• Abstract and Figures
• Public Full-text

Probate and Trust Law Section Newsletter Published by the Section on Probate and Trust Law of the Philadelphia Bar Association OCTOBER 2016 | NO. 143 IN THIS ISSUE REPORT OF THE CHAIR 03 Jewel Inside the New BY AARON H. FOX, ESQUIRE | PENNSYLVANIA TRUST Jersey Uniform Trust Code As I sat down to write my final Committee and eventually was column for our quarterly newsletter, asked to start the officer rotation. 06 Lessons from Prince’s Lack I got to thinking how a person of a Will In the eighteen years between that who had a long history of never first meeting in 1998 and now, I 09 Tax Update volunteering for anything ended up have had the good fortune to meet as Chair of a Bar Association section 12 Case Summaries from the and work with terrific people and with 500+ lawyers. The journey Orphans’ Court Litigation have been exposed to countless actually began in a conference Committee experiences that never would have room at 1650 Market Street when happened but for my involvement my then-boss, Dave Schwartz, asked with the Bar Association. I recall if any of the young lawyers in the waiting in line to get a drink at the room would like to accompany annual meeting last December, him to an Education Committee and realizing that I could name just meeting he was going to attend about every person at the meeting. later that afternoon. True to form, I remained silent. That, however, In the last few years, the Officers NEWSLETTER didn’t stop Dave from singling me and Executive Committee have ARTICLES out and gently “suggesting” I tag made a conscious effort to bring in Would you like to see something along. new people and get them engaged in future issues of the Probate in the activities of the Section. As a member of that Committee, and Trust Law Section Having gone through the process my recollection is that I spoke up Newsletter? Then, why don’t you myself and knowing what an honor perhaps twice in the first four years write it? If you are interested, it has been to serve, I know that (the first occasion may have been please contact the Editor: all of these new folks will find the when role was taken.) Basically, experience to be as rewarding as Heike K. Sullivan I was just trying not to embarrass I have found it. I look forward to email: sullivanh@ballardspahr. myself or my employer; sounding seeing how these dedicated new com smart was a benchmark that members continue to change and seemed too ambitious. But as the improve the Section as it evolves in old adage goes, just showing up the years to come. is half the battle, and before too long I found myself chairing the 1 Probate and Trust Law Section Newsletter | NO. 143 Probate and Trust Law Section Newsletter | NO. 143 2 JEWEL INSIDE THE NEW JERSEY UNIFORM TRUST CODE BY GLENN A. HENKEL, ESQUIRE | KULZER & DIPADOVA, P.A. On January 19, 2016, Governor the New Jersey Banker’s Association be an appropriate or likely fit with Chris Christie signed Assembly Bill for consideration. The Bankers’ New Jersey law. 2915/Senate Bill 2035 known as the lobbyists turned to their constituency New Jersey Uniform Trust Code, to see whether the bankers should The second provision in the revision Public Laws 2015, Chapter 276. This support this project or not. The of the Delaware UTC law did massive bill includes 82 provisions bankers requested that the Bar seem particularly appropriate in dealing with a codification of make New Jersey’s trust law “more New Jersey. The concept of “a the New Jersey trust rules. In like Delaware.” Like the corporate directed trust” is a movement New Jersey, trust law has been arena, Delaware trust law has which seemed to be catch and developed over 150 years and, thus, always been viewed as progressive hold. If a settlor creates a trust the need for a trust code in New and pro management. The ad hoc and wants to provide for specific Jersey was not as prevalent as other committee considered this request terms to bifurcate responsibility for jurisdictions where there were only and focused on two particular a particular asset between two a few trust cases ever decided. In aspects to Delaware law that could “fiduciaries,” New Jersey law has New Jersey, our population has have been considered. always followed the “probable been making challenges and intent” of the Testator. This was such litigating various issues related to The first is the concept of a well settled case law that it was trusts for a long time and, as such, “qualified domestic trust,” which is a codified in 2004. See N.J.S.A. 3B:3- the case law is extensive. provision in the trust law authorizing 33.1; Fidelity Union Trust Company an individual to create a “self- v. Robert, 36 N.J. 561 (1962); Engle The New Jersey Uniform Trust settled” “spendthrift” trust. In other v. Siegel, 74 N.J. 287 (1977); in Re Code (“NJUTC”) was the project words, in some foreign jurisdictions Estate of Branigan, 129 N.J. 324 of an ad hoc committee of trust an individual could transfer assets (1992). Since 1986, Delaware has and estates lawyers in the New to a trust for his or her benefit and had a statute which gave the Jersey Bar Association who tried after a period of time and assuming trustee (usually a corporate trustee) to adapt the Uniform Trust Code the transfer was not a “fraudulent the ability to take direction from (“UTC”) to be consistent with New conveyance,” the trust assets would another individual serving as an Jersey’s common law. This article be outside the reach of the settlor’s investment advisor. Typically, this is not about the NJUTC, per se, but creditors. This is the opposite of a will allow for a lower fee for a trust instead, about a provision included long standing New Jersey statute that holds a “difficult asset,” such in the NJUTC involving the concept N.J.S.A. 3B:11-1 and likely against as a residence or business. This, the of a “directed trust.” public policy. While Delaware, ad hoc committee felt, would be Alaska and about 10 other states an appropriate mechanism for New The NJUTC was a product of have enacted this “qualified Jersey law because of the probable the New Jersey Bar Association, domestic” trust legislation to provide intent doctrine. principally the Real Property. In benefits to individuals who will many of the other roughly 30 states want to set aside a family nest In the legislative process it was that have enacted versions of the egg and protect it from the reach proposed that the bankers would UTC, bankers were a significant of creditors, based upon the New support the NJUTC if the Bar moving force. In order to engender Jersey statute cited above as well Association would support the support within the legislature for the common law, this did not appear to directed trust statute. This was provisions, the Bar reached out to accomplished and the directed trust continued on page 4 Probate and Trust Law Section Newsletter | NO. 143 3 UNIFORM TRUST CODE, CONTINUED statute now gives greater authority responsible for taking administrative If an investment advisor is named to New Jersey clients to include steps to review the activities of the in a document as an investment provisions that authorize a trustee investment advisor and the directed advisor, be wary that that individual to direct investment functions to trustee has no duty to monitor the will continue to have fiduciary another individual. conduct of the investment advisor duties as related to that investment. or provide advice to the investment This can be problematic if the The NJUTC included a provision advisor or communicate or apprise investment is a business interest or which generally authorized direction beneficiaries with respect to the vacation home. However, typically, in similar circumstances. This directed investment. the individual serving as investment provision is now codified in N.J.S.A. advisor will be closer to the family 3B:31-61, whereby a trust can confer Why would a directed trust provision and will be aware of the goals and upon another trustee the ability to be helpful? In some circumstances, objectives of the family maintaining let a trustee follow the direction when an individual wants to utilize that asset. of a third party. This power under a corporate fiduciary, there could N.J.S.A. 3B:31-61(c) can be even as be a concern on the part of the In sum, the enactment of the broad as the power to direct the corporate fiduciary to the underlying New Jersey directed trust statute modification or termination of the assets that are particular to the in N.J.S.A. 3B: 31-62 is a welcome trust. However, the bill annexed an family. Often, a family business or addition to New Jersey’s trust law additional provision called “powers vacation residence will constitute for those critics of this provision who to direct investment functions” a part of the corpus of the trust feel that it can result to a bad result, which is very similar to the Delaware by having a third party investment simply draft away from its use. directed trust statute contained in advisor responsible for this particular 12 Del. Code § 3313. See N.J.S.A asset, a corporate fiduciary can 38:31-62. accept a trusteeship without the JOIN A COMMITTEE obligation to diversify.

Load more

  15

Copy Link