Bill Summary – FastDemocracy

Enrolled Copy                                                                          S.B. 45
                UNIFORM FIDUCIARY INCOME AND PRINCIPAL ACT
                                           AMENDMENTS
                                      2020 GENERAL SESSION
                                           STATE OF UTAH
                               Chief Sponsor: Lyle W. Hillyard
                                House Sponsor: V. Lowry Snow
 7
 LONG TITLE
 General Description:
        This bill amends provisions of the Uniform Fiduciary Income and Principal Act.
 Highlighted Provisions:
        This bill:
        < modifies definitions;
        < clarifies language of the Uniform Fiduciary Income and Principal Act;
        < resolves a conflict between the Uniform Fiduciary Income and Principal Act and the
 Uniform Directed Trust Act regarding the terms of a trust;
        < modifies dates to reflect the effective date of the Uniform Fiduciary Income and
 Principal Act; and
        < makes technical and conforming changes.
 Money Appropriated in this Bill:
        None
 Other Special Clauses:
        This bill provides a special effective date.
 Utah Code Sections Affected:
 AMENDS:
        22-3-102 (Effective 07/01/20), as repealed and reenacted by Laws of Utah 2019,
 Chapter 495
        22-3-104 (Effective 07/01/20), as repealed and reenacted by Laws of Utah 2019,
 Chapter 495
      S.B. 45                                                                   Enrolled Copy
       22-3-201 (Effective 07/01/20), as repealed and reenacted by Laws of Utah 2019,
 Chapter 495
       22-3-202 (Effective 07/01/20), as repealed and reenacted by Laws of Utah 2019,
 Chapter 495
       22-3-203 (Effective 07/01/20), as enacted by Laws of Utah 2019, Chapter 495
       22-3-301 (Effective 07/01/20), as repealed and reenacted by Laws of Utah 2019,
 Chapter 495
       22-3-302 (Effective 07/01/20), as repealed and reenacted by Laws of Utah 2019,
 Chapter 495
       22-3-303 (Effective 07/01/20), as repealed and reenacted by Laws of Utah 2019,
 Chapter 495
       22-3-304 (Effective 07/01/20), as enacted by Laws of Utah 2019, Chapter 495
       22-3-305 (Effective 07/01/20), as enacted by Laws of Utah 2019, Chapter 495
       22-3-307 (Effective 07/01/20), as enacted by Laws of Utah 2019, Chapter 495
       22-3-308 (Effective 07/01/20), as enacted by Laws of Utah 2019, Chapter 495
       22-3-309 (Effective 07/01/20), as enacted by Laws of Utah 2019, Chapter 495
       22-3-401 (Effective 07/01/20), as repealed and reenacted by Laws of Utah 2019,
 Chapter 495
       22-3-402 (Effective 07/01/20), as repealed and reenacted by Laws of Utah 2019,
 Chapter 495
       22-3-403 (Effective 07/01/20), as repealed and reenacted by Laws of Utah 2019,
 Chapter 495
       22-3-404 (Effective 07/01/20), as repealed and reenacted by Laws of Utah 2019,
 Chapter 495
       22-3-405 (Effective 07/01/20), as repealed and reenacted by Laws of Utah 2019,
 Chapter 495
       22-3-407 (Effective 07/01/20), as repealed and reenacted by Laws of Utah 2019,
 Chapter 495
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      Enrolled Copy                                                                         S.B. 45
       22-3-409 (Effective 07/01/20), as repealed and reenacted by Laws of Utah 2019,
 Chapter 495
       22-3-411 (Effective 07/01/20), as repealed and reenacted by Laws of Utah 2019,
 Chapter 495
       22-3-412 (Effective 07/01/20), as repealed and reenacted by Laws of Utah 2019,
 Chapter 495
       22-3-414 (Effective 07/01/20), as repealed and reenacted by Laws of Utah 2019,
 Chapter 495
       22-3-415 (Effective 07/01/20), as repealed and reenacted by Laws of Utah 2019,
 Chapter 495
       22-3-505 (Effective 07/01/20), as repealed and reenacted by Laws of Utah 2019,
 Chapter 495
       22-3-506 (Effective 07/01/20), as repealed and reenacted by Laws of Utah 2019,
 Chapter 495
       22-3-507 (Effective 07/01/20), as enacted by Laws of Utah 2019, Chapter 495
       22-3-601 (Effective 07/01/20), as repealed and reenacted by Laws of Utah 2019,
 Chapter 495
       22-3-602 (Effective 07/01/20), as repealed and reenacted by Laws of Utah 2019,
 Chapter 495
       22-3-701 (Effective 07/01/20), as enacted by Laws of Utah 2019, Chapter 495
       22-3-702 (Effective 07/01/20), as enacted by Laws of Utah 2019, Chapter 495
       22-3-703 (Effective 07/01/20), as enacted by Laws of Utah 2019, Chapter 495
       22-3-801 (Effective 07/01/20), as enacted by Laws of Utah 2019, Chapter 495
       22-3-803 (Effective 07/01/20), as enacted by Laws of Utah 2019, Chapter 495
       22-3-804 (Effective 07/01/20), as enacted by Laws of Utah 2019, Chapter 495
       75-7-103 (Superseded 07/01/20), as last amended by Laws of Utah 2019, Chapter 153
       75-7-103 (Effective 07/01/20), as last amended by Laws of Utah 2019, Chapters 153
 and 495
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        S.B. 45                                                                             Enrolled Copy
 86
 Be it enacted by the Legislature of the state of Utah:
         Section 1. Section 22-3-102 (Effective 07/01/20) is amended to read:
         22-3-102 (Effective 07/01/20). Definitions.
         In this chapter:
         (1) (a) "Accounting period" means a calendar year, unless a fiduciary selects another
 period of 12 calendar months or approximately 12 calendar months.
         (b) "Accounting period" includes a part of a calendar year or another period of 12
 calendar months or approximately 12 calendar months that begins when an income interest
 begins or ends when an income interest ends.
         (2) (a) "Asset-backed security" means a security that is serviced primarily by the cash
 flows of a discrete pool of fixed or revolving receivables or other financial assets that by [their]
 the financial assets' terms convert into cash within a finite time.
         (b) "Asset-backed security" includes rights or other assets that ensure the servicing or
 timely distribution of proceeds to the holder of the asset-backed security.
         (c) "Asset-backed security" does not include an asset to which Section 22-3-401,
 22-3-409, or 22-3-414 applies.
         (3) "Beneficiary" includes:
         (a) for a trust:
         (i) a current beneficiary, including a current income beneficiary and a beneficiary that
 may receive only principal;
         (ii) a remainder beneficiary; and
         (iii) any other successor beneficiary;
         (b) for an estate, an heir and devisee; and
         (c) for a life estate or term interest, a person that holds a life estate, term interest, or
 remainder, or other interest following a life estate or term interest.
         (4) "Court" means a court [of competent jurisdiction in the state] in this state with
 jurisdiction over a trust or estate, or a life estate or other term interest described in Subsection
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        Enrolled Copy                                                                               S.B. 45
 22-3-103(2).
        (5) "Current income beneficiary" means a beneficiary to which a fiduciary may
 distribute net income, [whether] even if the fiduciary also may distribute principal to the
 beneficiary.
        (6) (a) "Distribution" means a payment or transfer by a fiduciary to a beneficiary in the
 beneficiary's capacity as a beneficiary, made under the terms of the trust, without consideration
 other than the beneficiary's right to receive the payment or transfer under the terms of the trust.
        (b) "Distribute," "distributed," and "distributee" have corresponding meanings.
        (7) (a) "Estate" means a decedent's estate.
        (b) "Estate" includes the property of the decedent as the estate is originally constituted
 and the property of the estate as it exists at any time during administration.
        (8) "Fiduciary" includes:
        (a) a trustee, trust director as defined in Section 75-12-102, personal representative, life
 tenant, holder of a term interest, and person acting under a delegation from a fiduciary;
        (b) a person that holds property for a successor beneficiary whose interest may be
 affected by an allocation of receipts and expenditures between income and principal; and
        (c) if there are two or more co-fiduciaries, all co-fiduciaries acting under the terms of
 the trust and applicable law.
        (9) (a) "Income" means money or other property a fiduciary receives as current return
 from principal.
        (b) "Income" includes a part of receipts from a sale, exchange, or liquidation of a
 principal asset to the extent provided in Part 4, Allocation of Receipts.
        (10) (a) "Income interest" means the right of a current income beneficiary to receive all
 or part of net income, whether the terms of the trust require the net income to be distributed or
 authorize the net income to be distributed in the fiduciary's discretion.
        (b) "Income interest" includes the right of a current beneficiary to use property held by
 a fiduciary.
        (11) "Independent person" means a person that is not:
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        S.B. 45                                                                             Enrolled Copy
         (a) for a trust:
         (i) a qualified beneficiary as determined under Section 75-7-103;
         (ii) a settlor of the trust; or
         (iii) an individual whose legal obligation to support a beneficiary may be satisfied by a
 distribution from the trust;
         (b) for an estate, a beneficiary;
         (c) a spouse, parent, brother, sister, or issue of an individual described in Subsection
 (11)(a) or (b);
         (d) a corporation, partnership, limited liability company, or other entity in which
 persons described in Subsections (11)(a) through (c), in the aggregate, have voting control; or
         (e) an employee of a person described in Subsection (11)(a), (b), (c), or (d).
         (12) "Mandatory income interest" means the right of a current income beneficiary to
 receive net income that the terms of the trust require the fiduciary to distribute.
         (13) (a) "Net income" means:
         (i) the total allocations during an accounting period to income under the terms of a trust
 and this chapter minus the disbursements during the accounting period, other than
 distributions, allocated to income under the terms of the trust and this chapter; and
         (ii) to the extent the trust is a unitrust under Part 3, Unitrust, the unitrust amount
 determined under Part 3, Unitrust.
         (b) "Net income" includes an adjustment from principal to income under Section
 22-3-203.
         (c) "Net income" does not include an adjustment from income to principal under
 Section 22-3-203.
         (14) "Person" means:
         (a) an individual[,];
         (b) an estate[,];
         (c) a trust[,];
         (d) a business or nonprofit entity[,];
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        Enrolled Copy                                                                              S.B. 45
        (e) a public corporation, government or governmental subdivision, agency, or
 instrumentality[,]; or
        (f) any other legal entity.
        (15) "Personal representative" means an executor, administrator, successor personal
 representative, special administrator, or person that performs substantially the same function
 with respect to an estate under the law governing the person's status.
        (16) "Principal" means property held in trust for distribution to, production of income
 for, or use by a current or successor beneficiary.
        (17) "Record" means information that is inscribed on a tangible medium or that is
 stored in an electronic or other medium and is retrievable in perceivable form.
        (18) "Settlor" means the same as that term is defined in Section 75-7-103.
        (19) "Special tax benefit" means:
        (a) exclusion of a transfer to a trust from gifts described in Section 2503(b) of the
 Internal Revenue Code because of the qualification of an income interest in the trust as a
 present interest in property;
        (b) status as a qualified subchapter S trust described in Section 1361(d)(3) of the
 Internal Revenue Code at a time the trust holds stock of an S corporation described in Section
 1361(a)(1) of the Internal Revenue Code;
        (c) an estate or gift tax marital deduction for a transfer to a trust under Section 2056 or
 2523 of the Internal Revenue Code that depends or depended in whole or in part on the right of
 the settlor's spouse to receive the net income of the trust;
        (d) exemption in whole or in part of a trust from the federal generation-skipping
 transfer tax imposed by Section 2601 of the Internal Revenue Code because the trust was
 irrevocable on September 25, 1985, if there is any possibility that:
        (i) a taxable distribution, as defined in Section 2612(b) of the Internal Revenue Code,
 could be made from the trust; or
        (ii) a taxable termination, as defined in Section 2612(a) of the Internal Revenue Code,
 could occur with respect to the trust; or
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        S.B. 45                                                                          Enrolled Copy
         (e) an inclusion ratio, as defined in Section 2642(a) of the Internal Revenue Code, of
 the trust which is less than one, if there is any possibility that:
         (i) a taxable distribution, as defined in Section 2612(b) of the Internal Revenue Code,
 could be made from the trust; or
         (ii) a taxable termination, as defined in Section 2612(a) of the Internal Revenue Code,
 could occur with respect to the trust.
         (20) "Successive interest" means the interest of a successor beneficiary.
         (21) "Successor beneficiary" means a person entitled to receive income or principal or
 to use property when an income interest or other current interest ends.
         (22) "Terms of a trust" means:
         (a) except as otherwise provided in Subsection (22)(b), the manifestation of the
 settlor's intent regarding a trust's provisions as:
         (i) expressed in the trust instrument; or
         (ii) established by other evidence that would be admissible in a judicial proceeding;
         (b) the trust's provisions as established, determined, or amended by:
         (i) a trustee or trust director in accordance with applicable law;
         (ii) a court order; or
         (iii) a nonjudicial settlement agreement under Section 75-7-110;
         (c) for an estate, a will; or
         (d) for a life estate or term interest, the corresponding manifestation of the rights of the
 beneficiaries.
         (23) (a) "Trust" includes:
         (i) an express trust, private or charitable, with additions to the trust, wherever and
 however created; and
         (ii) a trust created or determined by judgment or decree under which the trust is to be
 administered in the manner of an express trust.
         (b) "Trust" does not include:
         (i) a constructive trust;
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        Enrolled Copy                                                                                  S.B. 45
         (ii) a resulting trust, conservatorship, guardianship, multi-party account, custodial
 arrangement for a minor, business trust, voting trust, security arrangement, liquidation trust, or
 trust for the primary purpose of paying debts, dividends, interest, salaries, wages, profits,
 pensions, retirement benefits, or employee benefits of any kind; or
         (iii) an arrangement under which a person is a nominee, escrowee, or agent for another.
         (24) (a) "Trustee" means a person, other than a personal representative, that owns or
 holds property for the benefit of a beneficiary.
         (b) "Trustee" includes an original, additional, or successor trustee, whether appointed
 or confirmed by a court.
         (25) (a) "Will" means any testamentary instrument recognized by applicable law
 [which] that makes a legally effective disposition of an individual's property[,] effective at the
 individual's death.
         (b) "Will" includes a codicil or other amendment to a testamentary instrument.
         Section 2. Section 22-3-104 (Effective 07/01/20) is amended to read:
         22-3-104 (Effective 07/01/20). Governing law.
         (1) Except as otherwise provided in the terms of a trust or this chapter, this chapter
 applies when this state is:
         (a) the principal place of administration of a trust or estate; or
         (b) the situs of property that is not held in a trust or estate and is subject to a life estate
 or other term interest described in Subsection 22-3-103(2).
         (2) By accepting the trusteeship of a trust having [its] the trust's principal place of
 administration in this state or by moving the principal place of administration of a trust to this
 state, the trustee submits to the application of this chapter to any matter within the scope of this
 chapter involvin