Brad Bedingfield, Esq., Wilmer Cutler Pickering Hale and Dorr LLP
Since the Uniform Law Commission first promulgated the Uniform Trust Code in 2000, Massachusetts has watched as a growing number of states, including neighbors Maine, Connecticut, New Hampshire and Vermont, adopted versions of the UTC. The flexibility and uniformity provided by the UTC has proven to be a great selling point in pitching settlors to establish trusts in UTC states, and trustees to migrate trusts to those states.
Now, it’s our turn.
Two bills currently before the Massachusetts legislature, the Massachusetts Uniform Trust Code (H. 2261 and S. 688) (“MUTC”) and a bill making certain important technical corrections to the Massachusetts Uniform Probate Code (“MUPC”) (S. 704), will go far towards modernizing trust law in Massachusetts. These bills, which have been endorsed by the Boston Bar Association, the Massachusetts Bar Association, and the Massachusetts Bankers Association, are important to ensure that Massachusetts remains competitive as a forum for trusts. They will streamline certain aspects of trust administration and probate court proceedings, reducing costs, inefficiency and uncertainty for trustees and for beneficiaries, and will ease the burden on the probate courts.
Some of the key benefits of the MUTC are that it:
- Codifies much of the existing law of trusts (now spread between statutes and court decisions), thereby making the law of trusts more accessible;
- Provides statutory guidelines regarding powers, duties and liabilities of trustees;
- Provides more flexible rules regarding representation in court proceedings, in many cases eliminating the need for appointment of a guardian ad litem;
- Eliminates the distinction between inter vivos and testamentary trusts, reducing the need for continued court oversight over testamentary trusts in many cases;
- Gives standing to donors of charitable trusts to bring a proceeding to enforce the trust’s terms;
- Provides courts with greater flexibility to modify or reform a trust instrument;
- Provides statutory support for non-judicial settlement agreements, allowing many trust matters to be resolved outside of court;
- Gives trustees the power to divide and combine trusts for tax or other purposes, and to terminate uneconomic trusts;
- Allows for the creation of trusts with no specific beneficiaries, established for specific non-charitable purposes (so-called “purpose trusts”); and
- Allows for directed trusts, in which certain powers may be granted to persons other than the trustees, with protection of trustees who act as directed.
The BBA’s statement to the Joint Committee on the Judiciary in support of the MUTC may be found here.
The provisions of the MUPC pertaining to trusts are scheduled to come into effect on January 2, 2012. This would also be the effective date of the MUTC, as filed. If passed, the MUTC will effectively replace the trust law provisions of the MUPC. However, if passage of the MUTC is delayed, courts, practitioners, trustees and beneficiaries will have to grapple with multiple disparate bodies of trust law in succession, unnecessarily increasing compliance costs and putting additional pressure on the courts.
In order to avoid this scenario, and to provide as much time as possible to prepare for the new law, both bills should be passed promptly.
At present, both bills are before the Joint Committee on the Judiciary. Therefore, please consider contacting your representatives and asking them (1) to urge the members of the Judiciary Committee to report these bills favorably out of the committee and (2) to vote for these bills, when they come to a full vote.
The phone numbers and email addresses of the members of the Judiciary Committee may be found here.
To identify your representatives, and for contact information, please click here.
A template letter for your consideration may be found here.
Thank you for helping to move Massachusetts trust law into the 21st century.