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Minnesota Legislature

Office of the Revisor of Statutes

SF 578

1st Engrossment - 89th Legislature (2015 - 2016) Posted on 03/24/2015 08:21am

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

Current Version - 1st Engrossment

Line numbers 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20
1.21 1.22
1.23 1.24
1.25 1.26 1.27 1.28 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12 2.13 2.14 2.15 2.16 2.17 2.18 2.19 2.20 2.21 2.22 2.23 2.24 2.25 2.26
2.27 2.28 2.29 2.30 2.31 2.32 2.33 2.34 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 3.11 3.12 3.13 3.14 3.15 3.16 3.17 3.18 3.19 3.20 3.21 3.22 3.23 3.24 3.25 3.26 3.27 3.28 3.29 3.30 3.31 3.32 3.33 3.34 3.35 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.15 4.16 4.17
4.18 4.19 4.20 4.21 4.22 4.23 4.24 4.25 4.26 4.27 4.28 4.29 4.30 4.31 4.32 4.33 4.34 5.1 5.2 5.3
5.4 5.5 5.6 5.7 5.8 5.9 5.10 5.11 5.12 5.13 5.14 5.15 5.16 5.17 5.18 5.19 5.20 5.21 5.22 5.23 5.24 5.25 5.26 5.27 5.28 5.29 5.30 5.31
5.32 5.33 5.34
6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 6.9 6.10 6.11 6.12 6.13 6.14
6.15 6.16 6.17 6.18 6.19 6.20 6.21 6.22 6.23 6.24 6.25 6.26 6.27 6.28 6.29 6.30 6.31 6.32 6.33 6.34 6.35 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 7.9 7.10 7.11 7.12 7.13 7.14 7.15
7.16 7.17 7.18 7.19 7.20 7.21 7.22 7.23 7.24 7.25 7.26 7.27 7.28 7.29 7.30
7.31 7.32 7.33 7.34 8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8 8.9 8.10 8.11 8.12
8.13 8.14 8.15 8.16 8.17 8.18 8.19 8.20 8.21 8.22 8.23 8.24 8.25 8.26 8.27 8.28 8.29 8.30 8.31 8.32 8.33 8.34
9.1 9.2 9.3 9.4
9.5 9.6
9.7 9.8 9.9 9.10 9.11 9.12 9.13 9.14 9.15 9.16 9.17 9.18 9.19 9.20 9.21 9.22 9.23 9.24 9.25 9.26 9.27 9.28 9.29 9.30 9.31 9.32 9.33 9.34 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 10.9 10.10 10.11 10.12 10.13
10.14 10.15 10.16 10.17 10.18 10.19 10.20 10.21 10.22 10.23 10.24 10.25 10.26 10.27 10.28 10.29 10.30 10.31 10.32 10.33 10.34 10.35 11.1 11.2 11.3 11.4 11.5 11.6 11.7 11.8 11.9 11.10 11.11 11.12 11.13 11.14 11.15 11.16 11.17 11.18 11.19 11.20 11.21
11.22 11.23 11.24 11.25 11.26 11.27 11.28 11.29 11.30 11.31 11.32 11.33 11.34 12.1 12.2 12.3 12.4 12.5 12.6 12.7 12.8 12.9 12.10 12.11 12.12 12.13 12.14
12.15 12.16 12.17 12.18 12.19 12.20 12.21 12.22 12.23 12.24 12.25 12.26 12.27 12.28 12.29 12.30
12.31 12.32 12.33 12.34 13.1 13.2 13.3 13.4 13.5 13.6 13.7 13.8 13.9
13.10 13.11 13.12 13.13 13.14 13.15 13.16 13.17 13.18 13.19 13.20 13.21 13.22 13.23
13.24 13.25 13.26 13.27 13.28 13.29 13.30 13.31 13.32 13.33 14.1 14.2 14.3 14.4 14.5 14.6 14.7
14.8 14.9 14.10
14.11 14.12
14.13 14.14 14.15 14.16 14.17 14.18 14.19 14.20 14.21 14.22 14.23 14.24 14.25 14.26 14.27 14.28 14.29 14.30 14.31 14.32 14.33
15.1 15.2 15.3 15.4 15.5 15.6 15.7 15.8
15.9 15.10 15.11 15.12 15.13 15.14 15.15 15.16 15.17 15.18 15.19 15.20 15.21 15.22 15.23 15.24 15.25 15.26 15.27 15.28 15.29 15.30 15.31
15.32 15.33 16.1 16.2 16.3 16.4 16.5 16.6
16.7 16.8 16.9 16.10 16.11 16.12 16.13 16.14 16.15 16.16 16.17 16.18 16.19 16.20 16.21 16.22 16.23 16.24 16.25
16.26 16.27
16.28 16.29 16.30 16.31 16.32 16.33 16.34 17.1 17.2 17.3 17.4 17.5 17.6 17.7 17.8 17.9 17.10 17.11
17.12 17.13 17.14 17.15 17.16 17.17 17.18 17.19 17.20 17.21 17.22 17.23 17.24 17.25 17.26 17.27 17.28 17.29 17.30
17.31 17.32 17.33 17.34 18.1 18.2 18.3
18.4 18.5 18.6 18.7
18.8 18.9 18.10 18.11
18.12 18.13 18.14 18.15
18.16 18.17 18.18 18.19 18.20 18.21 18.22 18.23 18.24 18.25 18.26 18.27 18.28
18.29 18.30 19.1 19.2 19.3 19.4 19.5 19.6 19.7 19.8 19.9
19.10 19.11 19.12 19.13 19.14 19.15 19.16 19.17 19.18 19.19 19.20 19.21 19.22 19.23 19.24 19.25 19.26 19.27 19.28 19.29 19.30 19.31 19.32 19.33 19.34
20.1 20.2 20.3 20.4 20.5 20.6 20.7 20.8 20.9 20.10 20.11
20.12 20.13 20.14 20.15 20.16 20.17 20.18 20.19 20.20 20.21 20.22 20.23
20.24 20.25 20.26 20.27 20.28
20.29 20.30 20.31 20.32 20.33
21.1 21.2 21.3 21.4
21.5 21.6
21.7 21.8 21.9 21.10 21.11 21.12 21.13 21.14 21.15 21.16 21.17 21.18 21.19 21.20
21.21 21.22 21.23 21.24 21.25 21.26 21.27 21.28 21.29 21.30 21.31 21.32
21.33 22.1 22.2 22.3 22.4 22.5 22.6 22.7 22.8 22.9 22.10 22.11 22.12 22.13 22.14 22.15
22.16 22.17 22.18 22.19 22.20 22.21 22.22 22.23 22.24 22.25 22.26
22.27 22.28 22.29
22.30 22.31
22.32 23.1 23.2
23.3 23.4 23.5 23.6 23.7 23.8 23.9 23.10 23.11 23.12 23.13 23.14 23.15 23.16 23.17 23.18 23.19 23.20 23.21 23.22 23.23 23.24 23.25 23.26 23.27 23.28 23.29 23.30 23.31 23.32 23.33
24.1 24.2 24.3 24.4 24.5 24.6 24.7 24.8 24.9 24.10 24.11 24.12 24.13 24.14
24.15 24.16 24.17
24.18 24.19 24.20 24.21 24.22 24.23 24.24 24.25 24.26 24.27 24.28 24.29 24.30 24.31 24.32 24.33 25.1 25.2 25.3
25.4 25.5
25.6 25.7 25.8 25.9 25.10 25.11 25.12 25.13 25.14 25.15 25.16 25.17 25.18 25.19 25.20 25.21 25.22 25.23
25.24 25.25 25.26 25.27 25.28 25.29 25.30 25.31
25.32 26.1 26.2 26.3 26.4 26.5 26.6 26.7 26.8 26.9 26.10 26.11 26.12 26.13 26.14 26.15 26.16 26.17 26.18 26.19 26.20 26.21 26.22 26.23 26.24
26.25 26.26 26.27 26.28 26.29 26.30 26.31 26.32 26.33 26.34 26.35 27.1 27.2 27.3 27.4 27.5 27.6 27.7 27.8 27.9 27.10 27.11 27.12 27.13 27.14 27.15 27.16 27.17
27.18 27.19 27.20 27.21 27.22 27.23 27.24 27.25
27.26 27.27 27.28 27.29 27.30 27.31 27.32 28.1 28.2 28.3 28.4 28.5 28.6 28.7 28.8 28.9 28.10 28.11
28.12 28.13 28.14 28.15 28.16 28.17 28.18 28.19 28.20 28.21
28.22 28.23 28.24 28.25 28.26 28.27 28.28 28.29 28.30
28.31 28.32 28.33 29.1 29.2 29.3 29.4 29.5
29.6 29.7
29.8 29.9 29.10 29.11
29.12 29.13 29.14 29.15 29.16 29.17 29.18 29.19 29.20 29.21 29.22 29.23 29.24 29.25 29.26 29.27 29.28 29.29 29.30 29.31 29.32 29.33 30.1 30.2 30.3 30.4 30.5 30.6 30.7 30.8 30.9 30.10 30.11 30.12 30.13 30.14 30.15
30.16 30.17 30.18
30.19 30.20 30.21 30.22
30.23 30.24 30.25 30.26 30.27 30.28 30.29 30.30 30.31 30.32 31.1 31.2 31.3 31.4 31.5 31.6 31.7
31.8 31.9 31.10 31.11 31.12 31.13 31.14 31.15 31.16 31.17 31.18 31.19 31.20 31.21 31.22 31.23 31.24 31.25 31.26 31.27 31.28 31.29 31.30 31.31 31.32 31.33 32.1 32.2 32.3 32.4 32.5 32.6 32.7 32.8 32.9 32.10 32.11 32.12 32.13 32.14 32.15 32.16 32.17 32.18 32.19 32.20 32.21 32.22 32.23 32.24 32.25 32.26 32.27 32.28 32.29 32.30 32.31 32.32 32.33 32.34 32.35 32.36 33.1 33.2 33.3 33.4 33.5 33.6 33.7 33.8 33.9 33.10 33.11 33.12 33.13 33.14 33.15 33.16 33.17 33.18 33.19 33.20 33.21 33.22 33.23 33.24 33.25 33.26 33.27 33.28 33.29 33.30 33.31 33.32 33.33 33.34 33.35 33.36 34.1 34.2 34.3 34.4 34.5 34.6 34.7 34.8 34.9 34.10 34.11 34.12 34.13 34.14 34.15 34.16 34.17 34.18 34.19 34.20 34.21 34.22 34.23 34.24 34.25 34.26 34.27 34.28 34.29 34.30 34.31 34.32 34.33 34.34 34.35 35.1 35.2 35.3 35.4 35.5 35.6 35.7 35.8 35.9 35.10 35.11 35.12 35.13 35.14 35.15 35.16 35.17 35.18 35.19 35.20 35.21 35.22 35.23 35.24 35.25 35.26 35.27 35.28 35.29 35.30 35.31 35.32 35.33 35.34 35.35 35.36 36.1 36.2 36.3 36.4 36.5 36.6 36.7 36.8 36.9 36.10 36.11 36.12 36.13 36.14 36.15 36.16 36.17 36.18 36.19 36.20 36.21 36.22 36.23 36.24
36.25 36.26 36.27 36.28 36.29 36.30 36.31 36.32 36.33
37.1 37.2 37.3 37.4 37.5 37.6
37.7 37.8 37.9 37.10 37.11
37.12 37.13 37.14 37.15 37.16 37.17 37.18 37.19 37.20 37.21 37.22 37.23 37.24 37.25 37.26 37.27 37.28 37.29 37.30 37.31 37.32 37.33 38.1 38.2
38.3 38.4 38.5 38.6 38.7 38.8 38.9 38.10 38.11 38.12 38.13 38.14 38.15 38.16 38.17 38.18 38.19 38.20 38.21 38.22 38.23 38.24 38.25 38.26 38.27 38.28 38.29 38.30 38.31 38.32 38.33 39.1 39.2 39.3 39.4 39.5 39.6 39.7 39.8 39.9 39.10 39.11 39.12 39.13 39.14 39.15 39.16 39.17
39.18 39.19 39.20 39.21 39.22 39.23 39.24 39.25 39.26 39.27
39.28 39.29 39.30 39.31 39.32 39.33 39.34 40.1 40.2 40.3 40.4 40.5 40.6 40.7 40.8 40.9 40.10 40.11 40.12 40.13 40.14 40.15 40.16 40.17 40.18 40.19 40.20 40.21 40.22 40.23 40.24 40.25 40.26 40.27 40.28 40.29 40.30 40.31 40.32 40.33 40.34 40.35 40.36 41.1 41.2 41.3 41.4 41.5 41.6 41.7 41.8 41.9 41.10 41.11 41.12 41.13 41.14 41.15 41.16 41.17 41.18 41.19 41.20 41.21 41.22 41.23 41.24 41.25 41.26 41.27 41.28 41.29 41.30 41.31 41.32 41.33 41.34 41.35 41.36 42.1 42.2 42.3 42.4 42.5 42.6 42.7 42.8 42.9 42.10 42.11 42.12 42.13 42.14 42.15 42.16 42.17 42.18 42.19 42.20 42.21 42.22 42.23 42.24 42.25 42.26 42.27 42.28 42.29 42.30 42.31 42.32 42.33 42.34 42.35
43.1 43.2 43.3 43.4 43.5 43.6 43.7 43.8 43.9 43.10 43.11 43.12
43.13 43.14
43.15 43.16 43.17 43.18 43.19 43.20 43.21 43.22 43.23 43.24 43.25 43.26 43.27 43.28 43.29 43.30 43.31 43.32 43.33 43.34 43.35 44.1 44.2 44.3 44.4 44.5 44.6 44.7 44.8 44.9 44.10 44.11 44.12 44.13 44.14 44.15 44.16 44.17 44.18 44.19 44.20 44.21 44.22 44.23 44.24 44.25 44.26 44.27 44.28 44.29 44.30 44.31 44.32 44.33 44.34 44.35 44.36 45.1 45.2 45.3 45.4 45.5 45.6 45.7 45.8 45.9 45.10 45.11 45.12 45.13 45.14 45.15 45.16 45.17 45.18 45.19 45.20 45.21 45.22 45.23 45.24 45.25 45.26 45.27 45.28 45.29 45.30 45.31
45.32 45.33 45.34
45.35 46.1 46.2 46.3 46.4 46.5 46.6 46.7 46.8 46.9 46.10 46.11 46.12 46.13 46.14 46.15 46.16 46.17
46.18 46.19 46.20 46.21 46.22 46.23 46.24
46.25 46.26 46.27 46.28 46.29 46.30 46.31
46.32 47.1 47.2 47.3
47.4 47.5 47.6 47.7 47.8 47.9 47.10 47.11 47.12 47.13 47.14 47.15 47.16 47.17
47.18 47.19 47.20 47.21
47.22 47.23 47.24 47.25 47.26 47.27
47.28 47.29 47.30 47.31 47.32 48.1 48.2 48.3 48.4 48.5 48.6 48.7 48.8
48.9 48.10 48.11 48.12 48.13 48.14 48.15 48.16 48.17
48.18 48.19 48.20 48.21 48.22 48.23 48.24 48.25 48.26 48.27 48.28 48.29
48.30 48.31 48.32 48.33 49.1 49.2 49.3 49.4 49.5 49.6 49.7 49.8 49.9
49.10 49.11 49.12 49.13 49.14 49.15 49.16 49.17 49.18 49.19 49.20 49.21 49.22 49.23 49.24
49.25 49.26 49.27 49.28 49.29 49.30 49.31 49.32 49.33 50.1 50.2 50.3 50.4 50.5 50.6 50.7 50.8 50.9 50.10 50.11 50.12 50.13 50.14 50.15 50.16 50.17 50.18 50.19 50.20 50.21 50.22 50.23 50.24 50.25 50.26 50.27 50.28 50.29 50.30 50.31 50.32 50.33 50.34 50.35 50.36 51.1 51.2 51.3 51.4 51.5 51.6 51.7 51.8 51.9 51.10
51.11 51.12 51.13 51.14 51.15 51.16 51.17 51.18 51.19 51.20 51.21 51.22 51.23 51.24 51.25 51.26 51.27 51.28 51.29 51.30 51.31 51.32 51.33 52.1 52.2 52.3 52.4 52.5 52.6 52.7 52.8 52.9 52.10 52.11 52.12 52.13 52.14 52.15 52.16 52.17 52.18 52.19 52.20 52.21 52.22 52.23 52.24 52.25 52.26 52.27 52.28 52.29 52.30 52.31 52.32 52.33 52.34 52.35 52.36 53.1 53.2 53.3 53.4 53.5 53.6 53.7 53.8 53.9 53.10 53.11 53.12 53.13 53.14 53.15 53.16 53.17 53.18 53.19 53.20 53.21 53.22 53.23 53.24 53.25 53.26 53.27 53.28 53.29 53.30 53.31 53.32 53.33 53.34 53.35 54.1 54.2 54.3 54.4 54.5 54.6 54.7 54.8 54.9 54.10 54.11 54.12 54.13 54.14 54.15 54.16 54.17 54.18 54.19 54.20 54.21 54.22 54.23 54.24 54.25 54.26 54.27 54.28 54.29 54.30 54.31 54.32 54.33 54.34 54.35 54.36 54.37 55.1 55.2
55.3 55.4
55.5 55.6 55.7 55.8 55.9 55.10 55.11 55.12 55.13 55.14 55.15 55.16 55.17 55.18 55.19
55.20 55.21 55.22 55.23 55.24 55.25 55.26 55.27 55.28 55.29 55.30 55.31 55.32 55.33 56.1 56.2 56.3 56.4 56.5 56.6 56.7 56.8 56.9 56.10 56.11
56.12 56.13 56.14 56.15 56.16 56.17 56.18 56.19 56.20 56.21 56.22 56.23 56.24 56.25 56.26 56.27 56.28 56.29 56.30 56.31 56.32 56.33 56.34 56.35 57.1 57.2 57.3 57.4 57.5 57.6 57.7 57.8 57.9 57.10 57.11 57.12 57.13 57.14 57.15 57.16 57.17 57.18 57.19 57.20
57.21 57.22 57.23 57.24 57.25 57.26 57.27 57.28 57.29 57.30 57.31 57.32 57.33 57.34 58.1 58.2 58.3 58.4 58.5 58.6 58.7 58.8 58.9 58.10 58.11 58.12 58.13 58.14 58.15 58.16 58.17 58.18 58.19 58.20 58.21 58.22
58.23 58.24 58.25 58.26 58.27 58.28 58.29 58.30 58.31 58.32 58.33 58.34 59.1 59.2 59.3 59.4 59.5 59.6 59.7 59.8 59.9 59.10 59.11 59.12 59.13 59.14 59.15 59.16 59.17 59.18 59.19 59.20 59.21 59.22 59.23 59.24 59.25 59.26
59.27 59.28 59.29 59.30 59.31 59.32 59.33 59.34 59.35 60.1 60.2 60.3 60.4 60.5 60.6 60.7 60.8 60.9 60.10 60.11 60.12 60.13 60.14 60.15 60.16 60.17 60.18 60.19 60.20 60.21 60.22 60.23 60.24 60.25 60.26 60.27 60.28 60.29 60.30 60.31 60.32 60.33 60.34 61.1 61.2 61.3 61.4 61.5 61.6 61.7 61.8 61.9 61.10 61.11 61.12 61.13 61.14 61.15 61.16 61.17 61.18 61.19 61.20 61.21 61.22 61.23 61.24 61.25 61.26 61.27 61.28 61.29 61.30 61.31 61.32 61.33 61.34
61.35 62.1 62.2 62.3 62.4 62.5 62.6 62.7 62.8 62.9 62.10 62.11 62.12 62.13 62.14
62.15 62.16 62.17 62.18 62.19 62.20 62.21 62.22 62.23 62.24 62.25 62.26 62.27 62.28 62.29 62.30 62.31 62.32 62.33 62.34 62.35 63.1 63.2 63.3 63.4
63.5 63.6 63.7 63.8 63.9 63.10 63.11 63.12 63.13 63.14 63.15 63.16 63.17 63.18 63.19 63.20 63.21 63.22 63.23 63.24 63.25 63.26 63.27 63.28 63.29 63.30
63.31 63.32 63.33 63.34 64.1 64.2 64.3 64.4 64.5 64.6 64.7 64.8 64.9 64.10 64.11 64.12 64.13 64.14 64.15 64.16
64.17 64.18 64.19 64.20 64.21 64.22 64.23 64.24 64.25 64.26 64.27 64.28 64.29 64.30 64.31 64.32 64.33 64.34 65.1 65.2
65.3 65.4 65.5 65.6 65.7 65.8 65.9 65.10 65.11 65.12 65.13 65.14 65.15 65.16 65.17 65.18 65.19 65.20 65.21 65.22 65.23 65.24 65.25 65.26 65.27 65.28 65.29 65.30 65.31 65.32 65.33 65.34 65.35 66.1 66.2 66.3 66.4 66.5 66.6 66.7 66.8 66.9 66.10 66.11 66.12 66.13 66.14 66.15 66.16 66.17 66.18 66.19 66.20 66.21 66.22 66.23 66.24 66.25 66.26 66.27 66.28 66.29 66.30 66.31 66.32 66.33 66.34 66.35 67.1 67.2 67.3 67.4 67.5 67.6 67.7 67.8 67.9 67.10 67.11 67.12 67.13 67.14 67.15 67.16 67.17 67.18 67.19 67.20 67.21 67.22 67.23 67.24 67.25 67.26 67.27 67.28 67.29 67.30 67.31 67.32 67.33 67.34 67.35 67.36 68.1 68.2 68.3 68.4 68.5 68.6 68.7 68.8 68.9 68.10 68.11 68.12 68.13 68.14 68.15 68.16 68.17 68.18 68.19 68.20 68.21 68.22 68.23 68.24 68.25
68.26 68.27 68.28 68.29 68.30 68.31 68.32 68.33 68.34 68.35 69.1 69.2 69.3 69.4 69.5 69.6 69.7 69.8 69.9 69.10 69.11 69.12 69.13 69.14 69.15 69.16 69.17 69.18 69.19 69.20 69.21 69.22 69.23 69.24 69.25 69.26 69.27 69.28 69.29 69.30 69.31 69.32 69.33 69.34 70.1 70.2 70.3 70.4 70.5 70.6 70.7 70.8 70.9 70.10 70.11 70.12 70.13 70.14 70.15 70.16 70.17 70.18 70.19 70.20 70.21 70.22 70.23 70.24
70.25 70.26 70.27 70.28 70.29 70.30 70.31 70.32 70.33 70.34 70.35 71.1 71.2 71.3 71.4 71.5 71.6 71.7 71.8 71.9 71.10 71.11 71.12 71.13 71.14 71.15 71.16 71.17 71.18 71.19 71.20 71.21
71.22 71.23 71.24 71.25 71.26 71.27 71.28 71.29 71.30 71.31 71.32
71.33 72.1 72.2
72.3 72.4 72.5
72.6 72.7 72.8
72.9 72.10
72.11 72.12 72.13 72.14 72.15 72.16 72.17 72.18 72.19 72.20 72.21 72.22 72.23 72.24 72.25 72.26 72.27 72.28 72.29 72.30 72.31 72.32 72.33
73.1 73.2 73.3 73.4 73.5 73.6 73.7 73.8 73.9 73.10 73.11 73.12 73.13 73.14 73.15 73.16 73.17 73.18 73.19 73.20 73.21 73.22 73.23 73.24 73.25 73.26 73.27 73.28
73.29 73.30 73.31 73.32 73.33 73.34 73.35 74.1 74.2
74.3 74.4 74.5 74.6
74.7 74.8 74.9 74.10 74.11 74.12 74.13 74.14 74.15 74.16 74.17 74.18 74.19 74.20 74.21 74.22 74.23 74.24 74.25 74.26 74.27 74.28 74.29 74.30 74.31 74.32 74.33 74.34 75.1 75.2 75.3 75.4 75.5 75.6 75.7 75.8 75.9 75.10 75.11 75.12 75.13 75.14 75.15 75.16 75.17 75.18 75.19 75.20 75.21 75.22 75.23 75.24 75.25 75.26 75.27 75.28 75.29 75.30 75.31 75.32 75.33 75.34 75.35 76.1 76.2 76.3 76.4 76.5 76.6 76.7 76.8 76.9 76.10 76.11 76.12 76.13 76.14 76.15 76.16 76.17 76.18 76.19 76.20 76.21 76.22 76.23 76.24 76.25 76.26 76.27 76.28 76.29 76.30 76.31 76.32
76.33 76.34 77.1 77.2 77.3 77.4 77.5 77.6 77.7 77.8 77.9 77.10 77.11 77.12 77.13 77.14 77.15 77.16 77.17 77.18 77.19 77.20 77.21 77.22 77.23 77.24 77.25 77.26 77.27 77.28 77.29 77.30 77.31 77.32 77.33
77.34 78.1 78.2 78.3 78.4 78.5 78.6 78.7 78.8 78.9 78.10 78.11 78.12 78.13 78.14 78.15 78.16 78.17 78.18 78.19
78.20 78.21 78.22 78.23
78.24 78.25 78.26 78.27 78.28
78.29 78.30 78.31 78.32 78.33 79.1 79.2 79.3 79.4 79.5 79.6 79.7 79.8 79.9 79.10 79.11 79.12 79.13 79.14 79.15 79.16 79.17 79.18 79.19 79.20 79.21 79.22 79.23 79.24 79.25 79.26 79.27 79.28 79.29 79.30 79.31 79.32 79.33 79.34 79.35 80.1 80.2 80.3 80.4 80.5 80.6 80.7 80.8 80.9 80.10 80.11 80.12 80.13 80.14 80.15 80.16
80.17 80.18 80.19 80.20 80.21 80.22 80.23 80.24 80.25 80.26 80.27 80.28 80.29 80.30 80.31 80.32 80.33 80.34 80.35 81.1 81.2 81.3 81.4 81.5 81.6 81.7 81.8 81.9 81.10 81.11 81.12 81.13 81.14 81.15 81.16 81.17 81.18 81.19 81.20 81.21 81.22 81.23 81.24 81.25 81.26 81.27 81.28 81.29 81.30 81.31 81.32 81.33 81.34 81.35 81.36 81.37 82.1 82.2 82.3 82.4 82.5 82.6 82.7 82.8 82.9 82.10 82.11 82.12 82.13 82.14 82.15 82.16 82.17 82.18 82.19 82.20 82.21 82.22 82.23 82.24 82.25 82.26 82.27 82.28
82.29 82.30
82.31 82.32 83.1 83.2 83.3
83.4 83.5 83.6 83.7 83.8 83.9 83.10
83.11 83.12 83.13 83.14 83.15 83.16
83.17 83.18 83.19 83.20 83.21 83.22 83.23 83.24 83.25 83.26 83.27 83.28 83.29 83.30 83.31 83.32 83.33 84.1 84.2
84.3 84.4
84.5 84.6 84.7 84.8 84.9 84.10 84.11
84.12 84.13 84.14 84.15 84.16 84.17 84.18 84.19 84.20 84.21 84.22 84.23 84.24
84.25 84.26 84.27 84.28 84.29 84.30 84.31 84.32 84.33 85.1 85.2 85.3 85.4 85.5 85.6 85.7 85.8 85.9 85.10 85.11 85.12 85.13 85.14 85.15 85.16 85.17 85.18 85.19 85.20 85.21 85.22 85.23 85.24 85.25 85.26 85.27
85.28 85.29 85.30 85.31 85.32 85.33 85.34 86.1 86.2 86.3
86.4 86.5 86.6 86.7 86.8 86.9 86.10 86.11 86.12 86.13 86.14 86.15 86.16 86.17 86.18 86.19 86.20 86.21 86.22 86.23 86.24 86.25 86.26 86.27 86.28 86.29 86.30 86.31 86.32
86.33 87.1 87.2 87.3 87.4 87.5 87.6 87.7 87.8 87.9 87.10 87.11 87.12 87.13 87.14 87.15 87.16 87.17 87.18 87.19 87.20 87.21 87.22 87.23 87.24 87.25 87.26 87.27 87.28 87.29 87.30 87.31 87.32 87.33 87.34 87.35 88.1 88.2 88.3 88.4 88.5 88.6 88.7 88.8 88.9 88.10 88.11 88.12 88.13 88.14 88.15 88.16 88.17 88.18 88.19 88.20 88.21 88.22 88.23 88.24 88.25 88.26 88.27 88.28 88.29 88.30 88.31 88.32 88.33 88.34 88.35 89.1 89.2 89.3 89.4 89.5 89.6 89.7 89.8 89.9 89.10 89.11 89.12 89.13
89.14 89.15 89.16 89.17 89.18 89.19 89.20 89.21 89.22 89.23 89.24 89.25 89.26 89.27 89.28 89.29 89.30 89.31 89.32 89.33 89.34 90.1 90.2 90.3 90.4 90.5 90.6 90.7 90.8 90.9 90.10 90.11 90.12 90.13 90.14 90.15 90.16 90.17 90.18 90.19 90.20 90.21 90.22 90.23 90.24 90.25 90.26 90.27 90.28 90.29 90.30 90.31 90.32 90.33 90.34 90.35 90.36 91.1 91.2 91.3 91.4 91.5 91.6 91.7 91.8 91.9 91.10 91.11 91.12 91.13 91.14 91.15 91.16 91.17 91.18 91.19 91.20 91.21 91.22 91.23 91.24 91.25 91.26 91.27 91.28 91.29 91.30 91.31 91.32 91.33 91.34 91.35 91.36 92.1 92.2 92.3 92.4 92.5 92.6 92.7 92.8 92.9 92.10 92.11 92.12 92.13 92.14 92.15 92.16 92.17 92.18 92.19 92.20 92.21 92.22 92.23 92.24 92.25 92.26 92.27 92.28 92.29 92.30 92.31 92.32 92.33 92.34 92.35 93.1 93.2 93.3 93.4 93.5 93.6 93.7 93.8 93.9 93.10 93.11 93.12 93.13 93.14 93.15 93.16 93.17 93.18 93.19 93.20 93.21 93.22 93.23 93.24 93.25 93.26 93.27 93.28 93.29 93.30 93.31 93.32 93.33 93.34 93.35 94.1 94.2 94.3 94.4 94.5 94.6 94.7 94.8 94.9 94.10 94.11 94.12 94.13 94.14 94.15 94.16 94.17 94.18 94.19 94.20 94.21 94.22 94.23 94.24 94.25 94.26 94.27 94.28 94.29 94.30 94.31 94.32 94.33 94.34 94.35 94.36 95.1 95.2 95.3 95.4 95.5 95.6 95.7 95.8
95.9 95.10 95.11 95.12 95.13 95.14 95.15 95.16 95.17 95.18 95.19 95.20 95.21 95.22 95.23 95.24 95.25 95.26 95.27 95.28 95.29 95.30 95.31 95.32 95.33
96.1 96.2 96.3 96.4 96.5 96.6 96.7 96.8 96.9 96.10 96.11 96.12 96.13 96.14 96.15 96.16 96.17 96.18 96.19 96.20 96.21 96.22 96.23 96.24 96.25 96.26 96.27 96.28 96.29 96.30 96.31 96.32 96.33 96.34 96.35
97.1 97.2 97.3 97.4 97.5 97.6 97.7 97.8 97.9 97.10 97.11 97.12 97.13 97.14 97.15 97.16 97.17 97.18 97.19 97.20 97.21 97.22 97.23 97.24 97.25 97.26 97.27 97.28 97.29 97.30 97.31 97.32 97.33
97.34 98.1 98.2 98.3
98.4 98.5
98.6 98.7 98.8 98.9 98.10 98.11 98.12
98.13 98.14 98.15 98.16 98.17 98.18 98.19 98.20 98.21 98.22 98.23 98.24 98.25 98.26 98.27 98.28 98.29 98.30 98.31 98.32 98.33 98.34 99.1 99.2 99.3 99.4 99.5 99.6 99.7 99.8 99.9 99.10 99.11 99.12 99.13 99.14 99.15 99.16 99.17 99.18 99.19 99.20 99.21 99.22 99.23 99.24 99.25 99.26 99.27 99.28 99.29 99.30 99.31 99.32 99.33 99.34 100.1 100.2 100.3 100.4 100.5 100.6 100.7 100.8 100.9 100.10 100.11 100.12 100.13 100.14 100.15 100.16
100.17 100.18 100.19 100.20
100.21 100.22 100.23 100.24 100.25 100.26 100.27 100.28 100.29 100.30 100.31
100.32 101.1 101.2 101.3 101.4 101.5 101.6 101.7 101.8 101.9
101.10 101.11 101.12 101.13 101.14 101.15 101.16 101.17 101.18 101.19 101.20 101.21 101.22 101.23
101.24 101.25 101.26 101.27 101.28 101.29 101.30 101.31 101.32 101.33 102.1 102.2 102.3 102.4 102.5 102.6 102.7 102.8 102.9 102.10
102.11 102.12 102.13 102.14 102.15
102.16 102.17 102.18 102.19 102.20 102.21 102.22 102.23
102.24 102.25 102.26 102.27 102.28 102.29 102.30 102.31 102.32 103.1 103.2 103.3 103.4 103.5 103.6 103.7 103.8 103.9
103.10 103.11 103.12 103.13 103.14 103.15 103.16 103.17 103.18 103.19 103.20 103.21 103.22 103.23 103.24 103.25
103.26 103.27 103.28 103.29 103.30 103.31 103.32 103.33 103.34 104.1 104.2 104.3 104.4 104.5 104.6 104.7 104.8
104.9 104.10 104.11 104.12 104.13 104.14 104.15 104.16 104.17 104.18 104.19 104.20 104.21 104.22 104.23
104.24 104.25 104.26 104.27 104.28 104.29 104.30 104.31 104.32 104.33 105.1 105.2 105.3 105.4 105.5 105.6 105.7 105.8 105.9 105.10 105.11 105.12 105.13 105.14 105.15 105.16 105.17 105.18 105.19 105.20 105.21 105.22 105.23 105.24 105.25 105.26 105.27 105.28 105.29 105.30 105.31 105.32 105.33 105.34 105.35 105.36 106.1 106.2 106.3 106.4 106.5 106.6 106.7 106.8 106.9 106.10 106.11 106.12 106.13 106.14 106.15 106.16 106.17 106.18 106.19 106.20 106.21 106.22
106.23 106.24 106.25 106.26 106.27 106.28 106.29 106.30 106.31 106.32 106.33 106.34 107.1 107.2 107.3 107.4 107.5 107.6 107.7 107.8 107.9 107.10 107.11 107.12
107.13 107.14 107.15 107.16 107.17 107.18 107.19 107.20 107.21 107.22 107.23 107.24 107.25 107.26 107.27 107.28 107.29 107.30 107.31 107.32 107.33 107.34 107.35 108.1 108.2 108.3 108.4 108.5 108.6 108.7 108.8 108.9 108.10 108.11 108.12 108.13 108.14 108.15 108.16 108.17
108.18 108.19 108.20 108.21 108.22 108.23 108.24 108.25 108.26 108.27 108.28 108.29 108.30 108.31 108.32 108.33 108.34 108.35 109.1 109.2 109.3 109.4 109.5 109.6 109.7 109.8 109.9 109.10 109.11 109.12 109.13 109.14
109.15 109.16 109.17 109.18 109.19 109.20 109.21 109.22 109.23 109.24 109.25 109.26 109.27 109.28 109.29 109.30 109.31 109.32 109.33 109.34 109.35 110.1 110.2 110.3 110.4
110.5 110.6
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110.12 110.13 110.14 110.15 110.16 110.17 110.18 110.19 110.20
110.21 110.22

A bill for an act
relating to trusts; establishing the Minnesota Trust Code; recodifying certain
provisions; modifying power of appointments; making conforming and technical
changes; amending Minnesota Statutes 2014, sections 48.01, subdivision 2;
48A.07, subdivision 6; 317A.161, subdivision 24; 353.95, subdivision 4; 500.17,
subdivision 2; 501B.31, subdivisions 2, 4, 5; 501B.41, subdivision 3; 501B.46;
508.62; 508A.62; 524.2-804, subdivision 1; 524.5-417; 529.06; 529.12; 529.14;
541.05, subdivision 1; proposing coding for new law in Minnesota Statutes,
chapters 502; 507; proposing coding for new law as Minnesota Statutes, chapter
501C; repealing Minnesota Statutes 2014, sections 501B.01; 501B.012; 501B.02;
501B.03; 501B.04; 501B.05; 501B.06; 501B.07; 501B.08; 501B.09; 501B.12;
501B.13; 501B.14; 501B.15; 501B.151; 501B.152; 501B.154; 501B.155;
501B.16; 501B.17; 501B.18; 501B.19; 501B.20; 501B.21; 501B.22; 501B.23;
501B.24; 501B.25; 501B.56; 501B.561; 501B.57; 501B.571; 501B.59; 501B.60;
501B.61; 501B.62; 501B.63; 501B.64; 501B.65; 501B.665; 501B.67; 501B.68;
501B.69; 501B.705; 501B.71; 501B.72; 501B.73; 501B.74; 501B.75; 501B.76;
501B.79; 501B.80; 501B.81; 501B.82; 501B.87; 501B.88; 501B.89; 501B.895;
501B.90; 502.62; 502.63; 502.64; 502.65; 502.66; 502.67; 502.68; 502.69;
502.70; 502.71; 502.72; 502.73; 502.74; 502.75; 502.76; 502.77; 502.78; 502.79.

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

ARTICLE 1

GENERAL PROVISIONS

Section 1.

new text begin [501C.0101] SHORT TITLE.
new text end

new text begin This chapter may be cited as the "Minnesota Trust Code."
new text end

Sec. 2.

new text begin [501C.0102] SCOPE.
new text end

new text begin (a) This chapter applies to express trusts, charitable or noncharitable, and trusts
created pursuant to a statute, judgment, or decree that require the trust to be administered
in the manner of an express trust.
new text end

new text begin (b) Sections 501C.0201 to 501C.0208 do not apply to trusts in the nature of
mortgages or to trusts commonly known as voting trusts. Sections 501C.0201 to
501C.0208 apply, unless otherwise provided in the trust instrument, to trusts established in
connection with bonds issued under chapter 469, and, at the sole election of the issuer of
bonds issued under chapter 469, without a trust indenture, to the pledges and other bond
covenants made by the issuer in one or more resolutions with respect to the bonds. If the
issuer elects to apply sections 501C.0201 to 501C.0208, for such purposes only, pledges
and other bond covenants shall be deemed the "trust," the resolution or resolutions shall be
deemed the "trust instrument," and the issuer shall be deemed the "trustee" notwithstanding
the absence of any fiduciary responsibility owed by the "issuer" toward the bondholders.
Nothing in this section precludes the issuer from seeking approval under sections
501C.0201 to 501C.0208 of the creation of any express trust under a trust indenture and
the appointment of a trustee to act as fiduciary for the benefit of the bondholders. As used
in sections 501C.0201 to 501C.0208, "beneficiary" includes a bondholder.
new text end

new text begin (c) This chapter does not apply to corporate trusts, except that sections 501C.0201 to
501C.0208 apply to corporate trusts that are administered by a trustee located in this state.
For purposes of this paragraph, the following terms have the meanings given:
new text end

new text begin (1) "Corporate trust" means any trust created pursuant to a corporate trust agreement;
and
new text end

new text begin (2) "Corporate trust agreement" means any indenture, pooling and servicing
agreement, collateral agency agreement, or other contractual arrangement that establishes
an express trust either before or upon the occurrence of an event of default and was
entered into with a trustee as a party to facilitate a commercial transaction for the issuance
of debt or equity securities or for the creation of other similar rights or interests, whether
or not the securities are subject to any securities laws, including but not limited to the
Trust Indenture Act of 1939, as amended.
new text end

Sec. 3.

new text begin [501C.0103] DEFINITIONS.
new text end

new text begin In this chapter:
new text end

new text begin (a) "Action" with respect to an act of a trustee includes a failure to act.
new text end

new text begin (b) "Ascertainable standard" means a standard relating to an individual's health,
education, support, or maintenance within the meaning of section 2041(b)(1)(A) or
2514(c)(1) of the Internal Revenue Code of 1986, as in effect on the effective date of this act.
new text end

new text begin (c) "Beneficiary" means a person that:
new text end

new text begin (1) has a present or future beneficial interest in a trust, vested or contingent; or
new text end

new text begin (2) in a capacity other than that of trustee, holds a power of appointment over trust
property.
new text end

new text begin (d) "Charitable trust" means a trust, or portion of a trust, created for a charitable
purpose described in section 501B.35.
new text end

new text begin (e) "Conservator" means a person who is appointed by a court to manage the estate
of a protected person under sections 524.5-101 to 524.5-903.
new text end

new text begin (f) "Environmental law" means a federal, state, or local law, rule, regulation, or
ordinance relating to protection of the environment.
new text end

new text begin (g) "Guardian" means a person who has qualified as a guardian of a minor or
incapacitated person pursuant to testamentary or court appointment, but excludes one who
is a guardian ad litem, under sections 524.5-101 to 524.5-903.
new text end

new text begin (h) "Interests of the beneficiaries" means the beneficial interests provided in the
terms of the trust.
new text end

new text begin (i) "Jurisdiction," with respect to a geographic area, includes a state or country.
new text end

new text begin (j) "Person" means an individual, corporation, business trust, estate, trust,
partnership, limited liability company, association, joint venture, government,
governmental subdivision, agency, or instrumentality, public corporation, or any other
legal or commercial entity.
new text end

new text begin (k) "Power of withdrawal" means a presently exercisable general power of
appointment other than a power:
new text end

new text begin (1) exercisable by a trustee and limited by an ascertainable standard; or
new text end

new text begin (2) exercisable by another person only upon consent of the trustee or a person
holding an adverse interest.
new text end

new text begin (l) "Property" means anything that may be the subject of ownership, whether real or
personal, legal or equitable, or any interest therein.
new text end

new text begin (m) "Qualified beneficiary" means a beneficiary who, on the date the beneficiary's
qualification is determined:
new text end

new text begin (1) a distributee or permissible distributee of trust income or principal;
new text end

new text begin (2) a distributee or permissible distributee of trust income or principal if the interests
of the distributees described in clause (1) terminated on that date without causing the
trust to terminate; or
new text end

new text begin (3) a distributee or permissible distributee of trust income or principal if the trust
terminated on that date.
new text end

new text begin (n) "Revocable," as applied to a trust, means revocable by the settlor without the
consent of the trustee or a person holding an adverse interest.
new text end

new text begin (o) "Settlor" means a person, including a testator, who creates or contributes property
to a trust. If more than one person creates or contributes property to a trust, each person is
a settlor of the portion of the trust property attributable to that person's contribution except
to the extent another person has the power to revoke or withdraw that portion.
new text end

new text begin (p) "Spendthrift provision" means a term of a trust which restricts both voluntary
and involuntary transfer of a beneficiary's interest.
new text end

new text begin (q) "State" means a state of the United States, the District of Columbia, Puerto
Rico, the United States Virgin Islands, or any territory or insular possession subject to the
jurisdiction of the United States. The term includes an Indian tribe or band recognized by
federal law or formally acknowledged by a state.
new text end

new text begin (r) "Terms of a trust" means the manifestation of the settlor's intent regarding a
trust's provisions as expressed in the trust instrument or as may be established by other
evidence that would be admissible in a judicial proceeding.
new text end

new text begin (s) "Trust instrument" means an instrument executed by the settlor that contains
terms of the trust, including any amendments thereto.
new text end

new text begin (t) "Trustee" includes an original, additional, and successor trustee, and a cotrustee,
whether or not appointed or confirmed by a court.
new text end

Sec. 4.

new text begin [501C.0104] KNOWLEDGE.
new text end

new text begin (a) Subject to paragraph (b), a person has knowledge of a fact if the person:
new text end

new text begin (1) has actual knowledge of it;
new text end

new text begin (2) has received a notice or notification of it; or
new text end

new text begin (3) from all the facts and circumstances known to the person at the time in question,
has reason to know it.
new text end

new text begin (b) An organization that conducts activities through employees has notice or
knowledge of a fact involving a trust only from the time the information was received
by an employee having responsibility to act for the trust, or would have been brought
to the employee's attention if the organization had exercised reasonable diligence.
An organization exercises reasonable diligence if it maintains reasonable policies
and procedures for communicating significant information to the employee having
responsibility to act for the trust and there is reasonable compliance with the policies and
procedures. Reasonable diligence does not require an employee of the organization to
communicate information unless the communication is part of the individual's regular
duties or the individual knows a matter involving the trust would be materially affected
by the information.
new text end

new text begin (c) With respect to a conveyance of real property, an organization or other person
shall be deemed to have knowledge of facts disclosed by a title examination in accordance
with applicable customs and standards.
new text end

Sec. 5.

new text begin [501C.0105] DEFAULT AND MANDATORY RULES.
new text end

new text begin (a) Except as otherwise provided in the terms of a trust, this chapter governs the
duties and powers of a trustee, relations among trustees, and the rights and interests of
a beneficiary.
new text end

new text begin (b) The terms of a trust prevail over any provision of this chapter except:
new text end

new text begin (1) the requirements for creating a trust;
new text end

new text begin (2) the duty of a trustee to act in good faith and in accordance with the terms and
purposes of the trust and the interests of the beneficiaries;
new text end

new text begin (3) the requirement that a trust and its terms be for the benefit of its beneficiaries,
and that the trust have a purpose that is lawful, not contrary to public policy, and possible
to achieve;
new text end

new text begin (4) the power of the court to modify or terminate a trust under sections 501C.0410
to 501C.0416;
new text end

new text begin (5) the effect of a spendthrift provision and the rights of certain creditors and
assignees to reach a trust as provided in sections 501C.0501 to 501C.0507;
new text end

new text begin (6) the power of the court under section 501C.0702 to require, dispense with,
or modify or terminate a bond;
new text end

new text begin (7) the power of the court under section 501C.0708, paragraph (b), to adjust a
trustee's compensation specified in the terms of the trust which is unreasonably low or high;
new text end

new text begin (8) the effect of an exculpatory term under section 501C.1008;
new text end

new text begin (9) the rights under sections 501C.1010 to 501C.1013 of a person other than a
trustee or beneficiary;
new text end

new text begin (10) periods of limitation for commencing a judicial proceeding;
new text end

new text begin (11) the power of the court to take such action and exercise such jurisdiction as may
be necessary in the interests of justice; and
new text end

new text begin (12) the subject-matter jurisdiction of the court as provided in section 501C.0202
and venue for commencing a proceeding as provided in section 501C.0207, except as
provided in section 501C.0102.
new text end

Sec. 6.

new text begin [501C.0106] COMMON LAW OF TRUSTS; PRINCIPLES OF EQUITY.
new text end

new text begin The common law of trusts and principles of equity supplement this chapter, except
to the extent modified by this chapter or another law of this state.
new text end

Sec. 7.

new text begin [501C.0107] GOVERNING LAW.
new text end

new text begin (a) The meaning and legal effect of the terms of a trust are determined by:
new text end

new text begin (1) the law of the jurisdiction designated in the terms of the trust unless the
application of that jurisdiction's law is contrary to a strong public policy of the jurisdiction
having the most significant relationship to the matter at issue. The mere fact that a
jurisdiction having the most significant relationship to the matter at issue has a law
contrary to the law of the designated jurisdiction does not, standing alone, indicate a
strong public policy contrary to that of the designated jurisdiction; or
new text end

new text begin (2) in the absence of a controlling designation in the terms of the trust, the law of the
jurisdiction having the most significant relationship to the matter at issue.
new text end

new text begin (b) For purposes of this section, factors to consider in determining which jurisdiction
has the most significant relationship to the matter at issue include the place of the trust's
creation, the location of trust property, and the domicile of the settlor, the trustee, and the
beneficiaries.
new text end

Sec. 8.

new text begin [501C.0108] PRINCIPAL PLACE OF ADMINISTRATION.
new text end

new text begin (a) Without precluding other means for establishing a sufficient connection with
the designated jurisdiction, terms of a trust designating the initial principal place of
administration are valid and controlling if:
new text end

new text begin (1) a trustee's principal place of business is located in, or a trustee is a resident
of, the designated jurisdiction; or
new text end

new text begin (2) all or part of the administration occurs in the designated jurisdiction.
new text end

new text begin (b) A trustee is under a continuing duty to administer the trust at a place appropriate
to its purposes, its administration, and the interests of the beneficiaries.
new text end

new text begin (c) Without precluding the right of the court to order, approve, or disapprove a
transfer, the trustee, in furtherance of the duty prescribed by paragraph (b), may transfer
the trust's principal place of administration to another state or to a jurisdiction outside of
the United States.
new text end

new text begin (d) The trustee shall notify the qualified beneficiaries of a proposed transfer of a
trust's principal place of administration not less than 60 days before initiating the transfer;
provided that the trustee may initiate the transfer at any time after the notice if all of the
qualified beneficiaries agree in writing to an earlier effective date or waive the right to
object to the transfer in writing, or upon court approval. The notice of proposed transfer
must include:
new text end

new text begin (1) the name of the jurisdiction to which the principal place of administration is to
be transferred;
new text end

new text begin (2) the address and telephone number at the new location at which the trustee can
be contacted;
new text end

new text begin (3) an explanation of the reasons for the proposed transfer;
new text end

new text begin (4) the date on which the proposed transfer is anticipated to occur; and
new text end

new text begin (5) the date, not less than 60 days after giving the notice, by which the qualified
beneficiary must notify the trustee of an objection to the proposed transfer.
new text end

new text begin (e) The authority of a trustee under this section to transfer a trust's principal place of
administration terminates if a qualified beneficiary notifies the trustee of an objection to
the proposed transfer on or before the date specified in the notice. If the trustee receives
an objection from a qualified beneficiary, the trustee shall not transfer the principal place
of administration absent court approval.
new text end

new text begin (f) Notwithstanding paragraphs (a) to (e), a trustee may transfer some or all of the
trust's assets to a successor trustee designated in the terms of the trust or appointed pursuant
to section 501C.0704 even if the successor trustee has a principal place of business or
residence in a jurisdiction that is different from the trust's principal place of administration.
new text end

Sec. 9.

new text begin [501C.0109] METHODS AND WAIVER OF NONJUDICIAL NOTICE.
new text end

new text begin (a) Notice to a person under this chapter or the sending of a document to a person
under this chapter must be accomplished in a manner reasonably suitable under the
circumstances and that is likely to result in receipt of the notice or document. Permissible
methods of notice or for sending a document include first-class mail, personal delivery,
delivery to the person's last known place of residence or place of business, or a properly
directed facsimile or electronic message.
new text end

new text begin (b) Notice otherwise required under this chapter or a document otherwise required to
be sent under this chapter need not be provided to a person whose identity is unknown or
whose location is unknown and not reasonably ascertainable by the trustee after making
reasonable efforts to locate the person.
new text end

new text begin (c) Notice under this chapter or the sending of a document under this chapter may be
waived in writing by the person to be notified or sent the document.
new text end

new text begin (d) Notice of a judicial proceeding must be given as provided in sections 501C.0201
to 501C.0208.
new text end

Sec. 10.

new text begin [501C.0110] OTHERS TREATED AS QUALIFIED BENEFICIARIES.
new text end

new text begin (a) Whenever notice to qualified beneficiaries of a trust is required under this
chapter, the trustee must also give notice to any other beneficiary who has sent the trustee
a request for notice.
new text end

new text begin (b) A charitable organization expressly designated to receive distributions under
the terms of a charitable trust has the rights of a qualified beneficiary under this chapter
if the charitable organization, on the date the charitable organization's qualification is
being determined:
new text end

new text begin (1) is a distributee or permissible distributee of trust income or principal;
new text end

new text begin (2) would be a distributee or permissible distributee of trust income or principal
upon the termination of the interests of other distributees or permissible distributees then
receiving or eligible to receive distributions; or
new text end

new text begin (3) would be a distributee or permissible distributee of trust income or principal if
the trust terminated on that date.
new text end

new text begin (c) The attorney general of this state has the rights of a qualified beneficiary with
respect to a charitable trust having its principal place of administration in this state.
new text end

Sec. 11.

new text begin [501C.0111] NONJUDICIAL SETTLEMENT AGREEMENTS.
new text end

new text begin (a) For purposes of this section, "interested persons" means persons whose consent
would be required in order to achieve a binding settlement were the settlement to be
approved by the court.
new text end

new text begin (b) Except as otherwise provided in paragraph (c), interested persons may enter into
a binding nonjudicial settlement agreement with respect to any matter involving a trust.
new text end

new text begin (c) A nonjudicial settlement agreement is valid only to the extent it does not violate
a material purpose of the trust and includes terms and conditions that could be properly
approved by the court under this chapter or other applicable law.
new text end

new text begin (d) Matters that may be resolved by a nonjudicial settlement agreement include:
new text end

new text begin (1) the interpretation or construction of the terms of the trust;
new text end

new text begin (2) the approval of a trustee's report or accounting;
new text end

new text begin (3) direction to a trustee to refrain from performing a particular act or the grant to a
trustee of any necessary or desirable power;
new text end

new text begin (4) the resignation or appointment of a trustee and the determination of a trustee's
compensation;
new text end

new text begin (5) transfer of a trust's principal place of administration; and
new text end

new text begin (6) liability of a trustee for an action relating to the trust.
new text end

new text begin (e) Any interested person may request that the court approve a nonjudicial settlement
agreement, to determine whether the representation as provided in sections 501C.0301 to
501C.0305 was adequate, and to determine whether the agreement contains terms and
conditions the court could have properly approved.
new text end

Sec. 12.

new text begin [501C.0112] RULES OF CONSTRUCTION.
new text end

new text begin The rules of construction that apply in this state to the interpretation of and
disposition of property by will also apply as appropriate to the interpretation of the terms
of a trust and the disposition of the trust property.
new text end

ARTICLE 2

JUDICIAL PROCEEDINGS

Section 1.

new text begin [501C.0201] ROLE OF COURT IN ADMINISTRATION OF TRUST
AND NATURE OF JUDICIAL PROCEEDING.
new text end

new text begin (a) An interested person may petition the district court and invoke its jurisdiction
as provided in sections 501C.0201 to 501C.0208 for those matters specified in section
501C.0202.
new text end

new text begin (b) As used in sections 501C.0201 to 501C.0208, "interested person" includes an
acting trustee, any person named as successor trustee under the trust instrument, any
person seeking court appointment as trustee whether or not named in the trust instrument,
a beneficiary, a creditor, and any other person having a property or other right in or claim
against the assets of the trust. Interested person also includes a fiduciary representing an
interested person and any other person acting in a representative capacity as provided in
sections 501C.0301 to 501C.0305, any person who takes action with respect to a trust in
the absence of an acting trustee or otherwise within the meaning of section 501C.0701,
an agent to whom a trustee has delegated a duty or power within the meaning of section
501C.0807, and any person with a power to direct the trustee within the meaning of
section 501C.0808. The meaning of interested person, as it relates to a particular person,
may vary from time to time and must be determined according to the particular purposes
of, and matter involved in, any petition.
new text end

new text begin (c) The petition shall specify whether the interested person is invoking the
jurisdiction of the district court as an in rem proceeding or as an in personam proceeding.
If the petition designates an in rem proceeding, the district court's in rem jurisdiction is
invoked, and sections 501C.0203, subdivision 1, and 501C.0204, subdivision 1, govern
the proceeding. If the petition designates an in personam proceeding, the district court's in
personam jurisdiction is invoked, and sections 501C.0203, subdivision 2, and 501C.0204,
subdivision 2, govern the proceeding.
new text end

new text begin (1) In the absence of a designation of an in rem or an in personam proceeding by
the petitioner, the district court's in rem jurisdiction is invoked, and sections 501C.0203,
subdivision 1, and 501C.0204, subdivision 1, govern the proceeding.
new text end

new text begin (2) If the district court's in rem jurisdiction is invoked, the district court shall retain
jurisdiction as a proceeding in rem, until jurisdiction is transferred to another court or
terminated by court order.
new text end

new text begin (3) If the district court's in personam jurisdiction is invoked, the trust is not subject
to continuing jurisdiction unless otherwise ordered by the court.
new text end

new text begin (4) Notwithstanding the designation of in personam jurisdiction as set forth in the
petition, the district court, on the request of any interested person, may invoke the in rem
jurisdiction of the district court and require compliance with the order for hearing and
notice provisions set forth in section 501C.0203, subdivision 1.
new text end

new text begin (d) A trust is not subject to continuing court supervision as a court-supervised trust
except as provided in section 501C.0205 or as otherwise ordered by the court. If the
district court assumes court supervision of the trust, all further court proceedings with
respect to the trust shall be maintained under the district court's in rem jurisdiction.
new text end

Sec. 2.

new text begin [501C.0202] SUBJECT MATTER OF JUDICIAL PROCEEDINGS.
new text end

new text begin A judicial proceeding involving a trust may relate to one or more of the following
matters:
new text end

new text begin (1) to confirm an action taken by a trustee;
new text end

new text begin (2) upon the filing of an account, to settle and allow the account;
new text end

new text begin (3) to determine the persons having an interest in the income or principal of the trust
and the nature and extent of their interests;
new text end

new text begin (4) to construe, interpret, or reform the terms of a trust, or authorize a deviation from
the terms of a trust, including a proceeding involving section 501B.31;
new text end

new text begin (5) to approve payment of the trustee's, attorney, or accountant fees, or any other
fees to be charged against the trust;
new text end

new text begin (6) to confirm the appointment of a trustee;
new text end

new text begin (7) to accept a trustee's resignation and discharge the trustee from the trust as
provided in section 501C.0705;
new text end

new text begin (8) to require a trustee to account;
new text end

new text begin (9) to remove a trustee as provided in section 501C.0706;
new text end

new text begin (10) to appoint a successor trustee when required by the terms of the trust instrument
or when by reason of death, resignation, removal, or other cause there is no acting trustee;
new text end

new text begin (11) to appoint an additional trustee or special fiduciary whether or not a vacancy in
trusteeship exists as provided in section 501C.0704;
new text end

new text begin (12) to confirm an act taken by a person with respect to a trust while there was no
acting trustee or otherwise in compliance with section 501C.0701;
new text end

new text begin (13) to subject a trust to or remove a trust from continuing court supervision under
section 501C.0205;
new text end

new text begin (14) to mortgage, lease, sell, or otherwise dispose of real property held by the trustee
notwithstanding any contrary provision of the trust instrument;
new text end

new text begin (15) to suspend the powers and duties of a trustee in military service or war service,
in accordance with section 525.95, and to order further action authorized in that section;
new text end

new text begin (16) to secure compliance with the provisions of sections 501B.33 to 501B.45, in
accordance with section 501B.41, relating to charitable trusts;
new text end

new text begin (17) to determine the validity of a disclaimer under sections 524.2-1101 to
524.2-1116;
new text end

new text begin (18) to transfer the trust's principal place of administration as provided in section
501C.0108;
new text end

new text begin (19) to redress a breach of trust;
new text end

new text begin (20) to terminate a trust;
new text end

new text begin (21) to divide a trust or to merge two or more trusts as provided in section 501C.0417;
new text end

new text begin (22) to approve a nonjudicial settlement as provided in section 501C.0111;
new text end

new text begin (23) to approve, modify, or object to a proposed trust decanting as provided in
section 502.851; or
new text end

new text begin (24) to instruct the trustee regarding any matter involving the trust's administration
or the discharge of the trustee's duties, including a request for instructions and an action to
declare rights.
new text end

Sec. 3.

new text begin [501C.0203] ORDER FOR HEARING AND NOTICE.
new text end

new text begin Subdivision 1. new text end

new text begin In rem judicial proceedings. new text end

new text begin Upon the filing of a petition under the
district court's in rem jurisdiction by an interested person, the court shall, by order, fix a time
and place for a hearing. Notice of the judicial proceeding must be given by an interested
person as follows: (1) by publishing, at least 20 days before the date of the hearing, a copy
of the order for hearing one time in a legal newspaper for the county in which the petition is
filed; and (2) by mailing, at least 15 days before the date of the hearing, a copy of the order
for hearing to those current trustees and qualified beneficiaries of the trust whose identity
is known and whose location is known or reasonably ascertainable to the petitioner after
making reasonable efforts to locate such persons. In the case of a qualified beneficiary who
is a minor or an incapacitated person as defined in section 524.5-102, notice of the judicial
proceeding shall also be given to any representative person acting on behalf of the qualified
beneficiary in accordance with the provisions of sections 501C.0301 to 501C.0305 who is
known to the petitioner. The district court shall have the discretion to order that notice of
the judicial proceeding may be given in any other manner as the court directs.
new text end

new text begin Subd. 2. new text end

new text begin In personam judicial proceedings. new text end

new text begin Upon the filing of a petition under the
district court's in personam jurisdiction by an interested person, the court shall, by order,
fix a time and place for hearing. Notice of the judicial proceeding must be given by an
interested person to the current trustees and the qualified beneficiaries in the same manner
as set forth under Rule 4 of the Rules of Civil Procedure by serving a copy of the order for
hearing and the petition at least 15 days prior to the hearing unless waived in writing by the
current trustees and the qualified beneficiaries. In the case of a qualified beneficiary who is
a minor or an incapacitated person as defined in section 524.5-102, notice of the judicial
proceeding shall also be given to any representative person acting on behalf of the qualified
beneficiary in accordance with the provisions of sections 501C.0301 to 501C.0305 who is
known to the petitioner. The district court shall have the discretion to order that notice of
the judicial proceeding may be given in any other manner as the court directs.
new text end

Sec. 4.

new text begin [501C.0204] ORDER AND APPEAL.
new text end

new text begin Subdivision 1. new text end

new text begin In rem judicial proceedings. new text end

new text begin Upon the hearing of a petition
under the district court's in rem jurisdiction, the court shall make an order it considers
appropriate. The order is binding in rem upon the trust estate and upon the interests of all
beneficiaries, vested or contingent, even though unascertained or not in being. An appeal
from an order which, in effect, determines the petition may be taken by any party after
service by any party of written notice of its filing as provided under the Rules of Appellate
Procedure or, if no notice is served, within six months after the filing of the order.
new text end

new text begin Subd. 2. new text end

new text begin In personam judicial proceedings. new text end

new text begin Upon the hearing of a petition under
the district court's in personam jurisdiction, the court shall make an order it considers
appropriate. The order is binding on (1) a party who is served with notice of the judicial
proceeding, (2) a party who appears in the judicial proceeding, and (3) any other party who
may be bound by such parties as described in sections 501C.0301 to 501C.0305. An appeal
from an order which, in effect, determines the petition may be taken by any party after
service by any party of written notice of its filing as provided under the Rules of Appellate
Procedure or, if no notice is served, within six months after the filing of the order.
new text end

Sec. 5.

new text begin [501C.0205] COURT-SUPERVISED TRUSTS.
new text end

new text begin (a) A person appointed as trustee of a trust or any interested person may file in the
district court an ex parte petition to confirm the appointment of the trustee and specify
the manner in which the trustee must qualify for appointment. Any such petition must be
filed as an in rem proceeding in compliance with section 501C.0203, subdivision 1. Upon
consideration of the petition, the court shall make an order it considers appropriate.
new text end

new text begin (b) A trustee whose appointment has been confirmed by court order under this
section or a trustee otherwise subject to continuing court supervision by court order must
file with the court administrator of the district court an inventory containing a list of all
property belonging to the trust. The trustee shall render to the court, at least annually, a
verified account containing a complete inventory of the trust assets and itemized principal
and income accounts. This section does not apply to trusts established in connection with
bonds issued under chapter 469.
new text end

Sec. 6.

new text begin [501C.0206] PERSONAL JURISDICTION OVER TRUSTEE AND
BENEFICIARY.
new text end

new text begin (a) By accepting the trusteeship of a trust having its principal place of administration
in this state or by moving the principal place of administration to this state, the trustee
submits to the personal jurisdiction of the courts of this state regarding any matter
involving the trust.
new text end

new text begin (b) With respect to their interests in the trust, the beneficiaries of a trust having
its principal place of administration in this state are subject to the personal jurisdiction
of the courts of this state regarding any matter involving the trust. By not releasing or
disclaiming the beneficiary's beneficial interest in the trust, a beneficiary of a trust having
its principal place of administration in this state submits to the personal jurisdiction of the
courts of this state regarding any matter involving the trust.
new text end

new text begin (c) This section does not preclude other methods of obtaining personal jurisdiction
over a trustee, beneficiary, or other person receiving property from the trust.
new text end

Sec. 7.

new text begin [501C.0207] VENUE.
new text end

new text begin (a) Except as otherwise provided in paragraph (b), venue for a judicial proceeding
involving a trust is as follows:
new text end

new text begin (1) in the case of a trust created by will, in the district court for (i) the county of this
state where the will was probated, (ii) the county of this state where a trustee having
custody of part or all of the trust assets resides or has a trust office, or (iii) the county of
this state in which the trust's principal place of administration is or will be located upon
approval by the court;
new text end

new text begin (2) in the case of a nontestamentary trust, in the district court for (i) the county
of this state where a trustee having custody of part or all of the trust assets resides or
has a trust office, or (ii) the county of this state in which the trust's principal place of
administration is or will be located upon approval by the court; or
new text end

new text begin (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 end

new text begin (b) In the case of a trust with respect to which there have been prior court
proceedings in this state, a petition under sections 501C.0201 to 501C.0206 must be filed
in the court in which the prior proceedings were held, absent approval from the prior court.
new text end

Sec. 8.

new text begin [501C.0208] APPLICATION.
new text end

new text begin Sections 501C.0201 to 501C.0207 do not limit or abridge the power or jurisdiction
of the court over trusts, trustees, and beneficiaries.
new text end

ARTICLE 3

REPRESENTATION

Section 1.

new text begin [501C.0301] REPRESENTATION: BASIC EFFECT.
new text end

new text begin (a) Notice to a person who may represent and bind another person under sections
501C.0302 to 501C.0305 has the same effect as if notice were given directly to the
other person.
new text end

new text begin (b) The consent of a person who may represent and bind another person under
sections 501C.0302 to 501C.0305 is binding on the person represented unless the person
represented objects to the representation before the consent would otherwise have been
effective. The provisions of this paragraph shall not apply to representation under section
501C.0302.
new text end

new text begin (c) Except as otherwise provided in sections 501C.0411 and 501C.0602, a person
who under sections 501C.0302 to 501C.0305 may represent a settlor who lacks capacity
may receive notice and give a binding consent on the settlor's behalf.
new text end

new text begin (d) A settlor may not represent and bind a beneficiary under sections 501C.0302
to 501C.0305 with respect to the termination or modification of a trust under section
501C.0411, paragraph (a).
new text end

new text begin (e) The settlor or another person, including one or more beneficiaries of the trust,
designated by the terms of the trust instrument to receive information from the trustee
concerning the administration of the trust and the material facts necessary to protect the
beneficiaries' interests in the manner described in section 501C.0813, paragraph (b), shall
be a representative of the beneficiaries with respect to the limitations period on judicial
proceedings against a trustee under section 501C.1005, paragraph (a).
new text end

Sec. 2.

new text begin [501C.0302] REPRESENTATION BY HOLDER OF A GENERAL
POWER.
new text end

new text begin For purposes of giving notice, waiving notice, initiating a proceeding, granting
consent or approval, or objecting with regard to any proceedings under this chapter, the
sole holder or all co-holders of a presently exercisable or testamentary general power
of appointment, power of revocation, or unlimited power of withdrawal are deemed
to represent and act for beneficiaries to the extent that their interests as permissible
appointees, takers in default, or otherwise are subject to the power.
new text end

Sec. 3.

new text begin [501C.0303] REPRESENTATION BY FIDUCIARIES AND PARENTS.
new text end

new text begin (a) To the extent there is no conflict of interest between the representative and the
person represented or among those being represented with respect to a particular question
or dispute:
new text end

new text begin (1) a conservator may represent and bind the estate that the conservator controls;
new text end

new text begin (2) an agent having authority to act with respect to the particular question or dispute
may represent and bind the principal;
new text end

new text begin (3) a trustee may represent and bind the beneficiaries of the trust;
new text end

new text begin (4) a personal representative of a decedent's estate may represent and bind persons
interested in the estate; and
new text end

new text begin (5) a parent may represent and bind the parent's minor or unborn child if a
conservator for the child has not been appointed.
new text end

new text begin (b) If a disagreement arises between parents seeking to represent the same minor
child:
new text end

new text begin (1) the parent who is a beneficiary of the trust that is the subject of the representation
is entitled to represent the minor child;
new text end

new text begin (2) if both parents are beneficiaries of the trust that is the subject of the representation,
the parent who is a lineal descendent of the settlor is entitled to represent the minor child;
new text end

new text begin (3) if neither parent is a beneficiary of the trust that is the subject of the representation,
the parent who is a lineal descendent of the settlor is entitled to represent the minor child; or
new text end

new text begin (4) if neither parent is a beneficiary or a lineal descendent of the settlor of the
trust that is the subject of the representation, a guardian ad litem must be appointed to
represent the minor child.
new text end

Sec. 4.

new text begin [501C.0304] REPRESENTATION BY PERSON HAVING
SUBSTANTIALLY IDENTICAL INTEREST.
new text end

new text begin Unless otherwise represented under section 501C.0302, 501C.0303, or 501C.0305, a
minor, an incapacitated or unborn individual, or a person whose identity or location is
unknown and not reasonably ascertainable after making reasonable efforts to locate such
person, may be represented by and bound by another having a substantially identical
interest with respect to the particular question or dispute, but only to the extent there is no
conflict of interest between the representative and the person represented.
new text end

Sec. 5.

new text begin [501C.0305] REPRESENTATION BY COURT; APPOINTMENT OF
REPRESENTATIVE.
new text end

new text begin (a) In any in rem proceeding, if a person with an interest in a trust is a minor or an
incapacitated person as defined in section 524.5-102 and has no conservator within the
state, or if a person with an interest in a trust is unborn, unascertained or a person whose
identity or address is unknown and not reasonably ascertainable, the court shall represent
that person, unless the court appoints a representative to represent the person.
new text end

new text begin (b) As to any other matter arising under this chapter, whether or not a judicial
proceeding concerning the trust is pending, if the court determines that a person
with an interest in a trust is not represented under sections 501C.0301 to 501C.0304,
or that the otherwise available representation might be inadequate, the court may
appoint a representative on behalf of such unrepresented person. The appointment of a
representative pursuant to this section shall constitute a determination by the court that
such appointment is appropriate.
new text end

new text begin (c) Any representative provided for in this section may be appointed upon
application of the trustee or of any other person with an interest in a trust, or by the court
on its own motion.
new text end

new text begin (d) In making decisions, the court or a representative, as the case may be, may
consider general benefit accruing to the living members of the represented person's family.
new text end

ARTICLE 4

CREATION, VALIDITY, MODIFICATION, AND TERMINATION OF TRUST

Section 1.

new text begin [501C.0401] METHODS OF CREATING TRUST.
new text end

new text begin (a) A trust may be created by:
new text end

new text begin (1) transfer of property to another person as trustee during the settlor's lifetime or by
will or other disposition taking effect upon the settlor's death;
new text end

new text begin (2) declaration by the owner of property that the owner holds identifiable property
as trustee; or
new text end

new text begin (3) exercise of a power of appointment in favor of a trustee.
new text end

new text begin (b) If a transfer of property is made to one person and the purchase price is paid by
another person, a resulting trust is presumed to arise in favor of the person by whom
the purchase price is paid, except:
new text end

new text begin (1) if the person by whom the purchase price was paid manifests a contrary intention,
no resulting trust is presumed to arise;
new text end

new text begin (2) if the transferee is a spouse, child, or other natural object of bounty of the payor,
a gift in favor of the transferee is presumed and no resulting trust is presumed to arise; and
new text end

new text begin (3) if the transfer is made to accomplish an illegal purpose, no resulting trust is
presumed to arise unless it is needed to prevent unjust enrichment of the transferee.
new text end

new text begin (c) Every legal estate and interest not embraced in an express trust and not otherwise
disposed of remains in the settlor.
new text end

Sec. 2.

new text begin [501C.0402] REQUIREMENTS FOR CREATION.
new text end

new text begin (a) A trust is created only if:
new text end

new text begin (1) the settlor has capacity to transfer property free from trust, except that if a trust is
a revocable trust, the settlor has capacity as required under section 501C.0601;
new text end

new text begin (2) the settlor indicates an intention to create the trust;
new text end

new text begin (3) the trust has a definite beneficiary or is:
new text end

new text begin (i) a charitable trust; or
new text end

new text begin (ii) a trust for a noncharitable purpose, as provided in section 501C.0409; and
new text end

new text begin (4) the trustee has duties to perform.
new text end

new text begin (b) A beneficiary is definite if the beneficiary can be ascertained now or in the
future, subject to any applicable rule against perpetuities.
new text end

new text begin (c) A power in a trustee to select a beneficiary from an indefinite class is valid. If
the power is not exercised within a reasonable time, the power fails and the property
subject to the power passes to the persons who would have taken the property if the power
had not been conferred.
new text end

new text begin (d) No trust is invalid or terminated, and title to trust assets is not merged, because
the trustee or trustees are the same person or persons as the beneficiaries of the trust.
new text end

new text begin (e) Passive trusts of real or personal property are abolished. An attempt to create a
passive trust vests the entire estate granted in the beneficiary.
new text end

Sec. 3.

new text begin [501C.0403] TRUSTS CREATED IN OTHER JURISDICTIONS.
new text end

new text begin A trust not created by will is validly created if its creation complies with the law
of jurisdiction in which the trust instrument is executed, or the law of the jurisdiction in
which, at the time of execution:
new text end

new text begin (1) the settlor was domiciled, had a place of abode, or was a national;
new text end

new text begin (2) a trustee was domiciled or had a place of business; or
new text end

new text begin (3) any trust property was located.
new text end

Sec. 4.

new text begin [501C.0404] TRUST PURPOSES.
new text end

new text begin A trust may be created only to the extent its purposes are lawful, not contrary to
public policy, and possible to achieve. A trust and its terms must be for the benefit of its
beneficiaries.
new text end

Sec. 5.

new text begin [501C.0406] CREATION OF TRUST INDUCED BY FRAUD, DURESS,
OR UNDUE INFLUENCE.
new text end

new text begin A trust is void to the extent its creation was induced by fraud, duress, or undue
influence.
new text end

Sec. 6.

new text begin [501C.0407] EVIDENCE OF ORAL TRUST.
new text end

new text begin The formal expression of intent to create a trust can be either written or oral subject
to the requirements of sections 513.04 and 524.2-502. The creation of an oral trust and its
terms must be established by clear and convincing evidence.
new text end

Sec. 7.

new text begin [501C.0409] NONCHARITABLE TRUST WITHOUT ASCERTAINABLE
BENEFICIARY.
new text end

new text begin Except as otherwise provided by law, the following rules apply:
new text end

new text begin (1) A trust may be created for a noncharitable purpose without a definite or definitely
ascertainable beneficiary or for a noncharitable but otherwise valid purpose to be selected
by the trustee. The trust may not be enforced for more than 21 years.
new text end

new text begin (2) A trust authorized by this section may be enforced by a person appointed in the
terms of the trust or, if no person is so appointed, by a person appointed by the court.
new text end

new text begin (3) Property of a trust authorized by this section may be applied only to its intended
use, except to the extent the court determines that the value of the trust property exceeds
the amount required for the intended use. Except as otherwise provided in the terms of
the trust, property not required for the intended use must be distributed to the settlor, if
then living, otherwise to the settlor's successors in interest.
new text end

Sec. 8.

new text begin [501C.0410] MODIFICATION OR TERMINATION OF TRUST;
PROCEEDINGS FOR APPROVAL OR DISAPPROVAL.
new text end

new text begin (a) In addition to the methods of termination prescribed by sections 501C.0411 to
501C.0414, a trust terminates to the extent the trust is revoked or expires pursuant to its
terms, no purpose of the trust remains to be achieved, or the purposes of the trust have
become unlawful, contrary to public policy, or impossible to achieve.
new text end

new text begin (b) A proceeding to approve or disapprove a proposed modification or termination
under sections 501C.0411 to 501C.0416, or trust combination or division under section
501C.0417, may be commenced by a trustee or beneficiary, and a proceeding to approve
or disapprove a proposed modification or termination under section 501C.0411 may be
commenced by the settlor.
new text end

Sec. 9.

new text begin [501C.0411] MODIFICATION OR TERMINATION OF
NONCHARITABLE IRREVOCABLE TRUST BY CONSENT.
new text end

new text begin (a) A noncharitable irrevocable trust may be modified or terminated upon consent of
the settlor and all beneficiaries, even if the modification or termination is inconsistent with
a material purpose of the trust. A settlor's power to consent to a trust's modification or
termination may be exercised by an agent under a power of attorney only to the extent
expressly authorized by the power of attorney or the terms of the trust; by the settlor's
conservator with the approval of the court supervising the conservatorship if an agent is
not so authorized; or by the settlor's guardian with the approval of the court supervising
the guardianship if an agent is not so authorized and a conservator has not been appointed.
new text end

new text begin (b) A noncharitable irrevocable trust may be terminated upon consent of all of the
beneficiaries if the court concludes that continuance of the trust is not necessary to achieve
any material purpose of the trust. A noncharitable irrevocable trust may be modified
upon consent of all of the beneficiaries if the court concludes that modification is not
inconsistent with a material purpose of the trust.
new text end

new text begin (c) The court is not precluded from modifying or terminating a trust because the
trust instrument contains spendthrift provisions.
new text end

new text begin (d) Upon termination of a trust under paragraph (a) or (b), the trustee shall distribute
the trust property as agreed by the beneficiaries.
new text end

new text begin (e) If not all of the beneficiaries consent to a proposed modification or termination
of the trust under paragraph (a) or (b), the modification or termination may be approved
by the court if the court is satisfied that:
new text end

new text begin (1) if all of the beneficiaries had consented, the trust could have been modified or
terminated under this section; and
new text end

new text begin (2) the interests of a beneficiary who does not consent will be adequately protected.
new text end

Sec. 10.

new text begin [501C.0412] MODIFICATION OR TERMINATION BECAUSE OF
UNANTICIPATED CIRCUMSTANCES OR INABILITY TO ADMINISTER
TRUST EFFECTIVELY.
new text end

new text begin (a) The court may modify the administrative or dispositive terms of a trust or
terminate the trust if, because of circumstances not anticipated by the settlor, modification
or termination will further the purposes of the trust. To the extent practicable, the
modification must be made in accordance with the settlor's probable intention.
new text end

new text begin (b) The court may modify the administrative terms of a trust if continuation of the trust
on its existing terms would be impracticable or wasteful or impair the trust's administration.
new text end

new text begin (c) Upon termination of a trust under this section, the trustee shall distribute the trust
property in a manner consistent with the order of the court.
new text end

Sec. 11.

new text begin [501C.0414] MODIFICATION OR TERMINATION OF UNECONOMIC
TRUST.
new text end

new text begin (a) After notice to the qualified beneficiaries, the trustee of a trust consisting of
trust property having a total value less than $50,000 may terminate the trust if the
trustee concludes that the value of the trust property is insufficient to justify the cost
of administration.
new text end

new text begin (b) The court may modify or terminate a trust or remove the trustee and appoint a
different trustee if it determines that the value of the trust property is insufficient to justify
the cost of administration.
new text end

new text begin (c) Upon termination of a trust under this section, the trustee shall distribute the trust
property in a manner consistent with the purposes of the trust.
new text end

new text begin (d) This section does not apply to an easement for conservation or preservation.
new text end

Sec. 12.

new text begin [501C.0415] REFORMATION TO CORRECT MISTAKES.
new text end

new text begin The court may reform the terms of a trust, even if unambiguous, to conform the
terms to the settlor's intention if it is proved by clear and convincing evidence what the
settlor's intention was and that the terms of the trust were affected by a mistake of fact or
law, whether in expression or inducement.
new text end

Sec. 13.

new text begin [501C.0416] MODIFICATION TO ACHIEVE SETTLOR'S TAX
OBJECTIVES.
new text end

new text begin To achieve settlor's tax objectives, the court may modify the terms of a trust in a
manner that is not contrary to the settlor's probable intention. The court may provide
that the modification has retroactive effect.
new text end

Sec. 14.

new text begin [501C.0417] COMBINATION AND DIVISION OF TRUSTS.
new text end

new text begin After notice to the qualified beneficiaries, a trustee may combine two or more trusts
into a single trust or divide a trust into two or more separate trusts, if the result does not
impair rights of any beneficiary or adversely affect achievement of the purposes of the trust.
new text end

ARTICLE 5

SPENDTHRIFT TRUSTS; CREDITOR'S CLAIMS

Section 1.

new text begin [501C.0502] SPENDTHRIFT PROVISION.
new text end

new text begin (a) A trust has a valid spendthrift provision if:
new text end

new text begin (1) the trust includes a provision that restricts both voluntary and involuntary
transfers of a beneficiary's interest; or
new text end

new text begin (2) by the terms of the trust instrument, the settlor manifests an intention to impose
restrictions on both voluntary and involuntary transfers of a beneficiary's interest.
new text end

new text begin (b) A term of a trust providing that the interest of a beneficiary is held subject to a
"spendthrift trust," or words of similar import, is sufficient to restrict both voluntary and
involuntary transfers of the beneficiary's interest.
new text end

new text begin (c) For the purposes of this section, neither a valid disclaimer nor the exercise of a
limited power of appointment is a voluntary transfer.
new text end

new text begin (d) A beneficiary may not transfer an interest in a trust in violation of a valid
spendthrift provision and a creditor or assignee of the beneficiary may not reach the
interest or a distribution by the trustee before its receipt by the beneficiary.
new text end

Sec. 2.

new text begin [501C.0504] RIGHT TO COMPEL DISTRIBUTION.
new text end

new text begin (a) Whether or not a trust contains a spendthrift provision, a creditor of a beneficiary
may not compel a distribution that is subject to the trustee's discretion, even if:
new text end

new text begin (1) the discretion is expressed in the form of a standard of distribution; or
new text end

new text begin (2) the trustee has abused the discretion.
new text end

new text begin (b) This section does not limit the right of a beneficiary to maintain a judicial
proceeding against a trustee for an abuse of discretion or failure to comply with a standard
for distribution.
new text end

new text begin (c) If the trustee's or cotrustee's discretion to make distributions for the trustee's or
cotrustee's own benefit is limited by an ascertainable standard, a creditor may not reach or
compel distribution of the beneficial interest except to the extent the interest would be
subject to the creditor's claim were the beneficiary not acting as trustee or cotrustee.
new text end

Sec. 3.

new text begin [501C.0505] CREDITOR'S CLAIM AGAINST SETTLOR.
new text end

new text begin Whether or not the terms of a trust contain a spendthrift provision, the following
rules apply:
new text end

new text begin (1) During the lifetime of the settlor, the property of a revocable trust is subject to
claims of the settlor's creditors.
new text end

new text begin (2) With respect to an irrevocable trust, a creditor or assignee of the settlor may
reach the maximum amount that can be distributed to or for the settlor's benefit. If a
trust has more than one settlor, the amount the creditor or assignee of a particular settlor
may reach may not exceed the settlor's interest in the portion of the trust attributable to
that settlor's contribution.
new text end

new text begin (3) After the death of a settlor, and subject to the settlor's right to direct the source
from which liabilities will be paid, the property of a trust that was revocable at the
settlor's death is subject to claims of the settlor's creditors, costs of administration of the
settlor's estate, the expenses of the settlor's funeral and disposal of remains, and statutory
allowances to a surviving spouse and children to the extent the settlor's probate estate is
inadequate to satisfy those claims, costs, expenses, and allowances.
new text end

Sec. 4.

new text begin [501C.0506] OVERDUE DISTRIBUTION.
new text end

new text begin (a) In this section, "mandatory distribution" means a distribution of income or
principal which the trustee is required to make to a beneficiary under the terms of the
trust, including a distribution upon termination of the trust. The term does not include a
distribution subject to the exercise of the trustee's discretion even if (1) the discretion is
expressed in the form of a standard of distribution, or (2) the terms of the trust authorizing
a distribution couple language of discretion with language of direction.
new text end

new text begin (b) Whether or not a trust contains a spendthrift provision, a creditor or assignee
of a beneficiary may reach a mandatory distribution of income or principal, including a
distribution upon termination of the trust, if the trustee has not made the distribution to the
beneficiary within a reasonable time after the designated distribution date.
new text end

Sec. 5.

new text begin [501C.0507] PERSONAL OBLIGATIONS OF TRUSTEE.
new text end

new text begin Trust property is not subject to personal obligations of the trustee, even if the trustee
becomes insolvent or bankrupt.
new text end

ARTICLE 6

REVOCABLE TRUSTS

Section 1.

new text begin [501C.0601] CAPACITY OF SETTLOR OF REVOCABLE TRUST.
new text end

new text begin The capacity required to create, amend, or revoke a revocable trust, or to direct the
actions of the trustee of a revocable trust, is the same as that required to make a will.
new text end

Sec. 2.

new text begin [501C.0602] REVOCATION OR AMENDMENT OF REVOCABLE
TRUST.
new text end

new text begin (a) Unless the terms of a trust expressly provide that the trust is revocable, the
settlor may not revoke or amend the trust.
new text end

new text begin (b) If a revocable trust is created or funded by more than one settlor:
new text end

new text begin (1) to the extent the trust consists of community property, the trust may be revoked
by either spouse acting alone but may be amended only by joint action of both spouses;
new text end

new text begin (2) to the extent the trust consists of property other than community property, each
settlor may revoke or amend the trust with regard to the portion of the trust property
attributable to that settlor's contribution; and
new text end

new text begin (3) upon the revocation or amendment of the trust by fewer than all of the settlors,
the trustee shall promptly notify the other settlors of the revocation or amendment.
new text end

new text begin (c) The settlor may revoke or amend a revocable trust:
new text end

new text begin (1) by substantial compliance with a method provided in the terms of the trust; or
new text end

new text begin (2) if the terms of the trust do not provide a method or the method provided in the
terms is not expressly made exclusive, by:
new text end

new text begin (i) if the trust is created pursuant to a writing, by another writing manifesting clear
and convincing evidence of the settlor's intent to revoke or amend the trust; or
new text end

new text begin (ii) if the trust is an oral trust, by any other method manifesting clear and convincing
evidence of the settlor's intent.
new text end

new text begin (d) Upon revocation of a revocable trust, the trustee shall deliver the trust property
as the settlor directs.
new text end

new text begin (e) A settlor's powers with respect to revocation, amendment, or distribution of
trust property may be exercised by an agent under a power of attorney only to the extent
expressly authorized by the terms of the trust or the power.
new text end

new text begin (f) A conservator of the settlor may exercise a settlor's powers with respect to
revocation, amendment, or distribution of trust property only with the approval of the
court supervising the conservatorship.
new text end

new text begin (g) A trustee who does not know that a trust has been revoked or amended is not
liable to the settlor or settlor's successors in interest for distributions made and other
actions taken on the assumption that the trust had not been amended or revoked.
new text end

Sec. 3.

new text begin [501C.0603] WRITTEN STATEMENT REGARDING TANGIBLE
PERSONAL PROPERTY.
new text end

new text begin A revocable trust may be amended by a written statement disposing of items of
tangible personal property not otherwise specifically disposed of by the settlor's will or
the trust instrument, other than money, coin collections, and property used in a trade or
business. To be effective as an amendment, the writing must be referred to in the trust
instrument, must either be in the handwriting of the settlor or signed by the settlor, and
must describe the items and the beneficiaries with reasonable certainty. The writing may
be referred to as one to be in existence at the time of the settlor's death; it may be prepared
before or after the execution of the trust instrument; it may be altered by the settlor after its
preparation; and it may be a writing which has no significance apart from its effect upon
the dispositions made by the trust instrument. A writing may include multiple writings
and if an item of tangible personal property is disposed of to different persons by different
writings, the most recent writing controls the disposition of the item.
new text end

Sec. 4.

new text begin [501C.0604] SETTLOR'S POWERS.
new text end

new text begin While a trust is revocable, rights of the beneficiaries are subject to the control of, and
the duties of the trustee are owed exclusively to, the settlor.
new text end

Sec. 5.

new text begin [501C.0605] LIMITATION ON ACTION CONTESTING VALIDITY OF
REVOCABLE TRUST; DISTRIBUTION OF TRUST PROPERTY.
new text end

new text begin (a) A person may commence a judicial proceeding to contest the validity of a trust
that was revocable immediately prior to the settlor's death within the earlier of:
new text end

new text begin (1) three years after the settlor's death; or
new text end

new text begin (2) 120 days after the trustee sent the person a copy of the trust instrument and a
notice informing the person of the trust's existence, of the trustee's name and address, and
of the time allowed for commencing a proceeding.
new text end

new text begin (b) Upon the death of the settlor of a trust that was revocable at the settlor's death,
the trustee may proceed to distribute the trust property in accordance with the terms of the
trust. The trustee is not subject to liability for doing so unless:
new text end

new text begin (1) the trustee knows of a pending judicial proceeding contesting the validity of
the trust; or
new text end

new text begin (2) a potential contestant has notified the trustee of a possible judicial proceeding
to contest the trust and a judicial proceeding is commenced within 60 days after the
contestant sent the notification.
new text end

new text begin (c) A beneficiary of a trust that is determined to have been invalid, in whole or
in part, is liable to return any distribution received, to the extent the invalidity applies
to the distribution.
new text end

ARTICLE 7

OFFICE OF TRUSTEE

Section 1.

new text begin [501C.0701] ACCEPTING OR DECLINING TRUSTEESHIP.
new text end

new text begin (a) Except as otherwise provided in paragraph (c), a person designated as trustee
accepts the trusteeship:
new text end

new text begin (1) by substantially complying with a method of acceptance provided in the terms
of the trust; or
new text end

new text begin (2) if the terms of the trust do not provide a method, or the method provided in
the terms is not expressly made exclusive, by accepting delivery of the trust property,
exercising powers or performing duties as trustee, or otherwise indicating acceptance
of the trusteeship.
new text end

new text begin (b) A person designated as trustee who has not yet accepted the trusteeship may
reject the trusteeship. A designated trustee who does not accept the trusteeship within a
reasonable time after knowing of the designation is deemed to have rejected the trusteeship.
new text end

new text begin (c) A person designated as trustee, without accepting the trusteeship, may:
new text end

new text begin (1) act to preserve the trust property if, within a reasonable time after acting, the
person sends a rejection of the trusteeship to the settlor or, if the settlor is dead or lacks
capacity, to a qualified beneficiary; and
new text end

new text begin (2) inspect or investigate trust property to determine potential liability or for any
other purpose.
new text end

Sec. 2.

new text begin [501C.0702] TRUSTEE'S BOND.
new text end

new text begin (a) A trustee shall give bond to secure performance of the trustee's duties only if the
court finds that a bond is needed to protect the interests of the beneficiaries or is required
by the terms of the trust and the court has not dispensed with the requirement.
new text end

new text begin (b) The court may specify the amount of a bond, its liabilities, and whether sureties
are necessary. The court may modify or terminate a bond at any time.
new text end

new text begin (c) A regulated financial-service institution qualified to do trust business in this state
need not give bond, even if required by the terms of the trust.
new text end

Sec. 3.

new text begin [501C.0703] COTRUSTEES.
new text end

new text begin (a) Cotrustees who are unable to reach a unanimous decision may act by majority
decision.
new text end

new text begin (b) If a vacancy occurs in a cotrusteeship, the remaining cotrustees may act for
the trust.
new text end

new text begin (c) A cotrustee must participate in the performance of a trustee's duties and powers
unless the cotrustee is unavailable to perform the duties or exercise the powers because
of absence, illness, disqualification under other law, or other temporary incapacity or the
cotrustee has properly delegated the performance of the function to another trustee.
new text end

new text begin (d) If a cotrustee is unavailable to perform duties or exercise the powers because
of absence, illness, disqualification under other law, or other temporary incapacity, and
prompt action is necessary to achieve the purposes of the trust or to avoid injury to the
trust property, the remaining cotrustee or a majority of the remaining cotrustees may
act for the trust.
new text end

new text begin (e) A trustee may delegate to a cotrustee the performance of any duties or powers
as prudent under the circumstances. Unless a delegation was irrevocable, a trustee may
revoke a delegation previously made.
new text end

new text begin (f) Except as otherwise provided in paragraph (g), a trustee who does not join in an
action of another trustee is not liable for the action.
new text end

new text begin (g) Each trustee shall exercise reasonable care to:
new text end

new text begin (1) prevent a cotrustee from committing a serious breach of trust; and
new text end

new text begin (2) compel a cotrustee to redress a serious breach of trust.
new text end

new text begin (h) A dissenting trustee who joins in an action at the direction of the majority of the
trustees and who notified any cotrustee of the dissent at or before the time of the action is
not liable for the action unless the action is a serious breach of trust.
new text end

Sec. 4.

new text begin [501C.0704] VACANCY IN TRUSTEESHIP; APPOINTMENT OF
SUCCESSOR.
new text end

new text begin (a) A vacancy in the trusteeship occurs if:
new text end

new text begin (1) a person designated as trustee rejects the trusteeship;
new text end

new text begin (2) a person designated as trustee cannot be identified or does not exist;
new text end

new text begin (3) a trustee resigns;
new text end

new text begin (4) a trustee is disqualified or removed;
new text end

new text begin (5) a trustee dies; or
new text end

new text begin (6) a guardian or conservator is appointed for an individual serving as trustee.
new text end

new text begin (b) If one or more cotrustees remain in office, a vacancy in trusteeship need not be
filled. A vacancy in a trusteeship must be filled if the trust has no remaining trustee.
new text end

new text begin (c) A vacancy in a trusteeship of a noncharitable trust that is required to be filled
must be filled in the following order of priority:
new text end

new text begin (1) by a person designated in the terms of the trust to act as successor trustee;
new text end

new text begin (2) by a person appointed by unanimous agreement of the qualified beneficiaries;
new text end

new text begin (3) by a person appointed pursuant to a nonjudicial settlement agreement as defined
in section 501C.0111; or
new text end

new text begin (4) by a person appointed by the court.
new text end

new text begin (d) A vacancy in a trusteeship of a charitable trust that is required to be filled must
be filled in the following order of priority:
new text end

new text begin (1) by a person designated in the terms of the trust to act as successor trustee;
new text end

new text begin (2) by a person selected by the charitable organizations expressly designated to
receive distributions under the terms of the trust if the attorney general concurs in the
selection; or
new text end

new text begin (3) by a person appointed by the court.
new text end

new text begin (e) Whether or not a vacancy in a trusteeship exists or is required to be filled, the
court may appoint an additional trustee or special fiduciary whenever the court considers
the appointment necessary for the administration of the trust.
new text end

Sec. 5.

new text begin [501C.0705] RESIGNATION OF TRUSTEE.
new text end

new text begin (a) A trustee may resign:
new text end

new text begin (1) upon notice to the qualified beneficiaries, the settlor, if living, and all cotrustees; or
new text end

new text begin (2) with the approval of the court.
new text end

new text begin (b) In approving a resignation, the court may issue orders and impose conditions
reasonably necessary for the protection of the trust property.
new text end

new text begin (c) Any liability of a resigning trustee or of any sureties on the trustee's bond for acts
or omissions of the trustee is not discharged or affected by the trustee's resignation.
new text end

Sec. 6.

new text begin [501C.0706] REMOVAL OF TRUSTEE.
new text end

new text begin (a) The settlor, a cotrustee, or a beneficiary may petition the court to remove a
trustee, or a trustee may be removed by the court on its own initiative.
new text end

new text begin (b) The court may remove a trustee if:
new text end

new text begin (1) the trustee has committed a serious breach of trust;
new text end

new text begin (2) lack of cooperation among cotrustees substantially impairs the administration of
the trust;
new text end

new text begin (3) the court determines that removal of the trustee best serves the interests of the
beneficiaries because of unfitness, unwillingness, or persistent failure of the trustee to
administer the trust effectively; or
new text end

new text begin (4) there has been a substantial change in circumstances or removal is requested by
all of the qualified beneficiaries, the court finds that removal of the trustee best serves the
interests of all of the beneficiaries and is not inconsistent with a material purpose of the
trust, and a suitable cotrustee or successor trustee is available.
new text end

new text begin (c) Pending a final decision on a petition to remove a trustee, or in lieu of or in
addition to removing a trustee, the court may order such appropriate relief under section
501C.1001, paragraph (b), as may be necessary to protect the trust property or the interests
of the beneficiaries.
new text end

Sec. 7.

new text begin [501C.0707] DELIVERY OF PROPERTY BY FORMER TRUSTEE.
new text end

new text begin (a) Unless a cotrustee remains in office or the court otherwise orders, and until the
trust property is delivered to a successor trustee or other person entitled to it, a trustee
who has resigned or been removed has the duties of a trustee and the powers necessary to
protect the trust property.
new text end

new text begin (b) A trustee who has resigned or been removed shall proceed expeditiously to
deliver the trust property within the trustee's possession to the cotrustee, successor trustee,
or other person entitled to it.
new text end

new text begin (c) Title to all trust property shall be owned by and vested in any successor trustee
without any conveyance, transfer, or assignment by the prior trustee.
new text end

Sec. 8.

new text begin [501C.0708] COMPENSATION OF TRUSTEE.
new text end

new text begin (a) If the terms of a trust do not specify the trustee's compensation, a trustee is
entitled to compensation that is reasonable under the circumstances.
new text end

new text begin (b) If the terms of a trust specify the trustee's compensation, the trustee is entitled to
be compensated as specified, but the court may allow more or less compensation if:
new text end

new text begin (1) the duties of the trustee are substantially different from those contemplated when
the trust was created; or
new text end

new text begin (2) the compensation specified by the terms of the trust would be unreasonably
low or high.
new text end

Sec. 9.

new text begin [501C.0709] REIMBURSEMENT OF EXPENSES.
new text end

new text begin (a) A trustee is entitled to be reimbursed out of the trust property, with interest
as appropriate, for:
new text end

new text begin (1) expenses that were properly incurred in the administration of the trust; and
new text end

new text begin (2) expenses that were not properly incurred in the administration of the trust, to the
extent necessary to prevent unjust enrichment of the trust.
new text end

new text begin (b) An advance by the trustee of money for the protection of the trust gives rise to a
lien against trust property to secure reimbursement with reasonable interest.
new text end

ARTICLE 8

DUTIES AND POWERS OF TRUSTEE

Section 1.

new text begin [501C.0801] DUTY TO ADMINISTER TRUST.
new text end

new text begin Upon acceptance of a trusteeship, the trustee shall administer the trust in good faith,
in accordance with its terms and purposes and the interests of the beneficiaries, and in
accordance with this chapter and all other applicable law.
new text end

Sec. 2.

new text begin [501C.0802] DUTY OF LOYALTY.
new text end

new text begin (a) A trustee owes a duty of loyalty to the beneficiaries. A trustee shall not place
the trustee's own interests above those of the beneficiaries.
new text end

new text begin (b) Subject to the rights of persons dealing with or assisting the trustee as provided
in section 501C.1012, a sale, encumbrance, or other transaction involving the investment
or management of trust property entered into by the trustee for the trustee's own personal
account or which is otherwise affected by a conflict between the trustee's fiduciary and
personal interests is voidable by a beneficiary affected by the transaction unless:
new text end

new text begin (1) the transaction was authorized by the terms of the trust;
new text end

new text begin (2) the transaction was approved by the court;
new text end

new text begin (3) the beneficiary did not commence a judicial proceeding within the time allowed
by section 501C.1005;
new text end

new text begin (4) the beneficiary consented to the trustee's conduct, ratified the transaction, or
released the trustee in compliance with section 501C.1009; or
new text end

new text begin (5) the transaction involves a contract entered into or claim acquired by the trustee
before the person became a trustee.
new text end

new text begin (c) A sale, encumbrance, or other transaction involving the investment or
management of trust property is presumed to be affected by a conflict between personal
and fiduciary interests if it is entered into by the trustee with:
new text end

new text begin (1) the trustee's spouse;
new text end

new text begin (2) the trustee's descendants, siblings, parents, or their spouses;
new text end

new text begin (3) an agent or an attorney of the trustee; or
new text end

new text begin (4) a corporation or other person or enterprise in which the trustee, or a person who
owns a significant interest in the trustee, has an interest that might affect the trustee's
best judgment.
new text end

new text begin (d) This section does not preclude the following transactions, if fair to the
beneficiaries:
new text end

new text begin (1) an agreement between a trustee and a beneficiary relating to the appointment
or compensation of the trustee;
new text end

new text begin (2) payment of reasonable compensation to the trustee;
new text end

new text begin (3) a transaction between a trust and another trust, decedent's estate, or
conservatorship of which the trustee is a fiduciary or in which a beneficiary has an interest;
new text end

new text begin (4) a deposit of trust money in a regulated financial service institution operated by
the trustee; or
new text end

new text begin (5) an advance by the trustee of money for the protection of the trust.
new text end

new text begin (e) The court may appoint a special fiduciary to make a decision with respect to any
proposed transaction that might violate this section if entered into by the trustee.
new text end

Sec. 3.

new text begin [501C.0803] IMPARTIALITY.
new text end

new text begin If a trust has two or more beneficiaries, the trustee shall administer the trust
impartially, giving due regard to the beneficiaries' respective interests.
new text end

Sec. 4.

new text begin [501C.0804] PRUDENT ADMINISTRATION.
new text end

new text begin A trustee shall administer the trust as a prudent person would, by considering the
purposes, terms, and distribution requirements of the trust and all relevant circumstances.
In satisfying this standard, the trustee shall exercise reasonable care, skill, and caution.
new text end

Sec. 5.

new text begin [501C.0807] DELEGATION BY TRUSTEE.
new text end

new text begin (a) A trustee may delegate to any person, even if the person is associated with the
trustee, duties and powers that a prudent trustee of comparable skills could properly
delegate under the circumstances. The trustee shall exercise reasonable care, skill, and
caution in:
new text end

new text begin (1) selecting an agent;
new text end

new text begin (2) establishing the scope and terms of the delegation, consistent with the purposes
and terms of the trust; and
new text end

new text begin (3) periodically reviewing the agent's actions in order to monitor the agent's
performance and that the agent is acting in compliance with the terms of the delegation.
new text end

new text begin (b) In performing a delegated function, an agent owes a duty to the trustee to
exercise reasonable care to comply with the terms of the delegation. This duty shall be
enforced by the trustee.
new text end

new text begin (c) A trustee who complies with paragraphs (a) and (b) is not liable to the
beneficiaries or to the trust for an action of the agent to whom the function was delegated.
new text end

new text begin (d) By accepting a delegation of powers or duties from the trustee of a trust that is
subject to the laws of this state, an agent submits to the jurisdiction of the courts of this state.
new text end

Sec. 6.

new text begin [501C.0808] DIRECTED TRUSTS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) The definitions in this section apply to this section.
new text end

new text begin (b) "Directing party" means any investment trust advisor, distribution trust advisor,
or trust protector as provided in this section.
new text end

new text begin (c) "Distribution trust advisor" means one or more persons given authority by the
governing instrument to direct, consent to, veto, or otherwise exercise all or any portion of
the distribution powers and discretions of the trust, including but not limited to authority
to make discretionary distributions of income or principal.
new text end

new text begin (d) "Excluded fiduciary" means any fiduciary that by the governing instrument is
directed to act in accordance with the exercise of specified powers by a directing party,
in which case such specified powers shall be deemed granted not to the fiduciary but to
the directing party and such fiduciary shall be deemed excluded from exercising such
specified powers. If a governing instrument provides that a fiduciary as to one or more
specified matters is to act, omit action, or make decisions only with the consent of a
directing party, then such fiduciary is an excluded fiduciary with respect to such matters.
A person may be an excluded fiduciary even if such person participated in the exercise of
(1) a power described in section 501C.0111 relating to nonjudicial settlement agreements,
(2) a power described in section 502.851 relating to decanting, (3) a permitted trustee
amendment, or (4) a similar power that invokes the provisions of this section with respect
to any new or existing trust.
new text end

new text begin (e) "Fiduciary" means any person expressly given one or more fiduciary duties by
the governing instrument, including but not limited to a trustee.
new text end

new text begin (f) "Governing instrument" means the instrument stating the terms of a trust,
including but not limited to any court order, or nonjudicial settlement agreement
establishing, construing, or modifying the terms of the trust in accordance with section
501C.0111 or 502.851, or other applicable law.
new text end

new text begin (g) "Investment trust advisor" means any one or more persons given authority by the
governing instrument to direct, consent to, or veto the exercise of all or any portion of the
investment powers of the trust.
new text end

new text begin (h) new text end new text begin "Power" means authority to take or withhold an action or decision, including
but not limited to an expressly specified power, the implied power necessary to exercise a
specified power, and authority inherent in a general grant of discretion.
new text end

new text begin (i) "Trust protector" means one or more persons given one or more of the powers
specified in subdivision 4, whether or not designated with the title of trust protector by
the governing instrument.
new text end

new text begin Subd. 2. new text end

new text begin Powers of investment trust advisor. new text end

new text begin An investment trust advisor may
be designated in the governing instrument of a trust. The powers of an investment trust
advisor may be exercised or not exercised in the sole and absolute discretion of the
investment trust advisor, and are binding on all other persons, including but not limited to
each beneficiary, fiduciary, excluded fiduciary, and any other party having an interest in
the trust. The governing instrument may use the title "investment trust advisor" or any
similar name or description demonstrating the intent to provide for the office and function
of an investment trust advisor. Unless the terms of the governing instrument provide
otherwise, the investment trust advisor has the authority to:
new text end

new text begin (1) direct the trustee with respect to the retention, purchase, transfer, assignment,
sale, or encumbrance of trust property and the investment and reinvestment of principal
and income of the trust;
new text end

new text begin (2) direct the trustee with respect to all management, control, and voting powers
related directly or indirectly to trust assets, including but not limited to voting proxies
for securities held in trust;
new text end

new text begin (3) select and determine reasonable compensation of one or more advisors,
managers, consultants, or counselors, including the trustee, and to delegate to them any of
the powers of the investment trust advisor in accordance with section 501C.0807; and
new text end

new text begin (4) determine the frequency and methodology for valuing any asset for which there
is no readily available market value.
new text end

new text begin Subd. 3. new text end

new text begin Powers of distribution trust advisor. new text end

new text begin A distribution trust advisor may
be designated in the governing instrument of a trust. The powers of a distribution trust
advisor may be exercised or not exercised in the sole and absolute discretion of the
distribution trust advisor, and are binding on all other persons, including but not limited to
each beneficiary, fiduciary, excluded fiduciary, and any other party having an interest in
the trust. The governing instrument may use the title "distribution trust advisor" or any
similar name or description demonstrating the intent to provide for the office and function
of a distribution trust advisor. Unless the terms of the governing instrument provide
otherwise, the distribution trust advisor has authority to direct the trustee with regard to
all decisions relating directly or indirectly to discretionary distributions to or for one or
more beneficiaries.
new text end

new text begin Subd. 4. new text end

new text begin Powers of trust protector. new text end

new text begin A trust protector may be designated in the
governing instrument of a trust. The powers of a trust protector may be exercised or not
exercised in the sole and absolute discretion of the trust protector, and are binding on all
other persons, including but not limited to each beneficiary, investment trust advisor,
distribution trust advisor, fiduciary, excluded fiduciary, and any other party having an
interest in the trust. The governing instrument may use the title "trust protector" or any
similar name or description demonstrating the intent to provide for the office and function
of a trust protector. The powers granted to a trust protector by the governing instrument
may include but are not limited to authority to do any one or more of the following:
new text end

new text begin (1) modify or amend the governing instrument to achieve favorable tax status or
respond to changes in the Internal Revenue Code, federal laws, state law, or the rulings
and regulations under such laws;
new text end

new text begin (2) increase, decrease, or modify the interests of any beneficiary or beneficiaries of
the trust;
new text end

new text begin (3) modify the terms of any power of appointment granted by the trust; provided,
however, such modification or amendment may not grant a beneficial interest to any
individual, class of individuals, or other parties not specifically provided for under the
trust instrument;
new text end

new text begin (4) remove, appoint, or remove and appoint, a trustee, investment trust advisor,
distribution trust advisor, another directing party, investment committee member, or
distribution committee member, including designation of a plan of succession for future
holders of any such office;
new text end

new text begin (5) terminate the trust, including determination of how the trustee shall distribute the
trust property to be consistent with the purposes of the trust;
new text end

new text begin (6) change the situs of the trust, the governing law of the trust, or both;
new text end

new text begin (7) appoint one or more successor trust protectors, including designation of a plan
of succession for future trust protectors;
new text end

new text begin (8) interpret terms of the trust instrument at the request of the trustee;
new text end

new text begin (9) advise the trustee on matters concerning a beneficiary;
new text end

new text begin (10) amend or modify the governing instrument to take advantage of laws governing
restraints on alienation, distribution of trust property, or to improve the administration of
the trust;
new text end

new text begin (11) veto or direct trust distributions; or
new text end

new text begin (12) provide direction regarding notification of qualified beneficiaries.
new text end

new text begin If a charity is a current beneficiary or a presumptive remainder beneficiary of the trust, a
trust protector must give notice to the attorney general's charitable trust division at least 60
days before taking any of the actions authorized under clause (2), (3), (4), (5), or (6). The
attorney general's charitable trust division may, however, waive this notice requirement.
new text end

new text begin Subd. 5. new text end

new text begin Duty and liability of directing party. new text end

new text begin A directing party is a fiduciary
of the trust subject to the same duties and standards applicable to a trustee of a trust as
provided by applicable law unless the governing instrument provides otherwise, but the
governing instrument may not, however, relieve or exonerate a directing party from the
duty to act or withhold acting as the directing party in good faith reasonably believes is
in the best interests of the trust.
new text end

new text begin Subd. 6. new text end

new text begin Duty and liability of excluded fiduciary. new text end

new text begin (a) The excluded fiduciary shall
act in accordance with the governing instrument and comply with the directing party's
exercise of the powers granted to the directing party by the governing instrument. Unless
otherwise provided in the governing instrument, an excluded fiduciary has no duty to
monitor, review, inquire, investigate, recommend, evaluate, or warn with respect to a
directing party's exercise of or failure to exercise any power granted to the directing
party by the governing instrument, including but not limited to, any power related to the
acquisition, disposition, retention, management, or valuation of any asset or investment.
Except as otherwise provided in this section or the governing instrument, an excluded
fiduciary is not liable, either individually or as a fiduciary, for any action, inaction, consent,
or failure to consent by a directing party, including but not limited to, any of the following:
new text end

new text begin (1) if a governing instrument provides that an excluded fiduciary is to follow the
direction of a directing party, and the excluded fiduciary acts in accordance with the
direction, then except in cases of willful misconduct on the part of the excluded fiduciary
in complying with the direction of the directing party, the excluded fiduciary is not liable
for any loss resulting directly or indirectly from following the direction, including but not
limited to, compliance regarding the valuation of assets for which there is no readily
available market value;
new text end

new text begin (2) if a governing instrument provides that an excluded fiduciary is to act or omit to
act only with the consent of a directing party, then except in cases of willful misconduct on
the part of the excluded fiduciary, the excluded fiduciary is not liable for any loss resulting
directly or indirectly from any act taken or omitted as a result of the directing party's failure
to provide consent after having been requested to do so by the excluded fiduciary; or
new text end

new text begin (3) if a governing instrument provides that, or if for any other reason, an excluded
fiduciary is required to assume the role or responsibilities of a directing party, or if the
excluded fiduciary appoints a directing party or successor to a directing party, then except
in cases of willful misconduct on the part of the excluded fiduciary, the excluded fiduciary
is not liable for any loss resulting directly or indirectly from its actions in carrying out the
roles and responsibilities of the directing party.
new text end

new text begin (b) Any excluded fiduciary is also relieved from any obligation to review or evaluate
any direction from a distribution trust advisor or to perform investment or suitability
reviews, inquiries, or investigations or to make recommendations or evaluations with
respect to investments to the extent the directing party, custodial account owner, or
authorized designee of a custodial account owner had authority to direct the acquisition,
disposition, or retention of any such investment. If the excluded fiduciary offers such
communication to the directing party or any investment person selected by the investment
trust advisor, the action may not be deemed to constitute an undertaking by the excluded
fiduciary to monitor or otherwise participate in actions within the scope of the advisor's
authority or to constitute any duty to do so.
new text end

new text begin (c) An excluded fiduciary is also relieved of any duty to communicate with, warn, or
apprise any beneficiary or third party concerning instances in which the excluded fiduciary
would or may have exercised the excluded fiduciary's own discretion in a manner different
from the manner directed by the directing party.
new text end

new text begin (d) Absent a contrary provision in the governing instrument, the actions of the
excluded fiduciary, including any communications with the directing party or others,
or carrying out, recording, or reporting actions taken at the directing party's direction
pertaining to matters within the scope of authority of the directing party, shall be deemed
to be administrative actions taken by the excluded fiduciary solely to allow the excluded
fiduciary to perform those duties assigned to the excluded fiduciary under the governing
instrument. An administrative action described under this paragraph may not be deemed
to constitute an undertaking by the excluded fiduciary to monitor, participate, or otherwise
take any fiduciary responsibility for actions within the scope of authority of the directing
party.
new text end

new text begin Subd. 7. new text end

new text begin Submission to court jurisdiction; effect on directing party. new text end

new text begin The
directing party may be made a party to any action or proceeding if issues relate to a
decision or action of the directing party, even if investment advisory agreements or other
related agreements provide otherwise.
new text end

new text begin Subd. 8. new text end

new text begin Duty to inform excluded fiduciary. new text end

new text begin Each directing party shall keep
the excluded fiduciary and any other directing party reasonably informed regarding the
administration of the trust with respect to any specific duty or function being performed by
the directing party to the extent that the duty or function would normally be performed by
the excluded fiduciary or to the extent that providing such information to the excluded
fiduciary or other directing party is reasonably necessary for the excluded fiduciary
or other directing party to perform its duties. The directing party shall provide such
information as reasonably requested by the excluded fiduciary or other directing party.
Neither the performance nor the failure to perform of a directing party's duty to inform as
provided in this subdivision affects the limitation on the liability of the excluded fiduciary
as provided in this section.
new text end

new text begin Subd. 9. new text end

new text begin Reliance on counsel. new text end

new text begin An excluded fiduciary may, but is not required to,
obtain and rely upon an opinion of counsel on any matter relevant to this section.
new text end

new text begin Subd. 10. new text end

new text begin Applicability. new text end

new text begin This section applies to:
new text end

new text begin (1) all existing and future trusts that appoint or provide for a directing party,
including but not limited to a party granted power or authority effectively comparable in
substance to that of a directing party as provided in this section; or
new text end

new text begin (2) any existing or future trusts that:
new text end

new text begin (i) are modified in accordance with applicable law or the terms of the governing
instrument to appoint or provide for a directing party; or
new text end

new text begin (ii) are modified to appoint or provide for a directing party, including but not limited
to, a party granted power or authority effectively comparable in substance to that of a
directing party, in accordance with (A) a court order, or (B) a nonjudicial settlement
agreement made in accordance with section 501C.0111, whether or not such order or
agreement specifies that this section governs the responsibilities, actions, and liabilities of
persons designated as a directing party or excluded fiduciary.
new text end

Sec. 7.

new text begin [501C.0809] CONTROL, PROTECTION, AND DELIVERY OF TRUST
PROPERTY.
new text end

new text begin (a) A trustee shall take reasonable steps to compel a former trustee or other person
to deliver the trust's tangible personal property and evidence of ownership of other trust
property to the trustee.
new text end

new text begin (b) A trustee shall take reasonable steps to take control of and protect the trust
property, except that this duty does not apply to, and the trustee is not responsible for,
items of tangible personal property that are property of a trust revocable by the settlor and
that are not in the possession or control of the trustee.
new text end

Sec. 8.

new text begin [501C.0810] RECORD KEEPING AND IDENTIFICATION OF TRUST
PROPERTY.
new text end

new text begin (a) A trustee shall keep adequate records of the administration of the trust.
new text end

new text begin (b) A trustee shall keep trust property separate from the trustee's own property.
new text end

new text begin (c) If the trustee maintains records clearly indicating the respective interests, a
trustee may invest as a whole the property of two or more separate trusts.
new text end

Sec. 9.

new text begin [501C.0811] ENFORCEMENT AND DEFENSE OF CLAIMS.
new text end

new text begin (a) A trustee shall take reasonable steps to redress a breach of trust known to the
trustee to have been committed by a former trustee.
new text end

new text begin (b) A trustee shall take reasonable steps to enforce claims of the trust known to the
trustee and to defend claims against the trust.
new text end

Sec. 10.

new text begin [501C.0813] DUTY TO INFORM AND REPORT.
new text end

new text begin (a) A trustee shall keep the qualified beneficiaries of an irrevocable trust reasonably
informed about the administration of the trust and of the material facts necessary to
protect their interests. Unless unreasonable under the circumstances, a trustee shall
promptly respond to a beneficiary's request for information related to the administration of
an irrevocable trust.
new text end

new text begin (b) A settlor may provide, by an express provision in the trust instrument, that
paragraph (a) shall not apply to the administration of a trust during any period when the
trustee is required by the terms of the trust to keep the settlor or another person, including
one or more beneficiaries of the trust or a representative of a beneficiary, reasonably
informed about the administration of the trust and of the material facts necessary to protect
the beneficiaries' interests. A trustee shall promptly respond to such person's requests
for information related to the administration of the trust. Unless the terms of the trust
provide otherwise, any person to whom trust administration information is furnished shall
have standing to enforce the trust but acts in a nonfiduciary capacity and has no duty or
responsibility to enforce the trust or to take any other action with respect to the information
furnished. If a settlor has, by an express provision in the trust instrument, prohibited
a trustee from sharing information with beneficiaries, including but not limited to,
accountings, a trustee shall have the right to seek judicial approval by filing a petition with
the court. Such petition shall comply with the notice provisions of section 501C.0203.
new text end

new text begin (c) A beneficiary may waive the right to information otherwise required to be
furnished under paragraph (a). A beneficiary may withdraw any such waiver previously
given. Any waiver or withdrawal of a waiver must be made by notice delivered to the
trustee.
new text end

Sec. 11.

new text begin [501C.0814] DISCRETIONARY POWERS; TAX SAVINGS.
new text end

new text begin (a) Notwithstanding the breadth of discretion granted to a trustee in the terms of
the trust, including the use of such terms as "absolute," "sole," or "uncontrolled," the
trustee must exercise a discretionary power in good faith, in accordance with the terms
and purposes of the trust and, in the best interests of the beneficiaries.
new text end

new text begin (b) Subject to paragraph (d), and unless the terms of the trust expressly indicate
that this paragraph does not apply:
new text end

new text begin (1) a person other than a settlor who is a beneficiary and trustee of a trust that confers
on the trustee a power to make discretionary distributions to or for the trustee's personal
benefit may exercise the power only in accordance with an ascertainable standard; and
new text end

new text begin (2) a trustee may not exercise a power to make discretionary distributions to satisfy a
legal obligation of support that the trustee personally owes another person.
new text end

new text begin (c) A power that is limited or prohibited by paragraph (b) may be exercised by
a majority of the remaining trustees whose exercise of the power is not so limited or
prohibited. If the power of all trustees is so limited or prohibited, the court may appoint
a special fiduciary with authority to exercise the power, or all of the trustees, acting by
unanimous agreement, may appoint a special fiduciary with authority to exercise the power.
A special fiduciary appointed by the other trustees may not be related to or subordinate to
any trustee within the meaning of section 672(c) of the Internal Revenue Code.
new text end

new text begin (d) Paragraph (b) does not apply to:
new text end

new text begin (1) a power held by the settlor's spouse who is the trustee of a trust for which a
marital deduction, as defined in section 2056(b)(5) or 2523(e) of the Internal Revenue
Code of 1986, as in effect on the effective date of this act, or as later amended, was
previously allowed;
new text end

new text begin (2) any trust during any period that the trust may be revoked or amended by its settlor;
new text end

new text begin (3) a trust if contributions to the trust qualify for the annual exclusion under section
2503(c) of the Internal Revenue Code of 1986, as in effect on the effective date of this
act, or as later amended;
new text end

new text begin (4) a trust created on or before May 14, 1993, if the entire principal of the trust
would be included in the gross estate of the trustee for federal estate tax purposes if the
trustee had died on May 14, 1993, without regard to any power described in paragraph (a);
new text end

new text begin (5) a trust created on or before May 14, 1993, if no part of the principal of the trust
would be included in the gross estate of the trustee for federal estate tax purposes if the
trustee had died on May 14, 1993, without exercising the power; or
new text end

new text begin (6) a trust created on or before May 14, 1993, if (i) the trust is not exempt from the
generation-skipping transfer tax under chapter 13 of the Internal Revenue Code of 1986,
as amended through December 31, 1992, because of Public Law 99-514, section 1433(b)
to (d); (ii) there would be a taxable termination with respect to the assets held in the trust if
the trustee and all beneficiaries of the trust who are assigned to the trustee's generation or a
higher generation had died on May 14, 1993; and (iii) the trust would have an inclusion
ratio, as defined in section 2642(c) of the Internal Revenue Code of 1986, as amended
through December 31, 1992, of one with respect to the taxable termination.
new text end

new text begin (e) This section does not apply to a power exercisable in a capacity other than as
a trustee.
new text end

new text begin (f) If a distribution to a beneficiary is subject to the exercise of the trustee's
discretion, whether or not the terms of a trust include a standard to guide the trustee in
making distributions, then the interest is neither a property interest nor an enforceable
right, but a mere expectancy.
new text end

Sec. 12.

new text begin [501C.0815] GENERAL POWERS OF TRUSTEE.
new text end

new text begin (a) A trustee, without authorization by the court, may exercise:
new text end

new text begin (1) powers conferred by the terms of the trust; and
new text end

new text begin (2) except as limited by the terms of the trust:
new text end

new text begin (i) all powers over the trust property which an unmarried competent owner has
over individually owned property;
new text end

new text begin (ii) any other powers appropriate to achieve the proper investment, management,
and distribution of the trust property; and
new text end

new text begin (iii) any other powers conferred by this chapter.
new text end

new text begin (b) The exercise of a power is subject to the fiduciary duties prescribed by this chapter.
new text end

Sec. 13.

new text begin [501C.0816] SPECIFIC POWERS OF TRUSTEE.
new text end

new text begin Without limiting the authority conferred by section 501C.0815, a trustee may:
new text end

new text begin (1) collect trust property and accept or reject additions to the trust property from a
settlor or another person;
new text end

new text begin (2) acquire or sell property, for cash or on credit, at public or private sale;
new text end

new text begin (3) exchange, partition, or otherwise change the character of trust property;
new text end

new text begin (4) deposit trust money in an account in a regulated financial service institution;
new text end

new text begin (5) borrow money, with or without security, and mortgage or pledge trust property
for a period within or extending beyond the duration of the trust;
new text end

new text begin (6) with respect to an interest in a preexisting or newly created joint venture,
proprietorship, partnership, limited liability company, business trust, corporation, or other
form of business or enterprise, continue the business or other enterprise, or create a new
business or other enterprise, even though such business or enterprise may exist for a period
extending beyond the duration of the trust, and take any action that may be taken by
shareholders, members, or property owners, including merging, dissolving, or otherwise
changing the form of business organization or contributing additional capital;
new text end

new text begin (7) with respect to stocks or other securities, exercise the rights of an absolute
owner, including the right to:
new text end

new text begin (i) vote, or give proxies to vote, with or without power of substitution, or enter
into or continue a voting trust agreement;
new text end

new text begin (ii) hold a security in the name of a nominee or in other form without disclosure of
the trust so that title may pass by delivery;
new text end

new text begin (iii) pay calls, assessments, and other sums chargeable or accruing against the
securities, and sell or exercise stock subscription or conversion rights; and
new text end

new text begin (iv) deposit the securities with a depository or other regulated financial service
institution;
new text end

new text begin (8) with respect to an interest in real property, construct or make ordinary or
extraordinary repairs to, alterations to, or improvements in, buildings or other structures,
demolish improvements, raze existing or erect new party walls or buildings, subdivide
or develop land, dedicate land to public use or grant public or private easements, and
make or vacate plats and adjust boundaries;
new text end

new text begin (9) enter into a lease for any purpose as lessor or lessee, including a lease or other
arrangement for exploration and removal of natural resources, with or without the option
to purchase or renew, for a period within or extending beyond the duration of the trust;
new text end

new text begin (10) grant an option involving a sale, lease, or other disposition of trust property or
acquire an option for the acquisition of property, including an option exercisable beyond
the duration of the trust, and exercise an option so acquired;
new text end

new text begin (11) insure the property of the trust against damage or loss, and insure the trustee
and the trustee's agents and beneficiaries against liability arising from the administration
of the trust;
new text end

new text begin (12) abandon or decline to administer property of no value or of insufficient value to
justify its collection or continued administration;
new text end

new text begin (13) with respect to possible liability for violation of environmental law:
new text end

new text begin (i) inspect or investigate property the trustee holds or has been asked to hold, or
property owned or operated by an organization in which the trustee holds or has been
asked to hold an interest, for the purpose of determining the application of environmental
law with respect to the property;
new text end

new text begin (ii) take action to prevent, abate, or otherwise remedy any actual or potential
violation of any environmental law affecting property held directly or indirectly by
the trustee, whether taken before or after the assertion of a claim or the initiation of
governmental enforcement;
new text end

new text begin (iii) decline to accept property into trust or disclaim any power with respect to
property that is or may be burdened with liability for violation of environmental law;
new text end

new text begin (iv) compromise claims against the trust which may be asserted for an alleged
violation of environmental law; and
new text end

new text begin (v) pay the expense of any inspection, review, abatement, or remedial action to
comply with environmental law;
new text end

new text begin (14) pay or contest any claim, settle a claim by or against the trust, and release, in
whole or in part, a claim belonging to the trust;
new text end

new text begin (15) pay taxes, assessments, compensation of the trustee and of employees and
agents of the trust, and other expenses incurred in the administration of the trust;
new text end

new text begin (16) exercise elections or choose not to exercise elections with respect to federal,
state, and local taxes;
new text end

new text begin (17) select a mode of payment under any employee benefit or retirement plan,
annuity, or life insurance payable to the trustee, exercise rights thereunder, including
exercise of the right to indemnification for expenses and against liabilities, and take
appropriate action to collect the proceeds;
new text end

new text begin (18) make loans out of trust property, including loans to a beneficiary on terms and
conditions the trustee considers to be fair and reasonable under the circumstances, and the
trustee has a lien on future distributions for repayment of those loans;
new text end

new text begin (19) appoint a trustee to act in another jurisdiction with respect to trust property
located in the other jurisdiction, confer upon the appointed trustee all of the powers and
duties of the appointing trustee, require that the appointed trustee furnish security, and
remove any trustee so appointed;
new text end

new text begin (20) pay an amount distributable to a beneficiary who is under a legal disability or
who the trustee reasonably believes is incapacitated, by paying it directly to the beneficiary
or applying it for the beneficiary's benefit, or by:
new text end

new text begin (i) paying it to the beneficiary's conservator or, if the beneficiary does not have
a conservator, the beneficiary's guardian;
new text end

new text begin (ii) paying it to the beneficiary's custodian under chapter 527, the Uniform Transfers
to Minors Act, or to the custodial trustee under chapter 529, the Uniform Custodial Trust
Act, and, for that purpose, creating a custodianship or custodial trust;
new text end

new text begin (iii) if the trustee does not know of a conservator, guardian, custodian, or custodial
trustee, paying it to an attorney-in-fact, an adult relative, or another person having legal or
physical care or custody of the beneficiary, to be expended on the beneficiary's behalf; or
new text end

new text begin (iv) managing it as a separate fund on the beneficiary's behalf, subject to the
beneficiary's continuing right to withdraw the distribution;
new text end

new text begin (21) on distribution of trust property or the division or termination of a trust, make
distributions in divided or undivided interests, allocate particular assets in proportionate
or disproportionate shares, value the trust property for those purposes, and adjust for
resulting differences in valuation;
new text end

new text begin (22) resolve a dispute concerning the interpretation of the trust or its administration
by mediation, arbitration, or other procedure for alternative dispute resolution;
new text end

new text begin (23) prosecute or defend an action, claim, or judicial proceeding in any jurisdiction
to protect trust property and the trustee in the performance of the trustee's duties;
new text end

new text begin (24) may enter into contracts and other instruments that are useful to achieve or
facilitate the exercise of the trustee's powers;
new text end

new text begin (25) on termination of the trust, exercise the powers appropriate to wind up the
administration of the trust and distribute the trust property to the persons entitled to it;
new text end

new text begin (26) acquire an undivided interest in a trust asset in which the trustee, in a trust
capacity, holds an undivided interest;
new text end

new text begin (27) create reserves out of income for depreciation, obsolescence, or amortization,
or for depletion in mineral or timber properties;
new text end

new text begin (28) hold two or more trusts or parts of trusts created by the same instrument, as an
undivided whole, without separation between the trusts or parts of trusts, if the separate
trusts or parts of trusts have undivided interests and if no holding defers the vesting of an
estate in possession or otherwise;
new text end

new text begin (29) create or join in the creation of a joint venture, partnership, limited liability
company, business trust, corporation, or other form of business or enterprise, continue
the business or other enterprise and take any action that may be taken by shareholders,
members, or property owners, including merging, dissolving, or otherwise changing the
form of business organization or contributing additional capital; and
new text end

new text begin (30) with respect to all trust property, hold the property in the name of a nominee
without disclosure of the trust.
new text end

Sec. 14.

new text begin [501C.0817] DISTRIBUTION UPON TERMINATION.
new text end

new text begin (a) Upon termination or partial termination of a trust, the trustee may send to
the beneficiaries a proposal for distribution. The right of any beneficiary to object to
the proposed distribution terminates if the beneficiary does not notify the trustee of an
objection within 30 days after the proposal was sent but only if the proposal informed the
beneficiary of the right to object and of the time allowed for objection.
new text end

new text begin (b) Upon the occurrence of an event terminating or partially terminating a trust, the
trustee shall proceed expeditiously to distribute the trust property to the persons entitled to
it, subject to the right of the trustee to retain a reasonable reserve for the payment of debts,
expenses, and taxes and to secure a right of reimbursement if the reserve is inadequate.
new text end

new text begin (c) A release by a beneficiary of a trustee from liability for breach of trust is invalid
to the extent it was induced by improper conduct of the trustee.
new text end

ARTICLE 9

PRUDENT INVESTOR ACT RECODIFICATION

Section 1.

new text begin [501C.0901] INVESTMENT AND MANAGEMENT OF TRUST
ASSETS.
new text end

new text begin Subdivision 1. new text end

new text begin Prudent investor rule. new text end

new text begin (a) Except as otherwise provided in
paragraph (b), a trustee who invests and manages trust assets shall comply with the
prudent investor rule set forth in this section.
new text end

new text begin (b) The prudent investor rule, a default rule, may be expanded, restricted, eliminated,
or otherwise altered by the trust instrument. A trustee is not liable to a beneficiary to the
extent that the trustee acted in reasonable reliance on the trust instrument.
new text end

new text begin Subd. 2. new text end

new text begin Standard of care; portfolio strategy; risk and return objectives. new text end

new text begin (a) A
trustee shall invest and manage trust assets as a prudent investor would, by considering
the purposes, terms, distribution requirements, and other circumstances of the trust. In
satisfying this standard, the trustee shall exercise reasonable care, skill, and caution.
new text end

new text begin (b) A trustee's investment and management decisions respecting individual assets
must be evaluated not in isolation but in the context of the trust portfolio as a whole and
as a part of an overall investment strategy having risk and return objectives reasonably
suited to the trust.
new text end

new text begin (c) The circumstances that a trustee may consider in making investment decisions
include, without limitation, the following:
new text end

new text begin (1) general economic conditions;
new text end

new text begin (2) the possible effect of inflation;
new text end

new text begin (3) the expected tax consequences of investment decisions or strategies;
new text end

new text begin (4) the role that each investment or course of action plays within the overall trust
portfolio;
new text end

new text begin (5) the expected total return from income and the appreciation of capital;
new text end

new text begin (6) other resources of the beneficiaries known to the trustee, including earning
capacity;
new text end

new text begin (7) needs for liquidity, regularity of income, and preservation or appreciation of
capital; and
new text end

new text begin (8) an asset's special relationship or special value, if any, to the purposes of the trust
or to one or more of the beneficiaries if consistent with the trustee's duty of impartiality.
new text end

new text begin (d) A trustee may invest in any kind of property or type of investment consistent
with the standards of this section.
new text end

new text begin (e) A trustee who has special skills or expertise, or is named trustee in reliance upon
the trustee's representation that the trustee has special skills or expertise, has a duty to use
those special skills or expertise.
new text end

new text begin Subd. 3. new text end

new text begin Diversification. new text end

new text begin A trustee shall diversify the investments of the trust unless
the trustee reasonably determines that, because of special circumstances, the purposes of
the trust are better served without diversifying.
new text end

new text begin Subd. 4. new text end

new text begin Duties at inception of trusteeship. new text end

new text begin Within a reasonable time after accepting
a trusteeship or receiving trust assets, a trustee shall review the trust assets and make and
implement decisions concerning the retention and disposition of assets, in order to bring
the trust portfolio into compliance with the purposes, terms, distribution requirements, and
other circumstances of the trust, and with the requirements of this section.
new text end

new text begin Subd. 5. new text end

new text begin Investment costs. new text end

new text begin In investing and managing trust assets, a trustee may
only incur costs that are appropriate and reasonable in relation to the assets, the purposes
of the trust, and the skills of the trustee.
new text end

new text begin Subd. 6. new text end

new text begin Reviewing compliance. new text end

new text begin Compliance with the prudent investor rule is
determined in light of the facts and circumstances existing at the time of a trustee's
decision or action and not by hindsight. The prudent investor rule is a test of conduct
and not of resulting performance.
new text end

new text begin Subd. 7. new text end

new text begin Language invoking standard. new text end

new text begin The following terms or comparable
language in the trust instrument, unless otherwise limited or modified, authorizes any
investment or strategy permitted under this section: "investments permissible by law for
investment of trust funds," "legal investments," "authorized investments," "using the
judgment and care under the circumstances then prevailing that persons of prudence,
discretion, and intelligence exercise in the management of their own affairs, not in regard
to speculation but in regard to the permanent disposition of their funds, considering the
probable income as well as the probable safety of their capital," "prudent man rule,"
"prudent trustee rule," "prudent person rule," and "prudent investor rule."
new text end

new text begin Subd. 8. new text end

new text begin Disposal of property. new text end

new text begin Unless the trust instrument or a court order
specifically directs otherwise, a trustee need not dispose of any property, real, personal,
or mixed, or any kind of investment, in the trust, however acquired, until the trustee
determines in the exercise of a sound discretion that it is advisable to dispose of the
property. Nothing in this subdivision excuses the trustee from the duty to exercise
discretion at reasonable intervals and to determine at those intervals the advisability of
retaining or disposing of property.
new text end

new text begin Subd. 9. new text end

new text begin No limitation on powers of court. new text end

new text begin This section does not restrict the
power of a court of proper jurisdiction to permit a trustee to deviate from the terms of a
will, agreement, court order, or other instrument relating to the acquisition, investment,
reinvestment, exchange, retention, sale, or management of trust property.
new text end

new text begin Subd. 10. new text end

new text begin Investment companies. new text end

new text begin (a) In the absence of an express prohibition in
the trust instrument, the trustee may acquire and retain securities of any open-end or
closed-end management type investment company or investment trust registered under
the Federal Investment Company Act of 1940. The fact that a trustee that is a banking
institution, as defined in section 48.01, subdivision 2, or any affiliate of a trustee that is a
banking institution, is providing services to the investment company or trust as investment
advisor, sponsor, broker, distributor, custodian, transfer agent, registrar, or otherwise, and
receiving compensation for the services shall not preclude the trustee from investing in the
securities of that investment company or trust. A trustee that is a banking institution shall
disclose to all current income beneficiaries of the trust the rate, formula, and method of
the compensation.
new text end

new text begin (b) This subdivision does not alter the degree of care and judgment required of
trustees under this section.
new text end

new text begin Subd. 11. new text end

new text begin Application to existing trusts. new text end

new text begin This section applies to trusts existing on
and created after January 1, 1997. As applied to trusts existing on January 1, 1997, this
section governs only decisions or actions occurring after that date.
new text end

new text begin Subd. 12. new text end

new text begin Short title. new text end

new text begin This section may be cited as the "Minnesota Prudent Investor
Act."
new text end

ARTICLE 10

LIABILITY OF TRUSTEES AND RIGHTS OF PERSON
DEALING WITH TRUSTEE

Section 1.

new text begin [501C.1001] REMEDIES FOR BREACH OF TRUST.
new text end

new text begin (a) A violation by a trustee of a duty the trustee owes to a beneficiary is a breach of
trust.
new text end

new text begin (b) To remedy a breach of trust that has occurred or may occur, the court may:
new text end

new text begin (1) compel the trustee to perform the trustee's duties;
new text end

new text begin (2) enjoin the trustee from committing a breach of trust;
new text end

new text begin (3) compel the trustee to redress a breach of trust by paying money, restoring
property, or other means;
new text end

new text begin (4) order a trustee to account;
new text end

new text begin (5) appoint a special fiduciary to take possession of the trust property and administer
the trust;
new text end

new text begin (6) suspend the trustee;
new text end

new text begin (7) remove the trustee as provided in section 501C.0706;
new text end

new text begin (8) reduce or deny compensation to the trustee;
new text end

new text begin (9) subject to section 501C.1012, void an act of the trustee, impose a lien or a
constructive trust on trust property, or trace trust property wrongfully disposed of and
recover the property or its proceeds; or
new text end

new text begin (10) order any other appropriate relief.
new text end

Sec. 2.

new text begin [501C.1002] DAMAGES FOR BREACH OF TRUST.
new text end

new text begin (a) A trustee who commits a breach of trust is liable for the greater of:
new text end

new text begin (1) the amount required to restore the value of the trust property and trust
distributions to what they would have been had the breach not occurred; or
new text end

new text begin (2) the profit the trustee made by reason of the breach.
new text end

new text begin (b) If more than one trustee is liable for a breach of trust, a trustee is entitled to
contribution or indemnity from the other trustee or trustees as the court may determine.
new text end

Sec. 3.

new text begin [501C.1003] REMEDIES IN ABSENCE OF BREACH.
new text end

new text begin (a) A trustee is chargeable for any profit made by the trustee arising from the
administration of the trust, even absent a breach of trust.
new text end

new text begin (b) Absent a breach of trust, a trustee is not liable for a loss or depreciation in the
value of trust property or for not having made a profit.
new text end

new text begin (c) This section does not limit a trustee's right to payments that are permitted under
section 501C.0802.
new text end

Sec. 4.

new text begin [501C.1004] ATTORNEY FEES AND COSTS.
new text end

new text begin In a judicial proceeding involving the administration of a trust, the court, as justice
and equity may require, may award costs and expenses, including reasonable attorney
fees, to any party from the trust that is the subject of the judicial proceeding.
new text end

Sec. 5.

new text begin [501C.1005] LIMITATION OF ACTION AGAINST TRUSTEE.
new text end

new text begin (a) A beneficiary may not commence a judicial proceeding against a trustee more
than three years after the date the beneficiary or a representative of the beneficiary was
sent a report that adequately disclosed the existence of a potential claim. If a report is sent
after the effective date of this section, the report may cover a period before the effective
date of this section.
new text end

new text begin (b) A report adequately discloses the existence of a potential claim if it provides
sufficient information so that the beneficiary or representative knows of the potential claim
or should have inquired into its existence.
new text end

new text begin (c) If paragraph (a) does not apply, a judicial proceeding by a beneficiary against a
trustee must be commenced within six years after the first to occur of:
new text end

new text begin (1) the removal, resignation, or death of the trustee;
new text end

new text begin (2) the termination of the beneficiary's interest in the trust; or
new text end

new text begin (3) the termination of the trust.
new text end

Sec. 6.

new text begin [501C.1006] RELIANCE ON TRUST INSTRUMENT.
new text end

new text begin A trustee who acts in reasonable reliance on the terms of the trust as expressed in
the trust instrument is not liable for a breach of trust to the extent the breach resulted
from the reliance.
new text end

Sec. 7.

new text begin [501C.1007] EVENT AFFECTING ADMINISTRATION OR
DISTRIBUTION.
new text end

new text begin If the occurrence of an event, including marriage, divorce, performance of
educational requirements, or death, affects the administration or distribution of a trust, a
trustee who has exercised reasonable care to ascertain the occurrence of the event is not
liable for a loss resulting from the trustee's lack of knowledge.
new text end

Sec. 8.

new text begin [501C.1008] EXCULPATION OF TRUSTEE.
new text end

new text begin (a) The terms of a trust relieving a trustee of liability for breach of trust is
unenforceable to the extent that it:
new text end

new text begin (1) relieves the trustee of liability for breach of trust committed in bad faith or with
reckless indifference to the purposes of the trust or the interests of the beneficiaries; or
new text end

new text begin (2) was inserted as the result of an abuse by the trustee of a fiduciary or confidential
relationship to the settlor.
new text end

new text begin (b) An exculpatory term drafted or caused to be drafted by the trustee is invalid as
an abuse of a fiduciary or confidential relationship unless:
new text end

new text begin (1) the settlor is represented by independent counsel with respect to the trust
instrument containing the term; or
new text end

new text begin (2) the trustee proves that the exculpatory term is fair under the circumstances and
that its existence and contents were adequately communicated to the settlor.
new text end

Sec. 9.

new text begin [501C.1009] BENEFICIARY'S CONSENT, RELEASE, OR
RATIFICATION.
new text end

new text begin A beneficiary's consent to a trustee's conduct, release of the trustee from liability for
the trustee's conduct, or ratification of the trustee's conduct is binding unless:
new text end

new text begin (1) the consent, release, or ratification of the beneficiary was induced by improper
conduct of the trustee; or
new text end

new text begin (2) at the time of the consent, release, or ratification, the beneficiary did not know
of the beneficiary's rights or of the material facts relating to the trustee's conduct and the
trustee did know of the material facts relating to the trustee's conduct.
new text end

Sec. 10.

new text begin [501C.1010] LIMITATION ON PERSONAL LIABILITY OF TRUSTEE.
new text end

new text begin (a) Except as otherwise provided in the contract, a trustee is not personally liable
on a contract properly entered into in the trustee's fiduciary capacity in the course of
administering the trust if the trustee in the contract disclosed the fiduciary capacity.
new text end

new text begin (b) A trustee is not personally liable for torts committed in the course of administering
a trust, or for obligations arising from ownership or control of trust property, including
liability for violation of environmental law, unless the trustee is personally at fault.
new text end

new text begin (c) A claim based on a contract entered into by a trustee in the trustee's fiduciary
capacity, on an obligation arising from ownership or control of trust property, or on
a tort committed in the course of administering a trust, may be asserted in a judicial
proceeding against the trustee in the trustee's fiduciary capacity, whether or not the trustee
is personally liable for the claim.
new text end

Sec. 11.

new text begin [501C.1011] INTEREST AS GENERAL PARTNER.
new text end

new text begin (a) Unless personal liability is imposed in the contract, a trustee who holds an
interest as a general partner in a general or limited partnership is not personally liable on a
contract entered into by the partnership after the trust's acquisition of the interest if the
trustee's fiduciary capacity was disclosed in the contract or, at the time of contracting, the
other party to the contract had knowledge of the trustee's fiduciary capacity.
new text end

new text begin (b) A trustee who holds an interest as a general partner in a general or limited
partnership is not personally liable for any obligation of the partnership arising or resulting
from a tort or other wrongful act or for any obligation arising from ownership or control of
the interest unless the trustee is personally at fault.
new text end

new text begin (c) Nothing in this section shall limit the protection otherwise existing by reason
of the partnership's status as a limited liability partnership or a limited liability limited
partnership.
new text end

Sec. 12.

new text begin [501C.1012] PROTECTION OF PERSON DEALING WITH TRUSTEE.
new text end

new text begin (a) A person other than a beneficiary who in good faith assists a trustee, or who
in good faith and for value deals with a trustee, without knowledge that the trustee is
exceeding or improperly exercising the trustee's powers is protected from liability as if
the trustee properly exercised the power.
new text end

new text begin (b) A person other than a beneficiary who in good faith deals with a trustee is not
required to inquire into the extent of the trustee's powers or the propriety of their exercise.
new text end

new text begin (c) A person who in good faith delivers assets to a trustee need not ensure their
proper application.
new text end

new text begin (d) A person other than a beneficiary who in good faith assists a former trustee, or
who in good faith and for value deals with a former trustee, without knowledge that
the trusteeship has terminated is protected from liability as if the former trustee were
still a trustee.
new text end

new text begin (e) Nothing in this section shall limit the protection provided by other laws relating
to commercial trust accounts or transfers of securities by fiduciaries.
new text end

Sec. 13.

new text begin [501C.1013] CERTIFICATE OF TRUST.
new text end

new text begin Subdivision 1. new text end

new text begin Contents of certificate. new text end

new text begin The settlor or a trustee of a trust, at any time
after execution or creation of a trust, may execute a certificate of trust that sets forth fewer
than all of the provisions of a trust instrument and any amendments to the instrument. The
certificate of trust must include:
new text end

new text begin (1) the name of the trust, if one is given;
new text end

new text begin (2) the date of the trust instrument;
new text end

new text begin (3) the name and address of each trustee empowered to act under the trust instrument
at the time of execution of the certificate;
new text end

new text begin (4) either (i) the following statement: "The trustees are authorized by the trust
instrument to sell, convey, pledge, mortgage, lease, or transfer title to any interest in
real or personal property, except as limited by the following: (if none, so indicate)" or
(ii) information as to the powers of the trustee relating to the purposes for which the
certificate is being offered;
new text end

new text begin (5) the number of trustees required to act; and
new text end

new text begin (6) a statement as to whether the trust has terminated or the trust instrument has
been revoked.
new text end

new text begin The certificate of trust must be upon the representation of the settlor or trustee that
the statements contained in the certificate of trust are true and correct and that there are no
other provisions in the trust instrument or amendments to it that limit (i) the powers of
the trustees to sell, convey, pledge, mortgage, lease, or transfer title to interests in real or
personal property or (ii) the authority of the trustees to exercise any other power identified
in the certificate of trust. The signature of the settlor or trustee must be under oath before a
notary public or other official authorized to administer oaths.
new text end

new text begin Subd. 2. new text end

new text begin Real property transactions. new text end

new text begin The certificate of trust may be used for
purposes of selling, conveying, pledging, mortgaging, leasing, or transferring title to any
interest in real property. If so used, the certificate of trust shall identify the name of each
settlor and the name of each original trustee and shall contain the following statement:
"The trustees are authorized by the instrument to sell, convey, pledge, mortgage, lease,
or transfer title to any interest in real property, except as limited by the following: (if
none, so indicate)."
new text end

new text begin Subd. 3. new text end

new text begin Recording. new text end

new text begin A certificate of trust executed under subdivision 2 may
be recorded in the office of the county recorder for any county or in the office of the
registrar of titles with respect to registered land described in the certificate of trust or
any attachment to it.
new text end

new text begin Subd. 4. new text end

new text begin Effect. new text end

new text begin When a certificate of trust is recorded in a county where real
property is situated, or in the case of personal property, when it is presented to a third party,
the certificate of trust serves to document the existence of the trust, the identity of the
trustees, the powers of the trustees and any limitations on those powers, and other matters
the certificate of trust sets out, as though the full trust instrument had been recorded or
presented. Until amended or revoked under subdivision 5, or until the full trust instrument
is recorded or presented, a certificate of trust is prima facie proof as to matters contained
in it and any party may rely upon the continued effectiveness of the certificate.
new text end

new text begin Subd. 5. new text end

new text begin Amendment or revocation. new text end

new text begin Amendment or revocation of a certificate of
trust may be made only by a written instrument executed by the settlor or a trustee of a
trust. Amendment or revocation of a certificate of trust is not effective as to a party unless
that party has actual notice of the amendment or revocation.
new text end

new text begin For purposes of this subdivision, "actual notice" means that a written instrument of
amendment or revocation has been received by the party or, in the case of real property,
that either a written instrument of amendment or revocation has been received by the party
or that a written instrument of amendment or revocation containing the legal description
of the real property has been recorded in the office of the county recorder or in the office
of the registrar of titles where the real property is situated.
new text end

new text begin Subd. 6. new text end

new text begin Reliance. new text end

new text begin A third party may rely upon a certificate of trust signed by
any settlor or trustee.
new text end

Sec. 14.

new text begin [501C.1014] AFFIDAVIT OF TRUSTEE IN REAL PROPERTY
TRANSACTIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Form of affidavit for inter vivos trust. new text end

new text begin An affidavit of a trustee
or of trustees of an inter vivos trust in support of a real property transaction may be
substantially in the following form:
new text end

new text begin STATE OF MINNESOTA
new text end
new text begin )
new text end
new text begin AFFIDAVIT OF TRUSTEE
new text end
new text begin ) ss.
new text end
new text begin COUNTY OF
new text end
new text begin )
new text end

new text begin .........................., being first duly sworn on oath says that:
new text end

new text begin 1. Affiant is the trustee (one of the trustees) named in that certain Certificate of
Trust (or Trust Instrument)
new text end

new text begin recorded ......., ...., as Document No. ..... (or in Book ..... of ............, Page ......) in the
Office of the (County Recorder/Registrar of Titles) of ........... County, Minnesota,
new text end

new text begin OR
new text end

new text begin to which this Affidavit is attached,
new text end

new text begin executed by Affiant or another trustee or the settlor of the trust described in the Certificate
of Trust (or set forth in the Trust Instrument), and which relates to real property in ..........
County, Minnesota legally described as follows:
new text end

new text begin .
new text end

new text begin .
new text end

new text begin .
new text end

new text begin .
new text end

new text begin (If more space is needed, continue on back or on attachment.)
new text end

new text begin 2. The name(s) and address(es) of the trustee(s) empowered by the Trust Instrument
to act at the time of the execution of this Affidavit are as follows:
new text end

new text begin .
new text end

new text begin .
new text end

new text begin .
new text end

new text begin 3. The trustee(s) who have executed that certain instrument relating to the real
property described above between ........................, as trustee(s) and ...........................,
dated .........., ....:
new text end

new text begin (a) are empowered by the trust instrument to sell, convey, pledge, mortgage, lease,
or transfer title to any interest in real property held in trust; and
new text end

new text begin (b) are the requisite number of trustees required by the trust instrument to execute
and deliver such an instrument.
new text end

new text begin 4. The trust has not terminated and the trust instrument has not been revoked.
new text end

new text begin - OR -
new text end

new text begin 4. The trust has terminated (or the trust instrument has been revoked). The execution
and delivery of the instrument described in paragraph 3 has been made pursuant to the
provisions of the trust.
new text end

new text begin 5. There has been no amendment to the trust which limits the power of trustee(s) to
execute and deliver the instrument described in paragraph 3.
new text end

new text begin 6. The trust is not supervised by any court.
new text end

new text begin - OR -
new text end

new text begin 6. The trust is supervised by the ............ Court of .............. County, ................ All
necessary approval has been obtained from the court for the trustee(s) to execute and
deliver the instrument described in paragraph 3.
new text end

new text begin 7. Affiant does not have actual knowledge of any facts indicating that the trust
is invalid.
new text end

new text begin .
new text end
new text begin , Affiant
new text end
new text begin Subscribed and sworn to before me this
....... day of .................., .......
new text end
new text begin .
new text end
new text begin Signature of Notary Public or Other Official
new text end
new text begin Notary Stamp or Seal
new text end
new text begin This instrument was drafted by:
new text end
new text begin .
new text end
new text begin .
new text end

new text begin Subd. 2. new text end

new text begin Form of affidavit for testamentary trust. new text end

new text begin An affidavit of a trustee
or of trustees of a testamentary trust in support of a real property transaction may be
substantially in the following form:
new text end

new text begin STATE OF MINNESOTA
new text end
new text begin )
new text end
new text begin AFFIDAVIT OF TRUSTEE
new text end
new text begin ) ss.
new text end
new text begin COUNTY OF
new text end
new text begin )
new text end

new text begin .........., being first duly sworn on oath says that:
new text end

new text begin 1. The .......... Trust was created by the Last Will and Testament of ..........,
Decedent, dated .........., ..... Decedent died on .........., ..... Affiant, as trustee of the Trust,
acquired by instrument or decree dated .........., ...., recorded in the office of the County
Recorder/Registrar of Titles, .......... County, Minnesota, as Document No. .........., an
interest in real property in .......... County, Minnesota, legally described as follows:
new text end

new text begin .
new text end

new text begin .
new text end

new text begin .
new text end

new text begin .
new text end

new text begin (If more space is needed, continue on back or on an attachment.)
new text end

new text begin 2. The name(s) and address(es) of the trustee(s) empowered by the terms of
decedent's will to act at the time of the execution of this Affidavit are as follows:
new text end

new text begin .
new text end

new text begin .
new text end

new text begin .
new text end

new text begin 3. The trustee(s) who have executed that certain instrument relating to the real
property described above between .........., as trustee(s) and .........., dated .........., ....:
new text end

new text begin (a) are empowered by the provisions of the trust under decedent's will to sell, convey,
pledge, mortgage, lease, or transfer title to any interest in real property held in trust; and
new text end

new text begin (b) are the requisite number of trustees required by the provisions of the will to
execute and deliver such an instrument.
new text end

new text begin 4. The Trust has not terminated and the trust instrument has not been revoked.
new text end

new text begin - OR -
new text end

new text begin 4. The Trust has terminated (or the trust instrument has been revoked). The
execution and delivery of the instrument described in paragraph 3 has been made pursuant
to the provisions of the Trust.
new text end

new text begin 5. There has been no amendment to the Trust which limits the powers of the
trustee(s) to execute and deliver the instrument described in paragraph 3.
new text end

new text begin 6. The Trust is not supervised by any court.
new text end

new text begin - OR -
new text end

new text begin 6. The Trust is supervised by the .......... Court of .......... County, .......... All
necessary approval has been obtained from the court for the trustee(s) to execute and
deliver the instrument described in paragraph 3.
new text end

new text begin 7. Affiant does not have actual knowledge of any facts indicating that the Trust
is invalid.
new text end

new text begin .
new text end
new text begin , Affiant
new text end
new text begin Subscribed and sworn to before me this
....... day of .................., .......
new text end
new text begin .
new text end
new text begin Signature of Notary Public or Other Official
new text end
new text begin Notary Stamp or Seal
new text end
new text begin This instrument was drafted by:
new text end
new text begin .
new text end
new text begin .
new text end

new text begin Subd. 3. new text end

new text begin Effect. new text end

new text begin An affidavit by the trustee or trustees under subdivision 1 or 2
is proof that:
new text end

new text begin (1) the trust described in the affidavit is a valid trust;
new text end

new text begin (2) either the trust has not terminated or the trust instrument has not been revoked
or, if the trust has terminated or the trust instrument has been revoked, the conveyance
described in the affidavit is made pursuant to the provisions of the trust;
new text end

new text begin (3) the powers granted the trustee or trustees extend to the real property described in
the affidavit or attachment to the affidavit;
new text end

new text begin (4) no amendment to the trust has been made limiting the power of the trustee or
trustees to sell, convey, pledge, mortgage, lease, or transfer title to the real property
described in the affidavit or attachment to the affidavit, if any;
new text end

new text begin (5) the requisite number of trustees have executed and delivered the instrument of
conveyance described in the affidavit; and
new text end

new text begin (6) any necessary court approval of the transaction has been obtained.
new text end

new text begin The proof is conclusive as to any party relying on the affidavit, except a party dealing
directly with the trustee or trustees who has actual knowledge of facts to the contrary.
new text end

new text begin Subd. 4. new text end

new text begin Recording. new text end

new text begin An Affidavit of Trustee or Trustees under subdivisions 1 and 2
may be recorded in the office of the county recorder for any county or in the office of the
registrar of titles for any county with respect to registered land described in the affidavit,
or in the Certificate of Trust or Trust Instrument referred to in the affidavit, and may be
recorded as a separate document or combined with or attached to an original or certified
copy of a Certificate of Trust or Trust Instrument, and recorded as one document.
new text end

ARTICLE 11

UNIFORM PRINCIPAL AND INCOME ACT RECODIFICATION

Section 1.

new text begin [501C.1101] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Scope. new text end

new text begin The definitions in this section apply to sections 501C.1101
to 501C.1118.
new text end

new text begin Subd. 1a. new text end

new text begin Accounting period. new text end

new text begin "Accounting period" means a calendar year unless
another 12-month period is selected by the trustee. Accounting period includes a portion
of a calendar year or other 12-month period that begins when an income interest begins or
ends when an income interest ends.
new text end

new text begin Subd. 2. new text end

new text begin Income beneficiary. new text end

new text begin "Income beneficiary" means the person to whom
income is presently payable or for whom it is accumulated for distribution as income.
new text end

new text begin Subd. 3. new text end

new text begin Inventory value. new text end

new text begin "Inventory value" means the cost of property purchased
by the trustee and the market value of other property at the time it became subject to
the trust, but in the case of a testamentary trust the trustee may use any value finally
determined for the purposes of an estate or inheritance tax.
new text end

new text begin Subd. 4. new text end

new text begin Remainderperson. new text end

new text begin "Remainderperson" means the person entitled to
principal, including income accumulated and added to principal.
new text end

Sec. 2.

new text begin [501C.1102] DUTY OF TRUSTEE AS TO RECEIPTS AND
EXPENDITURE.
new text end

new text begin Subdivision 1. new text end

new text begin General rules of administration. new text end

new text begin A trust must be administered with
due regard to the respective interests of income beneficiaries and remainderpersons. A
trust is so administered with respect to the allocation of receipts and expenditures if a
receipt is credited or an expenditure is charged to income or principal or partly to each:
new text end

new text begin (1) in accordance with the terms of the trust instrument, notwithstanding contrary
provisions of sections 501C.1101 to 501C.1118;
new text end

new text begin (2) in the absence of contrary terms of the trust instrument, in accordance with
sections 501C.1101 to 501C.1118;
new text end

new text begin (3) if neither of the preceding rules of administration is applicable, in accordance with
what is reasonable and equitable in view of the interests of those entitled to income as well
as of those entitled to principal, and in view of the manner in which persons of ordinary
prudence, discretion, and judgment would act in the management of their own affairs.
new text end

new text begin Subd. 2. new text end

new text begin Trustee's discretion. new text end

new text begin If a trust instrument gives the trustee discretion in
crediting a receipt or charging an expenditure to income or principal or partly to each,
no inference of imprudence or partiality arises from the fact that the trustee has made an
allocation contrary to sections 501C.1101 to 501C.1118.
new text end

new text begin Subd. 3. new text end

new text begin Standards for exercise. new text end

new text begin In exercising a power to adjust under section
501C.1112 or a discretionary power of administration regarding a matter within the scope of
sections 501C.1101 to 501C.1118, a fiduciary shall administer the trust or estate impartially,
based on what is fair and reasonable to all of the beneficiaries, except to the extent that
the terms of the trust or the will clearly manifest an intention that the fiduciary shall or
may favor one or more of the beneficiaries. A determination in accordance with sections
501C.1101 to 501C.1118 is presumed to be fair and reasonable to all of the beneficiaries.
new text end

Sec. 3.

new text begin [501C.1103] INCOME; PRINCIPAL; CHARGES.
new text end

new text begin Subdivision 1. new text end

new text begin Income defined. new text end

new text begin "Income" means the return in money or property
derived from the use of principal, including return received as:
new text end

new text begin (1) rent of real or personal property, including sums received for cancellation or
renewal of a lease;
new text end

new text begin (2) interest on money lent, including sums received as consideration for the privilege
of prepayment of principal, except as provided in section 501C.1107 on bond premium
and bond discount;
new text end

new text begin (3) income earned during administration of a decedent's estate as provided in section
501C.1105;
new text end

new text begin (4) corporate distributions as provided in section 501C.1106;
new text end

new text begin (5) accrued increment on bonds or other obligations issued at discount as provided
in section 501C.1107;
new text end

new text begin (6) receipts from business and farming operations as provided in section 501C.1108;
new text end

new text begin (7) receipts from disposition of natural resources as provided in sections 501C.1109
and 501C.1110; and
new text end

new text begin (8) receipts from other principal subject to depletion as provided in section
501C.1111.
new text end

new text begin Subd. 2. new text end

new text begin Principal defined. new text end

new text begin "Principal" means the property set aside by the owner
or the person legally empowered so that it is held in trust eventually to be delivered to
a remainderperson while the return or use of the principal is in the meantime taken or
received by or held for accumulation for an income beneficiary. Principal includes:
new text end

new text begin (1) consideration received by the trustee on the sale or other transfer of principal, on
repayment of a loan, or as a refund, replacement, or change in the form of principal;
new text end

new text begin (2) proceeds of property taken on eminent domain proceedings;
new text end

new text begin (3) proceeds of insurance on property forming part of the principal, except proceeds
of insurance on a separate interest of an income beneficiary;
new text end

new text begin (4) stock dividends, receipts on liquidation of a corporation, and other corporate
distributions as provided in section 501C.1106;
new text end

new text begin (5) receipts from the disposition of corporate securities as provided in section
501C.1107;
new text end

new text begin (6) royalties and other receipts from disposition of natural resources as provided in
sections 501C.1109 and 501C.1110;
new text end

new text begin (7) receipts from other principal subject to depletion as provided in section
501C.1111;
new text end

new text begin (8) profit resulting from a change in the form of principal;
new text end

new text begin (9) allowances for depreciation established under sections 501C.1108 and
501C.1113, subdivision 1, clause (2); and
new text end

new text begin (10) gain or loss, including the purchase premium, if any, from the grant of an
option to buy or sell property of the trust, whether or not the trust owns the property
when the option is granted.
new text end

new text begin Subd. 3. new text end

new text begin Charges. new text end

new text begin After determining income and principal in accordance with the
terms of the trust instrument or of sections 501C.1101 to 501C.1118, the trustee shall
charge to income or principal expenses and other charges as provided in section 501C.1113.
new text end

Sec. 4.

new text begin [501C.1104] WHEN RIGHT TO INCOME ARISES; APPORTIONMENT
OF INCOME.
new text end

new text begin Subdivision 1. new text end

new text begin General rule. new text end

new text begin An income beneficiary is entitled to income from the
date specified in the trust instrument or, if none is specified, from the date an asset becomes
subject to the trust. In the case of an asset that becomes subject to a trust because of the
death of any person, it becomes subject to the trust as of the date of the death of the person
or, if later, the date the estate or trust becomes entitled to the asset if acquired after the death
of the person, even though there is an intervening period of administration of an estate or
trust during which the beneficiary may have no right to a distribution of the income.
new text end

new text begin Subd. 2. new text end

new text begin Receipts due but not paid; periodic payments. new text end

new text begin In the administration of a
decedent's estate or an asset that becomes subject to a trust by reason of a will:
new text end

new text begin (1) receipts due but not paid at the date of death of the testator are principal;
new text end

new text begin (2) receipts in the form of periodic payments, other than corporate distributions to
stockholders, including rent, interest, or annuities, not due at the date of the death of the
testator must be treated as accruing from day to day. That portion of the receipt that
accrues before the date of death is principal, and the balance is income.
new text end

new text begin Subd. 3. new text end

new text begin Other receipts. new text end

new text begin In all other cases, any receipt from an income-producing
asset is income even though the receipt was earned or accrued in whole or in part before
the date when the asset became subject to the trust.
new text end

new text begin Subd. 4. new text end

new text begin Termination of income interest. new text end

new text begin On termination of an income interest,
the income beneficiary whose interest is terminated, or the income beneficiary's estate,
is entitled to:
new text end

new text begin (1) income undistributed on the date of termination;
new text end

new text begin (2) income due but not paid to the trustee on the date of termination; and
new text end

new text begin (3) income in the form of periodic payments, other than corporate distributions to
stockholders, including rent, interest, or annuities, not due on the date of termination,
accrued from day to day.
new text end

new text begin Subd. 5. new text end

new text begin Corporate distributions to stockholders. new text end

new text begin Corporate distributions to
stockholders must be treated as due on the day fixed by the corporation for determination
of stockholders of record entitled to distribution or, if no date is fixed, on the date of
declaration of the distribution by the corporation.
new text end

new text begin Subd. 6. new text end

new text begin Income payable to spouse. new text end

new text begin If a gift or bequest is made in trust that is
intended to qualify for the federal estate tax deduction for transfers under section 2056 of
the Internal Revenue Code of 1986, as amended, or the federal gift tax deduction under
section 2523 of the Internal Revenue Code of 1986, as amended, all distributions of
income to the transferor's spouse shall not be made less frequently than annually.
new text end

Sec. 5.

new text begin [501C.1105] INCOME EARNED DURING ADMINISTRATION OF A
DECEDENT'S ESTATE.
new text end

new text begin Subdivision 1. new text end

new text begin Expenses. new text end

new text begin Unless a will provides otherwise and subject to
subdivision 2, all expenses incurred in connection with the settlement of a decedent's
estate, including debts, funeral expenses, estate taxes, interest and penalties concerning
taxes, family allowances, fees of attorneys and personal representatives, and court costs
must be charged against the principal of the estate.
new text end

new text begin Subd. 2. new text end

new text begin Income. new text end

new text begin Unless the will or trust instrument provides otherwise, income
from the assets of a decedent's estate after the death of the testator and before distribution
and income from the assets of a trust after an income interest in a trust terminates,
including income from property used to discharge liabilities, must be determined in
accordance with the rules applicable to a trustee and distributed as follows:
new text end

new text begin (1) to specific devisees or to any beneficiary who is to receive specific property
from a trust, the income from the property devised or distributed to them respectively,
less property taxes, ordinary repairs, interest, and other expenses of management and
operation of the property, and less an appropriate portion of taxes imposed on income,
excluding taxes on capital gains, that accrue during the period of administration or after
an income interest in a trust terminates;
new text end

new text begin (2) to a devisee or to any beneficiary who receives a pecuniary amount outright,
the interest or any other amount provided by the will, the terms of the trust instrument
or applicable law from income determined in accordance with the rules applicable to a
trustee or, to the extent income is insufficient, from principal. If a beneficiary is to receive
a pecuniary amount outright from a trust after an income interest ends and no interest or
other amount is provided for by the terms of the trust instrument or applicable law, the
trustee shall distribute the interest or other amount to which the beneficiary would be
entitled under applicable law if the pecuniary amount were required to be paid under a will;
new text end

new text begin (3) to all other devisees or beneficiaries, the balance of the income determined
in accordance with the rules applicable to a trustee, less the balance of property taxes,
ordinary repairs, interest, and other expenses of management and operation of all property
from which the estate or trust is entitled to income, and taxes imposed on income,
excluding taxes on capital gains, that accrue during the period of administration or after an
income interest terminates, in proportion to their respective interests in the undistributed
assets of the estate or trust computed at times of distribution on the basis of inventory value.
new text end

new text begin For purposes of this subdivision, an income interest in a trust terminates upon the
occurrence of any event which causes the right of a person to receive mandatory or
discretionary distributions of income from the trust to end.
new text end

new text begin Subd. 3. new text end

new text begin Income received by trustee. new text end

new text begin Income received by a trustee under
subdivision 2 must be treated as income of the trust.
new text end

Sec. 6.

new text begin [501C.1106] ENTITY DISTRIBUTIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Distribution of ownership interests; shares; stock splits; stock
dividends; subscription rights.
new text end

new text begin Distributions of shares of a distributing corporation or
similar equity ownership interests in noncorporate entities, including distributions in the
form of or equivalent to a stock split or stock dividend, are principal. An entity owner's
right to subscribe to shares, ownership interests, or other securities of the distributing
entity and the proceeds of any sale of that right are principal.
new text end

new text begin Subd. 2. new text end

new text begin Redemption; merger; reorganization; liquidation. new text end

new text begin Subject to
subdivisions 3 and 4, and except to the extent that the entity indicates that some part
of an entity distribution is a settlement of preferred or guaranteed corporate dividends
or distribution preferences based upon a return on invested capital accrued under the
governing instrument since the trustee acquired the related ownership interest or is in lieu
of an ordinary cash dividend or similar distribution from current earnings of the entity, an
entity distribution is principal if the distribution is pursuant to:
new text end

new text begin (1) redemption of the ownership interest or a call of shares;
new text end

new text begin (2) a merger, consolidation, reorganization, or other plan by which assets of the
entity are acquired by another entity; or
new text end

new text begin (3) a total or partial liquidation of the entity, including a distribution the entity
indicates is a distribution in total or partial liquidation or distribution of assets, other than
cash, pursuant to a court decree or final administrative order by a government agency
ordering distribution of the particular assets.
new text end

new text begin Subd. 3. new text end

new text begin Regulated investment company; real estate investment trust.
new text end

new text begin Distributions made from ordinary income by a regulated investment company or by a trust
qualifying and electing to be taxed under federal law as a real estate investment trust are
income. All other distributions made by the company or trust, including distributions from
short-term or long-term capital gains, depreciation, or depletion, whether in the form of
cash or an option to take new stock or cash or an option to purchase additional shares,
are principal.
new text end

new text begin Subd. 4. new text end

new text begin Distributions from pass-through entities. new text end

new text begin Distributions from
pass-through entities must be allocated between income and principal as reasonably and
equitably determined by the trustee. This subdivision applies for any accounting period
during which an entity is a pass-through entity for any portion of the accounting period. In
making its determination, the trustee may consider the following:
new text end

new text begin (1) characterization of income, distributions, and transactions in financial or other
information received from the entity, including financial statements and tax information;
new text end

new text begin (2) whether the entity completed a significant capital transaction outside of the
ordinary course of business that the trustee believes has resulted in a distribution to the
owners of the entity in the nature of a partial liquidating distribution;
new text end

new text begin (3) the extent to which the burden for income tax with respect to the income of the
entity is to be paid by the trustee out of trust assets or by the beneficiaries of the trust;
new text end

new text begin (4) the net amount of distributions from the entity available to the trustee after
estimating or accounting for tax payments by the trustee or distributions to beneficiaries
for the purpose of paying taxes on income earned by the entity;
new text end

new text begin (5) whether distributions appear to be made out of or contributed to by income earned
by the entity and subjected to income taxes in a prior accounting period which may include
accounting periods prior to the date the trustee acquired the related ownership interest;
new text end

new text begin (6) whether the entity is consistently a pass-through entity during multiple
accounting periods or a change to or from being a pass-through entity has or will occur in
accounting periods preceding or subsequent to the current accounting period;
new text end

new text begin (7) if the trust owns a controlling interest or total interest in an entity, the trustee may
reasonably allocate distributions between income and principal and not necessarily as if
that business interest were owned by the trust as a proprietorship; and
new text end

new text begin (8) other facts and circumstances as the trustee reasonably considers relevant to its
determination.
new text end

new text begin Subd. 5. new text end

new text begin Other distributions. new text end

new text begin Except as provided in subdivisions 1, 2, 3, and 4,
all distributions from entities are income. "Entity distributions" includes cash dividends,
distributions of or rights to subscribe to shares or securities or obligations of entities other
than the distributing entity, and the proceeds of the rights or property distributions. Except
as provided in subdivisions 1, 2, 3, and 4, if the distributing entity gives the owner of an
ownership interest an option to receive a distribution either in cash or in an ownership
interest in the entity, the distribution chosen is income.
new text end

new text begin Subd. 6. new text end

new text begin Reliance on statements. new text end

new text begin The trustee may rely on a statement of the
distributing entity as to a fact relevant under a provision of sections 501C.1101 to
501C.1118 concerning the source or character of dividends or distributions of corporate
assets.
new text end

new text begin Subd. 7. new text end

new text begin Definitions. new text end

new text begin The definitions in this subdivision apply to this section.
new text end

new text begin (a) Entity. "Entity" means a corporation, partnership, limited liability company,
regulated investment company, real estate investment trust, common or collective trust
fund, or any other organization in which a trustee has an interest other than a trust or estate
governed by any other provision of sections 501C.1101 to 501C.1118.
new text end

new text begin (b) Pass-through entity. "Pass-through entity" means any entity that passes through
income, loss, deductions, credits, and other tax attributes to the owners of an interest in
the entity under the Internal Revenue Code in such manner that the owner is directly
subject to income taxation on all or any part of the income of the entity (whether or not the
pass-through of the tax attributes is related to distributions from the entity), including,
but not limited to, S corporations, partnerships, limited liability companies, or limited
liability partnerships.
new text end

Sec. 7.

new text begin [501C.1107] BOND PREMIUM AND DISCOUNT.
new text end

new text begin Subdivision 1. new text end

new text begin Principal. new text end

new text begin Bonds or other obligations for the payment of money
are principal at their inventory value, except as provided in subdivision 2 for discount
bonds. No provision may be made for amortization of bond premiums or for accumulation
for discount. The proceeds of sale, redemption, or other disposition of the bonds or
obligations are principal.
new text end

new text begin Subd. 2. new text end

new text begin Income. new text end

new text begin The increment in value realized upon sale, redemption, or other
disposition of a bond or other obligation for the payment of money bearing no stated
interest but payable or redeemable at maturity or at a future time at an amount in excess of
the amount in consideration of which it was issued or in accordance with a fixed schedule
of appreciation, is distributable as income. The increment in value is distributable to
the beneficiary who was the income beneficiary at the time of increment from the first
principal cash available or, if none is available, when realized by sale, redemption, or other
disposition. Whenever unrealized increment is distributed as income but out of principal,
the principal must be reimbursed for the increment when realized.
new text end

Sec. 8.

new text begin [501C.1108] SOLE PROPRIETORSHIPS.
new text end

new text begin Subdivision 1. new text end

new text begin Separate account. new text end

new text begin A trustee who conducts a business or other
activity as a sole proprietor may establish and maintain a separate account for the
transactions of the business or other activity, whether or not its assets are segregated
from other trust assets, if the trustee determines that it is in the best interest of all the
beneficiaries to establish a separate account instead of accounting for the business or other
activity as part of the trust's general accounting records.
new text end

new text begin (a) A trustee who establishes a separate account for a business or other activity
shall determine the extent to which its net cash receipts will be retained in the separate
account for working capital, the acquisition or replacement of fixed assets, and other
reasonably foreseeable needs of the business or activity or will be transferred out of the
separate account and accounted for as principal or income in the trust's general accounting
records as the trustee reasonably and equitably determines. If a trustee sells assets of the
business or other activity, other than in the ordinary course of the business or activity, and
determines that any portion of the amount received is no longer required in the conduct of
the business the trustee shall transfer that portion out of the separate account and shall
account for that portion as principal in the trust's general accounting records.
new text end

new text begin (b) A trustee may not account separately for a traditional securities portfolio to avoid
the provisions of sections 501C.1101 to 501C.1118 that otherwise apply to securities.
new text end

new text begin Subd. 2. new text end

new text begin Other income or losses. new text end

new text begin If a trustee does not maintain a separate account
for a business or other activity conducted as a sole proprietorship, the net profits of the
sole proprietorship in any fiscal or calendar year, as reasonably and equitably determined
by the trustee, must be allocated to income while any net loss in that year must be charged
to principal and must not be carried into any other fiscal or calendar year for purposes of
calculating net income.
new text end

Sec. 9.

new text begin [501C.1109] DISPOSITION OF NATURAL RESOURCES.
new text end

new text begin Subdivision 1. new text end

new text begin Allocation of receipts. new text end

new text begin If a part of the principal consists of a right to
receive royalties, overriding or limited royalties, working interests, production payments,
net profit interests, or other interests in minerals or other natural resources in, on, or
under land, the receipts from taking the natural resources from the land must be allocated
under paragraphs (a) to (c).
new text end

new text begin (a) If received as rent on a lease or extension payments on a lease, the receipts
are income.
new text end

new text begin (b) If received from a production payment carved out of a mineral property, the
receipts are income to the extent of a factor for interest or its equivalent provided in the
governing instrument or a greater amount determined by the trustee to be reasonable and
equitable in view of the interests of those entitled to income as well as those entitled to
principal. The receipts not allocated to income are principal.
new text end

new text begin (c) If received as a royalty, overriding or limited royalty, or bonus or from a working,
net profit, or other interest in minerals or other natural resources, receipts not provided
for in paragraph (a) or (b) must be apportioned on a yearly basis in accordance with
this paragraph whether or not any natural resource was being taken from the land at the
time the trust was established. The receipts from these properties must be allocated in
accordance with what is reasonable and equitable in view of the interests of those entitled
to income as well as of those entitled to principal. The amount allocated to principal must
be presumed to be reasonable and equitable if it is neither substantially more nor less than
the amount allowable as a deduction for depletion, amortization, depreciation, or similar
costs under the Internal Revenue Code of 1986. Any allocated amount must be added to
principal as an allowance for depletion of the asset. The balance of the gross receipts, after
payment from the receipts of all direct and indirect expenses, is income.
new text end

new text begin Subd. 2. new text end

new text begin Timber excepted. new text end

new text begin This section does not apply to timber.
new text end

Sec. 10.

new text begin [501C.1110] TIMBER.
new text end

new text begin Subdivision 1. new text end

new text begin Net receipts. new text end

new text begin If a part of the principal consists of land from which
merchantable timber may be removed, the net receipts from taking the timber from the
land must be allocated as follows:
new text end

new text begin (1) to income to the extent that the amount of timber removed from the land during
the accounting period does not exceed the rate of growth of the timber;
new text end

new text begin (2) to principal to the extent that the amount of timber removed from the land during
the accounting period exceeds the rate of growth of the timber or the net receipts are
from the sale of standing timber;
new text end

new text begin (3) to or between income and principal if the net receipts are from the lease of
timberland or from a contract to cut timber from land owned by a trust, by determining
the amount of timber removed from the land under the lease or contract and applying
the rules in clause (1) or (2); or
new text end

new text begin (4) to principal to the extent that advance payments, bonuses, and other payments
are not allocated pursuant to clause (1), (2), or (3).
new text end

new text begin Subd. 2. new text end

new text begin Depletion. new text end

new text begin In determining net receipts to be allocated pursuant to
subdivision 1, a trustee shall deduct and transfer to principal a reasonable amount for
depletion.
new text end

new text begin Subd. 3. new text end

new text begin Scope. new text end

new text begin This section applies whether or not timber was harvested from the
property before it became subject to the trust.
new text end

Sec. 11.

new text begin [501C.1111] ANNUITIES, QUALIFIED AND NONQUALIFIED
EMPLOYEE COMPENSATION, RETIREMENT PLANS AND OTHER
PROPERTY SUBJECT TO DEPLETION.
new text end

new text begin Except as provided in sections 501C.1109 and 501C.1110, if part of the principal
consists of property subject to depletion, including leaseholds, patents, copyrights, royalty
rights, rights to receive payments on a contract for deferred compensation, qualified and
nonqualified employer retirement plans, individual retirement accounts, and annuities, the
receipts from the property must be allocated in accordance with what is reasonable and
equitable in view of the interests of those entitled to income as well as of those entitled
to principal. The trustee may determine the allocation based on a fixed percentage of
each payment, an amortization of the inventory value of the series of payments, or, if the
individual retirement account, pension, profit-sharing, stock-bonus, or stock-ownership
plan consists of segregated and identifiable assets, the trustee may apply the provisions
of sections 501C.1101 to 501C.1118 to the receipts in the account or plan in order to
characterize the payments received during a trust accounting period. To the extent that a
payment is characterized by the payer as interest or a dividend or a payment made in lieu
of interest or a dividend, a trustee shall allocate it to income. The amount allocated to
principal is presumed to be reasonable and equitable if it is neither substantially more nor
less than the amount allowable as a deduction for depletion, amortization, depreciation, or
similar costs under the Internal Revenue Code of 1986.
new text end

Sec. 12.

new text begin [501C.1112] TRUSTEE'S POWER TO ADJUST.
new text end

new text begin Subdivision 1. new text end

new text begin Power to adjust. new text end

new text begin A trustee may adjust between principal and
income to the extent the trustee considers necessary to comply with section 501C.1102,
subdivision 3, after applying section 501C.1102, subdivisions 1 and 2, if the trustee invests
and manages the trust assets as a prudent investor and the terms of the trust describe the
amount that may or must be distributed to a beneficiary by referring to the trust's income.
new text end

new text begin Subd. 2. new text end

new text begin Factors to consider. new text end

new text begin 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:
new text end

new text begin (1) the nature, purpose, and expected duration of the trust;
new text end

new text begin (2) the intent of the settlor;
new text end

new text begin (3) the identity and circumstances of the beneficiaries;
new text end

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

new text begin (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;
new text end

new text begin (6) the net amount allocated to income under the other provisions of sections
501C.1101 to 501C.1118 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;
new text end

new text begin (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;
new text end

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

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

new text begin (10) the investment return under current economic conditions from other portfolios
meeting fiduciary requirements.
new text end

new text begin Subd. 3. new text end

new text begin Limitation on trustee's power. new text end

new text begin A trustee may not make an adjustment:
new text end

new text begin (1) 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;
new text end

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

new text begin (3) 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;
new text end

new text begin (4) 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;
new text end

new text begin (5) 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;
new text end

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

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

new text begin Subd. 4. new text end

new text begin Cotrustee may exercise power. new text end

new text begin If the provisions of subdivision 3, clause
(4), (5), (6), or (7), 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.
new text end

new text begin Subd. 5. new text end

new text begin Release of power. new text end

new text begin 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),
or (7), 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.
new text end

new text begin Subd. 6. new text end

new text begin Power may be negated by specific reference. new text end

new text begin Terms of a trust that limit
the power of a trustee to make an adjustment between principal and income do not affect
the application of this section unless it is clear from the terms of the trust that the terms are
intended to deny the trustee the power of adjustment conferred by subdivision 1.
new text end

new text begin Subd. 7. new text end

new text begin No duty to adjust; remedy. new text end

new text begin Nothing in this section is intended to create or
imply a duty to make an adjustment, and a trustee is not liable for not considering whether
to make an adjustment or for choosing not to make an adjustment. In a proceeding with
respect to the trustee's nonexercise of the power to make an adjustment from principal to
income (or with respect to the trustee's failure to make a greater adjustment from principal
to income), the sole remedy is to direct or deny an adjustment (or greater adjustment)
from principal to income.
new text end

new text begin Subd. 8. new text end

new text begin Notice of determination. new text end

new text begin A trustee may give notice of a proposed action
regarding a matter governed by this section as provided in this subdivision. For purposes
of this subdivision, a proposed action includes a course of action and a determination
not to take action.
new text end

new text begin (a) The trustee shall mail notice of the proposed action to all adult beneficiaries who
are receiving, or are entitled to receive, income under the trust or to receive a distribution
of principal if the trust were terminated at the time the notice is given. Notice may
be given to any other beneficiary.
new text end

new text begin (b) The notice of proposed action must state that it is given pursuant to this
subdivision and must state the following:
new text end

new text begin (1) the name and mailing address of the trustee;
new text end

new text begin (2) the name and telephone number of a person who may be contacted for additional
information;
new text end

new text begin (3) a description of the action proposed to be taken and an explanation of the reasons
for the action;
new text end

new text begin (4) the time within which objections to the proposed action can be made, which must
be at least 30 days from the mailing of the notice of proposed action; and
new text end

new text begin (5) the date on or after which the proposed action may be taken or is effective.
new text end

new text begin (c) A beneficiary may object to the proposed action by mailing a written objection to
the trustee at the address stated in the notice of proposed action within the time period
specified in the notice of proposed action.
new text end

new text begin (d) If a trustee does not receive a written objection to the proposed action from the
beneficiary within the applicable period, the trustee is not liable for an action regarding a
matter governed by this chapter to a beneficiary if:
new text end

new text begin (1) the beneficiary is an adult (or is a minor with a duly appointed conservator of
the estate) and the notice is mailed to the adult beneficiary or conservator at the address
determined by the trustee after reasonable diligence;
new text end

new text begin (2) the beneficiary is an adult (or is a minor with a duly appointed conservator of the
estate) and the adult beneficiary or conservator receives actual notice;
new text end

new text begin (3) the beneficiary is not an adult and has no duly appointed conservator of the estate
and an adult having a substantially identical interest and having no conflicting interest
receives actual notice;
new text end

new text begin (4) the beneficiary (or the conservator of the estate of a minor beneficiary) consents
in writing to the proposed action either before or after the action is taken; or
new text end

new text begin (5) the beneficiary is not an adult and has no duly appointed conservator of the estate
and an adult having a substantially identical interest and having no conflicting interest
consents in writing to the proposed action either before or after the action is taken.
new text end

new text begin (e) If the trustee receives a written objection within the applicable time period, either
the trustee or a beneficiary may petition the court to have the proposed action performed
as proposed, performed with modifications, or denied. In the proceeding, a beneficiary
objecting to the proposed action has the burden of proof as to whether the trustee's
proposed action should not be performed. A beneficiary who has not objected is not
estopped from opposing the proposed action in the proceeding. If the trustee decides not
to implement the proposed action, the trustee shall notify the beneficiaries of the decision
not to take the action and the reasons for the decision, and the trustee's decision not to
implement the proposed action does not itself give rise to liability to any current or future
beneficiary. A beneficiary may petition the court to have the action performed and has
the burden of proof as to whether it should be performed.
new text end

new text begin (f) Nothing in this subdivision limits the right of a trustee or beneficiary to petition
the court pursuant to section 501C.0201 for instructions as to any action, failure to act,
or determination not to act regarding a matter governed by this section in the absence of
notice as provided in this subdivision. In any such proceeding, any beneficiary filing such
a petition or objecting to a petition of the trustee has the burden of proof as to any action
taken, any failure to act, or determination not to act, by the trustee.
new text end

Sec. 13.

new text begin [501C.1113] CHARGES AGAINST INCOME AND PRINCIPAL.
new text end

new text begin Subdivision 1. new text end

new text begin Income. new text end

new text begin The following charges must be made against income:
new text end

new text begin (1) ordinary expenses incurred in connection with the administration, management,
or preservation of the trust property, including regularly recurring taxes assessed against
a portion of the principal, water rates, premiums on insurance taken upon the interests
of the income beneficiary, remainderperson, or trustee, interest paid by the trustee, and
ordinary repairs;
new text end

new text begin (2) a reasonable allowance for depreciation on property subject to depreciation
under generally accepted accounting principles, but no allowance may be made for
depreciation of that portion of real property used by a beneficiary as a residence or for
depreciation of property held by the trustee on January 1, 1970, for which the trustee is not
then making an allowance for depreciation;
new text end

new text begin (3) one-half of the court costs, attorneys' fees, and other fees on periodic accountings
or judicial proceedings, unless the court directs otherwise;
new text end

new text begin (4) court costs, attorneys' fees, and other fees on other accountings or judicial
proceedings if the matter primarily concerns the income interest, unless the court directs
otherwise;
new text end

new text begin (5) one-half of the trustee's regular compensation for services performed for the
income beneficiary or in the production of income whether based on a percentage of
principal or income, and all expenses reasonably incurred for current management of
principal and application of income; and
new text end

new text begin (6) any tax levied on receipts defined as income under sections 501C.1101 to
501C.1118 or the trust instrument and payable by the trustee.
new text end

new text begin Subd. 2. new text end

new text begin Unusual charges. new text end

new text begin If charges against income are of an unusual amount, the
trustee may charge them over a reasonable period of time or, by means of reserves or other
reasonable means, withhold from distribution sufficient sums to regularize distributions.
new text end

new text begin Subd. 3. new text end

new text begin Principal. new text end

new text begin The following charges must be made against principal:
new text end

new text begin (1) trustee's compensation not chargeable to income under subdivision 1, clause
(5), special compensation of the trustee, expenses reasonably incurred in connection
with principal, court costs and attorneys' fees primarily concerning matters of principal,
and trustee's compensation computed on principal as an acceptance, distribution, or
termination fee;
new text end

new text begin (2) charges not provided for in subdivision 1, including the cost of investing and
reinvesting principal, the payments on principal of an indebtedness, including a mortgage
amortized by periodic payments of principal, expenses for preparation of property for
rental or sale, and, unless the court directs otherwise, expenses incurred in maintaining
or defending any action to construe the trust or protect it or the property or assure the
title of any trust property;
new text end

new text begin (3) extraordinary repairs or expenses incurred in making a capital improvement to
principal, including special assessments, but a trustee may establish an allowance for
depreciation out of income to the extent permitted by subdivision 1, clause (2), and by
section 501C.1105;
new text end

new text begin (4) any tax levied on profit, gain, or other receipts allocated to principal, even if the
taxing authority calls the tax an income tax;
new text end

new text begin (5) any amount apportioned to a trust, including interest and penalties, if an estate or
inheritance tax is levied in respect of a trust in which both an income beneficiary and a
remainderperson have an interest.
new text end

new text begin Subd. 4. new text end

new text begin Regular charges payable from income. new text end

new text begin Regularly recurring charges
payable from income must be apportioned to the same extent and in the same manner that
income is apportioned under section 501C.1104.
new text end

new text begin Subd. 5. new text end

new text begin Exceptions. new text end

new text begin Paragraphs (a) to (c) are exceptions to the requirements of
subdivisions 1 to 4.
new text end

new text begin (a) With respect to a revocable living trust, during the lifetime of the grantor, all of
the trustee's regular compensation for services performed must be charged against income,
unless directed otherwise by the grantor.
new text end

new text begin (b) If charging a part or all of the trustee's regular compensation to principal, in the
judgment of the trustee, is impracticable, because of the lack of sufficient cash and readily
marketable assets, or inadvisable, because of the nature of the principal assets, the trustee
may determine to pay part or all of the compensation out of income. The decision of the
trustee to pay a larger portion or all of the trustee's regular compensation out of income is
conclusive, and the income of the trust is not entitled to reimbursement from principal
at any subsequent time or times.
new text end

new text begin (c) If charging a part or all of the trustee's regular compensation to income, in the
judgment of the trustee, is impracticable, because of the lack of sufficient income, or
inadvisable, because of a desire to provide maximum income to the beneficiary, the trustee
may determine to pay part or all of such compensation out of principal. The decision of
the trustee to pay a larger portion or all of the trustee's regular compensation out of the
principal is conclusive.
new text end

Sec. 14.

new text begin [501C.1114] NONTRUST ESTATES.
new text end

new text begin Subdivision 1. new text end

new text begin Limitations. new text end

new text begin Sections 501C.1101 to 501C.1118 apply to nontrust
estates, subject to:
new text end

new text begin (1) agreement of the parties;
new text end

new text begin (2) specific direction in the instrument creating the nontrust estates;
new text end

new text begin (3) subdivision 2; and
new text end

new text begin (4) other applicable statutes.
new text end

new text begin References in sections 501C.1101 to 501C.1118 to trusts and trustees must be read as
applying to nontrust estates and to tenants and remainderpersons as the context requires.
new text end

new text begin Subd. 2. new text end

new text begin Application. new text end

new text begin In applying sections 501C.1101 to 501C.1118 to nontrust
estates, the rules in paragraphs (a) to (d) must be followed.
new text end

new text begin (a) A legal life tenant or a remainderperson who has incurred a charge for the
tenant's or remainderperson's benefit without the consent or agreement of the other, shall
pay the charge in full.
new text end

new text begin (b) Costs of an improvement, including special taxes or assessments representing
an addition to value of property forming part of the principal that cannot reasonably be
expected to outlast the legal life estate, must be paid by the legal life tenant.
new text end

new text begin (c) If the improvement can reasonably be expected to outlast the legal life estate,
only a portion of the costs must be paid by the legal life tenant and the balance by the
remainderperson.
new text end

new text begin (1) The portion payable by the legal life tenant is that fraction of the total found by
dividing the present value of the legal life estate by the present value of an estate of the
same form as that of the legal life estate but limited to a period corresponding to the
reasonably expected duration of the improvement.
new text end

new text begin (2) The present value of the legal life estate must be computed by applying the federal
estate tax regulations for the calculation of the value of life estates under section 2031 of the
Internal Revenue Code of 1986. The federal estate tax regulations applied must be those in
force on the date when the costs of the improvement are initially determined by assessment,
agreement, or otherwise. No other evidence of duration or expectancy may be considered.
new text end

new text begin (d) No allowance may be made for depreciation of property held by a legal life
tenant on January 1, 1990, if the life tenant was not making the allowance with respect
to the property prior to January 1, 1990.
new text end

Sec. 15.

new text begin [501C.1115] APPLICATION.
new text end

new text begin Except as specifically provided in the governing instrument, Minnesota Statutes
1988, sections 501.48 to 501.63, apply to a receipt or expense received or incurred after
January 1, 1970, and before January 1, 1990, by any trust or decedent's estate whether
established before or after January 1, 1970, and whether the asset involved was acquired
by the trustee before or after January 1, 1970.
new text end

new text begin Except as specifically provided in the governing instrument, sections 501C.1101 to
501C.1118 apply to a receipt or expense received or incurred after December 31, 1989,
by a trust or decedent's estate whether established before, on, or after January 1, 1990,
and whether the asset involved or legal estate was acquired by the trustee, personal
representative, legal life tenant, or remainderperson before, on, or after January 1, 1990.
new text end

Sec. 16.

new text begin [501C.1116] ASCERTAINMENT OF INCOME OR PRINCIPAL.
new text end

new text begin Sections 501C.1101 to 501C.1118 do not govern the ascertainment of what
constitutes the receipt of income or principal by the estate or trust for income tax purposes.
new text end

Sec. 17.

new text begin [501C.1117] UNIFORMITY OF INTERPRETATION.
new text end

new text begin Sections 501C.1101 to 501C.1118 must be so construed as to effectuate their general
purpose to make uniform the law of those states that enact them.
new text end

Sec. 18.

new text begin [501C.1118] SHORT TITLE.
new text end

new text begin Sections 501C.1101 to 501C.1117 may be cited as the Uniform Principal and
Income Act.
new text end

ARTICLE 12

MISCELLANEOUS PROVISIONS RECODIFICATION

Section 1.

new text begin [501C.1201] MEMORIAL FUND.
new text end

new text begin Subdivision 1. new text end

new text begin Establishment. new text end

new text begin A trust may be created for the purpose of
establishing a fund for the benefit of one or more individuals with a single transfer under
the Minnesota Uniform Custodial Trust Act in the manner and form provided by section
529.17. A trust authorized under this section must be created and administered and is
subject to the Minnesota Uniform Custodial Trust Act.
new text end

new text begin Subd. 2. new text end

new text begin Additional funds. new text end

new text begin Notwithstanding subdivision 1, after a fund has been
created, additional funds may be transferred to the fund without the formalities required
by chapter 529 if the transferor manifests a reasonable expression of intent to make the
transfer, together with a reasonable form of delivery of the property including, but not
limited to, the following:
new text end

new text begin (1) a check payable to the name of the fund and delivered to the trustee or the
trustee's custodial agent;
new text end

new text begin (2) delivery of cash or tangible personal property to the trustee or to the trustee's
custodial agent;
new text end

new text begin (3) delivery and recording of title of stock or other registered security in the name of
the fund;
new text end

new text begin (4) delivery of a deed and acceptance of the deed by the trustee of the fund, or the
recording of a deed in the name of the trustee of the fund with the applicable county
recorder or registrar of titles for real property; and
new text end

new text begin (5) any other means of transfer and delivery so that a reasonable person would
conclude that the transferor intended the property be titled in the name of, and used for the
benefit of the beneficiaries of, the fund.
new text end

Sec. 2.

new text begin [501C.1202] SUSPENSION OF THE POWER OF ALIENATION.
new text end

new text begin Subdivision 1. new text end

new text begin Suspension; exceptions. new text end

new text begin The power of alienation is suspended if
there are no persons in being who, alone or in conjunction with others, can convey an
absolute fee in possession or absolute ownership of real property or absolute ownership of
personal property.
new text end

new text begin (a) There is no suspension of the power of alienation by the terms of a trust or by
interests in property held in trust if there is an unlimited power in one or more persons
then in being to terminate the trust, by revocation or otherwise, and to acquire an absolute
fee in possession or absolute ownership of the trust property.
new text end

new text begin (b) There is no suspension of the power of alienation by the terms of a trust or
by interests in property held in trust if the trustee has power to sell an absolute fee in
possession or absolute ownership of the trust property.
new text end

new text begin Subd. 2. new text end

new text begin Suspension for 21 years. new text end

new text begin The power of alienation of property held in trust
may be suspended, by the terms of the trust, for a period of not more than 21 years. During
any period of suspension of the power of alienation of real property, sections 501C.0201
to 501C.0208 apply. Notwithstanding any contrary term of a trust, suspension of the
power of alienation by the terms of a trust ceases after a period of 21 years, after which the
trustee has the power to convey an absolute fee in possession or absolute ownership of the
trust property, and to mortgage, pledge, and lease the same. A provision in the terms of a
trust for forfeiture of the interest of a trustee or beneficiary if the trustee or beneficiary
participates in or seeks to convey, mortgage, pledge, or lease trust property after the
expiration of a 21-year period of suspension is void.
new text end

new text begin Subd. 3. new text end

new text begin Inapplicable to certain trusts. new text end

new text begin Subdivision 2 does not apply to a trust if the
beneficial interests in the trust are evidenced by or constitute securities within the meaning
of section 2(1) of the Securities Act of 1933, title 15, United States Code, section 77(b)(1).
new text end

new text begin Subd. 4. new text end

new text begin Void future interests. new text end

new text begin Every future interest in real or personal property
not held in trust is void in its creation if it might suspend the power of alienation for a
period longer than a life or lives in being plus 21 years.
new text end

Sec. 3.

new text begin [501C.1203] TRUSTS FORMING PART OF RETIREMENT PLANS
FOR PARTICIPATING MEMBERS.
new text end

new text begin If a trust forms part of a retirement plan created by and for the benefit of self-employed
persons for the purpose of receiving their contributions and investing, accumulating, and
distributing to the persons or their beneficiaries the corpus, profits, and earnings of the
trust in accordance with the plan, the power of a person beneficially interested in the trust
to sell, assign, or transfer that beneficial interest, to anticipate payments under the plan, or
to terminate the trust, may be limited or withheld in accordance with the provisions of the
plan, whether or not the person furnished consideration for the creation of the trust.
new text end

Sec. 4.

new text begin [501C.1204] TRUSTS NOT AFFECTED.
new text end

new text begin Notwithstanding other law to the contrary, a trust created before June 1, 1973,
relating to one's "minority" or "majority" or other related terms is governed by the
definitions of those terms existing at the time of the creation of the trust.
new text end

Sec. 5.

new text begin [501C.1205] TRUST PROVISIONS LINKED TO PUBLIC ASSISTANCE
ELIGIBILITY; SUPPLEMENTAL NEEDS TRUSTS.
new text end

new text begin Subdivision 1. new text end

new text begin Trusts containing limitations linked to eligibility for public
assistance.
new text end

new text begin (a) Except as allowed by subdivision 2 or 3, a provision in a trust that provides
for the suspension, termination, limitation, or diversion of the principal, income, or
beneficial interest of a beneficiary if the beneficiary applies for, is determined eligible
for, or receives public assistance or benefits under a public health care program is
unenforceable as against the public policy of this state, without regard to the irrevocability
of the trust or the purpose for which the trust was created.
new text end

new text begin (b) This subdivision applies to trust provisions created after July 1, 1992. For
purposes of this section, a trust provision is created on the date of execution of the first
instrument that contains the provision, even though the trust provision is later amended or
reformed or the trust is not funded until a later date.
new text end

new text begin Subd. 2. new text end

new text begin Supplemental trusts for persons with disabilities. new text end

new text begin (a) It is the public
policy of this state to enforce supplemental needs trusts as provided in this subdivision.
new text end

new text begin (b) For purposes of this subdivision, a "supplemental needs trust" is a trust created
for the benefit of a person with a disability and funded by someone other than the trust
beneficiary, the beneficiary's spouse, or anyone obligated to pay any sum for damages
or any other purpose to or for the benefit of the trust beneficiary under the terms of a
settlement agreement or judgment.
new text end

new text begin (c) For purposes of this subdivision, a "person with a disability" means a person
who, prior to creation of a trust which otherwise qualifies as a supplemental needs trust
for the person's benefit:
new text end

new text begin (1) is considered to be a person with a disability under the disability criteria specified
in Title II or Title XVI of the Social Security Act; or
new text end

new text begin (2) has a physical or mental illness or condition which, in the expected natural
course of the illness or condition, either prior to or following creation of the trust, to a
reasonable degree of medical certainty, is expected to:
new text end

new text begin (i) last for a continuous period of 12 months or more; and
new text end

new text begin (ii) substantially impair the person's ability to provide for the person's care or custody.
new text end

new text begin Disability may be established conclusively for purposes of this subdivision by the
written opinion of a licensed professional who is qualified to diagnose the illness or
condition, confirmed by the written opinion of a second licensed professional who is
qualified to diagnose the illness or condition.
new text end

new text begin (d) The general purpose of a supplemental needs trust must be to provide for the
reasonable living expenses and other basic needs of a person with a disability when
benefits from publicly funded benefit programs are not sufficient to provide adequately for
those needs. Subject to the restrictions contained in this paragraph, a supplemental needs
trust may authorize distributions to provide for all or any portion of the reasonable living
expenses of the beneficiary. A supplemental needs trust may allow or require distributions
only in ways and for purposes that supplement or complement the benefits available
under medical assistance, Minnesota supplemental aid, and other publicly funded benefit
programs for disabled persons. A supplemental needs trust must contain provisions that
prohibit disbursements that would have the effect of replacing, reducing, or substituting
for publicly funded benefits otherwise available to the beneficiary or rendering the
beneficiary ineligible for publicly funded benefits.
new text end

new text begin (e) A supplemental needs trust is not enforceable if the trust beneficiary becomes
a patient or resident after age 64 in a state institution or nursing facility for six months
or more and, due to the beneficiary's medical need for care in an institutional setting,
there is no reasonable expectation that the beneficiary will ever be discharged from the
institution or facility. For purposes of this paragraph "reasonable expectation" means that
the beneficiary's attending physician has certified that the expectation is reasonable. For
purposes of this paragraph, a beneficiary participating in a group residential program is
not deemed to be a patient or resident in a state institution or nursing facility.
new text end

new text begin (f) The trust income and assets of a supplemental needs trust are considered available
to the beneficiary for medical assistance purposes to the extent they are considered
available to the beneficiary under medical assistance, supplemental security income, or
Minnesota family investment program methodology, whichever is used to determine
the beneficiary's eligibility for medical assistance. For other public assistance programs
established or administered under state law, assets and income will be considered available
to the beneficiary in accordance with the methodology applicable to the program.
new text end

new text begin (g) Nothing in this subdivision requires submission of a supplemental needs trust to
a court for interpretation or enforcement.
new text end

new text begin (h) Paragraphs (a) to (g) apply to supplemental needs trusts whenever created, but
the limitations and restrictions in paragraphs (c) to (g) apply only to trusts created after
June 30, 1993.
new text end

new text begin Subd. 3. new text end

new text begin Supplemental needs trusts under federal law. new text end

new text begin A trust created on or
after August 11, 1993, which qualifies as a supplemental needs trust for a person with a
disability under United States Code, title 42, section 1396p(c)(2)(B)(iv) or 1396p(d), as
amended by section 13611(b) of the Omnibus Budget Reconciliation Act of 1993, Public
Law 103-66, commonly known as OBRA 1993, is enforceable, and the courts of this state
may authorize creation and funding of a trust which so qualifies.
new text end

new text begin Subd. 4. new text end

new text begin Annual filing requirement for supplemental needs trusts. new text end

new text begin (a) A trustee
of a trust under subdivision 3 and United States Code, title 42, section 1396p(d)(4)(A) or
(C), shall submit to the commissioner of human services, at the time of a beneficiary's
request for medical assistance, the following information about the trust:
new text end

new text begin (1) a copy of the trust instrument; and
new text end

new text begin (2) an inventory of the beneficiary's trust account assets and the value of those assets.
new text end

new text begin (b) A trustee of a trust under subdivision 3 and United States Code, title 42, section
1396p(d)(4)(A) or (C), shall submit an accounting of the beneficiary's trust account to the
commissioner of human services at least annually until the trust, or the beneficiary's
interest in the trust, terminates. Accountings are due on the anniversary of the execution
date of the trust unless another annual date is established by the terms of the trust. The
accounting must include the following information for the accounting period:
new text end

new text begin (1) an inventory of trust assets and the value of those assets at the beginning of the
accounting period;
new text end

new text begin (2) additions to the trust during the accounting period and the source of those
additions;
new text end

new text begin (3) itemized distributions from the trust during the accounting period, including the
purpose of the distributions and to whom the distributions were made;
new text end

new text begin (4) an inventory of trust assets and the value of those assets at the end of the
accounting period; and
new text end

new text begin (5) changes to the trust instrument during the accounting period.
new text end

new text begin (c) For the purpose of paragraph (b), an accounting period is 12 months unless an
accounting period of a different length is permitted by the commissioner.
new text end

Sec. 6.

new text begin [501C.1206] PUBLIC HEALTH CARE PROGRAMS AND CERTAIN
TRUSTS.
new text end

new text begin (a) It is the public policy of this state that individuals use all available resources to
pay for the cost of long-term care services, as defined in section 256B.0595, before turning
to Minnesota health care program funds, and that trust instruments should not be permitted
to shield available resources of an individual or an individual's spouse from such use.
new text end

new text begin (b) When a state or local agency makes a determination on an application by the
individual or the individual's spouse for payment of long-term care services through
a Minnesota public health care program pursuant to chapter 256B, any irrevocable
inter-vivos trust or any legal instrument, device, or arrangement similar to an irrevocable
inter-vivos trust created on or after July 1, 2005, containing assets or income of an
individual or an individual's spouse, including those created by a person, court, or
administrative body with legal authority to act in place of, at the direction of, upon the
request of, or on behalf of the individual or individual's spouse, becomes revocable for the
sole purpose of that determination. For purposes of this section, any inter-vivos trust and
any legal instrument, device, or arrangement similar to an inter-vivos trust:
new text end

new text begin (1) shall be deemed to be located in and subject to the laws of this state; and
new text end

new text begin (2) is created as of the date it is fully executed by or on behalf of all of the settlors
or others.
new text end

new text begin (c) For purposes of this section, a legal instrument, device, or arrangement similar
to an irrevocable inter-vivos trust means any instrument, device, or arrangement which
involves a settlor who transfers or whose property is transferred by another including, but
not limited to, any court, administrative body, or anyone else with authority to act on their
behalf or at their direction, to an individual or entity with fiduciary, contractual, or legal
obligations to the settlor or others to be held, managed, or administered by the individual
or entity for the benefit of the settlor or others. These legal instruments, devices, or other
arrangements are irrevocable inter-vivos trusts for purposes of this section.
new text end

new text begin (d) In the event of a conflict between this section and the provisions of an irrevocable
trust created on or after July 1, 2005, this section shall control.
new text end

new text begin (e) This section does not apply to trusts that qualify as supplemental needs trusts
under section 501C.1205 or to trusts meeting the criteria of United States Code, title 42,
section 1396p (d)(4)(a) and (c) for purposes of eligibility for medical assistance.
new text end

new text begin (f) This section applies to all trusts first created on or after July 1, 2005, as permitted
under United States Code, title 42, section 1396p, and to all interests in real or personal
property regardless of the date on which the interest was created, reserved, or acquired.
new text end

Sec. 7.

new text begin [501C.1207] EFFECT OF DISSOLUTION OF MARRIAGE.
new text end

new text begin Subdivision 1. new text end

new text begin Revocation of certain trust provisions. new text end

new text begin If after execution of a trust
instrument in which a sole settlor reserves a power to alter, amend, revoke, or terminate
the provisions of the trust, the settlor's marriage is dissolved or annulled, the dissolution or
annulment revokes any disposition, provision for beneficial enjoyment or appointment of
property made by the trust instrument to a settlor's former spouse, any provisions conferring
a general or special power of appointment on the former spouse and any appointment of
the former spouse as trustee, unless the trust instrument expressly provides otherwise.
new text end

new text begin Subd. 2. new text end

new text begin Passing of property. new text end

new text begin Property prevented from passing to a former spouse
because of revocation by dissolution or annulment of marriage passes as if the former
spouse died on the date of the entry of the judgment and decree dissolving or annulling
the settlor's marriage and other provisions conferring some power or office on the former
spouse are interpreted as if the former spouse died on the date of the entry of the judgment
and decree dissolving or annulling the settlor's marriage.
new text end

new text begin Subd. 3. new text end

new text begin Revival of revoked provisions. new text end

new text begin If provisions are revoked solely by this
section, they are revived by the settlor's remarriage to the former spouse. For purposes
of this chapter, dissolution of marriage includes divorce. A decree of separation which
does not terminate the status of husband and wife is not a dissolution of marriage for
purposes of this section. No change of circumstances other than as described in this
section revokes a trust instrument.
new text end

Sec. 8.

new text begin [501C.1208] SETTLOR AND AGENTS OF SETTLOR.
new text end

new text begin If a trust instrument reserves to the settlor, in a nonfiduciary capacity, the control
over any or all investment decisions, the trustee is not responsible for the investment
decisions made by the settlor or an agent of the settlor.
new text end

Sec. 9.

new text begin [507.48] BONA FIDE PURCHASERS PROTECTED.
new text end

new text begin An express trust not declared in the disposition to the trustee or a constructive or
resulting trust does not defeat the title of a purchaser from the trustee for value and without
notice of the trust, or the rights of a creditor who extended credit to the trustee in reliance
upon the trustee's apparent ownership of the trust property.
new text end

Sec. 10.

new text begin [507.49] CERTIFICATE OF CUSTODIANSHIP.
new text end

new text begin Subdivision 1. new text end

new text begin Contents of certificate. new text end

new text begin (a) A custodian or the owner of property
held in a custodianship, at any time after execution or creation of a custodianship
instrument, may execute a certificate of custodianship that sets forth less than all of
the provisions of the custodial instrument and any amendments to the instrument. The
certificate of custodianship may be used for purposes of selling, conveying, pledging,
mortgaging, leasing, or transferring title to any interest in real or personal property. The
certificate of custodianship must include:
new text end

new text begin (1) the name of the custodianship, if one is given;
new text end

new text begin (2) the date of the custodianship instrument;
new text end

new text begin (3) the name of each owner of property held in the custodianship;
new text end

new text begin (4) the name of each original custodian;
new text end

new text begin (5) the name and address of each custodian empowered to act under the custodianship
instrument at the time of execution of the certificate;
new text end

new text begin (6) the following statement: "The custodians are authorized by the instrument to
sell, convey, pledge, mortgage, lease, or transfer title to any interest in real or personal
property, except as limited by the following: (if none, so indicate)";
new text end

new text begin (7) any other custodianship provisions the custodians or owners of property held
in the custodianship include; and
new text end

new text begin (8) a statement as to whether the custodianship instrument has terminated or been
revoked.
new text end

new text begin (b) The certificate of custodianship must be upon the representation of the custodians
or the owners of property held in the custodianship that the statements contained in the
certificate of custodianship are true and correct and that there are no other provisions in the
custodianship instrument or amendments to it that limit the powers of the custodianship
to sell, convey, pledge, mortgage, lease, or transfer title to interests in real or personal
property. The signature of the custodians or the owners of property held in the custodianship
must be under oath before a notary public or other official authorized to administer oaths.
new text end

new text begin Subd. 2. new text end

new text begin Effect. new text end

new text begin A certificate of custodianship executed under subdivision 1 may be
recorded in the office of the county recorder for any county or in the office of the registrar
of titles with respect to registered land described in the certificate of custodianship or
any attachment to it. When it is recorded in a county where real property is situated,
or in the case of personal property, when it is presented to a third party, the certificate
of custodianship serves to document the existence of the custodianship, the identity of
the custodians, the powers of the custodians and any limitations on those powers, and
other matters the certificate of custodianship sets out, as though the full custodianship
instrument had been recorded, filed, or presented. Until amended or revoked under
subdivision 3, or until the full custodianship instrument is recorded or presented, a
certificate of custodianship is prima facie proof as to the matters contained in it, and any
party may rely upon the continued effectiveness of the certificate.
new text end

new text begin Subd. 3. new text end

new text begin Amendment or revocation. new text end

new text begin (a) Amendment or revocation of a certificate
of custodianship may be made only by a written instrument executed by a custodian or an
owner of property held in the custodianship. Amendment or revocation of a certificate
of custodianship is not effective as to a party unless that party has actual notice of the
amendment or revocation.
new text end

new text begin (b) For purposes of this subdivision, "actual notice" means that a written instrument
of amendment or revocation has been received by the party or, in the case of real property,
that either a written instrument of amendment or revocation has been received by the party
or that a written instrument of amendment or revocation containing the legal description
of the real property has been recorded in the office of the county recorder or in the office
of the registrar of titles where the real property is situated.
new text end

new text begin Subd. 4. new text end

new text begin Application. new text end

new text begin (a) Subdivisions 1 to 3 apply to custodianship instruments
whenever created or executed.
new text end

new text begin (b) Subdivisions 1 to 3 apply only to custodianships established under a federal
law or under a statute of this or any other state. Subdivisions 1 to 3 do not apply to
custodianships governed by chapter 527 or by the similar laws of another state.
new text end

Sec. 11.

new text begin [507.50] AFFIDAVIT OF CUSTODIAN IN REAL PROPERTY
TRANSACTIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Form of affidavit for custodianship. new text end

new text begin An affidavit of a custodian
or of custodians of a custodianship in support of a real property transaction may be
substantially in the following form:
new text end

new text begin STATE OF MINNESOTA
new text end
new text begin )
new text end
new text begin AFFIDAVIT OF CUSTODIAN
new text end
new text begin ) ss.
new text end
new text begin COUNTY OF
new text end
new text begin )
new text end

new text begin .........................., being first duly sworn on oath says that:
new text end

new text begin 1. Affiant is the custodian (one of the custodians) named in that certain Certificate of
Custodianship (or Custodianship Instrument)
new text end

new text begin recorded ......., ...., as Document No. ..... (or in Book ..... of ............, Page ......) in the
Office of the (County Recorder/Registrar of Titles) of ........... County, Minnesota,
new text end

new text begin OR
new text end

new text begin to which this Affidavit is attached,
new text end

new text begin executed by Affiant or another custodian or by the owner of the property that is held
in the custodianship described in the Certificate of Custodianship (or set forth in
the Custodianship Instrument), and which relates to real property in .......... County,
Minnesota, legally described as follows:
new text end

new text begin .
new text end

new text begin .
new text end

new text begin (If more space is needed, continue on back or on attachment.)
new text end

new text begin 2. The name(s) and address(es) of the custodian(s) empowered by the Custodian
Instrument to act at the time of the execution of this Affidavit are as follows:
new text end

new text begin .
new text end

new text begin .
new text end

new text begin 3. The custodian(s) who have executed that certain instrument relating to the real
property described above between ........................, as custodian(s) and ...........................,
dated .........., ....:
new text end

new text begin (i) are empowered by the provisions of the custodianship to sell, convey, pledge,
mortgage, lease, or transfer title to any interest in real property held in custodianship; and
new text end

new text begin (ii) are the requisite number of custodians required by the provisions of the
custodianship to execute and deliver such an instrument.
new text end

new text begin 4. The custodianship has not terminated and has not been revoked.
new text end

new text begin - OR -
new text end

new text begin 4. The custodianship has terminated (or has been revoked). The execution and
delivery of the instrument described in paragraph 3 has been made pursuant to the
provisions of the custodianship.
new text end

new text begin 5. There has been no amendment to the custodianship which limits the power of
custodian(s) to execute and deliver the instrument described in paragraph 3.
new text end

new text begin 6. The custodianship is not supervised by any court.
new text end

new text begin - OR -
new text end

new text begin 6. The custodianship is supervised by the ............ Court of .............. County,
................ All necessary approval has been obtained from the court for the custodian(s) to
execute and deliver the instrument described in paragraph 3.
new text end

new text begin 7. Affiant does not have actual knowledge of any facts indicating that the
custodianship is invalid.
new text end

new text begin .
new text end
new text begin Subscribed and sworn to before me this
new text end new text begin .... day of ........., .....
new text end
new text begin , Affiant
new text end
new text begin .
new text end
new text begin Signature of Notary Public or Other Official
new text end
new text begin Notary Stamp or Seal
new text end
new text begin This instrument was drafted by:
new text end
new text begin .
new text end
new text begin .
new text end

new text begin Subd. 2. new text end

new text begin Effect. new text end

new text begin An affidavit by the custodian or custodians under subdivision 1
is proof that:
new text end

new text begin (1) the custodianship described in the affidavit is a valid custodianship;
new text end

new text begin (2) either the custodianship has not terminated or been revoked or, if the
custodianship has terminated or been revoked, the conveyance described in the affidavit
is made pursuant to the provisions of the custodianship;
new text end

new text begin (3) the powers granted the custodian or custodians extend to the real property
described in the affidavit or attachment to the affidavit;
new text end

new text begin (4) no amendment to the custodianship has been made limiting the power of the
custodian or custodians to sell, convey, pledge, mortgage, lease, or transfer title to the real
property described in the affidavit or attachment to the affidavit, if any;
new text end

new text begin (5) the requisite number of custodians have executed and delivered the instrument of
conveyance described in the affidavit; and
new text end

new text begin (6) any necessary court approval of the transaction has been obtained.
new text end

new text begin The proof is conclusive as to any party relying on the affidavit, except a party dealing
directly with the custodian or custodians who has actual knowledge of facts to the contrary.
new text end

new text begin Subd. 3. new text end

new text begin Recording. new text end

new text begin An Affidavit of Custodian or Custodians under subdivision
1 may be recorded in the office of the county recorder for any county or in the office
of the registrar of titles for any county with respect to registered land described in the
affidavit, or in the Certificate of Custodianship or Custodianship Instrument referred to in
the affidavit, and may be recorded as a separate document or combined with or attached to
an original or certified copy of a Certificate of Custodianship or Custodianship Instrument,
and recorded as one document.
new text end

new text begin Subd. 4. new text end

new text begin Application. new text end

new text begin (a) Subdivisions 1 to 3 apply to custodianship instruments
whenever created or executed.
new text end

new text begin (b) Subdivisions 1 to 3 apply only to custodianships established under a federal
law or under a statute of this or any other state. Subdivisions 1 to 3 do not apply to
custodianships governed by chapter 527 or by the similar laws of another state.
new text end

ARTICLE 13

APPLICATION AND CONSTRUCTION OF TRUST CODE

Section 1.

new text begin [501C.1301] UNIFORMITY OF APPLICATION AND
CONSTRUCTION.
new text end

new text begin In applying and construing sections 501C.0101 to 501C.1014, consideration must
be given to the need to promote uniformity of the law with respect to its subject matter
among states that enact it.
new text end

Sec. 2.

new text begin [501C.1302] ELECTRONIC RECORDS AND SIGNATURES.
new text end

new text begin The provisions of sections 501C.0101 to 501C.1208 governing the legal effect,
validity, or enforceability of electronic records or electronic signatures, and of contracts
formed or performed with the use of such records or signatures, conform to the
requirements of section 102 of the Electronic Signatures in Global and National
Commerce Act, United States Code, title 15, section 7002, and supersede, modify, and
limit the requirements of the Electronic Signatures in Global and National Commerce Act.
new text end

Sec. 3.

new text begin [501C.1303] SEVERABILITY.
new text end

new text begin If any provision located in sections 501C.0101 to 501C.1208 or their application to
any person or circumstances is held invalid, the invalidity does not affect other provisions
or applications of any provision located in sections 501C.0101 to 501C.1208 which can be
given effect without the invalid provision or application, and to this end the provisions of
this chapter are severable.
new text end

Sec. 4.

new text begin [501C.1304] APPLICATION TO EXISTING RELATIONSHIPS.
new text end

new text begin (a) Except as otherwise provided in sections 501C.0101 to 501C.1208:
new text end

new text begin (1) sections 501C.0101 to 501C.1208 apply to all trusts created before, on, or after
its effective date;
new text end

new text begin (2) sections 501C.0101 to 501C.1208 apply to all judicial proceedings concerning
trusts commenced on or after its effective date;
new text end

new text begin (3) sections 501C.0101 to 501C.1208 apply to judicial proceedings concerning trusts
commenced before its effective date unless the court finds that application of a particular
provision of this chapter would substantially interfere with the effective conduct of the
judicial proceedings or unfairly prejudice the rights of the parties;
new text end

new text begin (4) any rule of construction or presumption provided in sections 501C.0101 to
501C.1208 apply to trust instruments executed before the effective date of this act unless
there is a clear indication of a contrary intent in the terms of the trust; and
new text end

new text begin (5) an act or omission that occurs before the effective date of sections 501C.0101 to
501C.1208 is not affected by sections 501C.0101 to 501C.1208.
new text end

new text begin (b) If a right is acquired, extinguished, or barred upon the expiration of a prescribed
period that has commenced to run under any other statute before the effective date of
sections 501C.0101 to 501C.1208, that statute continues to apply to the right even if it
has been repealed or superseded.
new text end

ARTICLE 14

POWERS OF APPOINTMENT

Section 1.

new text begin [502.80] COMMON LAW OF POWERS RETAINED, EXCEPT AS
MODIFIED BY THIS CHAPTER.
new text end

new text begin (a) The common law of powers remains in full force and effect and supplements the
provisions of this chapter, unless explicitly modified or displaced by this chapter.
new text end

new text begin (b) If any provision of this chapter differs or is inconsistent with any provision in
chapter 523 relating to powers of attorney, the provisions of chapter 523 shall prevail to
the extent the provisions are different or inconsistent.
new text end

Sec. 2.

new text begin [502.81] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Application. new text end

new text begin The terms defined in this section apply to this chapter.
new text end

new text begin Subd. 2. new text end

new text begin Appointee. new text end

new text begin "Appointee" means the person in whose favor a power of
appointment is exercisable.
new text end

new text begin Subd. 3. new text end

new text begin Appointive property. new text end

new text begin "Appointive property" means property which is the
subject of a power of appointment.
new text end

new text begin Subd. 4. new text end

new text begin Donee. new text end

new text begin "Donee" means the person to whom a power is given or in whose
favor a power is reserved.
new text end

new text begin Subd. 5. new text end

new text begin Donor. new text end

new text begin "Donor" means the person who creates or reserves a power.
new text end

new text begin Subd. 6. new text end

new text begin Power. new text end

new text begin "Power" means an authority to do any act in relation to property,
including the creation or revocation of an estate therein or a charge thereon, that the donor
of the power might do, except that the term, as used in this chapter, does not apply to a
power of attorney to convey property in the name of the owner.
new text end

Sec. 3.

new text begin [502.82] VARIETIES OF POWER.
new text end

new text begin Subdivision 1. new text end

new text begin Powers of appointment and other powers. new text end

new text begin This chapter applies to
powers of appointment. A power of appointment, as the term is used in this chapter, is an
authority created or reserved by a donor having property subject to the donor's disposition,
enabling the donee to designate, within the limits that may be prescribed by the donor, the
appointees of the property, the shares, or the manner in which the property shall be received.
new text end

new text begin Subd. 2. new text end

new text begin Classification of powers of appointment as to kind; general and
special; exclusive and nonexclusive.
new text end

new text begin (a) A power of appointment is:
new text end

new text begin (1) general or special; and
new text end

new text begin (2) exclusive or nonexclusive.
new text end

new text begin (b) A power of appointment is general to the extent that it is exercisable wholly
in favor of the donee, the donee's estate, the donee's creditors, or the creditors of the
donee's estate.
new text end

new text begin (c) All other powers of appointment are special.
new text end

new text begin (d) A special power of appointment is exclusive if it may be exercised in favor of
one or more of the appointees to the exclusion of the others.
new text end

new text begin (e) A special power of appointment is nonexclusive if it must be exercised in favor
of all the appointees.
new text end

new text begin Subd. 3. new text end

new text begin Classification of powers of appointment as to time of exercise;
presently exercisable, testamentary, and postponed.
new text end

new text begin (a) A power of appointment, as to
the time of its exercise, may be presently exercisable, testamentary, or postponed.
new text end

new text begin (b) A power of appointment is presently exercisable if it may be exercised by the
donee, during the donee's lifetime or by the donee's written will, at any time after its
creation, and does not include a postponed power as described in paragraph (d).
new text end

new text begin (c) A power of appointment is testamentary if it is exercisable only by a written
will of the donee.
new text end

new text begin (d) A power of appointment is postponed if it is exercisable by the donee only after
the expiration of a stated time or after the occurrence or nonoccurrence of a specified event.
new text end

new text begin Subd. 4. new text end

new text begin Classification of powers of appointment as to duty to exercise;
imperative and discretionary.
new text end

new text begin (a) A power of appointment is either imperative or
discretionary.
new text end

new text begin (b) A power of appointment is imperative if the instrument creating the power
imposes on the donee a duty to exercise it, and the power may be imperative even though
it is exclusive.
new text end

new text begin (c) A power of appointment is discretionary if the donee is authorized to exercise
or not to exercise it.
new text end

Sec. 4.

new text begin [502.83] RULES FOR CREATION OF A POWER OF APPOINTMENT.
new text end

new text begin The donor of a power of appointment:
new text end

new text begin (1) must be a person capable of transferring the appointive property;
new text end

new text begin (2) must have created or reserved the power by a written instrument executed by
the donor in the manner required by law;
new text end

new text begin (3) must manifest the donor's intention to confer the power on a person capable of
holding the appointive property; and
new text end

new text begin (4) must not nullify or alter the rights of creditors of the donee, as defined in this
chapter, by any language in the instrument creating or reserving the power purporting to
give the interest of the donee a spendthrift character.
new text end

Sec. 5.

new text begin [502.84] EXTENT OF DONEE'S AUTHORITY TO APPOINT OR
CONTRACT TO APPOINT AN ESTATE IN APPOINTIVE PROPERTY.
new text end

new text begin Subdivision 1. new text end

new text begin Scope of the authority of the donee. new text end

new text begin The scope of the donee's
authority as to appointees and as to the time and manner of the appointment is unlimited
except as the donor manifests a contrary intention.
new text end

new text begin Subd. 2. new text end

new text begin Contract to appoint; power presently exercisable. new text end

new text begin The donee of a power
of appointment which is presently exercisable, or of a postponed power which has become
exercisable, can contract to make an appointment to the extent that the contract or the
promised appointment does not confer a benefit upon a person who is not a permissible
appointee under the power.
new text end

new text begin Subd. 3. new text end

new text begin Contract to appoint; power not presently exercisable. new text end

new text begin (a) The donee
of a power of appointment which is not presently exercisable, or of a postponed power
which has not become exercisable, must not contract to make an appointment, except that
this prohibition shall not apply if the donor and donee are the same person. A prohibited
contract under this subdivision, if made, must not be the basis of an action for specific
performance or damages, but the promisee may obtain restitution of the value given by the
promisee for the promise unless the donee has exercised the power pursuant to the contract.
new text end

new text begin (b) The provisions of this section do not abridge the ability of the donee of a power
of appointment, which is not presently exercisable, to release the power pursuant to
section 502.87, subdivision 2, except that where the donor designated persons or a class to
take in default of the donee's exercise of the power, a release with respect to appointive
property must serve to benefit all those so designated as provided by the donor.
new text end

new text begin Subd. 4. new text end

new text begin Priority. new text end

new text begin With respect to real property subject to a power of appointment,
the interest of a donee and any appointee has priority as against creditors, purchasers, or
encumbrancers of the real property, or as against a person having an estate in the real
property, only from the time at which the instrument creating the power is duly recorded,
but only if the creditors, purchasers, encumbrancers, and estate holders act in good faith
or without notice. As against all other persons, this interest has priority from the time at
which the instrument creating the power takes effect.
new text end

Sec. 6.

new text begin [502.85] EXERCISE OF A POWER OF APPOINTMENT.
new text end

new text begin Subdivision 1. new text end

new text begin Manifestation of intention of donee. new text end

new text begin (a) Subject to paragraph (b),
an effective exercise of a power of appointment does not require an express reference to
the power. A power is effectively exercised if the donee manifests the donee's intention to
exercise the power. A manifestation of the donee's intent exists when the donee:
new text end

new text begin (1) declares in substance that the donee is exercising all of the donee's powers;
new text end

new text begin (2) sufficiently identifying the appointive property or any part thereof, executes an
instrument purporting to dispose of the property or part thereof; or
new text end

new text begin (3) makes a disposition which, when read with reference to the property the donee
owned and the circumstances existing at the time of its making, manifests the donee's
understanding that the donee was disposing of the appointive property.
new text end

new text begin (b) If the donor has expressly directed that no instrument is effective to exercise the
power unless the instrument contains a specific reference to the power, an instrument not
containing this reference does not validly exercise the power.
new text end

new text begin Subd. 2. new text end

new text begin Conformity to directions of donor. new text end

new text begin The directions of the donor as to the
manner, time, and conditions of the exercise of a power must be observed, except that:
new text end

new text begin (1) where the donor has authorized a power of appointment to be exercised by
an instrument legally insufficient to dispose of the appointive property, the manner of
exercise is to be determined by the provisions of this chapter;
new text end

new text begin (2) where the donor has directed any formality to be observed in the exercise of a
power of appointment in addition to those which would be legally sufficient to dispose of the
appointive property, no additional formality is necessary to a valid exercise of the power;
new text end

new text begin (3) where the donor has made a power of appointment exercisable only by deed, it is
also exercisable by a written will unless exercise by will is expressly excluded; and
new text end

new text begin (4) where the donor of a general power of appointment has not expressly imposed a
requirement of good faith or of reasonableness with respect to the donee's exercise of the
power, neither requirement shall be implied.
new text end

new text begin Subd. 3. new text end

new text begin Type of instrument. new text end

new text begin A donee may exercise a power of appointment only
by an instrument executed with sufficient formalities to pass title to the property covered
by the power. When a power of appointment is exercisable only by will, a donee may
not exercise it by deed. When a power of appointment is exercisable by deed, a donee
may exercise it by will.
new text end

new text begin Subd. 4. new text end

new text begin Required consents. new text end

new text begin (a) When the consent of the donor or of a third person
to the exercise of a power of appointment is required, the consent must be expressed in
a written instrument, subscribed by the person whose consent is required. To entitle
the instrument of exercise to be recorded, the signatures of the donee and of the person
consenting must be acknowledged or proved in the manner required by the laws of this
state for the recording of a deed of real property.
new text end

new text begin (b) Unless the donor expressly provides otherwise:
new text end

new text begin (1) When the consents of two or more persons are required for the exercise of a
power of appointment, all must consent.
new text end

new text begin (2) If before the exercise of the power:
new text end

new text begin (i) one or more of the persons required to consent die, the consent of the survivor
is sufficient; or
new text end

new text begin (ii) one or more of the persons required to consent become incompetent, the consent
of the competent person is sufficient.
new text end

new text begin Subd. 5. new text end

new text begin Exercise of exclusive and nonexclusive power of appointment. new text end

new text begin Unless
the donor expressly provides otherwise:
new text end

new text begin (1) the donee of an exclusive power may appoint all or any part of the appointive
property to one or more of the appointees to the exclusion of the others; or
new text end

new text begin (2) the donee of a nonexclusive power must appoint in favor of all of the appointees
equally, unless the instrument creating the power manifests an intent that some other
division be made.
new text end

new text begin Subd. 6. new text end

new text begin Exercise by all donees; exceptions. new text end

new text begin Except as provided in section
502.851, whenever a power of appointment is created in two or more donees, all must
unite in the exercise of the power of appointment, unless the instrument creating the power
provides otherwise. If, before its execution, one or more of the donees dies or becomes
incompetent, the power may be exercised by the survivor or the competent donee, unless
this exercise is explicitly barred by the terms of the instrument creating the power.
new text end

new text begin Subd. 7. new text end

new text begin Imperative power of appointment; effectuation. new text end

new text begin (a) The exercise of an
imperative power of appointment devolves upon a court having jurisdiction over the
instrument creating the power of appointment in the following cases:
new text end

new text begin (1) failure to designate the donee;
new text end

new text begin (2) death of the designated donee without exercising the power;
new text end

new text begin (3) incompetence of the sole donee; or
new text end

new text begin (4) defective exercise of the power, either wholly or in part, by the donee.
new text end

new text begin (b) Where an imperative power of appointment:
new text end

new text begin (1) is exclusive, and the donee dies without exercising the power, the power must
be exercised for the benefit of all the appointees equally;
new text end

new text begin (2) has been exercised defectively by the donee, it may be properly exercised in
favor of persons intended to be benefited by the donee;
new text end

new text begin (3) has been exercised defectively by the donee, a purchaser for a valuable
consideration claiming under the defective exercise is entitled to the same relief as a
similar purchaser claiming under a defective disposition from an actual owner;
new text end

new text begin (4) is nonexclusive, and the right of the appointee is assignable, creditors or
assignees of the appointee can compel the exercise of the power for their benefit; or
new text end

new text begin (5) is nonexclusive, an appointee's guardian or estate conservator, as the case may
be, can compel the exercise of the power.
new text end

new text begin Subd. 8. new text end

new text begin Exercise of a power of appointment in further trust. new text end

new text begin If the donee of a
power of appointment exercises the power in favor of the trustee of a trust under a will or
deed other than that under which the power was created, and, if the exercise is otherwise
valid, the appointive property shall be distributed to the trustee of, and administered under
the terms of, the trust under the will or deed, and jurisdiction over the appointive property
must thereafter be in the court having jurisdiction over the trust created by the will or deed.
new text end

Sec. 7.

new text begin [502.851] TRUST DECANTING.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin The definitions in this subdivision apply to this section.
new text end

new text begin (a) "Appointed trust" means an irrevocable trust which receives principal from an
invaded trust under subdivision 3 or 4, including another trust created by the settlor of the
invaded trust, under the terms of the invaded trust or any other trust instrument, or by the
trustees, in that capacity, of the invaded trust. For purposes of creating another trust, any
requirement that a trust instrument be signed by the settlor shall be deemed satisfied by the
signature of the trustee of the appointed trust.
new text end

new text begin (b) "Authorized trustee" means, as to an invaded trust, any trustee or trustees with
authority to pay trust principal to or for one or more current beneficiaries other than a
trustee who is the settlor, or a beneficiary to whom income or principal must be paid
currently or in the future, or who is or will become eligible to receive a distribution of
income or principal in the discretion of the trustee, other than by the exercise of a power
of appointment held in a nonfiduciary capacity.
new text end

new text begin (c) "Current beneficiary" or "beneficiaries" means the person or persons, or as to a
class, any person or persons who are or will become members of that class, to whom the
trustees may distribute principal at the time of the exercise of the power, provided that
the interest of a beneficiary to whom income, but not principal, may be distributed at the
discretion of the trustee of the invaded trust, may be continued in the appointed trust.
new text end

new text begin (d) "Invade" means the power to pay directly to the beneficiary of a trust or make
application for the benefit of the beneficiary.
new text end

new text begin (e) "Invaded trust" means any existing irrevocable inter vivos or testamentary trust
whose principal is appointed under subdivision 3 or 4.
new text end

new text begin (f) "Person or persons interested in the invaded trust" means all qualified
beneficiaries as defined in section 501C.0103, paragraph (m).
new text end

new text begin (g) "Principal" includes the income of the trust at the time of the exercise of the power
that is not currently required to be distributed, including accrued and accumulated income.
new text end

new text begin (h) "Unlimited discretion" means the unlimited power to distribute principal. A
power to distribute principal that includes words such as best interests, welfare, comfort,
or happiness shall not be considered a limitation of the power to distribute principal.
new text end

new text begin Subd. 2. new text end

new text begin Power of appointment; effect when more or less extensive than
authorized.
new text end

new text begin An exercise of a power of appointment is not void if the exercise is:
new text end

new text begin (1) more extensive than was authorized but is valid to the extent authorized by the
instrument creating its power; or
new text end

new text begin (2) less extensive than authorized by the instrument creating the power, unless the
donor has manifested a contrary intention.
new text end

new text begin Subd. 3. new text end

new text begin Authorized trustee with unlimited discretion. new text end

new text begin (a) An authorized trustee
with unlimited discretion to invade trust principal may appoint part or all of the principal
to a trustee of an appointed trust for, and only for the benefit of, one, more than one, or
all of the current beneficiaries of the invaded trust, to the exclusion of any one or more
of the current beneficiaries. The successor and remainder beneficiaries of the appointed
trust may be none, one, more than one, or all of the successor and remainder beneficiaries
of the invaded trust.
new text end

new text begin (b) An authorized trustee exercising the power under paragraph (a) may grant a
discretionary power of appointment in the appointed trust to one or more of the current
beneficiaries of the invaded trust, provided that the beneficiary granted a power to appoint
may receive principal outright under the terms of the invaded trust.
new text end

new text begin (c) If the authorized trustee grants a power of appointment, the class of permissible
appointees in favor of whom the beneficiary may exercise the power of appointment
granted in the appointed trust may be broader or otherwise different from the current,
successor, and remainder beneficiaries of the invaded trust.
new text end

new text begin (d) If the beneficiary or beneficiaries of the invaded trust are described by a class,
the beneficiary or beneficiaries of the appointed trust may include present or future
members of the class.
new text end

new text begin Subd. 4. new text end

new text begin Authorized trustee without unlimited discretion. new text end

new text begin (a) An authorized
trustee with the power to invade trust principal but without unlimited discretion may
appoint part or all of the principal of the trust to a trustee of an appointed trust, provided
that the current beneficiaries of the appointed trust shall be the same as the current
beneficiaries of the invaded trust and the successor and remainder beneficiaries shall be
the same as the successor and remainder beneficiaries of the invaded trust.
new text end

new text begin (b) If the authorized trustee exercises the power under this subdivision, the appointed
trust shall include the same language authorizing the trustee to distribute the income or
invade the principal of the appointed trust as in the invaded trust.
new text end

new text begin (c) If the authorized trustee exercises the power under this subdivision to extend the
term of the appointed trust beyond the term of the invaded trust, for any period after the
invaded trust would have otherwise terminated under the provisions of the invaded trust,
the appointed trust, in addition to the language required to be included in the appointed trust
pursuant to paragraph (b), may also include language providing the trustee with unlimited
discretion to invade the principal of the appointed trust during this extended term.
new text end

new text begin (d) If the beneficiary or beneficiaries of the invaded trust are described by a class,
the beneficiary or beneficiaries of the appointed trust shall include present or future
members of the class.
new text end

new text begin (e) If the authorized trustee exercises the power under this subdivision and if the
invaded trust grants a power of appointment to a beneficiary of the trust, the appointed
trust shall grant the power of appointment in the appointed trust and the class of
permissible appointees shall be the same as in the invaded trust.
new text end

new text begin Subd. 5. new text end

new text begin Special power of appointment. new text end

new text begin An exercise of the power to invade trust
principal under subdivision 3 or 4 shall be considered the exercise of a special power of
appointment.
new text end

new text begin Subd. 6. new text end

new text begin Term of appointed trust. new text end

new text begin The appointed trust to which an authorized
trustee appoints the assets of the invaded trust may have a term that is longer than the
term set forth in the invaded trust, including, but not limited to, a term measured by the
lifetime of a current beneficiary.
new text end

new text begin Subd. 7. new text end

new text begin Unlimited discretion governs. new text end

new text begin If an authorized trustee has unlimited
discretion to invade the principal of a trust, and the same trustee or another trustee has
the power to invade principal under the trust instrument and that power is not subject to
unlimited discretion, the authorized trustee having unlimited discretion may exercise the
power of appointment under subdivision 3.
new text end

new text begin Subd. 8. new text end

new text begin Current need to invade principal. new text end

new text begin An authorized trustee may exercise the
power to appoint in favor of an appointed trust under subdivision 3 or 4 whether or not
there is a current need to invade principal under the terms of the invaded trust.
new text end

new text begin Subd. 9. new text end

new text begin Fiduciary duty. new text end

new text begin An authorized trustee exercising the power under this
section has a fiduciary duty to exercise the power in the best interests of one or more
proper objects of the exercise of the power and as a prudent person would exercise the
power under the prevailing circumstances.
new text end

new text begin Subd. 10. new text end

new text begin Subsequently discovered assets. new text end

new text begin Unless the authorized trustee provides
otherwise:
new text end

new text begin (1) the appointment of all the assets comprising the principal of the invaded trust
to an appointed trust shall include subsequently discovered assets of the invaded trust
and undistributed principal of the invaded trust acquired after the appointment to the
appointed trust; and
new text end

new text begin (2) the appointment of part but not all of the assets comprising the principal of
the invaded trust to an appointed trust shall not include subsequently discovered assets
belonging to the invaded trust and principal paid to or acquired by the invaded trust after the
appointment to the appointed trust. These assets shall remain the assets of the invaded trust.
new text end

new text begin Subd. 11. new text end

new text begin Requirements for exercise of power to appoint; notice. new text end

new text begin (a) The exercise
of the power to appoint to an appointed trust under subdivision 3 or 4 must be evidenced
by an instrument in writing, signed, dated, and acknowledged by the authorized trustee.
The exercise of the power shall be effective 60 days after the date of delivery of notice as
specified in paragraph (c), unless each person entitled to notice agrees in writing to an
earlier effective date or waives in writing the right to object to the exercise of the power.
new text end

new text begin (b) An authorized trustee may exercise the power authorized by subdivision 3 or
4 without the consent of the settlor or the persons interested in the invaded trust and
without court approval, provided that the authorized trustee may seek court approval for
the exercise with notice to all persons interested in the invaded trust.
new text end

new text begin (c) A copy of the instrument exercising the power, a copy of the appointed trust, and
a copy of the invaded trust shall be delivered to:
new text end

new text begin (1) any person having the right, pursuant to the terms of the invaded trust, to remove
or replace the authorized trustee exercising the power under subdivision 3 or 4; and
new text end

new text begin (2) all persons interested in the invaded trust.
new text end

new text begin (d) Notice of an exercise of the power must be given in the same manner as provided
in section 501C.0109.
new text end

new text begin (e) The instrument exercising the power shall state whether the appointment is of
all the assets comprising the principal of the invaded trust or only a part of the assets
comprising the principal of the invaded trust and, if a part, the approximate percentage of
the value of the principal of the invaded trust that is subject to the appointment.
new text end

new text begin (f) A person entitled to notice may object to the authorized trustee's exercise of the
power under this section by serving a written notice of objection upon the authorized
trustee prior to the effective date of the exercise of the power. The failure to object shall
not constitute a consent.
new text end

new text begin (g) If the authorized trustee does not receive a written objection to the proposed
exercise from a person entitled to notice within the applicable period, the authorized trustee
is not liable to any person who received the required notice for the exercise of the power.
new text end

new text begin (h) If the authorized trustee receives a written objection within the applicable period,
either the authorized trustee or any person entitled to notice may petition the court to have
the proposed exercise of a power performed as proposed, performed with modifications,
or denied. In a proceeding, a person objecting to the proposed exercise has the burden of
proof as to whether the authorized trustee's proposed exercise should not be performed. A
person who has not objected is not estopped from opposing the proposed exercise in the
proceeding. If the authorized trustee decides not to implement the proposed exercise, the
trustee shall notify all persons entitled to notice of the decision not to exercise the power
and the reasons for the decision, and the authorized trustee's decision not to implement
the proposed exercise does not itself give rise to liability to any person interested in the
invaded trust. A person entitled to notice may petition the court to have the exercise of a
power performed and has the burden of proof as to whether it should be performed.
new text end

new text begin (i) A copy of the instrument exercising the power and a copy of each of the invaded
trust and the appointed trust shall be filed with records of the appointed trust and the
invaded trust.
new text end

new text begin Subd. 12. new text end

new text begin Rights of trustee. new text end

new text begin This section shall not be construed to abridge the
right of any trustee to appoint property in further trust that arises under the terms of the
governing instrument of a trust or under any other provision of law or under common law,
or as directed by any court having jurisdiction over the trust.
new text end

new text begin Subd. 13. new text end

new text begin No duty to exercise a power to invade. new text end

new text begin Nothing in this section is
intended to create or imply a duty to exercise a power to invade principal, and no inference
of impropriety shall be made as a result of an authorized trustee not exercising the power
conferred under subdivision 3 or 4.
new text end

new text begin Subd. 14. new text end

new text begin Power clarified. new text end

new text begin A power authorized by subdivision 3 or 4 may be
exercised, subject to the provisions of subdivision 9, unless expressly prohibited by
the terms of the governing instrument, but a general prohibition of the amendment or
revocation of the invaded trust or a provision that constitutes a spendthrift clause shall not
preclude the exercise of a power under subdivision 3 or 4.
new text end

new text begin Subd. 15. new text end

new text begin Prohibitions. new text end

new text begin An authorized trustee may not exercise a power authorized
by subdivision 3 or 4 to effect any of the following:
new text end

new text begin (1) to reduce, limit, or modify any beneficiary's current right to a mandatory
distribution of income or principal, a mandatory annuity or unitrust interest, a current
right to withdraw a percentage of the value of the trust, or a current right to withdraw a
specified dollar amount; provided, however, and subject to the other limitations in this
section, an authorized trustee may exercise a power authorized by subdivision 3 or 4
to appoint to an appointed trust that is a supplemental needs trust that conforms to the
provisions of section 501C.1205;
new text end

new text begin (2) notwithstanding section 501C.1008, paragraph (b), to decrease or indemnify
against a trustee's liability or exonerate a trustee from liability for failure to exercise
reasonable care, diligence, and prudence;
new text end

new text begin (3) to alter or eliminate a provision granting another person the right to remove or
replace the authorized trustee exercising the power under subdivision 3 or 4, unless notice
has been provided to the persons under subdivision 11, paragraph (c), or approval is
granted by a court having jurisdiction over the trust;
new text end

new text begin (4) to make a binding and conclusive fixation of the value of any asset for purposes
of distribution, allocation, or otherwise;
new text end

new text begin (5) to extend the term of the appointed trust beyond any permissible period of
the rule against perpetuities of the invaded trust, and any exercise of the power which
extends the term of the appointed trust beyond the permissible period of the rule against
perpetuities of the invaded trust shall void the entire exercise of the power; or
new text end

new text begin (6) to jeopardize:
new text end

new text begin (i) the deduction or exclusion originally claimed with respect to any contribution
to the invaded trust that qualified for the annual exclusion under section 2503(b) of the
Internal Revenue Code; the marital deduction under section 2056(a) or 2523(a) of the
Internal Revenue Code; or the charitable deduction under section 170(a), 642(c), 2055(a),
or 2522(a) of the Internal Revenue Code;
new text end

new text begin (ii) the qualification of a transfer as a direct skip under section 2642(c) of the
Internal Revenue Code; or
new text end

new text begin (iii) any other specific tax benefit for which a contribution originally qualified for
income, gift, estate, or generation-skipping transfer purposes under the Internal Revenue
Code.
new text end

new text begin Subd. 16. new text end

new text begin Compensation; commissions. new text end

new text begin For the purposes of this section:
new text end

new text begin (1) Unless a court otherwise directs, an authorized trustee may not exercise a power
authorized by subdivision 3 or 4 to change the provisions regarding the determination of
the compensation of any trustee. The commissions or other compensation payable to the
trustees of the invaded trust may continue to be paid to the trustees of the appointed trust
during the term of the appointed trust and shall be determined in the same manner as
in the invaded trust.
new text end

new text begin (2) No trustee shall receive any paying commission or other compensation for
appointing of property from the invaded trust to an appointed trust pursuant to subdivision
3 or 4.
new text end

new text begin Subd. 17. new text end

new text begin Application. new text end

new text begin Unless the invaded trust expressly provides otherwise, this
section applies to any trust governed by the laws of this state, including a trust whose
governing law has been changed to the laws of this state.
new text end

Sec. 8.

new text begin [502.86] RIGHTS OF CREDITORS IN APPOINTIVE PROPERTY.
new text end

new text begin Subdivision 1. new text end

new text begin Special power. new text end

new text begin Property that is covered by either a special power of
appointment or a general power of appointment that is exercisable solely for the support,
maintenance, health, and education of the donee within the meaning of sections 2041 and
2514 of the Internal Revenue Code is not subject to the payment of the claims of creditors
of the donee, the donee's estate, or the expenses of administering the donee's estate.
new text end

new text begin Subd. 2. new text end

new text begin General power currently exercisable. new text end

new text begin Property that is covered by
a general power of appointment, other than one exercisable solely for the support,
maintenance, health, and education of the donee within the meaning of sections 2041
and 2514 of the Internal Revenue Code, that is presently exercisable, or of a postponed
power that has become exercisable, is subject to the payment of the claims of creditors of
the donee, the donee's estate, and the expenses of administering the donee's estate, but
only to the extent that other property available for the payment of the creditor's claim is
insufficient for this payment. It is immaterial whether the donor of the power is the donee
or some other person, or whether the donee has or has not purported to exercise the power.
new text end

new text begin Subd. 3. new text end

new text begin Power subject to a condition. new text end

new text begin A general power of appointment may be
created subject to a condition precedent or subsequent, and, until the condition is fulfilled,
it is not subject to the provisions of subdivision 2.
new text end

new text begin Subd. 4. new text end

new text begin General power not presently exercisable. new text end

new text begin Property that is covered by a
general power of appointment which, when created, is not presently exercisable, is subject
to the payment of the claims of creditors of the donee, the donee's estate, and the expenses
of administering the donee's estate only if:
new text end

new text begin (1) the power was created by the donee in favor of the donee; or
new text end

new text begin (2) a postponed power becomes exercisable in accordance with the terms of the
creating instrument, except in the case of a testamentary general power.
new text end

Sec. 9.

new text begin [502.87] REVOCATION AND RELEASE OF A POWER OF
APPOINTMENT.
new text end

new text begin Subdivision 1. new text end

new text begin Revocability of a power of appointment. new text end

new text begin (a) A power of
appointment is irrevocable unless the donor reserves the right to revoke it.
new text end

new text begin (b) An exercise of power of appointment is irrevocable whenever:
new text end

new text begin (1) the donor of a special power manifests an intent that the exercise of the special
power be irrevocable; or
new text end

new text begin (2) the donee does not manifest in the instrument exercising the power an intent
to reserve a power of revocation.
new text end

new text begin (c) If the donee in exercising a power reserves a power to revoke the appointment,
but does not expressly reserve a power to reappoint, upon the exercise of the power of
revocation, the donee may reappoint.
new text end

new text begin (d) An instrument exercising a power of appointment is affected by fraud in the same
manner as a deed or will executed by an owner or by a trustee of property.
new text end

new text begin Subd. 2. new text end

new text begin Release of a power of appointment. new text end

new text begin (a) Any power of appointment,
whether exercisable only by deed, only by will, or by either deed or will, and whether
general or special, exclusive or nonexclusive, is releasable, either with or without
consideration, by written instrument signed by the donee of the power and delivered as
provided in paragraph (c).
new text end

new text begin (b) A releasable power of appointment may be released with respect to all or any
part of the appointive property and may also be released in a manner as to reduce or limit
the appointees, or classes of appointees, in whose favor the power is exercisable.
new text end

new text begin (c) A release may be delivered to any of the following persons in the order provided:
new text end

new text begin (1) any person specified for this purpose in the instrument creating the power;
new text end

new text begin (2) if no person is specified as provided in clause (1), any trustee of the property
subject to the power; or
new text end

new text begin (3) if no person is specified as provided in clause (1) or serving as trustee as provided
in clause (2), any person, other than the donee, who might be adversely affected by an
exercise of the power.
new text end

new text begin (d) In addition to the provisions of paragraph (c), a release may be delivered to the
county clerk of the county in which the donee resides or has a place of business or in
which the instrument creating the power is filed, to be duly filed by the clerk upon the
payment of the fees due for the filing or, if the power was created by will, to the clerk of
the probate court having jurisdiction over the estate of the donor.
new text end

new text begin (e) This section applies to releases delivered on or after the effective date of this act.
new text end

Sec. 10.

new text begin [502.88] RULE AGAINST PERPETUITIES AND ACCUMULATIONS
AS AFFECTED BY POWERS OF APPOINTMENT.
new text end

new text begin Subdivision 1. new text end

new text begin Scope. new text end

new text begin Notwithstanding any provision of this section to the contrary,
nothing in this section shall be construed, applied, or interpreted to be inconsistent with
chapter 501A.
new text end

new text begin Subd. 2. new text end

new text begin Time at which permissible period begins. new text end

new text begin (a) If an estate is created
by an instrument exercising a power of appointment, the permissible period of the rule
against perpetuities begins:
new text end

new text begin (1) In the case of an instrument exercising either:
new text end

new text begin (i) a general power which is presently exercisable; or
new text end

new text begin (ii) any other power, whether presently exercisable, testamentary, or postponed, but
only if the exercise of the power makes express reference to this item, section 502.88,
subdivision 2, paragraph (a), clause (1), item (ii), in the instrument of exercise,
new text end

new text begin the period shall begin on the effective date of the instrument of exercise.
new text end

new text begin (2) In all other cases, the period begins at the time of the creation of the power.
new text end

new text begin (b) If the creator of a trust reserves an unqualified power to revoke, the permissible
period of the rule against perpetuities begins when the power to revoke terminates by
reason of the death of the creator, by a release of the power, or otherwise.
new text end

new text begin Subd. 3. new text end

new text begin Law which determines permissible period. new text end

new text begin In all cases covered by
subdivision 2, the permissible period of the rule against perpetuities is determined by the
law in effect when the power is exercised or the unqualified power to revoke is terminated,
and not by the law in effect when the power was created.
new text end

new text begin Subd. 4. new text end

new text begin Facts to be considered. new text end

new text begin When the permissible period of the rule against
perpetuities must be computed from the time of the creation of the power of appointment,
facts and circumstances existing on the effective date of the instrument exercising the
power must be taken into account in determining the validity of interests created by the
instrument exercising the power.
new text end

new text begin Subd. 5. new text end

new text begin Rule against accumulations; law determining validity in exercise of a
power of appointment.
new text end

new text begin When a direction for the accumulation of income is contained in
an instrument exercising a power, whether the instrument is created before or after the
effective date of this act, the validity of the direction is determined by the law in effect
when the power is exercised or the unqualified power to revoke is terminated, and not by
the law in effect when the power was created.
new text end

Sec. 11. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2014, sections 502.62; 502.63; 502.64; 502.65; 502.66; 502.67;
502.68; 502.69; 502.70; 502.71; 502.72; 502.73; 502.74; 502.75; 502.76; 502.77; 502.78;
and 502.79,
new text end new text begin are repealed.
new text end

ARTICLE 15

CONFORMING CHANGES

Section 1.

Minnesota Statutes 2014, section 48.01, subdivision 2, is amended to read:


Subd. 2.

Banking institution.

The term "banking institution" means any bank,
trust company, bank and trust company, or savings bank which is now or may hereafter
be organized under the laws of this state. For purposes of sections 48A.07, 48A.08, and
deleted text begin501B.151deleted text endnew text begin 501C.0901new text end, subdivision deleted text begin11deleted text endnew text begin 10new text end, and to the extent permitted by federal law,
"banking institution" includes any national banking association or affiliate exercising
trust powers in this state.

Sec. 2.

Minnesota Statutes 2014, section 48A.07, subdivision 6, is amended to read:


Subd. 6.

Investment authority.

(a) The bank or trust company may, in its
discretion, retain and continue an investment and security or securities coming into its
possession in a fiduciary capacity.

(b) In the absence of an express prohibition in the trust instrument, the trustee may
acquire and retain securities of an open-end or closed-end management company or unit
investment trust registered under the federal Investment Company Act of 1940. The fact
that the banking institution or an affiliate of the banking institution, is providing services
to the investment company or trust as investment advisor, sponsor, broker, distributor,
custodian, transfer agent, registrar, or otherwise, and receiving compensation for the
services does not preclude the trustee from investing in the securities of that investment
company or trust. The banking institution shall disclose to all current income beneficiaries
of the trust the rate, formula, and method of the compensation. This paragraph does not
alter the degree of care and judgment required of trustees by section deleted text begin501B.151deleted text endnew text begin 501C.0901new text end.

(c) Except as otherwise provided in this subdivision, a bank or trust company shall
invest an amount not less than $500 received by it as representative or trustee or by
order of the court, not required for the purposes of the trust and not to be accounted for
within one year, as provided in this subdivision, in authorized securities then held by it or
specially procured by it. Except as may be otherwise provided in the governing will, trust
agreement, court order, or other instrument, any amount in any one trust account, may
be invested in certificates of deposit or savings accounts in the same bank, or any other
bank or banks if the certificates of deposit or savings accounts are fully insured by the
Federal Deposit Insurance Corporation and receive the prevailing rate of interest on the
certificates or savings accounts.

(d) Where funds are invested in authorized securities, as defined by law, the provisions
of section 48.24 limiting the amount of liability of a person, corporation, or copartnership,
with reference to a percentage of the capital and surplus of the bank, does not apply.

(e) A bank or trust company may invest all money received by it in trust in authorized
securities. It is responsible to the owner or cestui que trust for the validity, regularity,
quality, value, and genuineness of these investments and securities at the time they are
made. It is also responsible to the owner or cestui que trust for the safekeeping of these
securities and evidences of them. When special directions are given in an order, judgment,
decree, will, or other written instrument as to the particular manner or the particular
class or kind of securities or property in which an investment must be made, the bank or
trust company must follow these directions and is not responsible for the performance of
the trust. In all other cases it may invest funds held in any trust capacity in authorized
securities using its best judgment in the selection of them, and is responsible for the
validity, regularity, quality, and value of them at the time made, and for their safekeeping.

(f) As the sole trustee or one of two or more cotrustees, it may invest in fractional parts
of, as well as in whole, securities, or may commingle funds for investment. If it invests in
fractional parts of securities or commingles funds for investment, all of the fractional parts
of the securities, or the whole of the funds so commingled must be owned and held by the
bank or trust company in its several trust capacities. The bank or trust company is liable
for the administration of these trusts in all respects as though separately invested. Not
more than $100,000, at the cost price of the investments, may be invested for any one trust
at any one time in fractional parts or as commingled funds for investment by a bank or trust
company having capital and surplus of less than $500,000, unless the authority to invest in
fractional parts or as commingled funds is given in the order, judgment, decree, will, or
other written instrument governing the trust. Funds so commingled for investment must be
designated collectively as a common trust fund. The trust company or bank shall maintain
the common trust fund in conformity with the rules and regulations prevailing from time
to time of the federal governmental agency that regulates the collective investment of trust
funds by national banks. It may, in its discretion, retain and continue an investment and
security or securities coming into its possession in any fiduciary capacity. Paragraphs (a)
to (f) apply whether a corporate trustee is acting alone or with an individual cotrustee.

(g) Notwithstanding the provisions of paragraph (f), a bank or trust company may:

(1) establish and maintain common trust funds for the collective investment of funds
held in a fiduciary capacity by it or by another bank or trust company that is owned or
controlled by a corporation that owns or controls the bank or trust company; and

(2) as a fiduciary or cofiduciary, invest funds that it holds for investment in common
trust funds established and maintained according to clause (1) if the investment is not
prohibited by the instrument, judgment, decree, or order creating the fiduciary relationship.
This section applies to fiduciary relationships now in existence or hereafter created.

To the extent not inconsistent with this paragraph, the provisions of paragraph (f)
relating to common trust funds apply to the establishment and maintenance of common
trust funds under this paragraph.

(h) A bank or trust company is entitled to reasonable compensation for the faithful
performance of its duties and discharge of its trust, including all necessary expenses and
interest at the legal rate, or the amount that has been or may be agreed upon by the parties.
No compensation or commission paid or agreed to be paid by it for the negotiation of a
loan, or the execution of a trust, is considered interest within the meaning of the law, and
no excess over the legal rate of interest is considered usury.

Sec. 3.

Minnesota Statutes 2014, section 317A.161, subdivision 24, is amended to read:


Subd. 24.

May invest trust property.

Except where the trust instrument prescribes
otherwise, a corporation may invest trust property or its proceeds in accordance with
section deleted text begin501B.151deleted text endnew text begin 501C.0901new text end.

Sec. 4.

Minnesota Statutes 2014, section 353.95, subdivision 4, is amended to read:


Subd. 4.

Management and termination of account.

The city may deposit money
in the account and may withdraw money from the account as needed for postemployment
benefits owed on behalf of retired employees of the city or its subgroups. Such transactions
must be at a time and in a manner required by the executive director of the Public
Employees Retirement Association. The city of Duluth must ensure that the investment
and management of the assets complies with the prudent investor rule in section deleted text begin501B.151deleted text endnew text begin
501C.0901
new text end and that withdrawals comply with the requirements of this section. The
account may be terminated only to the extent the city's postemployment benefit actuarial
liability is satisfied or otherwise defeased. The city shall file with the state auditor an
investment policy statement under section 356.219, subdivision 3, paragraph (a).

Sec. 5.

Minnesota Statutes 2014, section 500.17, subdivision 2, is amended to read:


Subd. 2.

Accumulation.

Where the controlling will or other written instrument
permits accumulation, either expressly or by necessary implication, income from personal
property and rents and profits from real estate may be accumulated for the period during
which the power of alienation may be suspended by future interests in real or personal
property not held in trust under section deleted text begin501B.09deleted text endnew text begin 501C.1202new text end, subdivision 3. Where any
will or other instrument authorizes accumulation beyond the period permissible under this
section, such authorization shall be void only as to the excess period.

Reasonable sums set aside for depreciation and depletion shall not be deemed an
accumulation within the meaning of this section.

Sec. 6.

Minnesota Statutes 2014, section 501B.31, subdivision 2, is amended to read:


Subd. 2.

Liberal interpretation; administration.

A charitable trust must be
liberally construed by the courts so that the intentions of the donor are carried out when
possible, and the trust must not fail solely because the donor has imperfectly outlined
the purpose and object of the charity or the method of administration. If the district
court of the proper county determines that the purpose and object of the donor's charity
are imperfectly expressed, the method of administration is incomplete or imperfect, or
circumstances have so changed since the execution of the instrument creating the trust as
to render impracticable, inexpedient, or impossible a literal compliance with the terms
of the instrument, the court may, upon the petition of the trustee under section deleted text begin501B.16deleted text endnew text begin
501C.0202
new text end, make an order directing that the trust must be administered or expended in a
manner the court determines will, as nearly as possible, accomplish the general purposes
of the instrument and the object and intention of the donor without regard to, and free from
any specific restriction, limitation, or direction it contains.

Sec. 7.

Minnesota Statutes 2014, section 501B.31, subdivision 4, is amended to read:


Subd. 4.

Determination of trust, gift, bequest, devise.

(a) This subdivision
applies to a gift or trust made or created by a living person before April 15, 1927, or a
gift, bequest, devise, or trust made or created by or under the will of a person who died
before April 15, 1927.

(b) If a gift, trust, or devise has been made for a charitable, benevolent, educational,
religious, or other public use or trust, or upon a condition, limitation, or restriction of any
kind, the property given, entrusted, or devised may be used only for that use or trust and
in accordance with the condition, limitation, or restriction. The grantee, devisee, trustee,
or other holder of property may petition the court under section deleted text begin501B.16deleted text endnew text begin 501C.0202new text end for
determination of the legal rights and relationship of the holder, the public, the grantor, and
the grantor's heirs, representatives, or assigns in and to the property.

(c) If the court determines that circumstances have so changed since the execution of
the instrument as to render impracticable, inexpedient, or impossible a literal compliance
with the terms or conditions of the instrument, but the terms and purposes of the
instrument may be substantially performed, the court may order that the terms of the
instrument be performed and the property be administered or expended in a manner that
will, in the judgment of the court, as nearly as possible, accomplish the general purposes
of the instrument and the intention of the grantor without regard to, and free from any,
specific restriction, limitation, condition, or direction contained in the instrument.

Sec. 8.

Minnesota Statutes 2014, section 501B.31, subdivision 5, is amended to read:


Subd. 5.

Attorney general.

In cases arising under this section, the attorney general
must be given notice of any court proceedings pursuant to section deleted text begin501B.18deleted text endnew text begin 501C.0203new text end.
The attorney general shall represent the beneficial interests in those cases and shall
enforce affected trusts.

Sec. 9.

Minnesota Statutes 2014, section 501B.41, subdivision 3, is amended to read:


Subd. 3.

Exemption from notice requirement.

The attorney general need not be
provided with notice under subdivision 2 of a charitable gift, devise, or bequest (1) for
which the donor or testator has named as a charitable beneficiary an organization that
is then in existence; or (2) that is not held and continued by a private express trust or
corporation, whether or not the gift, devise, or bequest creates a fiduciary relationship.

This subdivision does not affect any other notice to the attorney general required
by this chapternew text begin or chapter 501Cnew text end.

Sec. 10.

Minnesota Statutes 2014, section 501B.46, is amended to read:


501B.46 PETITION FOR COURT ORDER TO SELL, MORTGAGE, OR
LEASE REAL PROPERTY HELD IN TRUST.

(a) Except as provided in paragraph (c), if the assets of an express trust by will or
other written instrument include real property in this state that the trustee is not, under
the terms of the trust, then permitted to sell, mortgage, or lease, and if section deleted text begin501B.23deleted text endnew text begin
501C.0205
new text end is applicable to the trust, the trustee or a beneficiary of the trust may petition
the court then having jurisdiction of the trust for an order directing the trustee to sell,
mortgage, or lease the real property or a part of the real property.

(b) Except as provided in paragraph (c), if the assets of an express trust by will or
other written instrument include real property in this state that the trustee is not, under
the terms of the trust, then permitted to sell, mortgage, or lease, and if section deleted text begin501B.23deleted text endnew text begin
501C.0205
new text end is not applicable to the trust, the trustee or a beneficiary of the trust may petition
an appropriate district court under section deleted text begin501B.16deleted text endnew text begin 501C.0202new text end for an order directing the
trustee to sell, mortgage, or lease the real property or a part of the real property.

(c) If a trust is of the kind described in section deleted text begin501B.09, subdivision 2adeleted text endnew text begin 501C.1202,
subdivision 3
new text end, no order described in paragraph (a) or (b) may be entered upon a petition
filed by a person other than the trustee.

Sec. 11.

Minnesota Statutes 2014, section 508.62, is amended to read:


508.62 TRUSTEE'S CONVEYANCE.

No instrument executed by an owner whose fee title to registered land is held in trust
which transfers or plats the land, shall be registered except upon the written certification
of the examiner of titles that the instrument is executed in accordance with a power
conferred in the instrument of trust, or evidenced in a certificate of trust authorized by
section deleted text begin501B.56deleted text endnew text begin 501C.1013new text end, or is authorized by law, or upon the order of the district court
directing its registration. The examiner shall not certify any such instrument unless:

(1) the trust is supervised by the court; or

(2) an affidavit of trustee authorized by section deleted text begin501B.57deleted text endnew text begin 501C.1014new text end and the
document creating the trust, a certified copy of it, or a certificate of trust authorized by
section deleted text begin501B.56deleted text endnew text begin 501C.1013new text end is registered as a memorial upon the certificate of title. The
certified copy of the certificate setting forth the adoption of the resolution for voluntary
dissolution of a corporate registered owner together with the certificate of the secretary of
state that said certificate of dissolution has been filed for record in the secretary's office
shall be deemed the document creating the trust.

Sec. 12.

Minnesota Statutes 2014, section 508A.62, is amended to read:


508A.62 TRUSTEE'S CONVEYANCE.

No instrument executed by an owner, whose fee title to land is registered under
sections 508A.01 to 508A.85 and is held in trust, which transfers or plats the land, shall be
registered except upon the written certification of the examiner of titles that the instrument
is executed in accordance with a power conferred in the instrument of trust, or evidenced
in a certificate of trust authorized by section deleted text begin501B.56deleted text endnew text begin 501C.1013new text end, or is authorized by law,
or upon the order of the district court directing the registration of it. The examiner shall
not certify any instrument unless:

(1) the trust is supervised by the court; or

(2) an affidavit of trustee authorized by section deleted text begin501B.57deleted text endnew text begin 501C.1014new text end and the
document creating the trust, a certified copy of it, or a certificate of trust authorized by
section deleted text begin501B.56deleted text endnew text begin 501C.1013new text end is registered as a memorial upon the CPT. The certified copy
of the certificate setting forth the adoption of the resolution for voluntary dissolution of a
corporate registered owner together with the certificate of the secretary of state that the
certificate of dissolution has been filed for record in the secretary's office shall be deemed
the document creating the trust.

Sec. 13.

Minnesota Statutes 2014, section 524.2-804, subdivision 1, is amended to read:


Subdivision 1.

Revocation upon dissolution.

Except as provided by the express
terms of a governing instrument, other than a trust instrument under section deleted text begin501B.90deleted text endnew text begin
501C.1207
new text end, executed prior to the dissolution or annulment of an individual's marriage,
a court order, a contract relating to the division of the marital property made between
individuals before or after their marriage, dissolution, or annulment, or a plan document
governing a qualified or nonqualified retirement plan, the dissolution or annulment of a
marriage revokes any revocable:

(1) disposition, beneficiary designation, or appointment of property made by an
individual to the individual's former spouse in a governing instrument;

(2) provision in a governing instrument conferring a general or nongeneral power of
appointment on an individual's former spouse; and

(3) nomination in a governing instrument, nominating an individual's former spouse
to serve in any fiduciary or representative capacity, including a personal representative,
executor, trustee, conservator, agent, or guardian.

Sec. 14.

Minnesota Statutes 2014, section 524.5-417, is amended to read:


524.5-417 GENERAL POWERS AND DUTIES OF CONSERVATOR.

(a) A conservator shall be subject to the control and direction of the court at all
times and in all things.

(b) The court shall grant to a conservator only those powers necessary to provide for
the demonstrated needs of the protected person.

(c) The court may appoint a conservator if it determines that all the powers and
duties listed in this section are needed to provide for the needs of the protected person.
The court may also appoint a conservator if it determines that a conservator is necessary to
provide for the needs of the protected person through the exercise of some, but not all,
of the powers and duties listed in this section. The duties and powers of a conservator
include, but are not limited to:

(1) the duty to pay the reasonable charges for the support, maintenance, and education
of the protected person in a manner suitable to the protected person's station in life and the
value of the estate. Nothing herein contained shall release parents from obligations imposed
by law for the support, maintenance, and education of their children. The conservator
has no duty to pay for these requirements out of personal funds. Wherever possible and
appropriate, the conservator should meet these requirements through governmental
benefits or services to which the protected person is entitled, rather than from the protected
person's estate. Failure to satisfy the needs and requirements of this section shall be
grounds for removal, but the conservator shall have no personal or monetary liability;

(2) the duty to pay out of the protected person's estate all lawful debts of the
protected person and the reasonable charges incurred for the support, maintenance, and
education of the protected person's spouse and dependent children and, upon order of the
court, pay such sum as the court may fix as reasonable for the support of any person
unable to earn a livelihood who is legally entitled to support from the protected person;

(3) the duty to possess and manage the estate, collect all debts and claims in favor
of the protected person, or, with the approval of the court, compromise them, institute
suit on behalf of the protected person and represent the protected person in any court
proceedings, and invest all funds not currently needed for the debts and charges named in
clauses (1) and (2) and the management of the estate, in accordance with the provisions
of sections 48A.07, subdivision 6, deleted text begin501B.151deleted text endnew text begin 501C.0901new text end, and 524.5-423, or as otherwise
ordered by the court. The standard of a fiduciary shall be applicable to all investments by
a conservator. A conservator shall also have the power to purchase certain contracts of
insurance as provided in section 50.14, subdivision 14, clause (b);

(4) where a protected person has inherited an undivided interest in real estate, the
court, on a showing that it is for the best interest of the protected person, may authorize an
exchange or sale of the protected person's interest or a purchase by the protected person of
any interest other heirs may have in the real estate, subject to the procedures and notice
requirements of section 524.5-418;

(5) the power to approve or withhold approval of any contract, except for necessities,
which the protected person may make or wish to make; and

(6) the power to apply on behalf of the protected person for any assistance, services,
or benefits available to the protected person through any unit of government.

(d) The conservator shall have the power to revoke, suspend, or terminate all or any
part of a durable power of attorney of which the protected person is the principal with
the same power the principal would have if the principal were not incapacitated. If a
durable power of attorney is in effect, a decision of the conservator takes precedence
over that of an attorney-in-fact.

(e) Transaction set aside. If a protected person has made a financial transaction or
gift or entered into a contract during the two-year period before establishment of the
conservatorship, the conservator may petition for court review of the transaction, gift, or
contract. If the court finds that the protected person was incapacitated or subject to duress,
coercion, or undue influence when the transaction, gift, or contract was made, the court
may declare the transaction, gift, or contract void except as against a bona fide transferee
for value and order reimbursement or other appropriate relief. This paragraph does not
affect any other right or remedy that may be available to the protected person with respect
to the transaction, gift, or contract.

(f) After the filing of the petition, a certificate of the district court certified to that
fact may be filed for record with the Minnesota secretary of state in the same manner as
provided in section 336.9-501. The certificate shall state that a petition is pending and
the name and address of the person for whom a conservator is sought. If a conservator is
appointed on the petition, and if the conservatorship order removes or restricts the right
of the protected person to transfer property or to contract, then all contracts except for
necessaries, and all transfers of personal property, tangible or intangible, including, but
not limited to, cash or securities transfers at banks, brokerage houses, or other financial
institutions, or transfers of cash or securities, made by the protected person after the filing
and before the termination of the conservatorship shall be voidable.

Sec. 15.

Minnesota Statutes 2014, section 529.06, is amended to read:


529.06 GENERAL DUTIES OF CUSTODIAL TRUSTEE.

(a) If appropriate, a custodial trustee shall register or record the instrument vesting
title to custodial trust property.

(b) If the beneficiary is not incapacitated, a custodial trustee shall follow the
directions of the beneficiary in the management, control, investment, or retention of the
custodial trust property. In the absence of effective contrary direction by the beneficiary
while not incapacitated, the custodial trustee shall observe the standard of care set forth
in section deleted text begin501B.151deleted text endnew text begin 501C.0901new text end. However, a custodial trustee, in the custodial trustee's
discretion, may retain any custodial trust property received from the transferor.

(c) Subject to subsection (b), a custodial trustee shall take control of and collect,
hold, manage, invest, and reinvest custodial trust property.

(d) A custodial trustee at all times shall keep custodial trust property of which the
custodial trustee has control, separate from all other property in a manner sufficient to
identify it clearly as custodial trust property of the beneficiary. Custodial trust property,
the title to which is subject to recordation, is so identified if an appropriate instrument so
identifying the property is recorded, and custodial trust property subject to registration is
so identified if it is registered, or held in an account in the name of the custodial trustee,
designated in substance: "as custodial trustee for ........ (name of beneficiary) under the
Minnesota Uniform Custodial Trust Act."

(e) A custodial trustee shall keep records of all transactions with respect to custodial
trust property, including information necessary for the preparation of tax returns, and
shall make the records and information available at reasonable times to the beneficiary
or legal representative of the beneficiary.

Sec. 16.

Minnesota Statutes 2014, section 529.12, is amended to read:


529.12 DECLINATION, RESIGNATION, INCAPACITY, DEATH, OR
REMOVAL OF CUSTODIAL TRUSTEE; DESIGNATION OF SUCCESSOR
CUSTODIAL TRUSTEE.

(a) Before accepting the custodial trust property, a person designated as custodial
trustee may decline to serve by notifying the person who made the designation, the
transferor, or the transferor's legal representative. If an event giving rise to a transfer has
not occurred, the substitute custodial trustee designated under section 529.03 becomes the
custodial trustee, or, if a substitute custodial trustee has not been designated, the person
who made the designation may designate a substitute custodial trustee pursuant to section
529.03. In other cases, the transferor or the transferor's legal representative may designate
a substitute custodial trustee.

(b) A custodial trustee who has accepted the custodial trust property may resign
by (i) delivering written notice to a successor custodial trustee, if any, the beneficiary
and, if the beneficiary is incapacitated, to the beneficiary's conservator, if any, and (ii)
transferring or registering, or recording an appropriate instrument relating to, the custodial
trust property, in the name of, and delivering the records to, the successor custodial trustee
identified under subsection (c).

(c) If a custodial trustee or successor custodial trustee is ineligible, resigns, dies, or
becomes incapacitated, the successor designated under section 529.02, subsection (g), or
529.03 becomes custodial trustee. If there is no effective provision for a successor, the
beneficiary, if not incapacitated, or the holder of the beneficiary's power of attorney,
may designate a successor custodial trustee.

(d) If a successor custodial trustee is not designated pursuant to subsection (c), the
transferor, the legal representative of the transferor or of the custodial trustee, an adult
member of the beneficiary's family, the conservator of the beneficiary, a person interested
in the custodial trust property, or a person interested in the welfare of the beneficiary,
may petition the court to designate a successor custodial trustee in accordance with the
procedures set forth in sections deleted text begin501B.16deleted text endnew text begin 501C.0201new text end to deleted text begin501B.25deleted text endnew text begin 501C.0208new text end.

(e) A custodial trustee who declines to serve or resigns, or the legal representative of
a deceased or incapacitated custodial trustee, as soon as practicable, shall put the custodial
trust property and records in the possession and control of the successor custodial trustee.
The successor custodial trustee may enforce the obligation to deliver custodial trust
property and records and becomes responsible for each item as received.

(f) A beneficiary, the beneficiary's conservator, an adult member of the beneficiary's
family, a guardian of the beneficiary, a person interested in the custodial trust property,
or a person interested in the welfare of the beneficiary, may petition the court to remove
the custodial trustee for cause and designate a successor custodial trustee, to require
the custodial trustee to furnish a bond or other security for the faithful performance of
fiduciary duties, or for other appropriate relief.

Sec. 17.

Minnesota Statutes 2014, section 529.14, is amended to read:


529.14 REPORTING AND ACCOUNTING BY CUSTODIAL TRUSTEE;
DETERMINATION OF LIABILITY OF CUSTODIAL TRUSTEE.

(a) Upon the acceptance of custodial trust property, the custodial trustee shall
provide a written statement describing the custodial trust property and shall thereafter
provide a written statement of the administration of the custodial trust property (i) once
each year, (ii) upon request at reasonable times by the beneficiary or the beneficiary's legal
representative, (iii) upon resignation or removal of the custodial trustee, and (iv) upon
termination of the custodial trust. The statements must be provided to the beneficiary or
to the beneficiary's legal representative, if any. Upon termination of the beneficiary's
interest, the custodial trustee shall furnish a current statement to the person to whom the
custodial trust property is to be delivered.

(b) A beneficiary, the beneficiary's legal representative, an adult member of the
beneficiary's family, a person interested in the custodial trust property, or a person
interested in the welfare of the beneficiary may petition the court for an accounting by the
custodial trustee or the custodial trustee's legal representative.

(c) A successor custodial trustee may petition the court for an accounting by a
predecessor custodial trustee.

(d) In an action or proceeding under sections 529.01 to 529.19 or in any other
proceeding, the court may require or permit the custodial trustee or the custodial trustee's
legal representative to account. The custodial trustee or the custodial trustee's legal
representative may petition the court for approval of final accounts.

(e) If a custodial trustee is removed, the court shall require an accounting and order
delivery of the custodial trust property and records to the successor custodial trustee and
the execution of all instruments required for transfer of the custodial trust property.

(f) On petition of the custodial trustee or any person who could petition for an
accounting, the court, after notice to interested persons, may issue instructions to
the custodial trustee or review the propriety of the acts of a custodial trustee or the
reasonableness of compensation determined by the custodial trustee for the services of the
custodial trustee or others.

(g) All proceedings described in this section shall be conducted in accordance with
the procedures set forth in sections deleted text begin501B.16deleted text endnew text begin 501C.0201new text end to deleted text begin501B.25deleted text endnew text begin 501C.0208new text end.

Sec. 18.

Minnesota Statutes 2014, section 541.05, subdivision 1, is amended to read:


Subdivision 1.

Six-year limitation.

Except where the Uniform Commercial Code
otherwise prescribes, the following actions shall be commenced within six years:

(1) upon a contract or other obligation, express or implied, as to which no other
limitation is expressly prescribed;

(2) upon a liability created by statute, other than those arising upon a penalty or
forfeiture or where a shorter period is provided by section 541.07;

(3) for a trespass upon real estate;

(4) for taking, detaining, or injuring personal property, including actions for the
specific recovery thereof;

(5) for criminal conversation, or for any other injury to the person or rights of
another, not arising on contract, and not hereinafter enumerated;

(6) for relief on the ground of fraud, in which case the cause of action shall not be
deemed to have accrued until the discovery by the aggrieved party of the facts constituting
the fraud;

deleted text begin (7) to enforce a trust or compel a trustee to account, where the trustee has neglected to
discharge the trust, or claims to have fully performed it, or has repudiated the trust relation;
deleted text end

deleted text begin (8)deleted text end new text begin(7) new text endagainst sureties upon the official bond of any public officer, whether of the
state or of any county, town, school district, or a municipality therein; in which case the
limitation shall not begin to run until the term of such officer for which the bond was
given shall have expired;

deleted text begin (9)deleted text end new text begin(8) new text endfor damages caused by a dam, used for commercial purposes; or

deleted text begin (10)deleted text end new text begin(9) new text endfor assault, battery, false imprisonment, or other tort resulting in personal
injury, if the conduct that gives rise to the cause of action also constitutes domestic abuse
as defined in section 518B.01.

ARTICLE 16

REPEALER

Section 1. new text beginREVISOR'S INSTRUCTION.
new text end

new text begin The revisor of statutes shall correct cross-references in Minnesota Statutes to
sections that are repealed by this act or repealed and reenacted by this act, and if Minnesota
Statutes, chapter 501B, is further amended in the 2015 legislative session, shall codify the
amendments in a manner consistent with this act.
new text end

Sec. 2. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2014, sections 501B.01; 501B.012; 501B.02; 501B.03; 501B.04;
501B.05; 501B.06; 501B.07; 501B.08; 501B.09; 501B.12; 501B.13; 501B.14; 501B.15;
501B.151; 501B.152; 501B.154; 501B.155; 501B.16; 501B.17; 501B.18; 501B.19;
501B.20; 501B.21; 501B.22; 501B.23; 501B.24; 501B.25; 501B.56; 501B.561; 501B.57;
501B.571; 501B.59; 501B.60; 501B.61; 501B.62; 501B.63; 501B.64; 501B.65; 501B.665;
501B.67; 501B.68; 501B.69; 501B.705; 501B.71; 501B.72; 501B.73; 501B.74; 501B.75;
501B.76; 501B.79; 501B.80; 501B.81; 501B.82; 501B.87; 501B.88; 501B.89; 501B.895;
and 501B.90,
new text end new text begin are repealed.
new text end

Sec. 3. new text beginEFFECTIVE DATE.
new text end

new text begin This act is effective January 1, 2016.
new text end