Minnesota Session Laws - 1987, Regular Session

  

                         Laws of Minnesota 1987 

                         CHAPTER 210-H.F.No. 88 
           An act relating to probate; changing and clarifying 
          certain powers of trustees; redefining "augmented 
          estate" for certain purposes; amending Minnesota 
          Statutes 1986, sections 501.125, subdivision 1; 
          501.66, subdivision 28; and 524.2-202; proposing 
          coding for new law in Minnesota Statutes, chapter 501; 
          repealing Minnesota Statutes 1986, sections 501.125, 
          subdivision 1a; and 501.66, subdivision 6a. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1986, section 501.125, 
subdivision 1, is amended to read:  
    Subdivision 1.  [GENERAL PROPERTIES AND INVESTMENTS.] (a) 
In acquiring, investing, reinvesting, exchanging and managing 
property, A trustee is authorized to acquire invest in every 
kind of real or personal property, real, personal or mixed, and 
every kind of investment, specifically including, but not by way 
of limitation, bonds, debentures and other individual or 
corporate obligations, mutual funds, and corporate stocks.  A 
trustee, in determining the prudence of a particular investment, 
shall consider the role that the proposed investment or 
investment course of action plays within the overall portfolio 
of assets.  In applying the total asset management 
approach, that a prudent person would invest in having in mind 
the preservation of the trust estate and the amount and 
regularity of the income derived.  In considering an investment, 
a trustee shall exercise the care, skill, and judgment and care 
under the circumstances then prevailing, which persons that a 
person of ordinary prudence, discretion, and intelligence would 
exercise in the management of their own affairs, not in regard 
to speculation but in regard to the permanent disposition of 
their funds the person's own property; and shall consider the 
role that the investment plays within the trust's overall 
portfolio of assets.  If the trustee has special greater skills 
or expertise than a person of ordinary prudence or if the 
trustee holds itself out as having special skills or 
expertise is named trustee by representing that the trustee has 
greater skills than a person of ordinary prudence, the trustee 
is under a duty to use those skills or expertise. 
    (b) Except as may be provided to the contrary in the 
instrument, the following are Among the factors that should to 
be considered by a trustee in applying the total asset 
management approach determining the prudence of a particular 
investment are the following: 
    (1) the probable income of the trust as well as the 
probable safety of the capital of the trust; 
    (2) marketability of investments the composition of the 
portfolio of the trust with regard to diversification; 
    (3) the length of the term of investments of the trust; 
    (4) the duration of the trust; 
    (5) the liquidity needs and current return of the trust's 
portfolio relative to the anticipated cash requirements of the 
trust; 
    (6) requirements of the beneficiary or beneficiaries; 
    (7) other assets of the beneficiary or beneficiaries, known 
to the trustees, including earning capacity; and 
    (8) effect of investments in increasing or diminishing 
liability for taxes 
    (7) the relative interests of income and remainder 
beneficiaries; and 
    (8) the tax consequences. 
    (c) If a trustee is a national banking association or holds 
a certificate under section 48.37 or if a trustee retains or 
employs an investment advisor registered under the Investment 
Advisors Act of 1940, an investment which is otherwise prudent 
is not imprudent solely because it is in new, unproven, untried, 
or other enterprises with a potential for a significant growth 
or in a limited partnership or commingled fund investing in 
these enterprises. 
    Sec. 2.  [501.155] [EMPLOYEES AND AGENTS OF TRUSTEE.] 
    Unless otherwise provided in the instrument, a trustee may 
employ attorneys, accountants, investment advisors, agents, or 
other persons, even if they are associated with the trustee, to 
advise or assist the trustee in the performance of duties.  The 
trustee may act without independent investigation upon their 
recommendations or, instead of acting personally, employ one or 
more agents to perform any act of administration, whether or not 
discretionary, except that: 
    (1) the trustee may not delegate all of the trustee's 
duties; 
    (2) the employment does not relieve the trustee of 
liability for the acts of a person that, if done by the trustee, 
would result in liability to the trustee; and 
    (3) the employment does not relieve the trustee of the duty 
to select and retain a person with reasonable care. 
    Sec. 3.  Minnesota Statutes 1986, section 501.66, 
subdivision 28, is amended to read:  
    Subd. 28.  The trustee may employ attorneys, accountants, 
investment advisors, agents or other persons, even if they are 
associated with the trustee, to advise or assist the trustee in 
the performance of duties; to act without independent 
investigation upon their recommendations; and instead of acting 
personally, to employ one or more agents to perform any act of 
administration, whether or not discretionary; except that: 
    (1) the trustee may not delegate all of the trustee's 
duties; and 
    (2) the employment does not relieve the trustee of 
liability for the discretionary acts of a person, which if done 
by the trustee, would result in liability to the trustee, or of 
the duty to select and retain a person with reasonable care.  
    Sec. 4.  Minnesota Statutes 1986, section 524.2-202, is 
amended to read:  
    524.2-202 [AUGMENTED ESTATE.] 
    The augmented estate means the estate reduced by funeral 
and administration expenses, the homestead, family allowances 
and exemptions, liens, mortgages, and enforceable claims, to 
which is added the sum of the following amounts:  
    (1) The value of property, other than the homestead, 
transferred by the decedent at any time during the marriage, to 
or for the benefit of any person other than the surviving 
spouse, to the extent that the decedent did not receive adequate 
and full consideration in money or money's worth for the 
transfer, if the transfer is of any of the following types:  
    (i) any transfer under which the decedent retained at the 
time of death the possession or enjoyment of, or right to income 
from, the property;  
    (ii) any transfer to the extent that the decedent retained 
at the time of death a power, either alone or in conjunction 
with any other person, to revoke or to consume, invade or 
dispose of the principal for personal benefit;  
    (iii) any transfer whereby property is held at the time of 
decedent's death by decedent and another with right of 
survivorship;  
    (iv) any transfer made within one year of death of the 
decedent to the extent that the aggregate transfers to any one 
donee in the year exceeds $30,000.  
    Any transfer is excluded if made with the written consent 
or joinder of the surviving spouse.  Property is valued as of 
the decedent's death except that property given irrevocably to a 
donee during lifetime of the decedent is valued as of the date 
the donee came into possession or enjoyment if that occurs first.
     Notwithstanding the provisions of (i) to (iv), the 
augmented estate includes the proceeds of property described in 
clause (3) only to the extent provided in clause (3). 
    (2) The value of property, other than the homestead, owned 
by the surviving spouse at the decedent's death, plus the value 
of property transferred by the spouse at any time during 
marriage to any person other than the decedent which would have 
been includable in the spouse's augmented estate if the 
surviving spouse had predeceased the decedent, to the extent the 
owned or transferred property is derived from the decedent by 
any means other than testate or intestate succession or as an 
obligation of support without a full consideration in money or 
money's worth.  For purposes of this clause:  
    (i) Property derived from the decedent includes, but is not 
limited to, any beneficial interest of the surviving spouse in a 
trust created by the decedent during the decedent's lifetime; 
any property appointed to the spouse by the decedent's exercise 
of a general or special power of appointment also exercisable in 
favor of others than the spouse; any proceeds of insurance, 
including accidental death benefits, on the life of the decedent 
attributable to premiums paid by the decedent; any lump sum 
immediately payable and the commuted value of the proceeds of 
annuity contracts under which the decedent was the primary 
annuitant attributable to premiums paid by the decedent; the 
commuted value of amounts payable after the decedent's death 
under any public or private pension, disability compensation, 
benefit, or retirement plan or account, excluding the federal 
social security system and tier 1 railroad retirement benefits, 
by reason of service performed, disabilities incurred, or 
deposits made by the decedent; any property held at the time of 
decedent's death by decedent and the surviving spouse with right 
of survivorship; any property held by decedent and transferred 
by contract to the surviving spouse by reason of the decedent's 
death; and the value of the share of the surviving spouse 
resulting from rights in community property in this or any other 
state formerly owned with the decedent.  
    (ii) Property owned by the spouse at the decedent's death 
is valued as of the date of death.  Property transferred by the 
spouse is valued at the time the transfer became irrevocable, or 
at the decedent's death, whichever occurred first.  Income 
earned by included property prior to the decedent's death is not 
treated as property derived from the decedent.  
    (iii) Property owned by the surviving spouse as of the 
decedent's death of the kind described in clause (2)(i) is 
presumed to have been derived from the decedent except to the 
extent that the surviving spouse establishes that it was derived 
from another source.  All other property owned by the surviving 
spouse as of the decedent's death, or previously transferred by 
the surviving spouse, is presumed not to have been derived from 
the decedent except to the extent that an interested party 
establishes that it was derived from the decedent.  
    (3) The value of property paid to, or for the benefit of, a 
person other than the surviving spouse as a result of the 
decedent's death if the property is any of the following types: 
    (i) proceeds of insurance, including accidental death 
benefits, but excluding (1) insurance required by a judgment and 
decree or court order; (2) credit life insurance; (3) insurance 
required by the terms of a contract; (4) insurance obtained for 
the purpose of discharging any other liability, contingent or 
fixed, to the extent the proceeds are used to discharge the 
liability; or (5) insurance obtained for a bona fide business 
purpose attributable to premiums paid by the decedent during the 
marriage except that:  (a) if an enforceable claim satisfied 
with proceeds of insurance on the decedent's life is not 
deducted in computing the augmented estate, the proceeds must 
not be included separately; (b) if the value of a business 
interest is included in the augmented estate, the proceeds of 
insurance on the decedent's life that are paid to the business 
or are applied in performance of a purchase agreement relating 
to the business interest must not be included separately; (c) if 
the decedent was required by a decree or order dissolving a 
prior marriage to pay premiums on insurance on the decedent's 
life for the benefit of specified persons, the proceeds of that 
insurance must not be included separately; and (d) in other 
similar cases the proceeds of insurance must not be included 
separately; 
    (ii) a lump sum immediately payable, or the commuted value 
of the proceeds of annuity contracts under which the decedent 
was the primary annuitant attributable to premiums paid by the 
decedent during the marriage; or 
    (iii) the commuted value of amounts payable after the 
decedent's death under any public or private pension, disability 
compensation, benefit, or retirement plan or account, 
excluding the federal social security system and tier 1 railroad 
retirement benefits, by reason of service performed, 
disabilities incurred, or deposits made by the decedent, 
attributable to premiums or contributions paid by the decedent 
during the marriage. 
    For purposes of this clause, premiums or contributions paid 
by the decedent's employer, the decedent's partner, a 
partnership of which the decedent was a member, or the 
decedent's creditors, are deemed to have been paid by the 
decedent, and any amounts otherwise includable in the augmented 
estate are excluded if made with the written consent or joinder 
of the surviving spouse. 
    Unless the payer of the property has received written 
notice of intention to file a petition for the elective share, 
the property may be paid, upon request and satisfactory proof of 
the decedent's death, to the designated beneficiary of the 
property.  Payment made discharges the payer from all claims for 
the amounts paid.  This does not extend to payments made after 
the payer has received written notice of intention to file a 
petition for the elective share.  Unless the notice is withdrawn 
by the surviving spouse, the surviving spouse must concur in any 
demand for withdrawal.  
    For an insurer, the written notice of intention to file a 
petition for the elective share must be mailed to its home 
office by registered mail, return receipt requested, or served 
upon the insurer in the same manner as a summons in a civil 
action.  Upon receipt of written notice of intention to file a 
petition for the elective share, an insurer may pay any amounts 
owed by it specified in clause (3) to the court in which the 
probate proceedings relating to the estate of the decedent are 
venued, or if no proceedings have been commenced, to the court 
having jurisdiction of decedents' estates located in the county 
of the insured's residence.  The court shall hold the funds and, 
upon its determination under section 524.2-205, subsection (d), 
shall order its disbursement in accordance with the 
determination.  If no petition is filed in the court within the 
specified time under section 524.2-205, subsection (a), or if 
filed, the demand for an elective share is withdrawn under 
section 524.2-205, subsection (c), the court shall order 
disbursement to the designated beneficiary.  Payment made to the 
court discharges the insurer from all claims for the amounts 
paid. 
    Upon petition to the probate court by the designated 
beneficiary, the court may order that all or part of the 
property be paid to the designated beneficiary in an amount and 
subject to conditions consistent with this section. 
    Sec. 5.  [REPEALER.] 
    Minnesota Statutes 1986, sections 501.125, subdivision 1a, 
and 501.66, subdivision 6a, are repealed. 
    Sec. 6.  [EFFECTIVE DATE.] 
    This act is effective the day following final enactment. 
    Approved May 26, 1987