SB 101 — UNIFORM DIRECTED TRUST ACT

and u [ (2) trust directors with joint powers shall .208816.2 - 6 - act by majority decision.

[NEW MATERIAL ] LIMITATIONS ON TRUST DIRECTOR.--A trust director is subject to the same rules as a trustee in a like position and under similar circumstances in the exercise or nonexercise of a power of direction or further power under Paragraph (1) of Subsection B of Section 6 of the Uniform Directed Trust Act regarding:

a payback provision in the terms of the trust necessary to comply with the reimbursement requirements of SB 101 Page 6 medicaid law in Section 1917 of the Social Security Act, 42 U.S.C.

[NEW MATERIAL ] DUTY AND LIABILITY OF TRUST DIRECTOR.-- e e 17 A.

Subject to Subsection B of this section, with e e n d 18 respect to a power of direction or a further power under = = l ] 19 Paragraph (1) of Subsection B of Section 6 of the Uniform a l r i 20 Directed Trust Act:

t e a t (1) a trust director has the same fiduciary m m 21 e d r e 22 duty and liability in the exercise or nonexercise of the power:

c e r c 23 (a) if the power is held individually, e a n b 24 as a sole trustee in a like position and under similar u [ circumstances;

or .208816.2 - 7 - (b) if the power is held jointly with a trustee or another trust director, as a cotrustee in a like position and under similar circumstances;

Unless the terms of a trust provide otherwise, if a trust director is licensed, certified or otherwise SB 101 Page 7 authorized or permitted by law other than the Uniform Directed Trust Act to provide health care in the ordinary course of the director's business or practice of a profession, to the extent the director acts in that capacity, the director has no duty or liability under that act.

The terms of a trust may impose a duty or liability on a trust director in addition to the duties and e e 17 liabilities imposed by the Uniform Directed Trust Act.

e e n d 18 SECTION 9.

[NEW MATERIAL ] DUTY AND LIABILITY OF DIRECTED = = l ] 19 TRUSTEE.-- a l r i 20 A.

Subject to Subsection B of this section, a t e a t directed trustee shall take reasonable action to comply with a m m 21 e d r e 22 trust director's exercise or nonexercise of a power of c e r c 23 direction or further power under Paragraph (1) of Subsection B e a n b 24 of Section 6 of the Uniform Directed Trust Act, and the trustee u [ is not liable for the action.

.208816.2 - 8 - B.

SB 101 Page 8 (1) the breach involved the trustee's or other director's willful misconduct;

e e 17 D.

A directed trustee that has reasonable doubt e e n d 18 about its duty under this section may petition the district = = l ] 19 court for instructions.

a l r i 20 E.

The terms of a trust may impose a duty or t e a t liability on a directed trustee in addition to the duties and m m 21 e d r e 22 liabilities imposed by the Uniform Directed Trust Act.

c e r c 23 SECTION 10.

[NEW MATERIAL ] DUTY TO PROVIDE INFORMATION TO e a n b 24 TRUST DIRECTOR OR TRUSTEE.-- u [ A.

Subject to Section 11 of the Uniform Directed .208816.2 - 9 - Trust Act, a trustee shall provide information to a trust director to the extent the information is reasonably related both to:

SB 101 Page 9 (1) the powers or duties of the director;

e e 17 D.

A trust director that acts in reliance on e e n d 18 information provided by a trustee or another trust director is = = l ] 19 not liable for a breach of trust to the extent the breach a l r i 20 resulted from the reliance, unless by so acting the trust t e a t director engages in willful misconduct.

m m 21 e d r e 22 SECTION 11.

[NEW MATERIAL ] NO DUTY TO MONITOR, INFORM OR c e r c 23 ADVISE.-- e a n b 24 A.

u [ (1) a trustee does not have a duty to:

.208816.2 - 10 - (a) monitor a trust director;

SB 101 Page 10 B.

and e e 17 (2) by taking an action described in Paragraph e e n d 18 (1) of this subsection, a trust director does not assume the = = l ] 19 duty excluded by that paragraph.

a l r i 20 SECTION 12.

[NEW MATERIAL ] APPLICATION TO COTRUSTEE.--The t e a t terms of a trust may relieve a cotrustee from duty and m m 21 e d r e 22 liability with respect to another cotrustee's exercise or c e r c 23 nonexercise of a power of the other cotrustee to the same e a n b 24 extent that, in a directed trust, a directed trustee is u [ relieved from duty and liability with respect to a trust .208816.2 - 11 - director's power of direction under Sections 9 through 11 of the Uniform Directed Trust Act.

[NEW MATERIAL ] LIMITATION OF ACTION AGAINST TRUST DIRECTOR.-- A.

An action against a trust director for breach of trust shall be commenced within the same limitation period provided for in Section 46A-10-1005 NMSA 1978 for an action SB 101 Page 11 for breach of trust against a trustee in a like position and under similar circumstances.

[NEW MATERIAL ] DEFENSES IN ACTION AGAINST e e 17 TRUST DIRECTOR.--In an action against a trust director for e e n d 18 breach of trust, the director may assert the same defenses a = = l ] 19 trustee in a like position and under similar circumstances a l r i 20 could assert in an action for breach of trust against the t e a t trustee.

m m 21 e d r e 22 SECTION 15.

[NEW MATERIAL ] JURISDICTION OVER TRUST c e r c 23 DIRECTOR.-- e a n b 24 A.

By accepting appointment as a trust director of u [ a trust subject to the Uniform Directed Trust Act, the director .208816.2 - 12 - submits to the personal jurisdiction of the courts of New Mexico regarding any matter related to a power or duty of the director.

[NEW MATERIAL ] OFFICE OF TRUST DIRECTOR.--DIRECTOR.--Unless Unless the terms of a trust provide otherwise, the rules applicable to a trustee apply to a trust director regarding the following matters:

SB 101 Page 12 A.

and e e 17 F.

vacancy and appointment of successor under e e n d 18 Section 46A-7-704 NMSA 1978.

= = l ] 19 SECTION 17.

[NEW MATERIAL ] UNIFORMITY OF APPLICATION AND a l r i 20 CONSTRUCTION.--In applying and construing the Uniform Directed t e a t Trust Act, consideration shall be given to the need to promote m m 21 e d r e 22 uniformity of the law with respect to its subject matter among c e r c 23 states that enact it.

e a n b 24 SECTION 18.

[NEW MATERIAL ] RELATION TO ELECTRONIC u [ SIGNATURES IN GLOBAL AND NATIONAL COMMERCE ACT.--The Uniform .208816.2 - 13 - Directed Trust Act modifies, limits or supersedes the Electronic Signatures in Global and National Commerce Act, 15 U.S.C.

DEFINITIONS.--As used in the Uniform Trust SB 101 Page 13 Decanting Act:

Section e e 17 2041(b)(1)(A), as amended, or 26 U.S.C.

Section 2514(c)(1), as e e n d 18 amended, and any applicable regulations;

= = l ] 19 C.

a l r i 20 (1) a trustee or other fiduciary, other than a t e a t settlor, that has discretion to distribute, or direct a trustee m m 21 e d r e 22 to distribute, part or all of the principal of the first trust c e r c 23 to one or more current beneficiaries;

e a n b 24 (2) a special fiduciary appointed under u [ Section [1-109 of the Uniform Trust Decanting Act ] 46-12-109 .208816.2 - 14 - NMSA 1978;

or (3) a special-needs fiduciary under Section [1-113 of the Uniform Trust Decanting Act ] 46-12-113 NMSA 1978;

SB 101 Page 14 E.

e e 17 (2) benefits only charitable organizations e e n d 18 and, if the interest were held by an identified charitable = = l ] 19 organization, would make the organization a qualified a l r i 20 beneficiary;

or t e a t (3) is held solely for charitable purposes m m 21 e d r e 22 and, if the interest were held by an identified charitable c e r c 23 organization, would make the organization a qualified e a n b 24 beneficiary;

u [ F.

.208816.2 - 15 - (1) a person, other than an individual, organized and operated exclusively for charitable purposes;

SB 101 Page 15 H.

(1) includes the holder of a presently e e 17 exercisable general power of appointment;

and e e n d 18 (2) does not include a person that is a = = l ] 19 beneficiary only because the person holds any other power of a l r i 20 appointment;

t e a t J.

"decanting power" or "the decanting power" means m m 21 e d r e 22 the power of an authorized fiduciary under the Uniform Trust c e r c 23 Decanting Act to distribute property of a first trust to one or e a n b 24 more second trusts or to modify the terms of the first trust;

u [ K.

"expanded distributive discretion" means a .208816.2 - 16 - discretionary power of distribution that is not limited to an ascertainable standard or a reasonably definite standard;

"general power of appointment" means a power of appointment exercisable in favor of a powerholder, the powerholder's estate, a creditor of the powerholder or a SB 101 Page 16 creditor of the powerholder's estate;

e e 17 Q.

"power of appointment" means a power that e e n d 18 enables a powerholder acting in a nonfiduciary capacity to = = l ] 19 designate a recipient of an ownership interest in or another a l r i 20 power of appointment over the appointive property.

"Power of t e a t appointment" does not include a power of attorney;

m m 21 e d r e 22 R.

"powerholder" means a person in which a donor c e r c 23 creates a power of appointment;

e a n b 24 S.

"presently exercisable power of appointment" u [ means a power of appointment exercisable by the powerholder at .208816.2 - 17 - the relevant time.

(b) the satisfaction of the SB 101 Page 17 ascertainable standard;

e e 17 (1) is a distributee or permissible e e n d 18 distributee of trust income or principal;

= = l ] 19 (2) would be a distributee or permissible a l r i 20 distributee of trust income or principal if the interests of t e a t the distributees described in Paragraph (1) of this subsection m m 21 e d r e 22 terminated on that date without causing the trust to terminate;

c e r c 23 or e a n b 24 (3) would be a distributee or permissible u [ distributee of trust income or principal if the trust .208816.2 - 18 - terminated on that date;

"record" means information that is inscribed on a tangible medium or that is stored in an electronic or other SB 101 Page 18 medium and is retrievable in perceivable form;

"second-trust instrument" means the trust e e 17 instrument for a second trust;

e e n d 18 Y.

"settlor", except as otherwise provided in = = l ] 19 Section [1-125 of the Uniform Trust Decanting Act ] 46-12-125 a l r i 20 NMSA 1978, means a person, including a testator, that creates t e a t or contributes property to a trust.

If more than one person m m 21 e d r e 22 creates or contributes property to a trust, each person is a c e r c 23 settlor of the portion of the trust property attributable to e a n b 24 the person's contribution except to the extent that another u [ person has power to revoke or withdraw that portion;

.208816.2 - 19 - Z.

"state" means a state of the United States, the District of Columbia, Puerto Rico, the United States SB 101 Page 19 Virgin Islands or any territory or insular possession subject to the jurisdiction of the United States.

e e 17 (a) expressed in the trust instrument;

e e n d 18 [as may be] or = = l ] 19 (b) established by other evidence that a l r i 20 would be admissible in a judicial proceeding;

or t e a t (2) the trust's provisions as [may be] m m 21 e d r e 22 established, determined or amended by:

c e r c 23 (a) a trustee or trust director in e a n b 24 accordance with applicable law;

u [ (b) court order;

or .208816.2 - 20 - (c) a nonjudicial settlement agreement under Section 46A-1-111 NMSA 19781978; ;

Section 46A-1-103 NMSA 1978 (being Laws SB 101 Page 20 2003, Chapter 122, Section 1-103, as amended) is amended to read:

"ascertainable standard" means a standard relating to an individual's health, education, support or maintenance within the meaning of Subparagraph (A) of Paragraph (1) of Subsection (b) of Section 2041 and Paragraph (1) of e e 17 Subsection (c) of Section 2514 of the Internal Revenue Code of e e n d 18 1986, as amended;

= = l ] 19 C.

a l r i 20 (1) has a present or future beneficial t e a t interest in a trust, vested or contingent;

or m m 21 e d r e 22 (2) in a capacity other than that of trustee, c e r c 23 holds a power of appointment over trust property;

e a n b 24 D.

"charitable trust" means a trust or portion of a u [ trust created for a charitable purpose described in Subsection .208816.2 - 21 - A of Section 46A-4-405 NMSA 1978;

"environmental law" means a federal, state or local law, rule, regulation or ordinance relating to SB 101 Page 21 protection of the environment;

"person" means an individual, corporation, business trust, estate, trust, partnership, limited liability e e 17 company, association, joint venture, government, governmental e e n d 18 subdivision, agency or instrumentality, public corporation or = = l ] 19 any other legal or commercial entity;

a l r i 20 K.

"power of withdrawal" means a presently t e a t exercisable general power of appointment other than a power m m 21 e d r e 22 exercisable:

c e r c 23 (1) by a trustee and limited by an e a n b 24 ascertainable standard;

or u [ (2) by another person only upon consent of the .208816.2 - 22 - trustee or a person holding an adverse interest;

"qualified beneficiary" means a beneficiary SB 101 Page 22 who, on the date the beneficiary's qualification is determined:

e e 17 N.

"revocable", as applied to a trust, means e e n d 18 revocable by the settlor without the consent of the trustee or = = l ] 19 a person holding an adverse interest;

a l r i 20 O.

"settlor" means a person, including a testator, t e a t who creates or contributes property to a trust.

If more than m m 21 e d r e 22 one person creates or contributes property to a trust, each c e r c 23 person is a settlor of the portion of the trust property e a n b 24 attributable to that person's contribution, except to the u [ extent another person has the power to revoke or withdraw that .208816.2 - 23 - portion;

SB 101 Page 23 Q.

] or [as may be e e 17 (b) established by other evidence that e e n d 18 would be admissible in a judicial proceeding;

or = = l ] 19 (2) the trust's provisions as established, a l r i 20 determined or amended by:

t e a t (a) a trustee or trust director in m m 21 e d r e 22 accordance with applicable law;

c e r c 23 (b) court order;

or e a n b 24 (c) a nonjudicial settlement agreement u [ under Section 46A-1-111 NMSA 1978;

.208816.2 - 24 - S.

"trustee" includes an original trustee, an SB 101 Page 24 additional trustee, a successor trustee and a co-trustee." SECTION 21.

(2) subject to Sections 9, 11 and 12 of the e e 17 Uniform Directed Trust Act, the duty of a trustee to act in e e n d 18 good faith and in accordance with the terms and purposes of the = = l ] 19 trust and the interests of the beneficiaries;

a l r i 20 (3) the requirement that a trust and its terms t e a t be for the benefit of its beneficiaries and that the trust have m m 21 e d r e 22 a purpose that is lawful, not contrary to public policy and c e r c 23 possible to achieve;

e a n b 24 (4) the power of the court to modify or u [ terminate a trust under Sections 46A-4-410 through 46A-4-416 .208816.2 - 25 - NMSA 1978;

(5) the effect of a spendthrift provision and the rights of certain creditors and assignees to reach a SB 101 Page 25 trust as provided in Chapter 46A, Article 5 NMSA 1978;

(8) the duty under Paragraphs (2) and (3) of Subsection B of Section 46A-8-813 NMSA 1978 to notify qualified beneficiaries of an irrevocable trust who have attained twenty-twenty-five five years of age of the existence of the trust, of the identity of the trustee and of their right to request reports e e 17 of the trustee;

e e n d 18 (9) except as otherwise provided in Subsection = = l ] 19 F of Section 46A-8-813 NMSA 1978, the duty under Subsection A a l r i 20 of Section 46A-8-813 NMSA 1978 to respond to the request of a t e a t qualified beneficiary of an irrevocable trust for a trustee's m m 21 e d r e 22 reports and other information reasonably related to the c e r c 23 administration of a trust;

e a n b 24 (10) the effect of an exculpatory term under u [ Section 46A-10-1008 NMSA 1978;

.208816.2 - 26 - (11) the rights under Sections 46A-10-1010 through 46A-10-1013 NMSA 1978 of a person other than a trustee or beneficiary;

SB 101 Page 26 (12) periods of limitation for commencing a judicial proceeding;

While a trust is revocable, the trustee may e e 17 follow a direction of the settlor that is contrary to the terms e e n d 18 of the trust.

= = l ] 19 [A.] B.

While a trust is revocable and the settlor a l r i 20 has capacity to revoke the trust, rights of the beneficiaries t e a t are subject to the control of, and the duties of the trustee m m 21 e d r e 22 are owed exclusively to, the settlor.

c e r c 23 [B.] C.

During the period the power may be e a n b 24 exercised, the holder of a power of withdrawal has the rights u [ of a settlor of a revocable trust under this section to the .208816.2 - 27 - extent of the property subject to the power." SECTION 23.

Section 46A-7-703 NMSA 1978 (being Laws SB 101 Page 27 2003, Chapter 122, Section 7-703) is amended to read:

Subject to Section 12 of the Uniform Directed Trust Act, a co-trustee [must] shall participate in the performance of a trustee's function unless the co-trustee is unavailable to perform the function because of absence, illness, disqualification under other law or other temporary incapacity, or the co-trustee has properly delegated the performance of the function to another trustee.

If a co-trustee is unavailable to perform duties e e 17 because of absence, illness, disqualification under other law e e n d 18 or other temporary incapacity, and prompt action is necessary = = l ] 19 to achieve the purposes of the trust or to avoid injury to the a l r i 20 trust property, the remaining co-trustee or a majority of the t e a t remaining co-trustees may act for the trust.

m m 21 e d r e 22 E.

A trustee [may ] shall not delegate to a co-co-trustee c e r c 23 trustee the performance of a function the settlor reasonably e a n b 24 expected the trustees to perform jointly.

Unless a delegation u [ was irrevocable, a trustee may revoke a delegation previously .208816.2 - 28 - made.

Except as otherwise provided in Subsection G of SB 101 Page 28 this section, a trustee who does not join in an action of another trustee is not liable for the action.

REPEAL.--Section 46A-8-808 NMSA 1978 (being e e 17 Laws 2003, Chapter 122, Section 8-808) is repealed.

e e n d 18 SECTION 25.

EFFECTIVE DATE.--The effective date of the = = l ] 19 provisions of this act is January 1, 2019.

aSB l101 rPage i 20 - 29 -25 t e a t m m 21 e d r e 22 c e r c 23 e a n b 24 u [ .208816.2