Chapter 434
2008 -- H 7979
Enacted 07/05/08
A N A C T
RELATING
TO FIDUCIARIES - POWERS OF FIDUCIARIES
Introduced
By: Representatives Scott, Lewiss, and Jackson
Date
Introduced: February 26, 2008
It is enacted by the General Assembly as follows:
SECTION 1. Section
18-4-24 of the General Laws in Chapter 18-4 entitled "Powers of
Fiduciaries" is hereby amended to read as
follows:
18-4-24.
Termination of small trusts. -- (a) Any corporate trustee authorized to
serve as
a trustee under chapter 3.1 of title 19, which
is a trustee of any inter vivos or testamentary trust,
may, in its sole discretion, or, if there is a
cotrustee or cotrustees, after having obtained the
approval of any cotrustee, terminate the trust
in whole or in part, if the current market value of the
trust principal is less than one two
hundred thousand dollars ($100,000) ($200,000). The
existence of any spendthrift or similar
protective provision shall not preclude termination of that
trust.
(b) (1) The trust
principal and income on hand, less fees and expenses, shall be
distributed to one or more beneficiaries and
remaindermen, or their legal representative, in the
proportions and amounts that the trustee in its
discretion determines to be appropriate under the
circumstances, giving consideration to the terms
of the trust and the interests of the income
beneficiaries and remaindermen. The recipient
shall release the trustee or trustees from liability
upon distribution of the amounts held.
(2) The interest
of a minor beneficiary, or any portion of the interest, may be converted
into qualifying property and distributed to a
custodian pursuant to the Rhode Island Uniform
Transfers to Minors Act, chapter 7 of this
title, or similar acts in other states.
(3) Any trust
qualifying for the marital deduction under appropriate provisions of the
Internal Revenue Code, 26 U.S.C. section 1 et
seq., shall be distributed only to the surviving
spouse of the decedent or settlor.
(4) Any trust
qualifying for the charitable deduction under appropriate provisions of the
Internal Revenue Code, 26 U.S.C. section 1 et
seq., shall be distributed only to the appropriate
charity or charities or in a manner to assure
the continued qualification of the distribution for the
charitable deduction. The trustee shall not be
required to look into the application by the charity
of the amount distributed.
(c) (1) The
termination may occur only after written notice sent by certified mail to all
interested persons who then have an interest in
the trust, or their legal or natural guardians. The
term "interested person" means any
living person or existing organization who is a current
income beneficiary or who would be a vested
remainderman of the trust if the trust were to
terminate at the time of the notification.
(2) The written
notice required by this section shall:
(i) State that
the trustee intends to terminate the trust in accordance with this section;
(ii) Include a
schedule of current trust assets and describe the plan of distribution;
(iii) Set forth
all rights of the interested person to object to the termination or plan of
distribution as set forth in subsection (d) of
this section; and
(iv) State that
the trustee may proceed to terminate the trust, notwithstanding any
objection to the termination or plan of
distribution.
(d) (1) Any
interested person shall have thirty (30) days after receiving written notice in
accordance with subsection (c) of this section
to object to the termination of the trust or the plan
of distribution in writing to the trustee,
stating the grounds for the objection. If the trustee has
received no written objection to the proposed termination
or plan of distribution within the thirty
(30) day period, it may proceed to terminate the
trust, subject to the waiting period contained in
subdivision (4) of this subsection.
(2) A trustee
receiving a written objection to the proposed termination or plan of
distribution from an interested person within
thirty (30) days of the person's receipt of written
notice may: (i) reformulate the proposed plan,
or (ii) state its intention to proceed with the
original plan of distribution. The trustee shall
then re-notify all interested persons of its intentions
in a writing sent by certified mail. The
re-notification shall begin again the thirty (30) day period
referred to in subdivision (1) of this
subsection.
(3) A trustee
receiving a written objection to the proposed reformulated plan of
distribution from an interested person within
thirty (30) days of the person's receipt of written
notice of the reformulated plan may proceed to
terminate the trust in accordance with the plan,
without court proceeding or approval,
notwithstanding the objection, provided that all interested
persons have been further notified in writing
sent by certified mail of:
(i) The
objection;
(ii) The
trustee's intention to proceed to terminate the trust, notwithstanding the
objection; and
(iii) Their right
to petition the superior court to prevent the termination of the trust or to
modify the plan of distribution.
(4) Any
interested person, within three (3) months of the mailing of the initial or the
further notice of the trustee's intention to
proceed with the termination, notwithstanding an
objection, may petition the superior court to
prevent termination or modify the plan of
distribution or may send the trustee a written
waiver of the right to petition. The trustee shall not
distribute the assets of the trust until three
(3) months from the date of the receipt by the last
interested person to receive notice or the
further written notice as provided in subdivision (3) of
this subsection.
(e) Superior
court approval of a termination of a small trust shall be required whenever
there is no corporate trustee. An individual
trustee may petition the superior court after notice to
all interested persons according to the notice provisions
in subsection (c) of this section. The
court shall make an order of distribution of the
trust property which shall specify the appropriate
share of each interested person who is to share
in the proceeds of the trust, taking into account the
interests of income beneficiaries or
remaindermen so as to conform as nearly as possible the
intention of the trust or testator. The superior
court, in addition, may make any other and further
orders that it deems proper or necessary to
protect the interests of the beneficiaries and of the
trustee. All provisions of subsection (b) of
this section shall apply to terminations under this
subsection.
(f)
Notwithstanding any other provision contained in this section, any corporate
trustee
of a trust may seek superior court approval of
the termination, and after submission of a principal
accounting, be released, along with any
cotrustee, from all liability with respect to the trust.
SECTION 2. This
act shall take effect upon passage and shall apply to trusts, whenever
created.
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LC01306
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