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LEGISLATURE OF NEBRASKA
ONE HUNDRED SIXTH LEGISLATURE
SECOND SESSION
LEGISLATIVE BILL 902
Introduced by Pansing Brooks, 28; Kolterman, 24; Stinner, 48.
Read first time January 09, 2020
Committee: Banking, Commerce and Insurance
1 A BILL FOR AN ACT relating to trusts; to amend section 76-902, Reissue
2 Revised Statutes of Nebraska; to adopt the Uniform Trust Decanting
3 Act; to change tax provisions for property transferred under the
4 act; to provide severability; and to repeal the original section.
5 Be it enacted by the people of the State of Nebraska,
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1 Section 1. Sections 1 to 29 of this act shall be known and may be
2 cited as the Uniform Trust Decanting Act.
3 Sec. 2. In the Uniform Trust Decanting Act:
4 (1) Appointive property means the property or property interest
5 subject to a power of appointment.
6 (2) Ascertainable standard has the same meaning as in section
7 30-3803.
8 (3) Authorized fiduciary means:
9 (A) a trustee or other fiduciary, other than a settlor, that has
10 discretion to distribute or direct a trustee to distribute part or all of
11 the principal of the first trust to one or more current beneficiaries;
12 (B) a special fiduciary appointed under section 9 of this act; or
13 (C) a special-needs fiduciary under section 13 of this act.
14 (4) Beneficiary means a person that:
15 (A) has a present or future, vested or contingent, beneficial
16 interest in a trust;
17 (B) holds a power of appointment over trust property; or
18 (C) is an identified charitable organization that will or may
19 receive distributions under the terms of the trust.
20 (5) Charitable interest means an interest in a trust which:
21 (A) is held by an identified charitable organization and makes the
22 organization a qualified beneficiary;
23 (B) benefits only charitable organizations and, if the interest were
24 held by an identified charitable organization, would make the
25 organization a qualified beneficiary; or
26 (C) is held solely for charitable purposes and, if the interest were
27 held by an identified charitable organization, would make the
28 organization a qualified beneficiary.
29 (6) Charitable organization means:
30 (A) a person, other than an individual, organized and operated
31 exclusively for charitable purposes; or
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1 (B) a government or governmental subdivision, agency, or
2 instrumentality, to the extent it holds funds exclusively for a
3 charitable purpose.
4 (7) Charitable purpose has the same meaning as the description of a
5 charitable trust in section 30-3831.
6 (8) Court means the court in this state having jurisdiction in
7 matters relating to trusts.
8 (9) Current beneficiary means a beneficiary that on the date the
9 beneficiary's qualification is determined is a distributee or permissible
10 distributee of trust income or principal. The term includes the holder of
11 a presently exercisable general power of appointment but does not include
12 a person that is a beneficiary only because the person holds any other
13 power of appointment.
14 (10) Decanting power or the decanting power means the power of an
15 authorized fiduciary under the act to distribute property of a first
16 trust to one or more second trusts or to modify the terms of the first
17 trust.
18 (11) Expanded distributive discretion means a discretionary power of
19 distribution that is not limited to an ascertainable standard or a
20 reasonably definite standard.
21 (12) First trust means a trust over which an authorized fiduciary
22 may exercise the decanting power.
23 (13) First-trust instrument means the trust instrument for a first
24 trust.
25 (14) General power of appointment means a power of appointment
26 exercisable in favor of a powerholder, the powerholder's estate, a
27 creditor of the powerholder, or a creditor of the powerholder's estate.
28 (15) Jurisdiction has the same meaning as in section 30-3803.
29 (16) Person means an individual, estate, business or nonprofit
30 entity, public corporation, government or governmental subdivision,
31 agency, or instrumentality, or other legal entity.
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1 (17) Power of appointment means a power that enables a powerholder
2 acting in a nonfiduciary capacity to designate a recipient of an
3 ownership interest in or another power of appointment over the appointive
4 property. The term does not include a power of attorney.
5 (18) Powerholder means a person in which a donor creates a power of
6 appointment.
7 (19) Presently exercisable power of appointment means a power of
8 appointment exercisable by the powerholder at the relevant time. The
9 term:
10 (A) includes a power of appointment exercisable only after the
11 occurrence of a specified event, the satisfaction of an ascertainable
12 standard, or the passage of a specified time only after:
13 (i) the occurrence of the specified event;
14 (ii) the satisfaction of the ascertainable standard; or
15 (iii) the passage of the specified time; and
16 (B) does not include a power exercisable only at the powerholder's
17 death.
18 (20) Qualified beneficiary has the same meaning as in section
19 30-3803.
20 (21) Reasonably definite standard means a clearly measurable
21 standard under which a holder of a power of distribution is legally
22 accountable within the meaning of 26 U.S.C. 674(b)(5)(A), as such section
23 existed on the effective date of this act, and any applicable
24 regulations.
25 (22) Record means information that is inscribed on a tangible medium
26 or that is stored in an electronic or other medium and is retrievable in
27 perceivable form.
28 (23) Second trust means:
29 (A) a first trust after modification under this act; or
30 (B) a trust to which a distribution of property from a first trust
31 is or may be made under the act.
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1 (24) Second-trust instrument means the trust instrument for a second
2 trust.
3 (25) Settlor, except as otherwise provided in section 25 of this
4 act, has the same meaning as in section 30-3803.
5 (26) Sign means, with present intent to authenticate or adopt a
6 record:
7 (A) to execute or adopt a tangible symbol; or
8 (B) to attach to or logically associate with the record an
9 electronic symbol, sound, or process.
10 (27) State has the same meaning as in section 30-3803.
11 (28) Terms of the trust means:
12 (A) Except as otherwise provided in subdivision (B) of this
13 subdivision, the manifestation of the settlor's intent regarding a
14 trust's provisions as:
15 (i) expressed in the trust instrument; or
16 (ii) established by other evidence that would be admissible in a
17 judicial proceeding; or
18 (B) the trust's provisions as established, determined, or amended
19 by:
20 (i) a trustee or other person in accordance with applicable law;
21 (ii) a court order; or
22 (iii) a nonjudicial settlement agreement under section 30-3811.
23 (29) Trust instrument means a record executed by the settlor to
24 create a trust or by any person to create a second trust which contains
25 some or all of the terms of the trust, including any amendments.
26 Sec. 3. (a) Except as otherwise provided in subsections (b) and (c)
27 of this section, the Uniform Trust Decanting Act applies to an express
28 trust that is irrevocable or revocable by the settlor only with the
29 consent of the trustee or a person holding an adverse interest.
30 (b) The act does not apply to a trust held solely for charitable
31 purposes.
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1 (c) Subject to section 15 of this act, a trust instrument may
2 restrict or prohibit exercise of the decanting power.
3 (d) The act does not limit the power of a trustee, powerholder, or
4 other person to distribute or appoint property in further trust or to
5 modify a trust under the trust instrument, law of this state other than
6 the act, common law, a court order, or a nonjudicial settlement
7 agreement.
8 (e) The act does not affect the ability of a settlor to provide in a
9 trust instrument for the distribution of the trust property or
10 appointment in further trust of the trust property or for modification of
11 the trust instrument.
12 Sec. 4. (a) In exercising the decanting power, an authorized
13 fiduciary shall act in accordance with its fiduciary duties, including
14 the duty to act in accordance with the purposes of the first trust.
15 (b) The Uniform Trust Decanting Act does not create or imply a duty
16 to exercise the decanting power or to inform beneficiaries about the
17 applicability of the act.
18 (c) Except as otherwise provided in a first-trust instrument, for
19 purposes of the act and section 30-3866 and subsection (a) of section
20 38-3867, the terms of the first trust are deemed to include the decanting
21 power.
22 Sec. 5. The Uniform Trust Decanting Act applies to a trust created
23 before, on, or after the effective date of this act which:
24 (1) has its principal place of administration in this state,
25 including a trust whose principal place of administration has been
26 changed to this state; or
27 (2) provides by its trust instrument that it is governed by the law
28 of this state or is governed by the law of this state for the purpose of:
29 (A) administration, including administration of a trust whose
30 governing law for purposes of administration has been changed to the law
31 of this state;
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1 (B) construction of terms of the trust; or
2 (C) determining the meaning or effect of terms of the trust.
3 Sec. 6. A trustee or other person that reasonably relies on the
4 validity of a distribution of part or all of the property of a trust to
5 another trust, or a modification of a trust, under the Uniform Trust
6 Decanting Act, law of this state other than the act, or the law of
7 another jurisdiction is not liable to any person for any action or
8 failure to act as a result of the reliance.
9 Sec. 7. (a) In this section, a notice period begins on the day
10 notice is given under subsection (c) of this section and ends fifty-nine
11 days after the day notice is given.
12 (b) Except as otherwise provided in the Uniform Trust Decanting Act,
13 an authorized fiduciary may exercise the decanting power without the
14 consent of any person and without court approval.
15 (c) Except as otherwise provided in subsection (f) of this section,
16 an authorized fiduciary shall give notice in a record of the intended
17 exercise of the decanting power not later than sixty days before the
18 exercise to:
19 (1) each settlor of the first trust, if living or then in existence;
20 (2) each qualified beneficiary of the first trust;
21 (3) each holder of a presently exercisable power of appointment over
22 any part or all of the first trust;
23 (4) each person that currently has the right to remove or replace
24 the authorized fiduciary;
25 (5) each other fiduciary of the first trust;
26 (6) each fiduciary of the second trust;
27 (7) each person acting as an advisor or protector of the first
28 trust;
29 (8) each person holding an adverse interest who has the power to
30 consent to the revocation of the first trust; and
31 (9) the Attorney General, if subsection (b) of section 14 of this
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1 act applies.
2 (d) An authorized fiduciary is not required to give notice under
3 subsection (c) of this section to a person that is not known to the
4 fiduciary or is known to the fiduciary but cannot be located by the
5 fiduciary after reasonable diligence.
6 (e) A notice under subsection (c) of this section must:
7 (1) specify the manner in which the authorized fiduciary intends to
8 exercise the decanting power;
9 (2) specify the proposed effective date for exercise of the power;
10 (3) include a copy of the first-trust instrument; and
11 (4) include a copy of all second-trust instruments.
12 (f) The decanting power may be exercised before expiration of the
13 notice period under subsection (a) of this section if all persons
14 entitled to receive notice waive the period in a signed record.
15 (g) The receipt of notice, waiver of the notice period, or
16 expiration of the notice period does not affect the right of a person to
17 file an application under section 9 of this act asserting that:
18 (1) an attempted exercise of the decanting power is ineffective
19 because it did not comply with the act or was an abuse of discretion or
20 breach of fiduciary duty; or
21 (2) section 22 of this act applies to the exercise of the decanting
22 power.
23 (h) An exercise of the decanting power is not ineffective because of
24 the failure to give notice to one or more persons under subsection (c) of
25 this section if the authorized fiduciary acted with reasonable care to
26 comply with subsection (c) of this section.
27 Sec. 8. (a) Notice to a person with authority to represent and bind
28 another person under a first-trust instrument or sections 30-3822 to
29 30-3826 has the same effect as notice given directly to the person
30 represented.
31 (b) Consent of or waiver by a person with authority to represent and
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1 bind another person under a first-trust instrument or sections 30-3822 to
2 30-3826 is binding on the person represented unless the person
3 represented objects to the representation before the consent or waiver
4 otherwise would become effective.
5 (c) A person with authority to represent and bind another person
6 under a first-trust instrument or sections 30-3822 to 30-3826 may file an
7 application under section 9 of this act on behalf of the person
8 represented.
9 (d) A settlor may not represent or bind a beneficiary for purposes
10 of the Uniform Trust Decanting Act.
11 Sec. 9. (a) On application of an authorized fiduciary, a person
12 entitled to notice under subsection (c) of section 7 of this act, a
13 beneficiary, or with respect to a charitable interest the Attorney
14 General or other person that has standing to enforce the c