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Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

  

                         Laws of Minnesota 1989 

                        CHAPTER 340-H.F.No. 306 
           An act relating to trusts; providing for their 
          creation, validity, administration, and supervision; 
          providing for the sale of real property; relating to 
          legal estates in real and personal property; relating 
          to estates; amending Minnesota Statutes 1988, sections 
          315.365, subdivision 3; 500.17, subdivision 2; 
          501A.05; 501A.06; 502.73; 524.1-404; 525.56, 
          subdivision 4; and 525.831; Laws 1987, chapter 60, 
          section 10, as amended; proposing coding for new law 
          as Minnesota Statutes, chapter 501B; proposing coding 
          for new law in Minnesota Statutes, chapter 525; 
          repealing Minnesota Statutes 1988, sections 500.13; 
          501.01; 501.02; 501.03; 501.04; 501.05; 501.06; 
          501.07; 501.08; 501.09; 501.10; 501.11; 501.115; 
          501.12; 501.125; 501.13; 501.14; 501.15; 501.155; 
          501.16; 501.17; 501.18; 501.19; 501.195; 501.20; 
          501.21; 501.211; 501.22; 501.23; 501.24; 501.25; 
          501.26; 501.27; 501.28; 501.29; 501.30; 501.31; 
          501.32; 501.33; 501.34; 501.35; 501.351; 501.36; 
          501.37; 501.38; 501.39; 501.40; 501.41; 501.42; 
          501.43; 501.44; 501.45; 501.46; 501.461; 501.48; 
          501.49; 501.50; 501.51; 501.52; 501.53; 501.54; 
          501.55; 501.56; 501.57; 501.58; 501.59; 501.60; 
          501.61; 501.62; 501.63; 501.64; 501.65; 501.66; 
          501.67; 501.71; 501.72; 501.73; 501.74; 501.75; 
          501.76; 501.77; 501.78; 501.79; 501.80; 501.805; and 
          501.81. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 

                                ARTICLE 1

                                 TRUSTS
    Section 1.  [501B.01] [PURPOSES FOR WHICH EXPRESS TRUSTS 
MAY BE CREATED.] 
    An active express trust may be created for any lawful 
purpose. 
    Sec. 2.  [501B.02] [PASSIVE TRUSTS ABOLISHED.] 
    Passive express trusts of real or personal property are 
abolished.  An attempt to create a passive trust vests the 
entire estate granted in the beneficiary. 
    Sec. 3.  [501B.03] [TERMINATION OF TRUST PURPOSES.] 
    If the purposes for which an active express trust is 
created have been accomplished, or become impossible of 
accomplishment or illegal, the trust will be terminated.  
    Sec. 4.  [501B.04] [REVERSION IN GRANTOR.] 
    Every legal estate and interest not embraced in an express 
trust and not otherwise disposed of remains in the grantor. 
    Sec. 5.  [501B.05] [BONA FIDE PURCHASERS PROTECTED.] 
    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. 
    Sec. 6.  [501B.06] [MISAPPLICATION OF PAYMENT TO TRUSTEE.] 
    A person who actually and in good faith makes a payment to 
a trustee that the trustee, as such, is authorized to receive, 
is not responsible for the proper application of the payment 
according to the trust.  No right or title derived by the person 
from the trustee, in consideration of the payment, may be 
impeached or called in question because of a misapplication of 
the payment by the trustee. 
    Sec. 7.  [501B.07] [PURCHASE MONEY RESULTING TRUSTS.] 
    If a transfer of property is made to one person and the 
purchase price is paid by another, a resulting trust is presumed 
to arise in favor of the person by whom the purchase price is 
paid, except: 
     (1) if the person by whom the purchase price is paid 
manifests a contrary intention, no resulting trust is presumed 
to arise; 
     (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 
     (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. 
     Sec. 8.  [501B.08] [APPOINTMENT OF AND ACQUISITION OF TITLE 
BY SUCCESSOR TRUSTEES AND CONFIRMATION OF ACTS PERFORMED DURING 
VACANCIES IN TRUSTEESHIP.] 
    If the terms of a trust provide for the appointment of a 
successor trustee and direct how the successor is to qualify, 
title to the trust assets vests in the successor trustee upon 
qualification, unless the terms of the trust expressly provide 
otherwise. 
    If the terms of a trust do not effectively provide for the 
appointment of a successor trustee and appointment of a 
successor is required, or if title to the trust assets does not 
vest in a successor trustee, the district court may appoint a 
successor trustee or vest title in a successor trustee.  
    The district court may confirm an act performed by a person 
in execution of the trust while there was no acting trustee. 
    Sec. 9.  [501B.09] [SUSPENSION OF THE POWER OF ALIENATION.] 
     Subdivision 1.  [SUSPENSION; EXCEPTIONS.] 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. 
    (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. 
     (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. 
     Subd. 2.  [SUSPENSION FOR 21 YEARS.] 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, section 38 applies.  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. 
     Subd. 3.  [VOID FUTURE INTERESTS.] 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. 
    Sec. 10.  [501B.10] [KINDS OF PROPERTY A TRUSTEE MAY 
ACQUIRE.] 
    Subdivision 1.  [GENERAL PROPERTIES AND INVESTMENTS.] (a) A 
trustee may invest in every kind of real or personal property 
and every kind of investment 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.  This permission 
includes, but is not limited to, bonds, debentures, and other 
individual or corporate obligations, mutual funds, and corporate 
stocks.  In considering an investment, a trustee shall exercise 
the care, skill, and judgment under the circumstances then 
prevailing that a person of ordinary prudence would exercise in 
the management of 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 greater skills than a 
person of ordinary prudence, the trustee is under a duty to use 
those skills. 
    (b) Among the factors to be considered by a trustee in 
determining the prudence of a particular investment are the 
following: 
    (1) the probable income of the trust and the probable 
safety of the capital of the trust; 
     (2) 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 and current return of the trust's 
portfolio relative to the anticipated cash requirements of the 
trust; 
     (6) other assets of the beneficiary or beneficiaries known 
to the trustees, including earning capacity; 
    (7) the relative interests of income and remainder 
beneficiaries; and 
    (8) the tax consequences. 
    (c) If a trustee is a national banking association or 
national trust company 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 that is otherwise prudent is not imprudent solely 
because it is in new, unproven, untried, or other enterprises 
with a potential for significant growth, or in a limited 
partnership or commingled fund investing in these enterprises. 
     Subd. 2.  [DISPOSAL OF PROPERTY.] 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. 
     Subd. 3.  [ALTERATION OF TERMS OF WILL.] This section does 
not authorize any departure from or variation of express terms 
or limitations in a will, agreement, court order, or other 
instrument creating or defining the trustee's duties and powers, 
but the terms "authorized securities," "authorized investments," 
or "legal investments," or words of similar import, as used in a 
will, agreement, court order, or instrument or in the statutes 
of this state in relation to the investment of trust funds by 
corporate or individual trustees, mean every kind of property, 
real, personal, or mixed, and every kind of investment, that a 
trustee is authorized to acquire under the terms of subdivision 
1. 
     Subd. 4.  [NO LIMITATION ON POWERS OF COURT.] 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. 
     Subd. 5.  [TRUSTEES DEFINED.] As used in this section, 
"trustee" means individual trustees and corporations having 
trust powers acting under wills, agreements, court orders, and 
other instruments, whether existing on the effective date of 
this section or made at a later time. 
     Subd. 6.  [INVESTMENT COMPANIES.] (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. 
     (b) This subdivision does not alter the degree of care and 
judgment required of trustees by subdivision 1. 
    Sec. 11.  [501B.11] [EMPLOYEES AND AGENTS OF TRUSTEE.] 
    Unless prohibited by the terms of the trust 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.  If the terms of the trust 
instrument do not address the authority of the trustee to 
delegate: 
    (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 of the trustee; and 
    (3) the employment does not relieve the trustee of the duty 
to select and retain a person with reasonable care. 
    Sec. 12.  [501B.12] [GRANTOR AND AGENTS OF GRANTOR.] 
    If a trust instrument reserves to the grantor, in a 
nonfiduciary capacity, the control over any or all investment 
decisions, the trustee is not responsible for the investment 
decisions made by the grantor or an agent of the grantor.  

                            COURT PROCEEDINGS
    Sec. 13.  [501B.16] [PETITION FOR COURT ORDER.] 
    A trustee of an express trust by will or other written 
instrument or a person interested in the trust may petition the 
district court for an order: 
    (1) to confirm an action taken by a trustee; 
    (2) upon filing of an account, to settle and allow the 
account; 
    (3) to determine the persons having an interest in the 
income or principal of the trust and the nature and extent of 
their interests; 
    (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 23; 
    (5) to approve payment of the trustee's fees, attorneys' 
fees, accountants' fees, or any other fees to be charged against 
the trust; 
    (6) to confirm the appointment of a trustee; 
    (7) to accept a trustee's resignation and discharge the 
trustee from the trust; 
    (8) to require a trustee to account; 
    (9) to remove a trustee for cause; 
    (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; 
     (11) to confirm an act performed in execution of the trust 
by a person while there was no acting trustee; 
     (12) to subject a trust to continuing court supervision 
under section 20; 
     (13) to remove a trust from continuing court supervision 
under section 20; 
     (14) to mortgage, lease, sell, or otherwise dispose of real 
property held by the trustee notwithstanding any contrary 
provision of the trust instrument; 
     (15) to suspend the powers and duties of a trustee in 
military service or war service in accordance with section 75 
and to order further action authorized in that section; 
    (16) to secure compliance with the provisions of sections 
25 to 37, in accordance with section 33; 
    (17) to determine the validity of a disclaimer filed under 
section 70; 
    (18) to change the situs of a trust; 
    (19) to redress a breach of trust; 
    (20) to terminate a trust; or 
    (21) to instruct the trustee, beneficiaries, and any other 
interested parties in any matter relating to the administration 
of the trust and the discharge of the trustee's duties. 
    Sec. 14.  [501B.17] [VENUE.] 
    A petition under section 13 or 19 may be filed: 
    (1) in the case of a trust created by will, in the district 
court for the county where the will was probated, or in the 
district court for the county where a trustee having custody of 
part or all of the trust assets resides or has a main place of 
business; 
    (2) in the case of a nontestamentary trust, in the district 
court for the county where a trustee having custody of part or 
all of the trust assets resides or has a main place of business; 
or 
    (3) in the case of a trust holding real property, in the 
district court for any county in which the real estate is 
situated. 
     In the case of a trust with respect to which there have 
been prior court proceedings in this state, a petition under 
section 13 or 19 must be filed in the court in which the prior 
proceedings were held. 
    Sec. 15.  [501B.18] [ORDER FOR HEARING.] 
    Upon the filing of a petition under section 13, the court 
shall, by order, fix a time and place for a hearing, unless 
notice and hearing have been waived in writing by the 
beneficiaries of the trust then in being.  Unless waived, notice 
of the hearing must be given 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 beneficiaries of the trust who are known to or 
reasonably ascertainable by the petitioner.  In the case of a 
beneficiary who is a minor or an incapacitated person as defined 
in section 525.54 and for whom a conservator, guardian, or 
guardian ad litem known to the petitioner has been appointed, 
notice must be mailed to that fiduciary.  Notice may be given in 
any other manner the court orders. 
    Sec. 16.  [501B.19] [REPRESENTATION OF PERSONS WHO ARE 
UNBORN, UNASCERTAINED, UNKNOWN, OR MINORS OR INCAPACITATED 
PERSONS.] 
    If an interested person is a minor or an incapacitated 
person as defined in section 525.54 and has no guardian or 
conservator within the state, or if an interested person is 
unborn, unascertained, or a person whose identity or address is 
unknown to the petitioner, the court shall represent that 
person, unless the court, upon the application of the trustee or 
any other interested person, appoints a guardian ad litem to 
represent the person. 
    Sec. 17.  [501B.20] [HOLDER OF A GENERAL POWER.] 
    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 coholders of a presently exercisable or testamentary general 
power of appointment, power of revocation, or unlimited power of 
withdrawal are deemed to represent the act for beneficiaries to 
the extent that their interests as objects, takers in default, 
or otherwise are subject to the power. 
    Sec. 18.  [501B.21] [ORDER AND APPEAL.] 
    Upon hearing a petition filed under section 13, the court 
shall make an order it considers appropriate.  The order is 
final as to all matters determined by it and binding in rem upon 
the trust estate and upon the interests of all beneficiaries, 
vested or contingent, even though unascertained or not in being, 
except that appeal may be taken under the rules of appellate 
procedure. 
    Sec. 19.  [501B.22] [CONFIRMATION OF APPOINTMENT OF 
TRUSTEE.] 
    A person appointed as trustee of an express trust by a will 
or other written instrument 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.  Upon consideration of the petition, the 
court shall make an order it considers appropriate.  A trustee 
whose appointment is confirmed under this section is subject to 
section 20. 
    Sec. 20.  [501B.23] [INVENTORY; ANNUAL ACCOUNT; CONTINUING 
COURT SUPERVISION.] 
    A trustee whose appointment has been confirmed by court 
order under section 19 or a trustee otherwise subject to 
continuing court supervision by court order shall file with the 
court administrator of the district court an inventory 
containing a list of all property then belonging to the trust.  
The trustee shall then 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 474. 
    Sec. 21.  [501B.24] [JURISDICTION.] 
    Once a district court has assumed jurisdiction of a trust, 
the district court has jurisdiction as a proceeding in rem, 
until jurisdiction is transferred to another court or terminated 
by court order.  This chapter does not limit or abridge the 
power or jurisdiction of the district court over trusts and 
trustees. 
    Sec. 22.  [501B.25] [APPLICATION.] 
    Sections 13 to 20 do not apply to trusts in the nature of 
mortgages or to trusts commonly known as voting trusts.  
Sections 13 to 20 apply, however, unless otherwise provided in 
the trust instrument, to trusts established in connection with 
bonds issued under chapter 474.  As used in sections 13 to 20, 
"person" includes an artificial as well as a natural person, and 
"beneficiary" includes a bondholder. 

                 CHARITABLE TRUSTS AND THEIR SUPERVISION
    Sec. 23.  [501B.31] [CHARITABLE TRUSTS.] 
    Subdivision 1.  [VALIDITY AND CONSTRUCTION.] No charitable 
trust is invalid because of indefiniteness or uncertainty of the 
object of the trust or of its beneficiaries designated in the 
instrument creating the trust or because the trust violates a 
statute or rule against perpetuities.  No charitable trust may 
prevent or limit the free alienation of the title to any of the 
trust estate by the trustee in the administration of the trust, 
except as may be permitted under existing or subsequent statutes.
    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 13, 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. 
     Subd. 3.  [LAWS NOT AFFECTED.] Nothing in this section 
impairs, limits, or abridges the operation and efficacy of the 
whole or any part of a statute that authorizes the creation of a 
corporation for charitable purposes or that permits a municipal 
corporation to act as trustee for a public or charitable 
purpose.  Nothing in subdivisions 1 to 3 of this section applies 
to a gift, bequest, devise, or trust made, created, or arising 
by or under the provisions of the will of a person who died 
before April 15, 1927.  
     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 13 
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. 
    Subd. 5.  [ATTORNEY GENERAL.] In cases arising under this 
section, the attorney general must be given notice of any court 
proceedings pursuant to section 15.  The attorney general shall 
represent the beneficial interests in those cases and shall 
enforce affected trusts. 
    Sec. 24.  [501B.32] [PRIVATE FOUNDATIONS; CHARITABLE 
TRUSTS; SPLIT-INTEREST TRUSTS.] 
    Subdivision 1.  [INCORPORATED PROVISIONS.] A will or trust 
instrument that creates a trust that is:  (1) a "private 
foundation," as defined in section 501(a) of the Internal 
Revenue Code of 1986; or (2) a "charitable trust," as defined in 
section 4947(a)(1) of the Internal Revenue Code of 1986; or (3) 
a "split-interest trust," as defined in section 4947(a)(2) of 
the Internal Revenue Code of 1986, and any other instrument 
governing the trustee of one of those trusts or the use, 
retention, or disposition of any of the income or property of 
one of those trusts, must be considered to have incorporated 
within it the provisions in paragraphs (a) to (e) with respect 
to the trust and its trustee.  Except as provided in subdivision 
2, paragraphs (a) to (e) govern the administration and 
distribution of the trust notwithstanding provisions of the 
governing instrument, statute, or law of this state to the 
contrary. 
    (a) The trustee shall distribute for each taxable year of 
the trust amounts at least sufficient to avoid liability for the 
tax imposed by section 4942(a) of the Internal Revenue Code of 
1986. 
    (b) The trustee shall not engage in an act of 
"self-dealing," as defined in section 4941(d) of the Internal 
Revenue Code of 1986, which would give rise to liability for the 
tax imposed by section 4941(a) of the Internal Revenue Code of 
1986. 
    (c) The trustee shall not keep "excess business holdings," 
as defined in section 4943(c) of the Internal Revenue Code of 
1986, that would give rise to liability for the tax imposed by 
section 4943(a) of the Internal Revenue Code of 1986. 
    (d) The trustee shall not make investments that would 
jeopardize the carrying out of any of the exempt purposes of the 
trust, within the meaning of section 4944 of the Internal 
Revenue Code of 1986, so as to give rise to liability for the 
tax imposed by section 4944(a) of the Internal Revenue Code of 
1986. 
    (e) The trustee shall not make a "taxable expenditure," as 
defined in section 4945(d) of the Internal Revenue Code of 1986, 
that would give rise to liability for the tax imposed by section 
4945(a) of the Internal Revenue Code of 1986. 
    Subd. 2.  [EXCEPTION.] Subdivision 1 does not apply to the 
extent that a court of competent jurisdiction determines that 
application would be contrary to the terms of the will, trust 
instrument, or other governing instrument described in 
subdivision 1 and that the will, trust instrument, or other 
governing instrument may not be changed to conform to 
subdivision 1. 
    Subd. 3.  [RIGHTS AND POWERS OF COURTS, ATTORNEY 
GENERAL.] Nothing in this section impairs the rights and powers 
of the attorney general or the courts of this state with respect 
to a trust. 
    Sec. 25.  [501B.33] [CITATION.] 
    Sections 25 to 37 may be cited as the "supervision of 
charitable trusts and trustees act."  
    Sec. 26.  [501B.34] [CHARITABLE TRUSTS; SUPERVISION BY 
ATTORNEY GENERAL.] 
    Sections 25 to 37 apply to trustees holding property for 
charitable purposes.  In connection with the supervision, 
administration, and enforcement of charitable trusts, the 
attorney general has the rights, duties, and powers in sections 
25 to 37, and common law and statutory rights, duties, and 
powers. 
    Sec. 27.  [501B.35] [DEFINITIONS.] 
    Subdivision 1.  [SCOPE.] The definitions in this section 
apply to sections 23 to 37 and do not modify or abridge any law 
or rule respecting the nature of a charitable trust or the 
nature and extent of the duties of a trustee except duties 
imposed by sections 23 to 37. 
    Subd. 2.  [CHARITABLE PURPOSE.] "Charitable purpose" means 
an actual or purported charitable, philanthropic, religious, 
social service, educational, eleemosynary, or other public use 
or purpose. 
    Subd. 3.  [CHARITABLE TRUST.] "Charitable trust" means a 
fiduciary relationship with respect to property that arises as a 
result of a manifestation of an intention to create it, and that 
subjects the person by whom the property is held to equitable 
duties to deal with the property for a charitable purpose. 
    Subd. 4.  [TRUSTEE.] "Trustee" means a person or group of 
persons either in an individual or a joint capacity, or a 
director, officer, or other agent of an association, foundation, 
trustee corporation, corporation, or other legal entity who is 
vested with the control or responsibility of administering 
property held for a charitable purpose. 
    Sec. 28.  [501B.36] [REGISTRATION AND REPORTING.] 
    The registration and reporting provisions of sections 29 
and 30 apply to a charitable trust, or an organization with a 
charitable purpose, that has gross assets of $25,000 or more, 
except that the provisions do not apply to: 
    (1) a charitable trust administered by the United States or 
a state, territory, or possession of the United States, the 
District of Columbia, the Commonwealth of Puerto Rico, or any of 
their agencies or subdivisions; 
    (2) a religious association organized under chapter 315 or 
chapter 317; 
    (3) a charitable trust organized and operated exclusively 
for religious purposes and administered by a religious 
association organized under chapter 315 or chapter 317; 
    (4) an organization described in section 509(a)(3) of the 
Internal Revenue Code of 1986 and operated, supervised, or 
controlled by or in connection with one or more organizations 
described in clauses (2) to (5); a pooled income fund as defined 
in section 642(c)(5) of the Internal Revenue Code of 1986 
maintained by an organization described in clauses (2) to (5); 
or a charitable remainder annuity trust or unitrust, as defined 
in section 664 of the Internal Revenue Code of 1986; 
    (5) a trust in which the only charitable interest is a 
contingent interest for which no charitable deduction has been 
allowed for Minnesota income, inheritance, or gift tax purposes 
or a trust in which not all of the unexpired interests are 
devoted to one or more charitable purposes and in which the only 
charitable interest is an annuity or an income interest with 
respect to which a charitable deduction is allowed the trust 
under applicable Minnesota income tax laws; 
    (6) an organization subject to sections 309.50 to 309.61; 
    (7) a trust for individual and charitable beneficiaries 
that is described in section 4947(a)(2) of the Internal Revenue 
Code of 1986, also known as a split-interest trust; or 
    (8) a charitable gift, bequest, or devise not held and 
continued by a private express trust or corporation even though 
the gift, bequest, or devise creates a fiduciary relationship, 
unless there is no named charitable beneficiary in existence or 
unless a named charitable beneficiary elects in a writing filed 
with the attorney general and with the fiduciary to come within 
the provisions of sections 29 and 30. 
    Sec. 29.  [501B.37] [REGISTER OF TRUSTS AND TRUSTEES.] 
    Subdivision 1.  [ESTABLISHMENT OF REGISTER; TRANSFER TO 
ATTORNEY GENERAL.] The attorney general shall establish and 
maintain a register of charitable trusts and trustees subject to 
sections 25 to 37. 
    Subd. 2.  [FILING OF INSTRUMENTS.] A charitable trust 
subject to sections 25 to 37 must register and file with the 
attorney general a copy of the instrument that created the 
charitable trust, including any amendments, within three months 
after the charitable trust first receives possession or control 
of property authorized or required to be applied, either at 
present or in the future, for charitable purposes. 
    Sec. 30.  [501B.38] [FILING OF ANNUAL REPORTS.] 
    Subdivision 1.  [REPORTS REQUIRED; DEADLINES; 
EXTENSIONS.] A charitable trust subject to sections 25 to 37 
must file with the attorney general written reports containing 
any information the trust is required to report under sections 
6056(b), 6033, 6034, and 6056 of the Internal Revenue Code of 
1986.  The reports must be filed annually on or before the 15th 
day of the fifth month following the close of the charitable 
trust's taxable year as established for federal tax purposes.  
The time for filing may be extended by application to the 
attorney general, but no extension may be for more than six 
months.  A charitable trust that files the information required 
under this subdivision with the attorney general is not required 
to file the same information with the commissioner of revenue. 
    Subd. 2.  [SUSPENSION OF FILING.] The attorney general may 
suspend the filing requirements under subdivision 1 for a 
particular charitable trust for a reasonable, specifically 
designated time on written application of the trustee filed with 
the attorney general.  If the filing requirements are suspended, 
the attorney general shall file in the register of charitable 
trusts a written statement that the interests of the 
beneficiaries will not be prejudiced by the suspension and that 
annual reports are not required for proper supervision by the 
attorney general's office. 
    Sec. 31.  [501B.39] [PUBLIC INSPECTION OF RECORDS.] 
    The register, copies of instruments, and the reports filed 
with the attorney general must be open to public inspection. 
    Sec. 32.  [501B.40] [INVESTIGATORY POWERS OF THE ATTORNEY 
GENERAL; CUSTODIANS TO FURNISH COPIES OF RECORDS.] 
    Subdivision 1.  [DISCOVERY.] The attorney general may 
conduct investigations that are reasonably necessary for:  (1) 
the administration of sections 25 to 37; or (2) determining 
whether property held for charitable purposes is properly 
administered.  In connection with an investigation under this 
section, the attorney general may obtain discovery from an 
agent, trustee, fiduciary, beneficiary, institution, 
association, corporation, or other person regarding a matter, 
fact, or circumstance, not privileged, that is relevant to the 
subject matter involved in the investigation.  The discovery may 
be obtained without commencement of a civil action and without 
leave of court, except as expressly required by subdivision 2.  
The applicable protective provisions of Rules 26.02, 30.02, and 
30.04, of the Rules of Civil Procedure for the District Court 
apply to discovery procedures instituted under this section.  
The attorney general or a person to whom discovery is directed 
may apply to and obtain leave of the district court in order to 
reduce or extend the time requirements of this subdivision, and, 
upon a showing of good cause, the district court shall order a 
reduction or extension.  In order to obtain discovery, the 
attorney general may: 
    (1) serve written interrogatories on a person.  Within 20 
days after service of interrogatories, separate written answers 
and objections to each interrogatory must be mailed to the 
attorney general; 
    (2) upon reasonable written notice of no less than 15 days, 
require a person to produce for inspection and copying 
documents, papers, books, accounts, letters, photographs, 
objects, or tangible things in the person's possession, custody, 
or control; and 
    (3) upon reasonable written notice of no less than 15 days, 
take the testimony of a person by deposition as to a fact or 
opinion relevant to the subject matter involved in the pending 
investigation. 
    Subd. 2.  [ORDER BY COURT.] If a person fails or refuses to 
answer interrogatories, produce materials, or be examined under 
oath, the attorney general may, upon notice to the person, apply 
to the district court in the county where the person resides or 
is found, for an order to compel compliance.  On a showing of 
cause by the attorney general, the court may issue an order to 
compel compliance with the discovery procedures authorized by 
this section. 
    Subd. 3.  [PUBLIC RECORDS.] A custodian of records of a 
court having jurisdiction of probate matters or of charitable 
trusts, and a custodian of records of a department, agency, or 
political subdivision of this state shall, upon request, furnish 
to the attorney general, free of charge, copies of records 
relating to the subject of sections 25 to 37. 
    Subd. 4.  [REPORT OF APPLICATIONS FOR TAX EXEMPTION.] Every 
officer, agency, board, or commission of this state that 
receives an application for exemption from taxation from a 
charitable trust subject to sections 25 to 37 shall annually 
file with the attorney general a list of all applications 
received during the year and shall notify the attorney general 
of the suspension or revocation of a tax exempt status 
previously granted. 
    Sec. 33.  [501B.41] [BREACH OF TRUST; PROCEEDINGS TO SECURE 
COMPLIANCE.] 
    Subdivision 1.  [ENFORCEMENT POWERS.] The attorney general 
may institute appropriate proceedings to obtain compliance with 
sections 25 to 37 and the proper administration of a charitable 
trust.  The powers and duties of the attorney general in this 
section are in addition to all other powers and duties. 
     Subd. 2.  [PARTICIPATION BY ATTORNEY GENERAL.] The attorney 
general must be notified of, and has the right to participate as 
a party in, all court proceedings: 
    (1) to terminate a charitable trust or to liquidate or 
distribute its assets; 
    (2) to modify or depart from the objects or purposes of a 
charitable trust as contained in the instrument governing the 
trust, including a proceeding for the application of the 
doctrine of cy pres; 
    (3) to construe the provisions of an instrument with 
respect to a charitable trust; 
    (4) to review an accounting of a charitable trust submitted 
by a trustee; or 
    (5) involving a charitable trust when the interests of the 
uncertain or indefinite charitable beneficiaries may be affected.
    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 chapter. 
    Subd. 4.  [FAILURE TO GIVE NOTICE.] If proceedings are 
commenced without service of process and service of the 
pleadings upon the attorney general, a judgment or order 
rendered in the proceedings is voidable, unenforceable, and, 
upon the attorney general's motion seeking relief, may be set 
aside.  With respect to the proceedings, no compromise, 
settlement agreement, contract, or judgment agreed to by any or 
all of the parties having or claiming to have an interest in a 
charitable trust is valid unless the attorney general was made a 
party to the proceedings and joined any agreement or the 
attorney general, in writing, waived the right to participate.  
The attorney general may enter into a compromise, settlement 
agreement, contract, or judgment that the attorney general 
believes is in the best interests of the people of the state and 
the uncertain or indefinite beneficiaries.  
    Subd. 5.  [WILLS.] The personal representative shall send 
to the attorney general a copy of the petition or application 
for probate together with a copy of the will and any codicils 
that are being offered for probate: 
    (1) when a will provides for a bequest or devise for a 
charitable purpose for which there is no named charitable 
beneficiary or for which there is then in existence no named 
charitable beneficiary; 
    (2) when a will provides for bequests or devises for 
charitable purposes in excess of $150,000; 
    (3) when a will provides for a bequest or devise to a named 
charitable beneficiary that is in receivership; or 
     (4) upon a written request served on the personal 
representative by a named charitable beneficiary prior to the 
order allowing the final account or, in unsupervised 
proceedings, within 30 days after service of the final account 
on the charitable beneficiary. 
    The personal representative shall serve the documents on 
the attorney general and file with the appropriate court a copy 
of the affidavit of service on the attorney general.  If the 
personal representative was requested to notify the attorney 
general of the probate proceedings according to clause (4), the 
requesting party shall file with the court a copy of the request 
and the affidavit of service on the personal representative. 
    If objections are filed to a will or codicil containing any 
bequest or devise to a charitable trust, the person filing the 
objections, at least 14 days before the hearing, shall send to 
the attorney general a copy of the objections, a copy of the 
petition or application for probate, a copy of the will, and any 
codicil that has been offered for probate. 
    Any service upon the attorney general under this section 
must be made personally or by registered or certified mail, 
return receipt requested.  The attorney general may become a 
party in the estate proceedings. 
     Subd. 6.  [BREACH OF TRUST.] The failure of a trustee to 
register under section 29, to file annual reports under section 
30, or to administer and manage property held for charitable 
purposes in accordance with law or consistent with fiduciary 
obligations constitutes a breach of trust. 
    Subd. 7.  [CIVIL ACTIONS.] The attorney general may begin a 
civil action in order to remedy and redress a breach of trust, 
as described in subdivision 6 or as otherwise provided by law, 
committed by a trustee subject to sections 25 to 37.  If it 
appears to the attorney general that a breach of trust has been 
committed, the attorney general may sue for and obtain: 
    (1) injunctive relief against the breach of trust or 
threatened breach of trust; 
     (2) the removal of a trustee who has committed or is 
committing a breach of trust; 
     (3) the recovery of damages; and 
     (4) another appropriate remedy. 
    Sec. 34.  [501B.42] [CONTRARY PROVISIONS OF INSTRUMENT 
INVALID.] 
    Sections 25 to 37 apply regardless of contrary provisions 
of an instrument. 
    Sec. 35.  [501B.43] [COST OF INVESTIGATIONS AND 
PROCEEDINGS; REGISTRATION AND FILING FEES.] 
    Subdivision 1.  [EXPENSES PAYABLE.] In a proceeding brought 
by the attorney general or in which the attorney general 
intervenes under sections 25 to 37, the judgment or order may 
provide that the trustee must pay the reasonable expenses 
necessarily incurred by the attorney general in the 
investigation and prosecution of the action, including 
attorneys' fees, if it is determined in the proceeding that the 
trustee has been guilty of an intentional or grossly negligent 
breach of trust. 
    Subd. 2.  [DISPOSITION OF MONEY.] All money received by the 
attorney general under this section must be deposited in the 
state treasury and credited to the general fund. 
    Sec. 36.  [501B.44] [IMMUNITY OF CHARITABLE TRUSTS.] 
    A charitable trust is an "organization" for purposes of 
section 317.201, and that section applies to charitable trusts.  
    Sec. 37.  [501B.45] [SALE OF BANKS OWNED BY CHARITABLE 
TRUSTS.] 
    Subdivision 1.  [DEFINITIONS.] For the purpose of this 
section, "charitable trust" means a charitable trust subject to 
supervision by the attorney general under the supervision of 
charitable trusts and trustees act, sections 25 to 37, that is 
required to divest excess business holdings by section 4943 of 
the Internal Revenue Code of 1986 and that owned 100 percent of 
a bank holding company on May 26, 1969, the date of enactment of 
section 4943 of the Internal Revenue Code of 1954. 
    Subd. 2.  [AUTHORIZATION.] The stock or assets of one or 
more banks or a bank holding company owned directly or 
indirectly by a charitable trust may be sold, assigned, merged, 
or transferred by the charitable trust under the procedures in 
section 48.93 to a bank holding company, bank, or other 
qualified entity as permitted by applicable banking laws without 
regard to whether the entity acquiring the stock or assets is 
located in a reciprocating state. 
    Subd. 3.  [LEGISLATIVE INTENT.] It is the express intention 
of the Minnesota legislature to act pursuant to United States 
Code, title 12, section 1842(d), to permit certain charitable 
trusts to sell, assign, or transfer certain financial 
institutions' assets without regard to whether the entity 
acquiring the assets of the charitable trust is located outside 
of this state. 
    Subd. 4.  [ADDITIONAL ACQUISITIONS.] A bank holding 
company, other than a reciprocating state bank holding company 
as defined in section 48.92, subdivision 8, that directly or 
indirectly acquires control of a bank located in this state 
under the provisions of this section may acquire additional bank 
assets through the expenditure of an annual amount not to exceed 
five percent of the Minnesota assets of the acquired bank 
holding company as of December 31 of the preceding year.  The 
restrictions within this subdivision apply only until the bank 
holding company making an acquisition under this section becomes 
a reciprocating state bank holding company.  This section does 
not prohibit the bank holding company from being granted a 
charter for a de novo bank or from establishing de novo detached 
facilities pursuant to Minnesota law. 

                   SALES AND LEASES OF REAL PROPERTY 
    Sec. 38.  [501B.46] [PETITION FOR COURT ORDER TO SELL, 
MORTGAGE, OR LEASE REAL PROPERTY HELD IN TRUST.] 
    (a) 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 20 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 any of the real property. 
    (b) 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 20 is not applicable to 
the trust, the trustee or a beneficiary of the trust may 
petition an appropriate district court under section 13 for an 
order directing the trustee to sell, mortgage, or lease the real 
property or a part of the real property. 
    Sec. 39.  [501B.47] [PETITION BY OWNER OF PRESENT OR FUTURE 
INTEREST FOR COURT ORDER TO SELL, MORTGAGE, OR LEASE INTERESTS 
IN REAL PROPERTY.] 
    Notwithstanding a contrary provision in the instrument 
creating the interests, when the ownership of real property 
situated in this state is divided into one or more possessory 
interests and one or more future interests, the owner of an 
interest may petition the district court for the county in which 
any of the real property is situated for an order directing that 
the real property or part of the real property be sold, 
mortgaged, or leased.  If an owner is a minor or incapacitated 
person as defined in section 525.54, the petition may be made on 
behalf of the owner by a custodian, conservator, or guardian. 
    Sec. 40.  [501B.48] [WHEN PETITION MAY BE GRANTED.] 
    Subdivision 1.  [PETITION UNDER SECTION 38.] The court to 
which a petition to sell, mortgage, or lease has been made under 
section 38 may grant the petition, on terms it considers 
appropriate, if the court determines that: 
    (1) if the interest in real property were owned in fee 
simple or absolute ownership by a single individual, a sale or 
mortgage of the interest would be desirable because total 
investment returns, including appreciation and the value of any 
use of the real property by trust beneficiaries, were 
inadequate; or 
    (2) an order directing a sale or mortgage would be 
economically advantageous to the trust beneficiaries to whom 
trust income is distributable or may be distributed and would 
not be seriously disadvantageous to any trust beneficiary. 
    The court to which a petition to lease has been made under 
section 38 may grant the petition on terms it considers 
appropriate, even though the term of the lease may extend beyond 
the term of the trust, if the court determines that an order 
directing a lease would be economically advantageous to the 
trust beneficiaries to whom trust income is distributable or may 
be distributed and would not be seriously disadvantageous to any 
trust beneficiary. 
    Subd. 2.  [PETITION UNDER SECTION 39.] The court to which a 
petition to sell or mortgage has been made under section 39 may 
grant the petition on terms it considers appropriate if the 
court determines that: 
    (1) were the real property held in trust for the owners of 
the possessory and future interests in the property, retention 
of the real property by the trustee without the sale or mortgage 
would be inconsistent with a trustee's common law duty to 
administer the trust impartially as between the holders of 
successive interests in income and principal; 
    (2) if the interest in real property were owned in fee 
simple or absolute ownership by a single individual, a sale or 
mortgage of the interest would be desirable because total 
investment returns, including appreciation and the value of any 
use of the real property by possessory owners, were inadequate; 
or 
    (3) an order directing a sale or mortgage would be 
economically advantageous to the owners of possessory interests 
in the real property and would not be seriously disadvantageous 
to the owner of any interest in the property.  
    The court to which a petition to lease has been made under 
section 39 may grant the petition on terms it considers 
appropriate, even though the term of the lease may extend beyond 
the duration of the possessory interests in the real property, 
if the court determines that an order directing a lease would be 
economically advantageous to the owners of possessory interests 
in the real property and would not be seriously disadvantageous 
to the owner of any interest in the property. 
    Sec. 41.  [501B.49] [NOTICE OF HEARING.] 
    Subdivision 1.  [HEARING REQUIRED.] On the filing of a 
petition under section 38 or 39, the court shall, by order, fix 
a time and place for a hearing on the petition unless a hearing 
has been waived in writing.  In the case of a petition under 
section 38, each beneficiary of the trust then in being must 
join in the waiver.  In the case of a petition under section 39, 
each person in being who owns an interest in the real property 
must join in the waiver. 
    Subd. 2.  [NOTICE.] Notice of hearing must be given by 
publishing a copy of the order for hearing one time in a legal 
newspaper for the county in which the petition is filed at least 
20 days before the date of the hearing, and by mailing copies of 
the order for hearing in the manner specified in this 
subdivision or in another manner ordered by the court.  In the 
case of a petition under section 38, mailed notice must be given 
by mailing a copy of the order for hearing to those 
beneficiaries of the trust then in being who are known to or 
reasonably ascertainable by the petitioner and, in the case of a 
beneficiary who is a minor or an incapacitated person as defined 
in section 525.54, to the conservator or guardian, or if none is 
acting within the state, to the guardian ad litem of the 
beneficiary, at least 15 days before the date of the hearing.  
In the case of a petition under section 39, mailed notice must 
be given by mailing a copy of the order for hearing to those 
persons owning an interest in the real property then in being 
who are known to or reasonably ascertainable by the petitioner 
and, in the case of a person who is a minor or an incapacitated 
person as defined in section 525.54, to the conservator or 
guardian, or if none is acting within the state, to the guardian 
ad litem of the person, at least 15 days before the date of the 
hearing. 
    Sec. 42.  [501B.50] [REPRESENTATION OF PERSONS WHO ARE 
UNBORN, UNASCERTAINED, UNKNOWN, OR MINORS OR INCAPACITATED 
PERSONS.] 
    If an interested person is a minor or an incapacitated 
person as defined in section 525.54 and does not have a guardian 
or conservator within the state, the court shall appoint a 
guardian ad litem for the person.  If an interested person is 
unborn, unascertained, or a person whose identity or address is 
unknown to the petitioner, the court shall represent the person, 
but the court may, upon the application of the petitioner or 
another interested person or on its own motion, appoint a 
guardian ad litem to represent the person. 
    Sec. 43.  [501B.51] [ORDER UPON PETITION; EXECUTION OF 
TRANSACTION.] 
    Subdivision 1.  [FORM OF ORDER; CONCLUSIVENESS.] At a 
hearing under section 41, the court shall make an order it 
considers appropriate.  If the petition is granted in whole or 
in part, the order must specify the real property to be sold, 
mortgaged, or leased and the terms and conditions on which the 
transaction is to be consummated.  The order is final and 
conclusive as to all matters determined by it and binding in rem 
on all persons interested in the real property, whether their 
interests are vested or contingent, even though the person is a 
minor, incapacitated as defined in section 525.54, 
unascertained, or not in being, except that appeal may be taken 
in the manner provided in the rules of appellate procedure. 
    Subd. 2.  [EXECUTION OF ORDER.] (a) In the case of a 
petition under section 38, all transactions required by the 
order must be executed by the trustee. 
    (b) In the case of a petition under section 39, the court 
shall appoint a suitable person as receiver to act for the court 
in executing each transaction required by the order.  Each 
required transaction must be executed by the receiver. 
    Sec. 44.  [501B.52] [REPORT OF AGREEMENT FOR CONFIRMATION.] 
    Before a sale, mortgage, or lease is made under an order 
described in section 43, the trustee or receiver shall enter 
into an agreement for the sale, mortgage, or lease, subject to 
the approval of the court, and must report the agreement to the 
court under oath.  At least 15 days before the hearing on the 
confirmation of the agreement, the trustee or receiver shall 
mail a copy of the agreement to each interested party to whom 
mailed notice was given under section 41 and to any interested 
party who did not receive notice but appeared at the hearing on 
the petition. 
    Sec. 45.  [501B.53] [ORDER OF CONFIRMATION; CONTENTS AND 
SUBSEQUENT PROCEDURES; DISTRIBUTION OF ASSETS.] 
    Subdivision 1.  [ORDER TO EXECUTE AGREEMENT.] If an 
agreement reported to the court under section 44 is found by the 
court to conform to the order described in section 43, the court 
shall make an order approving and confirming the agreement and 
directing the trustee or receiver to execute and deliver the 
deed, mortgage, or lease of real property required by the 
agreement. 
    Subd. 2.  [COSTS; ALLOWANCES.] The order of confirmation 
may direct that each participant in the proceeding be paid 
reasonable costs of the proceeding incurred by the participant.  
The order of confirmation may make appropriate allowances to 
persons who have served in the proceeding as receiver, guardian 
ad litem, or counsel, and may direct the manner of payment of 
these allowances. 
    Subd. 3.  [SAFEKEEPING, MANAGEMENT, AND DISTRIBUTION OF 
ASSETS.] The order of confirmation must include appropriate 
provisions for the safekeeping, management, and distribution of 
assets derived from the ordered transaction.  In the case of 
assets derived from a transaction executed by a trustee under 
section 43, subdivision 2, paragraph (a), distribution must be 
made to the trustee for administration as trust assets.  In the 
case of assets derived from a transaction executed by a receiver 
under section 43, subdivision 2, paragraph (b), distribution 
must be made to the owners, at the time of the sale or mortgage, 
of present possessory interests in the real property that was 
sold or mortgaged, and to the owners of leased real property who 
would be entitled to possession on the present termination of 
the lease.  Notwithstanding any contrary provision in the terms 
of the instrument creating the interests in real property sold, 
mortgaged, or leased under this subdivision, the same possessory 
and future interests exist in the assets distributed as existed 
in the real property, and any provision in the creating 
instrument for forfeiture of an interest in real property upon a 
sale or other assignment must be disregarded by the court in 
directing distribution or other assignment of interests in the 
proceeds of a sale. 
    Subd. 4.  [HEARING ON CONFIRMATION ORDER.] The trustee or 
receiver shall obtain from the court a time and place for the 
court's hearing on the confirmation of the agreement and shall 
give mailed notice of the time and place of the hearing to the 
interested parties described in section 43 at least 15 days 
before the date of that hearing.  The order of confirmation is 
final and conclusive as to all matters determined by it and 
binding in rem on all persons interested in the real property, 
whether their interests are vested or contingent, even though a 
person is a minor, incapacitated as defined in section 525.54, 
unascertained, or not in being, except that appeal may be taken 
in the manner provided in the rules of appellate procedure. 
    Subd. 5.  [COMBINED PROCEEDINGS.] In appropriate 
circumstances, proceedings under this section and section 44 may 
be combined with proceedings under sections 38 to 43. 
    Sec. 46.  [501B.54] [LEGAL EFFECT OF DEED, MORTGAGE, OR 
LEASE MADE UNDER SECTION 45.] 
    A deed, mortgage, or lease executed and delivered in 
accordance with an order of confirmation under section 45 binds 
the interests of the applicant for the order and of all other 
persons interested in the real property sold, mortgaged, or 
leased. 
    Sec. 47.  [501B.55] [DATE OF CREATION OF INTERESTS AFFECTED 
BY THE PROCEDURES IN SECTIONS 38 TO 46.] 
    The procedures in sections 38 to 46 apply to proceedings 
initiated after January 1, 1990, with respect to interests 
created before, on, or after January 1, 1990. 

                    UNIFORM PRINCIPAL AND INCOME ACT 
    Sec. 48.  [501B.59] [DEFINITIONS.] 
    Subdivision 1.  [SCOPE.] The definitions in this section 
apply to sections 48 to 65. 
     Subd. 2.  [INCOME BENEFICIARY.] "Income beneficiary" means 
the person to whom income is presently payable or for whom it is 
accumulated for distribution as income. 
     Subd. 3.  [INVENTORY VALUE.] "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. 
     Subd. 4.  [REMAINDERPERSON.] "Remainderperson" means the 
person entitled to principal, including income accumulated and 
added to principal. 
    Subd. 5.  [TRUSTEE.] "Trustee" means an original trustee 
and any successor or added trustee. 
    Sec. 49.  [501B.60] [DUTY OF TRUSTEE AS TO RECEIPTS AND 
EXPENDITURE.] 
    Subdivision 1.  [GENERAL RULES OF ADMINISTRATION.] 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: 
    (1) in accordance with the terms of the trust instrument, 
notwithstanding contrary provisions of sections 48 to 65; 
    (2) in the absence of contrary terms of the trust 
instrument, in accordance with sections 48 to 65; 
    (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. 
    Subd. 2.  [TRUSTEE'S DISCRETION.] 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 48 to 65.
    Sec. 50.  [501B.61] [INCOME; PRINCIPAL; CHARGES.] 
    Subdivision 1.  [INCOME DEFINED.] "Income" means the return 
in money or property derived from the use of principal, 
including return received as: 
    (1) rent of real or personal property, including sums 
received for cancellation or renewal of a lease; 
    (2) interest on money lent, including sums received as 
consideration for the privilege of prepayment of principal, 
except as provided in section 54 on bond premium and bond 
discount; 
    (3) income earned during administration of a decedent's 
estate as provided in section 52; 
    (4) corporate distributions as provided in section 50; 
    (5) accrued increment on bonds or other obligations issued 
at discount as provided in section 54; 
    (6) receipts from business and farming operations as 
provided in section 55; 
    (7) receipts from disposition of natural resources as 
provided in sections 56 and 57; 
    (8) receipts from other principal subject to depletion as 
provided in section 58; and 
    (9) receipts from disposition of underproductive property 
as provided in section 59. 
    Subd. 2.  [PRINCIPAL DEFINED.] "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: 
     (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; 
     (2) proceeds of property taken on eminent domain 
proceedings; 
     (3) proceeds of insurance on property forming part of the 
principal, except proceeds of insurance on a separate interest 
of an income beneficiary; 
     (4) stock dividends, receipts on liquidation of a 
corporation, and other corporate distributions as provided in 
section 53; 
    (5) receipts from the disposition of corporate securities 
as provided in section 54; 
    (6) royalties and other receipts from disposition of 
natural resources as provided in sections 56 and 57; 
    (7) receipts from other principal subject to depletion as 
provided in section 58; 
    (8) profit resulting from a change in the form of 
principal, except as provided in section 59 on underproductive 
property; 
    (9) receipts from disposition of underproductive property 
as provided in section 59; and 
    (10) allowances for depreciation established under sections 
55 and 60, subdivision 1, clause (2). 
    Subd. 3.  [CHARGES.] After determining income and principal 
in accordance with the terms of the trust instrument or of 
sections 48 to 65, the trustee shall charge to income or 
principal expenses and other charges as provided in section 60. 
    Sec. 51.  [501B.62] [WHEN RIGHT TO INCOME ARISES; 
APPORTIONMENT OF INCOME.] 
    Subdivision 1.  [GENERAL RULE.] 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 a will, it becomes subject 
to the trust as of the date of the death of the testator or date 
of receipt in the estate if acquired after death, even though 
there is an intervening period of administration of the 
testator's estate during which the beneficiary may have no right 
to a distribution of the income. 
     Subd. 2.  [RECEIPTS DUE BUT NOT PAID; PERIODIC 
PAYMENTS.] In the administration of a decedent's estate or an 
asset that becomes subject to a trust by reason of a will: 
     (1) receipts due but not paid at the date of death of the 
testator are principal; 
     (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. 
     Subd. 3.  [OTHER RECEIPTS.] 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. 
     Subd. 4.  [TERMINATION OF INCOME INTEREST.] On termination 
of an income interest, the income beneficiary whose interest is 
terminated, or the income beneficiary's estate, is entitled to: 
     (1) income undistributed on the date of termination; 
     (2) income due but not paid to the trustee on the date of 
termination; and 
    (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. 
    Subd. 5.  [CORPORATE DISTRIBUTIONS TO STOCKHOLDERS.] 
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. 
    Sec. 52.  [501B.63] [INCOME EARNED DURING ADMINISTRATION OF 
A DECEDENT'S ESTATE.] 
     Subdivision 1.  [EXPENSES.] 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. 
    Subd. 2.  [INCOME.] Unless the will provides otherwise, 
income from the assets of a decedent's estate after the death of 
the testator and before distribution, including income from 
property used to discharge liabilities, must be determined in 
accordance with the rules applicable to a trustee and 
distributed as follows: 
     (1) to specific devisees, the income from the property 
devised 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; 
    (2) to all other devisees, except devisees of pecuniary 
devises not in trust, the balance of the income, less the 
balance of property taxes, ordinary repairs, interest, and other 
expenses of management and operation of all property from which 
the estate is entitled to income, and taxes imposed on income, 
excluding taxes on capital gains, that accrue during the period 
of administration, in proportion to their respective interests 
in the undistributed assets of the estate computed at times of 
distribution on the basis of inventory value. 
     Subd. 3.  [INCOME RECEIVED BY TRUSTEE.] Income received by 
a trustee under subdivision 2 must be treated as income of the 
trust. 
    Sec. 53.  [501B.64] [CORPORATE DISTRIBUTIONS.] 
     Subdivision 1.  [SHARES; STOCK SPLITS; STOCK DIVIDENDS; 
SUBSCRIPTION RIGHTS.] Distributions of shares of a distributing 
corporation, including distributions in the form of a stock 
split or stock dividend, are principal.  A shareholder's right 
to subscribe to shares or other securities of the distributing 
corporation and the proceeds of any sale of that right are 
principal. 
     Subd. 2.  [CALL OF SHARES; MERGER; LIQUIDATION.] Except to 
the extent that the corporation indicates that some part of a 
corporate distribution is a settlement of preferred or 
guaranteed dividends accrued since the trustee became a 
stockholder or is in lieu of an ordinary cash dividend, a 
corporate distribution is principal if the distribution is 
pursuant to: 
     (1) a call of shares; 
     (2) a merger, consolidation, reorganization, or other plan 
by which assets of the corporation are acquired by another 
corporation; or 
     (3) a total or partial liquidation of the corporation, 
including a distribution the corporation 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. 
    Subd. 3.  [REGULATED INVESTMENT COMPANY; REAL ESTATE 
INVESTMENT TRUST.] 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 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. 
     Subd. 4.  [OTHER DISTRIBUTIONS.] Except as provided in 
subdivisions 1, 2, and 3, all corporate distributions are 
income.  "Corporate distributions" includes cash dividends, 
distributions of or rights to subscribe to shares or securities 
or obligations of corporations other than the distributing 
corporation, and the proceeds of the rights or property 
distributions.  Except as provided in subdivisions 2 and 3, if 
the distributing corporation gives a stockholder an option to 
receive a distribution either in cash or in its own shares, the 
distribution chosen is income. 
     Subd. 5.  [RELIANCE ON STATEMENTS.] The trustee may rely on 
a statement of the distributing corporation as to a fact 
relevant under a provision of sections 48 to 65 concerning the 
source or character of dividends or distributions of corporate 
assets. 
    Sec. 54.  [501B.65] [BOND PREMIUM AND DISCOUNT.] 
     Subdivision 1.  [PRINCIPAL.] 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. 
     Subd. 2.  [INCOME.] The increment in value of a bond or 
other obligation for the payment of money payable at a future 
time in accordance with a fixed schedule of appreciation in 
excess of the price at which it was issued, 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. 
    Sec. 55.  [501B.66] [BUSINESS AND FARMING OPERATIONS.] 
    Subdivision 1.  [BUSINESS INCOME OR LOSSES.] If a trustee 
uses part of the principal in the continuance of a business of 
which the settlor was a sole proprietor or a partner, the net 
profits of the business, computed in accordance with generally 
accepted accounting principles for a comparable business, are 
income.  If a loss results in any fiscal or calendar year, the 
loss falls on principal and must not be carried into any other 
fiscal or calendar year for purposes of calculating new income. 
    Subd. 2.  [AGRICULTURAL INCOME.] Generally accepted 
accounting principles must be used to determine income from an 
agricultural or farming operation, including the raising of 
animals or the operation of a nursery. 
    Sec. 56.  [501B.67] [DISPOSITION OF NATURAL RESOURCES.] 
     Subdivision 1.  [ALLOCATION OF RECEIPTS.] 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). 
     (a) If received as rent on a lease or extension payments on 
a lease, the receipts are income. 
     (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. 
    (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 not 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. 
    Subd. 2.  [TIMBER EXCEPTED.] This section does not apply to 
timber. 
    Sec. 57.  [501B.68] [TIMBER.] 
     If a part of the principal consists of land from which 
merchantable timber may be removed, the receipts from taking the 
timber from the land 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 not less than the amount 
allowable as a deduction for depletion, amortization, 
depreciation, or similar costs under the Internal Revenue Code 
of 1986. 
    Sec. 58.  [501B.69] [OTHER PROPERTY SUBJECT TO DEPLETION.] 
    Except as provided in sections 56 and 57, if part of the 
principal consists of property subject to depletion, including 
leaseholds, patents, copyrights, royalty rights, and rights to 
receive payments on a contract for deferred compensation, 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 amount allocated to principal is presumed to be 
reasonable and equitable if it is not less than the amount 
allowable as a deduction for depletion, amortization, 
depreciation, or similar costs under the Internal Revenue Code 
of 1986. 
    Sec. 59.  [501B.70] [UNDERPRODUCTIVE PROPERTY.] 
     Subdivision 1.  [PORTION OF PROCEEDS AS INCOME.] Except as 
otherwise provided in this section, a portion of the net 
proceeds of a sale of a part of the principal that has not 
produced an average net income of at least one percent per year 
of its inventory value for more than a year, including as income 
the value of any beneficial use of the property by the income 
beneficiary, must be treated as delayed income to which the 
income beneficiary is entitled as provided in this section.  The 
net proceeds of sale are the gross proceeds received, including 
the value of property received in substitution for the property 
disposed of, less the expenses, including capital gains tax, if 
any, incurred in the disposition and less any carrying charges 
paid while the property was underproductive. 
     Subd. 2.  [CALCULATION OF DELAYED INCOME.] The sum 
allocated as delayed income is the difference between the net 
proceeds and the amount that would have produced the net 
proceeds, had it been invested at simple interest at four 
percent per year while the property was underproductive.  This 
sum, plus any carrying charges and expenses previously charged 
against income while the property was underproductive, less any 
income received by the income beneficiary from the property and 
less the value of any beneficial use of the property by the 
income beneficiary, is income, and the balance is principal. 
     Subd. 3.  [ACCRUAL OF DELAYED INCOME.] An income 
beneficiary or the income beneficiary's estate is entitled to 
delayed income under this section as if accrued from day to day. 
    Subd. 4.  [DIFFICULT-TO-APPORTION PROPERTY.] If principal 
subject to this section is disposed of by conversion into 
property that cannot be apportioned easily, including, but not 
limited to, land, mortgages, or realty acquired by or in lieu of 
foreclosure, the income beneficiary is entitled to the net 
income from any property or obligation into which the original 
principal is converted while the substituted property or 
obligation is held.  If within five years after the conversion 
the substituted property has not been further converted into 
easily apportionable property, no allocation as provided in this 
section may be made. 
    Sec. 60.  [501B.71] [CHARGES AGAINST INCOME AND PRINCIPAL.] 
    Subdivision 1.  [INCOME.] The following charges must be 
made against income: 
     (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; 
     (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; 
    (3) one-half of the court costs, attorneys' fees, and other 
fees on periodic accountings or judicial proceedings, unless the 
court directs otherwise; 
    (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; 
    (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 
    (6) any tax levied on receipts defined as income under 
sections 48 to 65 or the trust instrument and payable by the 
trustee. 
    Subd. 2.  [UNUSUAL CHARGES.] 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. 
     Subd. 3.  [PRINCIPAL.] The following charges must be made 
against principal: 
     (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; 
     (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; 
     (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 52; 
    (4) any tax levied on profit, gain, or other receipts 
allocated to principal, even if the taxing authority calls the 
tax an income tax; 
    (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.  
    Subd. 4.  [REGULAR CHARGES PAYABLE FROM INCOME.] Regularly 
recurring charges payable from income must be apportioned to the 
same extent and in the same manner that income is apportioned 
under section 51. 
    Sec. 61.  [501B.72] [NONTRUST ESTATES.] 
    Subdivision 1.  [LIMITATIONS.] Sections 48 to 65 apply to 
nontrust estates, subject to: 
    (1) agreement of the parties; 
    (2) specific direction in the instrument creating the 
nontrust estates; 
    (3) subdivision 2; and 
    (4) other applicable statutes. 
References in sections 48 to 65 to trusts and trustees must be 
read as applying to nontrust estates and to tenants and 
remainderpersons as the context requires. 
    Subd. 2.  [APPLICATION.] In applying sections 48 to 65 to 
nontrust estates, the rules in paragraphs (a) to (c) must be 
followed. 
    (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. 
    (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. 
     (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. 
     (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. 
     (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. 
    Sec. 62.  [501B.73] [APPLICATION.] 
    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. 
    Except as specifically provided in the governing 
instrument, sections 48 to 65 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. 
    Sec. 63.  [501B.74] [ASCERTAINMENT OF INCOME OR PRINCIPAL.] 
    Sections 48 to 65 do not govern the ascertainment of what 
constitutes the receipt of income or principal by the estate or 
trust for income tax purposes. 
    Sec. 64.  [501B.75] [UNIFORMITY OF INTERPRETATION.] 
    Sections 48 to 65 must be so construed as to effectuate 
their general purpose to make uniform the law of those states 
that enact them.  
    Sec. 65.  [501B.76] [SHORT TITLE.] 
    Sections 48 to 65 may be cited as the uniform principal and 
income act. 

                     MINNESOTA TRUSTEES' POWERS ACT
    Sec. 66.  [501B.79] [TRUSTEE DEFINED.] 
    As used in sections 66 to 69, "trustee" means a 
corporation, individual, or other legal entity acting as an 
original, added, or successor trustee of a trust created under a 
written instrument, whichever in a particular case is 
appropriate. 
    Sec. 67.  [501B.80] [INCORPORATION BY REFERENCE.] 
    By a clear expression in a written instrument of the 
intention of the grantor, one or more of the powers in section 
68, as they exist at the time of the signing of the written 
instrument, may be incorporated by reference as though that 
language were set forth verbatim in the instrument.  
    Sec. 68.  [501B.81] [ENUMERATED POWERS OF TRUSTEE.] 
    Subdivision 1.  [TRUST ASSETS.] The trustee may retain 
trust assets until, in the judgment of the trustee, disposition 
of the assets should be made, without regard to any effect 
retention may have on the diversification of the assets of the 
trust.  The property may be retained even though it includes an 
asset in which the trustee is personally interested. 
    Subd. 2.  [ADDITIONS TO TRUST ASSETS.] The trustee may 
receive from any source additions to the assets of the trust. 
    Subd. 3.  [BUSINESS OR ENTERPRISE.] The trustee may 
continue or participate in the operation of a business or other 
enterprise, and to effect incorporation, dissolution, or other 
change in the form of the organization of the business or 
enterprise. 
    Subd. 4.  [UNDIVIDED INTEREST IN TRUST ASSET.] The trustee 
may acquire an undivided interest in a trust asset in which the 
trustee, in a trust capacity, holds an undivided interest. 
    Subd. 5.  [INVESTMENT OF TRUST ASSETS.] The trustee may 
invest and reinvest trust assets in any property or any 
undivided interest in the property.  These investments include 
but are not limited to bonds, debentures, secured or unsecured 
notes, preferred or common stocks of corporations, mutual funds, 
real estate or real estate improvements or interests, wherever 
located, oil and mineral leases, royalty or similar interests, 
and interests in trusts, including investment trusts and common 
trust funds maintained by a corporate trustee, and insurance 
upon the life of a person who is or may become a trust 
beneficiary.  These investments may be made without regard to 
diversification. 
    Subd. 6.  [DEPOSITS.] The trustee may deposit trust funds 
in a bank, including a bank operated by the trustee, or in a 
state or federal savings and loan association. 
    Subd. 7.  [PURCHASE AND SALE.] The trustee may acquire, 
sell, or otherwise dispose of an asset, at public or private 
sale, for cash or on credit, with or without security as the 
trustee deems advisable, and manage, develop, exchange, 
partition, change the character of, or abandon a trust asset or 
any interest in it. 
    Subd. 8.  [OPTIONS.] The trustee may grant an option for 
the sale or other disposition of a trust asset, or take an 
option for the acquisition of an asset. 
    Subd. 9.  [LEASES.] The trustee may enter into a lease as 
lessor or lessee, with or without option to purchase or renew, 
though the term of the lease, renewal, or option extends beyond 
the terms of the trust. 
    Subd. 10.  [REPAIRS; IMPROVEMENTS; ALTERATIONS.] The 
trustee may make ordinary or extraordinary repairs, 
improvements, or alterations in buildings or other structures or 
in other trust assets, and remove or demolish improvements. 
    Subd. 11.  [BUILDINGS; PARTY WALLS.] The trustee may raze 
existing or erect new party walls or buildings, alone or jointly 
with owners of adjacent property. 
    Subd. 12.  [SUBDIVISION; DEVELOPMENT; DEDICATION TO PUBLIC 
USE.] The trustee may subdivide, develop, or dedicate land to 
public use; make or obtain the vacation of plats and adjust 
boundaries; on exchange or partition, adjust differences in 
valuation by giving or receiving consideration; and dedicate 
easements to public use without consideration. 
    Subd. 13.  [EXPLORATION AND REMOVAL OF NATURAL 
RESOURCES.] The trustee may enter into a lease or arrangement 
for exploration for and removal of oil, gas, and other minerals 
or natural resources, and may enter into pooling and unitization 
agreements. 
    Subd. 14.  [INSURANCE.] The trustee may insure the assets 
of the trust against damage or loss and the trustee against 
liability with respect to third persons. 
    Subd. 15.  [VOTING STOCK OR SECURITIES.] The trustee may 
vote shares of stock or other securities held by the trustee, in 
person or by general or limited proxy, and enter into voting 
trust agreements on terms and for periods the trustee considers 
advisable. 
    Subd. 16.  [SECURITIES CALLS, ASSESSMENTS, AND 
CHARGES.] The trustee may pay calls, assessments, and any other 
sums chargeable or accruing against or on account of shares of 
stock, bonds, debentures, or other corporate securities in the 
hands of the trustee. 
    Subd. 17.  [STOCK RIGHTS.] The trustee may sell or exercise 
stock subscription or conversion rights, participate in 
foreclosures, reorganizations, consolidations, mergers, or 
liquidations, and consent, directly or through a committee or 
other agent, to corporate sales, leases, and encumbrances.  In 
the exercise of these powers the trustee may, if the trustee 
considers it expedient, deposit stocks, bonds, or other 
securities with a protective or other similar committee, on 
terms and conditions respecting the deposit that the trustee 
approves. 
    Subd. 18.  [OWNERSHIP IN OTHER NAME.] The trustee may hold 
any asset in the name of a nominee or nominees, without 
disclosure of a fiduciary relationship, but the trustee is 
liable for acts and omissions of the nominee relating to those 
assets. 
    Subd. 19.  [BORROWING; MORTGAGES.] The trustee may borrow 
money and mortgage or otherwise encumber or pledge trust assets 
for a term within or extending beyond the term of the trust, in 
connection with the exercise of a power vested in the trustee. 
    Subd. 20.  [CONTRACTS.] The trustee may enter into 
contracts binding on the trust that are reasonably incident to 
the administration of the trust and that the trustee believes to 
be for the best interests of the trust. 
    Subd. 21.  [SETTLEMENT OF CLAIMS.] The trustee may pay, 
compromise, contest, submit to arbitration, or otherwise settle 
claims in favor of or against the trust or the trustee. 
    Subd. 22.  [RELEASE OF CLAIMS.] The trustee may release, in 
whole or in part, a claim or lien belonging to the trust. 
    Subd. 23.  [TRUST EXPENSES.] The trustee may pay taxes, 
assessments, compensation of the trustee, and other expenses 
incurred in the collection, care, administration, and protection 
of the trust. 
    Subd. 24.  [RESERVES.] The trustee may create reserves out 
of income for depreciation, obsolescence, or amortization, or 
for depletion in mineral or timber properties. 
    Subd. 25.  [PAYMENTS TO MINORS AND THOSE UNDER LEGAL 
DISABILITY.] The trustee may pay a sum distributable to a minor 
or other beneficiary under legal disability, without liability 
to the trustee, in one or more of the following ways: 
     (1) directly to the beneficiary; 
     (2) to the legal guardian or conservator of the 
beneficiary; 
     (3) directly for the maintenance, education, and general 
welfare of the beneficiary; 
     (4) to a parent of the beneficiary; 
     (5) to a person who has custody and care of the person of 
the beneficiary; or 
     (6) to a custodian under a uniform transfers to minors 
statute. 
    Subd. 26.  [DISTRIBUTION OF INTERESTS.] The trustee may 
distribute property and money in divided or undivided interests 
and adjust resulting differences in valuation. 
    Subd. 27.  [EMPLOYMENT OF ADVISORS, ASSISTANTS.] 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.  The trustee may act without independent investigation 
upon their recommendations, and instead of acting personally, 
may employ one or more agents to perform any act of 
administration whether or not discretionary. 
    Subd. 28.  [LEGAL ACTIONS.] The trustee may prosecute or 
defend actions, claims, or proceedings for the protection of 
trust assets and of the trustee in the performance of duties. 
    Subd. 29.  [ADVANCES TO BENEFICIARIES.] The trustee may 
advance income to or for the use of a beneficiary, for which 
advance the trustee has a lien on the future benefits of that 
beneficiary. 
    Subd. 30.  [ADVANCES BY TRUSTEE; REPAYMENT.] The trustee 
may advance money for the protection of the trust or its assets, 
for all expenses and liabilities sustained or incurred in or 
about the administration or protection of the trust, or because 
of the holding or ownership of any trust assets, for which 
advances the trustee has a lien on the trust assets, and may be 
reimbursed out of the trust assets with interest. 
    Subd. 31.  [EXECUTION AND DELIVERY OF INSTRUMENTS.] The 
trustee may execute and deliver instruments that will accomplish 
or facilitate the exercise of the powers vested in the trustee. 
    Subd. 32.  [MULTIPLE TRUSTS.] The trustee may 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. 
    Sec. 69.  [501B.82] [CITATION.] 
    Sections 66 to 69 may be cited or referred to as the 
"Minnesota trustees' powers act." 

                              MISCELLANEOUS
    Sec. 70.  [501B.86] [DISCLAIMER OF INTERESTS PASSING BY 
DEED, ASSIGNMENT, UNDER CERTAIN NONTESTAMENTARY INSTRUMENTS, OR 
UNDER CERTAIN POWERS OF APPOINTMENT.] 
    Subdivision 1.  [DEFINITIONS.] As used in this section, 
unless otherwise clearly required by the context: 
    (a) "beneficiary" means a person entitled, but for the 
person's disclaimer, to take an interest: 
     (1) as grantee; 
     (2) as donee; 
     (3) under an assignment or instrument of conveyance or 
transfer; 
     (4) by succession to a disclaimed interest, other than by 
will, intestate succession, or through the exercise or 
nonexercise of a testamentary power of appointment; 
     (5) as beneficiary of an inter vivos trust or insurance 
contract; 
     (6) pursuant to the exercise or nonexercise of a 
nontestamentary power of appointment; 
     (7) as donee of a power of appointment created by a 
nontestamentary instrument; or 
    (8) otherwise under a nontestamentary instrument; 
    (b) "interest" means: 
    (1) the whole of any property, real or personal, legal or 
equitable; 
    (2) a fractional part, share, particular portion, or 
specific assets of property; 
    (3) an estate in property; 
    (4) a power to appoint, consume, apply, or expend property; 
or 
    (5) any other right, power, privilege, or immunity relating 
to property; and 
    (c) "disclaimer" means a written instrument that declines, 
refuses, releases, or disclaims an interest that would otherwise 
be succeeded to by a beneficiary, if the instrument defines the 
nature and extent of the interest disclaimed and is signed, 
witnessed, and acknowledged by the disclaimant in the manner 
provided for deeds of real estate. 
    Subd. 2.  [WHO MAY DISCLAIM.] A beneficiary may disclaim an 
interest in whole or in part, or with reference to specific 
parts, shares, portions, or assets, by filing a disclaimer in 
court in the manner provided in this section.  A guardian or 
conservator of the estate of a minor or an incapacitated person 
under section 525.54, or the personal representative of the 
estate of a deceased beneficiary may execute and file a 
disclaimer on behalf of the beneficiary if that representative 
considers it not detrimental to the best interests of the 
beneficiary and in the best interests of those interested in the 
beneficiary's estate and of those who take the beneficiary's 
interest by virtue of the disclaimer.  The representative may 
file the disclaimer with or without a court order within the 
time specified in subdivision 3.  A beneficiary may file a 
disclaimer by an attorney or attorney-in-fact.  
     Subd. 3.  [FILING DEADLINE.] A disclaimer under subdivision 
2 may be filed at any time after the creation of the interest, 
but it must be filed within nine months after the effective date 
of the nontestamentary instrument creating the interest, or, if 
the disclaimant is not then finally ascertained as a beneficiary 
or the disclaimant's interest has not then become indefeasibly 
fixed both in quality and in quantity, the disclaimer must be 
filed not later than nine months after the event that would 
cause the disclaimant to become finally ascertained and the 
interest to become indefeasibly fixed both in quality and 
quantity. 
    Subd. 4.  [EFFECTIVE DATE.] (a) A disclaimer under 
subdivision 2 is effective on being filed in a district court of 
the state of Minnesota.  A copy of the disclaimer must be 
delivered or mailed to the trustee of a trust in which the 
interest disclaimed exists or to any other person who has legal 
title to, or possession of, the property in which the interest 
disclaimed exists.  The trustee or person is not liable for any 
otherwise proper distribution or other disposition made without 
actual notice of the disclaimer.  
     (b) If an interest in or relating to real estate is 
disclaimed, the original of the disclaimer, or a copy of the 
disclaimer certified as true and complete by the court 
administrator of the district court where the disclaimer has 
been filed, must also be filed with the county recorder or with 
the registrar of titles, as appropriate, in the county or 
counties where the real estate is situated.  The filed 
disclaimer is notice to all persons after the time of filing.  
If title to the real estate has not been registered under 
chapter 508, the disclaimer or certified copy must be filed with 
the county recorder.  If title to the real estate has been 
registered under chapter 508, the disclaimer or certified copy 
must be filed with the registrar of titles. 
    Subd. 5.  [DISTRIBUTION OF DISCLAIMED PROPERTY.] Unless 
otherwise provided in the nontestamentary instrument creating 
the interest with reference to the possibility of a disclaimer 
by the beneficiary, the interest disclaimed must be distributed 
or otherwise disposed of in the same manner as if the 
disclaimant had died immediately preceding the death or other 
event that causes the disclaimant to become finally ascertained 
as a beneficiary and the interest to become indefeasibly fixed 
both in quality and quantity.  The disclaimer relates for all 
purposes to that date, whether filed before or after the death 
or other event.  Unless the disclaimer provides otherwise, a 
person disclaiming an interest in a nonresiduary gift under a 
trust instrument or otherwise is not excluded from sharing in a 
gift of the residue even though, through lapse, the residue 
includes the assets disclaimed. 
    Subd. 6.  [BARS TO RIGHT TO DISCLAIM.] The right to 
disclaim is barred if the beneficiary:  (1) is insolvent; (2) 
assigns or transfers, or contracts to assign or transfer, an 
interest in the property to be disclaimed; (3) in writing, 
waives the right to disclaim the succession to an interest in 
the property; or (4) sells or otherwise disposes of an interest 
in the property.  
     Subd. 7.  [EFFECT OF RESTRICTIONS.] The right to disclaim 
granted by this section exists despite a limitation imposed on 
the interest of the disclaimant in the nature of an express or 
implied spendthrift provision or similar restriction.  A 
disclaimer, when filed under this section, or a written waiver 
of the right to disclaim, is binding on the disclaimant or 
waiving beneficiary and all parties later claiming by, through, 
or under the disclaimant or waiving beneficiary, except that a 
waiving beneficiary may later transfer, assign, or release the 
waiving beneficiary's interest if it is not prohibited by an 
express or implied spendthrift provision.  If an interest in 
real estate is disclaimed and the disclaimer is filed in 
accordance with subdivision 4, the spouse of the disclaimant, if 
the spouse has consented to the disclaimer in writing, is 
automatically debarred from the spouse's statutory or common law 
right or estate by curtesy or in dower or otherwise in the real 
estate to which the spouse, except for the disclaimer, would 
have been entitled. 
     Subd. 8.  [OTHER LAW.] This section does not abridge the 
right of a person, apart from this section, under an existing or 
future statute or rule of law, to disclaim an interest or to 
assign, convey, release, renounce, or otherwise dispose of an 
interest. 
    Subd. 9.  [INTERESTS IN EXISTENCE ON MAY 22, 1965.] If an 
interest existed on May 22, 1965, it may be disclaimed under 
this section if it had not then become indefeasibly fixed both 
in quality and quantity or if its taker had not then become 
finally ascertained.  
     Subd. 10.  [BANK DEPOSITS.] The survivor or survivors of a 
bank deposit held in the names of the decedent and the survivor 
or survivors may at any time disclaim that interest by 
authorizing the inclusion of the proceeds of the bank deposit in 
the inventory and appraisal required by law to be filed by the 
representative or executor of the estate of the decedent.  For 
purposes of this subdivision, "bank deposit" includes a checking 
or savings account or time deposit in any financial institution 
authorized to accept deposits. 
    Sec. 71.  [501B.87] [TRUSTS FORMING PART OF RETIREMENT 
PLANS FOR PARTICIPATING MEMBERS.] 
    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. 
    Sec. 72.  [501B.88] [TRUSTS NOT AFFECTED.] 
    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. 
    Sec. 73.  Minnesota Statutes 1988, 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, rents and profits from real estate 
may be accumulated to the same extent and for the same period 
permitted by law for the accumulation of income from personal 
property 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 9, 
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. 74.  Minnesota Statutes 1988, section 502.73, is 
amended to read: 
    502.73 [RIGHT OF ALIENATION SUSPENDED, WHEN.] 
    The period during which the absolute right power of 
alienation, within the meaning of section 9, may be suspended by 
any instrument in execution of a power is to be computed from 
the time of the creation of the power and not from the date of 
the instrument, except that in the case of a general power 
presently exercisable, the period is to be computed from the 
date of the instrument.  
    Sec. 75.  [525.95] [FIDUCIARY POWERS, SUSPENSION DURING WAR 
SERVICE.] 
     Subdivision 1.  [DEFINITIONS.] The definitions in this 
subdivision apply to this section. 
     (a) "War service" includes the following, during a period 
when the United States is engaged in war or other major military 
engagement with a foreign nation: 
    (1) active membership in the military forces of the United 
States or any of its allies; 
    (2) acceptance for membership in the military forces of the 
United States or any of its allies and awaiting induction into 
that service; 
     (3) participation in work abroad in connection with a 
governmental agency of the United States or any of its allies, 
with the Red Cross, or with a similar service; 
    (4) internment by an enemy or absence from the United 
States and inability to return; and 
    (5) service arising out of or in connection with the war or 
other major military engagement, which in the opinion of the 
court prevents the fiduciary from giving the proper attention to 
duties. 
     (b) "Fiduciary" refers to a trustee of a testamentary trust 
or of an express trust, a guardian or conservator of the person 
or estate of a person, an executor of a will, an administrator 
of the estate of the decedent, a custodian under the Minnesota 
uniform transfers to minors act, or an advisor or consultant in 
a testamentary or express trust. 
     Subd. 2.  [POWERS OF FIDUCIARY MAY BE SUSPENDED; PETITION.] 
A fiduciary who contemplates entering war service, a fiduciary 
who is engaged in war service, a cofiduciary, or an interested 
person may petition the proper court having jurisdiction in 
matters of that nature for the suspension of the powers and 
duties of the fiduciary during the period of war service and 
until the further order of the court, and may petition for the 
reinstatement of the fiduciary upon the fiduciary's return. 
     Subd. 3.  [NOTICE OF HEARING.] Notice of the hearing on a 
petition under subdivision 2 must be given to persons and in the 
manner the court directs. 
     Subd. 4.  [HEARING; ORDER.] After a hearing on a petition 
under subdivision 2 or in the case of an executor, 
administrator, or guardian on the court's own motion, the court 
may: 
    (1) order the suspension of the powers and duties of the 
fiduciary who is in war service for the period of the war 
service and until the further order of the court; 
    (2) appoint a successor fiduciary to serve for the period 
of suspension of the powers and duties of the fiduciary and 
until the further order of the court, if upon suspension of 
powers and duties, there is no fiduciary to exercise the powers 
and duties of the fiduciary who is in war service, or if in the 
opinion of the court the appointment of a cofiduciary is 
advisable; 
     (3) decree that the ownership and title to the trust 
property vests in the successor fiduciary or cofiduciary, as the 
case may be, and that the duties, powers, and discretions, or 
those of the powers and discretions that are not personal to the 
fiduciary, may be exercised by the cofiduciary or successor 
fiduciary; 
    (4) make other orders the court considers advisable with 
respect to the trust estate or its administration, and authorize 
a reasonable compensation to the successor fiduciary; or 
    (5) reserve jurisdiction for the entry of further orders 
and for the reinstatement of the fiduciary. 
    Upon petition, the court shall order the reinstatement of 
the fiduciary when the fiduciary's war service has terminated if 
it appears that the trust is not fully executed or 
administration of the estate is not completed. 
    Subd. 5.  [RESPONSIBILITY OF FIDUCIARY.] The fiduciary has 
no responsibility for the acts and doings of the cofiduciary or 
successor fiduciary during the period of the suspension of the 
fiduciary's powers and duties, but is not relieved of 
responsibility for the fiduciary's own acts or doings in the 
administration of the trust fund or estate.  A successor 
fiduciary appointed under this section is not responsible for 
the acts of the predecessor fiduciary. 
    Sec. 76.  [EFFECTIVE DATE.] 
    Except as required by section 645.35 or as otherwise 
provided in sections 47, 60, 62, 70, subdivision 9, and 72, this 
article is effective January 1, 1990, and applies to trusts, 
property interests, and powers of appointment whenever created 
to the extent permitted under the United States Constitution and 
the Minnesota Constitution. 
    Sec. 77.  [REPEALER.] 
    Minnesota Statutes 1988, sections 500.13; 501.01; 501.02; 
501.03; 501.04; 501.05; 501.06; 501.07; 501.08; 501.09; 501.10; 
501.11; 501.115; 501.12; 501.125; 501.13; 501.14; 501.15; 
501.155; 501.16; 501.17; 501.18; 501.19; 501.195; 501.20; 
501.21; 501.211; 501.22; 501.23; 501.24; 501.25; 501.26; 501.27; 
501.28; 501.29; 501.30; 501.31; 501.32; 501.33; 501.34; 501.35; 
501.351; 501.36; 501.37; 501.38; 501.39; 501.40; 501.41; 501.42; 
501.43; 501.44; 501.45; 501.46; 501.461; 501.48; 501.49; 501.50; 
501.51; 501.52; 501.53; 501.54; 501.55; 501.56; 501.57; 501.58; 
501.59; 501.60; 501.61; 501.62; 501.63; 501.64; 501.65; 501.66; 
501.67; 501.71; 501.72; 501.73; 501.74; 501.75; 501.76; 501.77; 
501.78; 501.79; 501.80; 501.805; and 501.81, are repealed. 

                                ARTICLE 2 

                         MISCELLANEOUS SECTIONS 
    Section 1.  Minnesota Statutes 1988, section 315.365, 
subdivision 3, is amended to read: 
    Subd. 3.  [CONTINUATION OF CORPORATE IDENTITIES.] When a 
merger and consolidation takes effect, the corporate identity of 
each party to it continues in the surviving corporation.  The 
legal title to assets held or owned by any property corporation 
that is a party to the merger and consolidation vests in the 
surviving corporation.  The surviving corporation is entitled to 
receive gifts, devises, bequests, legacies, or other transfers 
or assignments of money or property, real, personal, or mixed, 
made after the merger directly or in trust to or intended for 
any of the constituent property corporations.  Except as 
provided in section 501.12 article 1, section 23, no properties 
or assets and no income of properties or assets held or received 
by a party to the merger and consolidation or by the surviving 
corporation shall be diverted from the uses and purposes for 
which they were received and held by the property corporations 
or from the uses and purposes for which they were expressed and 
intended.  
    Sec. 2.  Minnesota Statutes 1988, section 501A.06, is 
amended to read: 
    501A.06 [SUPERSESSION; REPEAL.] 
    Sections 501A.01 to 501A.07 supersede the rule of the 
common law known as the rule against perpetuities and repeals 
Minnesota Statutes, section 500.13. 
    Sec. 3.  Minnesota Statutes 1988, section 524.1-404, is 
amended to read: 
    524.1-404 [NOTICE TO CHARITABLE BENEFICIARIES.] 
    If a will includes a gift, devise or bequest to a named 
charitable beneficiary, the initial written notice of the 
probate proceedings given to the beneficiary shall state that 
the beneficiary may request notice of the probate proceedings be 
given to the attorney general pursuant to section 501.79 article 
1, section 33, subdivision 5. 
    Sec. 4.  Minnesota Statutes 1988, section 525.56, 
subdivision 4, is amended to read: 
    Subd. 4.  [DUTIES OF GUARDIAN OR CONSERVATOR OF THE 
ESTATE.] The court may appoint a guardian of the estate if it 
determines that all the powers and duties listed in this 
subdivision are needed to provide for the needs of the 
incapacitated person.  The court may appoint a conservator of 
the estate if it determines that a conservator is necessary to 
provide for the needs of the incapacitated person through the 
exercise of some, but not all, of the powers and duties listed 
in this subdivision.  The duties and powers of a guardian or 
those which the court may grant to a conservator include, but 
are not limited to: 
    (1) The duty to pay the reasonable charges for the support, 
maintenance, and education of the ward or conservatee in a 
manner suitable to the ward's or conservatee's station in life 
and the value of estate.  Nothing herein contained shall release 
parents from obligations imposed by law for the support, 
maintenance, and education of their children.  The guardian or 
conservator has no duty to pay for these requirements out of 
personal funds.  Wherever possible and appropriate, the guardian 
or conservator should meet these requirements through 
governmental benefits or services to which the ward or 
conservatee is entitled, rather than from the ward's or 
conservatee's estate.  Failure to satisfy the needs and 
requirements of this clause shall be grounds for removal, but 
the guardian or conservator shall have no personal or monetary 
liability; 
    (2) The duty to pay out of the ward's or conservatee's 
estate all just and lawful debts of the ward or conservatee and 
the reasonable charges incurred for the support, maintenance, 
and education of the ward's or conservatee'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 ward or conservatee; 
    (3) The duty to possess and manage the estate, collect all 
debts and claims in favor of the ward or conservatee, or, with 
the approval of the court, compromise them, institute suit on 
behalf of the ward or conservatee and represent the ward or 
conservatee 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 section 48.84 and 501.125 article 1, 
section 10, subdivision 1, or as otherwise ordered by the 
court.  The standard of a fiduciary shall be applicable to all 
investments by a guardian or conservator.  A guardian or 
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 ward or conservatee has inherited an undivided 
interest in real estate, the court, on a showing that it is for 
the best interest of the ward or conservatee, may authorize an 
exchange or sale of the ward's or conservatee's interest or a 
purchase by the ward or conservatee of any interest other heirs 
may have in the real estate.  
    Sec. 5.  Minnesota Statutes 1988, section 525.831, is 
amended to read: 
    525.831 [NOTICE TO ATTORNEY GENERAL OF DEVISES FOR 
CHARITABLE PURPOSES.] 
    Whenever a will provides for a devise for a charitable 
purpose, as defined in section 501.73 article 1, section 27, 
subdivision 2, the personal representative shall provide the 
attorney general with the notices or documents, if any, required 
by section 501.79 article 1, section 33, subdivision 5. 
    Sec. 6.  If 1989 H.F. No. 1203 is enacted in the 1989 
legislative session, article 1, section 28, is amended to read:  
    Sec. 28.  [501B.36] [REGISTRATION AND REPORTING.] 
    The registration and reporting provisions of sections 29 
and 30 apply to a charitable trust, or an organization with a 
charitable purpose, that has gross assets of $25,000 or more, 
except that the provisions do not apply to: 
    (1) a charitable trust administered by the United States or 
a state, territory, or possession of the United States, the 
District of Columbia, the Commonwealth of Puerto Rico, or any of 
their agencies or subdivisions; 
    (2) a religious association organized under chapter 315 or 
chapter 317 317A; 
    (3) a charitable trust organized and operated exclusively 
for religious purposes and administered by a religious 
association organized under chapter 315 or chapter 317 317A; 
    (4) an organization described in section 509(a)(3) of the 
Internal Revenue Code of 1986 and operated, supervised, or 
controlled by or in connection with one or more organizations 
described in clauses (2) to (5); a pooled income fund as defined 
in section 642(c)(5) of the Internal Revenue Code of 1986 
maintained by an organization described in clauses (2) to (5); 
or a charitable remainder annuity trust or unitrust, as defined 
in section 664 of the Internal Revenue Code of 1986; 
    (5) a trust in which the only charitable interest is a 
contingent interest for which no charitable deduction has been 
allowed for Minnesota income, inheritance, or gift tax purposes 
or a trust in which not all of the unexpired interests are 
devoted to one or more charitable purposes and in which the only 
charitable interest is an annuity or an income interest with 
respect to which a charitable deduction is allowed the trust 
under applicable Minnesota income tax laws; 
    (6) an organization subject to sections 309.50 to 309.61; 
    (7) a trust for individual and charitable beneficiaries 
that is described in section 4947(a)(2) of the Internal Revenue 
Code of 1986, also known as a split-interest trust; or 
    (8) a charitable gift, bequest, or devise not held and 
continued by a private express trust or corporation even though 
the gift, bequest, or devise creates a fiduciary relationship, 
unless there is no named charitable beneficiary in existence or 
unless a named charitable beneficiary elects in a writing filed 
with the attorney general and with the fiduciary to come within 
the provisions of sections 29 and 30. 
    Sec. 7.  If 1989 H.F. No. 1203 is enacted in the 1989 
legislative session, article 1, section 36, is amended to read: 
    Sec. 36.  [501B.44] [IMMUNITY OF CHARITABLE TRUSTS.] 
    A charitable trust is an "organization" for purposes of 
section 317.201 317A.257, and that section applies to charitable 
trusts.  
    Sec. 8.  If 1989 H.F. No. 1203 is enacted in the 1989 
legislative session, 1989 H.F. No. 1203, section 22, 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 
501.125 article 1, section 10. 
    Sec. 9.  If 1989 H.F. No. 1203 is enacted in the 1989 
legislative session, 1989 H.F. No. 1203, section 93, is amended 
to read: 
    Sec. 93.  [317A.671] [CERTAIN ASSETS NOT TO BE DIVERTED.] 
    Except as provided in section 501.12 article 1, section 23, 
when a corporation dissolves, merges or consolidates, transfers 
its assets, or grants a mortgage or other security interest in 
its assets, assets of the corporation or a constituent 
corporation, and assets subsequently received by a single 
corporation after a merger or consolidation, may not be diverted 
from the uses and purposes for which the assets have been 
received and held, or from the uses and purposes expressed or 
intended by the original donor. 
    Sec. 10.  If 1989 H.F. No. 1203 is enacted in the 1989 
legislative session, 1989 H.F. No. 1203, section 104, 
subdivision 4, is amended to read: 
    Subd. 4.  [REMAINDER.] The distribution of assets held for 
or devoted to a charitable or public use or purpose is subject 
to section 501.12 article 1, section 23.  
    Sec. 11.  If 1989 H.F. No. 1203 is enacted in the 1989 
legislative session, 1989 H.F. No. 1203, section 119, is amended 
to read: 
    Sec. 119.  [317A.813] [REMEDIAL POWERS OF ATTORNEY 
GENERAL.] 
    The attorney general has the powers in sections section 
8.31, 501.78, and 501.79 article 1, sections 32 and 33, to 
supervise and investigate corporations under this chapter and to 
bring proceedings to secure compliance. 
    Sec. 12.  If 1989 H.F. No. 1203 is enacted in the 1989 
legislative session, 1989 H.F. No. 1203, section 123, 
subdivision 2, is amended to read: 
    Subd. 2.  [ATTORNEY GENERAL POWERS CONTINUED.] A 
corporation dissolved under this section continues for three 
years after the dissolution date for the sole purpose of 
supervision, investigation, and other actions by the attorney 
general under sections section 8.31, 501.78, and 501.79 
article 1, sections 32 and 33.  
    Sec. 13.  [EFFECTIVE DATE.] 
    This article is effective January 1, 1990. 

                               ARTICLE 3 

                       RULE AGAINST PERPETUITIES 
    Section 1.  Minnesota Statutes 1988, section 501A.05, is 
amended to read: 
    501A.05 [PROSPECTIVE APPLICATION.] 
    (a) Except as extended by subsection (b), sections 501A.01 
to 501A.07 apply to a nonvested property interest or a power of 
appointment that is created after December 31, 1989 1990.  For 
purposes of this section, a nonvested property interest or a 
power of appointment created by the exercise of a power of 
appointment is created when the power is irrevocably exercised 
or when a revocable exercise becomes irrevocable. 
    (b) If a nonvested property interest or a power of 
appointment was created before January 1, 1990 1991, and is 
determined in a judicial proceeding, commenced after December 
31, 1989 1990, to violate this state's rule against perpetuities 
as that rule existed before January 1, 1990 1991, a court upon 
the petition of an interested person may reform the disposition 
in the manner that most closely approximates the transferor's 
manifested plan of distribution and is within the limits of the 
rule against perpetuities applicable when the nonvested property 
interest or power of appointment was created. 
     Sec. 2.  Laws 1987, chapter 60, section 10, as amended by 
Laws 1988, chapter 482, section 2, is amended to read: 
     Sec. 10.  [TIME OF TAKING EFFECT.] 
    This act takes effect January 1, 1990 1991. 
    Presented to the governor May 30, 1989 
    Signed by the governor June 1, 1989, 11:00 p.m.