FILED SENATE
Mar 8, 2021
GENERAL ASSEMBLY OF NORTH CAROLINA
S.B. 197
SESSION 2021 PRINCIPAL CLERK
S D
SENATE BILL DRS15024-MUz-8A
Short Title: GSC Trusts & Estates Amendments. (Public)
Sponsors: Senators Edwards and Galey (Primary Sponsors).
Referred to:
1 A BILL TO BE ENTITLED
2 AN ACT TO (I) REMOVE THE LOCATION REQUIREMENT FOR HOLOGRAPHIC WILLS
3 TO ALIGN NORTH CAROLINA WITH ALL OTHER STATES RECOGNIZING
4 HOLOGRAPHIC WILLS, (II) UPDATE THE DEFINITIONS OF "TERMS OF A TRUST"
5 AND "TRUST INSTRUMENT" AND REVISE THE ARTICLE ON POWER HOLDERS
6 OF TRUSTS, AND (III) CLARIFY THE TRUST EXCLUSION TO THE RULE AGAINST
7 PERPETUITIES AND MAKE TECHNICAL CHANGES IN THE SURROUNDING
8 LANGUAGE, AS RECOMMENDED BY THE GENERAL STATUTES COMMISSION.
9 The General Assembly of North Carolina enacts:
10
11 PART I. REMOVE LOCATION REQUIREMENT FOR HOLOGRAPHIC WILLS
12 SECTION 1.(a) G.S. 28A-2A-9 reads as rewritten:
13 "§ 28A-2A-9. Manner of probate of holographic will.
14 A holographic will may be probated only in the following manner:
15 (1) Upon upon the testimony of at least three competent witnesses that they
16 believe that the will is written entirely in the handwriting of the person whose
17 will it purports to be, and that the name of the testator as written in or on, or
18 subscribed to, the will is in the handwriting of the person whose will it
19 purports to be; andbe.
20 (2) Upon the testimony of one witness who may, but need not be, one of the
21 witnesses referred to in subdivision (1) of this section to a statement of facts
22 showing that the will was found after the testator's death as required by G.S.
23 31-3.4."
24 SECTION 1.(b) G.S. 31-3.4 reads as rewritten:
25 "§ 31-3.4. Holographic will.
26 (a) A holographic will is a will that meets all of the following requirements:
27 (1) Written entirely in the handwriting of the testator but when all the words
28 appearing on a paper in the handwriting of the testator are sufficient to
29 constitute a valid holographic will, the fact that other words or printed matter
30 appear thereon not in the handwriting of the testator, and not affecting the
31 meaning of the words in such the handwriting, shall does not affect the validity
32 of the will, andwill.
33 (2) Subscribed by the testator, or with the testator's name written in or on the will
34 in the testator's own handwriting, andhandwriting.
35 (3) Found after the testator's death among the testator's valuable papers or effects,
36 or in a safe-deposit box or other safe place where it was deposited by the
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1 testator or under the testator's authority, or in the possession or custody of
2 some person with whom, or some firm or corporation with which, it was
3 deposited by the testator or under the testator's authority for safekeeping.
4 (b) No attesting witness to a holographic will is required."
5 SECTION 1.(c) This section is effective when it becomes law and applies to estates
6 of decedents dying on or after that date.
7
8 PART II. AMENDMENTS TO NC UNIFORM TRUST CODE DEFINITIONS AND
9 ARTICLE ON POWER HOLDERS OF TRUSTS
10 SECTION 2.(a) G.S. 36C-1-103 reads as rewritten:
11 "§ 36C-1-103. Definitions.
12 The following definitions apply in this Chapter:
13 …
14 (20) Terms of a trust. – The manifestation of the settlor's intent regarding a trust's
15 provisions as expressed in the trust instrument or established in a judicial
16 proceeding.as established, determined, or amended by any of the following:
17 a. A judicial proceeding.
18 b. A nonjudicial settlement agreement.
19 c. A nonjudicial modification with the consent of the settlor and all
20 beneficiaries under G.S. 36C-4-411(a) or other law.
21 d. A trustee or other person in accordance with law, including a power
22 holder under Article 8A of this Chapter or a trustee under Article 8B
23 of this Chapter.
24 (21) Trust instrument. – An instrument executed by the settlor that contains terms
25 of the trust, including any amendments to the instrument, and any
26 modifications permitted by court order.An instrument that contains the terms
27 of a trust.
28 …."
29 SECTION 2.(b) G.S. 36C-1-105 reads as rewritten:
30 "§ 36C-1-105. Default and mandatory rules.
31 (a) Except as otherwise provided in the terms of the trust, this Chapter governs the duties
32 and powers of a trustee and a power holder under Article 8A of this Chapter, relations among
33 trustees and those power holders, and the rights and interests of a beneficiary.
34 (b) The terms of a trust prevail over any provision of this Chapter except:
35 …
36 (2) The duty of a trustee or a power holder under Article 8A of this Chapter to act
37 in good faith and in accordance with the terms and purposes of the trust and
38 the interests of the beneficiaries, except as otherwise provided in subsection
39 (c) of this section.follows:
40 a. This duty is subject to G.S. 36C-8A-4 with respect to the trustee.
41 b. This duty does not apply to the extent the power holder is acting in a
42 nonfiduciary capacity as provided in G.S. 36C-8A-3.
43 …
44 (6) The effect of an exculpatory term under G.S. 36C-10-1008, except as
45 otherwise provided in subsection (c) of this section.to the extent the power
46 holder is acting in a nonfiduciary capacity as provided in G.S. 36C-8A-3.
47 …
48 (c) The provisions of subdivisions (2) and (6) of subsection (b) of this section shall not
49 apply to a power holder described in Article 8A of this Chapter with respect to powers conferred
50 upon the power holder in a nonfiduciary capacity under G.S. 36C-8A-3(a) or under the terms of
51 the trust."
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1 SECTION 2.(c) Article 8A of Chapter 36C of the General Statutes reads as rewritten:
2 "Article 8A.
3 "Powers, Duties, and Liability of a Power Holder Other Than a Trustee; Duty and Liability of a
4 Trustee With Respect to Power Holder's Actions.
5 "§ 36C-8A-1. Definition."Power holder" defined.
6 (a) For purposes of this Article, Article:
7 (1) the The term "power holder" means a person who described in subdivision (2)
8 of this subsection that under the terms of a trust has the power to take certain
9 actions with respect to a trust and who that is not a any of the following:
10 a. trustee or a A trustee.
11 b. A settlor with a power to direct or consent pursuant to G.S. 36C-8-808.
12 c. A person in which a donor creates a power of appointment.
13 d. A person that has authority to consent to the exercise of a power of
14 appointment.
15 e. A beneficiary with a power over a trust to the extent the exercise or
16 nonexercise of the power affects the beneficial interest of the
17 beneficiary or another beneficiary represented by a beneficiary under
18 G.S. 36C-3-301 through G.S. 36C-3-305 with respect to the exercise
19 or nonexercise of the power.
20 (2) A power holder may be any of the following:
21 a. One or more individuals.
22 b. One or more other persons each of which is qualified to exercise trust
23 powers in this State.
24 c. Any combination of the persons described in sub-subdivisions a. and
25 b. of this subdivision.
26 (b) A person is a power holder whether or not the terms of a trust refer to the person as a
27 power holder and, except as otherwise provided in sub-subdivisions (a)(1)b. and e. of this section,
28 whether or not the person is a beneficiary or settlor of the trust.
29 "§ 36C-8A-2. Powers of a power holder.
30 (a) The terms of a trust may confer upon a power holder a power to direct or consent to
31 a duty that would normally be required of a trustee, including, but not limited to, a power to direct
32 or consent to the following:
33 (1) Investments, including any action relating to investment of all or any one or
34 more of the trust assets that a trustee is authorized to may take under this
35 Chapter.
36 (2) Discretionary distributions of trust assets, including distributions to one or
37 more beneficiaries, distribution of one of more trust assets, and termination of
38 the trust by distribution of all of the trust assets.
39 (3) Any other matter regarding trust administration, including the transfer of the
40 principal place of administration of the trust.
41 (b) The terms of a trust may also confer upon the a power holder any other power,
42 including, but not limited to, the power to do the following:
43 (1) Modify or amend the trust to do any of the following:
44 a. Achieve favorable tax status under applicable law.
45 b. Take advantage of laws governing restraints on alienation or other
46 State laws restricting the terms of the trust, distribution of trust
47 property, or the administration of the trust.
48 (2) Remove and appoint trustees and power holders.
49 (3) Increase or decrease the interests of any beneficiary.
50 (4) Grant a power of appointment to one or more beneficiaries of the trust or
51 modify the terms of or terminate a power of appointment granted to a
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1 beneficiary by the governing instrument, except that a grant or modification
2 of a power of appointment may shall not grant a beneficial interest to any of
3 the following:
4 a. Any individual or class of individuals not specifically provided for in
5 the trust instrument.
6 b. The person having the power to grant, modify, or terminate the power
7 of appointment.
8 c. The estate and creditors of the person having the power to grant,
9 modify, or terminate the power of appointment.
10 (5) Change the governing law of the trust.
11 (c) A power holder may exercise any further power appropriate to the exercise or
12 nonexercise of a power granted to the power holder under subsections (a) and (b) of this section.
13 (d) The powers granted to a power holder under this section are subject to the same
14 provisions of G.S. 36C-8-814 regarding discretionary powers and tax savings that are applicable
15 to a trustee in a like position and under similar circumstances.
16 "§ 36C-8A-3. Duty and liability of power holder.
17 (a) A power holder is a fiduciary with respect to the powers conferred upon the power
18 holder who, as such, is required to act in good faith and in accordance with the purposes and
19 terms of a trust and the interests of the beneficiaries, except a power holder is not a fiduciary with
20 respect to the following:
21 (1) A power to remove and appoint a trustee or power holder.
22 (2) A power that constitutes a power of appointment held by a beneficiary of a
23 trust.
24 (3) A power the exercise or nonexercise of which may affect only the interests of
25 the power holder and no other beneficiary.
26 Except as otherwise provided in subsection (f) of this section, a power holder is a fiduciary
27 with respect to the exercise or nonexercise of a power and has the same duty and liability as the
28 following:
29 (1) If the power is not held jointly with the trustee or another power holder, as a
30 sole trustee in a like position and under similar circumstances.
31 (2) If the power is held jointly with the trustee or another power holder, as a
32 cotrustee in a like position and under similar circumstances.
33 (b) A power holder is liable for any loss that results from breach of fiduciary duty
34 occurring as a result of the exercise or nonexercise of the power.
35 (c) The following provisions applicable to a trustee shall also be applicable to a power
36 holder with respect to powers conferred upon the power holder as a fiduciary:The provisions
37 regarding the same duty and liability of a power holder as a trustee in a like position and under
38 similar circumstances include all of the following:
39 (1) The provisions of G.S. 36C-8-814 regarding discretionary powers and tax
40 savings.Article 8 of this Chapter regarding the duties of a trustee.
41 (2) The provisions of G.S. 36C-10-1001 through G.S. 36C-10-1012 regarding
42 liability of trustees and rights of third persons dealing with trustees.
43 (3) The provisions of Article 9 of this Chapter regarding the uniform prudent
44 investor rule.
45 (4) The provisions of G.S. 36C-7-703 regarding cotrustees.
46 (d) Subject to subsection (e) of this section, a power holder shall provide information to
47 a trustee or another power holder to the extent the information is reasonably related both to the
48 powers and duties of a power holder and the powers and duties of the trustee or the other power
49 holder. A trustee or other power holder that acts in reliance on information provided by the power
50 holder is not liable for breach of trust to the extent the breach resulted from the reliance, unless
51 by so acting the trustee or the other power holder engages in intentional misconduct.
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1 (e) A power holder does not have a duty to monitor a trustee or another power holder or
2 inform or give advice to a settlor, beneficiary, trustee, or another power holder concerning an
3 instance in which the power holder might have acted differently than a trustee or another power
4 holder. By taking the action described in this subsection, the power holder does not assume the
5 duty excluded under this subsection.
6 (f) The terms of a trust may provide that a power holder is a nonfiduciary with respect to
7 the exercise or nonexercise of a power, including the power to achieve the settlor's tax objectives
8 under the Internal Revenue Code. Unless the terms of a trust provide otherwise, the power to
9 remove and appoint a trustee or power holder shall be deemed to be held in a nonfiduciary
10 capacity.
11 "§ 36C-8A-4. Duty and liability of trustee.
12 (a) If the terms of a trust confer upon a power holder the power to direct certain actions
13 of the trustee, the trustee must shall act in accordance with the direction and is not liable,
14 individually or as a fiduciary, for any loss resulting directly or indirectly from compliance with
15 the direction direction, unless compliance with the direction constitutes intentional misconduct
16 on the part of the trustee.
17 (b) If the terms of a trust confer upon the power holder the power to consent to certain
18 actions of the trustee, and the power holder does not provide consent within a reasonable time
19 after the trustee has made a timely request for the power holder's consent, the trustee is not liable,
20 individually or as a fiduciary, for any loss resulting directly or indirectly from the trustee's failure