Minnesota finally has a new set of trust laws; 25 years after the laws were last updated. The new bill had to pass through both houses of state legislature before it was ratified by Governor Mark Dayton. It has been dubbed “The Uniform Trust Code”.
The Uniform Trust Code was drafted (in part) by the Uniform Law Commission. This group works on laws which are not federally mandated and attempts to make them uniform across states. However, nearly all states make modifications to the ULC proposed laws before enacting them. The resulting laws are similar, but not completely identical.
A MBSA (Minnesota State Bar Association) subcommittee has spent more than four years combining Minnesota’s current trust laws with the new Uniform Code. This work has resulted in laws that make it easier to modify trusts, correct errors, successfully plan tax objectives and more.
One of the most anticipated changes in the new Trust Code is the ability to set up “directed trusts”. In a directed trust, the trustee can be assigned the role of “excluded fiduciary”. This means that he or she administers the trust and controls dividends, but has no control or responsibility for the investments. An “Investment Trust Advisor” or similar figure can be appointed to manage the trust funds. The absolute discretion over holding or selling trust investments lies with this advisor.
Finally, the trustee can grant greater authority to the advisor (or “Trust Protector”). This is especially useful in the case of irrevocable trusts. These powers can be numerous and widespread. They include things such as revising the trust position for tax purposes, modifying beneficiary interests, cancelling distributions or even terminating the trust.
Support for the Trust Code is becoming widespread. The changes and increased flexibility are expected to aid both trustees and beneficiaries. The Minnesota Society of Certified Public Accountants (MNCPA) was very pleased with the law. They wrote, “The new Trust Code brings Minnesota Trust law into the 21st century and in line with national trends.” You can look for this new code to become effective on January 1, 2016.