SCS/SB 1007 - This act establishes the "Missouri Uniform Fiduciary Income and Principal Act" which applies to trusts or estates in which this state is the principal place of administration and life estates or other term interest in which the interest of one or more persons will be succeeded by the interest of another and in which the place where the property is located. This act provides requirements for fiduciaries when making an allocation or determination or exercising discretion pursuant to this act, including acting in good faith and administering the trust or estate impartially and in terms of the trust and this act. Furthermore, the fiduciary shall add a receipt and charge disbursement to principal to the extent neither the terms of the trust nor this act allocate receipt or disbursement between income and principal. As provided in this act, the fiduciary may exercise the power to adjust, convert an income trust to a unitrust, change the percentage or method used to calculate a unitrust amount, or convert a unitrust to an income trust, if the fiduciary determines the exercise of the power will assist the fiduciary to administer the trust or estate impartially.
The court shall not order a fiduciary to change a decision unless the court determines that there was an abuse of discretion, upon which the court may order a remedy authorized by law and as provided in the act to place the beneficiaries in the positions as if there was not an abuse of discretion. A fiduciary may petition the court for instruction on whether a proposed fiduciary decision will result in an abuse of discretion. If the petition meets the requirements of this act, the beneficiaries have the burden to establish that a fiduciary decision will result in an abuse of discretion.
This act modifies provisions relating to fiduciary determinations of net income upon the death of an individual resulting in the creation of an estate or trust or termination of an income interest in a trust, relating to rights of beneficiaries to receive a share of net income, and relating to dates on which income interests begin, assets become subject to a trust, and fiduciary allocation of an income receipt or disbursement to principal. This act also modifies provisions relating to mandatory income interests and undistributed income.
Under this act, a fiduciary shall allocate to income money received in an entity distribution, as that term is defined in the act, and tangible personal property of nominal value received from the entity. A fiduciary shall also allocate to principal certain moneys and other property received in an entity distribution. The act further provides factors for a fiduciary to determine or estimate that money received in an entity distribution is a capital distribution.
The fiduciary, instead of the trustee, shall also allocate to income an amount received as a distribution of income, including a unitrust distribution, from a trust or estate in which the fiduciary, instead of the trust, has an interest, other than an interest the fiduciary purchased in a trust that is an investment entity, and shall allocate to principal an amount received as a distribution of principal from the trust or estate. Furthermore, this act makes changes to the provisions relating to businesses or other activity conducted by a fiduciary if the fiduciary determines that in the interests of the beneficiaries to account separately for the business or other.
This act modifies provisions relating to allocations to principal by the fiduciary instead of the trustee, allocations of rental property income, allocations of amounts received as interest or from the sale, redemption, or other disposition on an obligation to pay money, and allocations of proceeds of a life insurance policy or other contract received by the fiduciary as beneficiary. If a fiduciary, instead of a trustee, determines that an allocation between income and principal is insubstantial, the fiduciary may allocate the entire amount to principal. The act further modifies the factors for a fiduciary to presume an allocation is insubstantial. Additionally, such power may be exercised by a co-fiduciary or may be released or delegated as provided by law.
This act repeals provisions relating to payment characterized as a distribution to the trustee allocated as income and instead provides rules for separate funds, as defined in the act, and requirements of fiduciaries of marital trusts. Furthermore, this act modifies provisions relating to liquidating assets and when the fiduciary does not account for receipts from the interests in minerals, water, or other natural resources, from the sale of timber and related products, or for transactions in derivatives. This act also contains modifications to the provisions relating to marital deductions, including qualifications for such deductions, and allocations of receipts from or related to an asset-backed security to income. Furthermore, this act provides that a fiduciary shall allocate receipts from or related to a financial instrument or arrangement not otherwise addressed by this act.
This act modifies provisions relating to required disbursements from income and principal by fiduciaries, rather than trustees, and transfers to principal of the net cash receipts from a principal asset that is subject to depreciation. This act also provides that a fiduciary may transfer an appropriate amount from principal to income in an accounting period to reimburse income if the fiduciary makes or expects to make an income disbursement, as described in the act. Furthermore, this act makes modifications to the provision regarding when a fiduciary may transfer an amount from income in an accounting period to reimburse principal or to provide a reserve for future principal disbursements.
Additionally, this act repeals the existing provision relating to adjustments between principal and income and provides that a fiduciary may make an adjustment between income and principal to offset the shifting of economic interests or tax benefits between current income beneficiaries and successor beneficiaries that arises from:
(1) An election or decision the fiduciary makes regarding a tax matter, other than a decision to claim an income tax deduction;
(2) An income tax or other tax imposed on the fiduciary or a beneficiary as a result of a transaction involving the fiduciary or a distribution by the fiduciary; or
(3) Ownership by the fiduciary of an interest in an entity, a part of whose taxable income, whether or not distributed, is includable in the taxable income of the fiduciary or a beneficiary.
This act further provides that a fiduciary may offset a charge to each beneficiary that benefits from a decrease in an income tax to reimburse the principal from which the increase in estate tax is paid by obtaining payment from the beneficiary, withholding an amount from future distributions to the beneficiary, or adopting another method.
This act modifies, limits, and supersedes the federal Electronic Signatures in Global and National Commerce Act, except for certain provisions relating to consumer disclosures, and does not authorize electronic delivery of certain notices.
Additionally, this act repeals existing provisions relating to unitrust amounts and establishes new provisions relating to unitrusts, which is defined as a trust for which net income is an amount computed by multiplying a determined value of a trust by a determined percentage. The act provides for the conversion of an income trust to a unitrust and for the determination of the rate used to compute the unitrust amount.
Furthermore, this act provides for certain requirements for a unitrust policy. The policy shall provide the unitrust rate or method for determining such rate, the method for determining the applicable value of assets, and rules for the administration of the unitrust. Additionally, the unitrust policy shall provide the period used for the determination of the rate and value, which may be a calendar year, a twelve-month period other than a calendar year, a calendar quarter, a three-month period other than a calendar quarter, or another period. The unitrust policy may also provide standards for using fewer preceding periods if certain circumstances exist and prorating the unitrust amount on a daily basis for a part of a period in which the trust or the administration of the trust as a unitrust or the interest of any beneficiary commences or terminates.
Additionally, a unitrust policy may provide methods and standards for determining the timing of distributions, making distributions in cash or in kind, or correcting an underpayment or overpayment to a beneficiary based on the unitrust amount if there is an error in calculating the unitrust amount, or may provide other standards and rules to serve the interest of the beneficiaries. This act also provides that if a trust qualifies for a special tax benefit or a fiduciary is not an independent person, the unitrust rate shall not be less than three percent or more than five percent and only certain provisions of this act apply.
Finally, this act repeals certain provisions relating to the statute of limitations on claims of a breach of trustee's duty to impartially administer a trust.
The provisions of this act apply to trusts and estates existing or created on or after August 28, 2024, except as otherwise expressly provided in the terms of the trust or by this act.
This act is similar to HB 1725 (2024), HB 1987 (2024), HCS/HB 968 (2023) and HB 2839 (2022).
KATIE O'BRIEN