NY State Senate Bill 2013-S2014

Archive: Last Bill Status - In Senate Committee Judiciary Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

Please enter your contact information

First Name

Last Name

Email Address

A valid email address is required.

Home address is used to determine the senate district in which you reside. Your support or opposition to this bill is then shared immediately with the senator who represents you.

Optional services from the NY State Senate:

Create an account. An account allows you to officially support or oppose key legislation, sign petitions with a single click, and follow issues, committees, and bills that matter to you. When you create an account, you agree to this platform's terms of participation.

Include a custom message for your Senator? (Optional)

Enter a message to your senator. Many New Yorkers use this to share the reasoning behind their support or opposition to the bill. Others might share a personal anecdote about how the bill would affect them or people they care about.

Actions

View Actions

Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 08, 2014	referred to judiciary
Jan 09, 2013	referred to judiciary

2013-S2014 (ACTIVE) - Details

Current Committee:: Senate Judiciary
Law Section:: Estates, Powers and Trusts Law
Laws Affected:: Add §11-2.2-a, EPT L
Versions Introduced in Other Legislative Sessions:: 2011-2012: S7183
2015-2016: S1635
2017-2018: S2055

2013-S2014 (ACTIVE) - Summary

Relates to the role and duties of advisors in trust agreements.

2013-S2014 (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S2014

TITLE  OF BILL:   An act to amend the estates, powers and trusts law, in
relation to the role and duties of advisors in trust agreements

PURPOSE:  This bill creates authority for grantors to establish directed
trusteeships under which fiduciaries  would  act  under  the  advice  or
direction  of  an  advisor  or protector who could direct, consent to or
disapprove  the  fiduciaries'  decisions  with  regard  to  investments,
distributions or other matters.

SUMMARY OF PROVISIONS:

Section  1:  Amends  the  Estates, Powers and Trusts Law by adding a new
section 11-2.2-a to make clear  that  grantors  may  establish  directed
trusteeships,  clarifies  the responsibilities of fiduciaries who follow
the advice or direction of an advisor or protector,  and  specifies  the
duties of the fiduciary in relation to advisors and protectors. Also, it
states  that  advisors  accept  the jurisdiction of New York courts when
accepting appointment. It also sets  the  same  standard  of  reasonable
compensation for an advisor as exists for other fiduciaries. Finally, it
clarifies  that  the term "advisor" includes "protectors," and specifies
some, but not all, of the powers of advisors;  and  clarifies  the  term
"investment decision."

Section 2: Effective date.

JUSTIFICATION:    This  legislation  is  designed to remedy a gap in the
State's judicial fabric by providing guidance for the  courts,  grantors
and fiduciaries as to the governing law, in the absence of provisions in
the  trust  instrument  to  the  contrary, for directed trusteeships. It
clarifies matters of definition, court jurisdiction, compensation, fidu-
ciary liability and the responsibility of  administrative  trustees  and
advisors or protectors. As in the Uniform Prudent Management of Institu-
tional Funds Act, Chapter 490 of the Laws of 2010, it allows a fiduciary
to  delegate  responsibility  to  a delegee so long as the instrument so
provides and the delegation is in accordance with its terms.  This  bill
is  designed  to  help  New York fiduciaries compete for trust business,
which is increasingly flowing to states with more modern trust laws.

A growing number of states are recognizing the desire of trust  grantors
to  establish  bifurcated trusts which vest authority for investment and
other major decisions in the hands of  an  advisor  or  protector  while
retaining  a  traditional  corporate  trustee  perform other ministerial
functions, While the New York courts have  recognized  the  validity  of
directed  trusteeships  in  New  York,  there  is  no  body of law which
provides guidance as to how such trusteeships should function. In  addi-
tion,  New  York's Prudent Investor Act makes a fiduciary liable for any
delegation of investment or other decisions,  even  when  the  fiduciary
follows all of the rules of delegation contained in the Prudent Investor
Act. This is unusual among the states that have enacted a prudent inves-

tor act. Thus, New York fiduciaries, even when directed by an advisor or
protector  in  all investment decision, remain liable under New York law
for those decisions. The broad liability exposure that  fiduciaries  are
subjected  to  causes  grantors  to choose states other than New York to
establish directed trusts. New York fiduciaries  have,  in  many  cases,
established  non-New  York affiliates to administer directed trusts, but
using out-of-State affiliates has two problems.  First,  many  New  York
corporate trustees are too small to establish an out-of-State affiliate,
resulting  in their being at a competitive disadvantage in competing for
directed trusteeship business with larger  corporate  trustees.  Second,
the  existence  of  out-of-State affiliates encourages a large number of
trust grantors to establish their trusts in jurisdictions more  friendly
to  directed trusteeships than New York.  This pulls jobs and the corpo-
rate and personal income taxes they generate out  of  the  State,  which
this legislation will help resolve.

LEGISLATIVE HISTORY:  S.7183 of 2012: Died in Senate Judiciary Committee

FISCAL IMPLICATIONS: None.

EFFECTIVE  DATE:  This act shall take effect immediately and shall apply
to all trusts which come into existence after this act shall have become
a law, provided, however,  those  trusts  incorporate  this  section  by
reference within the trust agreement.

2013-S2014 (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  2014

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 9, 2013
                               ___________

Introduced  by  Sen. BONACIC -- read twice and ordered printed, and when
  printed to be committed to the Committee on Judiciary

AN ACT to amend the estates, powers and trusts law, in relation  to  the
  role and duties of advisors in trust agreements

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The estates, powers and trusts law is amended by  adding  a
new section 11-2.2-a to read as follows:
S 11-2.2-A ADVISORS
  (A) ADVISORS.
  (1)  WHERE  ONE  OR MORE PERSONS ARE GIVEN AUTHORITY BY THE TERMS OF A
GOVERNING INSTRUMENT TO DIRECT, CONSENT TO OR DISAPPROVE  A  FIDUCIARY'S
ACTUAL OR PROPOSED INVESTMENT DECISIONS, DISTRIBUTION DECISIONS OR OTHER
DECISION  OF THE FIDUCIARY, SUCH PERSONS SHALL BE CONSIDERED TO BE ADVI-
SORS AND FIDUCIARIES WHEN EXERCISING SUCH AUTHORITY UNLESS THE GOVERNING
INSTRUMENT OTHERWISE PROVIDES.
  (2) IF A GOVERNING INSTRUMENT PROVIDES THAT A FIDUCIARY IS  TO  FOLLOW
THE  DIRECTION  OF AN ADVISOR, AND THE FIDUCIARY ACTS IN ACCORDANCE WITH
SUCH A DIRECTION, THEN EXCEPT IN CASES OF WILLFUL MISCONDUCT ON THE PART
OF THE FIDUCIARY SO DIRECTED, THE FIDUCIARY SHALL NOT BE LIABLE FOR  ANY
LOSS RESULTING DIRECTLY OR INDIRECTLY FROM ANY SUCH ACT.
  (3)  IF  A  GOVERNING  INSTRUMENT PROVIDES THAT A FIDUCIARY IS TO MAKE
DECISIONS WITH THE CONSENT OF AN ADVISOR, THEN EXCEPT IN CASES OF  WILL-
FUL  MISCONDUCT  OR  GROSS  NEGLIGENCE ON THE PART OF THE FIDUCIARY, THE
FIDUCIARY SHALL NOT BE LIABLE FOR ANY LOSS RESULTING DIRECTLY  OR  INDI-
RECTLY FROM ANY ACT TAKEN OR OMITTED AS A RESULT OF SUCH ADVISOR'S FAIL-
URE  TO PROVIDE SUCH CONSENT AFTER HAVING BEEN REQUESTED TO DO SO BY THE
FIDUCIARY.
  (4) WHENEVER A GOVERNING INSTRUMENT PROVIDES THAT A  FIDUCIARY  IS  TO
FOLLOW THE DIRECTION OF AN ADVISOR WITH RESPECT TO INVESTMENT DECISIONS,

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.

                                                           LBD05971-01-3

S. 2014                             2

DISTRIBUTION  DECISIONS,  OR  OTHER  DECISIONS  OF  THE FIDUCIARY, THEN,
EXCEPT TO THE EXTENT THAT THE GOVERNING INSTRUMENT  PROVIDES  OTHERWISE,
THE FIDUCIARY SHALL HAVE NO DUTY TO:
  (A) MONITOR THE CONDUCT OF THE ADVISOR;
  (B) PROVIDE ADVICE TO THE ADVISOR OR CONSULT WITH THE ADVISOR; OR
  (C) COMMUNICATE WITH OR WARN OR APPRISE ANY BENEFICIARY OR THIRD PARTY
CONCERNING  INSTANCES  IN  WHICH THE FIDUCIARY WOULD OR MIGHT HAVE EXER-
CISED THE FIDUCIARY'S OWN DISCRETION IN  A  MANNER  DIFFERENT  FROM  THE
MANNER DIRECTED BY THE ADVISOR.
  ABSENT  CLEAR  AND CONVINCING EVIDENCE TO THE CONTRARY, THE ACTIONS OF
THE FIDUCIARY PERTAINING TO MATTERS WITHIN THE SCOPE  OF  THE  ADVISOR'S
AUTHORITY  (SUCH  AS  CONFIRMING THAT THE ADVISOR'S DIRECTIONS HAVE BEEN
CARRIED OUT AND RECORDING AND REPORTING ACTIONS TAKEN AT  THE  ADVISOR'S
DIRECTION),  SHALL BE PRESUMED TO BE ADMINISTRATIVE ACTIONS TAKEN BY THE
FIDUCIARY SOLELY TO ALLOW THE FIDUCIARY TO PERFORM THOSE DUTIES ASSIGNED
TO THE FIDUCIARY UNDER THE GOVERNING INSTRUMENT AND SUCH  ADMINISTRATIVE
ACTIONS  SHALL NOT BE DEEMED TO CONSTITUTE AN UNDERTAKING BY THE FIDUCI-
ARY TO MONITOR THE ADVISOR OR OTHERWISE PARTICIPATE  IN  ACTIONS  WITHIN
THE SCOPE OF THE ADVISOR'S AUTHORITY.
  (B) COURT JURISDICTION.
  BY  ACCEPTING  APPOINTMENT TO SERVE AS ADVISOR, THE ADVISOR SUBMITS TO
THE JURISDICTION OF THE COURTS OF THIS STATE EVEN IF THE ADVISORY AGREE-
MENT OR OTHER RELATED AGREEMENTS PROVIDE OTHERWISE, AND THE ADVISOR  MAY
BE  MADE  A  PARTY  TO  ANY  ACTION OR PROCEEDING RELATING TO DECISIONS,
ACTIONS OR INACTIONS OF THE ADVISOR.
  (C) COMPENSATION.
  (1) THE ADVISOR SHALL BE ENTITLED  TO  SUCH  COMPENSATION  AS  MAY  BE
REASONABLE,  AND  THE  COURT, UPON APPLICATION OF A PERSON INTERESTED IN
THE TRUST, MAY REVIEW THE REASONABLENESS OF SUCH COMPENSATION.
  (2) THE FIDUCIARY SHALL BE ENTITLED TO COMMISSIONS IN ACCORDANCE  WITH
ARTICLE TWENTY-THREE OF THE SURROGATE'S COURT PROCEDURE ACT.
  (D) DEFINITIONS. AS USED IN THIS SECTION:
  (1)  "ADVISOR"  SHALL  INCLUDE A "PROTECTOR" WHO SHALL HAVE ALL OF THE
POWER AND AUTHORITY GRANTED TO THE PROTECTOR BY THE TERMS OF THE GOVERN-
ING INSTRUMENT, WHICH MAY INCLUDE BUT SHALL NOT BE LIMITED TO:
  (A) THE POWER TO REMOVE AND APPOINT TRUSTEES, ADVISORS, TRUST  COMMIT-
TEE MEMBERS, AND OTHER PROTECTORS;
  (B)  THE  POWER TO MODIFY OR AMEND THE GOVERNING INSTRUMENT TO ACHIEVE
FAVORABLE TAX STATUS OR TO FACILITATE THE  EFFICIENT  ADMINISTRATION  OF
THE TRUST; AND
  (C)  THE  POWER TO MODIFY, EXPAND, OR RESTRICT THE TERMS OF A POWER OF
APPOINTMENT GRANTED TO A BENEFICIARY BY THE GOVERNING INSTRUMENT.
  (2) "INVESTMENT DECISION" MEANS, WITH RESPECT TO ANY  INVESTMENT,  THE
RETENTION, PURCHASE, SALE, EXCHANGE, TENDER OR OTHER TRANSACTION AFFECT-
ING THE OWNERSHIP THEREOF OR RIGHTS THEREIN, AND AN ADVISOR WITH AUTHOR-
ITY WITH RESPECT TO SUCH DECISIONS IS AN INVESTMENT ADVISOR.
  S  2.  This  act  shall take effect immediately and shall apply to all
trusts which come into existence after this act shall have become a law,
provided, however, those trusts incorporate this  section  by  reference
within the trust agreement.

Comments

Open Legislation is a forum for New York State legislation. All comments are subject to review and community moderation is encouraged.

Comments deemed off-topic, commercial, campaign-related, self-promotional; or that contain profanity, hate or toxic speech; or that link to sites outside of the nysenate.gov domain are not permitted, and will not be published. Attempts to intimidate and silence contributors or deliberately deceive the public, including excessive or extraneous posting/posts, or coordinated activity, are prohibited and may result in the temporary or permanent banning of the user. Comment moderation is generally performed Monday through Friday. By contributing or voting you agree to the Terms of Participation and verify you are over 13.

Create an account. An account allows you to sign petitions with a single click, officially support or oppose key legislation, and follow issues, committees, and bills that matter to you. When you create an account, you agree to this platform's terms of participation.

Find your Senator and share your views on important issues.

Do you support this bill?

Senate Bill S2014

Sponsored By

Archive: Last Bill Status - In Senate Committee Judiciary Committee

Actions

2013-S2014 (ACTIVE) - Details

2013-S2014 (ACTIVE) - Summary

2013-S2014 (ACTIVE) - Sponsor Memo

2013-S2014 (ACTIVE) - Bill Text download pdf

Comments

Do you support this bill?

Get Status Alerts for 2013-S2014

Senate Bill S2014

Share this bill

Sponsored By

John J. Bonacic

Archive: Last Bill Status - In Senate Committee Judiciary Committee

Actions

2013-S2014 (ACTIVE) - Details

2013-S2014 (ACTIVE) - Summary

2013-S2014 (ACTIVE) - Sponsor Memo

2013-S2014 (ACTIVE) - Bill Text download pdf

Comments