2017 -- S 0076

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LC000428

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2017

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A N   A C T

RELATING TO FIDUCIARIES -- TRUST

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

     Date Introduced: January 18, 2017

     Referred To: Senate Judiciary

     It is enacted by the General Assembly as follows:

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

hereby amended by adding thereto the following section:

     18-4-32. Trust advisors; Directed trusts.

     (a) Where one or more persons or entities are given authority by the terms of a governing

instrument to direct, consent to or disapprove a fiduciary's actual or proposed investment

decisions, distribution decisions or other decisions, such persons shall be considered to be

advisors and fiduciaries when exercising such authority; provided, however, that the governing

instrument may provide that any such advisor (including a protector) shall act in a non-fiduciary

capacity.

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

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

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

resulting directly or indirectly from any such act.

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

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

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

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

been requested to do so by the fiduciary.

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

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

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

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

advisor.

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

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

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

fiduciary shall have no duty to:

     (1) Monitor the conduct of the advisor;

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

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

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

manner different from the manner directed by the advisor.

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

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

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

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

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

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

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

advisor's authority.

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

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

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

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

other protectors;

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

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

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

to a beneficiary of a governing instrument.

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

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

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

and trust protectors.

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

executed.

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LC000428

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