1 STATE OF OKLAHOMA
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2 2nd Session of the 59th Legislature (2024)
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3 HOUSE BILL 3962 By: Echols
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6 AS INTRODUCED
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7 An Act relating to trusts; enacting the Oklahoma
7 Trust Reform Act of 2024; providing for directed
8 trusts; defining terms; providing that a trust
8 instrument may provide trust advisor or trust
9 protector with powers and immunities of trustee;
9 providing liability limits of excluded fiduciary;
10 providing relief from obligations for excluded
10 fiduciary; providing burden of proof in action
11 against excluded fiduciary; providing for actions of
11 an excluded fiduciary in the event of the death of a
12 grantor; providing guideline for a trust advisor as a
12 fiduciary; providing liability for an excluded
13 fiduciary for loss if trust protector appointed;
13 providing powers and discretions of a trust
14 protector; providing for court and the effect on
14 trust advisor or trust protector; clarifying powers
15 of trust protector when incorporated by reference in
15 will or trust instrument; providing that a trust
16 instrument may provide for a person to act as an
16 investment trust advisor or a distribution trust
17 advisor; providing powers and discretions of
17 investment trust advisor; providing powers and
18 discretions of distribution trust advisor; providing
18 powers and discretions of family advisor; providing
19 when notice of the existence of trust is required to
19 be given to qualified beneficiaries; providing when
20 certain notices are required; defining terms for
20 qualified dispositions into trust; defining trust
21 instrument; defining qualified person; providing
21 requirements to be considered a qualified person;
22 providing for persons and entities not to be
22 considered a qualified person; providing for the
23 appointment, removal, or replacement of co-trustee,
23 trust advisor, or trust protector; providing who may
24 serve as an investment trust advisor; providing that
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 1 a transferor may not serve as a fiduciary; providing
1 for successor qualified person; providing for
2 disposition to more than one trustee; providing that
2 for dispositions to more than one trustee, a
3 qualified disposition may not be treated as other
3 than a qualified disposition solely because not all
4 of the trustees are qualified persons; providing
4 powers and rights of a transferor and its effect on a
5 qualified disposition; limiting actions of creditors
5 to transfers with the intent to defraud; providing
6 requirements for bringing claim for fraudulent
6 transfer of settlor's assets; providing for
7 disposition by transferor who is a trustee;
7 prohibiting certain actions against a trustee,
8 advisor, or trust preparer; prohibiting an action
8 against trustee, advisor, or preparer of trust
9 prohibited if action by creditor in certain
9 circumstances; providing court jurisdiction;
10 providing for the collection attorneys' fees and
10 costs in certain circumstances; providing for when
11 multiple qualified dispositions in same trust
11 instrument; providing certain exceptions to
12 application of this act under certain events and
12 circumstances; providing for avoidance of a qualified
13 disposition; providing for discretionary interest;
13 providing that the rules against perpetuities shall
14 not apply to trusts; providing intent to allow trust
14 to have perpetual durations; providing for
15 noncodification; providing for codification; and
15 providing an effective date.
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19 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
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20 SECTION 1. NEW LAW A new section of law not to be
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21 codified in the Oklahoma Statutes reads as follows:
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22 This act shall be known and cited as the "Oklahoma Trust Reform
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23 Act of 2024".
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 1 SECTION 2. NEW LAW A new section of law to be codified
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2 in the Oklahoma Statutes as Section 1201 of Title 60, unless there
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3 is created a duplication in numbering, reads as follows:
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4 A. Sections 2 through 15 of this act create and govern directed
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5 trusts.
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6 B. As used in sections 2 through 15 of this act:
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7 1. "Custodial account" means an account, established by a party
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8 with a bank as defined in 26 U.S.C. 408(n), as of January 1, 2006,
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9 or with another person approved by the Internal Revenue Service as
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10 satisfying the requirements to be a nonbank trustee or a nonbank
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11 passive trustee set forth in U.S. Treasury Regulations promulgated
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12 under 26 U.S.C. 408, that is governed by an instrument concerning
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13 the establishment or maintenance, or both, of an individual
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14 retirement account, qualified retirement plan, Archer medical
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15 savings account, health savings account, Coverdell education savings
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16 account, or any similar retirement or savings vehicle permitted
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17 under the Internal Revenue Code of 1986, as of January 1, 2006;
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18 2. "Custodial account owner" means any party who establishes a
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19 custodial account; or has the power to designate the beneficiaries
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20 or appoint the custodian of the custodial account; or otherwise is
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21 the party who possesses the power to direct the investment,
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22 disposition, or retention of any assets in the custodial account or
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23 name an authorized designee to effect the same;
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 1 3. "Distribution trust advisor" means a fiduciary, given
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2 authority by the instrument to exercise all or any portions of the
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3 powers and discretions set forth in section 13 of this act;
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4 4. "Excluded fiduciary" means any fiduciary excluded from
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5 exercising certain powers under the instrument which powers may be
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6 exercised by the grantor, custodial account owner, trust advisor,
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7 trust protector, trust committee, or other persons designated in the
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8 instrument;
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9 5. "Family advisor" means any person whose appointment is
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10 provided for in the governing instrument or by court order who is
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11 authorized to consult with or advise a fiduciary with regard to
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12 fiduciary or nonfiduciary matters and actions, and who may also be
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13 authorized by the governing instrument or court order to otherwise
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14 act in a nonfiduciary capacity.
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15 6. "Fiduciary" means a trustee or custodian under any
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16 instrument, an executor, administrator, or personal representative
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17 of a decedent's estate, or any other party, including a trust
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18 advisor, a trust protector, or a trust committee, who is acting in a
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19 fiduciary capacity for any person, trust, or estate;
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20 7. "Instrument" means any revocable or irrevocable trust
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21 document created inter vivos or testamentary or any custodial
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22 account agreement whether such document or agreement was created
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23 prior to, on, or after the effective date of this act;
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 1 8. "Investment trust advisor" means a fiduciary, given
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2 authority by the instrument to exercise all or any portions of the
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3 powers and discretions set forth in section 11 of this act;
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4 9. "Trust advisor" means either an investment trust advisor or
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5 a distribution trust advisor or, in the case of a custodial account,
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6 a custodial account owner or the owner's designee;
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7 10. "Trust protector" means any person whose appointment as
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8 protector is provided for in the instrument. Such person may not be
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9 considered to be acting in a fiduciary capacity except to the extent
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10 the governing instrument provides otherwise. However, a protector
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11 shall be considered acting in a fiduciary capacity to the extent
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12 that the person exercises the authority of an investment trust
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13 advisor or a distribution trust advisor;
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14 SECTION 3. NEW LAW A new section of law to be codified
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15 in the Oklahoma Statutes as Section 1202 of Title 60, unless there
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16 is created a duplication in numbering, reads as follows:
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17 Any governing instrument providing for a trust advisor or trust
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18 protector may also provide such trust advisor or trust protector
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19 with some, none, or all of the rights, powers, privileges, benefits,
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20 immunities, or authorities available to a trustee under Oklahoma law
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21 or under the governing instrument. Unless the governing instrument
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22 provides otherwise, a trust advisor or trust protector has no
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23 greater liability to any person than would a trustee holding or
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24 benefiting from the rights, powers, privileges, benefits,
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 1 immunities, or authority provided or allowed by the governing
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2 instrument to such trust advisor or trust protector.
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3 SECTION 4. NEW LAW A new section of law to be codified
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4 in the Oklahoma Statutes as Section 1203 of Title 60, unless there
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5 is created a duplication in numbering, reads as follows:
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6 A. An excluded fiduciary is not liable, either individually or
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7 as a fiduciary, for any of the following:
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8 1. Any loss that results from compliance with a direction of
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9 the trust advisor, including any loss from the trust advisor
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10 breaching fiduciary responsibilities or acting beyond the trust
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11 advisor's scope of authority;
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12 2. Any loss that results from a failure to take any action
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13 proposed by an excluded fiduciary that requires a prior
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14 authorization of the trust advisor if that excluded fiduciary timely
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15 sought but failed to obtain that authorization;
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16 3. Any loss that results from any action or inaction, except
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17 for gross negligence or willful misconduct, when an excluded
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18 fiduciary is required, pursuant to the trust agreement or any other
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19 reason, to assume the role of trust advisor or trust protector;
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20 4. Any loss that results from relying upon any trust advisor
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21 for valuation of trust assets; or
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22 5. Any loss that results from any tax filing made or tax
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23 position taken based on the recommendations or instructions received
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 1 from a tax preparer or professional used by the excluded fiduciary
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2 at the direction of the grantor or of another trust fiduciary.
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3 B. Any excluded fiduciary is also relieved from any obligation
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4 to independently value trust assets, to review or evaluate any
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5 direction from a distribution trust advisor, or to perform
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6 investment or suitability reviews, inquiries, or investigations or
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7 to make recommendations or evaluations with respect to any
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8 investments to the extent the trust advisor had authority to direct
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9 the acquisition, disposition, or retention of the investment. If
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10 the excluded fiduciary offers such communication to the trust
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11 advisor, trust protector, or any investment person selected by the
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12 investment trust advisor, such action does not constitute an
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13 undertaking by the excluded fiduciary to monitor or otherwise
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14 participate in actions within the scope of the advisor's authority
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15 or to constitute any duty to do so.
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16 C. Any excluded fiduciary is also relieved of any duty to
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17 communicate with or warn or apprise any beneficiary or third party
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18 concerning instances in which the excluded fiduciary would or might
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19 have exercised the excluded fiduciary's own discretion in a manner
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20 different from the manner directed by the trust advisor or trust
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21 protector.
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22 D. Absent contrary provisions in the governing instrument, the
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23 actions of the excluded fiduciary (such as any communications with
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24 the trust advisor and others and carrying out, recording, and
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 1 reporting actions taken at the trust advisor's direction) pertaining
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2 to matters within the scope of authority of the trust advisor or
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3 trust protector constitute administrative actions taken by the
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4 excluded fiduciary solely to allow the excluded fiduciary to perform
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5 those duties assigned to the excluded fiduciary under the governing
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6 instrument, and such administrative actions do not constitute an
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7 undertaking by the excluded fiduciary to monitor, participate, or
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8 otherwise take any fiduciary responsibility for actions within the
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9 scope of authority of the trust advisor or trust protector.
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10 E. Nothing in paragraph 2 of subsection A of this section
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11 imposes an obligation or liability with respect to a custodian of a
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12 custodial account.
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13 F. In an action against an excluded fiduciary pursuant to the
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14 provisions of this section, the burden to prove the matter by clear
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15 and convincing evidence is on the person seeking to hold the
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16 excluded fiduciary liable.
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17 SECTION 5. NEW LAW A new section of law to be codified
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18 in the Oklahoma Statutes as Section 1204 of Title 60, unless there
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19 is created a duplication in numbering, reads as follows:
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20 An excluded fiduciary may continue to follow the direction of
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21 the trust advisor upon the incapacity or death of the grantor if the
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22 instrument so allows.
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 1 SECTION 6. NEW LAW A new section of law to be codified
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2 in the Oklahoma Statutes as Section 1205 of Title 60, unless there
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3 is created a duplication in numbering, reads as follows:
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4 If one or more trust advisors are given authority by the terms
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5 of a governing instrument to direct, consent to, or disapprove a
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6 fiduciary's investment or distribution decisions, or proposed
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7 investment or distribution decisions, such trust advisors shall be
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8 considered to be fiduciaries when exercising such authority. For
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9 investment decisions, so long as there is at least one fiduciary
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10 exercising the authority of the investment advisor pursuant to
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11 section 12 of this act for the investment, except in the cases of
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12 willful misconduct or gross negligence by the fiduciary investment
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13 advisor in the selection or monitoring of the nonfiduciary trust
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14 advisors, the governing instrument may provide that such other trust
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15 advisors acting pursuant to this section are not acting in a
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16 fiduciary capacity. Similarly, for distribution decisions, so long
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17 as there is at least one fiduciary exercising the authority of the
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18 distribution advisor pursuant to section 13 of this act for the
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19 distribution, except in the case of willful misconduct or gross
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20 negligence by the fiduciary distribution advisor in the selection or
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21 monitoring of the nonfiduciary trust advisors, the governing
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22 instrument may provide that such other trust advisors acting
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23 pursuant to this section are not acting in a fiduciary capacity.
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 1 SECTION 7. NEW LAW A new section of law to be codified
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2 in the Oklahoma Statutes as Section 1206 of Title 60, unless there
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3 is created a duplication in numbering, reads as follows:
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4 If an instrument appoints a trust protector, the excluded
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5 fiduciary is not liable for any loss resulting from any action taken
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6 upon such trust protector's direction.
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7 SECTION 8. NEW LAW A new section of law to be codified
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8 in the Oklahoma Statutes as Section 1207 of Title 60, unless there
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9 is created a duplication in numbering, reads as follows:
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10 The powers and discretions of a trust prot