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First Substitute H.B. 299
Representative David Clark proposes the following substitute bill:
1
TRUST LAW AMENDMENTS
2
2003 GENERAL SESSION
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STATE OF UTAH
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Sponsor: David Clark
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This act modifies the Revenue and Tax Code and the Utah Uniform Probate Code to
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address issues related to trusts and to make technical changes. The act repeals the tax on
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accrued income in irrevocable trusts. This act modifies the statutory rule against
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perpetuities. This act provides protection for assets of trusts and addresses
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administration of trusts. The provisions in this act that amend certain tax-related
10
provisions take effect for taxable years beginning on or after January 1, 2004. All other
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provisions take effect on May 5, 2003.
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This act affects sections of Utah Code Annotated 1953 as follows:
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AMENDS:
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7-5-1, as last amended by Chapter 39, Laws of Utah 1998
15
59-10-103, as last amended by Chapter 257, Laws of Utah 2000
16
59-10-201, as last amended by Chapter 390, Laws of Utah 1997
17
75-2-205, as repealed and reenacted by Chapter 39, Laws of Utah 1998
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75-2-702, as enacted by Chapter 39, Laws of Utah 1998
19
75-2-1201, as enacted by Chapter 39, Laws of Utah 1998
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75-2-1203, as enacted by Chapter 39, Laws of Utah 1998
21
75-2-1205, as enacted by Chapter 39, Laws of Utah 1998
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75-2-1207, as enacted by Chapter 39, Laws of Utah 1998
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75-2-1208, as enacted by Chapter 39, Laws of Utah 1998
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75-7-201, as enacted by Chapter 150, Laws of Utah 1975
25
75-7-202, as last amended by Chapter 119, Laws of Utah 1995
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75-7-204, as enacted by Chapter 150, Laws of Utah 1975
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75-7-402, as last amended by Chapter 179, Laws of Utah 1992
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ENACTS:
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25-6-14, Utah Code Annotated 1953
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75-2-1206.5, Utah Code Annotated 1953
31
75-7-208, Utah Code Annotated 1953
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75-7-601, Utah Code Annotated 1953
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75-7-602, Utah Code Annotated 1953
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75-7-603, Utah Code Annotated 1953
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Be it enacted by the Legislature of the state of Utah:
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Section 1.
Section
7-5-1
is amended to read:
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7-5-1. Definitions -- Allowable trust companies -- Exceptions.
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(1) As used in this chapter:
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(a) "Business trust" means an entity engaged in a trade or business that is created by a
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declaration of trust that transfers property to trustees, to be held and managed by them for the
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benefit of persons holding certificates representing the beneficial interest in the trust estate and
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assets.
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(b) "Trust business" means, except as provided in Subsection (1)(c), a business in
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which one acts in any agency or fiduciary capacity, including that of personal representative,
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executor, administrator, conservator, guardian, assignee, receiver, depositary, or trustee under
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appointment as trustee for any purpose permitted by law, including the definition of "trust" set
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forth in Subsection
75-1-201
(53).
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(c) "Trust business" does not include the following means of holding funds, assets, or
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other property:
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(i) funds held in a client trust account by an attorney authorized to practice law in this
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state;
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(ii) funds held in connection with the purchase or sale of real estate by a person
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authorized to act as a real estate broker in this state;
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(iii) funds or other assets held in escrow by a person authorized by the department in
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accordance with Chapter 22 or by the Utah Insurance Department to act as an escrow agent in
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this state;
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(iv) funds held by a homeowners' association or similar organization to pay
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maintenance and other related costs for commonly owned property;
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(v) funds held in connection with the collection of debts or payments on loans by a
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person acting solely as the agent or representative or otherwise at the sole direction of the
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person to which the debt or payment is owed, including funds held by an escrow agent for
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payment of taxes or insurance;
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(vi) funds and other assets held in trust on an occasional or isolated basis by a person
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who does not represent that he is engaged in the trust business in Utah;
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(vii) funds or other assets found by a court to be held in an implied, resulting, or
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constructive trust;
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(viii) funds or other assets held by a court appointed conservator, guardian, receiver,
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trustee, or other fiduciary if:
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(A) the conservator, receiver, guardian, trustee, or other fiduciary is responsible to the
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court in the same manner as a personal representative under Title 75, Chapter 3, Part 5,
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Supervised Administration, or as a receiver under Rule 66, Utah Rules of Civil Procedure;
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(B) the conservator, trustee, or other fiduciary is a certified public accountant or has
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qualified for and received a designation as a certified financial planner, chartered financial
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consultant, certified financial analyst, or similar designation suitable to the court, that
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evidences the conservator's, trustee's, or other fiduciary's professional competence to manage
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financial matters;
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(C) no trust company is willing or eligible to serve as conservator, guardian, trustee, or
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receiver after notice has been given pursuant to Section
75-1-401
to all trust companies doing
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business in this state, including a statement of the value of the assets to be managed. That
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notice need not be provided, however, if a trust company has been employed by the fiduciary to
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manage the assets; and
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(D) in the event guardianship services are needed, the person seeking appointment as a
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guardian under this Subsection (1) is a specialized care professional, as that term is defined in
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Section
75-5-311
, or a business or state agency that employs the services of one of those
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professionals for the purpose of caring for the incapacitated person, so long as the specialized
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care professional, business, or state agency does not:
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(I) profit financially or otherwise from, or receive compensation for acting in that
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capacity, except for the direct costs of providing guardianship or conservatorship services; or
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(II) otherwise have a conflict of interest in providing those services;
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(ix) funds or other assets held by a credit services organization operating in compliance
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with Title 13, Chapter 21, Credit Services Organizations Act;
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(x) funds, securities, or other assets held in a customer account in connection with the
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purchase or sale of securities by a regulated securities broker, dealer, or transfer agent; or
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(xi) funds, assets, and other property held in a business trust for the benefit of holders
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of certificates of beneficial interest if the fiduciary activities of the business trust are merely
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incidental to conducting business in the business trust form.
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(d) "Trust company" means an institution authorized to engage in the trust business
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under this chapter. Only the following may be a trust company:
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(i) a Utah depository institution or its wholly owned subsidiary;
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(ii) an out-of-state depository institution authorized to engage in business as a
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depository institution in Utah or its wholly owned subsidiary;
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(iii) a corporation, including a credit union service organization, owned entirely by one
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or more federally insured depository institutions as defined in Subsection
7-1-103
(8);
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[(iii)] (iv) a direct or indirect subsidiary of a depository institution holding company
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that also has a direct or indirect subsidiary authorized to engage in business as a depository
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institution in Utah; and
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[(iv)] (v) any other corporation continuously and lawfully engaged in the trust business
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in this state since before July 1, 1981.
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(2) Only a trust company may engage in the trust business in this state.
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(3) The requirements of this chapter do not apply to:
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(a) an institution authorized to engage in a trust business in another state that is
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engaged in trust activities in this state solely to fulfill its duties as a trustee of a trust created
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and administered in another state;
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(b) a national bank, federal savings bank, federal savings and loan association, or
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federal credit union authorized to engage in business as a depository institution in Utah, or any
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wholly owned subsidiary of any of these, to the extent the institution is authorized by its
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primary federal regulator to engage in the trust business in this state; or
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(c) a state agency that is otherwise authorized by statute to act as a conservator,
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receiver, guardian, trustee, or in any other fiduciary capacity.
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Section 2.
Section
25-6-14
is enacted to read:
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25-6-14. Restricting transfers of trust interests.
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(1) (a) For trusts created on or after May 5, 2003, a settlor who in writing irrevocably
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transfers property in trust may provide that the income or principal interest of the settlor as
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beneficiary of the trust may not be either voluntarily or involuntarily transferred before
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payment or delivery to the settlor or beneficiary by the trustee. The provision shall be
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considered to be a restriction on the transfer of the settlor's beneficial interest in the trust that is
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enforceable under applicable nonbankruptcy law within the meaning of Section 541(c)(2) of
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the Bankruptcy Code or successor provision.
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(b) This Subsection (1) applies to:
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(i) any form of transfer into trust including:
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(A) deed;
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(B) conveyance; or
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(C) assignment; and
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(ii) transfers of:
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(A) real property;
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(B) personal property; or
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(C) interests in real or personal property.
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(2) (a) Except as provided in Subsection (2)(b), if a trust has a restriction as provided in
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Subsection (1)(a), the fol1owing may not satisfy a claim, or liability on it, in either law or
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equity, out of the settlor or beneficiary's restricted interest in the trust:
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(i) a creditor existing on the date of the transfer;
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(ii) a person who becomes a creditor after the date of transfer; or
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(iii) another person wishing to satisfy a claim out of the settlor or beneficiary's interest
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in the trust.
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(b) For the purposes of Subsections (2)(a)(i) and (ii), a creditor includes one holding or
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seeking to enforce a judgment entered by a court or other body having adjudicative authority as
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well as one with a right to payment, whether or not reduced to judgment, liquidated,
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unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
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secured, or unsecured.
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(c) A restriction provided under Subsection (1) does not prevent a person described in
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Subsection (2)(a) from satisfying a claim or liability out of the settlor or beneficiary's restricted
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interest if:
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(i) the transfer into trust is made in whole or in part with actual intent to hinder, delay,
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or defraud creditors or other persons under Subsection
25-6-5
(1)(a);
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(ii) the trust provides that the settlor may revoke or terminate all or part of the trust
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without the consent of a person who has a substantial beneficial interest in the trust and the
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interest would be adversely affected by the exercise of the settlor's power to revoke or
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terminate all or part of the trust;
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(iii) the trust requires that all or a part of the trust's income or principal, or both must
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be distributed to the settlor or beneficiary;
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(iv) at the time of the transfer, the settlor or beneficiary is in default by 30 or more days
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of making a payment due under a child support judgment or order; or
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(v) the transfer renders the settlor or beneficiary insolvent after the transfer.
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(d) For the purposes of Subsection (2)(c) "revoke or terminate" does not include:
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(i) a power to veto a distribution from the trust;
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(ii) a testamentary special power of appointment or similar power;
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(iii) the right to receive a distribution of income, principal, or both in the discretion of
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another, including a trustee other than the settlor, or is an interest in a charitable remainder
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unitrust or charitable remainder annuity trust as defined in Internal Revenue Code Section 664
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or successor provision, or is a right to receive principal subject to an ascertainable standard set
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forth in the trust; or
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(iv) the power to appoint nonsubordinate advisers or trust protectors who can remove
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and appoint trustees, who can direct, consent to or disapprove distributions, or is the power to
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serve as an investment director or appoint an investment director under Subsections
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75-7-302
(13) and (14).
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(3) The satisfaction of a claim under Subsection (2)(c) is limited to that part of the trust
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to which it applies.
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(4) A cause of action or claim for relief under Subsection (2)(c), is extinguished unless
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the action is brought by a person who:
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(a) is a creditor on the date of the transfer to trust within the later of:
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(i) three years after the date the transfer is made; or
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(ii) one year after the transfer is or reasonably could have been discovered by the
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person; or
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(b) becomes a creditor after the date of the transfer into trust, within two years after the
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date the transfer is made.
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(5) (a) If a trust has a restriction as provided under Subsection (1), the restriction
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prevents anyone, including a person listed in Subsection (2)(a), from asserting any cause of
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action or claim for relief against a trustee or anyone involved in the counseling, drafting,
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preparation, execution, or funding of the trust for:
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(i) conspiracy to commit a fraudulent conveyance;
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(ii) aiding and abetting a fraudulent conveyance; or
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(iii) participating in the trust transaction.
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(b) A person prevented from asserting a cause of action or claim for relief under this
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Subsection (5) may assert a cause of action only against:
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(i) the trust assets; or
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(ii) the settlor or beneficiary to the extent allowed under Subsection
25-6-5
(1)(a).
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(6) In any action brought under Subsection (2)(c), the burden to prove the matter by
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clear and convincing evidence shall be upon the creditor.
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(7) For purposes of this section, the transfer shall be considered to have been made on
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the date the property was originally transferred in trust.
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Section 3.
Section
59-10-103
is amended to read:
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59-10-103. Definitions.
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(1) As used in this chapter:
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(a) "Adult with a disability" means an individual who:
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(i) is 18 years of age or older;
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(ii) is eligible for services under Title 62A, Chapter 5, Services to People with
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Disabilities; and
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(iii) is not enrolled in:
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(A) an education program for students with disabilities that is authorized under Section
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53A-15-301
; or
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(B) a school established under Title 53A, Chapter 25, Schools for the Deaf and Blind.
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(b) "Corporation" includes:
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(i) associations[,];
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(ii) joint stock companies[,]; and
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(iii) insurance companies.
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(c) "Dependent child with a disability" means an individual 21 years of age or younger
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who:
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(i) (A) is diagnosed by a school district representative under rules adopted by the State
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Board of Education as having a disability classified as:
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(I) autism;
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(II) deafness;
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(III) preschool developmental delay;
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(IV) dual sensory impairment;
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(V) hearing impairment;
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(VI) intellectual disability;
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(VII) multidisability;
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(VIII) orthopedic impairment;
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(IX) other health impairment;
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(X) traumatic brain injury; or
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(XI) visual impairment;
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(B) is not receiving residential services from:
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(I) the Division of Services for People with Disabilities created under Section
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62A-5-102
; or
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(II) a school established under Title 53A, Chapter 25, Schools for the Deaf and Blind;
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and
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(C) is enrolled in:
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(I) an education program for students with disabilities that is authorized under Section
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53A-15-301
; or
239
(II) a school established under Title 53A, Chapter 25, Schools for the Deaf and Blind;
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or
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(ii) is identified under guidelines of the Department of Health as qualified for:
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(A) Early Intervention; or
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(B) Infant Development Services.
244
(d) "Employer," "employee," and "wages" are defined as provided in Section
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59-10-401
.
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(e) "Fiduciary" means:
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(i) a guardian[,];
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(ii) a trustee[,];
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(iii) an executor[,];
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(iv) an administrator[,];
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(v) a receiver[,];
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(vi) a conservator[,]; or
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(vii) any person acting in any fiduciary capacity for any individual.
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(f) "Homesteaded land diminished from the Uintah and Ouray Reservation" means the
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homesteaded land that was held to have been diminished from the Uintah and Ouray
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Reservation in Hagen v. Utah, 510 U.S. 399 (1994).
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(g) "Individual" means a natural person and includes aliens and minors.
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(h) "Nonresident individual" means an individual who is not a resident of this state.
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(i) "Nonresident trust" or "nonresident estate" means a trust or estate which is not a
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resident estate or trust.
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(j) (i) "Partnership" includes a syndicate, group, pool, joint venture, or other
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unincorporated organization[,]:
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(A) through or by means of which any business, financial operation, or venture is
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carried on[,]; and
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(B) which is not, within the meaning of this chapter[,]:
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(I) a trust [or];
267
(II) an estate; or
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(III) a corporation.
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(ii) "Partnership" does not include any organization not included under the definition of
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"partnership" [contained] in Section 761, Internal Revenue Code.
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(iii) "Partner" includes a member in [such] a syndicate, group, pool, joint venture, or
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organization described in Subsection (1)(j)(i).
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(k) (i) "Resident individual" means:
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[(i)] (A) an individual who is domiciled in this state for any period of time during the
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taxable year, but only for the duration of [such period; or (ii)] the period during which the
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individual is domiciled in this state; or
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(B) an individual who is not domiciled in this state but:
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(I) maintains a permanent place of abode in this state; and
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(II) spends in the aggregate 183 or more days of the taxable year in this state.
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(ii) For purposes of this Subsection (1)(k)[(ii)](i)(B), a fraction of a calendar day shall
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be counted as a whole day.
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(l) (i) "Resident estate" or "resident trust" means:
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(A) an estate of a decedent who at [his] death was domiciled in this state;
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(B) a trust, or a portion of a trust, consisting of property transferred by will of a
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decedent who at his death was domiciled in this state; or
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(C) a trust administered in this state.
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(ii) [For purposes of this chapter, a] A trust shall be considered to be administered in
288
this state if:
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(A) [the place of business where] the fiduciary transacts [a major portion of its] any
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administration of the trust [is] in this state; [or]
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[(B) the usual place of business of the fiduciary is in this state.]
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[(iii) Where there are two or more fiduciaries, the residency status of the trust shall be
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determined by the situs of the corporate or professional fiduciary with primary responsibility
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for the administration of the trust as defined in the trust instrument.]
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[(iv) The commission may, by rule, provide additional guidelines to determine the
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residency status of a trust.]
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(B) the trust states that it is governed by the laws of this state and any administration of
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the trust is in this state; or
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(C) the trust falls within the provisions of Section
75-7-208
.
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(m) "Taxable income" and "state taxable income" are defined as provided in Sections
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59-10-111
,
59-10-112
,
59-10-116
,
59-10-201.1
, and
59-10-204
.
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(n) "Taxpayer" means any individual, estate, or trust or beneficiary of an estate or trust,
303
whose income is subject in whole or part to the tax imposed by this chapter.
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(o) "Uintah and Ouray Reservation" means the lands recognized as being included
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within the Uintah and Ouray Reservation in:
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(i) Hagen v. Utah, 510 U.S. 399 (1994); and
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(ii) Ute Indian Tribe v. Utah, 114 F.3d 1513 (10th Cir. 1997).
308
(p) "Ute tribal member" means a person who is enrolled as a member of the Ute Indian
309
Tribe of the Uintah and Ouray Reservation.
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(q) "Ute tribe" means the Ute Indian Tribe of the Uintah and Ouray Reservation.
311
(2) (a) Any term used in this chapter has the same meaning as when used in
312
comparable context in the laws of the United States relating to federal income taxes unless a
313
different meaning is clearly required.
314
(b) Any reference to the Internal Revenue Code or to the laws of the United States shall
315
mean the Internal Revenue Code or other provisions of the laws of the United States relating to
316
federal income taxes [which] that are in effect for the taxable year.
317
(c) Any reference to a specific section of the Internal Revenue Code or other provision
318
of the laws of the United States relating to federal income taxes shall include any
319
corresponding or comparable provisions of the Internal Revenue Code as hereafter amended,
320
redesignated, or reenacted.
321
Section 4.
Section
59-10-201
is amended to read:
322
59-10-201. Taxation of resident trusts and estates.
323
(1) [A] Except for trusts which first became resident trusts on or after January 1, 2004,
324
a tax determined in accordance with the rates prescribed by Section
59-10-104
for individuals
325
filing separately is imposed for each taxable year on the state taxable income of each resident
326
estate or trust, except for trusts taxed as corporations.
327
(2) A resident estate or trust shall be allowed the credit provided in Section
59-10-106
,
328
relating to an income tax imposed by another state, except that the limitation shall be computed
329
by reference to the taxable income of the estate or trust.
330
(3) The property of the trusts established in Title 53B, Chapter 8a, Higher Education
331
Savings Incentive Program, and Chapter 8b, Higher Education Supplemental Savings Incentive
332
Program, and their income from operations and investments are exempt from all taxation by
333
the state under this chapter.
334
Section 5.
Section
75-2-205
is amended to read:
335
75-2-205. Decedent's nonprobate transfers to others.
336
Unless excluded under Section
75-2-208
, the value of the augmented estate includes the
337
value of the decedent's nonprobate transfers to others, not included under Section
75-2-204
, of
338
any of the [following] types described in this section, in the amount provided respectively for
339
each type of transfer:
340
(1) Property owned or owned in substance by the decedent immediately before death
341
that passed outside probate at the decedent's death. Property included under this category
342
consists of[:] the property described in this Subsection (1).
343
(a) (i) Property over which the decedent alone, immediately before death, held a
344
presently exercisable general power of appointment.
345
(ii) The amount included is the value of the property subject to the power, to the extent
346
the property passed at the decedent's death, by exercise, release, lapse, in default, or otherwise,
347
to or for the benefit of any person other than the decedent's estate or surviving spouse.
348
(b) (i) The decedent's fractional interest in property held by the decedent in joint
349
tenancy with the right of survivorship.
350
(ii) The amount included is the value of the decedent's fractional interest, to the extent
351
the fractional interest passed by right of survivorship at the decedent's death to a surviving joint
352
tenant other than the decedent's surviving spouse.
353
(c) (i) The decedent's ownership interest in property or accounts held in POD, TOD, or
354
co-ownership registration with the right of survivorship.
355
(ii) The amount included is the value of the decedent's ownership interest, to the extent
356
the decedent's ownership interest passed at the decedent's death to or for the benefit of any
357
person other than the decedent's estate or surviving spouse.
358
(d) (i) Proceeds of insurance, including accidental death benefits, on the life of the
359
decedent, if the decedent owned the insurance policy immediately before death or if and to the
360
extent the decedent alone and immediately before death held a presently exercisable general
361
power of appointment over the policy or its proceeds.
362
(ii) The amount included:
363
(A) is the value of the proceeds, to the extent they were payable at the decedent's death
364
to or for the benefit of any person other than the decedent's estate or surviving spouse[,
365
however, the amount included]; and
366
(B) may not exceed the greater of the cash surrender value of the policy immediately
367
prior to the death of the decedent or the amount of premiums paid on the policy during the
368
decedent's life.
369
(2) Property transferred in any of the [following] forms described in this Subsection (2)
370
by the decedent during marriage:
371
(a) (i) Any irrevocable transfer in which the decedent retained the right to the
372
possession or enjoyment of, or to the income from, the property if and to the extent the
373
decedent's right terminated at or continued beyond the decedent's death.
374
(ii) An irrevocable transfer in trust which includes a restrictive transfer on the
375
decedent's, settlor's, or beneficiary's interest as described in Section
25-6-14
.
376
(iii) The amount included is the value of the fraction of the property to which the
377
decedent's right related, to the extent the fraction of the property passed outside probate to or
378
for the benefit of any person other than the decedent's estate or surviving spouse.
379
(b) (i) Any transfer in which the decedent created a power over income or property,
380
exercisable by the decedent alone or in conjunction with any other person, or exercisable by a
381
nonadverse party, to or for the benefit of the decedent, creditors of the decedent, the decedent's
382
estate, or creditors of the decedent's estate.
383
(ii) The amount included with respect to a power over property is the value of the
384
property subject to the power, and the amount included with respect to a power over income is
385
the value of the property that produces or produced the income, to the extent the power in
386
either case was exercisable at the decedent's death to or for the benefit of any person other than
387
the decedent's surviving spouse or to the extent the property passed at the decedent's death, by
388
exercise, release, lapse, in default, or otherwise, to or for the benefit of any person other than
389
the decedent's estate or surviving spouse.
390
(iii) If the power is a power over both income and property and [the preceding
391
sentence] Subsection (2)(b)(ii) produces different amounts, the amount included is the greater
392
amount.
393
(3) Property that passed during marriage and during the two-year period next preceding
394
the decedent's death as a result of a transfer by the decedent if the transfer was of any of the
395
[following] types[:] described in this Subsection (3).
396
(a) (i) Any property that passed as a result of the termination of a right or interest in, or
397
power over, property that would have been included in the augmented estate under Subsection
398
(1)(a), (b), or (c), or under Subsection (2), if the right, interest, or power had not terminated
399
until the decedent's death.
400
(ii) The amount included is the value of the property that would have been included
401
under [those subsections] Subsection (1)(a), (b), (c), or Subsection (2) if the property were
402
valued at the time the right, interest, or power terminated, and is included only to the extent the
403
property passed upon termination to or for the benefit of any person other than the decedent or
404
the decedent's estate, spouse, or surviving spouse.
405
(iii) (A) As used in this Subsection (3)(a), "termination," with respect to a right or
406
interest in property, occurs when the right or interest terminated by the terms of the governing
407
instrument or the decedent transferred or relinquished the right or interest, and, with respect to
408
a power over property, occurs when the power terminated by exercise, release, lapse, default, or
409
otherwise[, but, with].
410
(B) With respect to a power described in Subsection (1)(a), "termination" occurs when
411
the power terminated by exercise or release, but not otherwise.
412
(b) (i) Any transfer of or relating to an insurance policy on the life of the decedent if
413
the proceeds would have been included in the augmented estate under Subsection (1)(d) had
414
the transfer not occurred.
415
(ii) The amount included:
416
(A) is the value of the insurance proceeds to the extent the proceeds were payable at
417
the decedent's death to or for the benefit of any person other than the decedent's estate or
418
surviving spouse[, however, the amount included]; and
419
(B) may not exceed the greater of the cash surrender value of the policy immediately
420
prior to the death of the decedent or the amount of premiums paid on the policy during the
421
decedent's life.
422
(c) (i) Any transfer of property, to the extent not otherwise included in the augmented
423
estate, made to or for the benefit of a person other than the decedent's surviving spouse.
424
(ii) The amount included is the value of the transferred property to the extent the
425
aggregate transfers to any one donee in either of the two years exceeded $10,000.
426
Section 6.
Section
75-2-702
is amended to read:
427
75-2-702. Requirement of survival by 120 hours -- Under probate code or
428
governing instrument -- Co-owners -- Exceptions -- Protection of payors, third parties,
429
and bona fide purchasers -- Personal liability of recipient.
430
(1) Except as provided in Subsection (4), an individual who is not established by clear
431
and convincing evidence to have survived an event, including the death of another individual,
432
by 120 hours is considered to have predeceased the event.
433
(2) Except as provided in Subsection (4), for purposes of a provision of a governing
434
instrument that relates to an individual surviving an event, including the death of another
435
individual, an individual who is not established by clear and convincing evidence to have
436
survived the event by 120 hours is considered to have predeceased the event.
437
(3) Except as provided in Subsection (4), if:
438
(a) it is not established by clear and convincing evidence that one of two co-owners
439
with right of survivorship survived the other co-owner by 120 hours, 1/2 of the property passes
440
as if one had survived by 120 hours and 1/2 as if the other had survived by 120 hours; and
441
(b) there are more than two co-owners and it is not established by clear and convincing
442
evidence that at least one of them survived the others by 120 hours, the property passes in the
443
proportion that one bears to the whole number of co-owners. For the purposes of this
444
subsection, "co-owners with right of survivorship" includes joint tenants, tenants by the
445
entireties, and other co-owners of property or accounts held under circumstances that entitles
446
one or more to the whole of the property or account on the death of the other or others.
447
(4) Survival by 120 hours is not required if:
448
(a) the governing instrument contains language dealing explicitly with simultaneous
449
deaths or deaths in a common disaster and that language is operable under the facts of the case;
450
(b) the governing instrument expressly indicates that an individual is not required to
451
survive an event, including the death of another individual, by any specified period or expressly
452
requires the individual to survive the event by a specified period; but survival of the event or
453
the specified period shall be established by clear and convincing evidence;
454
(c) the imposition of a 120-hour requirement of survival would cause a nonvested
455
property interest or a power of appointment to fail to qualify for validity under [Subsection]
456
Section
75-2-1203
[(1)(a), (2)(a), or (3)(a)] or to become invalid under [Subsection] Section
457
75-2-1203
[(1)(b), (2)(b), or (3)(b)]; but survival shall be established by clear and convincing
458
evidence; or
459
(d) the application of a 120-hour requirement of survival to multiple governing
460
instruments would result in an unintended failure or duplication of a disposition; but survival
461
shall be established by clear and convincing evidence.
462
(5) (a) A payor or other third party is not liable for having made a payment or
463
transferred an item of property or any other benefit to a beneficiary designated in a governing
464
instrument who, under this section, is not entitled to the payment or item of property, or for
465
having taken any other action in good faith reliance on the beneficiary's apparent entitlement
466
under the terms of the governing instrument, before the payor or other third party received
467
written notice of a claimed lack of entitlement under this section. A payor or other third party
468
is liable for a payment made or other action taken after the payor or other third party received
469
written notice of a claimed lack of entitlement under this section.
470
(b) Written notice of a claimed lack of entitlement under Subsection (5)(a) shall be
471
mailed to the payor's or other third party's main office or home by registered or certified mail,
472
return receipt requested, or served upon the payor or other third party in the same manner as a
473
summons in a civil action. Upon receipt of written notice of a claimed lack of entitlement
474
under this section, a payor or other third party may pay any amount owed or transfer or deposit
475
any item of property held by it to or with the court having jurisdiction of the probate
476
proceedings relating to the decedent's estate, or if no proceedings have been commenced, to or
477
with the court having jurisdiction of probate proceedings relating to the decedent's estates
478
located in the county of the decedent's residence. The court shall hold the funds or item of
479
property and, upon its determination under this section, shall order disbursement in accordance
480
with the determination. Payments, transfers, or deposits made to or with the court discharge
481
the payor or other third party from all claims for the value of amounts paid to or items of
482
property transferred to or deposited with the court.
483
(6) (a) A person who purchases property for value and without notice, or who receives
484
a payment or other item of property in partial or full satisfaction of a legally enforceable
485
obligation, is neither obligated under this section to return the payment, item of property, or
486
benefit nor is liable under this section for the amount of the payment or the value of the item of
487
property or benefit. But a person who, not for value, receives a payment, item of property, or
488
any other benefit to which the person is not entitled under this section is obligated to return the
489
payment, item of property, or benefit, or is personally liable for the amount of the payment or
490
the value of the item of property or benefit, to the person who is entitled to it under this section.
491
(b) If this section or any part of this section is preempted by federal law with respect to
492
a payment, an item of property, or any other benefit covered by this section, a person who, not
493
for value, receives the payment, item of property, or any other benefit to which the person is
494
not entitled under this section is obligated to return the payment, item of property, or benefit, or
495
is personally liable for the amount of the payment or the value of the item of property or
496
benefit, to the person who would have been entitled to it were this section or part of this section
497
not preempted.
498
Section 7.
Section
75-2-1201
is amended to read:
499
Part 12. Statutory Rule Against Perpetuities
500
75-2-1201. Statutory Rule Against Perpetuities.
501
This part is known as the "[Uniform] Statutory Rule Against Perpetuities."
502
Section 8.
Section
75-2-1203
is amended to read:
503
75-2-1203. Validity of nonvested property interest -- Validity of general power of
504
appointment subject to a condition precedent -- Validity of nongeneral or testamentary
505
power of appointment -- Effect of certain "later-of" type language.
506
(1) A nonvested property interest is invalid unless[:] within 1,000 years after the
507
interest's creation the interest vests or terminates.
508
[(a) when the interest is created, it is certain to vest or terminate no later than 21 years
509
after the death of an individual then alive; or]
510
[(b) the interest either vests or terminates within 90 years after its creation.]
511
(2) A general power of appointment not presently exercisable because of a condition
512
precedent is invalid unless[:] within 1,000 years after the general power of appointment's
513
creation the power of appointment is irrevocably exercised or terminates.
514
[(a) when the power is created, the condition precedent is certain to be satisfied or
515
becomes impossible to satisfy no later than 21 years after the death of an individual then alive;
516
or]
517
[(b) the condition precedent either is satisfied or becomes impossible to satisfy within
518
90 years after its creation.]
519
(3) A nongeneral power of appointment or a general testamentary power of
520
appointment is invalid unless[:] within 1,000 years after its creation the power of appointment
521
is irrevocably exercised or terminates.
522
[(a) when the power is created, it is certain to be irrevocably exercised or otherwise to
523
terminate no later than 21 years after the death of an individual then alive; or]
524
[(b) the power is irrevocably exercised or otherwise terminates within 90 years after its
525
creation.]
526
[(4) In determining whether a nonvested property interest or a power of appointment is
527
valid under Subsection (1)(a), (2)(a), or (3)(a), the possibility that a child will be born to an
528
individual after the individual's death is disregarded.]
529
[(5)] (4) The language in a governing instrument is inoperative to the extent it produces
530
a period of time that exceeds 21 years after the death of the survivor of the specified lives, if, in
531
measuring a period from the creation of a trust or other property arrangement, the language:
532
(a) seeks to disallow the vesting or termination of any interest or trust beyond;
533
(b) seeks to postpone the vesting or termination of any interest or trust until; or
534
(c) seeks to operate in effect in any similar fashion upon, the later of:
535
(i) the expiration of a period of time not exceeding 21 years after the death of the
536
survivor of specified lives in being at the creation of the trust or other property arrangement; or
537
(ii) the expiration of a period of time that exceeds or might exceed 21 years after the
538
death of the survivor of lives in being at the creation of the trust or other property arrangement.
539
(5) If a nongeneral power of appointment is exercised to create a new presently
540
exercisable general power of appointment, all property interests subject to that new presently
541
exercisable general power of appointment are invalid unless, within 1,000 years after the
542
creation of the new presently exercisable general power of appointment, the property interests
543
that are subject to the new presently exercisable general power of appointment vest or
544
terminate.
545
(6) If a nongeneral power of appointment is exercised to create a new or successive
546
nongeneral power of appointment or a new or successive testamentary general power of
547
appointment, all property interests subject to the exercise of that new or successive nongeneral
548
or testamentary general power of appointment are invalid unless, within 1,000 years from the
549
time of creation of the original instrument or conveyance creating the original nongeneral
550
power of appointment that is exercised to create a new or successive nongeneral or
551
testamentary general power of appointment, the property interests that are subject to the new or
552
successive nongeneral or testamentary general power of appointment vest or terminate.
553
Section 9.
Section
75-2-1205
is amended to read:
554
75-2-1205. Reformation.
555
Upon the petition of an interested person, a court shall reform a disposition in the
556
manner that most closely approximates the transferor's manifested plan of distribution and is
557
within the [90] 1,000 years allowed by [Subsection] Section
75-2-1203
[(1)(b), (2)(b), or (3)(b)]
558
if:
559
(1) a nonvested property interest or a power of appointment becomes invalid under
560
Section
75-2-1203
;
561
(2) a class gift is not but might become invalid under Section
75-2-1203
and the time
562
has arrived when the share of any class member is to take effect in possession or enjoyment; or
563
(3) a nonvested property interest that is not validated by [Subsection] Section
564
75-2-1203
[(1)(a)] can vest but not within [90] 1,000 years after its creation.
565
Section 10.
Section
75-2-1206.5
is enacted to read:
566
75-2-1206.5. Savings provision.
567
A property interest that becomes invalid pursuant to Section
75-2-1203
upon the
568
expiration of the 1,000-year period shall be distributed as follows:
569
(1) If the property interest is payable to one person, it shall be distributed to that
570
person. If the property interest is payable to more than one person, it shall be distributed to the
571
persons to whom the property interest is then payable:
572
(a) in the shares to which the persons are entitled; or
573
(b) equally among all persons who are entitled to shares if not specified.
574
(2) If the property interest is payable in the discretion of a trustee and is payable to one
575
person, it shall be distributed to that person. If the property interest is payable to more than one
576
person, it shall be distributed to the persons eligible to receive it:
577
(a) in the shares to which the persons are entitled; or
578
(b) equally among all persons who are entitled to shares if not specified.
579
(3) When there is no person then living to whom a property interest may be distributed
580
under Subsection (1) or (2), it shall be payable to one or more organizations described in 26
581
U.S.C. 2055(a) Internal Revenue Code, or successor provisions and in the shares or proportions
582
that the trustee or trustees then acting may determine.
583
Section 11.
Section
75-2-1207
is amended to read:
584
75-2-1207. Prospective application.
585
(1) (a) Except as extended by Subsection (2), this section applies to a nonvested
586
property interest or a power of appointment that is created on or after [July 1, 1998] May 5,
587
2003.
588
(b) For purposes of this section, a nonvested property interest or a power of
589
appointment created by the exercise of a power of appointment is created when:
590
(i) the power is irrevocably exercised; or [when]
591
(ii) a revocable exercise becomes irrevocable.
592
(2) If a nonvested property interest or a power of appointment was created before [July
593
1, 1998] May 5, 2003, and is determined in a judicial proceeding, commenced on or after [July
594
1, 1998] May 5, 2003, to violate Utah's rule against perpetuities as that rule existed before [July
595
1, 1998] May 5, 2003, a court upon the petition of an interested person may reform the
596
disposition:
597
(a) in the manner that most closely approximates the transferor's manifested plan of
598
distribution; and
599
(b) that is within the limits of the rule against perpetuities applicable when the
600
nonvested property interest or power of appointment was created.
601
(3) Section
75-2-1203
applies to a trust instrument or conveyance executed on or after
602
May 5, 2003, if the trust instrument or conveyance creates a contingent power of appointment
603
or nonvested property interest subject to the exercise of a power of appointment that creates a
604
new or successive power of appointment.
605
Section 12.
Section
75-2-1208
is amended to read:
606
75-2-1208. Rule against perpetuities does not apply.
607
[This title supersedes the rule of the] The common law [known as the] rule against
608
perpetuities does not apply in this state.
609
Section 13.
Section
75-7-201
is amended to read:
610
75-7-201. Court -- Exclusive jurisdiction of trusts.
611
(1) (a) The court has exclusive jurisdiction of proceedings initiated by interested parties
612
concerning [the internal affairs of trusts. Proceedings] trusts administered in this state under
613
Subsection
59-10-103
(1)(l), trusts described in Section
75-7-208
and Subsection
75-7-601
(3),
614
and proceedings under Section
25-6-14
.
615
(b) Proceedings which may be maintained under this section [are those concerning]
616
include:
617
(i) the administration and distribution of trusts[,];
618
(ii) the declaration of rights[,]; and
619
(iii) the determination of other matters involving trustees and beneficiaries of trusts.
620
[These include, but are not limited to, proceedings to: (a) Appoint]
621
(c) This Subsection (1) applies to proceedings to:
622
(i) appoint or remove a trustee[. (b) Review trustees'];
623
(ii) review a trustee's fees [and];
624
(iii) review and settle interim or final accounts[. (c) Ascertain];
625
(iv) ascertain beneficiaries[,];
626
(v) determine any question arising in the administration or distribution of any trust,
627
including questions of construction of trust instruments[,];
628
(vi) instruct trustees [and];
629
(vii) determine the existence or nonexistence of any immunity, power, privilege, duty,
630
or right[. (d) Order]; and
631
(viii) order transfer of administration of the trust to another state upon appropriate
632
conditions as may be determined by the court or accept transfer of administration of a trust
633
from another state to this state [upon such conditions as may be imposed by the supervising
634
court of the other state, unless the court in this state determines that these conditions are
635
incompatible with its own rules and procedures].
636
(2) (a) A proceeding under this section does not result in continuing supervision by the
637
court over the administration of the trust.
638
(b) The management and distribution of a trust estate, submission of accounts and
639
reports to beneficiaries, payment of trustee's fees and other obligations of a trust, acceptance
640
and change of trusteeship, and other aspects of the administration of a trust shall proceed
641
expeditiously consistent with the terms of the trust, free of judicial intervention and without
642
order, approval or other action of any court, subject to the jurisdiction of the court as invoked
643
by interested parties or as otherwise exercised as provided by law.
644
Section 14.
Section
75-7-202
is amended to read:
645
75-7-202. Effect of administration in this state -- Consent to jurisdiction.
646
[(1) By accepting the trusteeship of a trust of which the principal place of
647
administration is in this state, or by moving the principal place of administration of a trust to
648
this state, the]
649
(1) The trustee submits personally to the jurisdiction of the courts of this state [in any
650
proceeding under Section
75-7-201
as to any matter relating to the trust arising while the
651
principal place of administration is located in this state.] regarding any matter involving the
652
trust if:
653
(a) the trustee accepts the trusteeship of a trust administered in this state;
654
(b) the trustee moves any administration to this state; or
655
(c) the trustee is a trustee of a trust described in Subsection
75-7-601
(3).
656
(2) To the extent of the beneficial interests in a trust [of which the principal place of
657
administration is] administered in this state, the beneficiaries of the trust are subject to the
658
jurisdiction of the courts of this state [for purposes of proceedings under Section
75-7-201
.]
659
regarding any matter involving the trust. By accepting a distribution from such a trust, the
660
recipient submits personally to the jurisdiction of the courts of this state regarding any matter
661
involving the trust.
662
(3) Unless otherwise designated in the trust instrument, [the principal place of
663
administration of a trust is the trustee's usual place of business where the records pertaining to
664
the trust are kept or at the trustee's residence if the trustee has no such place of business. In the
665
case of co-trustees, the principal place of administration, if not otherwise designated in the trust
666
instrument, is:] a trust is administered in this state if it meets the requirements of Subsection
667
59-10-103
(1)(l).
668
[(a) the usual place of business of the corporate trustee if there is but one corporate
669
co-trustee;]
670
[(b) the usual place of business or residence of the individual trustee who is a
671
professional fiduciary if there is one individual trustee and no corporate co-trustee; or]
672
[(c) the usual place of business or residence of any of the co-trustees as agreed upon by
673
them.]
674
(4) By accepting the delegation of a trust function from the trustee of a trust [of which
675
the principal place of administration is] administered in this state, the agent submits to the
676
jurisdiction of the courts of this state [for purposes of proceedings under Section
75-7-201
]
677
regarding any matter involving the trust.
678
Section 15.
Section
75-7-204
is amended to read:
679
75-7-204. Trust proceedings -- Dismissal of matters relating to foreign trusts.
680
(1) [The] Except as provided in Subsection (2), the court [will] may not, over the
681
objection of a party, entertain proceedings [under Section
75-7-201
] involving a trust which:
682
(a) is under the continuing supervision of a foreign court[,]; or
683
(b) is registered in another state[, or has its principal place of business in another state,
684
except: (a) If].
685
(2) Notwithstanding Subsection (1), a court may entertain a proceeding regarding any
686
matter involving a trust if:
687
(a) all appropriate parties could not be bound by litigation in the courts of the other
688
state[.];
689
(b) [If] the interests of justice would be seriously impaired[.]; or
690
[(2) The court may condition a stay or dismissal of a proceeding on the consent of any
691
party to the jurisdiction of the courts of another state, or the court may grant a continuance or
692
enter any other appropriate order.]
693
(c) the trust is a trust described in Subsection
75-7-601
(3), Section
75-7-208
, or the
694
proceeding is a proceeding under Section
25-6-14
, or a trust is administered in this state as set
695
forth in Subsection
59-10-103
(1)(l).
696
Section 16.
Section
75-7-208
is enacted to read:
697
75-7-208. Governing law.
698
(1) If a trust provides by its terms that it is governed by the laws of this state, the
699
meaning and effect of the terms of the trust are to be governed by the laws of this state if any
700
administration of the trust is done in this state, including without limitation items listed in
701
Subsection (3)(a) or (c).
702
(2) If a trust does not specify a governing state law, the meaning and effect of the terms
703
of the trust are to be governed by the laws of this state if the trust is administered in this state
704
under Subsection
59-10-103
(1)(l) or is a trust described in Subsection
75-7-601
(3).
705
(3) A provision that the laws of this state govern the validity, construction, and
706
administration of the trust and that the trust is subject to the jurisdiction of this state is valid,
707
effective, and conclusive for the trust if:
708
(a) some or all the trust assets are deposited in this state in:
709
(i) a transaction account described in Subsection
7-1-103
(34);
710
(ii) a savings described in Subsection
7-1-103
(29);
711
(iii) a certificate of deposit;
712
(iv) a brokerage account;
713
(v) a trust company fiduciary account; or
714
(vi) account or deposit located in this state that is similar to an account listed in this
715
Subsection (3)(a);
716
(b) the trust is being administered by at least one qualified trustee; and
717
(c) any administration of the trust occurs in this state, including:
718
(i) physically maintaining trust records in this state; and
719
(ii) preparing or arranging for the preparation of an income tax return that must be filed
720
by the trust.
721
(4) The validity, construction, and administration of a trust with a state jurisdiction
722
provision is determined by the laws of this state, including provisions concerning the:
723
(a) capacity of the settlor;
724
(b) powers, obligations, liabilities, and rights of the trustee;
725
(c) appointment and removal of the trustees; and
726
(d) existence and extent of powers, conferred or retained, including:
727
(i) a trustee's discretionary powers;
728
(ii) the powers retained by a beneficiary of the trust; and
729
(iii) the validity of the exercise of a power.
730
Section 17.
Section
75-7-402
is amended to read:
731
75-7-402. Powers of trustees conferred by this part.
732
(1) From time of creation of the trust until final distribution of the assets of the trust, a
733
trustee has the power to perform, without court authorization, every act which a prudent man
734
would perform for the purposes of the trust, including the powers specified in Subsection (3).
735
(2) In the exercise of his powers, including the powers granted by this part, a trustee
736
has a duty to act with due regard to his obligation as a fiduciary, according to the standard set
737
forth in Section
75-7-302
.
738
(3) A trustee has the power, subject to Subsections (1) and (2) to:
739
(a) collect, hold, and retain trust assets received from a trustor until, in the judgment of
740
the trustee, disposition of the assets should be made. The assets may be retained even though
741
they include an asset in which the trustee is personally interested;
742
(b) receive additions to the assets of the trust;
743
(c) continue or participate in the operation of any business or other enterprise and
744
effect incorporation, dissolution, or other change in the form of the organization of the business
745
or enterprise;
746
(d) acquire an undivided interest in a trust asset in which the trustee, in any trust
747
capacity, holds an undivided interest;
748
(e) invest and reinvest trust assets in bonds, notes, stocks of corporations regardless of
749
class, real estate or any interest in real estate, interests in trusts or in any other property, or
750
individual interests in property wherever it is located;
751
(f) invest and reinvest trust assets in securities of an open-end or closed-end type
752
management investment company or investment trust which is registered under the Investment
753
Company Act of 1940, as amended, including securities of any investment company or
754
investment trust that is affiliated with or a subsidiary of the trustee, or to which the trustee or
755
its affiliate or subsidiary provides a service such as that of an investment advisor, custodian,
756
transfer agent, registrar, sponsor, distributor, manager, or otherwise, for which it receives
757
reasonable remuneration for such service;
758
(g) deposit or invest trust funds in a bank, including a bank operated by the trustee;
759
(h) (i) acquire or dispose of an asset, for cash or on credit, at public or private sale;
760
(ii) manage, develop, improve, exchange, partition, change the character of, or abandon
761
a trust asset or any interest therein; and
762
(iii) encumber, mortgage, or pledge a trust asset for a term within or extending beyond
763
the term of the trust, in connection with the exercise of any power vested in the trustee;
764
(i) make ordinary or extraordinary repairs or alterations in buildings or other structures,
765
or demolish any improvements, raze existing or erect new party walls or buildings;
766
(j) (i) subdivide, develop, or dedicate land to public use;
767
(ii) make or obtain the vacation of plats and adjust boundaries;
768
(iii) adjust differences in valuation on exchange or partition by giving or receiving
769
consideration; or
770
(iv) dedicate easements to public use without consideration;
771
(k) enter, for any purpose into a lease as lessor or lessee with or without an option to
772
purchase or renew for a term within or extending beyond the term of the trust;
773
(l) enter into a lease or arrangement for exploration and removal of minerals or other
774
natural resources or enter into a pooling or unitization agreement;
775
(m) grant an option involving disposition of a trust asset, or take an option for the
776
acquisition of any asset;
777
(n) vote a security, in person or by general or limited proxy;
778
(o) pay calls, assessments, and any other sums chargeable or accruing against or on
779
account of securities;
780
(p) sell or exercise stock subscription or conversion rights, consent, directly or through
781
a committee or other agent, to the reorganization, consolidation, merger, dissolution, or
782
liquidation of a corporation or other business enterprise;
783
(q) hold property in the name of a nominee or in other form without disclosure of the
784
trust so that title to the property may pass by delivery, but the trustee is liable for any act of the
785
nominee in connection with the property so held;
786
(r) insure the assets of the trust against damage or loss and the trustee against liability
787
with respect to third persons;
788
(s) (i) borrow money to be repaid from trust assets or otherwise;
789
(ii) advance money to be repaid from trust assets or otherwise; or
790
(iii) advance money for the protection of the trust, and for all expenses, losses, and
791
liabilities sustained in the administration of the trust or because of the holding or ownership of
792
any trust assets, for which advances with any interest the trustee has a lien on the trust assets as
793
against the beneficiary;
794
(t) (i) pay or contest any claim;
795
(ii) settle a claim by or against the trust by compromise, arbitration, or otherwise; and
796
(iii) release, in whole or in part, any claim belonging to the trust to the extent that the
797
claim is uncollectible;
798
(u) pay taxes, assessments, compensation of the trustee, and other expenses incurred in
799
the collection, care, administration, and protection of the trust;
800
(v) allocate items of income or expense to either trust income or principal, as provided
801
by law, including creation of reserves out of income for depreciation, obsolescence,
802
amortization, or for depletion in mineral or timber properties;
803
(w) notwithstanding the provisions of Section
75-5-102
, pay any sum distributable to a
804
beneficiary under legal disability, without liability to the trustee, by paying the sum to the
805
beneficiary or by paying the sum for the use of the beneficiary either to a legal representative
806
appointed by the court, or if none, to a relative;
807
(x) effect distribution of property and money in divided or undivided interests and
808
adjust resulting differences in valuation;
809
(y) (i) employ persons, including attorneys, auditors, investment advisers, or agents,
810
even if they are associated with the trustee, to advise or assist the trustee in the performance of
811
his administrative duties;
812
(ii) act without independent investigation upon their recommendations; and
813
(iii) instead of acting personally, employ one or more agents to perform any act of
814
administration, whether or not discretionary;
815
(z) prosecute or defend actions, claims, or proceedings for the protection of trust assets
816
and of the trustee in the performance of his duties; and
817
(aa) execute and deliver all instruments which will accomplish or facilitate the exercise
818
of the powers vested in the trustee.
819
(4) If a governing instrument or order requires or authorizes investment in United
820
States government obligations, a trustee may invest in those obligations, either directly or in the
821
form of securities or other interests, in any open-end or closed-end management type
822
investment company or investment trust registered under the provisions of the Investment
823
Company Act of 1940, 15 U.S.C. Sections 80a-1 through 80a-64 if:
824
(a) the portfolio of the investment company or investment trust is limited to United
825
States government obligations, and repurchase agreements are fully collateralized by United
826
States government obligations; and
827
(b) the investment company or investment trust takes delivery of the collateral for any
828
repurchase agreement either directly or through an authorized custodian.
829
(5) The trustee may exercise the powers set forth in this section and in the trust either
830
in the name of the trust or in the name of the trustee as trustee, specifically including the right
831
to take title to, encumber, or convey assets, including real property, in the name of the trust. If
832
the trust contains a restriction on transfer described in Section 25-6-14, any titling of property
833
using the trust's name shall indicate in the name that the trust contains such a restriction or is an
834
asset protection trust. This subsection applies to a trustee's exercise of trust powers both prior
835
to and after the effective date of this subsection. After the effective date of this subsection, for
836
recording purposes, the name and address of at least one trustee must be included on all
837
recorded documents affecting real property to which the trust is a party in interest.
838
(6) (a) If the fair market value of a trust is less than $25,000, the trustee may terminate
839
the trust by the following procedure:
840
(i) the trustee shall determine a plan of distribution that agrees, as nearly as possible,
841
with the trust's dispositive plan;
842
(ii) the trustee shall give notice to all interested persons of its intent to distribute the
843
assets in accordance with the plan unless an interested person objects within 20 days after the
844
date of the notice;
845
(iii) if no objection is received within 20 days after the date of the notice, the trustee
846
shall proceed to distribute the trust assets in accordance with the plan;
847
(iv) if the trustee receives a written objection to the plan within 20 days of the date of
848
the notice, the trustee shall not distribute the assets of the trust, but may then petition the court
849
for an order authorizing distribution in accordance with the plan. The court shall have plenary
850
authority to approve, modify, or reject the trustee's petition.
851
(b) The existence of a spendthrift or similar provision shall not effect the trustee's
852
powers under this subsection unless the trust instrument specifically provides that the trustee
853
shall not have the power to terminate the trust.
854
Section 18.
Section
75-7-601
is enacted to read:
855
75-7-601. Situs.
856
(1) (a) For purposes of this section:
857
(i) "Foreign trust" means a trust that is created in another state or country and valid in
858
the state or country in which the trust is created.
859
(ii) "State jurisdiction provision" means a provision that the laws of this state govern
860
the validity, construction, and administration of a trust and the trust is subject to the jurisdiction
861
of this state.
862
(iii) "Qualified trustee" means a person other than a settlor or beneficiary of a trust
863
who:
864
(A) resides in this state, has a true and permanent home in this state, does not have a
865
present intention of moving from this state, and has the intention of returning to this state when
866
away; or
867
(B) an allowable trust company under Title 7, Chapter 5, Trust Business, that exercises
868
trust powers and has a place of business in this state.
869
(b) An individual may be a qualified trustee if the individual's absence from the state is
870
for:
871
(i) brief intervals;
872
(ii) military service;
873
(iii) attendance at an educational or training institution; or
874
(iv) good cause shown.
875
(2) The situs of any trust is this state when a qualified person serves as a trustee, and:
876
(a) the trust satisfies the provisions of Section
75-7-208
; or
877
(b) any administration of the trust occurs in this state.
878
(3) If the situs of a foreign trust is moved to this state as provided in this section, the
879
following provisions are effective and enforceable under the laws of this state:
880
(a) a provision in the trust that restricts the transfer of trust assets in a manner similar
881
to Section
25-6-14
;
882
(b) a provision that allows the trust to be perpetual; or
883
(c) a provision that is not expressly prohibited by the law of this state.
884
(4) A foreign trust that moves its situs to this state is valid whether or not the trust
885
complied with the laws of this state at the time of the trust's creation or after the trust's creation.
886
(5) If a qualified trustee ceases to be a qualified trustee, the successor qualified trustee
887
appointed in the trust shall serve, but if none is appointed, the courts of this state shall appoint
888
a qualified trustee.
889
Section 19.
Section
75-7-602
is enacted to read:
890
75-7-602. Challenge to trusts.
891
(1) (a) Except as provided in Section
25-6-14
, a trust or transfer described in
892
Subsection (1)(b) is not void, voidable, liable to be set aside, defective in any fashion, or
893
questionable as to the settlor's capacity, on the grounds that the trust or transfer avoids or
894
defeats a right, claim, or interest conferred by law on a person by reason of a personal or
895
business relationship with the settlor or by way of a marital or similar right.
896
(b) Subsection (1)(a) applies to:
897
(i) (A) a trust that is described in Subsection
75-7-601
(3); or
898
(B) is administered in this state and provides that it is governed by the laws of this
899
state; or
900
(ii) (A) a property transfer to a trust if the trust is described in Subsection
75-7-601
(3);
901
or
902
(B) is administered in this state and provides that it is governed by the laws of this
903
state.
904
(2) If a trust or a property transfer to a trust is voided or set aside under Subsection (1),
905
the trust or property transfer shall be voided or set aside only to the extent necessary to satisfy:
906
(a) the settlor or beneficiary's debt to the creditor or other person at whose instance the
907
trust or property transfer is voided or set aside; and
908
(b) the costs and attorney fees allowed by the court.
909
(3) If a trust or a property transfer to a trust is voided or set aside under Subsection (1)
910
and the court is satisfied that the trustee did not act in bad faith in accepting or administering
911
the property that is the subject of the trust:
912
(a) the trustee has a first and paramount lien against the property that is the subject of
913
the trust in an amount equal to the entire cost, properly incurred by the trustee in a defense of
914
the action or proceedings to void or set aside the trust or the property transfer, including
915
attorney fees;
916
(b) the trust or property transfer that is voided or set aside is subject to the proper fees,
917
costs, preexisting rights, claims, and interest of the trustee and any predecessor trustee if the
918
trustee and predecessor trustee did not act in bad faith; and
919
(c) any beneficiary, including the settlor, may retain a distribution made by exercising a
920
trust power or discretion vested in the trustee of the trust, if the power or discretion was
921
properly exercised before the commencement of the action or proceeding to void or set aside
922
the trust or property transfer.
923
Section 20.
Section
75-7-603
is enacted to read:
924
75-7-603. Nonqualified persons serving as trustee.
925
(1) If at least one qualified trustee serves as trustee of a trust that contains a valid,
926
conclusive, and effective state jurisdiction provision, as defined in Section
75-7-601
, then
927
individuals who do not reside in this state may also serve as trustees even though they are not
928
qualified.
929
(2) Notwithstanding any other provision of law, a trustee who is not a qualified trustee
930
is not considered to be engaging in business in this state solely by reason of serving as trustee
931
of a trust that contains a valid, conclusive, and effective state jurisdiction provision, as defined
932
in Section
75-7-601
.
933
Section 21. Effective date.
934
(1) Sections
59-10-103
and
59-10-201
take effect for taxable years beginning on or
935
after January 1, 2004.
936
(2) All other provisions in this act take effect on May 5, 2003.
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