67th Legislature SB 239.1
1 SENATE BILL NO. 239
2 INTRODUCED BY M. MCNALLY
3
4 A BILL FOR AN ACT ENTITLED: “AN ACT ESTABLISHING THE UNIFORM DIRECTED TRUST ACT;
5 PROVIDING FOR APPLICABILITY; PRESERVING COMMON LAW; PROVIDING EXCEPTIONS; DETAILING
6 THE POWERS, LIMITATIONS, AND DUTIES OF TRUST DIRECTORS; ESTABLISHING THE DUTY AND
7 LIABILITY OF CERTAIN TRUSTEES; PROVIDING FOR COTRUSTEES; PROVIDING FOR ACTIONS
8 AGAINST AND JURISDICTION OVER TRUST DIRECTORS; PROVIDING FOR UNIFORMITY OF
9 APPLICATION AND CONSTRUCTION; SPECIFYING THIS ACT'S RELATION TO THE ELECTRONIC
10 SIGNATURES IN GLOBAL AND NATIONAL COMMERCE ACT; PROVIDING DEFINITIONS; AMENDING
11 SECTIONS 72-38-103, 72-38-105, 72-38-603, AND 72-38-703, MCA; AND REPEALING SECTION 72-38-808,
12 MCA.”
13
14 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
15
16 NEW SECTION. Section 1. Short title. [Sections 1 through 18] may be cited as the Uniform Directed
17 Trust Act.
18
19 NEW SECTION. Section 2. Definitions. In [sections 1 through 18]:
20 (1) "Breach of trust" includes a violation by a trust director or trustee of a duty imposed on that director
21 or trustee by the terms of the trust, [sections 1 through 18], or law of this state other than [sections 1 through 18
22 pertaining to trusts.
23 (2) "Directed trust" means a trust for which the terms of the trust grant a power of direction.
24 (3) "Directed trustee" means a trustee that is subject to a trust director’s power of direction.
25 (4) "Person" has the meaning in section 72-38-103(12).
26 (5) "Power of direction" means a power over a trust granted to a person by the terms of the trust to
27 the extent the power is exercisable while the person is not serving as a trustee. The term includes a power over
28 the investment, management, or distribution of trust property or other matters of trust administration. The term
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1 excludes the powers described in [section 5(2)].
2 (6) "Settlor" has the meaning in section 72-38-103(18).
3 (7) "State" has the meaning in section 72-38-103(20).
4 (8) "Terms of a trust" means:
5 (a) except as otherwise provided in subsection (8)(b), the manifestation of the settlor's intent
6 regarding a trust's provision as:
7 (i) expressed in the trust instrument; or
8 (ii) established by other evidence that would be admissible in a judicial proceeding; or
9 (b) the trust's provisions as established, determined, or amended by:
10 (i) a trustee or trust director in accordance with applicable law;
11 (ii) court order; or
12 (iii) a nonjudicial settlement agreement under section 72-38-111.
13 (9) "Trust director" means a person that is granted a power of direction by the terms of a trust to the
14 extent the power is exercisable while the person is not serving as a trustee. The person is a trust director
15 whether or not the terms of the trust refer to the person as a trust director and whether or not the person is a
16 beneficiary or settlor of the trust.
17 (10) "Trustee" has the meaning in section 72-38-103(23).
18
19 NEW SECTION. Section 3. Application -- principal place of administration. (1) [Sections 1
20 through 18] apply to a trust, whenever created, that has its principal place of administration in this state, subject
21 to the following rules:
22 (a) if the trust was created before October 1, 2021, [sections 1 through 18] apply only to a decision or
23 action occurring on or after October 1, 2021; and
24 (b) if the principal place of administration of the trust is changed to this state on or after October 1,
25 2021, [sections 1 through 18] apply only to a decision or action occurring on or after the date of the change.
26 (2) Without precluding other means to establish a sufficient connection with the designated jurisdiction
27 in a directed trust, terms of the trust that designate the principal place of administration of the trust are valid and
28 controlling if:
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1 (a) a principal place of business is located in or a trustee is a resident of the designated jurisdiction;
2 (b) a trust director’s principal place of business is located in or a trust director is a resident of the
3 designated jurisdiction; or
4 (c) all or part of the administration occurs in the designated jurisdiction.
5
6 NEW SECTION. Section 4. Common law and principles of equity. The common law and principles
7 of equity supplement [sections 1 through 18], except to the extent modified by [sections 1 through 18] or law of
8 this state other than [sections 1 through 18].
9
10 NEW SECTION. Section 5. Exclusions. (1) In this section, “power of appointment” means a power
11 that enables a person acting in a nonfiduciary capacity to designate a recipient of an ownership interest in or
12 another power of appointment over trust property.
13 (2) [Sections 1 through 18] do not apply to a:
14 (a) power of appointment;
15 (b) power to appoint or remove a trustee or trust director;
16 (c) power of a settlor over a trust to the extent the settlor has a power to revoke the trust;
17 (d) power of a beneficiary over a trust to the extent the exercise or nonexercise of the power affects
18 the beneficial interest of:
19 (i) the beneficiary; or
20 (ii) another beneficiary represented by the beneficiary under sections 72-38-301 through 72-38-305
21 with respect to the exercise or nonexercise of the power; or
22 (e) power over a trust if:
23 (i) the terms of the trust provide that the power is held in a nonfiduciary capacity; and
24 (ii) the power must be held in a nonfiduciary capacity to achieve the settlor’s tax objectives under the
25 United States Internal Revenue Code of 1986, as amended, and regulations issued under it, as amended.
26 (3) Unless the terms of a trust provide otherwise, a power granted to a person to designate a recipient
27 of an ownership interest in or power of appointment over trust property, which is exercisable while the person is
28 not serving as a trustee, is a power of appointment and not a power of direction.
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1
2 NEW SECTION. Section 6. Powers of trust director. (1) Subject to [section 7], the terms of a trust
3 may grant a power of direction to a trust director.
4 (2) Unless the terms of a trust provide otherwise:
5 (a) a trust director may exercise any further power appropriate to the exercise or nonexercise of a
6 power of direction granted to the director under subsection (1); and
7 (b) trust directors with joint powers shall act by majority decision.
8
9 NEW SECTION. Section 7. Limitations on trust director. A trust director is subject to the same
10 rules as a trustee in a like position and under similar circumstances in the exercise or nonexercise of a power of
11 direction or further power under [section 6(2)(a)] regarding:
12 (1) a payback provision in the terms of a trust necessary to comply with the reimbursement
13 requirements of medicaid law in section 1917 of the Social Security Act, 42 U.S.C. 1396p(d)(4)(A), as
14 amended, and regulations issued under it, as amended; and
15 (2) a charitable interest in the trust, including notice regarding the interest to the attorney general.
16
17 NEW SECTION. Section 8. Duty and liability of trust director. (1) Subject to subsection (2), with
18 respect to a power of direction or further power under [section 6(2)(a)]:
19 (a) a trust director has the same fiduciary duty and liability in the exercise or nonexercise of the
20 power:
21 (i) if the power is held individually, as a sole trustee in a like position and under similar circumstances;
22 or
23 (ii) if the power is held jointly with a trustee or another trust director, as a cotrustee in a like position
24 and under similar circumstances; and
25 (b) the terms of the trust may vary the director’s duty or liability to the same extent the terms of the
26 trust could vary the duty or liability of a trustee in a like position and under similar circumstances.
27 (2) Unless the terms of a trust provide otherwise, if a trust director is licensed, certified, or otherwise
28 authorized or permitted by law other than [sections 1 through 18] to provide health care in the ordinary course
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1 of the director’s business or practice of a profession, to the extent the director acts in that capacity, the director
2 has no duty or liability under [sections 1 through 18].
3 (3) The terms of a trust may impose a duty or liability on a trust director in addition to the duties and
4 liabilities under this section.
5
6 NEW SECTION. Section 9. Duty and liability of directed trustee. (1) Subject to subsection (2), a
7 directed trustee shall take reasonable action to comply with a trust director’s exercise or nonexercise of a power
8 of direction or further power under [section 6(2)(a)], and the trustee is not liable for the action.
9 (2) A directed trustee may not comply with a trust director’s exercise or nonexercise of a power of
10 direction or further power under [section 6(2)(a)] to the extent that by complying the trustee would engage in
11 willful misconduct.
12 (3) An exercise of a power of direction under which a trust director may release a trustee or another
13 trust director from liability for breach of trust is not effective if:
14 (a) the breach involved the trustee’s or other director’s willful misconduct;
15 (b) the release was induced by improper conduct of the trustee or other director in procuring the
16 release; or
17 (c) at the time of the release, the director did not know the material facts relating to the breach.
18 (4) A directed trustee that has reasonable doubt about its duty under this section may petition the
19 court for instructions.
20 (5) The terms of a trust may impose a duty or liability on a directed trustee in addition to the duties
21 and liabilities under this section.
22
23 NEW SECTION. Section 10. Duty to provide information to trust director or trustee. (1) Subject
24 to [section 11], a trustee shall provide information to a trust director to the extent the information is reasonably
25 related both to:
26 (a) the powers or duties of the trustee; and
27 (b) the powers or duties of the director.
28 (2) Subject to [section 11], a trust director shall provide information to a trustee or another trust
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1 director to the extent the information is reasonably related both to:
2 (a) the powers or duties of the director; and
3 (b) the powers or duties of the trustee or other director.
4 (3) A trustee that acts in reliance on information provided by a trust director is not liable for a breach
5 of trust to the extent the breach resulted from the reliance, unless by so acting the trustee engages in willful
6 misconduct.
7 (4) A trust director that acts in reliance on information provided by a trustee or another trust director is
8 not liable for a breach of trust to the extent the breach resulted from the reliance, unless by so acting the trust
9 director engages in willful misconduct.
10
11 NEW SECTION. Section 11. No duty to monitor, inform, or advise. (1) Unless the terms of a trust
12 provide otherwise:
13 (a) a trustee does not have a duty to:
14 (i) monitor a trust director; or
15 (ii) inform or give advice to a settlor, beneficiary, trustee, or trust director concerning an instance in
16 which the trustee might have acted differently than the director; and
17 (b) by taking an action described in subsection (1)(a), a trustee does not assume the duty excluded
18 by subsection (1)(a).
19 (2) Unless the terms of a trust provide otherwise:
20 (a) a trust director does not have a duty to:
21 (i) monitor a trustee or another trust director; or
22 (ii) inform or give advice to a settlor, beneficiary, trustee, or another trust director concerning an
23 instance in which the director might have acted differently than a trustee or another trust director; and
24 (b) by taking an action described in subsection (2)(a), a trust director does not assume the duty
25 excluded by subsection (2)(a).
26
27 NEW SECTION. Section 12. Application to cotrustee. The terms of a trust may relieve a cotrustee
28 from duty and liability with respect to another cotrustee’s exercise or nonexercise of a power of the other
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1 cotrustee to the same extent that in a directed trust a directed trustee is relieved from duty and liability with
2 respect to a trust director’s power of direction under [sections 9 through 11].
3
4 NEW SECTION. Section 13. Limitation of action against trust director. (1) An action against a
5 trust director for breach of trust must be commenced within the same limitation period as under 72-38-1005 for
6 an action for breach of trust against a trustee in a like position and under similar circumstances.
7 (2) A report or accounting has the same effect on the limitation period for an action against a trust
8 director for breach of trust that the report or accounting would have under 72-38-1005 in an action for breach of
9 trust against a trustee in a like position and under similar circumstances.
10
11 NEW SECTION. Section 14. Defenses in action against trust director. In an action against a trust
12 director for breach of trust, the director may assert the same defenses a trustee in a like position and under
13 similar circumstances could assert in an action for breach of trust against the trustee.
14
15 NEW SECTION. Section 15. Jurisdiction over trust director. (1) By accepting appointment as a
16 trust director of a trust subject to [sections 1 through 18], the director submits to personal jurisdiction of the
17 courts of this state regarding any matter related to a power or duty of the director.
18 (2) This section does not preclude other methods of obtaining jurisdiction over a trust director.
19
20 NEW SECTION. Section 16. Office of trust director. Unless the terms of a trust provide otherwise,
21 the rules applicable to a trustee apply to a trust director regarding the following matters:
22 (1) acceptance under 72-38-701;
23 (2) giving of bond to secure performance under 72-38-702;
24 (3) reasonable compensation under 72-38-708;
25 (4) resignation under 72-38-705;
26 (5) removal under 72-38-706; and
27 (6) vacancy and appointment of successor under 72-38-704.
28
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1 NEW SECTION. Section 17. Uniformity of application and construction. In applying and
2 construing this uniform act, consideration must be given to the need to promote uniformity of the law with
3 respect to its subject matter among states that enact it.
4
5 NEW SECTION. Section 18.