Chapter 515
AN ACT
SB 693
Relating to trustees; creating new
provisions; and amending ORS 130.205, 130.655 and 130.725.
Be It Enacted by the People of
the State of
SECTION 1. ORS 130.205 is amended to read:
130.205. (1) The court may modify the administrative or dispositive terms
of a trust or terminate the trust if modification or termination will further
the purposes of the trust and the modification or termination is requested by
reason of circumstances not anticipated by the settlor. To the extent
practicable, the modification must be made in accordance with the settlor’s
probable intention.
(2) The court may modify
the administrative terms of a trust if continuation of the trust on its
existing terms would be impracticable or wasteful, or would impair the trust’s
administration.
(3) A trustee may
terminate a trust if:
(a) Termination is
appropriate by reason of circumstances not anticipated by the settlor;
(b) Termination will not
be inconsistent with the material purposes of the trust;
(c) All qualified
beneficiaries have consented to the termination;
(d) The trustee is not a
beneficiary of the trust and has no duty of support for any beneficiary of the
trust; and
(e) In the case of a
charitable trust, the Attorney General has consented to the termination, or
contingencies have made the charitable interest negligible.
[(3)] (4) Upon termination of a
trust under this section, the trustee shall distribute the trust property in a
manner consistent with the purposes of the trust.
SECTION 2. ORS 130.655 is amended to read:
130.655. (1) A trustee
shall administer the trust solely in the interests of the beneficiaries.
(2) Subject to the
rights of persons dealing with or assisting the trustee as provided in ORS
130.855, a sale, encumbrance or other transaction involving the investment or
management of trust property entered into by the trustee for the trustee’s own
personal account or that is otherwise affected by a conflict between the
trustee’s fiduciary and personal interests is voidable by a beneficiary
affected by the transaction unless:
(a) The transaction was
authorized by the terms of the trust;
(b) The transaction was
approved by a court;
(c) The beneficiary did
not commence a judicial proceeding within the time allowed by ORS 130.820;
(d) The beneficiary
consented to the trustee’s conduct, ratified the transaction or released the
trustee in the manner provided by ORS 130.840; or
(e) The transaction
involves a contract entered into or claim acquired by the trustee before the
person became or contemplated becoming trustee.
(3) A sale, encumbrance
or other transaction involving the investment or management of trust property
is presumed to be affected by a conflict between the personal and fiduciary
interests of the trustee if it is entered into by the trustee with:
(a) The trustee’s
spouse;
(b) The trustee’s
descendants, siblings or parents, or their spouses;
(c) An agent or attorney
of the trustee; or
(d) A corporation or
other person or enterprise in which the trustee, or a person that owns a
significant interest in the trustee, has an interest that might affect the
trustee’s best judgment.
(4) Unless a trustee can
establish that the transaction was fair to the beneficiary, a transaction
between a trustee and a beneficiary that does not concern trust property but
from which the trustee obtains an advantage is voidable by the beneficiary if
the transaction occurs during the existence of the trust or while the trustee
retains significant influence over the beneficiary.
(5) A transaction not
concerning trust property in which the trustee engages in the trustee’s
individual capacity involves a conflict between personal and fiduciary
interests if the transaction concerns an opportunity properly belonging to the trust.
(6) An investment by a
trustee in securities of an investment company or an investment trust to which
the trustee, or an affiliate of the trustee, provides services in a capacity
other than as trustee is not presumed to be affected by a conflict between
personal and fiduciary interests if the investment otherwise complies with the
prudent investor rule of ORS 130.750 to 130.775. In addition to compensation
for acting as trustee, the trustee may be compensated by the investment company
or investment trust for providing those services out of fees charged to the
trust. If the trustee receives compensation from the investment
company or investment trust for providing investment advisory or
investment management services, the trustee at least annually shall give notice
of the rate and method by which that compensation was determined to the persons
entitled under ORS 130.710 to receive a copy of the trustee’s annual report.
(7) In voting shares of
stock of a corporation or in exercising powers of control over similar
interests in other forms of business entities, the trustee shall act in the
best interests of the beneficiaries. If the trust is the sole owner of a
corporation or other form of business entity, the trustee shall elect or
appoint directors or other managers who will manage the corporation or entity
in the best interests of the beneficiaries.
(8) This section does
not preclude the following transactions, if fair to the beneficiaries:
(a) An agreement between
a trustee and a beneficiary relating to the appointment or compensation of the
trustee;
(b) Payment of
reasonable compensation to the trustee;
(c) A transaction
between a trust and another trust, decedent’s estate, custodianship or
conservatorship of which the trustee is a fiduciary or in which a beneficiary
has an interest;
(d) A deposit of trust
money in a financial institution operated by the trustee; [or]
(e) An advance by the
trustee of money for the protection of the trust;
(f) An advance by the
trustee of money to the trust for the payment of expenses, losses or
liabilities sustained by the trustee in the administration of the trust or by
reason of owning or possessing any trust assets; or
(g) A loan to the
trustee for the protection of the trust, or for the payment of expenses, losses
or liabilities sustained by the trustee in the administration of the trust or
by reason of owning or possessing any trust assets. A loan under this paragraph
may be from a lender operated by, or affiliated with, the trustee.
(9) The court may appoint
a special fiduciary to make a decision with respect to any proposed transaction
that might violate this section if entered into by the trustee.
SECTION 3. ORS 130.725 is amended to read:
130.725. Without
limiting the authority conferred by ORS 130.720, a trustee may do any of the
following:
(1) Collect trust
property and accept or reject additions to the trust property from a settlor or
any other person.
(2) Acquire or sell
property, for cash or on credit, at public or private sale.
(3) Exchange, partition
or otherwise change the character of trust property.
(4) Deposit trust money
in an account in a financial institution, including a financial institution
operated by the trustee, if the deposit is adequately insured or secured.
(5) Borrow money, with
or without security, to be repaid from trust assets or otherwise,
and advance money for the protection of the trust and for all expenses, losses
and liabilities sustained in the administration of the trust or because of the
holding or ownership of any trust assets. Money may be borrowed under this
subsection from any lender, including a financial institution operated by or
affiliated with the trustee. A trustee is entitled to be reimbursed out of
the trust property or from property that has been distributed from the trust,
with reasonable interest, for an advance of money under this subsection.
(6) Continue operation
of any proprietorship, partnership, limited liability company, business trust,
corporation or other form of business or enterprise in which the trust has an
interest, and take any action that may be taken by shareholders, members or
property owners, including merging, dissolving or otherwise changing the form
of business organization or contributing additional capital.
(7) Exercise the rights
of an absolute owner of stocks and other securities, including the right to:
(a) Vote, or give
proxies to vote, with or without power of substitution, or enter into or
continue a voting trust agreement;
(b) Hold a security in
the name of a nominee or in other form without disclosure of the trust so that
title may pass by delivery;
(c) Pay calls,
assessments and other sums chargeable or accruing against the securities, and
sell or exercise stock subscription or conversion rights; and
(d) Deposit the securities
with a depository or other financial institution.
(8) Construct, repair,
alter or otherwise improve buildings or other structures on real property in
which the trust has an interest, demolish improvements, raze existing or erect
new party walls or buildings on real property in which the trust has an
interest, subdivide or develop land, dedicate land to public use or grant
public or private easements, and make or vacate plats and adjust boundaries.
(9) Enter into a lease
for any purpose as lessor or lessee, including a lease or other arrangement for
exploration and removal of natural resources, with or without the option to
purchase or renew, even though the period of the lease extends beyond the
duration of the trust.
(10) Grant an option
involving a sale, lease or other disposition of trust property or acquire an
option for the acquisition of property, even though the option is exercisable
after the trust is terminated, and exercise an option so acquired.
(11) Insure the property
of the trust against damage or loss and insure the trustee, the trustee’s
agents, and beneficiaries against liability arising from the administration of
the trust.
(12) Abandon or decline
to administer property of no value or property of a value that is not adequate
to justify its collection or continued administration.
(13) Avoid possible
liability for violation of environmental law by:
(a)
Inspecting or investigating property the trustee holds or has been asked to
hold, or property owned or operated by an organization in which the trustee
holds or has been asked to hold an interest, for the purpose of determining the
application of environmental law with respect to the property;
(b) Taking action to
prevent, abate or otherwise remedy any actual or potential violation of any
environmental law affecting property held directly or indirectly by the
trustee, whether taken before or after the assertion of a claim or the
initiation of governmental enforcement;
(c) Declining to accept
property into trust or disclaiming any power with respect to property that is
or may be burdened with liability for violation of environmental law;
(d) Compromising claims
against the trust that may be asserted for an alleged violation of
environmental law; and
(e) Paying the expense
of any inspection, review, abatement or remedial action to comply with
environmental law.
(14) Pay or contest any
claim, settle a claim by or against the trust, and release, in whole or in
part, a claim belonging to the trust.
(15) Pay taxes,
assessments, compensation of the trustee and of employees and agents of the
trust, and other expenses incurred in the administration of the trust.
(16) Exercise elections
available under federal, state and local tax laws.
(17) Select a mode of
payment under any employee benefit or retirement plan, annuity or life
insurance payable to the trustee, exercise rights under employee benefit or
retirement plans, annuities or policies of life insurance, including exercise
of the right to indemnification for expenses and against liabilities, and take
appropriate action to collect the proceeds.
(18) Make loans out of
trust property. The trustee may make a loan to a beneficiary on terms and
conditions the trustee considers to be fair and reasonable under the
circumstances. The trustee may collect loans made to a beneficiary by making
deductions from future distributions to the beneficiary.
(19) Pledge trust
property to guarantee loans made by others to the beneficiary.
(20) Appoint a trustee
to act in another state, country or other jurisdiction with respect to trust
property located in the other state, country or other jurisdiction, confer upon
the appointed trustee all of the powers and duties of the appointing trustee,
require that the appointed trustee furnish security and remove any trustee so
appointed.
(21) Make a distribution
to a beneficiary who is under a legal disability or who the trustee reasonably
believes is financially incapable, either:
(a) Directly;
(b) By application of
the distribution for the beneficiary’s benefit;
(c) By paying the
distribution to the beneficiary’s conservator or, if the beneficiary does not
have a conservator, the beneficiary’s guardian;
(d) By creating a
custodianship under the Uniform Transfers to Minors Act by paying the
distribution to a custodian for the beneficiary;
(e) By paying the
distribution to any existing custodian under the Uniform Transfers to Minors
Act;
(f) By paying the
distribution to an adult relative or other person having legal or physical care
or custody of the beneficiary, to be expended on the beneficiary’s behalf, if
the trustee does not know of a conservator, guardian or custodian for the
beneficiary; or
(g) By managing the
distribution as a separate fund held by the trustee on behalf of the
beneficiary, subject to the beneficiary’s continuing right to withdraw the
distribution.
(22) On distribution of
trust property or the division or termination of a trust, make distributions in
divided or undivided interests, allocate particular assets in proportionate or
disproportionate shares, value the trust property for those purposes and adjust
for resulting differences in valuation.
(23) Resolve a dispute
concerning the interpretation of the trust or the administration of the trust
by mediation, arbitration or other procedure for alternative dispute
resolution.
(24) Prosecute or defend
an action, claim or judicial proceeding in any state, country or other
jurisdiction to protect trust property and the trustee in the performance of
the trustee’s duties.
(25) Sign and deliver
contracts and other instruments that are useful to achieve or facilitate the
exercise of the trustee’s powers.
(26) On termination of
the trust, exercise the powers appropriate to wind up the administration of the
trust and distribute the trust property to the persons entitled to the
property.
(27) Allocate items of
income or expense to either trust income or principal, as provided by law,
including creation of reserves out of income for depreciation, obsolescence or
amortization, or for depletion in mineral or timber properties.
(28) Employ persons,
including attorneys, auditors, investment advisors or agents, to advise or
assist the trustee in the performance of administrative duties. A trustee may
act based on the recommendations of professionals without independently
investigating the recommendations.
(29) Apply for and
qualify all or part of the property in the trust estate for special
governmental tax programs or other programs that may benefit the trust estate
or any of the beneficiaries.
(30) Deposit securities
in a clearing corporation as provided in ORS 128.100.
SECTION 4. The amendments to ORS 130.205, 130.655 and
130.725 by sections 1 to 3 of this 2007 Act apply to all trusts, whether
created before, on or after the effective date of this 2007 Act.
Approved by the Governor June 20, 2007
Filed in the office of Secretary of State June 21, 2007
Effective date January 1, 2008
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