ENGROSSED ORIGINAL
A BILL
25-224
IN THE COUNCIL OF THE DISTRICT OF COLUMBIA
_________________________
1 To amend Title 19 of the District of Columbia Official Code 19 to enact the Uniform Trust
2 Decanting Code to provide clear rules pursuant to which a trustee, acting in accordance
3 with fiduciary duties, may modify the terms of a trust to address unanticipated changes in
4 beneficiary circumstances and other changes to effectuate the settlor’s general intent, to
5 provide appropriate limits on a trustee’s ability to decant, to protect beneficiaries by
6 requiring notice and providing that their interests may not be reduced, to protect
7 charitable interests by providing that they may not be reduced and requiring notice of a
8 protect decanting to the Attorney General, to protect trustees from liability from a
9 previous trustee’s decanting, and for other purposes.
10
11 BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA, That this
12 act may be cited as the “Uniform Trust Decanting Amendment Act of 2024.”
13 Sec. 2. Title 19 of the District of Columbia Official Code is amended as follows:
14 (a) The table of contents is amended by adding at the end the phrase: “19. Uniform Trust
15 Decanting Code . . . 19-1901”.
16 (b) A new chapter 19 is added to read as follows:
17 “CHAPTER 19.
18 “UNIFORM TRUST DECANTING ACT
19 “Section
20 Ҥ 19-1901. Short title.
21 Ҥ 19-1902. Definitions.
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22 Ҥ 19-1903. Scope.
23 Ҥ 19-1904. Fiduciary duty.
24 Ҥ 19-1905. Application; governing law.
25 Ҥ 19-1906. Reasonable reliance.
26 Ҥ 19-1907. Notice; exercise of decanting power.
27 Ҥ 19-1908. Representation.
28 Ҥ 19-1909. Court involvement.
29 Ҥ 19-1910. Formalities.
30 Ҥ 19-1911. Decanting power under expanded distributive discretion.
31 Ҥ 19-1912. Decanting power under limited distributive discretion.
32 Ҥ 19-1913. Trust for beneficiary with disability.
33 Ҥ 19-1914. Protection of charitable interest.
34 Ҥ 19-1915. Trust limitation on decanting.
35 Ҥ 19-1916. Change in compensation.
36 Ҥ 19-1917. Relief from liability and indemnification.
37 Ҥ 19-1918. Removal or replacement of authorized fiduciary.
38 Ҥ 19-1919. Tax-related limitations.
39 Ҥ 19-1920. Duration of second trust.
40 Ҥ 19-1921. Need to distribute not required.
41 Ҥ 19-1922. Saving provision.
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42 Ҥ 19-1923. Trust for care of animal.
43 Ҥ 19-1924. Terms of second trust.
44 Ҥ 19-1925. Settlor.
45 Ҥ 19-1926. Later-discovered property.
46 Ҥ 19-1927. Obligations.
47 Ҥ 19-1928. Uniformity of application and construction.
48 Ҥ 19-1929. Relation to Electronic Signatures in Global and National Commerce Act.
49 Ҥ 19-1901. Short title.
50 “This chapter may be cited as the “Uniform Trust Decanting Code”.
51 Ҥ 19-1902. Definitions.
52 “(a) For the purposes of this chapter, the term:
53 “(1) “Appointive property” means the property or property interest subject to a
54 power of appointment.
55 “(2) “Ascertainable standard” means a standard relating to an individual’s health,
56 education, support, or maintenance within the meaning of 26 U.S.C. § 2041(b)(1)(A) or 26
57 U.S.C. § 2514(c)(1) and any applicable regulations.
58 “(3) “Attorney General” means the Attorney General for the District of Columbia.
59 “(4) “Authorized fiduciary” means:
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60 “(A) A trustee or other fiduciary, other than a settlor, that has discretion to
61 distribute or direct a trustee to distribute part or all of the principal of the first trust to one or
62 more current beneficiaries;
63 “(B) A special fiduciary appointed under § 19-1909; or
64 “(C) A special-needs fiduciary under § 19-1913.
65 “(5) “Beneficiary” means a person that:
66 “(A) Has a present or future, vested or contingent, beneficial interest in a
67 trust;
68 “(B) Holds a power of appointment over trust property; or
69 “(C) Is an identified charitable organization that will or may receive
70 distributions under the terms of the trust.
71 “(6) “Charitable interest” means an interest in a trust which:
72 “(A) Is held by an identified charitable organization and makes the
73 organization a qualified beneficiary;
74 “(B) Benefits only charitable organizations and, if the interest were held
75 by an identified charitable organization, would make the organization a qualified beneficiary; or
76 “(C) Is held solely for charitable purposes and, if the interest were held by
77 an identified charitable organization, would make the organization a qualified beneficiary.
78 “(7) “Charitable organization” means:
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79 “(A) A person, other than an individual, organized and operated
80 exclusively for charitable purposes; or
81 “(B) A government or governmental subdivision, agency, or
82 instrumentality, to the extent it holds funds exclusively for a charitable purpose.
83 “(8) “Charitable purpose” means the relief of poverty, the advancement of
84 education or religion, the promotion of health, a municipal or other governmental purpose, or
85 another purpose the achievement of which is beneficial to the community.
86 “(9) “Court” means the Superior Court of the District of Columbia.
87 “(10) “Current beneficiary” means a beneficiary that on the date the beneficiary’s
88 qualification is determined is a distributee or permissible distributee of trust income or principal.
89 The term includes the holder of a presently exercisable general power of appointment but does
90 not include a person that is a beneficiary only because the person holds any other power of
91 appointment.
92 “(11) “Decanting power” means the power of an authorized fiduciary under this
93 chapter to distribute property of a first trust to one or more second trusts or to modify the terms
94 of the first trust.
95 “(12) “District” means the District of Columbia.
96 “(13) “Expanded distributive discretion” means a discretionary power of
97 distribution that is not limited to an ascertainable standard or a reasonably definite standard.
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98 “(14) “First trust” means a trust over which an authorized fiduciary may exercise
99 the decanting power.
100 “(15) “First-trust instrument” means the trust instrument for a first trust.
101 “(16) “General power of appointment” means a power of appointment exercisable
102 in favor of a powerholder, the powerholder’s estate, a creditor of the powerholder, or a creditor
103 of the powerholder’s estate.
104 “(17) “Jurisdiction”, with respect to a geographic area, includes a state or country.
105 “(18) “Person” means an individual, estate, business or nonprofit entity, public
106 corporation, government or governmental subdivision, agency, or instrumentality, or other legal
107 entity.
108 “(19) “Power of appointment” means a power that enables a powerholder acting
109 in a nonfiduciary capacity to designate a recipient of an ownership interest in or another power of
110 appointment over the appointive property. The term “power of appointment” does not include a
111 power of attorney.
112 “(20) “Powerholder” means a person in which a donor creates a power of
113 appointment.
114 “(21)(A) “Presently exercisable power of appointment” means a power of
115 appointment exercisable by the powerholder at the relevant time.
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116 “(B) The term “presently exercisable power of appointment” includes a
117 power of appointment exercisable only after the occurrence of a specified event, the satisfaction
118 of an ascertainable standard, or the passage of a specified time only after:
119 “(i) The occurrence of the specified event;
120 “(ii) The satisfaction of the ascertainable standard; or
121 “(iii) The passage of the specified time.
122 “(C) The term “presently exercisable power of appointment” does not
123 include a power exercisable only at the powerholder’s death.
124 “(22) “Qualified beneficiary” means a beneficiary that on the date the
125 beneficiary’s qualification is determined:
126 “(A) Is a distributee or permissible distributee of trust income or principal;
127 “(B) Would be a distributee or permissible distributee of trust income or
128 principal if the interests of the distributees described in subparagraph (A) of this paragraph
129 terminated on that date without causing the trust to terminate; or
130 “(C) Would be a distributee or permissible distributee of trust income or
131 principal if the trust terminated on that date.
132 “(23) “Reasonably definite standard” means a clearly measurable standard under
133 which a holder of a power of distribution is legally accountable within the meaning of 26 U.S.C.
134 § 674(b)(5)(A) and any applicable regulations.
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135 “(24) “Record” means information that is inscribed on a tangible medium or that
136 is stored in an electronic or other medium and is retrievable in perceivable form.
137 “(25) “Second trust” means:
138 “(A) A first trust after modification under this chapter; or
139 “(B) A trust to which a distribution of property from a first trust is or may
140 be made under this chapter.
141 “(26) “Second-trust instrument” means the trust instrument for a second trust.
142 “(27) “Settlor”, except as otherwise provided in § 19-1925, means a person,
143 including a testator, that creates or contributes property to a trust. If more than one person creates
144 or contributes property to a trust, each person is a settlor of the portion of the trust property
145 attributable to the person’s contribution except to the extent another person has power to revoke
146 or withdraw that portion.
147 “(28) “Sign” means, with present intent to authenticate or adopt a record:
148 “(A) To execute or adopt a tangible symbol; or
149 “(B) To attach to or logically associate with the record an electronic
150 symbol, sound, or process.
151 “(29) “State” means a state of the United States, the District, Puerto Rico, the
152 United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of
153 the United States.
154 “(30) “Terms of a trust” means:
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155 “(A) Except as otherwise provided in subparagraph (B) of this paragraph,
156 the manifestation of the settlor’s intent regarding a trust’s provisions as:
157 “(i) Expressed in the trust instrument; or
158 “(ii) Established by other evidence that would be admissible in a
159 judicial proceeding; or
160 “(B) The trust’s provisions as established, determined, or amended by:
161 “(i) A trustee or trust director in accordance with applicable law;
162 “(ii) Court order; or
163 “(iii) A nonjudicial settlement agreement under § 19-1301.11.
164 “(31) “Trust instrument” means a record executed by the settlor to create a trust or
165 by any person to create a second trust which contains some or all of the terms of the trust,
166 including any amendments.
167 Ҥ 19-1903. Scope.
168 “(a) Except as otherwise provided in subsections (b) and (c) of this section, this chapter
169 applies to an express trust that is irrevocable or revocable by the settlor only with the consent of
170 the trustee or a person holding an adverse interest.
171 “(b) This chapter does not apply to a trust held solely for charitable purposes.
172 “(c) Subject to § 19-1915, a trust instrument may restrict or prohibit exercise of the
173 decanting power.
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174 “(d) This chapter does not limit the power of a trustee, powerholder, or other person to
175 distribute or appoint property in further trust or to modify a trust under the trust instrument, law
176 of the District other than this chapter, common law, a court order, or a nonjudicial settlement
177 agreement.
178 “(e) This chapter does not affect the ability of a settlor to provide in a trust instrument for
179 the distribution of the trust property or appointment in further trust of the trust property or for
180 modification of the trust instrument.
181 Ҥ 19-1904. Fiduciary duty.
182 “(a) In exercising the decanting power, an authorized fiduciary shall act in accordance
183 with its fiduciary duties, including the duty to act in accordance with the purposes of the first
184 trust.
185 “(b) This chapter does not create or imply a duty to exercise the decanting power or to
186 inform beneficiaries about the applicability of this chapter.
187 “(c) Except as otherwise provided in a first-trust instrument, for the purposes of this
188 chapter and §§ 19-1308.01 and 19-1308.02(a), the terms of the first trust are deemed to include
189 the decanting power.
190 Ҥ 19-1905. Application; governing law.
191 “This chapter applies to a trust created before, on, or after the effective date of this
192 chapter, which:
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193 “(1) Has its principal place of administration in the District, including a trust
194 whose principal place of administration has been changed to the District; or
195 “(2) Provides by its trust instrument that it is governed by the law of the District
196 or is governed by the law of the District for the purpose of:
197 “(A) Administration, including administration of a trust whose governing
198 law for purposes of administration has been changed to the law of the District;
199 “(B) Construction of terms of the trust; or
200 “(C) Determining the meaning or effect of terms of the trust.
201 Ҥ 19-1906. Reasonable reliance.
202 “A trustee or other person that reasonably relies on the validity of a distribution of part or
203 all of the property of a trust to another trust, or a modification of a trust, under this chapter, law
204 of the District other than this chapter, or the law of another jurisdiction is not liable to any person
205 for any action or failure to act as a result of the reliance.
206 Ҥ 19-1907. Notice; exercise of decanting power.
207 “(a) For the purposes of this section, a notice period begins on the day notice is given
208 under subsection (c) of this section and ends 59 days after the day notice is given.
209 “(b) Except as otherwise provided in this chapter, an authorized fiduciary may exercise
210 the decanting power without the consent of any person and without court approval.
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211 “(c) Except as otherwise provided in subsection (f) of this section, an authorized fiduciary
212 shall give notice in a record of the intended exercise of the decanting power not later than 60
213 days before the exercise to:
214 “(1) Each settlor of the first trust, if living or then in existence;
215 “(2) Each qualified beneficiary of the first trust;
216 “(3) Each holder of a presently exercisable power of appointment over any part or
217 all of the first trust;
218 “(4) Each person that currently has the right to remove or replace the authorized
219 fiduciary;
220 “(5) Each other fiduciary of the first trust;
221 “(6) Each fiduciary of the second trust; and
222 “(7) The Attorney General, if § 19-1914(b) applies.
223 “(d) An authorized fiduciary is not required to give notice under subsection (c) of this
224 section to a qualified beneficiary who is a minor and has no representative or to a person that is
225 not known to the fiduciary or is known to the fiduciary but cannot be located by the fiduciary
226 after reasonable diligence.
227 “(e) A notice under subsection (c) of this section must:
228 “(1) Specify the manner in which the authorized fiduciary intends to exercise the
229 decanting power;
230 “(2) Specify the proposed effective date for exercise of the power;
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231 “(3) Include a copy of the first-trust instrument; and
232 “(4) Include a copy of all second-trust instruments.
233 “(f) The decanting power may be exercised before expiration of the notice period under
234 subsection (a) of this section if all persons entitled to receive notice waive the period in a signed
235 record.
236 “(g) The receipt of notice, waiver of the notice period, or expiration of the notice period
237