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Minnesota Legislature

Office of the Revisor of Statutes

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

                             CHAPTER 15-S.F.No. 346 
                  An act relating to trusts; making changes to the 
                  Uniform Principal and Income Act; simplifying the 
                  antilapse law; amending Minnesota Statutes 2000, 
                  sections 144.225, subdivision 7; 501B.59, by adding a 
                  subdivision; 501B.60, by adding a subdivision; 
                  501B.61, subdivision 2; 501B.62, subdivision 1; 
                  501B.63, subdivision 2; 501B.64; 501B.68; 501B.69; and 
                  524.6-301; proposing coding for new law in Minnesota 
                  Statutes, chapters 501B; and 524; repealing Minnesota 
                  Statutes 2000, sections 501B.66; 501B.70; and 
                  524.2-603. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 2000, section 144.225, 
        subdivision 7, is amended to read: 
           Subd. 7.  [CERTIFIED COPY OF BIRTH OR DEATH CERTIFICATE.] 
        The state or local registrar shall issue a certified copy of a 
        birth or death certificate or a statement of no record found to 
        an individual upon the individual's proper completion of an 
        attestation provided by the commissioner: 
           (1) to a person who has a tangible interest in the 
        requested certificate.  A person who has a tangible interest is: 
           (i) the subject of the certificate; 
           (ii) a child of the subject; 
           (iii) the spouse of the subject; 
           (iv) a parent of the subject; 
           (v) the grandparent or grandchild of the subject; 
           (vi) the party responsible for filing the certificate; 
           (vii) the legal custodian or guardian or conservator of the 
        subject; 
           (viii) a personal representative of the estate of the 
        subject or, by sworn affidavit of the fact that the certified 
        copy is required for administration of the estate; 
           (ix) a successor of the subject, as defined in section 
        524.1-201, if the subject is deceased, by sworn affidavit of the 
        fact that the certified copy is required for administration of 
        the estate; 
           (ix) a representative authorized by a person under clauses 
        (1) to (3) (x) if the requested certificate is a death 
        certificate, a trustee of a trust by sworn affidavit of the fact 
        that the certified copy is needed for the proper administration 
        of the trust; or 
           (x) (xi) a person or entity who demonstrates that a 
        certified copy of the certificate is necessary for the 
        determination or protection of a personal or property right, 
        pursuant to rules adopted by the commissioner; 
           (2) to any local, state, or federal governmental agency 
        upon request if the certified certificate is necessary for the 
        governmental agency to perform its authorized duties.  An 
        authorized governmental agency includes the department of human 
        services, the department of revenue, and the United States 
        Immigration and Naturalization Service; or 
           (3) to an attorney upon evidence of the attorney's license; 
           (4) pursuant to a court order issued by a court of 
        competent jurisdiction.  For purposes of this section, a 
        subpoena does not constitute a court order; or 
           (5) to a representative authorized by a person under 
        clauses (1) to (4). 
           Sec. 2.  Minnesota Statutes 2000, section 501B.59, is 
        amended by adding a subdivision to read: 
           Subd. 1a.  [ACCOUNTING PERIOD.] "Accounting period" means a 
        calendar year unless another 12-month period is selected by the 
        trustee.  Accounting period includes a portion of a calendar 
        year or other 12-month period that begins when an income 
        interest begins or ends when an income interest ends. 
           Sec. 3.  Minnesota Statutes 2000, section 501B.60, is 
        amended by adding a subdivision to read: 
           Subd. 3.  [STANDARDS FOR EXERCISE.] In exercising a power 
        to adjust under section 501B.70 or a discretionary power of 
        administration regarding a matter within the scope of sections 
        501B.59 to 501B.76, a fiduciary shall administer the trust or 
        estate impartially, based on what is fair and reasonable to all 
        of the beneficiaries, except to the extent that the terms of the 
        trust or the will clearly manifest an intention that the 
        fiduciary shall or may favor one or more of the beneficiaries.  
        A determination in accordance with sections 501B.59 to 501B.76 
        is presumed to be fair and reasonable to all of the 
        beneficiaries. 
           Sec. 4.  Minnesota Statutes 2000, section 501B.61, 
        subdivision 2, is amended to read: 
           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 501B.64; 
           (5) receipts from the disposition of corporate securities 
        as provided in section 501B.65; 
           (6) royalties and other receipts from disposition of 
        natural resources as provided in sections 501B.67 and 501B.68; 
           (7) receipts from other principal subject to depletion as 
        provided in section 501B.69; 
           (8) profit resulting from a change in the form of 
        principal, except as provided in section 501B.70 on 
        underproductive property; 
           (9) receipts from disposition of underproductive property 
        as provided in section 501B.70; and 
           (10) allowances for depreciation established under sections 
        501B.66 and 501B.71, subdivision 1, clause (2); and 
           (11) gain or loss, including the purchase premium, if any, 
        from the grant of an option to buy or sell property of the 
        trust, whether or not the trust owns the property when the 
        option is granted. 
           Sec. 5.  Minnesota Statutes 2000, section 501B.62, 
        subdivision 1, is amended to read: 
           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 the death of any 
        person, it becomes subject to the trust as of the date of the 
        death of the testator the person or date of receipt in the 
        estate, if later, the date the estate or trust becomes entitled 
        to the asset if acquired after the death of the person, even 
        though there is an intervening period of administration of the 
        testator's an estate or trust during which the beneficiary may 
        have no right to a distribution of the income. 
           Sec. 6.  Minnesota Statutes 2000, section 501B.63, 
        subdivision 2, is amended to read: 
           Subd. 2.  [INCOME.] Unless the will or trust instrument 
        provides otherwise, income from the assets of a decedent's 
        estate after the death of the testator and before 
        distribution and income from the assets of a trust after an 
        income interest in a trust terminates, including income from 
        property used to discharge liabilities, must be determined in 
        accordance with the rules applicable to a trustee and 
        distributed as follows: 
           (1) to specific devisees or to any beneficiary who is to 
        receive specific property from a trust, the income from the 
        property devised or distributed to them respectively, less 
        property taxes, ordinary repairs, interest, and other expenses 
        of management and operation of the property, and less an 
        appropriate portion of taxes imposed on income, excluding taxes 
        on capital gains, that accrue during the period of 
        administration or after an income interest in a trust 
        terminates; 
           (2) to a devisee or to any beneficiary who receives a 
        pecuniary amount outright, the interest or any other amount 
        provided by the will, the terms of the trust instrument or 
        applicable law from income determined in accordance with the 
        rules applicable to a trustee or, to the extent income is 
        insufficient, from principal.  If a beneficiary is to receive a 
        pecuniary amount outright from a trust after an income interest 
        ends and no interest or other amount is provided for by the 
        terms of the trust instrument or applicable law, the trustee 
        shall distribute the interest or other amount to which the 
        beneficiary would be entitled under applicable law if the 
        pecuniary amount were required to be paid under a will; 
           (3) to all other devisees or beneficiaries, except devisees 
        of pecuniary devises not in trust, the balance of the 
        income determined in accordance with the rules applicable to a 
        trustee, less the balance of property taxes, ordinary repairs, 
        interest, and other expenses of management and operation of all 
        property from which the estate or trust is entitled to income, 
        and taxes imposed on income, excluding taxes on capital gains, 
        that accrue during the period of administration or after an 
        income interest terminates, in proportion to their respective 
        interests in the undistributed assets of the estate or trust 
        computed at times of distribution on the basis of inventory 
        value.  
        For purposes of this subdivision, an income interest in a trust 
        terminates upon the occurrence of any event which causes the 
        right of a person to receive mandatory or discretionary 
        distributions of income from the trust to end. 
           Sec. 7.  Minnesota Statutes 2000, section 501B.64, is 
        amended to read: 
           501B.64 [CORPORATE ENTITY DISTRIBUTIONS.] 
           Subdivision 1.  [DISTRIBUTION OF OWNERSHIP INTERESTS; 
        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 or similar 
        equity ownership interests in noncorporate entities, including 
        distributions in the form of or equivalent to a stock split or 
        stock dividend, are principal.  An entity owner's right to 
        subscribe to shares, ownership interests, or other securities of 
        the distributing entity and the proceeds of any sale of that 
        right are principal. 
           Subd. 2.  [CALL OF SHARES; MERGER; LIQUIDATION REDEMPTION; 
        MERGER; REORGANIZATION; LIQUIDATION.] Subject to subdivisions 3 
        and 4, and except to the extent that the corporation entity 
        indicates that some part of a corporate an entity distribution 
        is a settlement of preferred or guaranteed corporate dividends 
        or distribution preferences based upon a return on invested 
        capital accrued under the governing instrument since the trustee 
        became a stockholder acquired the related ownership interest or 
        is in lieu of an ordinary cash dividend, a corporate or similar 
        distribution from current earnings of the entity, an entity 
        distribution is principal if the distribution is pursuant to: 
           (1) redemption of the ownership interest or a call of 
        shares; 
           (2) a merger, consolidation, reorganization, or other plan 
        by which assets of the corporation entity are acquired by 
        another corporation entity; or 
           (3) a total or partial liquidation of the corporation 
        entity, including a distribution the corporation entity 
        indicates is a distribution in total or partial liquidation or 
        distribution of assets, other than cash, pursuant to a court 
        decree or final administrative order by a government agency 
        ordering distribution of the particular assets. 
           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.  [DISTRIBUTIONS FROM PASS-THROUGH ENTITIES.] 
        Distributions from pass-through entities must be allocated 
        between income and principal as reasonably and equitably 
        determined by the trustee.  This subdivision applies for any 
        accounting period during which an entity is a pass-through 
        entity for any portion of the accounting period.  In making its 
        determination, the trustee may consider the following: 
           (1) characterization of income, distributions, and 
        transactions in financial or other information received from the 
        entity, including financial statements and tax information; 
           (2) whether the entity completed a significant capital 
        transaction outside of the ordinary course of business that the 
        trustee believes has resulted in a distribution to the owners of 
        the entity in the nature of a partial liquidating distribution; 
           (3) the extent to which the burden for income tax with 
        respect to the income of the entity is to be paid by the trustee 
        out of trust assets or by the beneficiaries of the trust; 
           (4) the net amount of distributions from the entity 
        available to the trustee after estimating or accounting for tax 
        payments by the trustee or distributions to beneficiaries for 
        the purpose of paying taxes on income earned by the entity; 
           (5) whether distributions appear to be made out of or 
        contributed to by income earned by the entity and subjected to 
        income taxes in a prior accounting period which may include 
        accounting periods prior to the date the trustee acquired the 
        related ownership interest; 
           (6) whether the entity is consistently a pass-through 
        entity during multiple accounting periods or a change to or from 
        being a pass-through entity has or will occur in accounting 
        periods preceding or subsequent to the current accounting 
        period; 
           (7) if the trust owns a controlling interest or total 
        interest in an entity, the trustee may reasonably allocate 
        distributions between income and principal and not necessarily 
        as if that business interest were owned by the trust as a 
        proprietorship; and 
           (8) other facts and circumstances as the trustee reasonably 
        considers relevant to its determination. 
           Subd. 5.  [OTHER DISTRIBUTIONS.] Except as provided in 
        subdivisions 1, 2, and 3, and 4, all corporate distributions 
        from entities are income.  "Corporate Entity distributions" 
        includes cash dividends, distributions of or rights to subscribe 
        to shares or securities or obligations of corporations entities 
        other than the distributing corporation entity, and the proceeds 
        of the rights or property distributions.  Except as provided in 
        subdivisions 1, 2 and, 3, and 4, if the 
        distributing corporation entity gives a stockholder the owner of 
        an ownership interest an option to receive a distribution either 
        in cash or in its own shares an ownership interest in the 
        entity, the distribution chosen is income. 
           Subd. 5 6.  [RELIANCE ON STATEMENTS.] The trustee may rely 
        on a statement of the distributing corporation entity as to a 
        fact relevant under a provision of sections 501B.59 to 501B.76 
        concerning the source or character of dividends or distributions 
        of corporate assets. 
           Subd. 7.  [DEFINITIONS.] The definitions in this 
        subdivision apply to this section. 
           (a) [ENTITY.] "Entity" means a corporation, partnership, 
        limited liability company, regulated investment company, real 
        estate investment trust, common or collective trust fund, or any 
        other organization in which a trustee has an interest other than 
        a trust or estate governed by any other provision of sections 
        501B.59 to 501B.76.  
           (b) [PASS-THROUGH ENTITY.] "Pass-through entity" means any 
        entity that passes through income, loss, deductions, credits, 
        and other tax attributes to the owners of an interest in the 
        entity under the Internal Revenue Code in such manner that the 
        owner is directly subject to income taxation on all or any part 
        of the income of the entity (whether or not the pass through of 
        the tax attributes are related to distributions from the 
        entity), including, but not limited to, S corporations, 
        partnerships, limited liability companies or limited liability 
        partnerships. 
           Sec. 8.  [501B.665] [SOLE PROPRIETORSHIPS.] 
           Subdivision 1.  [SEPARATE ACCOUNT.] A trustee who conducts 
        a business or other activity as a sole proprietor may establish 
        and maintain a separate account for the transactions of the 
        business or other activity, whether or not its assets are 
        segregated from other trust assets, if the trustee determines 
        that it is in the best interest of all the beneficiaries to 
        establish a separate account instead of accounting for the 
        business or other activity as part of the trust's general 
        accounting records. 
           (a) A trustee who establishes a separate account for a 
        business or other activity shall determine the extent to which 
        its net cash receipts will be retained in the separate account 
        for working capital, the acquisition or replacement of fixed 
        assets, and other reasonably foreseeable needs of the business 
        or activity or will be transferred out of the separate account 
        and accounted for as principal or income in the trust's general 
        accounting records as the trustee reasonably and equitably 
        determines.  If a trustee sells assets of the business or other 
        activity, other than in the ordinary course of the business or 
        activity, and determines that any portion of the amount received 
        is no longer required in the conduct of the business the trustee 
        shall transfer that portion out of the separate account and 
        shall account for that portion as principal in the trust's 
        general accounting records. 
           (b) A trustee may not account separately for a traditional 
        securities portfolio to avoid the provisions of sections 501B.59 
        to 501B.76 that otherwise apply to securities. 
           Subd. 2.  [OTHER INCOME OR LOSSES.] If a trustee does not 
        maintain a separate account for a business or other activity 
        conducted as a sole proprietorship, the net profits of the sole 
        proprietorship in any fiscal or calendar year, as reasonably and 
        equitably determined by the trustee, must be allocated to income 
        while any net loss in that year must be charged to principal and 
        must not be carried into any other fiscal or calendar year for 
        purposes of calculating net income. 
           Sec. 9.  Minnesota Statutes 2000, section 501B.68, is 
        amended to read: 
           501B.68 [TIMBER.] 
           Subdivision 1.  [NET RECEIPTS.] If a part of the principal 
        consists of land from which merchantable timber may be removed, 
        the net receipts from taking the timber from the land must be 
        allocated in accordance with what is reasonable and equitable in 
        view of the interests of those entitled to income as well as of 
        those entitled to principal.  The amount allocated to principal 
        must be presumed to be reasonable and equitable if it is neither 
        substantially more nor less than the amount allowable as a 
        deduction for depletion, amortization, depreciation, or similar 
        costs under the Internal Revenue Code of 1986. as follows:  
           (1) to income to the extent that the amount of timber 
        removed from the land during the accounting period does not 
        exceed the rate of growth of the timber; 
           (2) to principal to the extent that the amount of timber 
        removed from the land during the accounting period exceeds the 
        rate of growth of the timber or the net receipts are from the 
        sale of standing timber; 
           (3) to or between income and principal if the net receipts 
        are from the lease of timberland or from a contract to cut 
        timber from land owned by a trust, by determining the amount of 
        timber removed from the land under the lease or contract and 
        applying the rules in paragraphs (1) or (2); or 
           (4) to principal to the extent that advance payments, 
        bonuses, and other payments are not allocated pursuant to 
        paragraphs (1), (2), or (3).  
           Subd. 2.  [DEPLETION.] In determining net receipts to be 
        allocated pursuant to subdivision 1, a trustee shall deduct and 
        transfer to principal a reasonable amount for depletion. 
           Subd. 3.  [SCOPE.] This section applies whether or not 
        timber was harvested from the property before it became subject 
        to the trust. 
           Sec. 10.  Minnesota Statutes 2000, section 501B.69, is 
        amended to read: 
           501B.69 [ANNUITIES, QUALIFIED AND NONQUALIFIED EMPLOYEE 
        COMPENSATION, RETIREMENT PLANS AND OTHER PROPERTY SUBJECT TO 
        DEPLETION.] 
           Except as provided in sections 501B.67 and 501B.68, 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 qualified and nonqualified employer retirement 
        plans, individual retirement accounts, and annuities, the 
        receipts from the property must be allocated in accordance with 
        what is reasonable and equitable in view of the interests of 
        those entitled to income as well as of those entitled to 
        principal.  The trustee may determine the allocation based on a 
        fixed percentage of each payment, an amortization of the 
        inventory value of the series of payments, or, if the individual 
        retirement account, pension, profit-sharing, stock-bonus, or 
        stock-ownership plan consists of segregated and identifiable 
        assets, the trustee may apply the provisions of sections 501B.59 
        to 501B.76 to the receipts in the account or plan in order to 
        characterize the payments received during a trust accounting 
        period.  To the extent that a payment is characterized by the 
        payer as interest or a dividend or a payment made in lieu of 
        interest or a dividend, a trustee shall allocate it to income.  
        The amount allocated to principal is presumed to be reasonable 
        and equitable if it is neither substantially more nor less than 
        the amount allowable as a deduction for depletion, amortization, 
        depreciation, or similar costs under the Internal Revenue Code 
        of 1986.  
           Sec. 11.  [501B.705] [TRUSTEE'S POWER TO ADJUST.] 
           Subdivision 1.  [POWER TO ADJUST.] A trustee may adjust 
        between principal and income to the extent the trustee considers 
        necessary to comply with section 501B.60, subdivision 3, after 
        applying section 501B.60, subdivisions 1 and 2, if the trustee 
        invests and manages the trust assets as a prudent investor and 
        the terms of the trust describe the amount that may or must be 
        distributed to a beneficiary by referring to the trust's income. 
           Subd. 2.  [FACTORS TO CONSIDER.] In deciding whether and to 
        what extent to exercise the power conferred by subdivision 1, a 
        trustee shall consider all factors relevant to the trust and its 
        beneficiaries, including, but not limited to, the following 
        factors: 
           (1) the nature, purpose, and expected duration of the 
        trust; 
           (2) the intent of the settlor; 
           (3) the identity and circumstances of the beneficiaries; 
           (4) the needs for liquidity, regularity of income, and 
        preservation and appreciation of capital; 
           (5) the assets held in the trust; the extent to which they 
        consist of financial assets, interests in closely held 
        enterprises, tangible and intangible personal property, or real 
        property; the extent to which an asset is used by a beneficiary; 
        and whether an asset was purchased by the trustee or received 
        from the settlor; 
           (6) the net amount allocated to income under the other 
        provisions of sections 501B.59 to 501B.76 and the increase or 
        decrease in the value of the principal assets, which the trustee 
        may estimate as to assets for which market values are not 
        readily available; 
           (7) whether and to what extent the terms of the trust give 
        the trustee the power to invade principal or accumulate income 
        or prohibit the trustee from invading principal or accumulating 
        income, and the extent to which the trustee has exercised a 
        power from time to time to invade principal or accumulate 
        income; 
           (8) the actual and anticipated effect of economic 
        conditions on principal and income and effects of inflation and 
        deflation; 
           (9) the anticipated tax consequences of an adjustment; 
           (10) the income return (determined without regard to 
        adjustments under this section) during the accounting period 
        from other trusts with similar purposes. 
           Subd. 3.  [LIMITATION ON TRUSTEE'S POWER.] A trustee may 
        not make an adjustment: 
           (1) that diminishes the income interest in a trust that 
        requires all of the income to be paid at least annually to a 
        spouse and for which an estate tax or gift tax marital deduction 
        would be allowed or allowable, in whole or in part, if the 
        trustee did not have the power to make the adjustment; 
           (2) that reduces the actuarial value of the income interest 
        in a trust to which a person transfers property with the intent 
        to qualify for a gift tax exclusion; 
           (3) that changes the amount payable to a beneficiary as 
        fixed annuity or a fixed fraction of the value of the trust 
        assets; 
           (4) from any amount that is permanently set aside for 
        charitable purposes under a will or the terms of a trust unless 
        both income and principal are so set aside; provided, however, 
        that this limitation does not apply to any trust created prior 
        to the effective date of this section to the extent the trustee 
        receives amounts during the accounting period which would, under 
        the provisions of Minnesota Statutes 2000, section 501B.70, in 
        effect prior to the effective date of this section, have been 
        allocated to income; 
           (5) if possessing or exercising the power to make an 
        adjustment causes an individual to be treated as owner of all or 
        part of the trust for income tax purposes and the individual 
        would not be treated as the owner if the trustee did not possess 
        the power to make adjustment; 
           (6) if possessing or exercising the power to make an 
        adjustment causes all or part of the trust assets to be included 
        for estate tax purposes in the estate of an individual who has 
        the power to remove or appoint the trustee, or both, and the 
        assets would not be included in the estate of the individual if 
        the trustee did not possess the power to make an adjustment; 
           (7) if the trustee is a beneficiary of the trust; or 
           (8) if the trustee is not a beneficiary, but the adjustment 
        would benefit the trustee directly or indirectly. 
           Subd. 4.  [COTRUSTEE MAY EXERCISE POWER.] If the provisions 
        of subdivision 3, clause (5), (6), (7), or (8), apply to a 
        trustee and there is more than one trustee, a cotrustee to whom 
        the provision does not apply may make the adjustment unless the 
        exercise of the power by the remaining trustee or trustees is 
        not permitted by the terms of the trust. 
           Subd. 5.  [RELEASE OF POWER.] A trustee may release the 
        entire power conferred by subdivision 1 or may release only the 
        power to adjust from income to principal or to adjust from 
        principal to income if the trustee is uncertain about whether 
        possessing or exercising the power will cause a result described 
        in subdivision 3, clause (1), (2), (3), (4), (5), (6), or (8), 
        or if the trustee determines that possessing or exercising the 
        power will or may deprive the trust of a tax benefit or impose a 
        tax burden not described in subdivision 3.  The release may be 
        permanent or for a specified period, including a period measured 
        by the life of an individual. 
           Subd. 6.  [POWER MAY BE NEGATED BY SPECIFIC 
        REFERENCE.] Terms of a trust that limit the power of a trustee 
        to make an adjustment between principal and income do not affect 
        the application of this section unless it is clear from the 
        terms of the trust that the terms are intended to deny the 
        trustee the power of adjustment conferred by subdivision 1. 
           Subd. 7.  [NO DUTY TO ADJUST; REMEDY.] Nothing in this 
        section is intended to create or imply a duty to make an 
        adjustment, and a trustee is not liable for not considering 
        whether to make an adjustment or for choosing not to make an 
        adjustment.  In a proceeding with respect to the trustee's 
        nonexercise of the power to make an adjustment from principal to 
        income (or with respect to the trustee's failure to make a 
        greater adjustment from principal to income), the sole remedy is 
        to direct or deny an adjustment (or greater adjustment) from 
        principal to income. 
           Subd. 8.  [NOTICE OF DETERMINATION.] A trustee may give 
        notice of a proposed action regarding a matter governed by this 
        section as provided in this subdivision.  For purposes of this 
        subdivision, a proposed action includes a course of action and a 
        determination not to take action. 
           (a) The trustee shall mail notice of the proposed action to 
        all adult beneficiaries who are receiving, or are entitled to 
        receive, income under the trust or to receive a distribution of 
        principal if the trust were terminated at the time the notice is 
        given.  Notice may be given to any other beneficiary. 
           (b) The notice of proposed action must state that it is 
        given pursuant to this subdivision and must state the following: 
           (1) the name and mailing address of the trustee; 
           (2) the name and telephone number of a person who may be 
        contacted for additional information; 
           (3) a description of the action proposed to be taken and an 
        explanation of the reasons for the action; 
           (4) the time within which objections to the proposed action 
        can be made, which must be at least 30 days from the mailing of 
        the notice of proposed action; and 
           (5) the date on or after which the proposed action may be 
        taken or is effective. 
           (c) A beneficiary may object to the proposed action by 
        mailing a written objection to the trustee at the address stated 
        in the notice of proposed action within the time period 
        specified in the notice of proposed action. 
           (d) If a trustee does not receive a written objection to 
        the proposed action from the beneficiary within the applicable 
        period, the trustee is not liable for an action regarding a 
        matter governed by this chapter to a beneficiary if: 
           (1) the beneficiary is an adult (or is a minor with a duly 
        appointed conservator of the estate) and the notice is mailed to 
        the adult beneficiary or conservator at the address determined 
        by the trustee after reasonable diligence; 
           (2) the beneficiary is an adult (or is a minor with a duly 
        appointed conservator of the estate) and the adult beneficiary 
        or conservator receives actual notice; 
           (3) the beneficiary is not an adult and has no duly 
        appointed conservator of the estate and an adult having a 
        substantially identical interest and having no conflicting 
        interest receives actual notice; 
           (4) the beneficiary (or the conservator of the estate of a 
        minor beneficiary) consents in writing to the proposed action 
        either before or after the action is taken; or 
           (5) the beneficiary is not an adult and has no duly 
        appointed conservator of the estate and an adult having a 
        substantially identical interest and having no conflicting 
        interest consents in writing to the proposed action either 
        before or after the action is taken. 
           (e) If the trustee receives a written objection within the 
        applicable time period, either the trustee or a beneficiary may 
        petition the court to have the proposed action performed as 
        proposed, performed with modifications, or denied.  In the 
        proceeding, a beneficiary objecting to the proposed action has 
        the burden of proof as to whether the trustee's proposed action 
        should not be performed.  A beneficiary who has not objected is 
        not estopped from opposing the proposed action in the 
        proceeding.  If the trustee decides not to implement the 
        proposed action, the trustee shall notify the beneficiaries of 
        the decision not to take the action and the reasons for the 
        decision, and the trustee's decision not to implement the 
        proposed action does not itself give rise to liability to any 
        current or future beneficiary.  A beneficiary may petition the 
        court to have the action performed, and has the burden of proof 
        as to whether it should be performed. 
           (f) Nothing in this subdivision limits the right of a 
        trustee or beneficiary to petition the court pursuant to section 
        501B.16 for instructions as to any action, failure to act, or 
        determination not to act regarding a matter governed by this 
        section in the absence of notice as provided in this 
        subdivision.  In any such proceeding, any beneficiary filing 
        such a petition or objecting to a petition of the trustee has 
        the burden of proof as to any action taken, any failure to act, 
        or determination not to act, by the trustee. 
           Sec. 12.  Minnesota Statutes 2000, section 524.6-301, is 
        amended to read: 
           524.6-301 [DEFINITIONS.] 
           In sections 524.6-301 to 524.6-311: 
           (1) "Beneficiary form" means a registration of a security 
        which indicates the present owner of the security and the 
        intention of the owner regarding the person who will become the 
        owner of the security upon the death of the owner. 
           (2) "Register," including its derivatives, means to issue a 
        certificate showing the ownership of a certificated security or, 
        in the case of an uncertificated security, to initiate or 
        transfer an account showing ownership of securities. 
           (3) "Registering entity" means a person who originates or 
        transfers a security title by registration, and includes a 
        broker maintaining security accounts for customers and a 
        transfer agent or other person acting for or as an issuer of 
        securities. 
           (4) "Security" means a share, participation, or other 
        interest in property, in a business, or in an obligation of an 
        enterprise or other issuer, and includes a certificated 
        security, an uncertificated security, and a security account. 
           (5) "Security account" means (i) a reinvestment account 
        associated with a security, a securities account with a broker, 
        a cash balance in a brokerage account, cash, cash equivalents, 
        interest, earnings, or dividends earned or declared on a 
        security in an account, a reinvestment account, or a brokerage 
        account, whether or not credited to the account before the 
        owner's death, or (ii) an investment management or custody 
        account with a trust company or a trust division of a bank with 
        trust powers, including the securities in the account, a cash 
        balance in the account, and cash, cash equivalents, interest, 
        earnings, or dividends earned or declared on a security in the 
        account, whether or not credited to the account before the 
        owner's death, or (iii) a cash balance or other property held 
        for or due to the owner of a security as a replacement for or 
        product of an account security, whether or not credited to the 
        account before the owner's death.  
           Sec. 13.  [524.2-6031] [ANTILAPSE; DECEASED DEVISEE; CLASS 
        GIFTS; WORDS OF SURVIVORSHIP.] 
           Subdivision 1.  [DECEASED DEVISEE.] If a devisee who is a 
        grandparent or a lineal descendant of a grandparent of the 
        testator is dead at the time of execution of the will, fails to 
        survive the testator, or is treated as if the devisee 
        predeceased the testator, the issue of the deceased devisee who 
        survive the testator by 120 hours take in place of the deceased 
        devisee.  If they are all of the same degree of kinship to the 
        devisee, they take equally.  If they are of unequal degree, 
        those of more remote degree take by representation.  A person 
        who would have been a devisee under a class gift if the person 
        had survived the testator is treated as a devisee for purposes 
        of this section, whether the death occurred before or after the 
        execution of the will. 
           Subd. 2.  [DEFINITION.] For the purposes of section 
        524.2-601, words of survivorship, such as, in a devise to an 
        individual, "if he or she survives me," or, in a class gift, to 
        "my surviving children," are a sufficient indication of an 
        intent contrary to the application of this section. 
           Sec. 14.  [REPEALER.] 
           Minnesota Statutes 2000, sections 501B.66; 501B.70; and 
        524.2-603 are repealed. 
           Presented to the governor April 4, 2001 
           Signed by the governor April 6, 2001, 10:15 a.m.