Delaware Trust Act 2020 Legislative Update
On August 6, 2020, Delaware Governor John C. Carney signed House Bill 334 into law (“Trust Act 2020”). Here are the key provisions of the Trust Act.
Enhancements to statutes regarding nonjudicial settlement agreements and modification with grantor’s consent or nonobjection (12 Del. C. §§ 3338 and 3342):
- When a grantor is a party to a nonjudicial settlement agreement under section 3338, or when a trust is modified with a grantor’s consent/nonobjection under section 3342, then:
- the beneficiaries needing to consent are all of the trust’s beneficiaries (tracking federal tax law); and
- the grantor can’t virtually represent anyone else (unless the grantor certifies in writing that the trust is an incomplete gift for federal gift tax purposes)
Amendments to statute allowing appointment of multiple trustees and allocation of duties among them (12 Del. C. § 3343):
- A power to appoint additional trustees can be exercised only when there is a vacancy
- Trustee powers that can be allocated include the power to direct or prevent trustee actions
- Greater detail has been provided regarding the interplay of this statute and section 3313A (the excluded co-trustee statute)
- The trustee now excluded can avail itself of any remedies available to a removed trustee (such as obtaining a release under section 3588 or obtaining eventual exoneration upon providing a report under section 3585)
- Existing trustees are given 30 days’ notice of any modification of their duties, unless they waive it
Further protections for departing fiduciaries and their beneficiaries (12 Del. C. § 3585):
- The ability of a trustee to obtain exoneration 120 days after notice is sent to a party can now occur when the trustee is in the process of resigning or being removed (not just when the trustee has actually resigned or been removed)
- Beneficiaries are protected because the trust property must be transferred to the successor trustee within a reasonable time after the 120-day period expires, and because the beneficiary continues to have a cause of action as to the trustee’s administration of assets during or after the 120-day period
Sustainable investing for those managing institutional funds (12 Del. C. § 4703):
- Now permitted (just as for private trust funds under sections 3302 and 3303)
Click here for .pdf version of these highlights.