SB 195

Abstract

Section 1 of the Act addresses statutes under Chapter 49 of Title 10 and (i) amends the title of section 4915 (but makes no substantive changes to the statute); and (ii) modifies section 4916 to provide that plans similar to the Delaware College Investment Plan and the Delaware Achieving a Better Life Experience Plan, but created under the laws of other states, are similarly exempt from the execution or attachment process in Delaware. Section 2 of the Act modifies section 6504 of Title 10 by: (i) providing that advisers and protectors under section 3313(a) of Title 12, and designated representatives under section 3339 of Title 12, are among those persons who may have a declaration of rights or legal relations in respect to the subjects currently enumerated in the statute; and (ii) making minor grammatical clarifications. Section 3 of the Act transfers certain statutes affecting the construction of trusts’ governing instruments from Chapter 2 of Title 12 (which governs wills) to Chapter 33 of Title 12 (which governs trusts) so that these statutes will be more readily accessible as a part of Delaware’s nationwide trust practice, and therefore cross-references the transferred statutes for purposes of the construction of wills. Section 4 of the Act addresses statutes under Chapter 33 of Title 12 and (i) clarifies that the definitions of section 3301 also apply to Chapters 35, 39, and 45 of Title 12, and to any other Delaware laws specifically incorporating section 3301 or the laws of trusts generally; (ii) clarifies that the definition of “fiduciary” as used in other sections of Title 12 also includes advisers or protectors acting in a fiduciary capacity under section 3313(a) of Title 12 and designated representatives acting in a fiduciary capacity under section 3339 of Title 12; (iii) defines in section 3301 the term “nonfiduciary” as used in other sections of Title 12; (iv) clarifies that sections 3302 and 3303 authorize sustainable investment strategies; (v) clarifies that section 3302’s protections of fiduciaries who do not have control over assets, or whose control is subject to the direction of a direction adviser, also apply to fiduciaries whose control is subject to the direction of a co-trustee or to fiduciaries whose co-trustees have exclusive authority over investment decisions; (vi) clarifies section 3313 such that only loans not in the nature of distribution decisions are considered to be investment decisions for purposes of directed trusts; (vii) modifies section 3313 by adding a new subsection (g), which provides that persons accepting appointment, or serving, as trust advisers submit to personal jurisdiction of this State, thereby paralleling the Uniform Trust Code; (viii) clarifies that under section 3313A, an excluded co-trustee is a fiduciary only with respect to powers from which such co-trustee is not excluded, and thus is not a fiduciary as to powers from which such co-trustee is excluded; (ix) clarifies that section 3317’s requirement for co-fiduciaries to keep each other informed also extends to nonfiduciaries with powers relating to a trust; (x) clarifies that section 3317’s protections for fiduciaries and nonfiduciaries providing information to co-fiduciaries or co-nonfiduciaries also extend to fiduciaries and nonfiduciaries receiving information from cofiduciaries or co-nonfiduciaries; (xi) clarifies that section 3323’s “majority rules” provisions relating to decisions among three or more co-fiduciaries also extend to decisions among three or more co-nonfiduciaries, and apply to powers vested in three or more such persons by a governing instrument or by law; (xii) transfers certain statutes affecting the construction of trusts’ governing instruments from Chapter 2 of Title 12 (which governs wills) to Chapter 33 of Title 12 (which governs trusts), and specifically to section 3330 (whose title is accordingly clarified), so that these statutes will be more readily accessible as a part of Delaware’s nationwide trust practice; (xiii) clarifies that section 3330 applies to trusts’ governing instruments generally (and not just wills or trust instruments); (xiv) clarifies that nonjudicial settlement agreements under section 3338 may resolve or address the removal of a trustee; (xv) clarifies section 3341 to provide that where substantially identical powers of appointment exist between two merged trusts, such powers applicable to the surviving trust before the merger shall extend to all of the assets within the surviving trust after the merger, unless the instrument of merger specifies otherwise, and also to clarify that section 3341 does not address the validity or effect of written instruments executed before trust mergers that purport to exercise powers of appointment over trusts; and (xvi) clarifies that modification of a trust under section 3342 permits both the addition of new provisions that were not included in the governing instrument previously as well as the modification of existing provisions that were included in the governing instrument previously. Section 5 of the Act addresses statutes under Chapter 35 of Title 12 and (i) reorders section 3524 to clarify when accountings for testamentary trusts are required to be filed with the Court of Chancery; (ii) modifies section 3528, such that exercises of powers to invade principal or income or both of a trust under that section need only be signed, and no longer need be acknowledged or filed with the records of the trust; (iii) modifies section 3536 so that a trustor may release a beneficial interest that is contingent on surviving the trustor’s spouse, so as to accelerate the next succeeding beneficial interests, thereby overturning Delaware common law to the contrary; (iv) clarifies the execution requirements for a trust’s governing instrument under section 3545; (v) clarifies section 3547 to define contingent successor remainder beneficiaries, define when such beneficiaries are more remote than others, and define when such beneficiaries may virtually represent more remote such beneficiaries; (vi) consistent with the Uniform Trust Code, modifies section 3547 to permit holders of general powers of appointment and the broadest form of nongeneral powers of appointment to virtually represent takers in default absent a conflict of interest; (vii) modifies section 3547 to allow a parent to virtually represent an unborn beneficiary (consistent with the Uniform Trust Code), and to provide that a virtual representative who represents a minor or incapacitated or unborn beneficiary and who, under the statute’s existing language, may therefore also represent an unborn or unascertainable person who has an interest in the trust substantially identical to that of the minor or incapacitated or unborn beneficiary represented by such virtual representative, may now also represent a minor or incapacitated or unborn person who has an interest in the trust substantially identical to that of the minor or incapacitated or unborn beneficiary represented by such virtual representative; (viii) clarifies section 3547 to provide that for purposes of virtually representing a trust that is a beneficiary of another trust, a trustee of an existing beneficiary-trust, or those who would be the beneficiaries under the terms of a beneficiary-trust not yet in existence, may virtually represent such beneficiary-trust; (ix) clarifies the definition of “trustee” in section 3580 for purposes of Subchapter VII of Chapter 35; (x) clarifies that sections 3585 and 3588 govern statutes of limitations applicable to any person interested in a trust (and not just beneficiaries) and to any claim against a trustee (and not just breach of trust claims); (xi) modifies the statute of limitations applicable to claims against a trustee from two years after a report is sent to a person to one year after such report is sent, to align such period with the Uniform Trust Code (unless the trust’s governing instrument specifies a period longer than one year, in which case the governing instrument shall control); and (xii) clarifies that section 3588 does not require consideration for indemnifications of trustees. Section 6 of the Act clarifies, within Section 505 of Title 25, that exercises of nongeneral powers of appointment to a donee’s revocable trust, for the benefit of proper objects of the power, are not rendered invalid by such appointment, and thus are deemed to create a separate trust within such revocable trust that is not subject to the creditors of the donee, the donee’s estate, or the donee’s revocable trust. Section 7 of the Act repeals sections 2725 and 2728 of Title 18 because they have been superseded by recent amendments to section 4915 of Title 10. Section 8 of the Act provides effective dates.