1.1                          A bill for an act 
  1.2             relating to trusts; providing for memorial fund 
  1.3             trusts; changing an application provision; providing 
  1.4             for agreements; clarifying procedures; providing an 
  1.5             effective date; amending Minnesota Statutes 2002, 
  1.6             section 501B.14, subdivision 3; Laws 2002, chapter 
  1.7             347, section 5; proposing coding for new law in 
  1.8             Minnesota Statutes, chapter 501B. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  [501B.012] [MEMORIAL FUND.] 
  1.11     Subdivision 1.  [ESTABLISHMENT.] A trust may be created for 
  1.12  the purpose of establishing a fund for the benefit of one or 
  1.13  more individuals with a single transfer under the Minnesota 
  1.14  Uniform Custodial Trust Act in the manner and form provided by 
  1.15  section 529.17.  A trust authorized under this section must be 
  1.16  created and administered and is subject to the Minnesota Uniform 
  1.17  Custodial Trust Act. 
  1.18     Subd. 2.  [ADDITIONAL FUNDS.] Notwithstanding subdivision 
  1.19  1, after a fund has been created, additional funds may be 
  1.20  transferred to the fund without the formalities required by 
  1.21  chapter 529 if the transferor manifests a reasonable expression 
  1.22  of intent to make the transfer, together with a reasonable form 
  1.23  of delivery of the property including, but not limited to, the 
  1.24  following: 
  1.25     (1) a check payable to the name of the fund and delivered 
  1.26  to the trustee or the trustee's custodial agent; 
  1.27     (2) delivery of cash or tangible personal property to the 
  2.1   trustee or to the trustee's custodial agent; 
  2.2      (3) delivery and recording of title of stock or other 
  2.3   registered security in the name of the fund; 
  2.4      (4) delivery of a deed and acceptance of the deed by the 
  2.5   trustee of the fund, or the recording of a deed in the name of 
  2.6   the trustee of the fund with the applicable county recorder or 
  2.7   registrar of titles for real property; and 
  2.8      (5) any other means of transfer and delivery so that a 
  2.9   reasonable person would conclude that the transferor intended 
  2.10  the property be titled in the name of, and used for the benefit 
  2.11  of the beneficiaries of, the fund. 
  2.12     Sec. 2.  Minnesota Statutes 2002, section 501B.14, 
  2.13  subdivision 3, is amended to read: 
  2.14     Subd. 3.  [APPLICATION.] (a) Except as provided in 
  2.15  paragraph (b), this section applies to any exercise of any 
  2.16  powers of the trustee after May 14, 1993, under any trust 
  2.17  created before, on, or after May 14, 1993, unless the terms of 
  2.18  the trust refer specifically to this section and provide that 
  2.19  this section does not apply.  
  2.20     (b) This section does not apply to a trustee: 
  2.21     (1) who retains or is granted an unlimited lifetime or 
  2.22  testamentary power, exercisable in a capacity other than as 
  2.23  trustee, to revoke the trust, or to withdraw all of the income 
  2.24  and principal of the trust, or to appoint all of the income and 
  2.25  principal of the trust to the trustee individually or the 
  2.26  trustee's estate; 
  2.27     (2) of a trust created on or before May 14, 1993, if the 
  2.28  entire principal of the trust would be included in the gross 
  2.29  estate of the trustee for federal estate tax purposes if the 
  2.30  trustee had died on May 14, 1993, without regard to any power 
  2.31  described in subdivision 1; 
  2.32     (3) of a trust created on or before May 14, 1993, if no 
  2.33  part of the principal of the trust would be included in the 
  2.34  gross estate of the trustee for federal estate tax purposes if 
  2.35  the trustee had died on May 14, 1993, without exercising the 
  2.36  power; or 
  3.1      (4) of a trust created on or before May 14, 1993, if (i) 
  3.2   the trust is not exempt from generation-skipping transfer tax 
  3.3   under chapter 13 of the Internal Revenue Code of 1986, as 
  3.4   amended through December 31, 1992, because of Public Law Number 
  3.5   99-514, section 1433(b) to (d); (ii) there would be a taxable 
  3.6   termination with respect to the assets held in the trust if the 
  3.7   trustee and all beneficiaries of the trust who are assigned to 
  3.8   the trustee's generation or a higher generation had died on May 
  3.9   14, 1993; and (iii) the trust would have an inclusion ratio, as 
  3.10  defined in section 2642(c) of the Internal Revenue Code of 1986, 
  3.11  as amended through December 31, 1992, of one with respect to the 
  3.12  taxable termination; or 
  3.13     (5) of a trust created on or before May 14, 1993, if (i) on 
  3.14  May 14, 1993, there is no person with the power to amend or 
  3.15  revoke the trust, and (ii) on May 14, 1993, there is only one 
  3.16  trustee of the trust.  
  3.17     (c) This section has no effect on an action taken by a 
  3.18  trustee on or before May 14, 1993. 
  3.19     Sec. 3.  [501B.154] [NONJUDICIAL SETTLEMENT AGREEMENTS.] 
  3.20     (a) The trustee and all beneficiaries of a trust not under 
  3.21  court supervision may enter into a binding nonjudicial 
  3.22  settlement agreement with respect to the matters listed in 
  3.23  paragraph (c). 
  3.24     (b) A nonjudicial settlement agreement is valid only to the 
  3.25  extent it does not violate a material purpose of the trust, 
  3.26  subject to paragraph (c), clause (5), and includes terms and 
  3.27  conditions that could be properly approved by the court under 
  3.28  applicable law. 
  3.29     (c) Matters that may be resolved by nonjudicial settlement 
  3.30  agreement are: 
  3.31     (1) the approval of a trustee's accounting; 
  3.32     (2) the resignation of a trustee; 
  3.33     (3) the determination of a trustee's compensation; 
  3.34     (4) the transfer of the trust's situs; and 
  3.35     (5) the termination of a noncharitable trust and 
  3.36  distribution of the trust property if the fair market value of 
  4.1   the trust is less than $50,000, as determined on the date of the 
  4.2   nonjudicial settlement agreement, and it has been determined 
  4.3   that relative to the costs of administering the trust, 
  4.4   continuance pursuant to its existing terms will defeat or 
  4.5   substantially impair the accomplishment of its purposes.  The 
  4.6   trust property must be distributed in a manner which conforms as 
  4.7   nearly as possible to the intention of the grantor.  The 
  4.8   existence of a spendthrift or similar protective provision in 
  4.9   the trust does not conclusively make this clause inapplicable. 
  4.10     Sec. 4.  [501B.155] [REPRESENTATION; PLEADINGS; WHEN 
  4.11  PARTIES ARE BOUND BY OTHERS; NOTICE.] 
  4.12     Subdivision 1.  [APPLICABILITY.] Subdivisions 2 to 4 apply 
  4.13  in judicial proceedings involving trusts and in nonjudicial 
  4.14  settlement agreements under section 501B.154. 
  4.15     Subd. 2.  [DESCRIPTION TO GIVE REASONABLE 
  4.16  NOTICE.] Interests to be affected must be described in the 
  4.17  agreement or pleadings which give reasonable information to 
  4.18  owners by name or class, by reference to the instrument creating 
  4.19  the interests, or in another appropriate manner. 
  4.20     Subd. 3.  [BINDING EFFECT OF ORDERS AND AGREEMENTS.] (a) 
  4.21  Persons are bound by orders and nonjudicial settlement 
  4.22  agreements binding others in the cases in paragraphs (b) to (d). 
  4.23     (b) Orders and agreements binding the sole holder or all 
  4.24  coholders of a power of revocation or a presently exercisable 
  4.25  general power of appointment, including one in the form of a 
  4.26  power of amendment, bind all persons to the extent that their 
  4.27  interests, as objects, takers in default, or otherwise are 
  4.28  subject to the power. 
  4.29     (c) To the extent there is no conflict of interest between 
  4.30  them or among persons represented: 
  4.31     (1) orders and agreements binding a conservator of the 
  4.32  property bind the conservatee; 
  4.33     (2) orders and agreements binding a guardian bind the ward 
  4.34  if no conservator of the estate has been appointed; and 
  4.35     (3) orders imposed upon and agreements entered into by an 
  4.36  agent having authority to represent and act on behalf of the 
  5.1   principal with respect to a particular question or dispute bind 
  5.2   the principal. 
  5.3      (d) An unborn or unascertained person, a person whose 
  5.4   identity or location is unknown and not reasonably 
  5.5   ascertainable, a minor, or any other person under a legal 
  5.6   disability who is not otherwise represented is bound by an order 
  5.7   or nonjudicial settlement agreement to the extent that the 
  5.8   person's interest is represented by another party having a 
  5.9   substantially identical interest, but only to the extent there 
  5.10  is no conflict of interest between them or among persons 
  5.11  represented.  A person's identity or location is not reasonably 
  5.12  ascertainable if the identity or location is unable to be 
  5.13  determined or ascertained after a diligent search is made. 
  5.14     Subd. 4.  [REQUIRED NOTICE.] In judicial proceedings 
  5.15  involving trusts, notice is required as follows: 
  5.16     (1) notice as prescribed by section 501B.18 must be given 
  5.17  to every interested person or to one who can bind an interested 
  5.18  person as described in subdivision 3, paragraph (c), clause (1), 
  5.19  (2), or (3), and may be given both to a person and to another 
  5.20  who may bind the person; 
  5.21     (2) notice is given to unborn or unascertained persons, who 
  5.22  are not represented under subdivision 3, paragraph (c), clause 
  5.23  (1), (2), or (3), by giving notice to all known persons whose 
  5.24  interests in the proceedings are substantially identical to 
  5.25  those of the unborn or unascertained persons. 
  5.26     Sec. 5.  Laws 2002, chapter 347, section 5, is amended to 
  5.27  read: 
  5.28     Sec. 7.  [EFFECTIVE DATE.] 
  5.29     Section 2 applies to decedents dying after July 31, 2002.  
  5.30  Section 4 applies to proceedings for a decree of descent 
  5.31  commenced after July 31, 2002.