CHAPTER 184
S.P. 538 - L.D. 1551
An Act To Make Technical Amendments to the Maine Uniform Trust Code
Emergency preamble. Whereas, acts of the Legislature do not become effective until 90 days after adjournment unless enacted as emergencies; and
Whereas, the Maine Uniform Trust Code, enacted by Public Law 2003, chapter 618, Part A, takes effect July 1, 2005; and
Whereas, the amendments in this legislation to the Maine Uniform Trust Code must also become effective on July 1, 2005, because allowing the amendments to become effective 90 days after the end of the legislative session would cause confusion and uncertainty for Maine citizens and taxpayers; and
Whereas, in the judgment of the Legislature, these facts create an emergency within the meaning of the Constitution of Maine and require the following legislation as immediately necessary for the preservation of the public peace, health and safety; now, therefore,
Be it enacted by the People of the State of Maine as follows:
Sec. 1. 18-A MRSA §5-508, sub-§(g), as amended by PL 1999, c. 66, §1, is further amended to read:
(g) The requirements of subsections (b), (c) and (d) do not render ineffective a durable financial power of attorney validly executed prior to September 19, 1997 or a durable financial power of attorney executed prior to December 31, 1998 in accordance with this section as in effect on September 19, 1997. The requirements of subsection (d) do not render ineffective a durable power of attorney validly executed prior to July 1, 2005 in accordance with this section.
Sec. 2. 18-B MRSA §103, sub-§1-A is enacted to read:
1-A. Ascertainable standard. "Ascertainable standard" means an ascertainable standard relating to an individual's health, education, support or maintenance within the meaning of Section 2041(b)(1)(A) or Section 2514(c)(1) of the federal Internal Revenue Code of 1986, as in effect on July 1, 2005.
Sec. 3. 18-B MRSA §103, sub-§10, as enacted by PL 2003, c. 618, Pt. A, §1 and affected by §2, is amended to read:
10. Power of withdrawal. "Power of withdrawal" means a presently exercisable general power of appointment other than a power exercisable by a trustee that is limited by an ascertainable standard, or exercisable by another person only upon consent of the trustee or a person holding an adverse interest.
Sec. 4. 18-B MRSA §103, sub-§12, as enacted by PL 2003, c. 618, Pt. A, §1 and affected by §2, is amended to read:
12. Qualified beneficiary. "Qualified beneficiary" means a living beneficiary who on the date the beneficiary's qualification is determined:
A. Is a distributee or permissible distributee of trust income or principal;
B. Would be a distributee or permissible distributee of trust income or principal if the interests of the distributees described in paragraph A terminated on that date, but the termination of those interests would not cause the trust to terminate; or
C. Would be a distributee or permissible distributee of trust income or principal if the trust terminated on that date.
"Qualified beneficiary" does not include a contingent distributee or a contingent permissible distributee of trust income or principal whose interest in the trust is not reasonably expected to vest.
Sec. 5. 18-B MRSA §105, sub-§2, ¶¶H and I, as enacted by PL 2003, c. 618, Pt. A, §1 and affected by §2, are amended to read:
H. The Subject to subsection 3, the duty under section 813, subsection 2, paragraphs B and C to notify qualified beneficiaries of an irrevocable trust who have attained 25 years of age of the existence of the trust, of the identity of the trustee and of their right to request trustee's reports;
I. The Subject to subsection 3, the duty under section 813, subsection 1 to respond to the request of a qualified beneficiary of an irrevocable trust for trustee's reports and other information reasonably related to the administration of a trust;
Sec. 6. 18-B MRSA §105, sub-§3 is enacted to read:
3. Waiver or modification. The settlor, in the trust instrument or in another writing delivered to the trustee, may waive or modify the duties of a trustee under section 813, subsection 1 or 2 to give notice, information and reports to qualified beneficiaries by:
A. Waiving or modifying such duties as to all qualified beneficiaries except the settlor's surviving spouse during the lifetime of the settlor or the lifetime of the settlor's surviving spouse; and
B. Designating a person or persons, any of whom may or may not be a beneficiary, to act in good faith to protect the interests of the qualified beneficiaries who are not receiving notice, information or reports and to receive any notice, information or reports required under section 813, subsection 1 or 2 in lieu of providing such notice, information or reports to the qualified beneficiaries. The person or persons designated under this paragraph are deemed to be representatives of the qualified beneficiaries not receiving notice, information or reports for the purposes of the time limitation for a beneficiary to commence an action against the trustee for breach of trust as provided in section 1005, subsection 1.
Sec. 7. 18-B MRSA §110, as enacted by PL 2003, c. 618, Pt. A, §1 and affected by §2, is amended to read:
§110. Others treated as qualified beneficiaries
1. Charitable organization or person to enforce trust. A charitable organization expressly designated to receive distributions under the terms of a charitable trust or a person appointed to enforce a trust created for the care of an animal or another noncharitable purpose as provided in section 408 or 409 has the rights of a qualified beneficiary under this Code. if the charitable organization, on the date the charitable organization's qualification is being determined:
A. Is a distributee or permissible distributee of trust income or principal;
B. Would be a distributee or a permissible distributee of trust income or principal upon the termination of the interests of other distributees or permissible distributees then receiving or eligible to receive distributions; or
C. Would be a distributee or permissible distributee of trust income or principal on that date.
A charitable organization whose interest in the trust as a contingent distributee of the trust income or principal is not reasonably expected to vest does not have the rights of a qualified beneficiary.
1-A. Person appointed to enforce trust. A person appointed to enforce a trust created for the care of an animal or another noncharitable purpose as provided in section 408 or 409 has the rights of a qualified beneficiary under this Code.
2. Attorney General. The Attorney General has the rights of a qualified beneficiary provided in Title 5, section 194 with respect to a charitable trust having its principal place of administration in this State, but may not be treated as and does not have the rights of a qualified beneficiary.
Sec. 8. 18-B MRSA §301, sub-§4 is enacted to read:
4. Limitation on representation by settlor. A settlor may not represent and bind a beneficiary under this chapter with respect to termination or modification of a trust under section 411, subsection 1.
Sec. 9. 18-B MRSA §411, sub-§1, as enacted by PL 2003, c. 618, Pt. A, §1 and affected by §2, is amended to read:
1. Consent of settlor and all beneficiaries. A noncharitable irrevocable trust may be modified or terminated upon consent of the settlor and all beneficiaries, even if the modification or termination is inconsistent with a material purpose of the trust. If the settlor and all beneficiaries consent to the modification or termination of an irrevocable trust, the court shall enter an order approving the modification or termination even if the modification or termination is inconsistent with a material purpose of the trust, if the court finds that the modification or termination is in the best interests of the beneficiaries. A settlor's power to consent to a trust's modification or termination may be exercised by an agent under a power of attorney only to the extent expressly authorized by the power of attorney or the terms of the trust; by the settlor's conservator with the approval of the court supervising the conservatorship if an agent is not so authorized; or by the settlor's guardian with the approval of the court supervising the guardianship if an agent is not so authorized and a conservator has not been appointed.
Sec. 10. 18-B MRSA §501, as enacted by PL 2003, c. 618, Pt. A, §1 and affected by §2, is amended to read:
§501. Rights of beneficiary's creditor or assignee
To the extent a beneficiary's interest is not protected by a spendthrift provision, the court may authorize a creditor or assignee of the beneficiary to reach the beneficiary's interest by attachment of present or future distributions to or for the benefit of the beneficiary or other means. The court may limit the award to such relief as is appropriate under the circumstances.
Sec. 11. 18-B MRSA §504, sub-§2, as enacted by PL 2003, c. 618, Pt. A, §1 and affected by §2, is amended to read:
2. Right of beneficiary not limited. This section does not limit the right of a beneficiary to maintain a judicial proceeding against a trustee for an abuse of discretion failure to exercise a discretionary power in accordance with the terms and purposes of the trust or for failure to comply with a standard for distribution.
Sec. 12. 18-B MRSA §504, sub-§3 is enacted to read:
3. Creditor limited. A creditor may not reach the interest of a beneficiary who is also a trustee, or otherwise compel a distribution, if the trustee's discretion is limited by an ascertainable standard.
Sec. 13. 18-B MRSA §603, sub-§1, as enacted by PL 2003, c. 618, Pt. A, §1 and affected by §2, is amended to read:
1. Revocable trust. While a trust is revocable and the settlor has capacity to revoke the trust, rights of the beneficiaries are subject to the control of, and the duties of the trustee are owed exclusively to, the settlor.
Sec. 14. 18-B MRSA §704, sub-§4, ¶B, as enacted by PL 2003, c. 618, Pt. A, §1 and affected by §2, is amended to read:
B. By a person appointed by unanimous agreement of the charitable organizations expressly designated to receive distributions under the terms of the trust if the Attorney General concurs in the appointment; or
Sec. 15. 18-B MRSA §802, sub-§§4 and 6, as enacted by PL 2003, c. 618, Pt. A, §1 and affected by §2, are amended to read:
4. Transaction between trustee and beneficiary. A transaction between a trustee and a beneficiary that does not concern trust property but that occurs during the existence of the trust or while the trustee retains significant influence over the beneficiary and from which the trustee obtains an advantage beyond the normal commercial advantage for such a transaction is voidable by the beneficiary unless the trustee establishes that the transaction was fair to the beneficiary. A transfer or obligation is not voidable under this section against a person who took property from the trustee in good faith for a reasonably equivalent value or against any subsequent transferee or obligee.
6. Investment. An investment by a trustee in securities of an investment company or investment trust to which the trustee, or its affiliate, provides services in a capacity other than as trustee is not presumed to be affected by a conflict between personal and fiduciary interests if the investment otherwise complies with the prudent investor rule of chapter 9. In addition to its compensation for acting as trustee, the trustee may be compensated by the investment company or investment trust for providing those services out of fees charged to the trust. If the trustee receives compensation from the investment company or investment trust for providing investment advisory or investment management services, the trustee at least annually shall notify the persons entitled under section 813 to receive a copy of the trustee's annual report of the rate and method by which that compensation was determined.
Sec. 16. 18-B MRSA §813, sub-§5 is enacted to read:
5. Applicable date. Subsection 2, paragraphs B and C apply only to a trustee who accepts a trusteeship on or after July 1, 2005, to an irrevocable trust created on or after July 1, 2005 and to a revocable trust that becomes irrevocable on or after July 1, 2005.
Sec. 17. 18-B MRSA §814, sub-§1, as enacted by PL 2003, c. 618, Pt. A, §1 and affected by §2, is amended to read:
1. Discretionary power; interests of beneficiaries. Notwithstanding the breadth of discretion granted to a trustee in the terms of the trust, including the use of such terms as "absolute," "sole" or "uncontrolled," the trustee shall exercise a discretionary power in good faith and in accordance with the terms and purposes of the trust and the interests of the beneficiaries. A trustee's power to make distributions is discretionary notwithstanding terms of the trust providing that the trustee "shall" make distributions exercising a discretionary power, with or without standards.
Sec. 18. 18-B MRSA §814, sub-§2, ¶A, as enacted by PL 2003, c. 618, Pt. A, §1 and affected by §2, is amended to read:
A. A person other than a settlor who is a beneficiary and trustee of a trust that confers on the trustee a power to make discretionary distributions to or for the trustee's personal benefit may exercise the power only in accordance with an ascertainable standard relating to the trustee's individual health, education, support or maintenance within the meaning of the federal Internal Revenue Code of 1986, Section 2041(b)(1)(A) or 2514(c)(1), as in effect on July 1, 2005, or as later amended; and
Emergency clause. In view of the emergency cited in the preamble, this Act takes effect July 1, 2005.
Effective July 1, 2005.
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