SB 163: "An Act relating to a trustee's duties to inform and account to beneficiaries; relating to the revocation, modification, termination, reformation, construction, and trustees of trusts; and relating to transfer restrictions in trusts."
00SENATE BILL NO. 163 01 "An Act relating to a trustee's duties to inform and account to beneficiaries; 02 relating to the revocation, modification, termination, reformation, construction, and 03 trustees of trusts; and relating to transfer restrictions in trusts." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 13.16.595(a) is amended to read: 06 (a) Before distributing to a trustee, the personal representative may require that 07 the trust be registered if the state in which it is to be administered provides for 08 registration and that the trustee inform the current beneficiaries as provided in 09 AS 13.36.080. 10 * Sec. 2. AS 13.36.080 is amended to read: 11 Sec. 13.36.080. Duty to inform and account to current beneficiaries. The 12 trustee shall keep the current beneficiaries of the trust reasonably informed of the trust 13 and its administration. In addition , [:] 14 (1) within 30 days after acceptance of the trust, the trustee shall inform
01 in writing the current beneficiaries and , if possible, one or more persons who under 02 AS 13.06.120 may represent current beneficiaries [WITH FUTURE INTERESTS], of 03 the court in which the trust is registered and of the trustee's name and address; 04 (2) upon reasonable request, the trustee shall provide the current 05 beneficiary with a copy of the terms of the trust that [WHICH] describe or affect the 06 beneficiary's interest and with relevant information about the assets of the trust and the 07 particulars relating to the administration; 08 (3) upon reasonable request, a current beneficiary is entitled to a 09 statement of the accounts of the trust annually and on termination of the trust or 10 change of the trustee. 11 * Sec. 3. AS 13.36.080 is amended by adding new subsections to read: 12 (b) The trust agreement may modify the trustee's duties under this section and 13 may prohibit the trustee from providing any notification or information to a current 14 beneficiary regarding the trust unless that beneficiary receives a distribution from the 15 trust, and then the notification or information may be limited to the accounting period 16 during which the distribution was made. 17 (c) In this section, "current beneficiary" means a beneficiary who is entitled 18 to a mandatory distribution of income or principal from the trust on an annual or more 19 frequent basis. 20 * Sec. 4. AS 13.36 is amended by adding new sections to read: 21 Sec. 13.36.335. Presumption of revocability. (a) Unless a trust is expressly 22 made irrevocable, a trust executed on or after the effective date of this Act is revocable 23 by the settlor. 24 (b) Notwithstanding AS 13.36.035 - 13.36.050, this section applies only if the 25 settlor is domiciled in this state when the trust is created, the trust instrument is 26 executed in this state, or the trust provides that the law of this state governs the trust. 27 Sec. 13.36.340. Modification and revocation of revocable trusts. (a) A 28 trust that is revocable by the settlor may be modified or revoked in whole or in part 29 by 30 (1) substantial compliance with a method of modification or revocation 31 provided in the trust instrument; or
01 (2) a writing, other than a will, signed by the settlor and delivered to 02 the trustee during the lifetime of the settlor, except that, if the trust instrument 03 expressly makes the method of revocation provided in the trust instrument the 04 exclusive method of revocation, the trust may not be revoked under this paragraph. 05 (b) Unless otherwise provided in the trust instrument, if a trust that is 06 revocable by the settlor is created or funded by more than one settlor, 07 (1) the trust may be modified or revoked as provided in AS 34.77.100 08 to the extent the trust consists of community property under AS 34.77 (Alaska 09 Community Property Act); 10 (2) each settlor may modify or revoke the trust as to the portion of the 11 trust property contributed by that settlor that is not community property under 12 AS 34.77. 13 (c) A revocable trust may not be modified or revoked by an attorney-in-fact 14 under a power of attorney unless the modification or revocation is expressly permitted 15 by the trust instrument. 16 Sec. 13.36.345. Modification or termination of irrevocable trusts because 17 of unanticipated circumstances. (a) On petition by a trustee, settlor, or beneficiary, 18 a court may modify the administrative or dispositive terms of an irrevocable trust or 19 terminate an irrevocable trust if, because of circumstances not anticipated by the 20 settlor, modification or termination would substantially further the settlor's purposes 21 in creating the trust. 22 (b) Upon termination of a trust under this section, the trust property shall be 23 distributed in accordance with the settlor's probable intention. 24 Sec. 13.36.350. Reformation to correct mistakes in irrevocable trusts. (a) 25 On petition by a trustee, settlor, or beneficiary, a court may reform the terms of an 26 irrevocable trust, even if the trust instrument is not ambiguous, to conform to the 27 settlor's intention if the failure to conform was due to a mistake of fact or law, 28 whether in expression in the trust or inducement to create the trust, and if the settlor's 29 intent can be established by clear and convincing evidence. 30 (b) A court may consider evidence, including direct evidence contradicting the 31 plain meaning of the text, when determining the settlor's intent or for any other
01 purpose under this section. 02 Sec. 13.36.355. Construction of trust to achieve settlor's tax objectives. (a) 03 The terms of a trust shall be construed to achieve the settlor's tax objectives. 04 (b) On petition by a trustee, settlor, or beneficiary, a court may modify the 05 terms of an irrevocable trust to achieve the settlor's tax objectives in a manner that 06 does not violate the settlor's probable intent. The court may order that the 07 modification operate retroactively. 08 Sec. 13.36.360. Modification or termination of irrevocable trust by consent. 09 (a) Except as otherwise provided by this section, on petition by a trustee, settlor, or 10 beneficiary, a court may modify or terminate an irrevocable trust if all of the 11 beneficiaries consent and if continuation of the trust on the existing terms of the trust 12 is not necessary to further a material purpose of the trust. However, the court, in its 13 discretion, may determine that the reason for modifying or terminating the trust under 14 the circumstances outweighs the interest in accomplishing the material purposes of the 15 trust. The inclusion of a restriction on the voluntary or involuntary transfer of trust 16 interests under AS 34.40.110 may constitute a material purpose of the trust under this 17 subsection, but is not presumed to constitute a material purpose of the trust under this 18 subsection. 19 (b) Unless otherwise provided in the trust instrument, an irrevocable trust may 20 not be modified or terminated under this section while a settlor is also a discretionary 21 beneficiary of the trust. 22 (c) If a beneficiary other than a qualified beneficiary does not consent to a 23 modification or termination of an irrevocable trust that is proposed by the trustee, 24 settlor, or other beneficiaries, a court may approve the proposed modification or 25 termination if the court determines 26 (1) if all the beneficiaries had consented, the trust could have been 27 modified or terminated under this section; and 28 (2) the rights of a beneficiary who does not consent will be adequately 29 protected or not significantly impaired. 30 (d) In (c) of this section, "qualified beneficiary" means a beneficiary who 31 (1) on the date the beneficiary's qualification is determined, is entitled
01 or eligible to receive a distribution of trust income or principal; or 02 (2) would be entitled to receive a distribution of trust income or 03 principal if the event causing the trust's termination occurs. 04 Sec. 13.36.365. Uneconomical irrevocable trust. (a) Notwithstanding the 05 other provisions of AS 13.36.335 - 13.36.370, if the value of the property of an 06 irrevocable trust is less than $50,000, the trustee may terminate the trust unless the 07 trust instrument provides otherwise. 08 (b) Notwithstanding the other provisions of AS 13.36.335 - 13.36.370 and the 09 terms of the trust, on petition to the superior court by a trustee, settlor, or beneficiary, 10 the court may modify or terminate an irrevocable noncharitable trust, or remove the 11 trustee and appoint a different trustee, if the court determines that the value of the trust 12 property is insufficient to justify the cost of administration. 13 (c) Upon termination of a trust under this section, the trustee shall distribute 14 the trust property in accordance with the settlor's probable intent. 15 Sec. 13.36.370. Exclusive procedure. Unless otherwise provided in the trust 16 instrument, except as provided by AS 13.12.212(c), 13.12.803, 13.12.804, 13.12.907, 17 AS 13.33.205, AS 13.36.130, and AS 13.60.010, AS 13.36.335 - 13.36.365 provide the 18 exclusive procedures for modifying, terminating, or revoking trusts. 19 * Sec. 5. AS 34.40.110 is amended by adding a new subsection to read: 20 (g) If a trust contains a transfer restriction allowed under (a) and effective 21 under (b) of this section, a beneficiary may not transfer an interest in the trust, and a 22 creditor or assignee of a beneficiary may not attach an interest in or a distribution from 23 the trust by the trustee before receipt of the interest or distribution by the beneficiary. 24 In this subsection, "receipt of the interest or distribution by the beneficiary" does not 25 include 26 (1) direct payment of a beneficiary's health, medical, or educational 27 expenses to the provider of the health, medical, or educational goods or services; 28 (2) the use or occupancy of property owned by the trust; or 29 (3) expenditures made for the maintenance or preservation of property 30 owned by the trust. 31 * Sec. 6. APPLICABILITY. AS 34.40.110(g), added by sec. 5 of this Act, applies to trusts
01 regardless of whether the trusts were created before, on, or after the effective date of this Act.