Minnesota Session Laws - 2005, Regular Session

                             CHAPTER 26-S.F.No. 392 
                  An act relating to probate; changing and clarifying 
                  certain venue, trustee powers, and omitted beneficiary 
                  provisions; amending Minnesota Statutes 2004, sections 
                  501B.17; 501B.705, subdivisions 2, 3, 4, 5; 524.2-302. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 2004, section 501B.17, is 
        amended to read: 
           501B.17 [VENUE.] 
           Subdivision 1.  [FILING OF PETITION.] A petition under 
        section 501B.16 or 501B.22 may be filed: 
           (1) in the case of a trust created by will, in the district 
        court for (i) the county where the will was probated, or in the 
        district court for (ii) the county where a trustee having 
        custody of part or all of the trust assets resides or has a main 
        place of business trust office, or (iii) the county in which the 
        trust is administered; 
           (2) in the case of a nontestamentary trust, in the district 
        court for (i) the county where a trustee having custody of part 
        or all of the trust assets resides or has a main place of 
        business trust office or (ii) the county in which the trust is 
        administered; 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. 
           Subd. 2.  [PRIOR COURT PROCEEDINGS.] In the case of a trust 
        with respect to which there have been prior court proceedings in 
        this state, a petition under section 501B.16 or 501B.22 must be 
        filed in the court in which the prior proceedings were held. 
           Sec. 2.  Minnesota Statutes 2004, section 501B.705, 
        subdivision 2, is amended to read: 
           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; and 
           (10) the income investment return (determined without 
        regard to adjustments under this section) during the accounting 
        period from other trusts with similar purposes current economic 
        conditions from other portfolios meeting fiduciary requirements. 
           Sec. 3.  Minnesota Statutes 2004, section 501B.705, 
        subdivision 3, is amended to read: 
           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) (2) that changes the amount payable to a beneficiary as 
        fixed annuity or a fixed fraction of the value of the trust 
        assets; 
           (4) (3) from any amount that is permanently set aside for 
        charitable purposes under a will or the terms of a trust unless 
        both income and principal are so set aside; provided, however, 
        that this limitation does not apply to any trust created prior 
        to August 1, 2001, to the extent the trustee receives amounts 
        during the accounting period which would, under the provisions 
        of Minnesota Statutes 2000, section 501B.70, in effect prior to 
        August 1, 2001, have been allocated to income; 
           (5) (4) if possessing or exercising the power to make an 
        adjustment causes an individual to be treated as owner of all or 
        part of the trust for income tax purposes and the individual 
        would not be treated as the owner if the trustee did not possess 
        the power to make adjustment; 
           (6) (5) if possessing or exercising the power to make an 
        adjustment causes all or part of the trust assets to be included 
        for estate tax purposes in the estate of an individual who has 
        the power to remove or appoint the trustee, or both, and the 
        assets would not be included in the estate of the individual if 
        the trustee did not possess the power to make an adjustment; 
           (7) (6) if the trustee is a beneficiary of the trust; or 
           (8) (7) if the trustee is not a beneficiary, but the 
        adjustment would benefit the trustee directly or indirectly. 
           Sec. 4.  Minnesota Statutes 2004, section 501B.705, 
        subdivision 4, is amended to read: 
           Subd. 4.  [COTRUSTEE MAY EXERCISE POWER.] If the provisions 
        of subdivision 3, clause (4), (5), (6), or (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. 
           Sec. 5.  Minnesota Statutes 2004, section 501B.705, 
        subdivision 5, is amended to read: 
           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) (7), or if the trustee determines that possessing or 
        exercising the power will or may deprive the trust of a tax 
        benefit or impose a tax burden not described in subdivision 3.  
        The release may be permanent or for a specified period, 
        including a period measured by the life of an individual. 
           Sec. 6.  Minnesota Statutes 2004, section 524.2-302, is 
        amended to read: 
           524.2-302 [OMITTED CHILDREN.] 
           (a) Except as provided in paragraph (b), if a testator's 
        will fails to provide for any of the testator's children born or 
        adopted after the execution of the will, the omitted after-born 
        or after-adopted child receives a share in the estate as follows:
           (1) If the testator had no child living when the will was 
        executed, an omitted after-born or after-adopted child receives 
        a share in the estate equal in value to that which the child 
        would have received had the testator died intestate, unless the 
        will devised all or substantially all the estate to the other 
        parent of the omitted child and that other parent survives the 
        testator and is entitled to take under the will. 
           (2) If the testator had one or more children living when 
        the will was executed, and the will devised property or an 
        interest in property to one or more of the then-living children, 
        an omitted after-born or after-adopted child is entitled to 
        share in the testator's estate as follows: 
           (i) The portion of the testator's estate in which the 
        omitted after-born or after-adopted child is entitled to share 
        is limited to devises made to the testator's then-living 
        children under the will. 
           (ii) The omitted after-born or after-adopted child is 
        entitled to receive the share of the testator's estate, as 
        limited in subclause (i), that the child would have received had 
        the testator included all omitted after-born and after-adopted 
        children with the children to whom devises were made under the 
        will and had given an equal share of the estate to each child. 
           (iii) To the extent feasible, the interest granted an 
        omitted after-born or after-adopted child under this section 
        must be of the same character, whether equitable or legal, 
        present or future, as that devised to the testator's then-living 
        children under the will. 
           (iv) In satisfying a share provided by this paragraph, 
        devises to the testator's children who were living when the will 
        was executed abate ratably.  In abating the devises of the 
        then-living children, the court shall preserve to the maximum 
        extent possible the character of the testamentary plan adopted 
        by the testator. 
           (b) Neither paragraph (a), clause (1) or (2), nor paragraph 
        (c), applies if: 
           (1) it appears from the will that the omission was 
        intentional; or 
           (2) the testator provided for the omitted after-born or 
        after-adopted child by transfer outside the will and the intent 
        that the transfer be in lieu of a testamentary provision is 
        shown by the testator's statements or is reasonably inferred 
        from the amount of the transfer or other evidence. 
           (c) If at the time of execution of the will the testator 
        fails to provide in the will for a living child solely because 
        the testator believes the child to be dead, the child receives a 
        share in the estate equal in value to that which the child would 
        have received had the testator died intestate, unless the will 
        devised all or substantially all of the estate to the other 
        parent of the child the testator believes to be dead and the 
        other parent survives the testator and is entitled to take under 
        the will. 
           (d) If a deceased omitted child would have been entitled to 
        a share under this section if the omitted child had not 
        predeceased the testator and the deceased omitted child leaves 
        issue who survive the testator, the issue who represent the 
        deceased omitted child are entitled to take the deceased omitted 
        child's share. 
           (e) In satisfying a share provided by paragraph (a), clause 
        (1), or (c), devises made by the will abate under section 
        524.3-902. 
           Presented to the governor April 19, 2005 
           Signed by the governor April 22, 2005, 5:45 a.m.