ENGROSSED ORIGINAL
A BILL
25-225
IN THE COUNCIL OF THE DISTRICT OF COLUMBIA
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1 To amend Title 19 of the District of Columbia Official Code to enact the Uniform Directed Trust
2 Code, to provide clear rules that allow a settlor to freely structure a directed trust while
3 preserving key fiduciary safeguards for beneficiaries, to provide default rules for
4 information sharing among trustees and trust directors, the procedures for accepting
5 appointment as a trust director, and the distinction between a power of direction and a
6 nonfiduciary power of appointment, and to make conforming and clarifying amendments
7 concerning directed trusts and insurable interests in trustees.
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9 BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA, That this
10 act may be cited as the “Uniform Directed Trust Amendment Act of 2024”.
11 Sec. 2. Title 19 of the District of Columbia Official Code is amended as follows:
12 (a) The table of contents is amended by adding at the end the phrase: “21. Uniform
13 Directed Trust Code . . . 19-2101.”.
14 (b) Chapter 13 is amended as follows:
15 (1) Section 1301.05(20) is amended to read as follows:
16 “(20) “Terms of a trust” means:
17 “(A) Except as otherwise provided in subparagraph (B) of this paragraph,
18 the manifestation of the settlor’s intent regarding a trust’s provisions as:
19 “(i) Expressed in the trust instrument; or
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20 “(ii) Established by other evidence that would be admissible in a
21 judicial proceeding; or
22 “(B) The trust’s provisions as established, determined, or amended by:
23 “(i) A trustee or trust director in accordance with applicable law;
24 “(ii) Court order; or
25 “(iii) A nonjudicial settlement agreement under § 19-1301.11.”.
26 (2) Section 1301.05(b)(2) is amended to read as follows:
27 “(2) Subject to §§ 19-2109, 19-2111, and 19-2112, the duty of a trustee to act in
28 good faith and in accordance with the purposes of the trust;”.
29 (c) A new chapter 21 is added to read as follows:
30 “CHAPTER 21.
31 “UNIFORM DIRECTED TRUST CODE
32 “Section
33 Ҥ 19-2101. Short title
34 Ҥ 19-2102. Definitions.
35 Ҥ 19-2103. Application; principal place of administration.
36 Ҥ 19-2104. Common law and principles of equity.
37 Ҥ 19-2105. Exclusions.
38 Ҥ 19-2106. Powers of trust director.
39 Ҥ 19-2107. Limitations on trust director.
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40 Ҥ 19-2108. Duty and liability of trust director.
41 Ҥ 19-2109. Duty and liability of directed trustee
42 Ҥ 19-2110. Duty to provide information to trust director or trustee.
43 Ҥ 19-2111. No duty to monitor, inform, or advise.
44 Ҥ 19-2112. Application to cotrustee.
45 Ҥ 19-2113. Limitation of action against trust director.
46 Ҥ 19-2114. Defenses in action against trust director.
47 Ҥ 19-2115. Jurisdiction over trust director.
48 Ҥ 19-2116. Office of trust director.
49 Ҥ 19-2117. Uniformity of application and construction.
50 Ҥ 19-2118. Relation to Electronic Signatures in Global and National Commerce Act
51 Ҥ 19-2101. Short title.
52 “This chapter may be cited as the “Uniform Directed Trust Act”.
53 Ҥ 19-2102. Definitions.
54 “For the purposes of this chapter, the term:
55 “(1) “Breach of trust” includes a violation by a trust director or trustee of a duty
56 imposed on that director or trustee by the terms of the trust, this chapter, or law of the District
57 other than this chapter pertaining to trusts.
58 “(2) “Directed trust” means a trust for which the terms of the trust grant a power
59 of direction.
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60 “(3) “Directed trustee” means a trustee that is subject to a trust director’s power of
61 direction.
62 “(4) “District” means the District of Columbia.
63 “(5) “Person” means an individual, estate, business or nonprofit entity, public
64 corporation, government or governmental subdivision, agency, or instrumentality, or other legal
65 entity.
66 “(6) “Power of direction” means a power over a trust granted to a person by the
67 terms of the trust to the extent the power is exercisable while the person is not serving as a
68 trustee. The term “power of direction” includes a power over the investment, management, or
69 distribution of trust property or other matters of trust administration. The term “power of
70 direction” does not include the powers described in § 19-2105(b).
71 “(7) “Settlor” means a person, including a testator, that creates, or contributes
72 property to, a trust. If more than one person creates or contributes property to a trust, each person
73 is a settlor of the portion of the trust property attributable to that person’s contribution except to
74 the extent another person has the power to revoke or withdraw that portion.
75 “(8) “State” means a state of the United States, the District, Puerto Rico, the
76 United States Virgin Islands, or any other territory or possession subject to the jurisdiction of the
77 United States.
78 “(9) “Terms of a trust” means:
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79 “(A) Except as otherwise provided in subparagraph (B) of this paragraph,
80 the manifestation of the settlor’s intent regarding a trust’s provisions as:
81 “(i) Expressed in the trust instrument; or
82 “(ii) Established by other evidence that would be admissible in a
83 judicial proceeding; or
84 “(B) The trust’s provisions as established, determined, or amended by:
85 “(i) A trustee or trust director in accordance with applicable law;
86 “(ii) Court order; or
87 “(iii) A nonjudicial settlement agreement under § 19-1301.11.
88 “(10) “Trust director” means a person that is granted a power of direction by the
89 terms of a trust to the extent the power is exercisable while the person is not serving as a trustee.
90 The person is a trust director whether or not the terms of the trust refer to the person as a trust
91 director and whether or not the person is a beneficiary or settlor of the trust.
92 “(11) “Trustee” includes an original, additional, and successor trustee, and a
93 cotrustee.
94 Ҥ 19-2103. Application; principal place of administration.
95 “(a) This chapter applies to a trust, whenever created, that has its principal place of
96 administration in the District, subject to the following rules:
97 “(1) If the trust was created before the effective date of this chapter, this chapter
98 applies only to a decision or action occurring on or after the effective date of this chapter; and
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99 “(2) If the principal place of administration of the trust is changed to the District
100 on or after the effective date of this chapter, this chapter applies only to a decision or action
101 occurring on or after the date of the change.
102 “(b) Without precluding other means to establish a sufficient connection with the
103 designated jurisdiction in a directed trust, terms of the trust which designate the principal place
104 of administration of the trust are valid and controlling if:
105 “(1) A trustee’s principal place of business is located in or a trustee is a resident of
106 the designated jurisdiction;
107 “(2) A trust director’s principal place of business is located in or a trust director is
108 a resident of the designated jurisdiction; or
109 “(3) All or part of the administration occurs in the designated jurisdiction.
110 Ҥ 19-2104. Common law and principles of equity.
111 “The common law and principles of equity supplement this chapter, except to the extent
112 modified by this chapter or law of the District other than this chapter.
113 Ҥ 19-2105. Exclusions.
114 “(a) For the purposes of this section, the term “power of appointment” means a power
115 that enables a person acting in a nonfiduciary capacity to designate a recipient of an ownership
116 interest in or another power of appointment over trust property.
117 “(b) This chapter does not apply to a:
118 “(1) Power of appointment;
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119 “(2) Power to appoint or remove a trustee or trust director;
120 “(3) Power of a settlor over a trust to the extent the settlor has a power to revoke
121 the trust;
122 “(4) Power of a beneficiary over a trust to the extent the exercise or nonexercise
123 of the power affects the beneficial interest of:
124 “(A) The beneficiary; or
125 “(B) Another beneficiary represented by the beneficiary under §§ 19-
126 1303.01 through 19-1303.05 with respect to the exercise or nonexercise of the power; or
127 “(5) Power over a trust if:
128 “(A) The terms of the trust provide that the power is held in a nonfiduciary
129 capacity; and
130 “(B) The power must be held in a nonfiduciary capacity to achieve the
131 settlor’s tax objectives under the United States Internal Revenue Code of 1986 and regulations
132 issued thereunder.
133 “(c) Unless the terms of a trust provide otherwise, a power granted to a person to
134 designate a recipient of an ownership interest in or power of appointment over trust property
135 which is exercisable while the person is not serving as a trustee is a power of appointment and
136 not a power of direction.
137 Ҥ 19-2106. Powers of trust director.
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138 “(a) Subject to § 19-2107, the terms of a trust may grant a power of direction to a trust
139 director.
140 “(b) Unless the terms of a trust provide otherwise:
141 “(1) A trust director may exercise any further power appropriate to the exercise or
142 nonexercise of a power of direction granted to the director under subsection (a) of this section;
143 and
144 “(2) Trust directors with joint powers must act by majority decision.
145 Ҥ 19-2107. Limitations on trust director.
146 “A trust director is subject to the same rules as a trustee in a like position and under
147 similar circumstances in the exercise or nonexercise of a power of direction or further power
148 under § 19-2106(b)(1) regarding:
149 “(1) A payback provision in the terms of a trust necessary to comply with the
150 reimbursement requirements of Medicaid law in section 1917(d)(4)(A) of the Social Security
151 Act, approved September 3, 1982 (96 Stat. 370; 42 U.S.C. § 1396p(d)(4)(A)), and regulations
152 issued thereunder; and
153 “(2) A charitable interest in the trust, including notice regarding the interest to the
154 Attorney General for the District of Columbia.
155 Ҥ 19-2108. Duty and liability of trust director.
156 “(a) Subject to subsection (b) of this section, with respect to a power of direction or
157 further power under § 19-2106(b)(1):
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158 “(1) A trust director has the same fiduciary duty and liability in the exercise or
159 nonexercise of the power:
160 “(A) If the power is held individually, as a sole trustee in a like position
161 and under similar circumstances; or
162 “(B) If the power is held jointly with a trustee or another trust director, as
163 a cotrustee in a like position and under similar circumstances; and
164 “(2) The terms of the trust may vary the director’s duty or liability to the same
165 extent the terms of the trust could vary the duty or liability of a trustee in a like position and
166 under similar circumstances.
167 “(b) Unless the terms of a trust provide otherwise, if a trust director is licensed, certified,
168 or otherwise authorized or permitted by law other than this chapter to provide health care in the
169 ordinary course of the director’s business or practice of a profession, to the extent the director
170 acts in that capacity, the director has no duty or liability under this chapter.
171 “(c) The terms of a trust may impose a duty or liability on a trust director in addition to
172 the duties and liabilities under this section.
173 Ҥ 19-2109. Duty and liability of directed trustee
174 “(a) Subject to subsection (b) of this section, a directed trustee shall take reasonable
175 action to comply with a trust director’s exercise or nonexercise of a power of direction or further
176 power under § 19-2106(b)(1), and the trustee is not liable for the action.
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177 “(b) A directed trustee shall not comply with a trust director’s exercise or nonexercise of
178 a power of direction or further power under § 19-2106(b)(1) to the extent that by complying the
179 trustee would engage in willful misconduct.
180 “(c) An exercise of a power of direction under which a trust director may release a trustee
181 or another trust director from liability for breach of trust is not effective if:
182 “(1) The breach involved the trustee’s or other director’s willful misconduct;
183 “(2) The release was induced by improper conduct of the trustee or other director
184 in procuring the release; or
185 “(3) At the time of the release, the director did not know the material facts relating
186 to the breach.
187 “(d) A directed trustee that has reasonable doubt about its duty under this section may
188 petition the Superior Court of the District of Columbia for instructions.
189 “(e) The terms of a trust may impose a duty or liability on a directed trustee in addition to
190 the duties and liabilities under this section.
191 Ҥ 19-2110. Duty to provide information to trust director or trustee.
192 “(a) Subject to § 19-2111, a trustee shall provide information to a trust director to the
193 extent the information is reasonably related both to:
194 “(1) The powers or duties of the trustee; and
195 “(2) The powers or duties of the director.
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196 “(b) Subject to § 19-2111, a trust director shall provide information to a trustee or another
197 trust director to the extent the information is reasonably related both to:
198 “(1) The powers or duties of the director; and
199 “(2) The powers or duties of the trustee or other director.
200 “(c) A trustee that acts in reliance on information provided by a trust director is not liable
201 for a breach of trust to the extent the breach resulted from the reliance, unless by so acting the
202 trustee engages in willful misconduct.
203 “(d) A trust director that acts in reliance on information provided by a trustee or another
204 trust director is not liable for a breach of trust to the extent the breach resulted from the reliance,
205 unless by so acting the trust director engages in willful misconduct.
206 Ҥ 19-2111. No duty to monitor, inform, or advise.
207 “(a) Unless the terms of a trust provide otherwise:
208 “(1) A trustee does not have a duty to:
209 “(A) Monitor a trust director; or
210 “(B) Inform or give advice to a settlor, beneficiary, trustee, or trust
211 director concerning an instance in which the trustee might have acted differently than the
212 director; and
213 “(2) By taking an action described in paragraph (1) of this subsection, a trustee
214 does not assume the duty excluded by paragraph (1) of this subsection.
215 “(b) Unless the terms of a trust provide otherwise:
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216 “(1) A trust director does not have a duty to:
217 “(A) Monitor a trustee or another trust director; or
218 “(B) Inform or give advice to a settlor, beneficiary, trustee, or another trust
219 director concerning an instance in which the director might have acted differently than a trustee
220 or another trust director; and
221 “(2) By taking an action described in paragraph (1) of this subsection, a trust
222 director does not assume the duty excluded by paragraph (1) of this subsection.
223 Ҥ 19-2112. Application to cotrustee.
224 “The terms of a trust may relieve a cotrustee from duty and liability with respect to
225 another cotrustee’s exercise or nonexercise of a power of the other cotrustee to the same extent
226 that in a directed trust a directed trustee is relieved from duty and liability with respect to a trust
227 director’s power of direction under §§ 19-2109 through 19-2111.
228 Ҥ 19-2113. Limitation of action against trust director.
229 “(a) An action against a trust director for breach of trust must be commenced within the
230 same limitation period as provided under § 19-1310.05 for an action for breach of trust against a
231 trustee in a like position and under similar circumstances.
232 “(b) A report or accountin