HCS 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."
00HOUSE CS FOR CS 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 new subsections to read: 06 (b) The settlor of a trust may exempt a trustee from the duties under (a) of this 07 section to provide notification or information regarding the trust to a beneficiary who 08 is not entitled to a mandatory distribution of income or principal from the trust on an 09 annual or more frequent basis. The settlor may provide the exemption by provision 10 in the instrument creating the trust if the trust is created by a writing, by an 11 amendment of the trust if the settlor reserved the power to amend the trust, or by a 12 written document after the trust is created. The exemption may not exceed in duration 13 the shorter of the settlor's lifetime or a judicial determination of the settlor's incapacity. 14 (c) If a settlor provides for an exemption under (b) of this section and a
01 beneficiary with a future interest 02 (1) who is not a beneficiary entitled to a mandatory distribution of 03 income or principal from the trust on an annual or more frequent basis receives a 04 distribution, the trustee shall provide notification or information limited to the 05 accounting period during which the distribution was made; 06 (2) becomes a beneficiary entitled to a mandatory distribution of 07 income or principal from the trust on an annual or more frequent basis, the trustee 08 shall provide notification and information as required under AS 13.16 and (a) of this 09 section. 10 * Sec. 2. AS 13.36 is amended by adding new sections to read: 11 Sec. 13.36.335. Presumption of revocability. (a) Unless a trust is expressly 12 made irrevocable, a trust executed on or after the effective date of this Act is revocable 13 by the settlor. 14 (b) Notwithstanding AS 13.36.035 - 13.36.050, this section applies only if the 15 (1) settlor is domiciled in this state when the trust is created; 16 (2) trust instrument is executed in this state; or 17 (3) trust provides that the law of this state governs the trust. 18 Sec. 13.36.340. Modification and revocation of revocable trusts. (a) A 19 trust that is revocable by the settlor may be modified or revoked in whole or in part 20 by 21 (1) substantial compliance with a method of modification or revocation 22 provided in the trust instrument; or 23 (2) a writing, other than a will, signed by the settlor and delivered to 24 the trustee during the lifetime of the settlor, except that, if the trust instrument 25 expressly makes the method of revocation provided in the trust instrument the 26 exclusive method of revocation, the trust may not be revoked under this paragraph. 27 (b) Unless otherwise provided in the trust instrument, if a trust that is 28 revocable by the settlor is created by or funded by more than one settlor, 29 (1) the trust may be modified or revoked as provided in AS 34.77.100 30 to the extent the trust consists of community property under AS 34.77 (Alaska 31 Community Property Act);
01 (2) each settlor may modify or revoke the trust as to the portion of the 02 trust property contributed by that settlor that is not community property under 03 AS 34.77. 04 (c) A revocable trust may not be modified or revoked by an attorney-in-fact 05 under a power of attorney unless the modification or revocation is expressly permitted 06 by the trust instrument. 07 Sec. 13.36.345. Modification or termination of irrevocable trusts because 08 of unanticipated circumstances. (a) On petition by a trustee, settlor, or beneficiary, 09 a court may modify the administrative or dispositive terms of an irrevocable trust or 10 terminate an irrevocable trust if, because of circumstances not anticipated by the 11 settlor, modification or termination would substantially further the settlor's purposes 12 in creating the trust. 13 (b) Upon termination of a trust under this section, the trust property shall be 14 distributed in accordance with the settlor's probable intention. 15 Sec. 13.36.350. Reformation to correct mistakes in irrevocable trusts. (a) 16 On petition by a trustee, settlor, or beneficiary, a court may reform the terms of an 17 irrevocable trust, even if the trust instrument is not ambiguous, to conform to the 18 settlor's intention if the failure to conform was due to a mistake of fact or law, 19 whether in expression in the trust or inducement to create the trust, and if the settlor's 20 intent can be established by clear and convincing evidence. 21 (b) A court may consider evidence, including direct evidence contradicting the 22 plain meaning of the text, when determining the settlor's intent or for any other 23 purpose under this section. 24 Sec. 13.36.355. Construction of trust to achieve settlor's tax objectives. (a) 25 The terms of a trust shall be construed to achieve the settlor's tax objectives. 26 (b) On petition by a trustee, settlor, or beneficiary, a court may modify the 27 terms of an irrevocable trust to achieve the settlor's tax objectives in a manner that 28 does not violate the settlor's probable intent. The court may order that the 29 modification operate retroactively. 30 Sec. 13.36.360. Modification or termination of irrevocable trust by consent. 31 (a) Except as otherwise provided by this section, on petition by a trustee, settlor, or
01 beneficiary, a court may modify or terminate an irrevocable trust if all of the 02 beneficiaries consent and if continuation of the trust on the existing terms of the trust 03 is not necessary to further a material purpose of the trust. However, the court, in its 04 discretion, may determine that the reason for modifying or terminating the trust under 05 the circumstances outweighs the interest in accomplishing the material purposes of the 06 trust. The inclusion of a restriction on the voluntary or involuntary transfer of trust 07 interests under AS 34.40.110 may constitute a material purpose of the trust under this 08 subsection, but is not presumed to constitute a material purpose of the trust under this 09 subsection. 10 (b) Unless otherwise provided in the trust instrument, an irrevocable trust may 11 not be modified or terminated under this section while a settlor is also a discretionary 12 beneficiary of the trust. 13 (c) If a beneficiary other than a qualified beneficiary does not consent to a 14 modification or termination of an irrevocable trust that is proposed by the trustee, 15 settlor, or other beneficiaries, a court may approve the proposed modification or 16 termination if the court determines 17 (1) if all the beneficiaries had consented, the trust could have been 18 modified or terminated under this section; and 19 (2) the rights of a beneficiary who does not consent will be adequately 20 protected or not significantly impaired. 21 (d) In (c) of this section, "qualified beneficiary" means a beneficiary who 22 (1) on the date the beneficiary's qualification is determined, is entitled 23 or eligible to receive a distribution of trust income or principal; or 24 (2) would be entitled to receive a distribution of trust income or 25 principal if the event causing the trust's termination occurs. 26 Sec. 13.36.365. Uneconomical irrevocable trust. (a) Notwithstanding the 27 other provisions of AS 13.36.335 - 13.36.365, if the value of the property of an 28 irrevocable trust is less than $50,000, the trustee may terminate the trust unless the 29 trust instrument provides otherwise. 30 (b) Notwithstanding the other provisions of AS 13.36.335 - 13.36.365 and the 31 terms of the trust, on petition to the superior court by a trustee, settlor, or beneficiary,
01 the court may modify or terminate an irrevocable noncharitable trust, or remove the 02 trustee and appoint a different trustee, if the court determines that the value of the trust 03 property is insufficient to justify the cost of administration. 04 (c) Upon termination of a trust under this section, the trustee shall distribute 05 the trust property in accordance with the settlor's probable intent.