74th OREGON LEGISLATIVE ASSEMBLY--2007 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 1960
Senate Bill 693
Sponsored by COMMITTEE ON JUDICIARY (at the request of Oregon
Bankers Association)
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 as
introduced.
Allows trustee to terminate trust under certain circumstances.
Clarifies authority of trustee to advance or borrow money for
payment of expenses, losses or liabilities sustained by trustee
in administration of trust or by reason of owning or possessing
trust assets. Provides that trustee may borrow money from
financial institution operated by or affiliated with trustee.
A BILL FOR AN ACT
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 Oregon:
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. + }
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