CSSB 163(JUD): "An Act relating to trusts, to a trustee's duties to notify and inform beneficiaries, and to the revocation, modification, termination, reformation, construction, and trustees of trusts."
00CS FOR SENATE BILL NO. 163(JUD) 01 "An Act relating to trusts, to a trustee's duties to notify and inform beneficiaries, 02 and to the revocation, modification, termination, reformation, construction, and 03 trustees of trusts." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 13.36.080 is amended by adding a new subsection to read: 06 (b) The trust agreement or instrument may exempt a trustee from the duty 07 under this section to provide notification or information regarding the trust to a 08 beneficiary who is not entitled to a mandatory distribution of income or principal from 09 the trust on an annual or more frequent basis. The exemption may not exceed in 10 duration the shorter of the settlor's lifetime or a judicial determination of the settlor's 11 incapacity. If the trust instrument or agreement provides for an exemption and a 12 beneficiary with a future interest who is not a beneficiary entitled to a mandatory 13 distribution of income or principal from the trust on an annual or more frequent basis 14 receives a distribution, the trustee shall provide notification or information limited to
01 the accounting period during which the distribution was made. If a beneficiary with 02 a future interest becomes a beneficiary entitled to a mandatory distribution of income 03 or principal from the trust on an annual or more frequent basis, the trustee shall 04 provide notification and information as required under AS 13.16 and this chapter. 05 * Sec. 2. AS 13.36.192 is amended by adding a new subsection to read: 06 (c) In addition to the powers provided under (a) of this section, the settlor of 07 a trust affected by AS 13.36.105 - 13.36.220 may, by provision in the instrument 08 creating the trust if the trust is created by a writing, by oral statement to the trustee at 09 the time of the creation of the trust if the trust is created orally, by an amendment of 10 the trust if the settlor reserved the power to amend the trust, or by a written document 11 after the trust is created, relieve the trustee from the duty to provide notification or 12 information to a beneficiary, subject to AS 13.36.080(b). 13 * Sec. 3. AS 13.36 is amended by adding new sections to read: 14 Sec. 13.36.335. Presumption of revocability. (a) Unless a trust is expressly 15 made irrevocable, a trust executed on or after the effective date of this Act is revocable 16 by the settlor. 17 (b) Notwithstanding AS 13.36.035 - 13.36.050, this section applies only if the 18 (1) settlor is domiciled in this state when the trust is created; 19 (2) trust instrument is executed in this state; or 20 (3) trust provides that the law of this state governs the trust. 21 Sec. 13.36.340. Modification and revocation of revocable trusts. (a) A 22 trust that is revocable by the settlor may be modified or revoked in whole or in part 23 by 24 (1) substantial compliance with a method of modification or revocation 25 provided in the trust instrument; or 26 (2) a writing, other than a will, signed by the settlor and delivered to 27 the trustee during the lifetime of the settlor, except that, if the trust instrument 28 expressly makes the method of revocation provided in the trust instrument the 29 exclusive method of revocation, the trust may not be revoked under this paragraph. 30 (b) Unless otherwise provided in the trust instrument, if a trust that is 31 revocable by the settlor is created by or funded by more than one settlor,
01 (1) the trust may be modified or revoked as provided in AS 34.77.100 02 to the extent the trust consists of community property under AS 34.77 (Alaska 03 Community Property Act); 04 (2) each settlor may modify or revoke the trust as to the portion of the 05 trust property contributed by that settlor that is not community property under 06 AS 34.77. 07 (c) A revocable trust may not be modified or revoked by an attorney-in-fact 08 under a power of attorney unless the modification or revocation is expressly permitted 09 by the trust instrument. 10 Sec. 13.36.345. Modification or termination of irrevocable trusts because 11 of unanticipated circumstances. (a) On petition by a trustee, settlor, or beneficiary, 12 a court may modify the administrative or dispositive terms of an irrevocable trust or 13 terminate an irrevocable trust if, because of circumstances not anticipated by the 14 settlor, modification or termination would substantially further the settlor's purposes 15 in creating the trust. 16 (b) Upon termination of a trust under this section, the trust property shall be 17 distributed in accordance with the settlor's probable intention. 18 Sec. 13.36.350. Reformation to correct mistakes in irrevocable trusts. (a) 19 On petition by a trustee, settlor, or beneficiary, a court may reform the terms of an 20 irrevocable trust, even if the trust instrument is not ambiguous, to conform to the 21 settlor's intention if the failure to conform was due to a mistake of fact or law, 22 whether in expression in the trust or inducement to create the trust, and if the settlor's 23 intent can be established by clear and convincing evidence. 24 (b) A court may consider evidence, including direct evidence contradicting the 25 plain meaning of the text, when determining the settlor's intent or for any other 26 purpose under this section. 27 Sec. 13.36.355. Construction of trust to achieve settlor's tax objectives. (a) 28 The terms of a trust shall be construed to achieve the settlor's tax objectives. 29 (b) On petition by a trustee, settlor, or beneficiary, a court may modify the 30 terms of an irrevocable trust to achieve the settlor's tax objectives in a manner that 31 does not violate the settlor's probable intent. The court may order that the
01 modification operate retroactively. 02 Sec. 13.36.360. Modification or termination of irrevocable trust by consent. 03 (a) Except as otherwise provided by this section, on petition by a trustee, settlor, or 04 beneficiary, a court may modify or terminate an irrevocable trust if all of the 05 beneficiaries consent and if continuation of the trust on the existing terms of the trust 06 is not necessary to further a material purpose of the trust. However, the court, in its 07 discretion, may determine that the reason for modifying or terminating the trust under 08 the circumstances outweighs the interest in accomplishing the material purposes of the 09 trust. The inclusion of a restriction on the voluntary or involuntary transfer of trust 10 interests under AS 34.40.110 may constitute a material purpose of the trust under this 11 subsection, but is not presumed to constitute a material purpose of the trust under this 12 subsection. 13 (b) Unless otherwise provided in the trust instrument, an irrevocable trust may 14 not be modified or terminated under this section while a settlor is also a discretionary 15 beneficiary of the trust. 16 (c) If a beneficiary other than a qualified beneficiary does not consent to a 17 modification or termination of an irrevocable trust that is proposed by the trustee, 18 settlor, or other beneficiaries, a court may approve the proposed modification or 19 termination if the court determines 20 (1) if all the beneficiaries had consented, the trust could have been 21 modified or terminated under this section; and 22 (2) the rights of a beneficiary who does not consent will be adequately 23 protected or not significantly impaired. 24 (d) In (c) of this section, "qualified beneficiary" means a beneficiary who 25 (1) on the date the beneficiary's qualification is determined, is entitled 26 or eligible to receive a distribution of trust income or principal; or 27 (2) would be entitled to receive a distribution of trust income or 28 principal if the event causing the trust's termination occurs. 29 Sec. 13.36.365. Uneconomical irrevocable trust. (a) Notwithstanding the 30 other provisions of AS 13.36.335 - 13.36.365, if the value of the property of an 31 irrevocable trust is less than $50,000, the trustee may terminate the trust unless the
01 trust instrument provides otherwise. 02 (b) Notwithstanding the other provisions of AS 13.36.335 - 13.36.365 and the 03 terms of the trust, on petition to the superior court by a trustee, settlor, or beneficiary, 04 the court may modify or terminate an irrevocable noncharitable trust, or remove the 05 trustee and appoint a different trustee, if the court determines that the value of the trust 06 property is insufficient to justify the cost of administration. 07 (c) Upon termination of a trust under this section, the trustee shall distribute 08 the trust property in accordance with the settlor's probable intent.