An Act Concerning Inter Vivos Trusts
SUMMARY: The bill imposes certain duties on trustees of inter vivos trusts and gives beneficiaries of these trusts certain rights. (An inter vivos trust is a trust someone (settlor) creates during his life which takes effect during his life.) The bill requires these trustees to file a notice with the appropriate probate court and notify the beneficiaries of their right to get a copy of the trust, information on current trust assets, and the contents of the trust notice, and their right to petition probate court for an accounting or to resolve disputes within the court's jurisdiction.
The requirements and rights apply only if (1) the settlor dies after December 31, 1999, (2) the trust was revocable during the settlor's lifetime but became irrevocable when he died, (3) the settlor was domiciled in Connecticut when he died, and (4) the trust assets are not payable to the settlor's estate.
Also, the bill:
1. allows trustees of other inter vivos trusts to file a notice of trust with probate court and thereby subject the trustees, trust, and beneficiaries to the bill's rights and requirements;
2. specifies when information concerning these trusts is public and what is available only with the court's permission;
3. allows trustees to provide beneficiaries with an annual trust account and gives beneficiaries six months to go to court about anything the account disclosed;
4. requires anyone who applies to probate court for the admission of a will or administration of a decedent's estate to disclose, to the extent he knows, the identity of any inter vivos trust which the decedent created that is covered by the bill and the trustee's names and addresses; and
5. establishes rules for determining which probate court has jurisdiction.
Finally, the bill establishes rules for who can represent other people or classes of people in fiduciary-related matters. The court can ignore these rules if it determines the representation is or may be inadequate and instead appoint a guardian ad litem to represent a person or class of people.
EFFECTIVE DATE: January 1, 2000
Required Notice to Probate Court
The bill requires at least one trustee to file notice of the trust with probate court and with any other trustees within 60 days after the settlor dies.
The notice must contain:
1. the trust's name and location;
2. the custodian of the original trust instrument;
3. names and addresses of each trustee, the attorney representing each trustee, and beneficiaries.
The trustee filing the notice must execute it under penalty of false statement.
The bill gives each protected beneficiary, upon written request, the right to receive from a trustee a copy of the trust instrument, information on current assets, and the contents of the notice filed with probate court. It also gives a beneficiary the right to petition probate court for an accounting or to resolve any disputes within the court's jurisdiction.
The right applies only to beneficiaries who have a current right, either discretionary or mandatory, to income or principal from an inter vivos trust subject to filing under the bill. Beneficiaries with only a future right are not covered by the bill.
Notice to Beneficiaries
The bill requires the trustee who filed the notice with probate court to provide written notice of these beneficiary's rights to each beneficiary the bill protects and all trustees. He must also certify that the attorney general has been given a copy of the notice if a protected beneficiary is a charitable organization.
The bill allows probate court to remove a trustee if he does not comply with these filing and notice requirements.
Notice to Out-of-State Trustees
The bill makes it a conclusive presumption, for purposes of notice to out-of-state trustees, that settlors of trusts have appointed the probate judge in the district that has jurisdiction over the trust as statutory agent for service of process. The bill requires the court to give written notice of any proceeding by certified mail, return receipt requested, or by any other means the court determines will give notice to the out-of-state trustee.
Other Trusts Can Come under Bill's Provisions
The bill allows trustees of trusts not covered by the bill's mandatory provisions also to file a notice of trust with probate court. Filing this notice submits the trust to probate court jurisdiction and subjects the trustee, the trust, and protected beneficiaries to the bill's provisions.
The bill makes public the identity and name of the trust and the name and address of each trustee and their attorneys.
The bill prohibits probate court from releasing any other information relating to the trust except for cause shown. The court may authorize the release of any relevant information to a party it concludes has sufficient interest.
Annual Trust Account
The bill authorizes any trustee who has complied with its provisions to provide each beneficiary and any other interested party, or his legal representative, with an annual trust account. An annual trust account includes a summary of all financial transactions in the form of a fiduciary's periodic or final account as provided by the probate court administrator, or in another format containing substantially the same information. It covers a calendar year, or a partial year, where applicable. It must be executed by all trustees under penalty of false statement. It must also contain a notice that beneficiaries have only six months to object to it in court. The trustee must include with the account a copy of the trust, information on current assets, the contents of the filed notice, and notice of the right to petition probate court for an accounting or to resolve any disputes.
Deadline to Go to Court
The bill gives beneficiaries or other interested parties who receive the annual account six months from the day they receive it to file a written objection in court or ask the court for an accounting. If they do not, the bill bars them from ever going to court about any matter disclosed in the account for the period the account covers.
The bill requires probate court to apply the law of whatever states the trust specifies if those laws do not conflict with the bill or Connecticut's public policy.
Disclosure In Connection with Decedents Estate
The bill requires those who apply to probate court for the admission of a will or administration of a decedent's estate to disclose, to the extent they know, the identity of any trust covered by the bill that the decedent created.
Execution of Trust
The bill authorizes anyone 18 years of age or older to execute a trust. If it initially contains Connecticut real estate it must be executed in the same manner that a deed is executed. This requires two witnesses and an acknowledgment taken by an attorney, notary public, or other authorized official.
The bill specifies that it does not invalidate a trust created in some other legally authorized way.
Where Notices Must Be Filed
The bill requires notices to be filed with probate court for the district in which the settlor was domiciled at the time of his death.
The bill gives probate court jurisdiction for inter vivos trust matters to the probate court in the district in which the settlor is domiciled, or in the case of a deceased settlor, was domiciled when the settlor died.
But the bill allows a probate court to transfer a case to any other district in which: (1) trust property is located; (2) bank accounts or evidences of other trust property (for example stock certificates) are maintained; or (3) any one of the trustees reside or has an office. The court may do so upon the petition of a settlor, trustee, or beneficiary, after notice and hearing. The court having possession of the file must copy and certify all recorded documents in the file and deliver them to the court the case has been transferred to.
When the settlor was not domiciled in Connecticut, the bill gives jurisdiction over the trust to the probate court where the settlor's will was proved or administration of his estate was granted.
If a deceased settlor's estate was handled by a probate court in another state or country, the bill gives jurisdiction over the trust to the Connecticut probate court for the district in which:
1. the settlor last resided,
2. any trust property is located,
3. any bank accounts or evidences of other intangible personal property are kept, or
4. any trustee resides or has an office.
If more than one probate court qualifies, the district in which jurisdiction is first established will handle the trust.
Transfer of Jurisdiction
If asked to do so by the settlor, trustee, or any beneficiary, the bill allows a probate court to transfer jurisdiction over an inter vivos trust of an out-of-state deceased settlor to another probate court in which:
1. the settlor last resided in Connecticut;
2. any trust property is located;
3. any bank accounts or evidences of other intangible property (such as stock certificates) are kept; or
4. any trustee resides or has an office.
The transferring court must copy and certify all recorded documents and deliver them to the new court, which will then have exclusive jurisdiction over the trust.
Jurisdiction for Allowance of Trustee's Actions
By law, a trustee or settlor can ask the probate court to allow certain trustee actions. Under current law, the request must be made to the court where either the trustee or settlor resides or the settlor resided when he died. The bill establishes the same probate court jurisdiction rules for this type of matter as it does for other matters involving inter vivos trusts. Thus the request must be made to the court where the settlor is domiciled or was domiciled when he died. But it can be transferred to the court where trust property or evidences of it is located or where any trustee resides or has an office.
Creation of Representation Rules
The bill establishes certain rules for who can represent others in certain fiduciary related matters. These rules apply only if there is no conflict of interest between the representative and the person or persons represented which might affect the representative's impartiality.
Any court order or decree that binds the representative also binds the person or class represented. Any consent, approval, or other action the representative takes also binds the person or class he represents.
The bill authorizes a probate court to ignore these rules and to ignore provisions in the trust or other governing document if it determines that the representation provided for any person or class of people is or may be inadequate. In such an instance, the court may require that notice be given to the person or class and may appoint a guardian ad litem to represent the person's or class's interests. If it does so, it must include in the court records its reasons.
The representation rules apply to all court proceedings, nonjudicial settlements, agreements, or acts that relate to:
1. property held as part of a decedent's estate, in trust or by someone in a fiduciary capacity;
2. applications to probate court of a will or for the administration of an estate;
3. actions by or against a decedent's estate, a trust, or other property held in a fiduciary capacity, or by or against the fiduciary;
4. proceedings to interpret a will, trust, or other documents involving property held in a fiduciary capacity;
5. intermediate or final fiduciary accountings; and
6. any other matter involving the administration of a decedent's estate, a trust, or any other property held in a fiduciary capacity.
Specific Rules. The bill allows: (1) a court-appointed conservator or guardian of the estate to represent a ward, (2) a trustee to represent all who have an interest in the trust, and (3) an executor or administrator of a decedent's estate to represent all who have an interest in it.
When property passes to a certain class of people upon the happening of a future event (for example, a certain person's death), the bill allows members of the class to represent all unborn or unascertained members of the class. It also allows members of the class who are not legally disabled to represent those who are disabled. The bill requires the court to appoint a guardian ad litem to represent a class's interests if there are no living members of the class or all class members are legally disabled. It also requires that in order to represent members or potential members of a class, the person must qualify to take the property if the future event had occurred either (1) right before the court proceedings began or (2) as of the effective date of the settlement, agreement, or act relating to the property.
When property has passed to a certain class of people or where a class already has a property interest, the living members of the class who are not legally disabled must represent all disabled members.
When a property interest will pass to a person or class of persons upon the happening of a future event and will pass to another person or class of persons when an additional event happens, the person or class who would take when the first event occurs must represent any person or class that takes when the subsequent event occurs if their interests are identical or substantially similar concerning the particular fiduciary matter involved. This rule applies whether or not the person or classes represented are related to those representing their interests.
The sole holder or all co-holders of any power of appointment must represent the potential appointees. The sole-holder or all co-holders of a power to revoke or a presently exercisable general power of appointment must represent those who take if they do not exercise their powers to revoke or appoint.
Inter Vivos Trust
An inter vivos trust is a trust created by someone (settlor) during his lifetime.
Guardian Ad Litem
A guardian ad litem is a person appointed by a court to represent someone else's best interests during the course of a legal proceeding.
A domicile is the place where a person has his permanent home and to which, whenever he is absent, he intends to return.
Joint Favorable Substitute