2016 -- S 2400

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LC004454

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2016

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A N   A C T

RELATING TO FIDUCIARIES -- TRUST

     

     Introduced By: Senators Archambault, Lombardi, McCaffrey, Jabour, and Conley

     Date Introduced: February 11, 2016

     Referred To: Senate Judiciary

     It is enacted by the General Assembly as follows:

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     SECTION 1. Chapter 18-4 of the General Laws entitled "Powers of Fiduciaries" is

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hereby amended by adding thereto the following section:

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     18-4-32. Trust advisors; Directed trusts -- (a) Where one or more persons or entities

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are given authority by the terms of a governing instrument to direct, consent to or disapprove a

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fiduciary's actual or proposed investment decisions, distribution decisions or other decisions, such

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persons shall be considered to be advisors and fiduciaries when exercising such authority;

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provided, however, that the governing instrument may provide that any such advisor (including a

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protector) shall act in a non-fiduciary capacity.

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     (b) If a governing instrument provides that a fiduciary is to follow the direction of an

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advisor, and the fiduciary acts in accordance with such a director, then except in cases of willful

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misconduct on the part of the fiduciary so directed, the fiduciary shall not be liable for any loss

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resulting directly or indirectly from any such act.

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     (c) If a governing instrument provides that a fiduciary is to make decisions with the

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consent of an advisor, then except in cases of willful misconduct or gross negligence on the part

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of the fiduciary, the fiduciary shall not be liable for any loss resulting directly or indirectly from

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any act taken or omitted as a result of such advisor's failure to provide such consent after having

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been requested to do so by the fiduciary.

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     (d) For purposes of this section, "investment decision" means with respect to any

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investment, the retention, purchase, sale, exchange, tender or other transaction affecting the

 

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ownership thereof or rights therein and with respect to non-publicly traded investments, the

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valuation thereof, and an advisor with authority with respect to such decisions is an investment

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advisor.

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     (e) Whenever a governing instrument provides that a fiduciary is to follow the direction

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of an advisor with respect to investment decisions, distribution decisions or other decisions of the

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fiduciary, then, except to the extent that the governing instrument provides otherwise, the

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fiduciary shall have no duty to:

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     (1) Monitor the conduct of the advisor;

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     (2) Provide advice to the advisor or consult with the advisor; or

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     (3) Communicate with or warn or apprise any beneficiary or third party concerning

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instances in which the fiduciary would or might have exercised the fiduciary's own discretion in a

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manner different from the manner directed by the advisor.

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     (f) Absent clear and convincing evidence to the contrary, the actions of the fiduciary

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pertaining to matters within the scope of the advisor's authority (such as confirming that the

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advisor's directions have been carried out and recording and reporting actions taken at the

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advisor's direction), shall be presumed to be administrative actions taken by the fiduciary solely

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to allow the fiduciary to perform those duties assigned to the fiduciary under the governing

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instrument and such administrative actions shall not be deemed to constitute an undertaking by

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the fiduciary to monitor the advisor or otherwise participate in actions within the scope of the

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advisor's authority.

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     (g) For purposes of this section, the term "advisor" shall include a "protector" who shall

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have all the power and authority granted to the protector by the terms of the governing

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instrument, which may include, but shall not be limited to:

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     (1) The power to remove and appoint trustees, advisors, trust committee members and

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other protectors;

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     (2) The power to modify or amend the governing instrument to achieve favorable tax

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status or to facilitate the efficient administration of the trust; and

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     (3) The power to modify, expand or restrict the terms of a power of appointment granted

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to a beneficiary of governing instrument.

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     SECTION 2. This act shall take effect upon passage and shall apply to all trusts,

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whenever executed.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO FIDUCIARIES -- TRUST

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     This act would permit the settlor of a trust to provide for a person other than the trustee to

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direct actions of the trustee, and would clearly establish the legal responsibilities of trust advisors

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and trust protectors.

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     This act would take effect upon passage and would apply to all trusts, whenever

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executed.

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