Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Session Laws - 1989, Regular Session
Key: (1) language to be deleted (2) new language
Laws of Minnesota 1989
CHAPTER 340-H.F.No. 306
An act relating to trusts; providing for their
creation, validity, administration, and supervision;
providing for the sale of real property; relating to
legal estates in real and personal property; relating
to estates; amending Minnesota Statutes 1988, sections
315.365, subdivision 3; 500.17, subdivision 2;
501A.05; 501A.06; 502.73; 524.1-404; 525.56,
subdivision 4; and 525.831; Laws 1987, chapter 60,
section 10, as amended; proposing coding for new law
as Minnesota Statutes, chapter 501B; proposing coding
for new law in Minnesota Statutes, chapter 525;
repealing Minnesota Statutes 1988, sections 500.13;
501.01; 501.02; 501.03; 501.04; 501.05; 501.06;
501.07; 501.08; 501.09; 501.10; 501.11; 501.115;
501.12; 501.125; 501.13; 501.14; 501.15; 501.155;
501.16; 501.17; 501.18; 501.19; 501.195; 501.20;
501.21; 501.211; 501.22; 501.23; 501.24; 501.25;
501.26; 501.27; 501.28; 501.29; 501.30; 501.31;
501.32; 501.33; 501.34; 501.35; 501.351; 501.36;
501.37; 501.38; 501.39; 501.40; 501.41; 501.42;
501.43; 501.44; 501.45; 501.46; 501.461; 501.48;
501.49; 501.50; 501.51; 501.52; 501.53; 501.54;
501.55; 501.56; 501.57; 501.58; 501.59; 501.60;
501.61; 501.62; 501.63; 501.64; 501.65; 501.66;
501.67; 501.71; 501.72; 501.73; 501.74; 501.75;
501.76; 501.77; 501.78; 501.79; 501.80; 501.805; and
501.81.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
ARTICLE 1
TRUSTS
Section 1. [501B.01] [PURPOSES FOR WHICH EXPRESS TRUSTS
MAY BE CREATED.]
An active express trust may be created for any lawful
purpose.
Sec. 2. [501B.02] [PASSIVE TRUSTS ABOLISHED.]
Passive express trusts of real or personal property are
abolished. An attempt to create a passive trust vests the
entire estate granted in the beneficiary.
Sec. 3. [501B.03] [TERMINATION OF TRUST PURPOSES.]
If the purposes for which an active express trust is
created have been accomplished, or become impossible of
accomplishment or illegal, the trust will be terminated.
Sec. 4. [501B.04] [REVERSION IN GRANTOR.]
Every legal estate and interest not embraced in an express
trust and not otherwise disposed of remains in the grantor.
Sec. 5. [501B.05] [BONA FIDE PURCHASERS PROTECTED.]
An express trust not declared in the disposition to the
trustee or a constructive or resulting trust does not defeat the
title of a purchaser from the trustee for value and without
notice of the trust, or the rights of a creditor who extended
credit to the trustee in reliance upon the trustee's apparent
ownership of the trust property.
Sec. 6. [501B.06] [MISAPPLICATION OF PAYMENT TO TRUSTEE.]
A person who actually and in good faith makes a payment to
a trustee that the trustee, as such, is authorized to receive,
is not responsible for the proper application of the payment
according to the trust. No right or title derived by the person
from the trustee, in consideration of the payment, may be
impeached or called in question because of a misapplication of
the payment by the trustee.
Sec. 7. [501B.07] [PURCHASE MONEY RESULTING TRUSTS.]
If a transfer of property is made to one person and the
purchase price is paid by another, a resulting trust is presumed
to arise in favor of the person by whom the purchase price is
paid, except:
(1) if the person by whom the purchase price is paid
manifests a contrary intention, no resulting trust is presumed
to arise;
(2) if the transferee is a spouse, child, or other natural
object of bounty of the payor, a gift in favor of the transferee
is presumed and no resulting trust is presumed to arise; and
(3) if the transfer is made to accomplish an illegal
purpose, no resulting trust is presumed to arise unless it is
needed to prevent unjust enrichment of the transferee.
Sec. 8. [501B.08] [APPOINTMENT OF AND ACQUISITION OF TITLE
BY SUCCESSOR TRUSTEES AND CONFIRMATION OF ACTS PERFORMED DURING
VACANCIES IN TRUSTEESHIP.]
If the terms of a trust provide for the appointment of a
successor trustee and direct how the successor is to qualify,
title to the trust assets vests in the successor trustee upon
qualification, unless the terms of the trust expressly provide
otherwise.
If the terms of a trust do not effectively provide for the
appointment of a successor trustee and appointment of a
successor is required, or if title to the trust assets does not
vest in a successor trustee, the district court may appoint a
successor trustee or vest title in a successor trustee.
The district court may confirm an act performed by a person
in execution of the trust while there was no acting trustee.
Sec. 9. [501B.09] [SUSPENSION OF THE POWER OF ALIENATION.]
Subdivision 1. [SUSPENSION; EXCEPTIONS.] The power of
alienation is suspended if there are no persons in being who,
alone or in conjunction with others, can convey an absolute fee
in possession or absolute ownership of real property or absolute
ownership of personal property.
(a) There is no suspension of the power of alienation by
the terms of a trust or by interests in property held in trust
if there is an unlimited power in one or more persons then in
being to terminate the trust, by revocation or otherwise, and to
acquire an absolute fee in possession or absolute ownership of
the trust property.
(b) There is no suspension of the power of alienation by
the terms of a trust or by interests in property held in trust
if the trustee has power to sell an absolute fee in possession
or absolute ownership of the trust property.
Subd. 2. [SUSPENSION FOR 21 YEARS.] The power of
alienation of property held in trust may be suspended, by the
terms of the trust, for a period of not more than 21 years.
During any period of suspension of the power of alienation of
real property, section 38 applies. Notwithstanding any contrary
term of a trust, suspension of the power of alienation by the
terms of a trust ceases after a period of 21 years, after which
the trustee has the power to convey an absolute fee in
possession or absolute ownership of the trust property, and to
mortgage, pledge, and lease the same. A provision in the terms
of a trust for forfeiture of the interest of a trustee or
beneficiary if the trustee or beneficiary participates in or
seeks to convey, mortgage, pledge, or lease trust property after
the expiration of a 21-year period of suspension is void.
Subd. 3. [VOID FUTURE INTERESTS.] Every future interest in
real or personal property not held in trust is void in its
creation if it might suspend the power of alienation for a
period longer than a life or lives in being plus 21 years.
Sec. 10. [501B.10] [KINDS OF PROPERTY A TRUSTEE MAY
ACQUIRE.]
Subdivision 1. [GENERAL PROPERTIES AND INVESTMENTS.] (a) A
trustee may invest in every kind of real or personal property
and every kind of investment that a prudent person would invest
in having in mind the preservation of the trust estate and the
amount and regularity of the income derived. This permission
includes, but is not limited to, bonds, debentures, and other
individual or corporate obligations, mutual funds, and corporate
stocks. In considering an investment, a trustee shall exercise
the care, skill, and judgment under the circumstances then
prevailing that a person of ordinary prudence would exercise in
the management of the person's own property and shall consider
the role that the investment plays within the trust's overall
portfolio of assets. If the trustee has greater skills than a
person of ordinary prudence, the trustee is under a duty to use
those skills.
(b) Among the factors to be considered by a trustee in
determining the prudence of a particular investment are the
following:
(1) the probable income of the trust and the probable
safety of the capital of the trust;
(2) the composition of the portfolio of the trust with
regard to diversification;
(3) the length of the term of investments of the trust;
(4) the duration of the trust;
(5) the liquidity and current return of the trust's
portfolio relative to the anticipated cash requirements of the
trust;
(6) other assets of the beneficiary or beneficiaries known
to the trustees, including earning capacity;
(7) the relative interests of income and remainder
beneficiaries; and
(8) the tax consequences.
(c) If a trustee is a national banking association or
national trust company or holds a certificate under section
48.37 or if a trustee retains or employs an investment advisor
registered under the Investment Advisors Act of 1940, an
investment that is otherwise prudent is not imprudent solely
because it is in new, unproven, untried, or other enterprises
with a potential for significant growth, or in a limited
partnership or commingled fund investing in these enterprises.
Subd. 2. [DISPOSAL OF PROPERTY.] Unless the trust
instrument or a court order specifically directs otherwise, a
trustee need not dispose of any property, real, personal, or
mixed, or any kind of investment, in the trust, however
acquired, until the trustee determines in the exercise of a
sound discretion that it is advisable to dispose of the
property. Nothing in this subdivision excuses the trustee from
the duty to exercise discretion at reasonable intervals and to
determine at those intervals the advisability of retaining or
disposing of property.
Subd. 3. [ALTERATION OF TERMS OF WILL.] This section does
not authorize any departure from or variation of express terms
or limitations in a will, agreement, court order, or other
instrument creating or defining the trustee's duties and powers,
but the terms "authorized securities," "authorized investments,"
or "legal investments," or words of similar import, as used in a
will, agreement, court order, or instrument or in the statutes
of this state in relation to the investment of trust funds by
corporate or individual trustees, mean every kind of property,
real, personal, or mixed, and every kind of investment, that a
trustee is authorized to acquire under the terms of subdivision
1.
Subd. 4. [NO LIMITATION ON POWERS OF COURT.] This section
does not restrict the power of a court of proper jurisdiction to
permit a trustee to deviate from the terms of a will, agreement,
court order, or other instrument relating to the acquisition,
investment, reinvestment, exchange, retention, sale, or
management of trust property.
Subd. 5. [TRUSTEES DEFINED.] As used in this section,
"trustee" means individual trustees and corporations having
trust powers acting under wills, agreements, court orders, and
other instruments, whether existing on the effective date of
this section or made at a later time.
Subd. 6. [INVESTMENT COMPANIES.] (a) In the absence of an
express prohibition in the trust instrument, the trustee may
acquire and retain securities of any open-end or closed-end
management type investment company or investment trust
registered under the Federal Investment Company Act of 1940.
(b) This subdivision does not alter the degree of care and
judgment required of trustees by subdivision 1.
Sec. 11. [501B.11] [EMPLOYEES AND AGENTS OF TRUSTEE.]
Unless prohibited by the terms of the trust instrument, a
trustee may employ attorneys, accountants, investment advisors,
agents, or other persons, even if they are associated with the
trustee, to advise or assist the trustee in the performance of
duties. The trustee may act without independent investigation
upon their recommendations or, instead of acting personally,
employ one or more agents to perform any act of administration,
whether or not discretionary. If the terms of the trust
instrument do not address the authority of the trustee to
delegate:
(1) the trustee may not delegate all of the trustee's
duties;
(2) the employment does not relieve the trustee of
liability for the acts of a person that, if done by the trustee,
would result in liability of the trustee; and
(3) the employment does not relieve the trustee of the duty
to select and retain a person with reasonable care.
Sec. 12. [501B.12] [GRANTOR AND AGENTS OF GRANTOR.]
If a trust instrument reserves to the grantor, in a
nonfiduciary capacity, the control over any or all investment
decisions, the trustee is not responsible for the investment
decisions made by the grantor or an agent of the grantor.
COURT PROCEEDINGS
Sec. 13. [501B.16] [PETITION FOR COURT ORDER.]
A trustee of an express trust by will or other written
instrument or a person interested in the trust may petition the
district court for an order:
(1) to confirm an action taken by a trustee;
(2) upon filing of an account, to settle and allow the
account;
(3) to determine the persons having an interest in the
income or principal of the trust and the nature and extent of
their interests;
(4) to construe, interpret, or reform the terms of a trust,
or authorize a deviation from the terms of a trust, including a
proceeding involving section 23;
(5) to approve payment of the trustee's fees, attorneys'
fees, accountants' fees, or any other fees to be charged against
the trust;
(6) to confirm the appointment of a trustee;
(7) to accept a trustee's resignation and discharge the
trustee from the trust;
(8) to require a trustee to account;
(9) to remove a trustee for cause;
(10) to appoint a successor trustee when required by the
terms of the trust instrument or when by reason of death,
resignation, removal, or other cause there is no acting trustee;
(11) to confirm an act performed in execution of the trust
by a person while there was no acting trustee;
(12) to subject a trust to continuing court supervision
under section 20;
(13) to remove a trust from continuing court supervision
under section 20;
(14) to mortgage, lease, sell, or otherwise dispose of real
property held by the trustee notwithstanding any contrary
provision of the trust instrument;
(15) to suspend the powers and duties of a trustee in
military service or war service in accordance with section 75
and to order further action authorized in that section;
(16) to secure compliance with the provisions of sections
25 to 37, in accordance with section 33;
(17) to determine the validity of a disclaimer filed under
section 70;
(18) to change the situs of a trust;
(19) to redress a breach of trust;
(20) to terminate a trust; or
(21) to instruct the trustee, beneficiaries, and any other
interested parties in any matter relating to the administration
of the trust and the discharge of the trustee's duties.
Sec. 14. [501B.17] [VENUE.]
A petition under section 13 or 19 may be filed:
(1) in the case of a trust created by will, in the district
court for the county where the will was probated, or in the
district court for the county where a trustee having custody of
part or all of the trust assets resides or has a main place of
business;
(2) in the case of a nontestamentary trust, in the district
court for the county where a trustee having custody of part or
all of the trust assets resides or has a main place of business;
or
(3) in the case of a trust holding real property, in the
district court for any county in which the real estate is
situated.
In the case of a trust with respect to which there have
been prior court proceedings in this state, a petition under
section 13 or 19 must be filed in the court in which the prior
proceedings were held.
Sec. 15. [501B.18] [ORDER FOR HEARING.]
Upon the filing of a petition under section 13, the court
shall, by order, fix a time and place for a hearing, unless
notice and hearing have been waived in writing by the
beneficiaries of the trust then in being. Unless waived, notice
of the hearing must be given as follows: (1) by publishing, at
least 20 days before the date of the hearing, a copy of the
order for hearing one time in a legal newspaper for the county
in which the petition is filed; and (2) by mailing, at least 15
days before the date of the hearing, a copy of the order for
hearing to those beneficiaries of the trust who are known to or
reasonably ascertainable by the petitioner. In the case of a
beneficiary who is a minor or an incapacitated person as defined
in section 525.54 and for whom a conservator, guardian, or
guardian ad litem known to the petitioner has been appointed,
notice must be mailed to that fiduciary. Notice may be given in
any other manner the court orders.
Sec. 16. [501B.19] [REPRESENTATION OF PERSONS WHO ARE
UNBORN, UNASCERTAINED, UNKNOWN, OR MINORS OR INCAPACITATED
PERSONS.]
If an interested person is a minor or an incapacitated
person as defined in section 525.54 and has no guardian or
conservator within the state, or if an interested person is
unborn, unascertained, or a person whose identity or address is
unknown to the petitioner, the court shall represent that
person, unless the court, upon the application of the trustee or
any other interested person, appoints a guardian ad litem to
represent the person.
Sec. 17. [501B.20] [HOLDER OF A GENERAL POWER.]
For purposes of giving notice, waiving notice, initiating a
proceeding, granting consent or approval, or objecting with
regard to any proceedings under this chapter, the sole holder or
all coholders of a presently exercisable or testamentary general
power of appointment, power of revocation, or unlimited power of
withdrawal are deemed to represent the act for beneficiaries to
the extent that their interests as objects, takers in default,
or otherwise are subject to the power.
Sec. 18. [501B.21] [ORDER AND APPEAL.]
Upon hearing a petition filed under section 13, the court
shall make an order it considers appropriate. The order is
final as to all matters determined by it and binding in rem upon
the trust estate and upon the interests of all beneficiaries,
vested or contingent, even though unascertained or not in being,
except that appeal may be taken under the rules of appellate
procedure.
Sec. 19. [501B.22] [CONFIRMATION OF APPOINTMENT OF
TRUSTEE.]
A person appointed as trustee of an express trust by a will
or other written instrument or any interested person may file in
the district court an ex parte petition to confirm the
appointment of the trustee and specify the manner in which the
trustee must qualify. Upon consideration of the petition, the
court shall make an order it considers appropriate. A trustee
whose appointment is confirmed under this section is subject to
section 20.
Sec. 20. [501B.23] [INVENTORY; ANNUAL ACCOUNT; CONTINUING
COURT SUPERVISION.]
A trustee whose appointment has been confirmed by court
order under section 19 or a trustee otherwise subject to
continuing court supervision by court order shall file with the
court administrator of the district court an inventory
containing a list of all property then belonging to the trust.
The trustee shall then render to the court at least annually a
verified account containing a complete inventory of the trust
assets and itemized principal and income accounts. This section
does not apply to trusts established in connection with bonds
issued under chapter 474.
Sec. 21. [501B.24] [JURISDICTION.]
Once a district court has assumed jurisdiction of a trust,
the district court has jurisdiction as a proceeding in rem,
until jurisdiction is transferred to another court or terminated
by court order. This chapter does not limit or abridge the
power or jurisdiction of the district court over trusts and
trustees.
Sec. 22. [501B.25] [APPLICATION.]
Sections 13 to 20 do not apply to trusts in the nature of
mortgages or to trusts commonly known as voting trusts.
Sections 13 to 20 apply, however, unless otherwise provided in
the trust instrument, to trusts established in connection with
bonds issued under chapter 474. As used in sections 13 to 20,
"person" includes an artificial as well as a natural person, and
"beneficiary" includes a bondholder.
CHARITABLE TRUSTS AND THEIR SUPERVISION
Sec. 23. [501B.31] [CHARITABLE TRUSTS.]
Subdivision 1. [VALIDITY AND CONSTRUCTION.] No charitable
trust is invalid because of indefiniteness or uncertainty of the
object of the trust or of its beneficiaries designated in the
instrument creating the trust or because the trust violates a
statute or rule against perpetuities. No charitable trust may
prevent or limit the free alienation of the title to any of the
trust estate by the trustee in the administration of the trust,
except as may be permitted under existing or subsequent statutes.
Subd. 2. [LIBERAL INTERPRETATION; ADMINISTRATION.] A
charitable trust must be liberally construed by the courts so
that the intentions of the donor are carried out when possible,
and the trust must not fail solely because the donor has
imperfectly outlined the purpose and object of the charity or
the method of administration. If the district court of the
proper county determines that the purpose and object of the
donor's charity are imperfectly expressed, the method of
administration is incomplete or imperfect, or circumstances have
so changed since the execution of the instrument creating the
trust as to render impracticable, inexpedient, or impossible a
literal compliance with the terms of the instrument, the court
may, upon the petition of the trustee under section 13, make an
order directing that the trust must be administered or expended
in a manner the court determines will, as nearly as possible,
accomplish the general purposes of the instrument and the object
and intention of the donor without regard to, and free from any
specific restriction, limitation, or direction it contains.
Subd. 3. [LAWS NOT AFFECTED.] Nothing in this section
impairs, limits, or abridges the operation and efficacy of the
whole or any part of a statute that authorizes the creation of a
corporation for charitable purposes or that permits a municipal
corporation to act as trustee for a public or charitable
purpose. Nothing in subdivisions 1 to 3 of this section applies
to a gift, bequest, devise, or trust made, created, or arising
by or under the provisions of the will of a person who died
before April 15, 1927.
Subd. 4. [DETERMINATION OF TRUST, GIFT, BEQUEST,
DEVISE.] (a) This subdivision applies to a gift or trust made or
created by a living person before April 15, 1927, or a gift,
bequest, devise, or trust made or created by or under the will
of a person who died before April 15, 1927.
(b) If a gift, trust, or devise has been made for a
charitable, benevolent, educational, religious, or other public
use or trust, or upon a condition, limitation, or restriction of
any kind, the property given, entrusted, or devised may be used
only for that use or trust and in accordance with the condition,
limitation, or restriction. The grantee, devisee, trustee, or
other holder of property may petition the court under section 13
for determination of the legal rights and relationship of the
holder, the public, the grantor, and the grantor's heirs,
representatives, or assigns in and to the property.
(c) If the court determines that circumstances have so
changed since the execution of the instrument as to render
impracticable, inexpedient, or impossible a literal compliance
with the terms or conditions of the instrument, but the terms
and purposes of the instrument may be substantially performed,
the court may order that the terms of the instrument be
performed and the property be administered or expended in a
manner that will, in the judgment of the court, as nearly as
possible, accomplish the general purposes of the instrument and
the intention of the grantor without regard to, and free from
any, specific restriction, limitation, condition, or direction
contained in the instrument.
Subd. 5. [ATTORNEY GENERAL.] In cases arising under this
section, the attorney general must be given notice of any court
proceedings pursuant to section 15. The attorney general shall
represent the beneficial interests in those cases and shall
enforce affected trusts.
Sec. 24. [501B.32] [PRIVATE FOUNDATIONS; CHARITABLE
TRUSTS; SPLIT-INTEREST TRUSTS.]
Subdivision 1. [INCORPORATED PROVISIONS.] A will or trust
instrument that creates a trust that is: (1) a "private
foundation," as defined in section 501(a) of the Internal
Revenue Code of 1986; or (2) a "charitable trust," as defined in
section 4947(a)(1) of the Internal Revenue Code of 1986; or (3)
a "split-interest trust," as defined in section 4947(a)(2) of
the Internal Revenue Code of 1986, and any other instrument
governing the trustee of one of those trusts or the use,
retention, or disposition of any of the income or property of
one of those trusts, must be considered to have incorporated
within it the provisions in paragraphs (a) to (e) with respect
to the trust and its trustee. Except as provided in subdivision
2, paragraphs (a) to (e) govern the administration and
distribution of the trust notwithstanding provisions of the
governing instrument, statute, or law of this state to the
contrary.
(a) The trustee shall distribute for each taxable year of
the trust amounts at least sufficient to avoid liability for the
tax imposed by section 4942(a) of the Internal Revenue Code of
1986.
(b) The trustee shall not engage in an act of
"self-dealing," as defined in section 4941(d) of the Internal
Revenue Code of 1986, which would give rise to liability for the
tax imposed by section 4941(a) of the Internal Revenue Code of
1986.
(c) The trustee shall not keep "excess business holdings,"
as defined in section 4943(c) of the Internal Revenue Code of
1986, that would give rise to liability for the tax imposed by
section 4943(a) of the Internal Revenue Code of 1986.
(d) The trustee shall not make investments that would
jeopardize the carrying out of any of the exempt purposes of the
trust, within the meaning of section 4944 of the Internal
Revenue Code of 1986, so as to give rise to liability for the
tax imposed by section 4944(a) of the Internal Revenue Code of
1986.
(e) The trustee shall not make a "taxable expenditure," as
defined in section 4945(d) of the Internal Revenue Code of 1986,
that would give rise to liability for the tax imposed by section
4945(a) of the Internal Revenue Code of 1986.
Subd. 2. [EXCEPTION.] Subdivision 1 does not apply to the
extent that a court of competent jurisdiction determines that
application would be contrary to the terms of the will, trust
instrument, or other governing instrument described in
subdivision 1 and that the will, trust instrument, or other
governing instrument may not be changed to conform to
subdivision 1.
Subd. 3. [RIGHTS AND POWERS OF COURTS, ATTORNEY
GENERAL.] Nothing in this section impairs the rights and powers
of the attorney general or the courts of this state with respect
to a trust.
Sec. 25. [501B.33] [CITATION.]
Sections 25 to 37 may be cited as the "supervision of
charitable trusts and trustees act."
Sec. 26. [501B.34] [CHARITABLE TRUSTS; SUPERVISION BY
ATTORNEY GENERAL.]
Sections 25 to 37 apply to trustees holding property for
charitable purposes. In connection with the supervision,
administration, and enforcement of charitable trusts, the
attorney general has the rights, duties, and powers in sections
25 to 37, and common law and statutory rights, duties, and
powers.
Sec. 27. [501B.35] [DEFINITIONS.]
Subdivision 1. [SCOPE.] The definitions in this section
apply to sections 23 to 37 and do not modify or abridge any law
or rule respecting the nature of a charitable trust or the
nature and extent of the duties of a trustee except duties
imposed by sections 23 to 37.
Subd. 2. [CHARITABLE PURPOSE.] "Charitable purpose" means
an actual or purported charitable, philanthropic, religious,
social service, educational, eleemosynary, or other public use
or purpose.
Subd. 3. [CHARITABLE TRUST.] "Charitable trust" means a
fiduciary relationship with respect to property that arises as a
result of a manifestation of an intention to create it, and that
subjects the person by whom the property is held to equitable
duties to deal with the property for a charitable purpose.
Subd. 4. [TRUSTEE.] "Trustee" means a person or group of
persons either in an individual or a joint capacity, or a
director, officer, or other agent of an association, foundation,
trustee corporation, corporation, or other legal entity who is
vested with the control or responsibility of administering
property held for a charitable purpose.
Sec. 28. [501B.36] [REGISTRATION AND REPORTING.]
The registration and reporting provisions of sections 29
and 30 apply to a charitable trust, or an organization with a
charitable purpose, that has gross assets of $25,000 or more,
except that the provisions do not apply to:
(1) a charitable trust administered by the United States or
a state, territory, or possession of the United States, the
District of Columbia, the Commonwealth of Puerto Rico, or any of
their agencies or subdivisions;
(2) a religious association organized under chapter 315 or
chapter 317;
(3) a charitable trust organized and operated exclusively
for religious purposes and administered by a religious
association organized under chapter 315 or chapter 317;
(4) an organization described in section 509(a)(3) of the
Internal Revenue Code of 1986 and operated, supervised, or
controlled by or in connection with one or more organizations
described in clauses (2) to (5); a pooled income fund as defined
in section 642(c)(5) of the Internal Revenue Code of 1986
maintained by an organization described in clauses (2) to (5);
or a charitable remainder annuity trust or unitrust, as defined
in section 664 of the Internal Revenue Code of 1986;
(5) a trust in which the only charitable interest is a
contingent interest for which no charitable deduction has been
allowed for Minnesota income, inheritance, or gift tax purposes
or a trust in which not all of the unexpired interests are
devoted to one or more charitable purposes and in which the only
charitable interest is an annuity or an income interest with
respect to which a charitable deduction is allowed the trust
under applicable Minnesota income tax laws;
(6) an organization subject to sections 309.50 to 309.61;
(7) a trust for individual and charitable beneficiaries
that is described in section 4947(a)(2) of the Internal Revenue
Code of 1986, also known as a split-interest trust; or
(8) a charitable gift, bequest, or devise not held and
continued by a private express trust or corporation even though
the gift, bequest, or devise creates a fiduciary relationship,
unless there is no named charitable beneficiary in existence or
unless a named charitable beneficiary elects in a writing filed
with the attorney general and with the fiduciary to come within
the provisions of sections 29 and 30.
Sec. 29. [501B.37] [REGISTER OF TRUSTS AND TRUSTEES.]
Subdivision 1. [ESTABLISHMENT OF REGISTER; TRANSFER TO
ATTORNEY GENERAL.] The attorney general shall establish and
maintain a register of charitable trusts and trustees subject to
sections 25 to 37.
Subd. 2. [FILING OF INSTRUMENTS.] A charitable trust
subject to sections 25 to 37 must register and file with the
attorney general a copy of the instrument that created the
charitable trust, including any amendments, within three months
after the charitable trust first receives possession or control
of property authorized or required to be applied, either at
present or in the future, for charitable purposes.
Sec. 30. [501B.38] [FILING OF ANNUAL REPORTS.]
Subdivision 1. [REPORTS REQUIRED; DEADLINES;
EXTENSIONS.] A charitable trust subject to sections 25 to 37
must file with the attorney general written reports containing
any information the trust is required to report under sections
6056(b), 6033, 6034, and 6056 of the Internal Revenue Code of
1986. The reports must be filed annually on or before the 15th
day of the fifth month following the close of the charitable
trust's taxable year as established for federal tax purposes.
The time for filing may be extended by application to the
attorney general, but no extension may be for more than six
months. A charitable trust that files the information required
under this subdivision with the attorney general is not required
to file the same information with the commissioner of revenue.
Subd. 2. [SUSPENSION OF FILING.] The attorney general may
suspend the filing requirements under subdivision 1 for a
particular charitable trust for a reasonable, specifically
designated time on written application of the trustee filed with
the attorney general. If the filing requirements are suspended,
the attorney general shall file in the register of charitable
trusts a written statement that the interests of the
beneficiaries will not be prejudiced by the suspension and that
annual reports are not required for proper supervision by the
attorney general's office.
Sec. 31. [501B.39] [PUBLIC INSPECTION OF RECORDS.]
The register, copies of instruments, and the reports filed
with the attorney general must be open to public inspection.
Sec. 32. [501B.40] [INVESTIGATORY POWERS OF THE ATTORNEY
GENERAL; CUSTODIANS TO FURNISH COPIES OF RECORDS.]
Subdivision 1. [DISCOVERY.] The attorney general may
conduct investigations that are reasonably necessary for: (1)
the administration of sections 25 to 37; or (2) determining
whether property held for charitable purposes is properly
administered. In connection with an investigation under this
section, the attorney general may obtain discovery from an
agent, trustee, fiduciary, beneficiary, institution,
association, corporation, or other person regarding a matter,
fact, or circumstance, not privileged, that is relevant to the
subject matter involved in the investigation. The discovery may
be obtained without commencement of a civil action and without
leave of court, except as expressly required by subdivision 2.
The applicable protective provisions of Rules 26.02, 30.02, and
30.04, of the Rules of Civil Procedure for the District Court
apply to discovery procedures instituted under this section.
The attorney general or a person to whom discovery is directed
may apply to and obtain leave of the district court in order to
reduce or extend the time requirements of this subdivision, and,
upon a showing of good cause, the district court shall order a
reduction or extension. In order to obtain discovery, the
attorney general may:
(1) serve written interrogatories on a person. Within 20
days after service of interrogatories, separate written answers
and objections to each interrogatory must be mailed to the
attorney general;
(2) upon reasonable written notice of no less than 15 days,
require a person to produce for inspection and copying
documents, papers, books, accounts, letters, photographs,
objects, or tangible things in the person's possession, custody,
or control; and
(3) upon reasonable written notice of no less than 15 days,
take the testimony of a person by deposition as to a fact or
opinion relevant to the subject matter involved in the pending
investigation.
Subd. 2. [ORDER BY COURT.] If a person fails or refuses to
answer interrogatories, produce materials, or be examined under
oath, the attorney general may, upon notice to the person, apply
to the district court in the county where the person resides or
is found, for an order to compel compliance. On a showing of
cause by the attorney general, the court may issue an order to
compel compliance with the discovery procedures authorized by
this section.
Subd. 3. [PUBLIC RECORDS.] A custodian of records of a
court having jurisdiction of probate matters or of charitable
trusts, and a custodian of records of a department, agency, or
political subdivision of this state shall, upon request, furnish
to the attorney general, free of charge, copies of records
relating to the subject of sections 25 to 37.
Subd. 4. [REPORT OF APPLICATIONS FOR TAX EXEMPTION.] Every
officer, agency, board, or commission of this state that
receives an application for exemption from taxation from a
charitable trust subject to sections 25 to 37 shall annually
file with the attorney general a list of all applications
received during the year and shall notify the attorney general
of the suspension or revocation of a tax exempt status
previously granted.
Sec. 33. [501B.41] [BREACH OF TRUST; PROCEEDINGS TO SECURE
COMPLIANCE.]
Subdivision 1. [ENFORCEMENT POWERS.] The attorney general
may institute appropriate proceedings to obtain compliance with
sections 25 to 37 and the proper administration of a charitable
trust. The powers and duties of the attorney general in this
section are in addition to all other powers and duties.
Subd. 2. [PARTICIPATION BY ATTORNEY GENERAL.] The attorney
general must be notified of, and has the right to participate as
a party in, all court proceedings:
(1) to terminate a charitable trust or to liquidate or
distribute its assets;
(2) to modify or depart from the objects or purposes of a
charitable trust as contained in the instrument governing the
trust, including a proceeding for the application of the
doctrine of cy pres;
(3) to construe the provisions of an instrument with
respect to a charitable trust;
(4) to review an accounting of a charitable trust submitted
by a trustee; or
(5) involving a charitable trust when the interests of the
uncertain or indefinite charitable beneficiaries may be affected.
Subd. 3. [EXEMPTION FROM NOTICE REQUIREMENT.] The attorney
general need not be provided with notice under subdivision 2 of
a charitable gift, devise, or bequest (1) for which the donor or
testator has named as a charitable beneficiary an organization
that is then in existence; or (2) that is not held and continued
by a private express trust or corporation, whether or not the
gift, devise, or bequest creates a fiduciary relationship.
This subdivision does not affect any other notice to the
attorney general required by this chapter.
Subd. 4. [FAILURE TO GIVE NOTICE.] If proceedings are
commenced without service of process and service of the
pleadings upon the attorney general, a judgment or order
rendered in the proceedings is voidable, unenforceable, and,
upon the attorney general's motion seeking relief, may be set
aside. With respect to the proceedings, no compromise,
settlement agreement, contract, or judgment agreed to by any or
all of the parties having or claiming to have an interest in a
charitable trust is valid unless the attorney general was made a
party to the proceedings and joined any agreement or the
attorney general, in writing, waived the right to participate.
The attorney general may enter into a compromise, settlement
agreement, contract, or judgment that the attorney general
believes is in the best interests of the people of the state and
the uncertain or indefinite beneficiaries.
Subd. 5. [WILLS.] The personal representative shall send
to the attorney general a copy of the petition or application
for probate together with a copy of the will and any codicils
that are being offered for probate:
(1) when a will provides for a bequest or devise for a
charitable purpose for which there is no named charitable
beneficiary or for which there is then in existence no named
charitable beneficiary;
(2) when a will provides for bequests or devises for
charitable purposes in excess of $150,000;
(3) when a will provides for a bequest or devise to a named
charitable beneficiary that is in receivership; or
(4) upon a written request served on the personal
representative by a named charitable beneficiary prior to the
order allowing the final account or, in unsupervised
proceedings, within 30 days after service of the final account
on the charitable beneficiary.
The personal representative shall serve the documents on
the attorney general and file with the appropriate court a copy
of the affidavit of service on the attorney general. If the
personal representative was requested to notify the attorney
general of the probate proceedings according to clause (4), the
requesting party shall file with the court a copy of the request
and the affidavit of service on the personal representative.
If objections are filed to a will or codicil containing any
bequest or devise to a charitable trust, the person filing the
objections, at least 14 days before the hearing, shall send to
the attorney general a copy of the objections, a copy of the
petition or application for probate, a copy of the will, and any
codicil that has been offered for probate.
Any service upon the attorney general under this section
must be made personally or by registered or certified mail,
return receipt requested. The attorney general may become a
party in the estate proceedings.
Subd. 6. [BREACH OF TRUST.] The failure of a trustee to
register under section 29, to file annual reports under section
30, or to administer and manage property held for charitable
purposes in accordance with law or consistent with fiduciary
obligations constitutes a breach of trust.
Subd. 7. [CIVIL ACTIONS.] The attorney general may begin a
civil action in order to remedy and redress a breach of trust,
as described in subdivision 6 or as otherwise provided by law,
committed by a trustee subject to sections 25 to 37. If it
appears to the attorney general that a breach of trust has been
committed, the attorney general may sue for and obtain:
(1) injunctive relief against the breach of trust or
threatened breach of trust;
(2) the removal of a trustee who has committed or is
committing a breach of trust;
(3) the recovery of damages; and
(4) another appropriate remedy.
Sec. 34. [501B.42] [CONTRARY PROVISIONS OF INSTRUMENT
INVALID.]
Sections 25 to 37 apply regardless of contrary provisions
of an instrument.
Sec. 35. [501B.43] [COST OF INVESTIGATIONS AND
PROCEEDINGS; REGISTRATION AND FILING FEES.]
Subdivision 1. [EXPENSES PAYABLE.] In a proceeding brought
by the attorney general or in which the attorney general
intervenes under sections 25 to 37, the judgment or order may
provide that the trustee must pay the reasonable expenses
necessarily incurred by the attorney general in the
investigation and prosecution of the action, including
attorneys' fees, if it is determined in the proceeding that the
trustee has been guilty of an intentional or grossly negligent
breach of trust.
Subd. 2. [DISPOSITION OF MONEY.] All money received by the
attorney general under this section must be deposited in the
state treasury and credited to the general fund.
Sec. 36. [501B.44] [IMMUNITY OF CHARITABLE TRUSTS.]
A charitable trust is an "organization" for purposes of
section 317.201, and that section applies to charitable trusts.
Sec. 37. [501B.45] [SALE OF BANKS OWNED BY CHARITABLE
TRUSTS.]
Subdivision 1. [DEFINITIONS.] For the purpose of this
section, "charitable trust" means a charitable trust subject to
supervision by the attorney general under the supervision of
charitable trusts and trustees act, sections 25 to 37, that is
required to divest excess business holdings by section 4943 of
the Internal Revenue Code of 1986 and that owned 100 percent of
a bank holding company on May 26, 1969, the date of enactment of
section 4943 of the Internal Revenue Code of 1954.
Subd. 2. [AUTHORIZATION.] The stock or assets of one or
more banks or a bank holding company owned directly or
indirectly by a charitable trust may be sold, assigned, merged,
or transferred by the charitable trust under the procedures in
section 48.93 to a bank holding company, bank, or other
qualified entity as permitted by applicable banking laws without
regard to whether the entity acquiring the stock or assets is
located in a reciprocating state.
Subd. 3. [LEGISLATIVE INTENT.] It is the express intention
of the Minnesota legislature to act pursuant to United States
Code, title 12, section 1842(d), to permit certain charitable
trusts to sell, assign, or transfer certain financial
institutions' assets without regard to whether the entity
acquiring the assets of the charitable trust is located outside
of this state.
Subd. 4. [ADDITIONAL ACQUISITIONS.] A bank holding
company, other than a reciprocating state bank holding company
as defined in section 48.92, subdivision 8, that directly or
indirectly acquires control of a bank located in this state
under the provisions of this section may acquire additional bank
assets through the expenditure of an annual amount not to exceed
five percent of the Minnesota assets of the acquired bank
holding company as of December 31 of the preceding year. The
restrictions within this subdivision apply only until the bank
holding company making an acquisition under this section becomes
a reciprocating state bank holding company. This section does
not prohibit the bank holding company from being granted a
charter for a de novo bank or from establishing de novo detached
facilities pursuant to Minnesota law.
SALES AND LEASES OF REAL PROPERTY
Sec. 38. [501B.46] [PETITION FOR COURT ORDER TO SELL,
MORTGAGE, OR LEASE REAL PROPERTY HELD IN TRUST.]
(a) If the assets of an express trust by will or other
written instrument include real property in this state that the
trustee is not, under the terms of the trust, then permitted to
sell, mortgage, or lease, and if section 20 is applicable to the
trust, the trustee or a beneficiary of the trust may petition
the court then having jurisdiction of the trust for an order
directing the trustee to sell, mortgage, or lease the real
property or any of the real property.
(b) If the assets of an express trust by will or other
written instrument include real property in this state that the
trustee is not, under the terms of the trust, then permitted to
sell, mortgage, or lease, and if section 20 is not applicable to
the trust, the trustee or a beneficiary of the trust may
petition an appropriate district court under section 13 for an
order directing the trustee to sell, mortgage, or lease the real
property or a part of the real property.
Sec. 39. [501B.47] [PETITION BY OWNER OF PRESENT OR FUTURE
INTEREST FOR COURT ORDER TO SELL, MORTGAGE, OR LEASE INTERESTS
IN REAL PROPERTY.]
Notwithstanding a contrary provision in the instrument
creating the interests, when the ownership of real property
situated in this state is divided into one or more possessory
interests and one or more future interests, the owner of an
interest may petition the district court for the county in which
any of the real property is situated for an order directing that
the real property or part of the real property be sold,
mortgaged, or leased. If an owner is a minor or incapacitated
person as defined in section 525.54, the petition may be made on
behalf of the owner by a custodian, conservator, or guardian.
Sec. 40. [501B.48] [WHEN PETITION MAY BE GRANTED.]
Subdivision 1. [PETITION UNDER SECTION 38.] The court to
which a petition to sell, mortgage, or lease has been made under
section 38 may grant the petition, on terms it considers
appropriate, if the court determines that:
(1) if the interest in real property were owned in fee
simple or absolute ownership by a single individual, a sale or
mortgage of the interest would be desirable because total
investment returns, including appreciation and the value of any
use of the real property by trust beneficiaries, were
inadequate; or
(2) an order directing a sale or mortgage would be
economically advantageous to the trust beneficiaries to whom
trust income is distributable or may be distributed and would
not be seriously disadvantageous to any trust beneficiary.
The court to which a petition to lease has been made under
section 38 may grant the petition on terms it considers
appropriate, even though the term of the lease may extend beyond
the term of the trust, if the court determines that an order
directing a lease would be economically advantageous to the
trust beneficiaries to whom trust income is distributable or may
be distributed and would not be seriously disadvantageous to any
trust beneficiary.
Subd. 2. [PETITION UNDER SECTION 39.] The court to which a
petition to sell or mortgage has been made under section 39 may
grant the petition on terms it considers appropriate if the
court determines that:
(1) were the real property held in trust for the owners of
the possessory and future interests in the property, retention
of the real property by the trustee without the sale or mortgage
would be inconsistent with a trustee's common law duty to
administer the trust impartially as between the holders of
successive interests in income and principal;
(2) if the interest in real property were owned in fee
simple or absolute ownership by a single individual, a sale or
mortgage of the interest would be desirable because total
investment returns, including appreciation and the value of any
use of the real property by possessory owners, were inadequate;
or
(3) an order directing a sale or mortgage would be
economically advantageous to the owners of possessory interests
in the real property and would not be seriously disadvantageous
to the owner of any interest in the property.
The court to which a petition to lease has been made under
section 39 may grant the petition on terms it considers
appropriate, even though the term of the lease may extend beyond
the duration of the possessory interests in the real property,
if the court determines that an order directing a lease would be
economically advantageous to the owners of possessory interests
in the real property and would not be seriously disadvantageous
to the owner of any interest in the property.
Sec. 41. [501B.49] [NOTICE OF HEARING.]
Subdivision 1. [HEARING REQUIRED.] On the filing of a
petition under section 38 or 39, the court shall, by order, fix
a time and place for a hearing on the petition unless a hearing
has been waived in writing. In the case of a petition under
section 38, each beneficiary of the trust then in being must
join in the waiver. In the case of a petition under section 39,
each person in being who owns an interest in the real property
must join in the waiver.
Subd. 2. [NOTICE.] Notice of hearing must be given by
publishing a copy of the order for hearing one time in a legal
newspaper for the county in which the petition is filed at least
20 days before the date of the hearing, and by mailing copies of
the order for hearing in the manner specified in this
subdivision or in another manner ordered by the court. In the
case of a petition under section 38, mailed notice must be given
by mailing a copy of the order for hearing to those
beneficiaries of the trust then in being who are known to or
reasonably ascertainable by the petitioner and, in the case of a
beneficiary who is a minor or an incapacitated person as defined
in section 525.54, to the conservator or guardian, or if none is
acting within the state, to the guardian ad litem of the
beneficiary, at least 15 days before the date of the hearing.
In the case of a petition under section 39, mailed notice must
be given by mailing a copy of the order for hearing to those
persons owning an interest in the real property then in being
who are known to or reasonably ascertainable by the petitioner
and, in the case of a person who is a minor or an incapacitated
person as defined in section 525.54, to the conservator or
guardian, or if none is acting within the state, to the guardian
ad litem of the person, at least 15 days before the date of the
hearing.
Sec. 42. [501B.50] [REPRESENTATION OF PERSONS WHO ARE
UNBORN, UNASCERTAINED, UNKNOWN, OR MINORS OR INCAPACITATED
PERSONS.]
If an interested person is a minor or an incapacitated
person as defined in section 525.54 and does not have a guardian
or conservator within the state, the court shall appoint a
guardian ad litem for the person. If an interested person is
unborn, unascertained, or a person whose identity or address is
unknown to the petitioner, the court shall represent the person,
but the court may, upon the application of the petitioner or
another interested person or on its own motion, appoint a
guardian ad litem to represent the person.
Sec. 43. [501B.51] [ORDER UPON PETITION; EXECUTION OF
TRANSACTION.]
Subdivision 1. [FORM OF ORDER; CONCLUSIVENESS.] At a
hearing under section 41, the court shall make an order it
considers appropriate. If the petition is granted in whole or
in part, the order must specify the real property to be sold,
mortgaged, or leased and the terms and conditions on which the
transaction is to be consummated. The order is final and
conclusive as to all matters determined by it and binding in rem
on all persons interested in the real property, whether their
interests are vested or contingent, even though the person is a
minor, incapacitated as defined in section 525.54,
unascertained, or not in being, except that appeal may be taken
in the manner provided in the rules of appellate procedure.
Subd. 2. [EXECUTION OF ORDER.] (a) In the case of a
petition under section 38, all transactions required by the
order must be executed by the trustee.
(b) In the case of a petition under section 39, the court
shall appoint a suitable person as receiver to act for the court
in executing each transaction required by the order. Each
required transaction must be executed by the receiver.
Sec. 44. [501B.52] [REPORT OF AGREEMENT FOR CONFIRMATION.]
Before a sale, mortgage, or lease is made under an order
described in section 43, the trustee or receiver shall enter
into an agreement for the sale, mortgage, or lease, subject to
the approval of the court, and must report the agreement to the
court under oath. At least 15 days before the hearing on the
confirmation of the agreement, the trustee or receiver shall
mail a copy of the agreement to each interested party to whom
mailed notice was given under section 41 and to any interested
party who did not receive notice but appeared at the hearing on
the petition.
Sec. 45. [501B.53] [ORDER OF CONFIRMATION; CONTENTS AND
SUBSEQUENT PROCEDURES; DISTRIBUTION OF ASSETS.]
Subdivision 1. [ORDER TO EXECUTE AGREEMENT.] If an
agreement reported to the court under section 44 is found by the
court to conform to the order described in section 43, the court
shall make an order approving and confirming the agreement and
directing the trustee or receiver to execute and deliver the
deed, mortgage, or lease of real property required by the
agreement.
Subd. 2. [COSTS; ALLOWANCES.] The order of confirmation
may direct that each participant in the proceeding be paid
reasonable costs of the proceeding incurred by the participant.
The order of confirmation may make appropriate allowances to
persons who have served in the proceeding as receiver, guardian
ad litem, or counsel, and may direct the manner of payment of
these allowances.
Subd. 3. [SAFEKEEPING, MANAGEMENT, AND DISTRIBUTION OF
ASSETS.] The order of confirmation must include appropriate
provisions for the safekeeping, management, and distribution of
assets derived from the ordered transaction. In the case of
assets derived from a transaction executed by a trustee under
section 43, subdivision 2, paragraph (a), distribution must be
made to the trustee for administration as trust assets. In the
case of assets derived from a transaction executed by a receiver
under section 43, subdivision 2, paragraph (b), distribution
must be made to the owners, at the time of the sale or mortgage,
of present possessory interests in the real property that was
sold or mortgaged, and to the owners of leased real property who
would be entitled to possession on the present termination of
the lease. Notwithstanding any contrary provision in the terms
of the instrument creating the interests in real property sold,
mortgaged, or leased under this subdivision, the same possessory
and future interests exist in the assets distributed as existed
in the real property, and any provision in the creating
instrument for forfeiture of an interest in real property upon a
sale or other assignment must be disregarded by the court in
directing distribution or other assignment of interests in the
proceeds of a sale.
Subd. 4. [HEARING ON CONFIRMATION ORDER.] The trustee or
receiver shall obtain from the court a time and place for the
court's hearing on the confirmation of the agreement and shall
give mailed notice of the time and place of the hearing to the
interested parties described in section 43 at least 15 days
before the date of that hearing. The order of confirmation is
final and conclusive as to all matters determined by it and
binding in rem on all persons interested in the real property,
whether their interests are vested or contingent, even though a
person is a minor, incapacitated as defined in section 525.54,
unascertained, or not in being, except that appeal may be taken
in the manner provided in the rules of appellate procedure.
Subd. 5. [COMBINED PROCEEDINGS.] In appropriate
circumstances, proceedings under this section and section 44 may
be combined with proceedings under sections 38 to 43.
Sec. 46. [501B.54] [LEGAL EFFECT OF DEED, MORTGAGE, OR
LEASE MADE UNDER SECTION 45.]
A deed, mortgage, or lease executed and delivered in
accordance with an order of confirmation under section 45 binds
the interests of the applicant for the order and of all other
persons interested in the real property sold, mortgaged, or
leased.
Sec. 47. [501B.55] [DATE OF CREATION OF INTERESTS AFFECTED
BY THE PROCEDURES IN SECTIONS 38 TO 46.]
The procedures in sections 38 to 46 apply to proceedings
initiated after January 1, 1990, with respect to interests
created before, on, or after January 1, 1990.
UNIFORM PRINCIPAL AND INCOME ACT
Sec. 48. [501B.59] [DEFINITIONS.]
Subdivision 1. [SCOPE.] The definitions in this section
apply to sections 48 to 65.
Subd. 2. [INCOME BENEFICIARY.] "Income beneficiary" means
the person to whom income is presently payable or for whom it is
accumulated for distribution as income.
Subd. 3. [INVENTORY VALUE.] "Inventory value" means the
cost of property purchased by the trustee and the market value
of other property at the time it became subject to the trust,
but in the case of a testamentary trust the trustee may use any
value finally determined for the purposes of an estate or
inheritance tax.
Subd. 4. [REMAINDERPERSON.] "Remainderperson" means the
person entitled to principal, including income accumulated and
added to principal.
Subd. 5. [TRUSTEE.] "Trustee" means an original trustee
and any successor or added trustee.
Sec. 49. [501B.60] [DUTY OF TRUSTEE AS TO RECEIPTS AND
EXPENDITURE.]
Subdivision 1. [GENERAL RULES OF ADMINISTRATION.] A trust
must be administered with due regard to the respective interests
of income beneficiaries and remainderpersons. A trust is so
administered with respect to the allocation of receipts and
expenditures if a receipt is credited or an expenditure is
charged to income or principal or partly to each:
(1) in accordance with the terms of the trust instrument,
notwithstanding contrary provisions of sections 48 to 65;
(2) in the absence of contrary terms of the trust
instrument, in accordance with sections 48 to 65;
(3) if neither of the preceding rules of administration is
applicable, in accordance with what is reasonable and equitable
in view of the interests of those entitled to income as well as
of those entitled to principal, and in view of the manner in
which persons of ordinary prudence, discretion, and judgment
would act in the management of their own affairs.
Subd. 2. [TRUSTEE'S DISCRETION.] If a trust instrument
gives the trustee discretion in crediting a receipt or charging
an expenditure to income or principal or partly to each, no
inference of imprudence or partiality arises from the fact that
the trustee has made an allocation contrary to sections 48 to 65.
Sec. 50. [501B.61] [INCOME; PRINCIPAL; CHARGES.]
Subdivision 1. [INCOME DEFINED.] "Income" means the return
in money or property derived from the use of principal,
including return received as:
(1) rent of real or personal property, including sums
received for cancellation or renewal of a lease;
(2) interest on money lent, including sums received as
consideration for the privilege of prepayment of principal,
except as provided in section 54 on bond premium and bond
discount;
(3) income earned during administration of a decedent's
estate as provided in section 52;
(4) corporate distributions as provided in section 50;
(5) accrued increment on bonds or other obligations issued
at discount as provided in section 54;
(6) receipts from business and farming operations as
provided in section 55;
(7) receipts from disposition of natural resources as
provided in sections 56 and 57;
(8) receipts from other principal subject to depletion as
provided in section 58; and
(9) receipts from disposition of underproductive property
as provided in section 59.
Subd. 2. [PRINCIPAL DEFINED.] "Principal" means the
property set aside by the owner or the person legally empowered
so that it is held in trust eventually to be delivered to a
remainderperson while the return or use of the principal is in
the meantime taken or received by or held for accumulation for
an income beneficiary. Principal includes:
(1) consideration received by the trustee on the sale or
other transfer of principal, on repayment of a loan, or as a
refund, replacement, or change in the form of principal;
(2) proceeds of property taken on eminent domain
proceedings;
(3) proceeds of insurance on property forming part of the
principal, except proceeds of insurance on a separate interest
of an income beneficiary;
(4) stock dividends, receipts on liquidation of a
corporation, and other corporate distributions as provided in
section 53;
(5) receipts from the disposition of corporate securities
as provided in section 54;
(6) royalties and other receipts from disposition of
natural resources as provided in sections 56 and 57;
(7) receipts from other principal subject to depletion as
provided in section 58;
(8) profit resulting from a change in the form of
principal, except as provided in section 59 on underproductive
property;
(9) receipts from disposition of underproductive property
as provided in section 59; and
(10) allowances for depreciation established under sections
55 and 60, subdivision 1, clause (2).
Subd. 3. [CHARGES.] After determining income and principal
in accordance with the terms of the trust instrument or of
sections 48 to 65, the trustee shall charge to income or
principal expenses and other charges as provided in section 60.
Sec. 51. [501B.62] [WHEN RIGHT TO INCOME ARISES;
APPORTIONMENT OF INCOME.]
Subdivision 1. [GENERAL RULE.] An income beneficiary is
entitled to income from the date specified in the trust
instrument or, if none is specified, from the date an asset
becomes subject to the trust. In the case of an asset that
becomes subject to a trust because of a will, it becomes subject
to the trust as of the date of the death of the testator or date
of receipt in the estate if acquired after death, even though
there is an intervening period of administration of the
testator's estate during which the beneficiary may have no right
to a distribution of the income.
Subd. 2. [RECEIPTS DUE BUT NOT PAID; PERIODIC
PAYMENTS.] In the administration of a decedent's estate or an
asset that becomes subject to a trust by reason of a will:
(1) receipts due but not paid at the date of death of the
testator are principal;
(2) receipts in the form of periodic payments, other than
corporate distributions to stockholders, including rent,
interest, or annuities, not due at the date of the death of the
testator must be treated as accruing from day to day. That
portion of the receipt that accrues before the date of death is
principal, and the balance is income.
Subd. 3. [OTHER RECEIPTS.] In all other cases, any receipt
from an income-producing asset is income even though the receipt
was earned or accrued in whole or in part before the date when
the asset became subject to the trust.
Subd. 4. [TERMINATION OF INCOME INTEREST.] On termination
of an income interest, the income beneficiary whose interest is
terminated, or the income beneficiary's estate, is entitled to:
(1) income undistributed on the date of termination;
(2) income due but not paid to the trustee on the date of
termination; and
(3) income in the form of periodic payments, other than
corporate distributions to stockholders, including rent,
interest, or annuities, not due on the date of termination,
accrued from day to day.
Subd. 5. [CORPORATE DISTRIBUTIONS TO STOCKHOLDERS.]
Corporate distributions to stockholders must be treated as due
on the day fixed by the corporation for determination of
stockholders of record entitled to distribution or, if no date
is fixed, on the date of declaration of the distribution by the
corporation.
Sec. 52. [501B.63] [INCOME EARNED DURING ADMINISTRATION OF
A DECEDENT'S ESTATE.]
Subdivision 1. [EXPENSES.] Unless a will provides
otherwise and subject to subdivision 2, all expenses incurred in
connection with the settlement of a decedent's estate, including
debts, funeral expenses, estate taxes, interest and penalties
concerning taxes, family allowances, fees of attorneys and
personal representatives, and court costs must be charged
against the principal of the estate.
Subd. 2. [INCOME.] Unless the will provides otherwise,
income from the assets of a decedent's estate after the death of
the testator and before distribution, including income from
property used to discharge liabilities, must be determined in
accordance with the rules applicable to a trustee and
distributed as follows:
(1) to specific devisees, the income from the property
devised to them respectively, less property taxes, ordinary
repairs, interest, and other expenses of management and
operation of the property, and less an appropriate portion of
taxes imposed on income, excluding taxes on capital gains, that
accrue during the period of administration;
(2) to all other devisees, except devisees of pecuniary
devises not in trust, the balance of the income, less the
balance of property taxes, ordinary repairs, interest, and other
expenses of management and operation of all property from which
the estate is entitled to income, and taxes imposed on income,
excluding taxes on capital gains, that accrue during the period
of administration, in proportion to their respective interests
in the undistributed assets of the estate computed at times of
distribution on the basis of inventory value.
Subd. 3. [INCOME RECEIVED BY TRUSTEE.] Income received by
a trustee under subdivision 2 must be treated as income of the
trust.
Sec. 53. [501B.64] [CORPORATE DISTRIBUTIONS.]
Subdivision 1. [SHARES; STOCK SPLITS; STOCK DIVIDENDS;
SUBSCRIPTION RIGHTS.] Distributions of shares of a distributing
corporation, including distributions in the form of a stock
split or stock dividend, are principal. A shareholder's right
to subscribe to shares or other securities of the distributing
corporation and the proceeds of any sale of that right are
principal.
Subd. 2. [CALL OF SHARES; MERGER; LIQUIDATION.] Except to
the extent that the corporation indicates that some part of a
corporate distribution is a settlement of preferred or
guaranteed dividends accrued since the trustee became a
stockholder or is in lieu of an ordinary cash dividend, a
corporate distribution is principal if the distribution is
pursuant to:
(1) a call of shares;
(2) a merger, consolidation, reorganization, or other plan
by which assets of the corporation are acquired by another
corporation; or
(3) a total or partial liquidation of the corporation,
including a distribution the corporation indicates is a
distribution in total or partial liquidation or distribution of
assets, other than cash, pursuant to a court decree or final
administrative order by a government agency ordering
distribution of the particular assets.
Subd. 3. [REGULATED INVESTMENT COMPANY; REAL ESTATE
INVESTMENT TRUST.] Distributions made from ordinary income by a
regulated investment company or by a trust qualifying and
electing to be taxed under federal law as a real estate
investment trust are income. All other distributions made by
the company or trust, including distributions from capital
gains, depreciation, or depletion, whether in the form of cash
or an option to take new stock or cash or an option to purchase
additional shares, are principal.
Subd. 4. [OTHER DISTRIBUTIONS.] Except as provided in
subdivisions 1, 2, and 3, all corporate distributions are
income. "Corporate distributions" includes cash dividends,
distributions of or rights to subscribe to shares or securities
or obligations of corporations other than the distributing
corporation, and the proceeds of the rights or property
distributions. Except as provided in subdivisions 2 and 3, if
the distributing corporation gives a stockholder an option to
receive a distribution either in cash or in its own shares, the
distribution chosen is income.
Subd. 5. [RELIANCE ON STATEMENTS.] The trustee may rely on
a statement of the distributing corporation as to a fact
relevant under a provision of sections 48 to 65 concerning the
source or character of dividends or distributions of corporate
assets.
Sec. 54. [501B.65] [BOND PREMIUM AND DISCOUNT.]
Subdivision 1. [PRINCIPAL.] Bonds or other obligations for
the payment of money are principal at their inventory value,
except as provided in subdivision 2 for discount bonds. No
provision may be made for amortization of bond premiums or for
accumulation for discount. The proceeds of sale, redemption, or
other disposition of the bonds or obligations are principal.
Subd. 2. [INCOME.] The increment in value of a bond or
other obligation for the payment of money payable at a future
time in accordance with a fixed schedule of appreciation in
excess of the price at which it was issued, is distributable as
income. The increment in value is distributable to the
beneficiary who was the income beneficiary at the time of
increment from the first principal cash available or, if none is
available, when realized by sale, redemption, or other
disposition. Whenever unrealized increment is distributed as
income but out of principal, the principal must be reimbursed
for the increment when realized.
Sec. 55. [501B.66] [BUSINESS AND FARMING OPERATIONS.]
Subdivision 1. [BUSINESS INCOME OR LOSSES.] If a trustee
uses part of the principal in the continuance of a business of
which the settlor was a sole proprietor or a partner, the net
profits of the business, computed in accordance with generally
accepted accounting principles for a comparable business, are
income. If a loss results in any fiscal or calendar year, the
loss falls on principal and must not be carried into any other
fiscal or calendar year for purposes of calculating new income.
Subd. 2. [AGRICULTURAL INCOME.] Generally accepted
accounting principles must be used to determine income from an
agricultural or farming operation, including the raising of
animals or the operation of a nursery.
Sec. 56. [501B.67] [DISPOSITION OF NATURAL RESOURCES.]
Subdivision 1. [ALLOCATION OF RECEIPTS.] If a part of the
principal consists of a right to receive royalties, overriding
or limited royalties, working interests, production payments,
net profit interests, or other interests in minerals or other
natural resources in, on, or under land, the receipts from
taking the natural resources from the land must be allocated
under paragraphs (a) to (c).
(a) If received as rent on a lease or extension payments on
a lease, the receipts are income.
(b) If received from a production payment carved out of a
mineral property, the receipts are income to the extent of a
factor for interest or its equivalent provided in the governing
instrument or a greater amount determined by the trustee to be
reasonable and equitable in view of the interests of those
entitled to income as well as those entitled to principal. The
receipts not allocated to income are principal.
(c) If received as a royalty, overriding or limited
royalty, or bonus or from a working, net profit, or other
interest in minerals or other natural resources, receipts not
provided for in paragraph (a) or (b) must be apportioned on a
yearly basis in accordance with this paragraph whether or not
any natural resource was being taken from the land at the time
the trust was established. The receipts from these properties
must be allocated in accordance with what is reasonable and
equitable in view of the interests of those entitled to income
as well as of those entitled to principal. The amount allocated
to principal must be presumed to be reasonable and equitable if
it is not less than the amount allowable as a deduction for
depletion, amortization, depreciation, or similar costs under
the Internal Revenue Code of 1986. Any allocated amount must be
added to principal as an allowance for depletion of the asset.
The balance of the gross receipts, after payment from the
receipts of all direct and indirect expenses, is income.
Subd. 2. [TIMBER EXCEPTED.] This section does not apply to
timber.
Sec. 57. [501B.68] [TIMBER.]
If a part of the principal consists of land from which
merchantable timber may be removed, the receipts from taking the
timber from the land must be allocated in accordance with what
is reasonable and equitable in view of the interests of those
entitled to income as well as of those entitled to principal.
The amount allocated to principal must be presumed to be
reasonable and equitable if it is not less than the amount
allowable as a deduction for depletion, amortization,
depreciation, or similar costs under the Internal Revenue Code
of 1986.
Sec. 58. [501B.69] [OTHER PROPERTY SUBJECT TO DEPLETION.]
Except as provided in sections 56 and 57, if part of the
principal consists of property subject to depletion, including
leaseholds, patents, copyrights, royalty rights, and rights to
receive payments on a contract for deferred compensation, the
receipts from the property must be allocated in accordance with
what is reasonable and equitable in view of the interests of
those entitled to income as well as of those entitled to
principal. The amount allocated to principal is presumed to be
reasonable and equitable if it is not less than the amount
allowable as a deduction for depletion, amortization,
depreciation, or similar costs under the Internal Revenue Code
of 1986.
Sec. 59. [501B.70] [UNDERPRODUCTIVE PROPERTY.]
Subdivision 1. [PORTION OF PROCEEDS AS INCOME.] Except as
otherwise provided in this section, a portion of the net
proceeds of a sale of a part of the principal that has not
produced an average net income of at least one percent per year
of its inventory value for more than a year, including as income
the value of any beneficial use of the property by the income
beneficiary, must be treated as delayed income to which the
income beneficiary is entitled as provided in this section. The
net proceeds of sale are the gross proceeds received, including
the value of property received in substitution for the property
disposed of, less the expenses, including capital gains tax, if
any, incurred in the disposition and less any carrying charges
paid while the property was underproductive.
Subd. 2. [CALCULATION OF DELAYED INCOME.] The sum
allocated as delayed income is the difference between the net
proceeds and the amount that would have produced the net
proceeds, had it been invested at simple interest at four
percent per year while the property was underproductive. This
sum, plus any carrying charges and expenses previously charged
against income while the property was underproductive, less any
income received by the income beneficiary from the property and
less the value of any beneficial use of the property by the
income beneficiary, is income, and the balance is principal.
Subd. 3. [ACCRUAL OF DELAYED INCOME.] An income
beneficiary or the income beneficiary's estate is entitled to
delayed income under this section as if accrued from day to day.
Subd. 4. [DIFFICULT-TO-APPORTION PROPERTY.] If principal
subject to this section is disposed of by conversion into
property that cannot be apportioned easily, including, but not
limited to, land, mortgages, or realty acquired by or in lieu of
foreclosure, the income beneficiary is entitled to the net
income from any property or obligation into which the original
principal is converted while the substituted property or
obligation is held. If within five years after the conversion
the substituted property has not been further converted into
easily apportionable property, no allocation as provided in this
section may be made.
Sec. 60. [501B.71] [CHARGES AGAINST INCOME AND PRINCIPAL.]
Subdivision 1. [INCOME.] The following charges must be
made against income:
(1) ordinary expenses incurred in connection with the
administration, management, or preservation of the trust
property, including regularly recurring taxes assessed against a
portion of the principal, water rates, premiums on insurance
taken upon the interests of the income beneficiary,
remainderperson, or trustee, interest paid by the trustee, and
ordinary repairs;
(2) a reasonable allowance for depreciation on property
subject to depreciation under generally accepted accounting
principles, but no allowance may be made for depreciation of
that portion of real property used by a beneficiary as a
residence or for depreciation of property held by the trustee on
January 1, 1970, for which the trustee is not then making an
allowance for depreciation;
(3) one-half of the court costs, attorneys' fees, and other
fees on periodic accountings or judicial proceedings, unless the
court directs otherwise;
(4) court costs, attorneys' fees, and other fees on other
accountings or judicial proceedings if the matter primarily
concerns the income interest, unless the court directs
otherwise;
(5) one-half of the trustee's regular compensation for
services performed for the income beneficiary or in the
production of income whether based on a percentage of principal
or income, and all expenses reasonably incurred for current
management of principal and application of income; and
(6) any tax levied on receipts defined as income under
sections 48 to 65 or the trust instrument and payable by the
trustee.
Subd. 2. [UNUSUAL CHARGES.] If charges against income are
of an unusual amount, the trustee may charge them over a
reasonable period of time or, by means of reserves or other
reasonable means, withhold from distribution sufficient sums to
regularize distributions.
Subd. 3. [PRINCIPAL.] The following charges must be made
against principal:
(1) trustee's compensation not chargeable to income under
subdivision 1, clause (5), special compensation of the trustee,
expenses reasonably incurred in connection with principal, court
costs and attorneys' fees primarily concerning matters of
principal, and trustee's compensation computed on principal as
an acceptance, distribution, or termination fee;
(2) charges not provided for in subdivision 1, including
the cost of investing and reinvesting principal, the payments on
principal of an indebtedness, including a mortgage amortized by
periodic payments of principal, expenses for preparation of
property for rental or sale, and, unless the court directs
otherwise, expenses incurred in maintaining or defending any
action to construe the trust or protect it or the property or
assure the title of any trust property;
(3) extraordinary repairs or expenses incurred in making a
capital improvement to principal, including special assessments,
but a trustee may establish an allowance for depreciation out of
income to the extent permitted by subdivision 1, clause (2), and
by section 52;
(4) any tax levied on profit, gain, or other receipts
allocated to principal, even if the taxing authority calls the
tax an income tax;
(5) any amount apportioned to a trust, including interest
and penalties, if an estate or inheritance tax is levied in
respect of a trust in which both an income beneficiary and a
remainderperson have an interest.
Subd. 4. [REGULAR CHARGES PAYABLE FROM INCOME.] Regularly
recurring charges payable from income must be apportioned to the
same extent and in the same manner that income is apportioned
under section 51.
Sec. 61. [501B.72] [NONTRUST ESTATES.]
Subdivision 1. [LIMITATIONS.] Sections 48 to 65 apply to
nontrust estates, subject to:
(1) agreement of the parties;
(2) specific direction in the instrument creating the
nontrust estates;
(3) subdivision 2; and
(4) other applicable statutes.
References in sections 48 to 65 to trusts and trustees must be
read as applying to nontrust estates and to tenants and
remainderpersons as the context requires.
Subd. 2. [APPLICATION.] In applying sections 48 to 65 to
nontrust estates, the rules in paragraphs (a) to (c) must be
followed.
(a) A legal life tenant or a remainderperson who has
incurred a charge for the tenant's or remainderperson's benefit
without the consent or agreement of the other, shall pay the
charge in full.
(b) Costs of an improvement, including special taxes or
assessments representing an addition to value of property
forming part of the principal that cannot reasonably be expected
to outlast the legal life estate, must be paid by the legal life
tenant.
(c) If the improvement can reasonably be expected to
outlast the legal life estate, only a portion of the costs must
be paid by the legal life tenant and the balance by the
remainderperson.
(1) The portion payable by the legal life tenant is that
fraction of the total found by dividing the present value of the
legal life estate by the present value of an estate of the same
form as that of the legal life estate but limited to a period
corresponding to the reasonably expected duration of the
improvement.
(2) The present value of the legal life estate must be
computed by applying the federal estate tax regulations for the
calculation of the value of life estates under section 2031 of
the Internal Revenue Code of 1986. The federal estate tax
regulations applied must be those in force on the date when the
costs of the improvement are initially determined by assessment,
agreement, or otherwise. No other evidence of duration or
expectancy may be considered.
Sec. 62. [501B.73] [APPLICATION.]
Except as specifically provided in the governing
instrument, Minnesota Statutes 1988, sections 501.48 to 501.63,
apply to a receipt or expense received or incurred after January
1, 1970, and before January 1, 1990, by any trust or decedent's
estate whether established before or after January 1, 1970, and
whether the asset involved was acquired by the trustee before or
after January 1, 1970.
Except as specifically provided in the governing
instrument, sections 48 to 65 apply to a receipt or expense
received or incurred after December 31, 1989, by a trust or
decedent's estate whether established before, on, or after
January 1, 1990, and whether the asset involved or legal estate
was acquired by the trustee, personal representative, legal life
tenant, or remainderperson before, on, or after January 1, 1990.
Sec. 63. [501B.74] [ASCERTAINMENT OF INCOME OR PRINCIPAL.]
Sections 48 to 65 do not govern the ascertainment of what
constitutes the receipt of income or principal by the estate or
trust for income tax purposes.
Sec. 64. [501B.75] [UNIFORMITY OF INTERPRETATION.]
Sections 48 to 65 must be so construed as to effectuate
their general purpose to make uniform the law of those states
that enact them.
Sec. 65. [501B.76] [SHORT TITLE.]
Sections 48 to 65 may be cited as the uniform principal and
income act.
MINNESOTA TRUSTEES' POWERS ACT
Sec. 66. [501B.79] [TRUSTEE DEFINED.]
As used in sections 66 to 69, "trustee" means a
corporation, individual, or other legal entity acting as an
original, added, or successor trustee of a trust created under a
written instrument, whichever in a particular case is
appropriate.
Sec. 67. [501B.80] [INCORPORATION BY REFERENCE.]
By a clear expression in a written instrument of the
intention of the grantor, one or more of the powers in section
68, as they exist at the time of the signing of the written
instrument, may be incorporated by reference as though that
language were set forth verbatim in the instrument.
Sec. 68. [501B.81] [ENUMERATED POWERS OF TRUSTEE.]
Subdivision 1. [TRUST ASSETS.] The trustee may retain
trust assets until, in the judgment of the trustee, disposition
of the assets should be made, without regard to any effect
retention may have on the diversification of the assets of the
trust. The property may be retained even though it includes an
asset in which the trustee is personally interested.
Subd. 2. [ADDITIONS TO TRUST ASSETS.] The trustee may
receive from any source additions to the assets of the trust.
Subd. 3. [BUSINESS OR ENTERPRISE.] The trustee may
continue or participate in the operation of a business or other
enterprise, and to effect incorporation, dissolution, or other
change in the form of the organization of the business or
enterprise.
Subd. 4. [UNDIVIDED INTEREST IN TRUST ASSET.] The trustee
may acquire an undivided interest in a trust asset in which the
trustee, in a trust capacity, holds an undivided interest.
Subd. 5. [INVESTMENT OF TRUST ASSETS.] The trustee may
invest and reinvest trust assets in any property or any
undivided interest in the property. These investments include
but are not limited to bonds, debentures, secured or unsecured
notes, preferred or common stocks of corporations, mutual funds,
real estate or real estate improvements or interests, wherever
located, oil and mineral leases, royalty or similar interests,
and interests in trusts, including investment trusts and common
trust funds maintained by a corporate trustee, and insurance
upon the life of a person who is or may become a trust
beneficiary. These investments may be made without regard to
diversification.
Subd. 6. [DEPOSITS.] The trustee may deposit trust funds
in a bank, including a bank operated by the trustee, or in a
state or federal savings and loan association.
Subd. 7. [PURCHASE AND SALE.] The trustee may acquire,
sell, or otherwise dispose of an asset, at public or private
sale, for cash or on credit, with or without security as the
trustee deems advisable, and manage, develop, exchange,
partition, change the character of, or abandon a trust asset or
any interest in it.
Subd. 8. [OPTIONS.] The trustee may grant an option for
the sale or other disposition of a trust asset, or take an
option for the acquisition of an asset.
Subd. 9. [LEASES.] The trustee may enter into a lease as
lessor or lessee, with or without option to purchase or renew,
though the term of the lease, renewal, or option extends beyond
the terms of the trust.
Subd. 10. [REPAIRS; IMPROVEMENTS; ALTERATIONS.] The
trustee may make ordinary or extraordinary repairs,
improvements, or alterations in buildings or other structures or
in other trust assets, and remove or demolish improvements.
Subd. 11. [BUILDINGS; PARTY WALLS.] The trustee may raze
existing or erect new party walls or buildings, alone or jointly
with owners of adjacent property.
Subd. 12. [SUBDIVISION; DEVELOPMENT; DEDICATION TO PUBLIC
USE.] The trustee may subdivide, develop, or dedicate land to
public use; make or obtain the vacation of plats and adjust
boundaries; on exchange or partition, adjust differences in
valuation by giving or receiving consideration; and dedicate
easements to public use without consideration.
Subd. 13. [EXPLORATION AND REMOVAL OF NATURAL
RESOURCES.] The trustee may enter into a lease or arrangement
for exploration for and removal of oil, gas, and other minerals
or natural resources, and may enter into pooling and unitization
agreements.
Subd. 14. [INSURANCE.] The trustee may insure the assets
of the trust against damage or loss and the trustee against
liability with respect to third persons.
Subd. 15. [VOTING STOCK OR SECURITIES.] The trustee may
vote shares of stock or other securities held by the trustee, in
person or by general or limited proxy, and enter into voting
trust agreements on terms and for periods the trustee considers
advisable.
Subd. 16. [SECURITIES CALLS, ASSESSMENTS, AND
CHARGES.] The trustee may pay calls, assessments, and any other
sums chargeable or accruing against or on account of shares of
stock, bonds, debentures, or other corporate securities in the
hands of the trustee.
Subd. 17. [STOCK RIGHTS.] The trustee may sell or exercise
stock subscription or conversion rights, participate in
foreclosures, reorganizations, consolidations, mergers, or
liquidations, and consent, directly or through a committee or
other agent, to corporate sales, leases, and encumbrances. In
the exercise of these powers the trustee may, if the trustee
considers it expedient, deposit stocks, bonds, or other
securities with a protective or other similar committee, on
terms and conditions respecting the deposit that the trustee
approves.
Subd. 18. [OWNERSHIP IN OTHER NAME.] The trustee may hold
any asset in the name of a nominee or nominees, without
disclosure of a fiduciary relationship, but the trustee is
liable for acts and omissions of the nominee relating to those
assets.
Subd. 19. [BORROWING; MORTGAGES.] The trustee may borrow
money and mortgage or otherwise encumber or pledge trust assets
for a term within or extending beyond the term of the trust, in
connection with the exercise of a power vested in the trustee.
Subd. 20. [CONTRACTS.] The trustee may enter into
contracts binding on the trust that are reasonably incident to
the administration of the trust and that the trustee believes to
be for the best interests of the trust.
Subd. 21. [SETTLEMENT OF CLAIMS.] The trustee may pay,
compromise, contest, submit to arbitration, or otherwise settle
claims in favor of or against the trust or the trustee.
Subd. 22. [RELEASE OF CLAIMS.] The trustee may release, in
whole or in part, a claim or lien belonging to the trust.
Subd. 23. [TRUST EXPENSES.] The trustee may pay taxes,
assessments, compensation of the trustee, and other expenses
incurred in the collection, care, administration, and protection
of the trust.
Subd. 24. [RESERVES.] The trustee may create reserves out
of income for depreciation, obsolescence, or amortization, or
for depletion in mineral or timber properties.
Subd. 25. [PAYMENTS TO MINORS AND THOSE UNDER LEGAL
DISABILITY.] The trustee may pay a sum distributable to a minor
or other beneficiary under legal disability, without liability
to the trustee, in one or more of the following ways:
(1) directly to the beneficiary;
(2) to the legal guardian or conservator of the
beneficiary;
(3) directly for the maintenance, education, and general
welfare of the beneficiary;
(4) to a parent of the beneficiary;
(5) to a person who has custody and care of the person of
the beneficiary; or
(6) to a custodian under a uniform transfers to minors
statute.
Subd. 26. [DISTRIBUTION OF INTERESTS.] The trustee may
distribute property and money in divided or undivided interests
and adjust resulting differences in valuation.
Subd. 27. [EMPLOYMENT OF ADVISORS, ASSISTANTS.] The
trustee may employ attorneys, accountants, investment advisors,
agents, or other persons, even if they are associated with the
trustee, to advise or assist the trustee in the performance of
duties. The trustee may act without independent investigation
upon their recommendations, and instead of acting personally,
may employ one or more agents to perform any act of
administration whether or not discretionary.
Subd. 28. [LEGAL ACTIONS.] The trustee may prosecute or
defend actions, claims, or proceedings for the protection of
trust assets and of the trustee in the performance of duties.
Subd. 29. [ADVANCES TO BENEFICIARIES.] The trustee may
advance income to or for the use of a beneficiary, for which
advance the trustee has a lien on the future benefits of that
beneficiary.
Subd. 30. [ADVANCES BY TRUSTEE; REPAYMENT.] The trustee
may advance money for the protection of the trust or its assets,
for all expenses and liabilities sustained or incurred in or
about the administration or protection of the trust, or because
of the holding or ownership of any trust assets, for which
advances the trustee has a lien on the trust assets, and may be
reimbursed out of the trust assets with interest.
Subd. 31. [EXECUTION AND DELIVERY OF INSTRUMENTS.] The
trustee may execute and deliver instruments that will accomplish
or facilitate the exercise of the powers vested in the trustee.
Subd. 32. [MULTIPLE TRUSTS.] The trustee may hold two or
more trusts or parts of trusts created by the same instrument,
as an undivided whole, without separation between the trusts or
parts of trusts, if the separate trusts or parts of trusts have
undivided interests and if no holding defers the vesting of an
estate in possession or otherwise.
Sec. 69. [501B.82] [CITATION.]
Sections 66 to 69 may be cited or referred to as the
"Minnesota trustees' powers act."
MISCELLANEOUS
Sec. 70. [501B.86] [DISCLAIMER OF INTERESTS PASSING BY
DEED, ASSIGNMENT, UNDER CERTAIN NONTESTAMENTARY INSTRUMENTS, OR
UNDER CERTAIN POWERS OF APPOINTMENT.]
Subdivision 1. [DEFINITIONS.] As used in this section,
unless otherwise clearly required by the context:
(a) "beneficiary" means a person entitled, but for the
person's disclaimer, to take an interest:
(1) as grantee;
(2) as donee;
(3) under an assignment or instrument of conveyance or
transfer;
(4) by succession to a disclaimed interest, other than by
will, intestate succession, or through the exercise or
nonexercise of a testamentary power of appointment;
(5) as beneficiary of an inter vivos trust or insurance
contract;
(6) pursuant to the exercise or nonexercise of a
nontestamentary power of appointment;
(7) as donee of a power of appointment created by a
nontestamentary instrument; or
(8) otherwise under a nontestamentary instrument;
(b) "interest" means:
(1) the whole of any property, real or personal, legal or
equitable;
(2) a fractional part, share, particular portion, or
specific assets of property;
(3) an estate in property;
(4) a power to appoint, consume, apply, or expend property;
or
(5) any other right, power, privilege, or immunity relating
to property; and
(c) "disclaimer" means a written instrument that declines,
refuses, releases, or disclaims an interest that would otherwise
be succeeded to by a beneficiary, if the instrument defines the
nature and extent of the interest disclaimed and is signed,
witnessed, and acknowledged by the disclaimant in the manner
provided for deeds of real estate.
Subd. 2. [WHO MAY DISCLAIM.] A beneficiary may disclaim an
interest in whole or in part, or with reference to specific
parts, shares, portions, or assets, by filing a disclaimer in
court in the manner provided in this section. A guardian or
conservator of the estate of a minor or an incapacitated person
under section 525.54, or the personal representative of the
estate of a deceased beneficiary may execute and file a
disclaimer on behalf of the beneficiary if that representative
considers it not detrimental to the best interests of the
beneficiary and in the best interests of those interested in the
beneficiary's estate and of those who take the beneficiary's
interest by virtue of the disclaimer. The representative may
file the disclaimer with or without a court order within the
time specified in subdivision 3. A beneficiary may file a
disclaimer by an attorney or attorney-in-fact.
Subd. 3. [FILING DEADLINE.] A disclaimer under subdivision
2 may be filed at any time after the creation of the interest,
but it must be filed within nine months after the effective date
of the nontestamentary instrument creating the interest, or, if
the disclaimant is not then finally ascertained as a beneficiary
or the disclaimant's interest has not then become indefeasibly
fixed both in quality and in quantity, the disclaimer must be
filed not later than nine months after the event that would
cause the disclaimant to become finally ascertained and the
interest to become indefeasibly fixed both in quality and
quantity.
Subd. 4. [EFFECTIVE DATE.] (a) A disclaimer under
subdivision 2 is effective on being filed in a district court of
the state of Minnesota. A copy of the disclaimer must be
delivered or mailed to the trustee of a trust in which the
interest disclaimed exists or to any other person who has legal
title to, or possession of, the property in which the interest
disclaimed exists. The trustee or person is not liable for any
otherwise proper distribution or other disposition made without
actual notice of the disclaimer.
(b) If an interest in or relating to real estate is
disclaimed, the original of the disclaimer, or a copy of the
disclaimer certified as true and complete by the court
administrator of the district court where the disclaimer has
been filed, must also be filed with the county recorder or with
the registrar of titles, as appropriate, in the county or
counties where the real estate is situated. The filed
disclaimer is notice to all persons after the time of filing.
If title to the real estate has not been registered under
chapter 508, the disclaimer or certified copy must be filed with
the county recorder. If title to the real estate has been
registered under chapter 508, the disclaimer or certified copy
must be filed with the registrar of titles.
Subd. 5. [DISTRIBUTION OF DISCLAIMED PROPERTY.] Unless
otherwise provided in the nontestamentary instrument creating
the interest with reference to the possibility of a disclaimer
by the beneficiary, the interest disclaimed must be distributed
or otherwise disposed of in the same manner as if the
disclaimant had died immediately preceding the death or other
event that causes the disclaimant to become finally ascertained
as a beneficiary and the interest to become indefeasibly fixed
both in quality and quantity. The disclaimer relates for all
purposes to that date, whether filed before or after the death
or other event. Unless the disclaimer provides otherwise, a
person disclaiming an interest in a nonresiduary gift under a
trust instrument or otherwise is not excluded from sharing in a
gift of the residue even though, through lapse, the residue
includes the assets disclaimed.
Subd. 6. [BARS TO RIGHT TO DISCLAIM.] The right to
disclaim is barred if the beneficiary: (1) is insolvent; (2)
assigns or transfers, or contracts to assign or transfer, an
interest in the property to be disclaimed; (3) in writing,
waives the right to disclaim the succession to an interest in
the property; or (4) sells or otherwise disposes of an interest
in the property.
Subd. 7. [EFFECT OF RESTRICTIONS.] The right to disclaim
granted by this section exists despite a limitation imposed on
the interest of the disclaimant in the nature of an express or
implied spendthrift provision or similar restriction. A
disclaimer, when filed under this section, or a written waiver
of the right to disclaim, is binding on the disclaimant or
waiving beneficiary and all parties later claiming by, through,
or under the disclaimant or waiving beneficiary, except that a
waiving beneficiary may later transfer, assign, or release the
waiving beneficiary's interest if it is not prohibited by an
express or implied spendthrift provision. If an interest in
real estate is disclaimed and the disclaimer is filed in
accordance with subdivision 4, the spouse of the disclaimant, if
the spouse has consented to the disclaimer in writing, is
automatically debarred from the spouse's statutory or common law
right or estate by curtesy or in dower or otherwise in the real
estate to which the spouse, except for the disclaimer, would
have been entitled.
Subd. 8. [OTHER LAW.] This section does not abridge the
right of a person, apart from this section, under an existing or
future statute or rule of law, to disclaim an interest or to
assign, convey, release, renounce, or otherwise dispose of an
interest.
Subd. 9. [INTERESTS IN EXISTENCE ON MAY 22, 1965.] If an
interest existed on May 22, 1965, it may be disclaimed under
this section if it had not then become indefeasibly fixed both
in quality and quantity or if its taker had not then become
finally ascertained.
Subd. 10. [BANK DEPOSITS.] The survivor or survivors of a
bank deposit held in the names of the decedent and the survivor
or survivors may at any time disclaim that interest by
authorizing the inclusion of the proceeds of the bank deposit in
the inventory and appraisal required by law to be filed by the
representative or executor of the estate of the decedent. For
purposes of this subdivision, "bank deposit" includes a checking
or savings account or time deposit in any financial institution
authorized to accept deposits.
Sec. 71. [501B.87] [TRUSTS FORMING PART OF RETIREMENT
PLANS FOR PARTICIPATING MEMBERS.]
If a trust forms part of a retirement plan created by and
for the benefit of self-employed persons for the purpose of
receiving their contributions and investing, accumulating, and
distributing to the persons or their beneficiaries the corpus,
profits, and earnings of the trust in accordance with the plan,
the power of a person beneficially interested in the trust to
sell, assign, or transfer that beneficial interest, to
anticipate payments under the plan, or to terminate the trust,
may be limited or withheld in accordance with the provisions of
the plan, whether or not the person furnished consideration for
the creation of the trust.
Sec. 72. [501B.88] [TRUSTS NOT AFFECTED.]
Notwithstanding other law to the contrary, a trust created
before June 1, 1973, relating to one's "minority" or "majority"
or other related terms is governed by the definitions of those
terms existing at the time of the creation of the trust.
Sec. 73. Minnesota Statutes 1988, section 500.17,
subdivision 2, is amended to read:
Subd. 2. [ACCUMULATION.] Where the controlling will or
other written instrument permits accumulation, either expressly
or by necessary implication, rents and profits from real estate
may be accumulated to the same extent and for the same period
permitted by law for the accumulation of income from personal
property income from personal property and rents and profits
from real estate may be accumulated for the period during which
the power of alienation may be suspended by future interests in
real or personal property not held in trust under section 9,
subdivision 3. Where any will or other instrument authorizes
accumulation beyond the period permissible under this section,
such authorization shall be void only as to the excess period.
Reasonable sums set aside for depreciation and depletion
shall not be deemed an accumulation within the meaning of this
section.
Sec. 74. Minnesota Statutes 1988, section 502.73, is
amended to read:
502.73 [RIGHT OF ALIENATION SUSPENDED, WHEN.]
The period during which the absolute right power of
alienation, within the meaning of section 9, may be suspended by
any instrument in execution of a power is to be computed from
the time of the creation of the power and not from the date of
the instrument, except that in the case of a general power
presently exercisable, the period is to be computed from the
date of the instrument.
Sec. 75. [525.95] [FIDUCIARY POWERS, SUSPENSION DURING WAR
SERVICE.]
Subdivision 1. [DEFINITIONS.] The definitions in this
subdivision apply to this section.
(a) "War service" includes the following, during a period
when the United States is engaged in war or other major military
engagement with a foreign nation:
(1) active membership in the military forces of the United
States or any of its allies;
(2) acceptance for membership in the military forces of the
United States or any of its allies and awaiting induction into
that service;
(3) participation in work abroad in connection with a
governmental agency of the United States or any of its allies,
with the Red Cross, or with a similar service;
(4) internment by an enemy or absence from the United
States and inability to return; and
(5) service arising out of or in connection with the war or
other major military engagement, which in the opinion of the
court prevents the fiduciary from giving the proper attention to
duties.
(b) "Fiduciary" refers to a trustee of a testamentary trust
or of an express trust, a guardian or conservator of the person
or estate of a person, an executor of a will, an administrator
of the estate of the decedent, a custodian under the Minnesota
uniform transfers to minors act, or an advisor or consultant in
a testamentary or express trust.
Subd. 2. [POWERS OF FIDUCIARY MAY BE SUSPENDED; PETITION.]
A fiduciary who contemplates entering war service, a fiduciary
who is engaged in war service, a cofiduciary, or an interested
person may petition the proper court having jurisdiction in
matters of that nature for the suspension of the powers and
duties of the fiduciary during the period of war service and
until the further order of the court, and may petition for the
reinstatement of the fiduciary upon the fiduciary's return.
Subd. 3. [NOTICE OF HEARING.] Notice of the hearing on a
petition under subdivision 2 must be given to persons and in the
manner the court directs.
Subd. 4. [HEARING; ORDER.] After a hearing on a petition
under subdivision 2 or in the case of an executor,
administrator, or guardian on the court's own motion, the court
may:
(1) order the suspension of the powers and duties of the
fiduciary who is in war service for the period of the war
service and until the further order of the court;
(2) appoint a successor fiduciary to serve for the period
of suspension of the powers and duties of the fiduciary and
until the further order of the court, if upon suspension of
powers and duties, there is no fiduciary to exercise the powers
and duties of the fiduciary who is in war service, or if in the
opinion of the court the appointment of a cofiduciary is
advisable;
(3) decree that the ownership and title to the trust
property vests in the successor fiduciary or cofiduciary, as the
case may be, and that the duties, powers, and discretions, or
those of the powers and discretions that are not personal to the
fiduciary, may be exercised by the cofiduciary or successor
fiduciary;
(4) make other orders the court considers advisable with
respect to the trust estate or its administration, and authorize
a reasonable compensation to the successor fiduciary; or
(5) reserve jurisdiction for the entry of further orders
and for the reinstatement of the fiduciary.
Upon petition, the court shall order the reinstatement of
the fiduciary when the fiduciary's war service has terminated if
it appears that the trust is not fully executed or
administration of the estate is not completed.
Subd. 5. [RESPONSIBILITY OF FIDUCIARY.] The fiduciary has
no responsibility for the acts and doings of the cofiduciary or
successor fiduciary during the period of the suspension of the
fiduciary's powers and duties, but is not relieved of
responsibility for the fiduciary's own acts or doings in the
administration of the trust fund or estate. A successor
fiduciary appointed under this section is not responsible for
the acts of the predecessor fiduciary.
Sec. 76. [EFFECTIVE DATE.]
Except as required by section 645.35 or as otherwise
provided in sections 47, 60, 62, 70, subdivision 9, and 72, this
article is effective January 1, 1990, and applies to trusts,
property interests, and powers of appointment whenever created
to the extent permitted under the United States Constitution and
the Minnesota Constitution.
Sec. 77. [REPEALER.]
Minnesota Statutes 1988, sections 500.13; 501.01; 501.02;
501.03; 501.04; 501.05; 501.06; 501.07; 501.08; 501.09; 501.10;
501.11; 501.115; 501.12; 501.125; 501.13; 501.14; 501.15;
501.155; 501.16; 501.17; 501.18; 501.19; 501.195; 501.20;
501.21; 501.211; 501.22; 501.23; 501.24; 501.25; 501.26; 501.27;
501.28; 501.29; 501.30; 501.31; 501.32; 501.33; 501.34; 501.35;
501.351; 501.36; 501.37; 501.38; 501.39; 501.40; 501.41; 501.42;
501.43; 501.44; 501.45; 501.46; 501.461; 501.48; 501.49; 501.50;
501.51; 501.52; 501.53; 501.54; 501.55; 501.56; 501.57; 501.58;
501.59; 501.60; 501.61; 501.62; 501.63; 501.64; 501.65; 501.66;
501.67; 501.71; 501.72; 501.73; 501.74; 501.75; 501.76; 501.77;
501.78; 501.79; 501.80; 501.805; and 501.81, are repealed.
ARTICLE 2
MISCELLANEOUS SECTIONS
Section 1. Minnesota Statutes 1988, section 315.365,
subdivision 3, is amended to read:
Subd. 3. [CONTINUATION OF CORPORATE IDENTITIES.] When a
merger and consolidation takes effect, the corporate identity of
each party to it continues in the surviving corporation. The
legal title to assets held or owned by any property corporation
that is a party to the merger and consolidation vests in the
surviving corporation. The surviving corporation is entitled to
receive gifts, devises, bequests, legacies, or other transfers
or assignments of money or property, real, personal, or mixed,
made after the merger directly or in trust to or intended for
any of the constituent property corporations. Except as
provided in section 501.12 article 1, section 23, no properties
or assets and no income of properties or assets held or received
by a party to the merger and consolidation or by the surviving
corporation shall be diverted from the uses and purposes for
which they were received and held by the property corporations
or from the uses and purposes for which they were expressed and
intended.
Sec. 2. Minnesota Statutes 1988, section 501A.06, is
amended to read:
501A.06 [SUPERSESSION; REPEAL.]
Sections 501A.01 to 501A.07 supersede the rule of the
common law known as the rule against perpetuities and repeals
Minnesota Statutes, section 500.13.
Sec. 3. Minnesota Statutes 1988, section 524.1-404, is
amended to read:
524.1-404 [NOTICE TO CHARITABLE BENEFICIARIES.]
If a will includes a gift, devise or bequest to a named
charitable beneficiary, the initial written notice of the
probate proceedings given to the beneficiary shall state that
the beneficiary may request notice of the probate proceedings be
given to the attorney general pursuant to section 501.79 article
1, section 33, subdivision 5.
Sec. 4. Minnesota Statutes 1988, section 525.56,
subdivision 4, is amended to read:
Subd. 4. [DUTIES OF GUARDIAN OR CONSERVATOR OF THE
ESTATE.] The court may appoint a guardian of the estate if it
determines that all the powers and duties listed in this
subdivision are needed to provide for the needs of the
incapacitated person. The court may appoint a conservator of
the estate if it determines that a conservator is necessary to
provide for the needs of the incapacitated person through the
exercise of some, but not all, of the powers and duties listed
in this subdivision. The duties and powers of a guardian or
those which the court may grant to a conservator include, but
are not limited to:
(1) The duty to pay the reasonable charges for the support,
maintenance, and education of the ward or conservatee in a
manner suitable to the ward's or conservatee's station in life
and the value of estate. Nothing herein contained shall release
parents from obligations imposed by law for the support,
maintenance, and education of their children. The guardian or
conservator has no duty to pay for these requirements out of
personal funds. Wherever possible and appropriate, the guardian
or conservator should meet these requirements through
governmental benefits or services to which the ward or
conservatee is entitled, rather than from the ward's or
conservatee's estate. Failure to satisfy the needs and
requirements of this clause shall be grounds for removal, but
the guardian or conservator shall have no personal or monetary
liability;
(2) The duty to pay out of the ward's or conservatee's
estate all just and lawful debts of the ward or conservatee and
the reasonable charges incurred for the support, maintenance,
and education of the ward's or conservatee's spouse and
dependent children and, upon order of the court, pay such sum as
the court may fix as reasonable for the support of any person
unable to earn a livelihood who is legally entitled to support
from the ward or conservatee;
(3) The duty to possess and manage the estate, collect all
debts and claims in favor of the ward or conservatee, or, with
the approval of the court, compromise them, institute suit on
behalf of the ward or conservatee and represent the ward or
conservatee in any court proceedings, and invest all funds not
currently needed for the debts and charges named in clauses (1)
and (2) and the management of the estate, in accordance with the
provisions of sections section 48.84 and 501.125 article 1,
section 10, subdivision 1, or as otherwise ordered by the
court. The standard of a fiduciary shall be applicable to all
investments by a guardian or conservator. A guardian or
conservator shall also have the power to purchase certain
contracts of insurance as provided in section 50.14, subdivision
14, clause (b);
(4) Where a ward or conservatee has inherited an undivided
interest in real estate, the court, on a showing that it is for
the best interest of the ward or conservatee, may authorize an
exchange or sale of the ward's or conservatee's interest or a
purchase by the ward or conservatee of any interest other heirs
may have in the real estate.
Sec. 5. Minnesota Statutes 1988, section 525.831, is
amended to read:
525.831 [NOTICE TO ATTORNEY GENERAL OF DEVISES FOR
CHARITABLE PURPOSES.]
Whenever a will provides for a devise for a charitable
purpose, as defined in section 501.73 article 1, section 27,
subdivision 2, the personal representative shall provide the
attorney general with the notices or documents, if any, required
by section 501.79 article 1, section 33, subdivision 5.
Sec. 6. If 1989 H.F. No. 1203 is enacted in the 1989
legislative session, article 1, section 28, is amended to read:
Sec. 28. [501B.36] [REGISTRATION AND REPORTING.]
The registration and reporting provisions of sections 29
and 30 apply to a charitable trust, or an organization with a
charitable purpose, that has gross assets of $25,000 or more,
except that the provisions do not apply to:
(1) a charitable trust administered by the United States or
a state, territory, or possession of the United States, the
District of Columbia, the Commonwealth of Puerto Rico, or any of
their agencies or subdivisions;
(2) a religious association organized under chapter 315 or
chapter 317 317A;
(3) a charitable trust organized and operated exclusively
for religious purposes and administered by a religious
association organized under chapter 315 or chapter 317 317A;
(4) an organization described in section 509(a)(3) of the
Internal Revenue Code of 1986 and operated, supervised, or
controlled by or in connection with one or more organizations
described in clauses (2) to (5); a pooled income fund as defined
in section 642(c)(5) of the Internal Revenue Code of 1986
maintained by an organization described in clauses (2) to (5);
or a charitable remainder annuity trust or unitrust, as defined
in section 664 of the Internal Revenue Code of 1986;
(5) a trust in which the only charitable interest is a
contingent interest for which no charitable deduction has been
allowed for Minnesota income, inheritance, or gift tax purposes
or a trust in which not all of the unexpired interests are
devoted to one or more charitable purposes and in which the only
charitable interest is an annuity or an income interest with
respect to which a charitable deduction is allowed the trust
under applicable Minnesota income tax laws;
(6) an organization subject to sections 309.50 to 309.61;
(7) a trust for individual and charitable beneficiaries
that is described in section 4947(a)(2) of the Internal Revenue
Code of 1986, also known as a split-interest trust; or
(8) a charitable gift, bequest, or devise not held and
continued by a private express trust or corporation even though
the gift, bequest, or devise creates a fiduciary relationship,
unless there is no named charitable beneficiary in existence or
unless a named charitable beneficiary elects in a writing filed
with the attorney general and with the fiduciary to come within
the provisions of sections 29 and 30.
Sec. 7. If 1989 H.F. No. 1203 is enacted in the 1989
legislative session, article 1, section 36, is amended to read:
Sec. 36. [501B.44] [IMMUNITY OF CHARITABLE TRUSTS.]
A charitable trust is an "organization" for purposes of
section 317.201 317A.257, and that section applies to charitable
trusts.
Sec. 8. If 1989 H.F. No. 1203 is enacted in the 1989
legislative session, 1989 H.F. No. 1203, section 22, subdivision
24, is amended to read:
Subd. 24. [MAY INVEST TRUST PROPERTY.] Except where the
trust instrument prescribes otherwise, a corporation may invest
trust property or its proceeds in accordance with section
501.125 article 1, section 10.
Sec. 9. If 1989 H.F. No. 1203 is enacted in the 1989
legislative session, 1989 H.F. No. 1203, section 93, is amended
to read:
Sec. 93. [317A.671] [CERTAIN ASSETS NOT TO BE DIVERTED.]
Except as provided in section 501.12 article 1, section 23,
when a corporation dissolves, merges or consolidates, transfers
its assets, or grants a mortgage or other security interest in
its assets, assets of the corporation or a constituent
corporation, and assets subsequently received by a single
corporation after a merger or consolidation, may not be diverted
from the uses and purposes for which the assets have been
received and held, or from the uses and purposes expressed or
intended by the original donor.
Sec. 10. If 1989 H.F. No. 1203 is enacted in the 1989
legislative session, 1989 H.F. No. 1203, section 104,
subdivision 4, is amended to read:
Subd. 4. [REMAINDER.] The distribution of assets held for
or devoted to a charitable or public use or purpose is subject
to section 501.12 article 1, section 23.
Sec. 11. If 1989 H.F. No. 1203 is enacted in the 1989
legislative session, 1989 H.F. No. 1203, section 119, is amended
to read:
Sec. 119. [317A.813] [REMEDIAL POWERS OF ATTORNEY
GENERAL.]
The attorney general has the powers in sections section
8.31, 501.78, and 501.79 article 1, sections 32 and 33, to
supervise and investigate corporations under this chapter and to
bring proceedings to secure compliance.
Sec. 12. If 1989 H.F. No. 1203 is enacted in the 1989
legislative session, 1989 H.F. No. 1203, section 123,
subdivision 2, is amended to read:
Subd. 2. [ATTORNEY GENERAL POWERS CONTINUED.] A
corporation dissolved under this section continues for three
years after the dissolution date for the sole purpose of
supervision, investigation, and other actions by the attorney
general under sections section 8.31, 501.78, and 501.79
article 1, sections 32 and 33.
Sec. 13. [EFFECTIVE DATE.]
This article is effective January 1, 1990.
ARTICLE 3
RULE AGAINST PERPETUITIES
Section 1. Minnesota Statutes 1988, section 501A.05, is
amended to read:
501A.05 [PROSPECTIVE APPLICATION.]
(a) Except as extended by subsection (b), sections 501A.01
to 501A.07 apply to a nonvested property interest or a power of
appointment that is created after December 31, 1989 1990. For
purposes of this section, a nonvested property interest or a
power of appointment created by the exercise of a power of
appointment is created when the power is irrevocably exercised
or when a revocable exercise becomes irrevocable.
(b) If a nonvested property interest or a power of
appointment was created before January 1, 1990 1991, and is
determined in a judicial proceeding, commenced after December
31, 1989 1990, to violate this state's rule against perpetuities
as that rule existed before January 1, 1990 1991, a court upon
the petition of an interested person may reform the disposition
in the manner that most closely approximates the transferor's
manifested plan of distribution and is within the limits of the
rule against perpetuities applicable when the nonvested property
interest or power of appointment was created.
Sec. 2. Laws 1987, chapter 60, section 10, as amended by
Laws 1988, chapter 482, section 2, is amended to read:
Sec. 10. [TIME OF TAKING EFFECT.]
This act takes effect January 1, 1990 1991.
Presented to the governor May 30, 1989
Signed by the governor June 1, 1989, 11:00 p.m.
Official Publication of the State of Minnesota
Revisor of Statutes