Recent Legislation: Oregon Uniform Trust Code Revisions
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From time to time, we will publish blurbs on recent local court opinions and state legislation:
Senate Bill 371 contains multiple, somewhat unrelated, amendments to ORS 130, which relates to trusts.
The first significant amendment adds modification of the terms of a trust (including extending or reducing the period the trust operates) to the list of actions that may be taken through a nonjudicial settlement agreement.
For all actions that can be taken by use of a nonjudicial settlement agreement, section 6 of bill 371 creates a procedure by which any interested person may file the a settlement agreement with the court. The amendment requires notice to all interested persons and an objection period of 120 days. If no objections are filed, the settlement agreement is binding. If there are objections, a hearing is held. An agreement will be approved unless (1) the agreement does not have all the required signatures; (2) the agreement is not allowed under the statute, or (3) the agreement is not equitable.
Another substantive amendment made by Senate Bill 371, Section 9 amends ORS 130.170 to state that “a trust is not a charitable trust if the trust contains contingencies that make the charitable interest negligible.” Another somewhat cryptic amendment appears in Section 16, which amends ORS 130.500 stating “A revocable trust remains a revocable trust for the purposes of ORS 130.520 to 130.575 even though a trust cannot be revoked because: (a) the settlor becomes financially incapable; or (b) an event occurs that by the terms of the trust prevents the revocation of the trust.”
Another major amendment made by Senate Bill 371 adds subsection 10 to ORS 130.710. It provides that a trustee does not need to provide a beneficiary with notice of the right to a trustee’s report or send a trustee report to the beneficiary until six months after the trust becomes irrevocable if the beneficiary’s only interest in the trust is a distribution of a specific item of property or a specific amount of money. It further states that the trustee must provide notice of the right to a trustee’s report if at the end of the six months the beneficiary has not received the distribution
The last amendment made by Senate Bill 371 creates a new party in trust administration called an “adviser.” An adviser can be appointed in a trust instrument to assist the trustee in making decisions regarding distributions, or sales of assets. The adviser will only have power to act as defined in the trust instrument. If the trustee follows the direction of the adviser, the trustee cannot be held liable for any loss as a result of relying on the adviser’s advice. Furthermore, the trustee does not have a duty to monitor the adviser.
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On December 16, 2009, the Wall Street Journal reported that the Democrats’ attempt to extend the Federal Estate Tax exemption of $3.5 million into 2010 has been blocked by the Republicans. Senator Max Baucus is quoted as saying, “We clearly will work to do this retroactively, so that when the law is changed, it will have retroactive application.” 
Since the passage of the Economic Growth and Tax Relief and Reconciliation Act in 2001, clients and practitioners have been waiting for years for Congress to determine what happens to estate taxes after 2009. The Republicans hoped to completely repeal the estate tax. The Democrats wanted to keep the estate tax but raise the amount that is exempt from estate tax. 