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SF 392

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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A bill for an act
relating to probate; changing and clarifying certain
venue, trustee powers, and omitted beneficiary
provisions; amending Minnesota Statutes 2004, sections
501B.17; 501B.705, subdivisions 2, 3, 4, 5; 524.2-302.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2004, section 501B.17, is
amended to read:


501B.17 VENUE.

new text begin Subdivision 1. new text end

new text begin Filing of petition. new text end

A petition under
section 501B.16 or 501B.22 may be filed:

(1) in the case of a trust created by will, in the district
court for new text begin (i) new text end the county where the will was probated, deleted text begin or in the
district court for
deleted text end new text begin (ii) new text end the county where a trustee having
custody of part or all of the trust assets resides or has a deleted text begin main
place of business
deleted text end new text begin trust office, or (iii) the county in which the
trust is administered
new text end ;

(2) in the case of a nontestamentary trust, in the district
court for new text begin (i) new text end the county where a trustee having custody of part
or all of the trust assets resides or has a deleted text begin main place of
business
deleted text end new text begin trust office or (ii) the county in which the trust is
administered
new text end ; or

(3) in the case of a trust holding real property, in the
district court for any county in which the real estate is
situated.

new text begin Subd. 2. new text end

new text begin Prior court proceedings. new text end

In the case of a trust
with respect to which there have been prior court proceedings in
this state, a petition under section 501B.16 or 501B.22 must be
filed in the court in which the prior proceedings were held.

Sec. 2.

Minnesota Statutes 2004, section 501B.705,
subdivision 2, is amended to read:


Subd. 2.

Factors to consider.

In deciding whether and to
what extent to exercise the power conferred by subdivision 1, a
trustee shall consider all factors relevant to the trust and its
beneficiaries, including, but not limited to, the following
factors:

(1) the nature, purpose, and expected duration of the
trust;

(2) the intent of the settlor;

(3) the identity and circumstances of the beneficiaries;

(4) the needs for liquidity, regularity of income, and
preservation and appreciation of capital;

(5) the assets held in the trust; the extent to which they
consist of financial assets, interests in closely held
enterprises, tangible and intangible personal property, or real
property; the extent to which an asset is used by a beneficiary;
and whether an asset was purchased by the trustee or received
from the settlor;

(6) the net amount allocated to income under the other
provisions of sections 501B.59 to 501B.76 and the increase or
decrease in the value of the principal assets, which the trustee
may estimate as to assets for which market values are not
readily available;

(7) whether and to what extent the terms of the trust give
the trustee the power to invade principal or accumulate income
or prohibit the trustee from invading principal or accumulating
income, and the extent to which the trustee has exercised a
power from time to time to invade principal or accumulate
income;

(8) the actual and anticipated effect of economic
conditions on principal and income and effects of inflation and
deflation;

(9) the anticipated tax consequences of an adjustment; new text begin and
new text end

(10) the deleted text begin income deleted text end new text begin investment new text end return deleted text begin (determined without
regard to adjustments
deleted text end under deleted text begin this section) during the accounting
period from other trusts with similar purposes
deleted text end new text begin current economic
conditions from other portfolios meeting fiduciary requirements
new text end .

Sec. 3.

Minnesota Statutes 2004, section 501B.705,
subdivision 3, is amended to read:


Subd. 3.

Limitation on trustee's power.

A trustee may
not make an adjustment:

(1) deleted text begin that diminishes the income interest in a trust that
requires all of the income to be paid at least annually to a
spouse and for which an estate tax or gift tax marital deduction
would be allowed or allowable, in whole or in part, if the
trustee did not have the power to make the adjustment;
deleted text end

deleted text begin (2) deleted text end that reduces the actuarial value of the income interest
in a trust to which a person transfers property with the intent
to qualify for a gift tax exclusion;

deleted text begin (3) deleted text end new text begin (2) new text end that changes the amount payable to a beneficiary as
fixed annuity or a fixed fraction of the value of the trust
assets;

deleted text begin (4) deleted text end new text begin (3) new text end from any amount that is permanently set aside for
charitable purposes under a will or the terms of a trust unless
both income and principal are so set aside; provided, however,
that this limitation does not apply to any trust created prior
to August 1, 2001, to the extent the trustee receives amounts
during the accounting period which would, under the provisions
of Minnesota Statutes 2000, section 501B.70, in effect prior to
August 1, 2001, have been allocated to income;

deleted text begin (5) deleted text end new text begin (4) new text end if possessing or exercising the power to make an
adjustment causes an individual to be treated as owner of all or
part of the trust for income tax purposes and the individual
would not be treated as the owner if the trustee did not possess
the power to make adjustment;

deleted text begin (6) deleted text end new text begin (5) new text end if possessing or exercising the power to make an
adjustment causes all or part of the trust assets to be included
for estate tax purposes in the estate of an individual who has
the power to remove or appoint the trustee, or both, and the
assets would not be included in the estate of the individual if
the trustee did not possess the power to make an adjustment;

deleted text begin (7) deleted text end new text begin (6) new text end if the trustee is a beneficiary of the trust; or

deleted text begin (8) deleted text end new text begin (7) new text end if the trustee is not a beneficiary, but the
adjustment would benefit the trustee directly or indirectly.

Sec. 4.

Minnesota Statutes 2004, section 501B.705,
subdivision 4, is amended to read:


Subd. 4.

Cotrustee may exercise power.

If the provisions
of subdivision 3, clause new text begin (4),new text end (5), (6), new text begin or new text end (7), deleted text begin or (8),deleted text end apply to
a trustee and there is more than one trustee, a cotrustee to
whom the provision does not apply may make the adjustment unless
the exercise of the power by the remaining trustee or trustees
is not permitted by the terms of the trust.

Sec. 5.

Minnesota Statutes 2004, section 501B.705,
subdivision 5, is amended to read:


Subd. 5.

Release of power.

A trustee may release the
entire power conferred by subdivision 1 or may release only the
power to adjust from income to principal or to adjust from
principal to income if the trustee is uncertain about whether
possessing or exercising the power will cause a result described
in subdivision 3, clause (1), (2), (3), (4), (5), deleted text begin (6),deleted text end or
deleted text begin (8) deleted text end new text begin (7)new text end , or if the trustee determines that possessing or
exercising the power will or may deprive the trust of a tax
benefit or impose a tax burden not described in subdivision 3.
The release may be permanent or for a specified period,
including a period measured by the life of an individual.


Sec. 6.

Minnesota Statutes 2004, section 524.2-302, is
amended to read:


524.2-302 OMITTED CHILDREN.

(a) Except as provided in paragraph (b), if a testator's
will fails to provide for any of the testator's children born or
adopted after the execution of the will, the omitted after-born
or after-adopted child receives a share in the estate as follows:

(1) If the testator had no child living when the will was
executed, an omitted after-born or after-adopted child receives
a share in the estate equal in value to that which the child
would have received had the testator died intestate, unless the
will devised all or substantially all the estate to the other
parent of the omitted child and that other parent survives the
testator and is entitled to take under the will.

(2) If the testator had one or more children living when
the will was executed, and the will devised property or an
interest in property to one or more of the then-living children,
an omitted after-born or after-adopted child is entitled to
share in the testator's estate as follows:

(i) The portion of the testator's estate in which the
omitted after-born or after-adopted child is entitled to share
is limited to devises made to the testator's then-living
children under the will.

(ii) The omitted after-born or after-adopted child is
entitled to receive the share of the testator's estate, as
limited in subclause (i), that the child would have received had
the testator included all omitted after-born and after-adopted
children with the children to whom devises were made under the
will and had given an equal share of the estate to each child.

(iii) To the extent feasible, the interest granted an
omitted after-born or after-adopted child under this section
must be of the same character, whether equitable or legal,
present or future, as that devised to the testator's then-living
children under the will.

(iv) In satisfying a share provided by this paragraph,
devises to the testator's children who were living when the will
was executed abate ratably. In abating the devises of the
then-living children, the court shall preserve to the maximum
extent possible the character of the testamentary plan adopted
by the testator.

(b) Neither paragraph (a), clause (1) or (2), nor paragraph
(c), applies if:

(1) it appears from the will that the omission was
intentional; or

(2) the testator provided for the omitted after-born or
after-adopted child by transfer outside the will and the intent
that the transfer be in lieu of a testamentary provision is
shown by the testator's statements or is reasonably inferred
from the amount of the transfer or other evidence.

(c) If at the time of execution of the will the testator
fails to provide in the will for a living child solely because
the testator believes the child to be dead, the child receives a
share in the estate equal in value to that which the child would
have received had the testator died intestatenew text begin , unless the will
devised all or substantially all of the estate to the other
parent of the child the testator believes to be dead and the
other parent survives the testator and is entitled to take under
the will
new text end .

(d) new text begin If a deceased omitted child would have been entitled to
a share under this section if the omitted child had not
predeceased the testator and the deceased omitted child leaves
issue who survive the testator, the issue who represent the
deceased omitted child are entitled to take the deceased omitted
child's share.
new text end

new text begin (e) new text end In satisfying a share provided by paragraph (a), clause
(1), or (c), devises made by the will abate under section
524.3-902.