71st OREGON LEGISLATIVE ASSEMBLY--2001 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 580
A-Engrossed
Senate Bill 120
Ordered by the Senate February 28
Including Senate Amendments dated February 28
Printed pursuant to Senate Interim Rule 213.28 by order of the
President of the Senate in conformance with presession filing
rules, indicating neither advocacy nor opposition on the part
of the President (at the request of Joint Interim Judiciary
Committee for Estate Planning section of Oregon State Bar)
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure.
Establishes procedure for asserting claims against { +
certain + } nontestamentary trusts. Provides that certain claims
are barred if claim not presented within specified time
limitations.
A BILL FOR AN ACT
Relating to claims against nontestamentary trusts.
Be It Enacted by the People of the State of Oregon:
SECTION 1. { + General statute of limitations for claims
against certain nontestamentary trusts. (1) Claims against a
nontestamentary trust described in subsection (2) of this section
that are not presented within the time limitations established
under section 2 of this 2001 Act or within the statute of
limitations applicable to the claim, whichever is earlier, are
barred from payment from the trust estate.
(2) Sections 1 to 12 of this 2001 Act apply only if:
(a) A claim is made against assets of a trust, as defined in
ORS 128.005;
(b) The trust came into existence during the grantor's lifetime
and was revocable by the grantor at any time after the trust was
created and before the death of the grantor;
(c) The claim is based on the debts or liabilities of the
grantor; and
(d) The claim is made against the assets of the trust after the
death of the grantor.
(3) Sections 1 to 12 of this 2001 Act apply to all claims
against a nontestamentary trust described in subsection (2) of
this section, without regard to whether the claims are
contingent, unliquidated or not yet due. + }
SECTION 2. { + Limitation on presentation of claims when
notice to claimants given. Not later than four months after the
death of a grantor of a nontestamentary trust described in
section 1 (2) of this 2001 Act, the trustee of the trust may give
notice to persons with claims against the trust estate in the
manner provided by sections 1 to 12 of this 2001 Act. All claims
against the trust estate are barred unless those claims are
submitted before the later of:
(1) Four months after the date of first publication of notice
to claimants in the manner provided by section 3 of this 2001
Act; or
(2) If the trustee delivers or mails a notice to a claimant
under section 4 of this 2001 Act, 30 days after a notice meeting
the requirements of section 4 of this 2001 Act is delivered or
mailed to the last-known address of the person having or
asserting the claim. + }
SECTION 3. { + Publication of notice. A trustee that wishes to
give notice to claimants under sections 1 to 12 of this 2001 Act
must cause a notice to claimants to be published once in each of
three consecutive weeks in a newspaper published in the county in
which the grantor resided immediately before death. The notice
must include:
(1) The name of the grantor;
(2) The name of the trustee and the address at which claims
must be presented;
(3) The date of the first publication of the notice; and
(4) A statement that claims against the estate may be barred
unless presented to the trustee at the address specified in the
notice within four months after the date of the first publication
of the notice. + }
SECTION 4. { + Notice to individual claimants. (1) A trustee
that wishes to give notice to claimants under sections 1 to 12 of
this 2001 Act must make reasonably diligent efforts to
investigate the financial records and affairs of the grantor and
to take such further actions as are reasonably necessary to
ascertain the identity and address of each person who has or
asserts a claim against the trust estate. The trustee must
thereafter cause to be delivered or mailed a notice containing
the information required in subsection (2) of this section to
each person known by the trustee to have or to assert a claim
against the estate and to the Estate Administration Unit of the
Senior and Disabled Services Division of the Department of Human
Services. Notice under this section is not required for any claim
that has already been presented, accepted or paid in full or on
account of a claim that is merely conjectural.
(2) The notice required by this section must include:
(a) The name and Social Security number of the grantor;
(b) The name of the trustee and the address at which claims
must be presented;
(c) A statement that claims against the trust estate that are
not presented to the trustee within 30 days after the date of the
notice may be barred; and
(d) The date of the notice, which shall be the date on which
the notice is delivered or mailed. + }
SECTION 5. { + Form of claim; evidence in support. (1) A claim
presented under sections 1 to 12 of this 2001 Act must:
(a) Be in writing.
(b) Describe the nature and the amount of the claim, if
ascertainable.
(c) State the name and address of the claimant and any attorney
for the claimant.
(2) A defect of form of a claim timely presented may be waived
by the trustee or by the court.
(3) Upon demand of a trustee, a claimant must produce any
written evidence supporting a claim made under sections 1 to 12
of this 2001 Act and account for any written evidence supporting
a claim that is not produced. + }
SECTION 6. { + Claim based on debt due or judgment. + } { +
(1) If a claim on a debt due is presented and allowed, allowance
shall be in the amount of the debt remaining unpaid on the date
of allowance.
(2) If a judgment was entered on a claim prior to the death of
the grantor, the claim shall be presented under sections 1 to 12
of this 2001 Act in the same manner as if no judgment had been
entered, and a copy of the judgment shall be attached to the
claim. The claim may be disallowed only if the judgment was void
or voidable, or if the judgment could have been set aside on the
date of the grantor's death, or if the claim is not presented
within the time required by section 1 of this 2001 Act. If the
judgment was a lien against the property of the estate on the
date of the grantor's death, the judgment shall be treated as a
claim on a debt due for which the creditor holds security. In all
other respects, a claim that has been reduced to judgment shall
have the same priority under section 10 of this 2001 Act as a
claim that has not been reduced to judgment. + }
SECTION 7. { + Claim on debts not yet due. A claim on a debt
not due, whether or not the creditor holds security for the
claim, may be presented under sections 1 to 12 of this 2001 Act
as a claim on a debt due. If the claim is allowed, allowance
shall be in an amount equal to the value of the debt on the date
of allowance. The creditor, after allowance of the claim, may
withdraw the claim without prejudice to other remedies. Payment
on the basis of the amount allowed discharges the debt and the
security, if any, held by the creditor for the claim. + }
SECTION 7a. { + Claim on secured debt that is due. (1) A claim
on a debt due for which the creditor holds security may be
presented under sections 1 to 12 of this 2001 Act as a claim on
an unsecured debt due, or the creditor may elect to rely entirely
on the security without presentation of the claim.
(2) If the claim is presented under this section, the claim
shall describe the security. If the security is an encumbrance
that is recorded, the encumbrance may be described by reference
to the book, page, date and place of recording.
(3) If a claim is presented and allowed under this section,
payment shall be on the basis of the amount of the debt remaining
unpaid on the date that the claim is allowed.
(4) If the creditor surrenders the security for a claim
presented and allowed under this section, payment shall be on the
basis of the amount allowed.
(5)(a) If the creditor does not surrender the security for a
claim presented and allowed under this section, and the creditor
exhausts the security before receiving payment on the claim,
payment shall be on the basis of the amount allowed less the
amount realized on exhausting the security unless otherwise
provided by law.
(b) If the creditor does not surrender the security for a claim
presented and allowed under this section, and the creditor does
not exhaust the security before receiving payment or does not
have the right to exhaust the security, payment shall be on the
basis of the amount allowed less the value of the security
determined by agreement or as the court may order.
(6) The trustee may convey the secured property to the creditor
in consideration of the satisfaction or partial satisfaction of
the claim. + }
SECTION 8. { + Claim on contingent or unliquidated debt. (1) A
claim on a contingent or unliquidated debt shall be presented
under sections 1 to 12 of this 2001 Act in the same manner as
other claims. If the debt becomes absolute or liquidated before
distribution of the estate, the claim shall be paid in the same
manner as a claim on an absolute or liquidated debt.
(2) If a contingent or unliquidated debt does not become
absolute or liquidated before distribution of the estate, the
trustee may provide for payment of the claim by any of the
following methods:
(a) The creditor and trustee may determine, by agreement,
arbitration or compromise, the value of the debt and the claim
may be allowed and paid in the same manner as a claim on an
absolute or liquidated debt.
(b) The trustee may distribute the trust estate, but retain
sufficient funds to pay the claim if and when the debt becomes
absolute or liquidated. Distribution of trust assets may not be
delayed under this paragraph for more than two years after
distribution would otherwise be required by the terms of the
trust. If the debt does not become absolute or liquidated within
that time, the funds retained, after payment therefrom of any
expenses accruing during that time, shall be distributed to the
beneficiaries.
(3) A court may order the trustee to make distribution of the
estate as though the claim did not exist.
(4) If after distribution under subsection (2)(b) or (3) of
this section the debt becomes absolute or liquidated, the
beneficiaries are liable to the creditor to the extent of the
trust estate received by them. Payment of the debt may be
arranged by creating a trust, giving a mortgage, securing a bond
from a distributee or by other method. + }
SECTION 9. { + Allowance and disallowance of claims. + }
{ + (1) The trustee may compromise a claim against the trust
estate.
(2) A claim presented to a trustee under sections 1 to 12 of
this 2001 Act shall be considered allowed as presented unless
within 60 days after the date of presentment of the claim the
trustee mails or delivers a notice of disallowance of the claim
in whole or in part to the claimant and to the attorney of the
claimant if the claimant has an attorney.
(3) A notice of disallowance of a claim shall inform the
claimant that the claim has been disallowed in whole or in part
and, to the extent disallowed, will be barred unless the claimant
requests a summary determination or brings an action in the
manner provided by subsection (4) of this section.
(4) If a trustee disallows a claim submitted under sections 1
to 12 of this 2001 Act in whole or in part, the claimant, within
30 days after the date of mailing or delivery of the notice of
disallowance, may:
(a) File a request for summary determination of the claim in
the probate court, with proof of service of a copy of the request
upon the trustee or the attorney of the trustee; or
(b) Commence a separate action against the trustee on the claim
in the circuit court.
(5) If the claimant fails either to request a summary
determination or commence a separate action as provided in
subsection (4) of this section, the claim is barred to the extent
the claim has been disallowed by the trustee.
(6) If a claimant prevails in a proceeding or action under
subsection (4) of this section, the claim shall be allowed or
judgment entered in the full amount determined to be due to the
claimant. The claim or judgment shall be paid from the assets of
the trust estate only to the extent that funds are available
after payment of other claims with higher priority under section
10 of this 2001 Act.
(7) If the claimant files a request for summary determination
of a claim under subsection (4) of this section, the trustee may
notify the claimant in writing that the claimant must commence a
separate action against the trustee on the claim within 60 days
after the claimant receives the notice. Notice under this
subsection must be given by the trustee within 30 days after the
request for summary determination is served on the trustee or the
attorney of the trustee. If the claimant fails to commence a
separate action within the time allowed, the claim is barred to
the extent the claim has been disallowed by the trustee.
(8) In a proceeding for summary determination under this
section:
(a) The trustee shall make response to the claim as though the
claim were a complaint filed in an action.
(b) The court shall hear the matter without a jury, after
notice to the claimant and trustee. The court shall determine the
claim in a summary manner, and shall make an order allowing or
disallowing the claim in whole or in part.
(c) No appeal may be taken from the order of the court made in
a proceeding for summary determination under this section.
(9) If a civil action is commenced under subsection (4) of this
section, a trustee, or beneficiary as defined by ORS 128.135, may
petition the court to approve a proposed disposition of claims or
to provide instructions on the treatment of claims. + }
SECTION 9a. { + Creditor may obtain order for payment. + }
{ + A creditor whose claim has been allowed or established by
summary determination or separate action, and who has not
received payment within six months after the date of the first
publication of notice to interested persons, may apply to the
court for an order directing the trustee to pay the claim. The
trustee may recover amounts owing under the claim from any
beneficiary who received a distribution from the trust estate.
The right of recovery is limited to the extent the beneficiary's
distribution would have been reduced by timely payment of all
allowed or established claims. + }
SECTION 9b. { + Evidence required to allow court approval of
claim disallowed by trustee. A claim that has been disallowed by
a trustee under sections 1 to 12 of this 2001 Act may not be
allowed by any court except upon some competent, satisfactory
evidence other than the testimony of the claimant. + }
SECTION 9c. { + Waiver of statute of limitations. A claim
subject to sections 1 to 12 of this 2001 Act that is barred by a
statute of limitations may not be allowed by the trustee or by
any court except upon the written direction or consent of those
interested persons who would be adversely affected by allowance
of the claim. + }
SECTION 9d. { + Tolling of statute of limitations on claim. If
a claim is not barred by the statute of limitations on the date
of death of the grantor, the claim is not barred by any statute
of limitations until at least one year after the date of
death. + }
SECTION 10. { + Priority of claims. (1) Claims allowed against
the trust estate under sections 1 to 12 of this 2001 Act must be
paid by the trustee in the following order of priority:
(a) Expenses of administering the trust estate.
(b) Expenses of a plain and decent funeral and disposition of
the remains of the grantor.
(c) Debts and taxes with preference under federal law.
(d) Reasonable and necessary medical and hospital expenses of
the last illness of the grantor, including compensation of
persons attending the grantor.
(e) Taxes with preference under the laws of this state that are
due and payable while possession of the trust estate of the
grantor is retained by the trustee.
(f) Debts owed employees of the grantor for labor performed
within 90 days immediately preceding the date of death of the
grantor.
(g) Child support arrearages.
(h) A claim of the Adult and Family Services Division for the
net amount of public assistance, as defined in ORS 411.010, paid
to or for the grantor, and the claim of the Mental Health and
Developmental Disability Services Division for care and
maintenance of any grantor who was at a state institution to the
extent provided in ORS 179.610 to 179.770.
(i) All other claims against the trust estate.
(2) If the assets of the trust estate are insufficient to pay
in full all expenses or claims of any one class specified in
subsection (1) of this section, each expense or claim of that
class shall be paid only in proportion to the amount thereof. + }
SECTION 11. { + Applicability of time limitations to public
bodies. Notwithstanding ORS 12.250, all statutes of limitations
and other time limitations imposed under sections 1 to 12 of this
2001 Act apply to actions brought in the name of the state, or
brought in the name of any county or public corporation, and to
actions brought for the benefit of the state or for the benefit
of any county or public corporation. + }
SECTION 12. { + Applicability of time limitations to certain
claims based on liens against property and liability of grantor
or trustee. The statutes of limitations and time limitations
provided by sections 1 to 12 of this 2001 Act do not affect:
(1) Any proceeding to enforce a mortgage, pledge or other lien
upon property of the estate;
(2) Any proceeding to quiet title or reform any instrument with
respect to title to property; or
(3) To the limits of the insurance protection only, any
proceeding to establish liability of the grantor or the trustee
for which the grantor or trustee is protected by liability
insurance at the time the proceeding is commenced. + }
SECTION 13. { + Section 14 of this 2001 Act is added to and
made a part of ORS chapter 115. + }
SECTION 14. { + The provisions of this chapter do not apply to
claims against nontestamentary trusts that are subject to the
provisions of sections 1 to 12 of this 2001 Act. + }
SECTION 15. { + Sections 1 and 14 of this 2001 Act apply only
to claims against estates that arise on or after the effective
date of this 2001 Act. + }
SECTION 16. { + The section captions used in this 2001 Act are
provided only for the convenience of the reader and do not become
part of the statutory law of this state or express any
legislative intent in the enactment of this 2001 Act. + }
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