CHAPTER 247
(SB 97)
Trust statutes revised.
ENTITLED, An Act to
revise certain miscellaneous provisions of the trust statutes.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:
Section
1.
That
§
43-3-14
be amended to read as follows:
43-3-14.
When
If
a future interest is limited to successors, heirs, issue, or children,
posthumous
children are
any posthumous child is
entitled to take in the same manner
as if living at the death
of their parent
, if the child was conceived prior to the decedent's death, was born within ten months
of the decedent's death, and survived one hundred twenty hours or more after birth
.
Section
2.
That
§
43-3-16
be amended to read as follows:
43-3-16.
A future interest, depending on the contingency of the death of any person without
successors, heirs, issue, or children, is defeated by the birth of a posthumous child of such person,
capable of taking by succession
, if the posthumous child was conceived prior to the decedent's
death, was born within ten months of the decedent's death, and survived one hundred twenty hours
or more after birth
.
Section
3.
That
§
29A-2-108
be amended to read as follows:
29A-2-108.
An individual
in gestation at a particular time
is treated as living at that time if
the
individual lives 120
the individual was conceived prior to a decedent's death, born within ten
months of a decedent's death, and survived one hundred twenty
hours or more after birth.
Section
4.
That subdivision (6) of
§
29A-1-201
be amended to read as follows:
(6)
"Child" includes an individual entitled to take as a child under this code by intestate
succession from the parent whose relationship is involved and excludes a person who
is only a stepchild, a foster child, a grandchild, or any more remote descendant.
Any
child of a deceased parent who is born after the decedent's death is considered a child
in being at the decedent's death, if the child was conceived prior to the decedent's death,
was born within ten months of the decedent's death, and survived one hundred twenty
hours or more after birth.
Section
5.
That chapter
15-2
be amended by adding thereto a NEW SECTION to read as
follows:
If
§
1-22-30 or
§
55-3-41 do not apply, absent fraud, intentional misrepresentation, or material
omission, an action to recover for breach of trust against a qualified person as defined in
§
55-3-41
or an officer, director or employee of a qualified person may be commenced only within two years
of a trustee's accounting for the period of the breach pursuant to chapter 55-3. In the case of fraud,
intentional misrepresentation or material omission, the limitation period does not commence to run
until discovery of the breach of trust.
Section
6.
That
§
55-1A-9
be amended to read as follows:
55-1A-9.
A trustee may invest and reinvest trust assets in any property or in an undivided
interest in any property, wherever located, including bonds, debentures, secured or unsecured
notes, preferred or common stock of corporations, real estate or improvements thereon or any
interest therein, oil and mineral leases or royalty or similar interests, and interests in trusts
including investment trusts and common trust funds maintained by a corporate trustee
and any
affiliated investments as defined in
§
55-1A-9
. Any such investments may be made, regardless of
any lack of diversification.
In the absence of an express prohibition in the trust instrument, the
trustee may acquire and retain securities of any open-end or closed-end management type
investment company or investment trust registered under the Federal Investment Company Act of
1940, as amended to January 1, 1993. The fact that the trustee, or an affiliate of the trustee, is
providing services to the investment company or trust as investment advisor, sponsor, broker,
distributor, custodian, transfer agent, registrar or otherwise, and receiving compensation for the
services does not preclude the trustee from investing in the securities of that investment company
or trust. The trustee shall disclose to all current income beneficiaries of the trust the rate, formula
and method of the compensation.
Section
7.
That chapter
55-1A
be amended by adding thereto a NEW SECTION to read as
follows:
(a) As used in this section:
(1) "Investment" shall mean any security as defined in
§
2(a)(1) of the Securities Act of
1933, any contract of sale of a commodity for future delivery within the meaning of
§
2(i) of the Commodity Exchange Act, or any other asset permitted for trustee accounts
pursuant to the terms of this title or by the terms of the governing instrument, including
by way of illustration and not limitation, individual portfolios of investment holdings,
shares or interests in a private investment fund (including a private investment fund
organized as a limited partnership, limited liability company, trust or other form, a
statutory or common law business trust, or a real estate investment trust), joint venture
or other general or limited partnership, or an open-end or closed-end management type
investment company or investment trust registered under the Investment Company Act
of 1940;
(2) "Affiliate" means any corporation or other entity that directly or indirectly through one
or more intermediaries controls, is controlled by or is under common control with the
trustee;
(3) Affiliated Investment" means an investment for which the trustee or an affiliate of the
trustee acts as investment adviser, sponsor, administrator, distributor, placement agent,
underwriter, broker, custodian, transfer agent, registrar or in any other capacity for
which it receives or has received a fee or commission from such investment or an
investment acquired or disposed of in a transaction for which the trustee or an affiliate
of the trustee receives or has received a fee or commission;
(4) "Fee or commission" means compensation paid to a trustee or an affiliate thereof on
account of its services to or on behalf of an investment, including by way of illustration
and not limitation, advisory fees, management fees, brokerage fees, service fees, special
performance fees, profit allocations, and expense reimbursements.
(b) In the absence of an express prohibition in the trust instrument, a trustee may purchase, sell,
hold or otherwise deal with an affiliate or an interest in an affiliated investment and, upon
satisfaction of the conditions stated in subsection (c) of this section, such trustee may receive
trustee compensation from such account at the same rate as the trustee would otherwise be entitled
to be compensated.
(c) A trustee seeking compensation pursuant to subsection (b) of this section shall disclose to
all qualified beneficiaries, as defined in
§
55-2-13, all fees, commissions, compensation or other
benefits and profits paid or to be paid by the account, or received or to be received by an affiliate
arising from such affiliated investment. The disclosure required under this subsection may be given
either in a copy of the prospectus or any other disclosure document prepared for the affiliated
investment under federal or state securities laws or in a written summary that includes all fees,
commissions, compensation or other benefits and profits received or to be received by the trustee
or any affiliate of the trustee and an explanation of the manner in which such fees, commissions,
compensation or other benefits and profits are calculated (either as a percentage of the assets
invested or by some other method). Such disclosure shall be made at least annually unless there
has been no increase in the rate at which such fees or commissions are calculated since the most
recent disclosure.
(d) A trustee that has complied with subsection (c) of this section (whether by making the
applicable disclosure or by relying on the terms of a governing instrument or court order) shall
have full authority to administer an affiliated investment (including the authority to vote proxies
thereon) without regard to the affiliation between the trustee and the investment.
Section
8.
That
§
55-2-13
be amended to read as follows:
55-2-13.
For purposes of this section, the term, qualified beneficiary, means a beneficiary who,
on the date the beneficiary's qualification is determined:
(1)
Is a distributee or permissible distributee of trust income or principal;
(2)
Would be a distributee or permissible distributee of trust income or principal if the
interests of the distributees terminated on that date; or
(3)
Would be a distributee or permissible distributee of trust income or principal if the trust
terminated on that date.
Except as otherwise provided by the terms of the trust or otherwise directed by the
grantor
settlor
at any time, within sixty days after the date the trustee of an irrevocable trust acquires
knowledge of the creation of an irrevocable trust, or upon the date the trustee acquires knowledge
that a formerly revocable trust has become irrevocable, whether by death of the
trustor
settlor
or
otherwise, the trustee shall notify the qualified beneficiaries of the trust's existence, of the identity
of the
trustor or trustors
settlor or settlors
, and of the right of the beneficiary to request a copy of
the trust instrument.
A trustee of an irrevocable trust:
(1)
Upon request of a qualified beneficiary, shall promptly furnish to the qualified
beneficiary a copy of the trust instrument;
(2)
If notification of the trust has not been accomplished pursuant to this section within
sixty days after accepting a trusteeship, shall notify the qualified beneficiaries of the
acceptance and of the trustee's name, address, and telephone number;
(3)
Shall promptly respond to a qualified beneficiary's request for information related to the
administration of the trust, unless the request is unreasonable under the circumstances.
The provisions of this section are effective for trusts created after July 1, 2002.
Section
9.
That chapter
55-2
be amended by adding thereto a NEW SECTION to read as
follows:
A trustee of a revocable trust:
(1) Subject to subdivision 3 below, shall keep the settlor reasonably informed of the trust
and its administration;
(2) Unless otherwise provided in the trust instrument, does not have a duty to inform a trust
beneficiary of the trust and its administration, other than the settlor or, if the trustor is
an incapacitated person, the trustor's designated agent;
(3) Unless otherwise provided in the trust instrument, if the trustee obtains actual
knowledge that the settlor of a revocable trust is an incapacitated person and has no
designated agent, the trustee may in its sole discretion keep each interested trust
beneficiary, who, if the settlor were then deceased, would be a current trust beneficiary,
reasonably informed of the trust and its administration. Notwithstanding the provisions
of the trust instrument, upon good cause shown, the court may order the trustee to keep
other beneficiaries reasonably informed of the trust and its administration.
Section
10.
That
§
55-4-30
be amended to read as follows:
55-4-30.
The
Subject to the final paragraph below, the
settlor of any trust affected by this
chapter may
, by
:
(1) By
provision in the instrument creating the trust if the trust was created by a writing
, or
by
;
(2) By
oral statement to the trustee at the time of the creation of the trust if the trust was
created orally
, or by
; or
(3) By
an amendment of the trust
,
if the settlor reserved the power to amend the trust,
relieve the trustee from any or all of the duties, restrictions, and liabilities which would
otherwise be imposed upon the trustee by this chapter; or alter or deny to the trustee any
or all of the privileges and powers conferred upon the trustee by this chapter; or add
duties, restrictions, liabilities, privileges, or powers, to those imposed or granted by this
chapter. However, no act of the settlor relieves a trustee from the duties, restrictions,
and liabilities imposed upon the trustee by §§ 55-4-10 to 55-4-12, inclusive.
A provision of a trust instrument relieving a trustee of liability for breach of trust is
unenforceable to the extent that it relieves the trustee of liability for breach of trust committed in
bad faith or as a result of gross negligence.
Section
11.
That
§
55-16-2
be amended to read as follows:
55-16-2.
For the purposes of this chapter, a trust instrument, is an instrument appointing a
qualified trustee for the property that is the subject of a disposition, which instrument:
(1)
Expressly incorporates the law of this state to govern the validity, construction, and
administration of the trust;
(2)
Is irrevocable, but a trust instrument may not be deemed revocable on account of its
inclusion of one or more of the following:
(a)
A transferor's power to veto a distribution from the trust;
(b)
A power of appointment, other than a power to appoint to the transferor, the
transferor's creditors, the transferor's estate, or the creditors of the transferor's
estate, exercisable by will or other written instrument of the transferor effective
only upon the transferor's death;
(c)
The transferor's potential or actual receipt of income, including rights to such
income retained in the trust instrument;
(d)
The transferor's potential or actual receipt of income or principal from a
charitable remainder unitrust or charitable remainder annuity trust as such terms
are defined in § 664 of the Internal Revenue Code of 1986, 26 U.S.C. § 664, as
of January 1, 2005;
(e)
The transferor's receipt each year of a percentage, not to exceed five percent,
specified in the trust instrument of the initial value of the trust or its value
determined from time to time pursuant to the trust instrument;
(f)
The transferor's potential or actual receipt or use of principal if such potential or
actual receipt or use of principal would be the result of a qualified trustee or
qualified trustees, including a qualified trustee or qualified trustees acting at the
direction of a trust advisor described in this section, acting either in such
qualified trustee's or qualified trustees' sole discretion or pursuant to an
ascertainable standard contained in the trust instrument;
(g)
The transferor's right to remove a trustee or trust advisor and to appoint a new
trustee or trust advisor, other than a person who is a related or subordinate party
with respect to the transferor within the meaning of § 672(c) of the Internal
Revenue Code of 1986, 26 U.S.C. § 672(c), as of January 1, 2005;
(h)
The transferor's potential or actual use of real property held under a qualified
personal residence trust within the meaning of such term as described in
§ 2702(c) of the Internal Revenue Code of 1986, 26 U.S.C. § 2702(c), as of
January 1, 2005;
(i) A pour back provision that pours back to the transferor's will or revocable trust
all or part of the trust assets;
(3)
Provides that the interest of the transferor or other beneficiary in the trust property or
the income therefrom may not be transferred, assigned, pledged, or mortgaged, whether
voluntarily or involuntarily, before the qualified trustee or qualified trustees actually
distribute the property or income therefrom to the beneficiary, and such provision of the
trust instrument shall be deemed to be a restriction on the transfer of the transferor's
beneficial interest in the trust that is enforceable under applicable nonbankruptcy law
within the meaning of § 541(c)(2) of the Bankruptcy Code, 11 U.S.C. § 541(c)(2), as
of January 1, 2005;
(4)
A disposition by a trustee that is not a qualified trustee to a trustee that is a qualified
trustee may not be treated as other than a qualified disposition solely because the trust
instrument fails to meet the requirements of subdivision (1) of this section.
Section
12.
That
§
55-16-13
be amended to read as follows:
55-16-13.
Notwithstanding any other provision of law, no action of any kind, including an
action to enforce a judgment entered by a court or other body having adjudicative authority, may
be brought at law or in equity against the trustee, or advisor described in § 55-16-4, of a trust that
is the subject of a qualified disposition, or against any person involved in the counseling, drafting,
preparation, execution, or funding of a trust that is the subject of a qualified disposition, if, as of
the date such action is brought, an action by a creditor with respect to such qualified disposition
would be barred under §§ 55-16-9 to 55-16-12, inclusive.
A court of this state has exclusive
jurisdiction over an action brought under a claim for relief that is based on a transfer of property
to a trust that is the subject of this section.
Signed March 3, 2007