Minnesota Session Laws - 1993, Regular Session

  
    Laws of Minnesota 1993 

                        CHAPTER 169-S.F.No. 1097 
           An act relating to trusts; prohibiting trustees from 
          exercising certain powers; proposing coding for new 
          law in Minnesota Statutes, chapter 501B.  
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  [501B.14] [PROHIBITION AGAINST EXERCISE OF 
POWERS BY TRUSTEE.] 
    Subdivision 1.  [PROHIBITION.] No trustee may exercise or 
participate in the exercise of any of the following powers:  
    (1) any power of the trustee to make discretionary 
distributions of either principal or income to or for the 
benefit of the trustee as beneficiary, unless by the terms of 
the will or other written instrument those discretionary 
distributions are limited by an ascertainable standard relating 
to that trustee's health, education, maintenance, or support as 
described in sections 2041 and 2514 of the Internal Revenue Code 
of 1986, as amended through December 31, 1992; or 
    (2) any power to make discretionary distributions of either 
principal or income to discharge any legal support or other 
obligations of the trustee to any person.  
    Subd. 2.  [EXERCISE OF AFFECTED POWERS.] Any power 
described in subdivision 1 that is conferred upon two or more 
trustees may be exercised by the trustee or trustees who are not 
disqualified under subdivision 1.  If there is no trustee 
qualified to exercise the power, any trustee or other person 
interested in the trust may petition the district court pursuant 
to section 501B.16 to appoint an additional trustee.  The 
district court may limit the powers of an additional trustee 
appointed under this subdivision to exercise the power to make 
discretionary distributions when no other trustee may exercise 
that power.  
    Subd. 3.  [APPLICATION.] (a) Except as provided in 
paragraph (b), this section applies to any exercise of any 
powers of the trustee after the date of final enactment under 
any trust created before, on, or after the date of enactment, 
unless the terms of the trust refer specifically to this section 
and provide that this section does not apply.  
    (b) This section does not apply to a trustee: 
    (1) who retains or is granted an unlimited lifetime or 
testamentary power, exercisable in a capacity other than as 
trustee, to revoke the trust, or to withdraw all of the income 
and principal of the trust, or to appoint all of the income and 
principal of the trust to the trustee individually or the 
trustee's estate; 
    (2) of a trust created on or before the date of final 
enactment if the entire principal of the trust would be included 
in the gross estate of the trustee for federal estate tax 
purposes if the trustee had died on the date of enactment 
without regard to any power described in subdivision 1; 
    (3) of a trust created on or before the date of final 
enactment if no part of the principal of the trust would be 
included in the gross estate of the trustee for federal estate 
tax purposes if the trustee had died on the date of enactment 
without exercising the power; 
    (4) of a trust created on or before the date of final 
enactment if (i) the trust is not exempt from 
generation-skipping transfer tax under chapter 13 of the 
Internal Revenue Code of 1986, as amended through December 31, 
1992, because of Public Law Number 99-514, section 1433(b) to 
(d); (ii) there would be a taxable termination with respect to 
the assets held in the trust if the trustee and all 
beneficiaries of the trust who are assigned to the trustee's 
generation or a higher generation had died on the date of 
enactment; and (iii) the trust would have an inclusion ratio, as 
defined in section 2642(c) of the Internal Revenue Code of 1986, 
as amended through December 31, 1992, of one with respect to the 
taxable termination; or 
    (5) of a trust created on or before the date of final 
enactment if (i) on the date of final enactment there is no 
person with the power to amend or revoke the trust, and (ii) on 
the date of final enactment there is only one trustee of the 
trust.  
    (c) This section has no effect on an action taken by a 
trustee on or before the date of final enactment. 
     Sec. 2.  [EFFECTIVE DATE.] 
    Section 1 is effective the day following final enactment. 
    Presented to the governor May 11, 1993 
    Signed by the governor May 14, 1993, 9:08 a.m.