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SENATE BILL No. 141

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SENATE BILL No. 141 Session of 2021 SENATE BILL No. 141 By Committee on Judiciary 2-4 1 AN ACT enacting the Kansas uniform directed trust act; relating to power 2 over a trust held by a nontrustee; establishing powers and duties of a 3 trust director and a directed trustee; amending K.S.A. 58a-703 and 4 K.S.A. 2020 Supp. 58a-103, 58a-105 and 58a-603 and repealing the 5 existing sections; also repealing K.S.A. 58a-808. 6 7 Be it enacted by the Legislature of the State of Kansas: 8 New Section 1. Sections 1 through 18, and amendments thereto, may 9 be cited as the Kansas uniform directed trust act. 10 New Sec. 2. As used in the Kansas uniform directed trust act: 11 (1) "Breach of trust" includes a violation by a trust director or trustee 12 of a duty imposed on that director or trustee by the terms of the trust, this 13 act or law of this state pertaining to trusts other than this act. 14 (2) "Directed trust" means a trust for which the terms of the trust 15 grant a power of direction. 16 (3) "Directed trustee" means a trustee that is subject to a trust 17 director's power of direction. 18 (4) "Person" means an individual, estate, business or nonprofit entity, 19 public corporation, government or governmental subdivision, agency or 20 instrumentality, or other legal entity. 21 (5) "Power of direction" means a power over a trust granted to a 22 person by the terms of the trust to the extent the power is exercisable while 23 the person is not serving as a trustee. The term includes a power over the 24 investment, management, or distribution of trust property or other matters 25 of trust administration. The term excludes the powers described in section 26 5(b), and amendments thereto. 27 (6) "Settlor" means a person, including a testator, that creates, or 28 contributes property to, a trust. If more than one person creates or 29 contributes property to a trust, each person is a settlor of the portion of the 30 trust property attributable to that person's contribution except to the extent 31 another person has the power to revoke or withdraw that portion. 32 (7) "State" means a state of the United States, the District of 33 Columbia, Puerto Rico, the United States Virgin Islands, or any other 34 territory or possession subject to the jurisdiction of the United States. 35 (8) "Terms of a trust" means: 36 (A) Except as otherwise provided in subsection (8)(B), the SB 141 2 1 manifestation of the settlor's intent regarding a trust's provisions as: 2 (i) Expressed in the trust instrument; or 3 (ii) established by other evidence that would be admissible in a 4 judicial proceeding; or 5 (B) the trust's provisions as established, determined, or amended by: 6 (i) A trustee or trust director in accordance with applicable law; 7 (ii) court order; or 8 (iii) a nonjudicial settlement agreement under K.S.A. 58a-111, and 9 amendments thereto. 10 (9) "Trust director" means a person that is granted a power of 11 direction by the terms of a trust to the extent the power is exercisable 12 while the person is not serving as a trustee. The person is a trust director 13 whether or not the terms of the trust refer to the person as a trust director 14 and whether or not the person is a beneficiary or settlor of the trust. 15 (10) "Trustee" includes an original, additional, and successor trustee, 16 and a cotrustee. 17 New Sec. 3. (a) The Kansas uniform directed trust act applies to a 18 trust, whenever created, that has its principal place of administration in this 19 state, subject to the following rules: 20 (1) If the trust was created before July 1, 2021, this act applies only to 21 a decision or action occurring on or after July 1, 2021. 22 (2) If the principal place of administration of the trust is changed to 23 this state on or after July 1, 2021, this act applies only to a decision or 24 action occurring on or after July 1, 2021. 25 (b) Without precluding other means to establish a sufficient 26 connection with the designated jurisdiction in a directed trust, terms of the 27 trust which designate the principal place of administration of the trust are 28 valid and controlling if: 29 (1) A trustee's principal place of business is located in or a trustee is a 30 resident of the designated jurisdiction; 31 (2) a trust director's principal place of business is located in or a trust 32 director is a resident of the designated jurisdiction; or 33 (3) all or part of the administration occurs in the designated 34 jurisdiction. 35 New Sec. 4. The common law and principles of equity supplement 36 the Kansas uniform directed trust act, except to the extent modified by this 37 act or law of this state other than this act. 38 New Sec. 5. (a) In this section, "power of appointment" means a 39 power that enables a person acting in a nonfiduciary capacity to designate 40 a recipient of an ownership interest in or another power of appointment 41 over trust property. 42 (b) The Kansas uniform directed trust act does not apply to a: 43 (1) Power of appointment; SB 141 3 1 (2) power to appoint or remove a trustee or trust director; 2 (3) power of a settlor over a trust to the extent the settlor has a power 3 to revoke the trust; 4 (4) power of a beneficiary over a trust to the extent the exercise or 5 nonexercise of the power affects the beneficial interest of: 6 (A) The beneficiary; or 7 (B) another beneficiary represented by the beneficiary under K.S.A. 8 58a-301 through 58a-305, and amendments thereto, with respect to the 9 exercise or nonexercise of the power; or 10 (5) power over a trust if: 11 (A) The terms of the trust provide that the power is held in a 12 nonfiduciary capacity; and 13 (B) the power must be held in a nonfiduciary capacity to achieve the 14 settlor's tax objectives under the internal revenue code of 1986, as in effect 15 on July 1, 2021. 16 (c) Unless the terms of a trust provide otherwise, a power granted to a 17 person to designate a recipient of an ownership interest in or power of 18 appointment over trust property which is exercisable while the person is 19 not serving as a trustee is a power of appointment and not a power of 20 direction. 21 New Sec. 6. (a) Subject to section 7, and amendments thereto, the 22 terms of a trust may grant a power of direction to a trust director. 23 (b) Unless the terms of a trust provide otherwise: 24 (1) A trust director may exercise any further power appropriate to the 25 exercise or nonexercise of a power of direction granted to the director 26 under subsection (a); and 27 (2) trust directors with joint powers must act by majority decision. 28 New Sec. 7. A trust director is subject to the same rules as a trustee in 29 a like position and under similar circumstances in the exercise or 30 nonexercise of a power of direction or further power under section 6(b)(1), 31 and amendments thereto, regarding: 32 (a) A payback provision in the terms of a trust necessary to comply 33 with the reimbursement requirements of medicaid law in section 1917 of 34 the social security act, 42 U.S.C. § 1396p(d)(4)(A), as in effect on July 1, 35 2021; and 36 (b) a charitable interest in the trust, including notice regarding the 37 interest to the attorney general. 38 New Sec. 8. (a) Subject to subsection (b), with respect to a power of 39 direction or further power under section 6(b)(1), and amendments thereto: 40 (1) A trust director has the same fiduciary duty and liability in the 41 exercise or nonexercise of the power: 42 (A) If the power is held individually, as a sole trustee in a like 43 position and under similar circumstances; or SB 141 4 1 (B) if the power is held jointly with a trustee or another trust director, 2 as a cotrustee in a like position and under similar circumstances; and 3 (2) the terms of the trust may vary the director's duty or liability to 4 the same extent the terms of the trust could vary the duty or liability of a 5 trustee in a like position and under similar circumstances. 6 (b) Unless the terms of a trust provide otherwise, if a trust director is 7 licensed, certified, or otherwise authorized or permitted by law other than 8 the Kansas uniform directed trust act to provide health care in the ordinary 9 course of the director's business or practice of a profession, to the extent 10 the director acts in that capacity, the director has no duty or liability under 11 this act. 12 (c) The terms of a trust may impose a duty or liability on a trust 13 director in addition to the duties and liabilities under this section. 14 New Sec. 9. (a) Subject to subsection (b), a directed trustee shall take 15 reasonable action to comply with a trust director's exercise or nonexercise 16 of a power of direction or further power under section 6(b)(1), and 17 amendments thereto, and the trustee is not liable for the action.
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