Subsection B of Section 6 of the Uniform Directed Trust Act, and the trustee is not liable for the action.

B. A directed trustee shall not comply with a trust director's exercise or nonexercise of a power of direction or further power under Paragraph (1) of Subsection B of Section 6 of the Uniform Directed Trust Act to the extent that, by complying, the trustee would engage in willful misconduct.

C. An exercise of a power of direction under which a trust director may release a trustee or another trust director from liability for breach of trust is not effective if:

(1) the breach involved the trustee's or other director's willful misconduct;

(2) the release was induced by improper conduct of the trustee or other director in procuring the release; or

(3) at the time of the release, the director did not know the material facts relating to the breach.

D. A directed trustee that has reasonable doubt about its duty under this section may petition the district court for instructions.

E. The terms of a trust may impose a duty or liability on a directed trustee in addition to the duties and liabilities imposed by the Uniform Directed Trust Act.

SECTION 10. [NEW MATERIAL] DUTY TO PROVIDE INFORMATION TO TRUST DIRECTOR OR TRUSTEE.--

A. Subject to Section 11 of the Uniform Directed Trust Act, a trustee shall provide information to a trust director to the extent the information is reasonably related both to:

(1) the powers or duties of the trustee; and

(2) the powers or duties of the director.

B. Subject to Section 11 of the Uniform Directed Trust Act, a trust director shall provide information to a trustee or another trust director to the extent the information is reasonably related both to:

(1) the powers or duties of the director; and

(2) the powers or duties of the trustee or other director.

C. A trustee that acts in reliance on information provided by a trust director is not liable for a breach of trust to the extent the breach resulted from the reliance, unless by so acting the trustee engages in willful misconduct.

D. A trust director that acts in reliance on information provided by a trustee or another trust director is not liable for a breach of trust to the extent the breach resulted from the reliance, unless by so acting the trust director engages in willful misconduct.

SECTION 11. [NEW MATERIAL] NO DUTY TO MONITOR, INFORM OR ADVISE.--

A. Unless the terms of a trust provide otherwise:

(1) a trustee does not have a duty to:

(a) monitor a trust director; or

(b) inform or give advice to a settlor, beneficiary, trustee or trust director concerning an instance in which the trustee might have acted differently than the director; and

(2) by taking an action described in Paragraph (1) of this subsection, a trustee does not assume the duty excluded by that paragraph.

B. Unless the terms of a trust provide otherwise:

(1) a trust director does not have a duty to:

(a) monitor a trustee or another trust director; or

(b) inform or give advice to a settlor, beneficiary, trustee or another trust director concerning an instance in which the director might have acted differently than a trustee or another trust director; and

(2) by taking an action described in Paragraph (1) of this subsection, a trust director does not assume the duty excluded by that paragraph.

SECTION 12. [NEW MATERIAL] APPLICATION TO COTRUSTEE.--The terms of a trust may relieve a cotrustee from duty and liability with respect to another cotrustee's exercise or nonexercise of a power of the other cotrustee to the same extent that, in a directed trust, a directed trustee is relieved from duty and liability with respect to a trust director's power of direction under Sections 9 through 11 of the Uniform Directed Trust Act.

SECTION 13. [NEW MATERIAL] LIMITATION OF ACTION AGAINST TRUST DIRECTOR.--

A. An action against a trust director for breach of trust shall be commenced within the same limitation period provided for in Section 46A-10-1005 NMSA 1978 for an action for breach of trust against a trustee in a like position and under similar circumstances.

B. A report or accounting has the same effect on the limitation period for an action against a trust director for breach of trust that the report or accounting would have under Section 46A-10-1005 NMSA 1978 in an action for breach of trust against a trustee in a like position and under similar circumstances.

SECTION 14. [NEW MATERIAL] DEFENSES IN ACTION AGAINST TRUST DIRECTOR.--In an action against a trust director for breach of trust, the director may assert the same defenses a trustee in a like position and under similar circumstances could assert in an action for breach of trust against the trustee.

SECTION 15. [NEW MATERIAL] JURISDICTION OVER TRUST DIRECTOR.--

A. By accepting appointment as a trust director of a trust subject to the Uniform Directed Trust Act, the director submits to the personal jurisdiction of the courts of New Mexico regarding any matter related to a power or duty of the director.

B. This section does not preclude other methods of obtaining jurisdiction over a trust director.

SECTION 16. [NEW MATERIAL] OFFICE OF TRUST DIRECTOR.--Unless the terms of a trust provide otherwise, the rules applicable to a trustee apply to a trust director regarding the following matters:

A. acceptance under Section 46A-7-701 NMSA 1978;

B. giving of bond to secure performance under Section 46A-7-702 NMSA 1978;

C. reasonable compensation under Section 46A-7-708 NMSA 1978;

D. resignation under Section 46A-7-705 NMSA 1978;

E. removal under Section 46A-7-706 NMSA 1978; and

F. vacancy and appointment of successor under Section 46A-7-704 NMSA 1978.

SECTION 17. [NEW MATERIAL] UNIFORMITY OF APPLICATION AND CONSTRUCTION.--In applying and construing the Uniform Directed Trust Act, consideration shall be given to the need to promote uniformity of the law with respect to its subject matter among states that enact it.

SECTION 18. [NEW MATERIAL] RELATION TO ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE ACT.--The Uniform Directed Trust Act modifies, limits or supersedes the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. Section 7001 et seq., but does not modify, limit or supersede Section 101(c) of that act, 15 U.S.C. Section 7001(c), or authorize electronic delivery of any of the notices described in Section 103(b) of that act, 15 U.S.C. Section 7003(b).

SECTION 19. Section 46-12-102 NMSA 1978 (being Laws 2016, Chapter 72, Section 1-102) is amended to read:

"46-12-102. DEFINITIONS.--As used in the Uniform Trust Decanting Act:

A. "appointive property" means the property or property interest subject to a power of appointment;

B. "ascertainable standard" means a standard relating to an individual's health, education, support or maintenance within the meaning of 26 U.S.C. Section 2041(b)(1)(A), as amended, or 26 U.S.C. Section 2514(c)(1), as amended, and any applicable regulations;

C. "authorized fiduciary" means:

(1) a trustee or other fiduciary, other than a settlor, that has discretion to distribute, or direct a trustee to distribute, part or all of the principal of the first trust to one or more current beneficiaries;

(2) a special fiduciary appointed under Section [1-109 of the Uniform Trust Decanting Act] 46-12-109 NMSA 1978; or

(3) a special-needs fiduciary under Section [1-113 of the Uniform Trust Decanting Act] 46-12-113 NMSA 1978;

D. "beneficiary" means a person that:

(1) has a present or future, vested or contingent, beneficial interest in a trust;

(2) holds a power of appointment over trust property; or

(3) is an identified charitable organization that will or may receive distributions under the terms of the trust;

E. "charitable interest" means an interest in a trust that:

(1) is held by an identified charitable organization and makes the organization a qualified beneficiary;

(2) benefits only charitable organizations and, if the interest were held by an identified charitable organization, would make the organization a qualified beneficiary; or

(3) is held solely for charitable purposes and, if the interest were held by an identified charitable organization, would make the organization a qualified beneficiary;

F. "charitable organization" means:

(1) a person, other than an individual, organized and operated exclusively for charitable purposes; or

(2) a government or governmental subdivision, agency or instrumentality, to the extent it holds funds exclusively for a charitable purpose;

G. "charitable purpose" means the relief of poverty, the advancement of education or religion, the promotion of health, a municipal or other governmental purpose or another purpose the achievement of which is beneficial to the community;

H. "court" means the district court;

I. "current beneficiary" means a beneficiary that, on the date the beneficiary's qualification is determined, is a distributee or permissible distributee of trust income or principal. "Current beneficiary":

(1) includes the holder of a presently exercisable general power of appointment; and

(2) does not include a person that is a beneficiary only because the person holds any other power of appointment;

J. "decanting power" or "the decanting power" means the power of an authorized fiduciary under the Uniform Trust Decanting Act to distribute property of a first trust to one or more second trusts or to modify the terms of the first trust;

K. "expanded distributive discretion" means a discretionary power of distribution that is not limited to an ascertainable standard or a reasonably definite standard;

L. "first trust" means a trust over which an authorized fiduciary may exercise the decanting power;

M. "first-trust instrument" means the trust instrument for a first trust;

N. "general power of appointment" means a power of appointment exercisable in favor of a powerholder, the powerholder's estate, a creditor of the powerholder or a creditor of the powerholder's estate;

O. "jurisdiction", with respect to a geographic area, includes a state or country;

P. "person" means an individual; an estate; a business or nonprofit entity; a public corporation; a government or governmental subdivision, agency or instrumentality; or another legal entity;

Q. "power of appointment" means a power that enables a powerholder acting in a nonfiduciary capacity to designate a recipient of an ownership interest in or another power of appointment over the appointive property. "Power of appointment" does not include a power of attorney;

R. "powerholder" means a person in which a donor creates a power of appointment;

S. "presently exercisable power of appointment" means a power of appointment exercisable by the powerholder at the relevant time. "Presently exercisable power of appointment":

(1) includes a power of appointment exercisable only after the occurrence of a specified event, the satisfaction of an ascertainable standard or the passage of a specified time only after:

(a) the occurrence of the specified event;

(b) the satisfaction of the ascertainable standard; or

(2) does not include a power exercisable only at the powerholder's death;

T. "qualified beneficiary" means a beneficiary that on the date the beneficiary's qualification is determined:

(1) is a distributee or permissible distributee of trust income or principal;

(2) would be a distributee or permissible distributee of trust income or principal if the interests of the distributees described in Paragraph (1) of this subsection terminated on that date without causing the trust to terminate; or

(3) would be a distributee or permissible distributee of trust income or principal if the trust terminated on that date;

U. "reasonably definite standard" means a clearly measurable standard under which a holder of a power of distribution is legally accountable within the meaning of 26 U.S.C. Section 674(b)(5)(A), as amended, and any applicable regulations;

V. "record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form;

W. "second trust" means:

(1) a first trust after modification under the Uniform Trust Decanting Act; or

(2) a trust to which a distribution of property from a first trust is or may be made under the Uniform Trust Decanting Act;

X. "second-trust instrument" means the trust instrument for a second trust;

Y. "settlor", except as otherwise provided in Section [1-125 of the Uniform Trust Decanting Act] 46-12-125 NMSA 1978, means a person, including a testator, that creates or contributes property to a trust. If more than one person creates or contributes property to a trust, each person is a settlor of the portion of the trust property attributable to the person's contribution except to the extent that another person has power to revoke or withdraw that portion;

Z. "sign" means, with present intent to authenticate or adopt a record:

(1) to execute or adopt a tangible symbol; or

(2) to attach to or logically associate with the record an electronic symbol, sound or process;

AA. "state" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands or any territory or insular possession subject to the jurisdiction of the United States. "State" includes an Indian tribe, pueblo, nation or band located within the United States and recognized by federal law or formally acknowledged by a state of the United States;

BB. "terms of the trust" means:

(1) except as otherwise provided in Paragraph (2) of this subsection, the manifestation of the settlor's intent regarding a trust's provisions as:

(a) expressed in the trust instrument; [as may be] or

(b) established by other evidence that would be admissible in a judicial proceeding; or

(2) the trust's provisions as [may be] established, determined or amended by:

(a) a trustee or trust director in accordance with applicable law;

(b) court order; or

CC. "trust instrument" means a record executed by the settlor to create a trust or by any person to create a second trust that contains some or all of the terms of the trust, including any amendments."

SECTION 20. Section 46A-1-103 NMSA 1978 (being Laws 2003, Chapter 122, Section 1-103, as amended) is amended to read:

"46A-1-103. DEFINITIONS.--As used in the Uniform Trust Code:

A. "action", with respect to an act of a trustee, includes a failure to act;

B. "ascertainable standard" means a standard relating to an individual's health, education, support or maintenance within the meaning of Subparagraph (A) of Paragraph (1) of Subsection (b) of Section 2041 and Paragraph (1) of Subsection (c) of Section 2514 of the Internal Revenue Code of 1986, as amended;

C. "beneficiary" means a person that:

(1) has a present or future beneficial interest in a trust, vested or contingent; or

(2) in a capacity other than that of trustee, holds a power of appointment over trust property;

D. "charitable trust" means a trust or portion of a trust created for a charitable purpose described in Subsection A of Section 46A-4-405 NMSA 1978;

E. "conservator" means a person appointed by the court to administer the estate of a minor or adult individual;

F. "environmental law" means a federal, state or local law, rule, regulation or ordinance relating to protection of the environment;

G. "guardian" means a person appointed by the court or a parent to make decisions regarding the support, care, education, health and welfare of a minor or adult person. "Guardian" does not include a guardian ad litem;

H. "interests of the beneficiaries" means the beneficial interests provided in the terms of the trust;

I. "jurisdiction", with respect to a geographic area, includes a state or country;

J. "person" means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision, agency or instrumentality, public corporation or any other legal or commercial entity;

K. "power of withdrawal" means a presently exercisable general power of appointment other than a power exercisable:

(1) by a trustee and limited by an ascertainable standard; or

(2) by another person only upon consent of the trustee or a person holding an adverse interest;

L. "property" means anything that may be the subject of ownership, whether real or personal, legal or equitable, or any interest therein;

M. "qualified beneficiary" means a beneficiary who, on the date the beneficiary's qualification is determined:

(1) is a distributee or permissible distributee of trust income or principal;

(3) would be a distributee or permissible distributee of trust income or principal if the trust terminated on that date;

N. "revocable", as applied to a trust, means revocable by the settlor without the consent of the trustee or a person holding an adverse interest;

O. "settlor" means a person, including a testator, who creates or contributes property to a trust. If more than one person creates or contributes property to a trust, each person is a settlor of the portion of the trust property attributable to that person's contribution, except to the extent another person has the power to revoke or withdraw that portion;

P. "spendthrift provision" means a term of a trust that restrains both voluntary and involuntary transfer of a beneficiary's interest;

Q. "state" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands or any territory or insular possession subject to the jurisdiction of the United States. "State" includes an Indian tribe, pueblo, nation or band recognized by federal law or formally acknowledged by a state;

R. "terms of a trust" means:

(1) except as otherwise provided in Paragraph (2) of this subsection, the manifestation of the settlor's intent regarding a trust's provisions as:

(a) expressed in the trust instrument; or [as may be]

(b) established by other evidence that would be admissible in a judicial proceeding; or

(2) the trust's provisions as established, determined or amended by:

(a) a trustee or trust director in accordance with applicable law;

(b) court order; or

S. "trust instrument" means an instrument executed by the settlor that contains terms of the trust, including any amendments thereto; and

T. "trustee" includes an original trustee, an additional trustee, a successor trustee and a co-trustee."

SECTION 21. Section 46A-1-105 NMSA 1978 (being Laws 2003, Chapter 122, Section 1-105, as amended) is amended to read:

"46A-1-105. DEFAULT AND MANDATORY RULES.--

A. Except as otherwise provided in the terms of the trust, the Uniform Trust Code governs the duties and powers of a trustee, relations among trustees and the rights and interests of a beneficiary.

B. The terms of a trust prevail over any provision of the Uniform Trust Code except:

(1) the requirements for creating a trust;

(2) subject to Sections 9, 11 and 12 of the Uniform Directed Trust Act, the duty of a trustee to act in good faith and in accordance with the terms and purposes of the trust and the interests of the beneficiaries;

(3) the requirement that a trust and its terms be for the benefit of its beneficiaries and that the trust have a purpose that is lawful, not contrary to public policy and possible to achieve;

(4) the power of the court to modify or terminate a trust under Sections 46A-4-410 through 46A-4-416 NMSA 1978;

(5) the effect of a spendthrift provision and the rights of certain creditors and assignees to reach a trust as provided in Chapter 46A, Article 5 NMSA 1978;

(6) the power of the court under Section

46A-7-702 NMSA 1978 to require, dispense with or modify or terminate a bond;

(7) the power of the court under Subsection B of Section 46A-7-708 NMSA 1978 to adjust a trustee's compensation specified in the terms of the trust that is unreasonably low or high;

(8) the duty under Paragraphs (2) and (3) of Subsection B of Section 46A-8-813 NMSA 1978 to notify qualified beneficiaries of an irrevocable trust who have attained twenty-five years of age of the existence of the trust, of the identity of the trustee and of their right to request reports of the trustee;

(9) except as otherwise provided in Subsection F of Section 46A-8-813 NMSA 1978, the duty under Subsection A of Section 46A-8-813 NMSA 1978 to respond to the request of a qualified beneficiary of an irrevocable trust for a trustee's reports and other information reasonably related to the administration of a trust;

(10) the effect of an exculpatory term under Section 46A-10-1008 NMSA 1978;

(11) the rights under Sections 46A-10-1010 through 46A-10-1013 NMSA 1978 of a person other than a trustee or beneficiary;

(12) periods of limitation for commencing a judicial proceeding; provided, however, any such period may be increased;

(13) the power of the court to take such action and exercise such jurisdiction as may be necessary in the interests of justice; and

(14) the subject-matter jurisdiction of the court and venue for commencing a proceeding as provided in Sections 46A-2-203 and 46A-2-204 NMSA 1978."

SECTION 22. Section 46A-6-603 NMSA 1978 (being Laws 2003, Chapter 122, Section 6-603, as amended) is amended to read:

"46A-6-603. SETTLOR'S POWERS--POWERS OF WITHDRAWAL.--

A. While a trust is revocable, the trustee may follow a direction of the settlor that is contrary to the terms of the trust.

[A.] B. While a trust is revocable and the settlor has capacity to revoke the trust, rights of the beneficiaries are subject to the control of, and the duties of the trustee are owed exclusively to, the settlor.

[B.] C. During the period the power may be exercised, the holder of a power of withdrawal has the rights of a settlor of a revocable trust under this section to the extent of the property subject to the power."

SECTION 23. Section 46A-7-703 NMSA 1978 (being Laws 2003, Chapter 122, Section 7-703) is amended to read:

"46A-7-703. CO-TRUSTEES.--

A. Co-trustees who are unable to reach a unanimous decision may act by majority decision.

B. If a vacancy occurs in a co-trusteeship, the remaining co-trustees may act for the trust.

C. Subject to Section 12 of the Uniform Directed Trust Act, a co-trustee [must] shall participate in the performance of a trustee's function unless the co-trustee is unavailable to perform the function because of absence, illness, disqualification under other law or other temporary incapacity, or the co-trustee has properly delegated the performance of the function to another trustee.

D. If a co-trustee is unavailable to perform duties because of absence, illness, disqualification under other law or other temporary incapacity, and prompt action is necessary to achieve the purposes of the trust or to avoid injury to the trust property, the remaining co-trustee or a majority of the remaining co-trustees may act for the trust.

E. A trustee [may] shall not delegate to a co-trustee the performance of a function the settlor reasonably expected the trustees to perform jointly. Unless a delegation was irrevocable, a trustee may revoke a delegation previously made.

F. Except as otherwise provided in Subsection G of this section, a trustee who does not join in an action of another trustee is not liable for the action.

G. Subject to Section 12 of the Uniform Directed Trust Act, each trustee shall exercise reasonable care to:

(1) prevent a co-trustee from committing a serious breach of trust; and

(2) compel a co-trustee to redress a serious breach of trust.

H. A dissenting trustee who joins in an action at the direction of the majority of the trustees and who notified any co-trustee of the dissent at or before the time of the action is not liable for the action unless the action is a serious breach of trust."

SECTION 24. REPEAL.--Section 46A-8-808 NMSA 1978 (being Laws 2003, Chapter 122, Section 8-808) is repealed.

SECTION 25. EFFECTIVE DATE.--The effective date of the provisions of this act is January 1, 2019.

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