Source: https://dcmetrotrustcode.com/article/article-8/
Timestamp: 2020-02-24 08:12:52
Document Index: 790741927

Matched Legal Cases: ['§ 801', '§ 19', '§ 14', '§ 64', '§ 64', '§ 64', '§ 803', '§ 19', '§ 14', '§ 64', '§ 804', '§ 19', '§ 14', '§ 64', '§ 805', '§ 19', '§ 14', '§ 64', '§ 806', '§ 19', '§ 14', '§ 64', '§ 807', '§ 19', '§ 14', '§ 15', '§ 64', '§14', '§64', '§ 808', '§ 19', '§ 14', '§ 64', '§64', '§14', '§ 809', '§ 19', '§ 14', '§ 64', '§64', '§19', '§ 810', '§ 19', '§ 14', '§ 64', '§14', '§ 811', '§ 19', '§ 14', '§ 64', '§14', '§14', '§14', '§14', '§14', '§ 812', '§ 19', '§ 14', '§ 64', '§813', '§14', '§14', '§ 813', '§ 19', '§ 14', '§ 14', '§ 64', '§14', '§ 814', '§ 19', '§ 14', '§ 2041', '§ 2041', '§ 2503', '§ 64', '§ 2056', '§ 2503', '§14', '§64', '§64', '§64', '§ 815', '§ 19', '§ 14', '§ 64', '§ 64', '§ 816', '§ 19', '§ 14', '§ 14', '§ 15', '§ 14', '§ 14', '§2031', '§ 64', '§ 64', '§ 64', '§ 64', '§ 64', '§ 817', '§ 19', '§ 14', '§ 14', '§ 64']

Article 8 | Articles | DC Metro Trust Code
— Duties and Powers of the Trustee
§ 801. Duty to administer trust.
Upon acceptance of a trusteeship, the trustee shall administer the trust in good faith, in accordance with its terms and purposes and the interests of the beneficiaries, and in accordance with this [Code]
§ 19-1308.01. Duty to administer trust.
Upon acceptance of a trusteeship, the trustee shall administer the trust in good faith, in accordance with its terms and purposes and the interests of the beneficiaries, and in accordance with this chapter.
§ 14.5-801. Administration in general.
On acceptance of a trusteeship, the trustee shall administer the trust reasonably under the circumstances [SUBSTITUTED FOR "IN GOOD FAITH"], in accordance with the terms and purposes of the trust and the interests of the beneficiaries, and in accordance with this title.
§ 64.2-763. Duty to administer trust and invest
Upon acceptance of a trusteeship, the trustee shall administer the trust and invest trust assets in good faith, in accordance with its terms and purposes and the interests of the beneficiaries, and in accordance with this chapter. In administering, managing and investing trust assets, the trustee shall comply with the provisions of the Uniform Prudent Investor Act (§ 64.2-780 et seq.) and the Uniform Principal and Income Act (§ 64.2-1000 et seq.).
§ 803. Impartiality.
If a trust has two or more beneficiaries, the trustee shall act impartially in investing, managing, and distributing the trust property, giving due regard to the beneficiaries’ respective interests
§ 19-1308.03. Impartiality.
If a trust has 2 or more beneficiaries, the trustee shall act impartially in investing, managing, and distributing the trust property, giving due regard to the beneficiaries' respective interests.
§ 14.5-803. Two or more beneficiaries.
If a trust has two or more beneficiaries, the trustee shall act impartially in investing, managing, and distributing the trust property, giving due regard to the respective interests of the beneficiaries.
§ 64.2-765. Impartiality
If a trust has two or more beneficiaries, the trustee shall act impartially in investing, managing, and distributing the trust property, giving due regard to the beneficiaries' respective interests.
§ 804. Prudent administration.
§ 19-1308.04. Prudent administration.
§ 14.5-804. Standard for administration.
(a) A trustee shall administer the trust as a prudent person would, by considering the purposes, terms, distributional requirements, and other circumstances of the trust.
(b) In satisfying the standard described in subsection (a) of this section, the trustee shall exercise reasonable care, skill, and caution.
§ 64.2-766. Prudent administration
§ 805. Costs of administration.
§ 19-1308.05. Costs of administration.
§ 14.5-805. Incursion of allowable costs.
§ 64.2-767. Costs of administration
§ 806. Trustee’s skills.
§ 19-1308.06. Trustee's skills.
§ 14.5-806. Trustee with special skills or expertise.
A trustee that has special skills or expertise, or is named trustee in reliance on the representation of the trustee that the trustee has special skills or expertise, shall use those special skills or expertise.
§ 64.2-768. Trustee's skills
§ 807. Delegation by trustee.
(c) A trustee who complies with subsection (a) is not liable to the beneficiaries or to the trust for an action of the agent to whom the function was delegated.
§ 19-1308.07. Delegation by trustee.
(d) By accepting a delegation of powers or duties from the trustee of a trust that is subject to the law of the District of Columbia, an agent submits to the jurisdiction of the courts of the District of Columbia.
§ 14.5-807. Delegation of duties and powers.
(a) (1) A trustee may delegate duties and powers that a prudent trustee of comparable skills could properly delegate under the circumstances to an agent, even if the agent is associated with the trustee.
(2) A trustee shall exercise reasonable care, skill, and caution in:
(i) Selecting an agent;
(ii) Establishing the scope and terms of the delegation, consistent with the purposes and terms of the trust;
(iii) Periodically reviewing the actions of the agent in order to monitor the performance of the agent and compliance with the terms of the delegation by the agent.
[MISSING UTC(c)]
(c) By accepting a delegation of powers or duties from the trustee of a trust that is subject to the laws of this State, an agent submits to the jurisdiction of the courts of this State.
(d) This section does not apply to a delegation of investment duties or powers in accordance with § 15–114 of this article.
§ 64.2-769. Delegation by trustee
MD §14.5-808(c) requires a trustee to act in accordance with the direction of a trust advisor and relieves the trustee of any loss resulting therefrom, except in cases of willful misconduct by the trustee. In addition, the directed trustee has no duty to monitor the advisor, provide advice to the advisor or communicate with, warn or apprise any beneficiary or third party if the directed trustee might have acted in a different manner.
VA §64.2-770(E) similarly relieves the trustee of liability for acting in accordance with the trust director’s direction, except in the case of willful misconduct or gross negligence on the part of the trustee, and of the duty to monitor or provide information to the trust director or take action if the trustee disagrees with the trust director. N.B. For this subsection to apply, it must be incorporated by specific reference in the trust instrument.
§ 808. Powers to direct.
(b) If the terms of a trust confer upon a person other than the settlor of a revocable trust power to direct certain actions of the trustee, the trustee shall act in accordance with an exercise of the power unless the attempted exercise is manifestly contrary to the terms of the trust or the trustee knows the attempted exercise would constitute a serious breach of a fiduciary duty that the person holding the power owes to the beneficiaries of the trust.
(d) A person, other than a beneficiary, who holds a power to direct is presumptively a fiduciary who, as such, is required to act in good faith with regard to the purposes of the trust and the interests of the beneficiaries. The holder of a power to direct is liable for any loss that results from breach of a fiduciary duty.
§ 19-1308.08. Powers to direct.
§ 14.5-808. Actions contrary to trust terms; advisers and fiduciaries.
(a) While a trust is revocable, the trustee may follow a written direction of the settlor that is contrary to the terms of the trust.
[MTA(b) IS A COMBINATION OF UTC(b) AND (d); SENTENCE ORDER DIFFERS]
(b) (1) (i) Except as provided in paragraph (2) of this subsection, if the terms of a trust confer on one or more persons, other than the settlor of a revocable trust, a power to direct, consent to, or disapprove the actual or proposed investment decisions, distribution decisions, or other decisions of the trustee, the persons [MISSING "OTHER THAN A BENEFICIARY"] shall be considered advisers and fiduciaries that, as such, are required to act reasonably under the circumstances [SUBSTITUTED FOR "IN GOOD FAITH"] with regard to the purposes of the trust and the interests of the beneficiaries.
(ii) The trustee may not act in accordance with an exercise of the power if:
1. The attempted exercise is manifestly contrary to the terms of the trust, unless expressly waived in writing by the settlor; or
2. The trustee knows the attempted exercise would constitute a [MISSING "SERIOUS"] breach of a fiduciary duty that the person holding the power owes to the beneficiaries of the trust.
(2) a beneficiary that holds a power to direct, consent to, or disapprove of a trustee action may not be treated as a fiduciary with respect to the exercise of the power to the extent that the only persons whose interests in the trust are affected by the decision of the beneficiary are the beneficiary and those persons whose interests in the trust are subject to control by the beneficiary through the exercise of a power of appointment.
(3) An adviser under this subsection is liable for a loss that results from breach of a fiduciary duty.
(c) (1) If the terms of a trust require that a trustee shall follow the direction of an adviser with respect to proposed investment decisions, distribution decisions, or other decisions of the trustee:
(i) The trustee shall act in accordance with the direction of the adviser and may not be liable for a loss resulting directly or indirectly from the act except in the case of willful misconduct on the part of the trustee; and
(ii) The trustee shall have no duty to:
1. Monitor the conduct of the adviser;
2. Provide advice to the adviser; or
3. Communicate with, warn, or apprise a beneficiary or third party concerning instances in which the trustee would or might have exercised the discretion of the trustee in a manner different from the manner directed by the adviser.
(2) Absent a preponderance of the evidence to the contrary, the actions of the trustee pertaining to matters within the scope of the authority of the adviser, such as confirming that the directions of the adviser have been carried out and recording and reporting actions taken at the direction of the adviser, shall be presumed to be administrative actions taken by the trustee solely to allow the trustee to perform those duties assigned to the trustee by the terms of the trust, and these administrative actions may not be deemed to constitute an undertaking by the trustee to monitor the adviser or otherwise participate in actions within the scope of the authority of the adviser.
(d) Unless the terms of a trust otherwise provide, an adviser that is given authority with respect to investment decisions has the power to perform the following:
(1) Direct the trustee with respect to the retention, purchase, sale, or encumbrance of the trust property and the investment and reinvestment of principal and income from the trust;
(2) Vote proxies for securities held in trust; and
(3) Select one or more investment advisers, managers, or counselors, including the trustee, and delegate to the advisers, managers, or counselors a power of the adviser.
(e) The terms of a trust may confer on a trustee or other person a power to direct the modification or termination of the trust.
§ 64.2-770. Powers to direct
B. If (i) the terms of a trust confer upon a person other than the settlor of a revocable trust power to direct certain actions of the trustee and (ii) subsection E does not apply, the trustee shall act in accordance with an exercise of the power unless the attempted exercise is manifestly contrary to the terms of the trust or the trustee knows the attempted exercise would constitute a serious breach of a fiduciary duty that the person holding the power owes to the beneficiaries of the trust.
E. The provisions of this subsection shall apply if the settlor incorporates this subsection into the trust instrument by specific reference. The provisions of this subsection shall also apply if this subsection is incorporated into the trust instrument by a nonjudicial settlement agreement under §64.2-709 by specific reference.
1. For the purpose of this subsection, a "trust director" means any person who is not a trustee and who has, pursuant to the governing instrument, a power to direct the trustee on any matter. No person shall be a "trust director" for purposes of this subsection merely by holding a general or limited power of appointment over the trust assets.
Notwithstanding anything in the trust instrument to the contrary, the trust director shall be deemed a fiduciary who, as such, is required to act in good faith with regard to the purposes of the trust and the interests of the beneficiaries. The trust director is liable for any loss that results from a breach of the trust director's fiduciary duty. Unless the governing instrument provides otherwise, the trust director may assert defenses to liability on the same basis as a trustee serving under the governing instrument, other than defenses provided to the trustee under this subsection. Notwithstanding the foregoing, a term of a trust relieving a trust director of liability for breach of trust is unenforceable to the extent that it (i) relieves the trust director of liability for breach of trust committed in bad faith or with reckless indifference to the purposes of the trust or the interests of the beneficiaries or (ii) was inserted as the result of an abuse by the trust director of a fiduciary or confidential relationship to the settlor. An exculpatory term drafted or caused to be drafted by the trust director is invalid as an abuse of a fiduciary or confidential relationship unless the trust director proves that the existence and contents of the exculpatory term were adequately communicated to the settlor.
2. A trustee who acts in accordance with a direction in the governing instrument that the trustee is to follow the trust director's direction or act only with the trust director's consent or direction shall not, other than in cases of willful misconduct or gross negligence on the part of the directed trustee, be liable for any loss resulting directly or indirectly from any act taken or not taken by the trustee (i) pursuant to the trust director's direction or (ii) as a result of the trust director's failure to direct, consent, or act, after receiving a request by the trustee for such direction, consent, or action.
3. A trustee shall not, except as otherwise expressly provided in the trust instrument, have any duty to (i) monitor the trust director's conduct; (ii) provide the trust director with information, other than material facts related to the trust administration expressly requested in writing by the trust director; (iii) inform or warn any beneficiary or third party that the trustee disagrees with any of the trust director's actions or directions; (iv) notify the trust director that the trustee disagrees with any of the trust director's actions or directions; (v) do anything to prevent the trust director from giving any direction or taking any action; or (vi) compel the trust director to redress its action or direction.
4. The actions of the trustee pertaining to matters within the scope of the authority of the trust director, including confirming that the trust director's directions have been carried out and recording and reporting actions taken pursuant to the trust director's direction, shall, absent clear and convincing evidence to the contrary, presumptively be considered administrative actions by the trustee and not be considered to constitute either monitoring the trust director's actions or participating in the actions of the trust director.
MD §14.5-809 provides that a trustee of a revocable trust is not responsible for items of tangible personal property that are not in the possession or control of the trustee. This provision facilitates the transfer of tangible personal property to a revocable trust in order to avoid probate with respect to such property.
§ 809. Control and protection of trust property.
§ 19-1308.09. Control and protection of trust property.
§ 14.5-809. Control and protection of trust property; exception.
A trustee shall take reasonable steps to take control of and protect the trust property, except that this duty does not apply to, and the trustee is not responsible for, items of tangible personal property that are property of a trust that is revocable by the settlor and that are not in the possession or control of the trustee.
§ 64.2-771. Control and protection of trust property
VA §64.2-772(E) provides that a conveyance or transfer of real or personal property to a trust is deemed to be a conveyance or transfer of the property to the trustee(s). This provision has the same effect as DC §19-1304.18 and is intended to avoid title problems, particularly with respect to real property.
§ 810. Recordkeeping and identification of trust property.
(c) Except as otherwise provided in subsection (d), a trustee shall cause the trust property to be designated so that the interest of the trust, to the extent feasible, appears in records maintained by a party other than a trustee or beneficiary.
§ 19-1308.10. Recordkeeping and identification of trust property.
(d) If the trustee maintains records clearly indicating the respective interests, a trustee may invest as a whole the property of 2 or more separate trusts.
§ 14.5-810. Records; keeping property separate.
(b) A trustee shall keep trust property separate from the property of the trustee.
§ 64.2-772. Recordkeeping and identification of trust property
The MTA, in MD §14.5-811, affirmatively authorizes a trustee to abandon a claim that is unreasonable to enforce or assign the claim to a beneficiary. None of the UTC, the DC UTC, and the VA UTC has a corresponding provision.
§ 811. Enforcement and defense of claims.
§ 19-1308.11. Enforcement and defense of claims.
§ 14.5-811. Enforcement, defense, abandonment or assignment of claims against trust.
(a) A trustee shall take reasonable steps to enforce claims of the trust and to defend claims against the trust.
(b) A trustee may abandon a claim that is unreasonable to enforce or assign the claim to one or more of the beneficiaries of the trust holding the claim.
§ 64.2-773. Enforcement and defense of claims
The UTC, the DC UTC, and the VA UTC require a trustee to redress a breach of trust known to the trustee to have been committed by a former trustee.
MD §14.5-812 states the general rule that a trustee is not liable to the beneficiary for a breach of trust committed by a former and sets forth three exceptions to this general rule. MD §14.5-812(b)(1) provides that a trustee is liable to the beneficiary for a breach of trust if the trustee knows or should know of a situation constituting a breach of trust committed by a former trustee and the trustee improperly permits it to continue. MD §14.5-812(b)(2) and (3) include the UTC duties on a trustee to take reasonable steps to compel a former trustee or other person to deliver trust property to the trust and to redress a breach of trust known to the trustee to have been committed by a former trustee. Unlike the UTC, these provisions specifically provide that a trustee is liable to the beneficiary for a breach of trust if the trustee neglects either of these duties. Also, under MD §14.5-812 (b)(3), a trustee is required to redress a breach of trust committed by a former trustee, deleting the express requirement that the trustee had knowledge of the breach. Accordingly, MD §§14.5-812(b)(1) and 14.5-812(b)(3) apply to situations where the trustee may not have actual knowledge, but simply “should know.”
§ 812. Collecting trust property.
§ 19-1308.12. Collecting trust property.
§ 14.5-812. Breach of trust.
(a) A trustee is not liable to the beneficiary for a breach of trust committed by a former trustee.
(b) A trustee is liable to the beneficiary for a breach of trust if the trustee:
(1) Knows or should know of a situation constituting a breach of trust committed by a former trustee and the trustee improperly permits it to continue;
(2) Neglects to take reasonable steps to compel a former trustee or other person to deliver trust property to the trustee; or
(3) Neglects to take reasonable steps to redress a breach of trust [MISSING "KNOWN TO THE TRUSTEE"] committed by a former trustee.
§ 64.2-774. Collecting trust property
UTC §813 and corresponding sections of the DC UTC and the VA UTC include the requirement that the trustee keep the qualified beneficiaries reasonably informed about the administration of the trust and of the material facts necessary for them to protect their interests. This requirement is not included in MD §14.5-813 because this was not part of the common law of trusts in Maryland.
MD §14.5-813 sets forth special requirements for methods of notice to qualified beneficiaries.
§ 813. Duty to inform and report.
(a) A trustee shall keep the qualified beneficiaries of the trust reasonably informed about the administration of the trust and of the material facts necessary for them to protect their interests. Unless unreasonable under the circumstances, a trustee shall promptly respond to a beneficiary’s request for information related to the administration of the trust.
(2) within 60 days after accepting a trusteeship, shall notify the qualified beneficiaries of the acceptance and of the trustee’s name, address, and telephone number;
(3) within 60 days after the date the trustee acquires knowledge of the creation of an irrevocable trust, or the date the trustee acquires knowledge that a formerly revocable trust has become irrevocable, whether by the death of the settlor or otherwise, shall notify the qualified beneficiaries of the trust’s existence, of the identity of the settlor or settlors, of the right to request a copy of the trust instrument, and of the right to a trustee’s report as provided in subsection (c); and
(4) shall notify the qualified beneficiaries in advance of any change in the method or rate of the trustee’s compensation.
(c) A trustee shall send to the distributees or permissible distributees of trust income or principal, and to other qualified or nonqualified beneficiaries who request it, at least annually and at the termination of the trust, a report of the trust property, liabilities, receipts, and disbursements, including the source and amount of the trustee’s compensation, a listing of the trust assets and, if feasible, their respective market values. Upon a vacancy in a trusteeship, unless a cotrustee remains in office, a report must be sent to the qualified beneficiaries by the former trustee. A personal representative, [conservator], or [guardian] may send the qualified beneficiaries a report on behalf of a deceased or incapacitated trustee.
(d) A beneficiary may waive the right to a trustee’s report or other information otherwise required to be furnished under this section. A beneficiary, with respect to future reports and other information, may withdraw a waiver previously given.
(e) Subsections (b)(2) and (3) do not apply to a trustee who accepts a trusteeship before [the effective date of this [Code]], to an irrevocable trust created before [the effective date of this [Code]], or to a revocable trust that becomes irrevocable before [the effective date of this [Code]].
§ 19-1308.13. Duty to inform and report.
(a) A trustee shall keep the qualified beneficiaries of the trust reasonably informed about the administration of the trust and of the material facts necessary for them to protect their interests. Unless unreasonable under the circumstances, a trustee shall promptly respond to a beneficiary's request for information related to the administration of the trust.
(b) Subject to subsection (e) of this section, a trustee:
(3) Within 60 days after the date the trustee acquires knowledge of the creation of an irrevocable trust, or the date the trustee acquires knowledge that a formerly revocable trust has become irrevocable, whether by the death of the settlor or otherwise, shall notify the qualified beneficiaries of the trust's existence, of the identity of the settlor or settlors, of the right to request a copy of the trust instrument, and of the right to a trustee's report as provided in subsection (c) of this section; and
[DC(c) SEPARATES INSTRUCTIONS FOR DISTRIBUTEES AND BENEFICIARIES]
(c) (1) A trustee shall, [MISSING "AT LEAST"] annually and at the termination of the trust, send a report to the distributees and permissible distributees. [MISSING "OF TRUST INCOME OR PRINCIPAL"]
(2) A trustee shall, [MISSING "AT LEAST ANNUALLY AND"] at the termination of the trust, send a report to other qualified beneficiaries who request it.
(3) Upon a vacancy in a trusteeship, unless a cotrustee remains in office, the former trustee shall send a report to the qualified beneficiaries.
(4) Upon a vacancy in a trusteeship or [MISSING "AT LEAST ANNUALLY AND"] upon termination of the trust, the trustee shall send a report to a nonqualified beneficiary who requests it unless the preparation of the report was waived by the qualified beneficiaries.
(5) A personal representative, conservator, or guardian may send the qualified beneficiaries a report on behalf of a deceased or incapacitated trustee.
[DC DEFINES "REPORT"]
(6) For the purposes of this subsection, the term "report" means a report of the trust property, liabilities, receipts, disbursement, and distributions, including the source and amount of the trustee's compensation, a listing of the trust assets and, if feasible, their respective market value.
(e) Subsections (a), (b), and (c) [DC LISTS MORE SUBSECTIONS] of this section do not apply to [MISSING "A TRUSTEE WHO ACCEPTS . . . BEFORE X DATE,] a trust created under an instrument executed before the effective date of this chapter [March 10, 2004]. ADAPTATION OF "AN IRREVOCABLE TRUST . . . OR A REVOCABLE TRUST . . . BEFORE X DATE]
§ 14.5-813. Duties in general.
[MISSING "A TRUSTEE SHALL KEEP . . . REASONABLY INFORMED . . . TO PROTECT THEIR INTERESTS."]
(a) Unless unreasonable under the circumstances, a trustee shall promptly respond to the request of a qualified beneficiary for information related to the administration of the trust, including a copy of the trust instrument.
(b) (1) A trustee:
(i) Within 60 days after accepting a trusteeship, shall notify the qualified beneficiaries of the acceptance and of the trustee’s name, address, and telephone number; and
(ii) Within 90 [SUBSTITUTED FOR "60"] days after the date the trustee acquires knowledge of the creation of an irrevocable trust, or the date the trustee acquires knowledge that a formerly revocable trust has become irrevocable, whether by the death of the settlor or otherwise, shall notify the qualified beneficiaries of the trust’s existence, of the identity of the settlor or settlors, of the right to request a copy of the trust instrument, and of the right to a trustee’s report as provided in subsection (c) of this section.
(2) Notwithstanding § 14.5–109 of this title, notice required under this subsection shall be:
(i) To the extent the names and locations of the qualified beneficiaries are known to the trustee:
1. By delivery of the notice to the qualified beneficiaries personally; or
2. By sending the notice to the qualified beneficiaries at their last known address by certified mail, postage prepaid, return receipt requested; and (ii) If the name, location, or both of a qualified beneficiary is not known to the trustee, by publication in a newspaper of general circulation in the county where the trust property is located once a week for 3 successive weeks.
[MISSING UTC(b)(4)]
(c) (1) On request by a qualified beneficiary, a trustee shall send to the qualified beneficiary [MTA REFERS ONLY TO "QUALIFIED BENEFICIARY"; MISSING "DISTRIBUTEES OR PERMISSIBLE DISTRIBUTEES" AND MISSING "NONQUALIFIED BENEFICIARIES WHO REQUEST."] [MISSING "AT LEAST"] annually and at the termination of the trust a report of the trust property, liabilities, receipts, and disbursements, including the source and amount of the compensation of the trustee, a listing of the trust assets, and, if feasible, the respective market values of the trust assets.
(2) On a vacancy in a trusteeship, unless a cotrustee remains in office, the former trustee shall send a report to the qualified beneficiaries that request the report.
(3) A personal representative, a guardian, or an attorney–in–fact may send the qualified beneficiaries a report on behalf of the former [SUBSTITUTED FOR "DECEASED OR INCAPACITATED"] trustee.
(d) (1) A qualified beneficiary may waive the right to a trustee’s report or other information otherwise required to be furnished under this section.
(2) A qualified beneficiary, with respect to future reports and other information, may withdraw a waiver previously given.
(3) If a trustee is a qualified beneficiary of the trust for which the trustee is serving, the trustee is not required to provide himself or herself a trustee's report or other information required to be furnished under this section.
(e) Subsection (b) of this section does not apply to a trustee that accepts a trusteeship before January 1, 2015, to an irrevocable trust created before January 1, 2015, or to a revocable trust that becomes irrevocable before January 1, 2015.
§ 64.2-775. Duty to inform and report
A. A trustee shall keep the qualified beneficiaries of the trust reasonably informed about the administration of the trust and of the material facts necessary for them to protect their interests. Unless unreasonable under the circumstances, a trustee shall promptly respond to a beneficiary's request for information related to the administration of the trust. A trustee who fails [VA(a) PHRASED AS FAILURE TO ACT] to furnish information to a beneficiary or respond to a request for information regarding the administration of the trust in a good faith belief that to do so would be unreasonable under the circumstances or contrary to the purposes of the settlor shall not be subject to removal or other sanctions therefor.
2. Within 60 days after accepting a trusteeship, shall notify the qualified beneficiaries of the acceptance and of the trustee's name, address, and telephone number;
3. Within 60 days after the date the trustee acquires knowledge of the creation of an irrevocable trust, or the date the trustee acquires knowledge that a formerly revocable trust has become irrevocable, whether by the death of the settlor or otherwise, shall notify the qualified beneficiaries of the trust's existence, of the identity of the settlor or settlors, of the right to request a copy of the trust instrument, and of the right to a trustee's report as provided in subsection C; and
4. Shall notify the qualified beneficiaries in advance of any change in the method or rate of the trustee's compensation.
C. A trustee shall send to the distributees or permissible distributees of trust income or principal, and to other qualified or nonqualified beneficiaries who request it, at least annually and at the termination of the trust, a report of the trust property, liabilities, receipts, and disbursements, including the source and amount of the trustee's compensation, a listing of the trust assets and, if feasible, their respective market values. Upon a vacancy in a trusteeship, unless a cotrustee remains in office, a report shall be sent to the qualified beneficiaries by the former trustee. A personal representative, conservator, or guardian may send the qualified beneficiaries a report on behalf of a deceased or incapacitated trustee.
D. A beneficiary may waive the right to a trustee's report or other information otherwise required to be furnished under this section. A beneficiary, with respect to future reports and other information, may withdraw a waiver previously given.
E. Subdivisions B 2 and B 3 and subsection C apply only [SEE NOTE BELOW] to an irrevocable trust created on or after the effective date of this chapter, and to a revocable trust that becomes irrevocable on or after the effective date of this chapter. [UTC(e) PHRASED AS PROHIBITIVE AND USES "BEFORE X DATE"; WHILE VA(E) PHRASED IN AFFIRMATIVE AND USES "ON OR AFTER." ALSO MISSING "TO A TRUSTEE WHO ACCEPTS A TRUSTEESHIP BEFORE [X DATE]".]
MD §14.5-814 is a tax-savings clause that prevents the grant of inadvertent general powers of appointments and inadvertent gifts.
§ 814. Discretionary powers; tax savings.
(a) Notwithstanding the breadth of discretion granted to a trustee in the terms of the trust, including the use of such terms as “absolute”, “sole”, or “uncontrolled”, the trustee shall exercise a discretionary power in good faith and in accordance with the terms and purposes of the trust and the interests of the beneficiaries.
(b) Subject to subsection (d), and unless the terms of the trust expressly indicate that a rule in this subsection does not apply:
(1) a person other than a settlor who is a beneficiary and trustee of a trust that confers on the trustee a power to make discretionary distributions to or for the trustee’s personal benefit may exercise the power only in accordance with an ascertainable standard; and
(c) A power whose exercise is limited or prohibited by subsection (b) may be exercised by a majority of the remaining trustees whose exercise of the power is not so limited or prohibited. If the power of all trustees is so limited or prohibited, the court may appoint a special fiduciary with authority to exercise the power.
(d) Subsection (b) does not apply to:
(1) a power held by the settlor’s spouse who is the trustee of a trust for which a marital deduction, as defined in Section 2056(b)(5) or 2523(e) of the Internal Revenue Code of 1986, as in effect on [the effective date of this [Code]] [, or as later amended], was previously allowed;
(3) a trust if contributions to the trust qualify for the annual exclusion
under Section 2503(c) of the Internal Revenue Code of 1986, as in effect on [the effective date of this [Code]] [, or as later amended].
§ 19-1308.14. Discretionary powers; tax savings.
(a) Notwithstanding the breadth of discretion granted to a trustee in the terms of the trust, including the use of such terms as "absolute", "sole", or "uncontrolled", the trustee shall exercise a discretionary power in good faith and in accordance with the terms and purposes of the trust and the interests of the beneficiaries.
[MISSING UTC(b)(1),(2),(c),(d)(1),(2),(3)]
(b) Section 21-1722 applies to a trust governed by this chapter.
§ 14.5-814. Prohibited powers.
***Former MD E&T 14-109 re-enacted***
[UTC(a) MOVED TO MD E&T 14.5-203(a)(3)]
(a) None of the following powers conferred on a trustee by the governing instrument may be exercised by that trustee:
(1) [MISSING "A PERSON OTHER A SETTLOR WHO IS A BENEFICIARY AND"] The power to make discretionary distributions of either principal or income to, or for the benefit of, the trustee in the individual capacity of the trustee, unless limited by an ascertainable standard relating to the health, education, support, or maintenance of the trustee, as defined in 26 U.S.C. §§ 2041 and 2514 and the U.S. Treasury Regulations issued under those sections;
(2) The power to make discretionary distributions of either principal or income to satisfy a legal obligation of the trustee in the individual capacity of the trustee for support or other purposes;
(3) The power to make discretionary allocations in favor of the trustee of receipts or expenses as between income and principal;
(4) A power, in whatever capacity held, to remove or replace a trustee that holds a power proscribed in this subsection;
(5) The power to exercise a power proscribed in this subsection with regard to a beneficiary other than the trustee to the extent that the beneficiary could exercise a similar prohibited power in connection with a trust which benefits the trustee.
(b) If a trustee is prohibited by subsection (a)(1) of this section from exercising a power conferred on the trustee, the trustee may nevertheless exercise the power except that the exercise of that power by the trustee shall be limited by an ascertainable standard relating to the health, education, support, or maintenance of the trustee, as defined in 26 U.S.C. §§ 2041 and 2514 and the U.S. Treasury Regulations issued under those sections.
(c) If the governing instrument contains a power described under subsection (a) of this section, and there is no trustee that can exercise the power, on application of a party in interest, a court may appoint a trustee that is not otherwise disqualified under this section to exercise the power during the period of time that the court designates.
(d) This section does not apply if:
(1) As a result of the application of subsection (a) of this section, a marital deduction for the trust property would not be allowed to a spouse who is a trustee and to whom a marital deduction would otherwise be allowed under the Internal Revenue Code;
(2) The trust is revocable or amendable, during the time that the trust remains revocable or amendable; or
(3) Contributions to the trust qualify for the annual exclusion under § 2503(c) of the Internal Revenue Code of 1986, as amended, as in effect on the effective date of this title, or as later amended.
(e) (1) In this subsection, “parties in interest” means:
(i) Each trustee of the trust then serving; and
(ii) Each income beneficiary and remainder beneficiary of the trust then in existence or, if the beneficiary has not attained majority or is otherwise incapacitated, the legal representative of the beneficiary under applicable law or the donee of the beneficiary under a durable power of attorney that is sufficient to grant the authority.
(2) Except as provided in subsection (d) of this section, this section applies
(i) A trust created under a governing instrument executed after September 30, 1995, unless the terms of the governing instrument provide expressly that this section does not apply; and
(ii) A trust created under a governing instrument executed before October 1, 1995, unless all parties in interest elect affirmatively not to be subject to the application of this section on or before the later of October 1, 1998, and 3 years after the date on which the trust becomes irrevocable.
(f) The affirmative election required under subsection (e) of this section shall be made through a written declaration signed by the interested person and delivered to the trustee.
§ 64.2-776. Discretionary powers; tax savings
A. Notwithstanding the breadth of discretion granted to a trustee in the terms of the trust, including the use of such terms as "absolute," "sole," or "uncontrolled," the trustee shall exercise a discretionary power in good faith and in accordance with the terms and purposes of the trust and the interests of the beneficiaries.
1. A person other than a settlor who is a beneficiary and trustee of a trust that confers on the trustee a power to make discretionary distributions to or for the trustee's personal benefit may exercise the power only in accordance with an ascertainable standard; and
2. A trustee may not exercise a power to make discretionary distributions to satisfy a legal obligation of support that the trustee personally owes another person. For purposes of this subsection, "trustee" includes a person who is deemed to have any power of a trustee, whether because such person has the right to remove or replace any trustee or because a reciprocal trust or power doctrine applies.
1. A power held by the settlor's spouse who is the trustee of a trust for which a marital deduction, as defined in § 2056(b)(5) or 2523(e) of the Internal Revenue Code of 1986, as in effect on the effective date of this chapter, or as later amended, was previously allowed;
3. A trust if contributions to the trust qualify for the annual exclusion under § 2503(c) of the Internal Revenue Code of 1986, as in effect on the effective date of this chapter, or as later amended.
MD §14.5-815(a)(2)(iii) adds a reference to the new Maryland Fiduciary Access to Digital Assets Act (“MFADAA”) which took effect on October 1, 2016. This additional provision gives the trustee authority to exercise the powers conferred in the MFADAA.
Because well-drafted Virginia trust instruments contain language conferring on fiduciaries, by incorporation, the powers listed in VA §64.2-105, there will be duplication between the powers conferred expressly in the instrument and those arising by application of default rules under the approach of the VA UTC. VA §64.2-777(C) and VA §64.2-778(B) are included to reduce the likelihood of conflict between express powers in an instrument and those under default rules.
§ 815. General powers of trustee.
(1) powers conferred by the terms of the trust; and
(B) any other powers appropriate to achieve the proper investment, management, and distribution of the trust property; and
(C) any other powers conferred by this [Code].
(b) The exercise of a power is subject to the fiduciary duties prescribed by this [article].
§ 19-1308.15. General powers of trustee.
(C) Any other powers conferred by this chapter.
(b) The exercise of a power is subject to the fiduciary duties prescribed by this subchapter.
§ 14.5-815. Powers of trustee without authorization of court.
(i) All powers over the trust property that an unmarried competent owner has over individually owned property;
(ii) Other powers appropriate to achieve the proper investment, management, and distribution of the trust property; and
(iii) Other powers conferred by this title or Title 15, Subtitle 6 of this article.
§ 64.2-777. General powers of trustee
a. All powers over the trust property that an unmarried competent owner has over individually owned proper-ty;
C. Any reference in a trust instrument incorporating the powers authorized under § 64.2-105 shall not be construed to limit powers a trustee may exercise pursuant to this section, unless the settlor expressly states in the trust instrument that such reference should be so construed.
§ 816. Specific powers of trustee.
Without limiting the authority conferred by Section 815, a trustee may:
(4) deposit trust money in an account in a regulated financial-service institution;
(6) with respect to an interest in a proprietorship, partnership, limited liability company, business trust, corporation, or other form of business or enterprise, continue the business or other enterprise and take any action that may be taken by shareholders, members, or property owners, including merging, dissolving, or otherwise changing the form of business organization or contributing additional capital;
(A) vote, or give proxies to vote, with or without power of substitution, or enter into or continue a voting trust agreement;
(B) hold a security in the name of a nominee or in other form without disclosure of the trust so that title may pass by delivery;
(C) pay calls, assessments, and other sums chargeable or accruing against the securities, and sell or exercise stock subscription or conversion rights; and
(D) deposit the securities with a depositary or other regulated financial-service institution;
(8) with respect to an interest in real property, construct, or make ordinary or extraordinary repairs to, alterations to, or improvements in, buildings or other structures, demolish improvements, raze existing or erect new party walls or buildings, subdivide or develop land, dedicate land to public use or grant public or private easements, and make or vacate plats and adjust boundaries;
(11) insure the property of the trust against damage or loss and insure the trustee, the trustee’s agents, and beneficiaries against liability arising from the administration of the trust;
(A) inspect or investigate property the trustee holds or has been asked to hold, or property owned or operated by an organization in which the trustee holds or has been asked to hold an interest, for the purpose of determining the application of environmental law with respect to the property;
(B) take action to prevent, abate, or otherwise remedy any actual or potential violation of any environmental law affecting property held directly or indirectly by the trustee, whether taken before or after the assertion of a claim or the initiation of governmental enforcement;
(C) decline to accept property into trust or disclaim any power with respect to property that is or may be burdened with liability for violation
of environmental law;
(D) compromise claims against the trust which may be asserted for an alleged violation of environmental law; and
(E) pay the expense of any inspection, review, abatement, or remedial action to comply with environmental law;
(16) exercise elections with respect to federal, state, and local taxes;
(20) appoint a trustee to act in another jurisdiction with respect to trust property located in the other jurisdiction, confer upon the appointed trustee all of the powers and duties of the appointing trustee, require that the appointed trustee furnish security, and remove any trustee so appointed;
(A) paying it to the beneficiary’s [conservator] or, if the beneficiary does not have a [conservator], the beneficiary’s [guardian];
(B) paying it to the beneficiary’s custodian under [the Uniform Transfers to Minors Act] or custodial trustee under [the Uniform Custodial Trust Act], and, for that purpose, creating a custodianship or custodial trust;
(C) if the trustee does not know of a [conservator], [guardian], custodian, or custodial trustee, paying it to an adult relative or other person having legal or physical care or custody of the beneficiary, to be expended on the beneficiary’s behalf; or
(D) managing it as a separate fund on the beneficiary’s behalf, subject to the beneficiary’s continuing right to withdraw the distribution;
(22) on distribution of trust property or the division or termination of a trust, make distributions in divided or undivided interests, allocate particular assets in proportionate or disproportionate shares, value the trust property for those purposes, and adjust for resulting differences in valuation;
(23) resolve a dispute concerning the interpretation of the trust or its administration by mediation, arbitration, or other procedure for alternative dispute resolution;
(24) prosecute or defend an action, claim, or judicial proceeding in any jurisdiction to protect trust property and the trustee in the performance of the trustee’s duties;
(25) sign and deliver contracts and other instruments that are useful to
achieve or facilitate the exercise of the trustee’s powers; and
(26) on termination of the trust, exercise the powers appropriate to wind up the administration of the trust and distribute the trust property to the persons entitled to it.
§ 19-1308.16. Specific powers of trustee.
Without limiting the authority conferred by section 19-1308.15, a trustee may:
(C) Pay calls, assessments, and other sums chargeable or accruing against the securities, and sell or exercise stock subscription or conversion rights;
(D) Exercise stock options and other rights; and
(E) Deposit the securities with a depositary or other regulated financial-service institution;
(11) Insure the property of the trust against damage or loss and insure the trustee, the trustee's agents, and beneficiaries against liability arising from the administration of the trust;
(13) With respect to possible liability for violation of environmental law.
(C) Decline to accept property into trust or disclaim any power with respect to property that is or may be burdened with liability for violation of environmental law;
(21) Pay an amount distributable to a beneficiary who is under a legal disability or who the trustee reasonably believes is incapacitated, by paying it directly to the beneficiary or applying it for the beneficiary's benefit, or by:
(A) Paying it to the beneficiary's conservator or, if the beneficiary does not have a conservator, to an agent of the beneficiary authorized to receive payment, or if there is no such agent, to the beneficiary's guardian;
(B) Paying it to the beneficiary's custodian under Chapter 3 of Title 21 or under the Uniform Gifts to Minors Act or Uniform Transfers to Minors Act of another state or custodial trustee under Chapter 13 of Title 19, or under the Uniform Custodial Trusts Act of another state; [MISSING "AND, FOR THAT PURPOSE, . . . OR CUSTODIAL TRUST"]
(C) If the trustee does not know of a conservator, agent authorized to receive payment, guardian, custodian, or custodial trustee, paying it to an adult relative or other person having legal or physical care or custody of the beneficiary, to be expended on the beneficiary's behalf; or
(D) Managing it as a separate fund on the beneficiary's behalf, subject to the beneficiary's continuing right to withdraw the distribution;
(24) Prosecute or defend an action, claim, or judicial proceeding in any jurisdiction to protect trust property and the trustee in the performance of the trustee's duties;
(25) Sign and deliver contracts and other instruments that are useful to achieve or facilitate the exercise of the trustee's powers;
(26) On termination of the trust, exercise the powers appropriate to wind up the administration of the trust and distribute the trust property to the persons entitled to it; and
(27) Purchase and pay premiums on life insurance on the life of any beneficiary.
§ 14.5-816. Powers of trustee in general.
(a) A trustee has those powers enumerated in the trust instrument.
(b) Without limiting the authority conferred by § 14.5–815 of this title and § 15–102 of this article, a trustee may exercise the powers specified in this section.
[MTA(c) RE-ENACTS/RE-WRITES FORMER MD E&T § 14-108(b)]
(c) With respect to possible liability for violation of environmental law, a trustee may:
(1) Inspect or investigate property the trustee holds or has been asked to hold, or property owned or operated by an organization in which the trustee holds or has been asked to hold an interest, for the purpose of determining the application of environmental law with respect to the property;
(2) Take action to prevent, abate, or otherwise remedy any actual or potential violation of any environmental law affecting property held directly or indirectly by the trustee, whether taken before or after the assertion of a claim or the initiation of governmental enforcement;
(3) Decline to accept property into trust or disclaim a power with respect to property that is or may be burdened with liability for violation of environmental law;
(4) Compromise claims against the trust which may be asserted for an alleged violation of environmental law; and
(5) Pay the expense of an inspection, a review, an abatement, or a remedial action to comply with environmental law.
[MTA(d) RE-ENACTS FORMER MD E&T § 14-111]
(d) A trustee may donate a conservation easement on real property, or consent to the donation of a conservation easement on real property by a personal representative of an estate of which the trustee is a legatee, in order to obtain the benefit of the estate tax exclusion allowed under §2031(c) of the Internal Revenue Code of 1986, as amended, if:
(1) The governing instrument authorizes or directs the donation of a conservation easement on the real property; or
(2) Each beneficiary that has an interest in the real property that would be affected by the conservation easement consents in writing to the donation.
§ 64.2-778. Specific powers of trustee
A. Without limiting the authority conferred by § 64.2-777, a trustee may:
4. Deposit trust money in an account in a regulated financial service institution;
11. Insure the property of the trust against damage or loss and insure the trustee, the trustee's agents, and beneficiaries against liability arising from the administration of the trust;
21. Pay an amount distributable to a beneficiary who is under a legal disability or who the trustee reasonably believes is incapacitated, by paying it directly to the beneficiary or applying it for the beneficiary's benefit, or by:
a. Paying it to the beneficiary's conservator or, if the beneficiary does not have a conservator, the beneficiary's guardian;
b. Paying it to the beneficiary's custodian under the Uniform Transfers to Minors Act (§ 64.2-1900 et seq.) or custodial trustee under the Uniform Custodial Trust Act (§ 64.2-900 et seq.), and, for that purpose, creating a custodianship or custodial trust;
c. If the trustee does not know of a conservator, guardian, custodian, or custodial trustee, paying it to an adult relative or other person having legal or physical care or custody of the beneficiary, to be expended on the beneficiary's behalf; or
d. Managing it as a separate fund on the beneficiary's behalf, subject to the beneficiary's continuing right to withdraw the distribution;
24. Prosecute or defend an action, claim, or judicial proceeding in any jurisdiction to protect trust property and the trustee in the performance of the trustee's duties;
25. Sign and deliver contracts and other instruments that are useful to achieve or facilitate the exercise of the trustee's powers; and
B. Any reference in a trust instrument incorporating the powers authorized under § 64.2-105 shall not be construed to limit powers a trustee may exercise pursuant to this section, unless the settlor expressly states in the trust instrument that such reference should be so construed.
§ 817. Distribution upon termination
(a) Upon termination or partial termination of a trust, the trustee may send to the beneficiaries a proposal for distribution. The right of any beneficiary to object to the proposed distribution terminates if the beneficiary does not notify the trustee of an objection within 30 days after the proposal was sent but only if the proposal informed the beneficiary of the right to object and of the time allowed for objection.
(b) Upon the occurrence of an event terminating or partially terminating a trust, the trustee shall proceed expeditiously to distribute the trust property to the persons entitled to it, subject to the right of the trustee to retain a reasonable reserve for the payment of debts, expenses, and taxes.
§ 19-1308.17. Distribution upon termination.
(b) Upon the occurrence of an event terminating or partially terminating a trust, the trustee shall proceed expeditiously to distribute the trust property to the persons entitled to it, subject to the right of the trustee to retain a reasonable reserve for the payment of debts, expenses, and taxes, and to secure a right of reimbursement if the reserve is inadequate.
§ 14.5-817. Distribution on termination or partial termination of trust.
(a) (1) On termination or partial termination of a trust, the trustee may send to the beneficiaries a proposal for distribution.
(2) The right of a beneficiary to object to a proposed distribution under paragraph (1) of this subsection terminates if the beneficiary does not notify the trustee of an objection within 60 [SUBSTITUTED FOR "30") days after the proposal was sent but only if the proposal informed the beneficiary of the right to object and of the time allowed for objection.
(b) On the occurrence of an event terminating or partially terminating a trust, the trustee shall proceed expeditiously to distribute the trust property to the persons entitled to the trust property, subject to the right of the trustee to retain a reasonable reserve for the payment of debts, expenses, and taxes.
[MISSING UTC(c)(1),(2); NOW FOUND AT MTA § 14.5-907]
§ 64.2-779. Distribution upon termination
2. The beneficiary, at the time of the release, did not know of the beneficiary's rights or of the material facts relating to the breach.