ENTITLED An Act to amend provisions regarding trusts.
Be it enacted by the Legislature of the State of South Dakota:
Section 1. That 21-22-18 be AMENDED:
21-22-18. The notice provided by 21-22-17 shall be served upon fiduciaries, beneficiaries, and attorneys of record, except as otherwise provided in chapter 55-18. Notice shall be served personally, by mail, postage prepaid, addressed to each person at the last known post office address as shown by the records and files in the proceeding, or electronically in accordance with 15-6-5(b) and applicable local rules, at least fourteen days prior to the hearing, unless and to the extent that the court for good cause shown directs a shorter period or approves a different form of notice for some or all persons.
Section 2. That chapter 55-1 be amended with a NEW SECTION:
Unless specifically restricted by the governing instrument, an enforcer may appoint an individual or a corporate fiduciary as a co-enforcer. The appointed co-enforcer may serve only as long as the appointing enforcer serves, or as long as the last to serve if more than one enforcer appointed the co-enforcer. The appointed co-enforcer may not become a successor enforcer upon the death, resignation, or incapacity of the appointing enforcer, unless appointed under the terms of the governing instrument or unless no other successor enforcer, or method for appointing a successor enforcer, is provided in the governing instrument.
The powers and the responsibilities of the appointed co-enforcer may be limited by the appointing enforcer in a writing signed by the appointing enforcer at the time of the appointment. If the powers or responsibilities are so limited, the powers or responsibilities of the co-enforcer shall be limited as set forth in writing. Unless the powers or responsibilities are so limited, the appointed co-enforcer may exercise all the powers of the appointing enforcer. The combined powers of the appointed co-enforcer and the appointing enforcer may not exceed the powers of the appointing enforcer alone. The enforcer appointing a co-enforcer may, in writing, revoke the appointment at any time, with or without cause.
Unless specifically restricted by the governing instrument, if the governing instrument gives a fiduciary other than the enforcer the power to remove and replace the enforcer, such power includes the power to appoint a co-enforcer to serve with the current enforcer.
If an appointment under this section confers upon the appointed co-enforcer, to the exclusion of another co-enforcer, the power to take certain actions, including the power to direct or prevent certain actions of the enforcers, the limitations on liability and the relief from duties and obligations afforded an excluded fiduciary under 55-1B-2 apply to a co-enforcer who does not hold such power.
If the governing instrument is silent concerning the enforcer's power to appoint a co-enforcer, the enforcer shall notify in writing, the trustor, if living, the current trustee or trustees, and any trust protector, trust advisors, and co-enforcers at least thirty days prior to the effective date of the enforcer's exercise of the power granted under this section. The notice, which shall include a copy of the proposed action, shall advise the trustor, the current trustee or trustees, trust protector, trust advisors, or co-enforcers that if they object to the enforcer's appointment, they need to file a written objection with the enforcer prior to the effective date set out in the notice of the proposed action. If an objection is received by the enforcer, prior to the effective date of the appointment, the enforcer may not appoint a co-enforcer. However, this section does not limit the power of the enforcer under law to petition the court for approval of the appointment. If no objection has been timely made, the proposed appointment becomes effective on the later of the date set out in the notice or thirty days after notice has been given. The notice shall be sent by any means allowed under the terms of the trust instrument or authorized in section 9 of this Act to the trustor, the current trustee or trustees, trust protector, trust advisors, or co-enforcers.
The provisions of this section are effective for trusts created before, on, or after July 1, 2023, except as otherwise directed by the trustor, current trustee or trustees, trust protector, trust advisors, or other fiduciary designated by the terms of the trust.
Section 3. That 55-1-32 be AMENDED:
55-1-32. Pierce the veil and dominion and control claims by a party are, in essence, a variation of the alter ego common law doctrine. This section covers all of these types of claims.
In the event that a party brings an action against a trustee, beneficiary, trust advisor, or trust protector under an alter ego claim, none of the following factors, alone or in combination, may be considered as resulting in the alter ego theory being applied to a trustee or the person who is claimed to be the alter ego:
(1) The settlor or a beneficiary serving as a trustee or a co-trustee as described in 55-1-28;
(2) The settlor or a beneficiary holds an unrestricted power to remove or replace a trustee;
(3) The settlor or a beneficiary is a trust administrator, a general partner of a partnership, a manager of a limited liability company, an officer of a corporation, or any other managerial function of any other type of entity, and part or all of the trust property consists of an interest in the entity;
(4) A person related by blood or adoption to the settlor or a beneficiary is appointed as trustee;
(5) The settlor's or a beneficiary's agent, accountant, attorney, financial advisor, or friend is appointed as trustee;
(6) A business associate is appointed as a trustee;
(7) A beneficiary holds any power of appointment over any or all of the trust property;
(8) The settlor holds a power to substitute property of equivalent value;
(9) The trustee may loan trust property to the settlor for less than a full and adequate rate of interest or without adequate security;
(10) The distribution language provides any discretion;
(11) The trust has only one beneficiary eligible for current distributions;
(12) A beneficiary serving as an investment trust advisor, as the role is defined in 55-1B-1;
(13) Isolated occurrences where the settlor has signed checks, made disbursements, or executed other documents related to the trust as a trustee, when in fact the settlor was not a trustee;
(14) Making any requests for distributions on behalf of beneficiaries;
(15) Making any requests to the trustee to hold, purchase, or sell any trust property; or
(16) A beneficiary serving as a trust protector or a trust advisor.
Section 4. That 55-1-33 be REPEALED.
Section 5. That chapter 55-1A be amended with a NEW SECTION:
If otherwise validly executed, the following documents may be executed in accordance with chapter 53-12:
(1) The governing instrument of an express trust, or other document, other than a will or codicil as defined in title 29A;
(2) The resignation, removal, appointment, or acceptance of appointment of any trustee, any advisor or protector, or of any designated representation addressed in title 55;
(3) A consent, release, ratification, or indemnification addressed in title 55; and
(4) Any other document addressed by title 55 to the extent it is not excluded from the scope of chapter 53-12.
Notwithstanding any provision of chapter 53-12 to the contrary, the documents under this section are deemed to be a transaction within the meaning of subdivision 53-12-1(17) and are within the scope of chapter 53-12.
Section 6. That 55-1A-41 be AMENDED:
55-1A-41. Unless specifically restricted by the governing instrument, a trustee may appoint an individual or a corporate fiduciary as a co-trustee. The appointed co-trustee may serve only as long as the appointing trustee serves, or as long as the last to serve if more than one trustee appointed the co-trustee. The appointed co-trustee may not become a successor trustee upon the death, resignation, or incapacity of the appointing trustee, unless appointed under the terms of the governing instrument or unless no other successor trustee, or method for appointing a successor trustee, is provided in the governing instrument.
The powers and the responsibilities of the appointed co-trustee may be limited by the appointing trustee in a writing signed by the appointing trustee at the time of the appointment. If the powers or responsibilities are so limited, the powers or responsibilities of the co-trustee shall be limited as set forth in writing. Unless the powers or responsibilities are so limited, the appointed co-trustee may exercise all the powers of the appointing trustee. The combined powers of the appointed co-trustee and the appointing trustee may not exceed the powers of the appointing trustee alone. The trustee appointing a co-trustee may, in writing, revoke the appointment at any time, with or without cause.
Unless specifically restricted by the governing instrument, if the governing instrument gives a fiduciary other than the trustee the power to remove and replace the trustee, such power includes the power to appoint a co-trustee to serve with the current trustee.
If an appointment under this section confers upon the appointed co-trustee, to the exclusion of another co-trustee, the power to take certain actions, including the power to direct or prevent certain actions of the trustees, the limitations on liability and the relief from duties and obligations afforded an excluded fiduciary under 55-1B-2 apply to a co-trustee who does not hold such power.
If the governing instrument is silent concerning the trustee's power to appoint a co-trustee, the trustee shall notify in writing, the trustor, if living, and all current income and principal beneficiaries at least thirty days prior to the effective date of the trustee's exercise of the power granted under this section. The notice, which shall include a copy of the proposed action, shall advise the trustor and current beneficiaries that if they object to the trustee's appointment they need to file a written objection with the trustee prior to the effective date set out in the notice of the proposed action. If an objection is received by the trustee, prior to the effective date of the appointment, the trustee may not appoint a co-trustee. However, this section does not limit the power of the trustee under law to petition the court for approval of the appointment. If no objection has been timely made, the proposed appointment becomes effective on the later of the date set out in the notice or thirty days after notice has been given. The notice must be sent by any means allowed under the terms of the trust instrument, by mail with postage prepaid to the last known address of the trustor or current beneficiary, or by means otherwise allowed by law.
A governing instrument may provide for the appointment of two or more trustees and confer or allocate on one or more of the trustees, to the exclusion of other trustees, the power to direct, veto, or overrule specified actions or decisions of other trustees, or with sole responsibility for certain trustee duties. Any excluded trustee shall act in accordance with the exercise of the power, is not liable for complying with the exercise of the power, and has no obligation to review, inquire, investigate, or undertake any recommendations or evaluations with respect to the exercise of the power. A trustee having the power has the sole duty to account to the beneficiaries with respect to the exercise of the power and, if found liable for a breach of the trustee's duties with respect to the exercise of the power, is liable as if that trustee were the sole trustee.
The provisions of this section are effective for trusts created before, on, or after July 1, 2017, except as otherwise directed by the trustor, trust protector, trust advisor, or other fiduciary designated by the terms of the trust.
Section 7. That 55-2-13 be AMENDED:
(1) Except as otherwise provided by the terms of a trust instrument governing a revocable trust and subject to 55-2-14, a trustee has no duty to notify the qualified beneficiaries of the trust's existence.
(2) Except as otherwise provided by the terms of a trust instrument governing an irrevocable trust or otherwise directed in writing by the trustor, trust advisor, or trust protector, the trustee shall:
(a) Notify the qualified beneficiaries of the trust's existence and of the right of the qualified beneficiary to request a copy of the trust instrument pertaining to the qualified beneficiary's interest in the trust within sixty days after the trustee has accepted trusteeship of the trust, or within sixty days after the date the trustee acquires knowledge that a formerly revocable trust has become irrevocable;
(b) Promptly furnish to the qualified beneficiary a copy of the trust instrument upon request by the qualified beneficiary; and
(c) Promptly respond to a qualified beneficiary's request for information related to the administration of the trust, unless the request is unreasonable under the circumstances.
(3) The trustor, trust advisor, or trust protector, may, by the terms of the governing instrument, or by providing written directions to the trustee, expand, restrict, eliminate, or otherwise modify the rights of beneficiaries to information relating to a trust. Unless otherwise stated in the governing instrument, the direction of the trustor controls in the event of a conflict among written directions provided to the trustee pursuant to this section. The trustee incurs no liability for a loss or otherwise for relying upon the written directions, including an instance when the governing instrument of an irrevocable trust does not expressly authorize an expansion, restriction, or other modification of the rights of beneficiaries to information relating to a trust.
The terms of a trust instrument governing an irrevocable trust or written directions provided pursuant to this section may expand, restrict, eliminate, or otherwise vary the right of a beneficiary to be informed of the beneficiary's interest in a trust indefinitely or for a period of time, for example:
(a) A period of time related to the age of a beneficiary;
(b) A period of time related to the lifetime of either a trustor or spouse of a trustor, or both;
(c) A period of time related to a term of years or specific date; and
(d) A period of time related to a specific event that is certain to occur.
(4) The terms of the governing instrument or w