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Morris Nichols' Delaware Trust Law Companion 2012

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Morris Nichols' Delaware Trust Law Companion 2012 MORRIS NICHOLS’ DELAWARE TRUST LAW COMPANION 2012 - 2013 Courtesy of the Trusts, Estates & Tax Group Morris, Nichols, Arsht & Tunnell LLP Copyright © 2013 Morris, Nichols, Arsht & Tunnell LLP Preface to Morris Nichols’ Delaware Trust Law Companion / 2012-2013 Morris Nichols’ Delaware Trust Law Companion / 2012-2013 returns completely updated and is completely up-to-date. The Companion compiles select publicly available materials that, in our experience, have proven to be the most useful to practicing Delaware trust law. Such information has not previously been assembled and made available in a single, convenient and portable resource. We hope that you will find the Companion to be useful when you have issues or matters involving Delaware trust law. Materials Selected (i) Title 12: Chapters 33, 35 (Subchapters I-VII), 38 (Subchapters I- II), Chapter 61 (Subchapters I-VI); (ii) Title 25: Chapter 5; (iii) Title 30: Chapter 16 (Subchapters I, III); (iv) Amendments to Court of Chancery Rules, Section XXII, Rules 100, 101, 102, and 103 (4/12/12); (v) Amendments to Court of Chancery Rules, Section XII, Rules 101 and Rules 104 (10/31/12). How to Use The Companion is divided into eighteen sections identified (and abbreviated) by Chapter and Subsection. Printed on the back of the Companion and page edges are coded tabs that correspond to and will help you easily access these sections. A complete listing of all materials by page number is provided in The Table of Contents. TABLE OF CONTENTS MORRIS NICHOLS’ DELAWARE TRUST LAW COMPANION / 2012-2013 TABLE OF CONTENTS TITLE 12 DECEDENTS’ ESTATES AND FIDUCIARY RELATIONS.…………………………………2 CHAPTER 33. ADMINISTRATIVE PROVISIONS: § 3301 - § 3335..……………………………………………………………………………………3 CHAPTER 35. TRUSTS § 3501 - § 3510 Subchapter I. Appointment of Trustee by Court; Title of Appointee to Trust Property ……………………………………………37 § 3521 - § 3528 Subchapter II. Accounting and Distribution of Trust Funds..……43 § 3531 - § 3549 Subchapter III. General Provisions……………………………………49 § 3551 - § 3556 Subchapter IV. Trusts for Cemeteries and Other Noncharitable Purposes..…………………………………………………………………67 § 3560 - § 3562 Subchapter V. Compensation of Trustees..…………………………73 § 3570 - § 3576 Subchapter VI. Qualified Dispositions in rustT ..……………………77 § 3580 - § 3595 Subchapter VII. Liability of Trustees and Rights of Persons Dealing With Trustee......................................................................... 89 CHAPTER 38. TREATMENT OF DELAWARE STATUTORY TRUSTS § 3801 - § 3826 Subchapter I. Domestic Statutory Trusts ..................................... 98 § 3851 - § 3863 Subchapter II. Foreign Statutory Trusts ........................................140 CHAPTER 61. DELAWARE UNIFORM PRINCIPAL AND INCOME ACT § 61-101 - § 61-107 Subchapter I. Definitions and General Principles .................153 § 61-201 - § 61-202 Subchapter II. Decedent’s Estate or Terminating Income Interest ......................................................................................... 169 § 61-301 - § 61-303 Subchapter III. Apportionment at Beginning and End of Income Interest ........................................................................... 173 § 61-401 - § 61-415 Subchapter IV. Allocation of Receipts During Administration of Trust .............................................................. 177 § 61-501 - § 61-506 Subchapter V. Allocation of Disbursements During Administration of Trust ............................................................... 189 § 61-601 - § 61-605 Subchapter VI. Miscellaneous Provisions .............................. 195 TABLE OF CONTENTS MORRIS NICHOLS’ DELAWARE TRUST LAW COMPANION / 2012-2013 TITLE 25 PROPERTY: GENERAL PROVISIONS .................................................................198 CHAPTER 5. RULE AGAINST PERPETUITIES; POWERS OF APPOINTMENT; RULE AGAINST ACCUMULATIONS § 501 - § 506.......………………………………………………………………………199 TITLE 30 STATE TAXES, INCOME, INHERITANCE AND ESTATE TAXES.........................204 CHAPTER 16. PASS-THROUGH ENTITIES, ESTATES AND TRUSTS § 1605 Subchapter I. In General……………………………………………………205 § 1631- § 1640 Subchapter III. Taxation of Estates, Trusts and Their Beneficiaries .................................................... 209 IN RE: AMENDMENTS TO COURT OF CHANCERY RULES, SECTION XXII, RULES 100, 101, 102, AND 103 (4/12/12) ............................................................................. 217 IN RE: AMENDMENTS TO COURT OF CHANCERY RULES, SECTION XII, RULES 101 AND 104 (10/31/12) ............................................................................................ 222 CONTACT INFORMATION ..................................................................................................... 226 MORRIS NICHOLS’ DELAWARE TRUST LAW COMPANION 2012 - 2013 Courtesy of the Trusts, Estates & Tax Group Morris, Nichols, Arsht & Tunnell LLP Copyright © 2013 Morris, Nichols, Arsht & Tunnell LLP 33 Administrative Provisions Title 12 Decedents’ Estates and Fiduciary Relations: Fiduciary Relations § 3301. Application of chapter; definitions. ����������������������������������������������������������������������������������3 § 3302. Degree of care; authorized investments. ������������������������������������������������������������������������4 § 3303. Effect of provisions of instrument. ����������������������������������������������������������������������������������6 § 3304. Retention by fiduciary of decedent’s or settlor’s investments..……………………………7 § 3305. Retention by bank or trust company acting as a fiduciary of its own stock...……………8 § 3306. Deviation from terms of instrument. ��������������������������������������������������������������������������������8 § 3307. Common fund investments by bank or trust company; regulations.............................…8 § 3308. Power of bank or trust company acting as a fiduciary to purchase property held by its commercial or banking department.…………………………………………………10 § 3309. Identification of securities.……………………………………………………………………11 § 3310. Storage of securities. ����������������������������������������������������������������������������������������������������11 § 3311. Deposit of securities in clearing corporation. ����������������������������������������������������������������11 § 3312. Investments in affiliated investments; transactions with affiliates.………………………12 § 3313. Advisers. �����������������������������������������������������������������������������������������������������������������������13 § 3314. Limitation on certain fiduciary powers. �������������������������������������������������������������������������15 § 3315. Trustee’s exercise of discretion; review by court; discretionary interests………………18 § 3316. Substituted property; equivalent value; fiduciary duty.……………………………………18 § 3317. Co-fiduciaries; duty to keep informed....……………………………………………………18 §§ 3318-3320. [Reserved.] ��������������������������������������������������������������������������������������������������������19 § 3321. Applicability of chapter; definitions. �������������������������������������������������������������������������������19 § 3322. Fiduciary agency contracts; delegation. �����������������������������������������������������������������������19 § 3323. Cofiduciaries..................................................................................................................20 § 3324. General powers of trustee.............................................................................................20 § 3325. Specific powers of trustee.............................................................................................21 § 3326. Resignation of trustee....................................................................................................25 § 3327. Removal of trustee........................................................................................................26 § 3328. Limitation on personal liability of fiduciary. �������������������������������������������������������������������26 § 3329. Effect of no-contest provision. ��������������������������������������������������������������������������������������27 § 3330. Effect of survivorship requirement. �������������������������������������������������������������������������������28 § 3331. Preference for early vesting. �����������������������������������������������������������������������������������������28 § 3332. Governing law; change of situs. �����������������������������������������������������������������������������������28 § 3333. Retention of counsel by fiduciary. ���������������������������������������������������������������������������������28 § 3334. Contributions to revocable trusts.. ��������������������������������������������������������������������������������29 § 3335. Effect of formula clauses in certain wills and trusts �����������������������������������������������������29 Page 2 TITLE 12 § 3301–3335 MORRIS NICHOLS’ DELAWARE TRUST LAW COMPANION / 2012-2013 33 § 3301. Application of chapter; definitions. (a) This chapter shall govern fiduciaries, as well as agents in certain instances, now or hereafter acting under governing instruments. (b) The term “agents” shall mean custodians (other than those acting under the Uniform Transfers to Minors Act, Chapter 45 of this title), escrow agents, managing agents and other persons holding, other than in the capacity of a fiduciary as defined in this section, property belonging to another person whether that other person is a fiduciary or a nonfiduciary. (c) The term “clearing
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