HOUSE BILL No. 2172
AN ACT concerning trusts; enacting the uniform trust decanting act; relating to the power
of an authorized fiduciary to distribute property of a first trust to one or more second
trusts or to modify the terms of the first trust; authorizing modification of a
noncharitable irrevocable trust to provide that the rule against perpetuities is
inapplicable; providing that the Kansas uniform statutory rule against perpetuities is
inapplicable to trusts under certain circumstances; modifying the definition of
resident trust in the Kansas income tax act; amending K.S.A. 59-3404 and K.S.A.
2022 Supp. 58a-411 and 79-32,109 and repealing the existing sections.
Be it enacted by the Legislature of the State of Kansas:
New Section 1. Sections 1 through 30, and amendments thereto,
shall be known and may be cited as the uniform trust decanting act.
New Sec. 2. As used in the uniform trust decanting act:
(a) "Appointive property" means the property or property interest
subject to a power of appointment.
(b) "Ascertainable standard" means a standard relating to an
individual's health, education, support or maintenance within the
meaning of 26 U.S.C. § 2041(b)(1)(A) or 26 U.S.C. § 2514(c)(1) and
any applicable regulations.
(c) "Authorized fiduciary" means a:
(1) Trustee or other fiduciary, other than a settlor, that has
discretion to distribute or direct a trustee to distribute part or all of the
principal of the first trust to one or more current beneficiaries;
(2) special fiduciary appointed under section 9, and amendments
thereto; or
(3) special-needs fiduciary under section 13, and amendments
thereto.
(d) "Beneficiary" means a person that:
(1) Has a present or future, vested or contingent, beneficial
interest in a trust;
(2) holds a power of appointment over trust property; or
(3) is an identified charitable organization that will or may receive
distributions under the terms of the trust.
(e) "Charitable interest" means an interest in a trust that:
(1) Is held by an identified charitable organization and makes the
organization a qualified beneficiary;
(2) benefits only charitable organizations and, if the interest were
held by an identified charitable organization, would make the
organization a qualified beneficiary; or
(3) is held solely for charitable purposes and, if the interest were
held by an identified charitable organization, would make the
organization a qualified beneficiary.
(f) "Charitable organization" means a:
(1) Person, other than an individual, organized and operated
exclusively for charitable purposes; or
(2) government or governmental subdivision, agency or
instrumentality, to the extent it holds funds exclusively for a charitable
purpose.
(g) "Charitable purpose" means the relief of poverty, the
advancement of education or religion, the promotion of health, a
municipal or other governmental purpose or another purpose the
achievement of which is beneficial to the community.
(h) "Court" means the district court.
(i) "Current beneficiary" means a beneficiary that, on the date the
beneficiary's qualification is determined, is a distributee or permissible
distributee of trust income or principal. The term includes the holder of
a presently exercisable general power of appointment but does not
include a person that is a beneficiary only because the person holds any
other power of appointment.
(j) "Decanting power" or "the decanting power" means the power
of an authorized fiduciary under the uniform trust decanting act to
distribute property of a first trust to one or more second trusts or to
modify the terms of the first trust.
(k) "Expanded distributive discretion" means a discretionary
power of distribution that is not limited to an ascertainable standard or HOUSE BILL No. 2172—page 2
a reasonably definite standard.
(l) "First trust" means a trust over which an authorized fiduciary
may exercise the decanting power.
(m) "First-trust instrument" means the trust instrument for a first
trust.
(n) "General power of appointment" means a power of
appointment exercisable in favor of a powerholder, the powerholder's
estate, a creditor of the powerholder or a creditor of the powerholder's
estate.
(o) "Jurisdiction," with respect to a geographic area, includes a
state or country.
(p) "Person" means an individual, estate, business or nonprofit
entity, public corporation, government or governmental subdivision,
agency or instrumentality or other legal entity.
(q) "Power of appointment" means a power that enables a
powerholder acting in a nonfiduciary capacity to designate a recipient
of an ownership interest in or another power of appointment over the
appointive property. The term does not include a power of attorney.
(r) "Powerholder" means a person in which a donor creates a
power of appointment.
(s) "Presently exercisable power of appointment" means a power
of appointment exercisable by the powerholder at the relevant time.
The term:
(1) Includes a power of appointment exercisable only after the
occurrence of a specified event, the satisfaction of an ascertainable
standard or the passage of a specified time only after the:
(A) Occurrence of the specified event;
(B) satisfaction of the ascertainable standard; or
(C) passage of the specified time; and
(2) does not include a power exercisable only at the powerholder's
death.
(t) "Qualified beneficiary" means a beneficiary that, on the date
the beneficiary's qualification is determined:
(1) Is a distributee or permissible distributee of trust income or
principal;
(2) would be a distributee or permissible distributee of trust
income or principal if the interests of the distributees described in
paragraph (1) terminated on that date without causing the trust to
terminate; or
(3) would be a distributee or permissible distributee of trust
income or principal if the trust terminated on that date.
(u) "Reasonably definite standard" means a clearly measurable
standard under which a holder of a power of distribution is legally
accountable within the meaning of 26 U.S.C. § 674(b)(5)(A) and any
applicable regulations.
(v) "Record" means information that is inscribed on a tangible
medium or that is stored in an electronic or other medium and is
retrievable in perceivable form.
(w) "Second trust" means a:
(1) First trust after modification under the uniform trust decanting
act; or
(2) trust to which a distribution of property from a first trust is or
may be made under the uniform trust decanting act.
(x) "Second-trust instrument" means the trust instrument for a
second trust.
(y) "Settlor," except as otherwise provided in section 25, and
amendments thereto, means a person, including a testator, that creates
or contributes property to a trust. If more than one person creates or
contributes property to a trust, each person is a "settlor" of the portion
of the trust property attributable to the person's contribution except to
the extent another person has power to revoke or withdraw that portion.
(z) "Sign" means, with present intent to authenticate or adopt a
record:
(1) To execute or adopt a tangible symbol; or HOUSE BILL No. 2172—page 3
(2) to attach to or logically associate with the record an electronic
symbol, sound or process.
(aa) "State" means a state of the United States, the District of
Columbia, Puerto Rico, the United States Virgin Islands or any territory
or insular possession subject to the jurisdiction of the United States.
(bb) "Terms of the trust" means:
(1) Except as otherwise provided in paragraph (2), the
manifestation of the settlor's intent regarding a trust's provisions as:
(A) Expressed in the trust instrument; or
(B) established by other evidence that would be admissible in a
judicial proceeding;
(2) the trust's provisions as established, determined or amended by
a:
(A) Trustee or other person in accordance with applicable law;
(B) court order; or
(C) nonjudicial settlement agreement under K.S.A. 58a-111, and
amendments thereto.
(cc) "Trust instrument" means a record executed by the settlor to
create a trust or by any person to create a second trust that contains
some or all of the terms of the trust, including any amendments.
New Sec. 3. (a) Except as otherwise provided in subsections (b)
and (c), the uniform trust decanting act applies to an express trust that
is irrevocable or revocable by the settlor only with the consent of the
trustee or a person holding an adverse interest.
(b) The uniform trust decanting act does not apply to a trust held
solely for charitable purposes.
(c) Subject to section 15, and amendments thereto, a trust
instrument may restrict or prohibit exercise of the decanting power.
(d) The uniform trust decanting act does not limit the power of a
trustee, powerholder or other person to distribute or appoint property in
further trust or to modify a trust under the trust instrument, law of this
state other than the act, common law, a court order or a nonjudicial
settlement agreement.
(e) The uniform trust decanting act does not affect the ability of a
settlor to provide in a trust instrument for the distribution of the trust
property or appointment in further trust of the trust property or for
modification of the trust instrument.
New Sec. 4. (a) In exercising the decanting power, an authorized
fiduciary shall act in accordance with its fiduciary duties, including the
duty to act in accordance with the purposes of the first trust.
(b) The uniform trust decanting act does not create or imply a duty
to exercise the decanting power or to inform beneficiaries about the
applicability of the act.
(c) Except as otherwise provided in a first-trust instrument, for
purposes of the uniform trust decanting act and K.S.A. 58a-801 and
58a-802(a), and amendments thereto, the terms of the first trust are
deemed to include the decanting power.
New Sec. 5. The uniform trust decanting act applies to a trust
created before, on, or after July 1, 2023, that:
(a) Has its principal place of administration in this state, including
a trust whose principal place of administration has been changed to this
state; or
(b) provides by its trust instrument that it is governed by the law
of this state or is governed by the law of this state for the purpose of:
(1) Administration, including administration of a trust whose
governing law for purposes of administration has been changed to the
law of this state;
(2) construction of terms of the trust; or
(3) determining the meaning or effect of terms of the trust.
New Sec. 6. A trustee or other person that reasonably relies on the
validity of a distribution of part or all of the property of a trust to
another trust, or a modification of a trust, under the uniform trust
decanting act, law of this state other than the act or the law of another
jurisdiction is not liable to any person for any action or failure to act as HOUSE BILL No. 2172—page 4
a result of the reliance.
New Sec. 7. (a) In this section, a notice period begins on the day
notice is given under subsection (c) and ends 59 days after the day
notice is given.
(b) Except as otherwise provided in the uniform trust decanting
act, an authorized fiduciary may exercise the decanting power without
the consent of any person and without court approval.
(c) Except as otherwise provided in subsection (f), an authorized
fiduciary shall give notice in a record of the intended exercise of the
decanting power not later than 60 days before the exercise to:
(1) Each settlor of the first trust, if living or then in existence;
(2) each qualified beneficiary of the first trust;
(3) each holder of a presently exercisable power of appointment
over any part or all of the first trust;
(4) each person that currently has the right to remove or replace
the authorized fiduciary;
(5) each other fiduciary of the first trust;
(6) each fiduciary of the second trust;
(7) each person acting as an advisor or protector of the first trust;
and
(8) the attorney general, if section 14(b), and amendments thereto,
applies.
(d) An authorized fiduciary is not required to give notice under
subsection (c) to a person that is not known to the fiduciary or is known
to the fiduciary but cannot be located by the fiduciary after reasonable
diligence.
(e) A notice under subsection (c) shall:
(1) Specify the manner in which the authorized fiduciary intends
to exercise the decanting power, which shall include a statement as to
the authorized fiduciary's reason for the proposed decanting and an
explanation as to the differences between the first trust and the second
trust or trusts;
(2) specify the proposed effective date for exercise of the power;
(3) include a copy of the first-trust instrument;
(4) include a copy of all second-trust instruments;
(5) include a statement indicating the capacity in which the
intended recipient is being given notice; and
(6) include a statement that any application under section 9, and
amendments thereto, shall be filed within six months from the day
notice is given.
(f) The decanting power may be exercised before expiration of the
notice period under subsection (a) if all persons entitled to receive
notice waive the period in a signed record.
(g) The receipt of notice, waiver of the notice period or expiration
of the notice period does not affect the right of a person to file an
application under section 9, and amendments thereto, except as
provided in that section.
(h) An exercise of the decanting power is not ineffective because
of the failure to give notice to one or more persons under subsection (c)
if the authorized fiduciary acted with reasonable care to comply with
subsection (c).
New Sec. 8. (a) Notice to a person with authority to represent and
bind another person under a first-trust instrument or the Kansas
uniform trust code, K.S.A. 58a-101 et seq., and amendments thereto,
has the same effect as notice given directly to the person represented.
(b) Consent of or waiver by a person with authority to represent
and bind another person under a first-trust instrument or the Kansas
uniform trust code, K.S.A. 58a-101 et seq., and amendments thereto, is
binding on the person represented unless the person represented objects
to the representation before the consent or waiver otherwise would
become effective.
(c) A person with authority to represent and bind another person
under a first-trust instrument or the Kansas uniform trust code, K.S.A.
58a-101 et seq., and amendments thereto, may file an application under HOUSE BILL No. 2172—page 5
section 9, and amendments thereto, on behalf of the person represented.
(d) A settlor shall not represent or bind a beneficiary under the
uniform trust decanting act.
New Sec. 9. (a) On application of an authorized fiduciary, a
person entitled to notice under section 7(c), and amendments thereto, a
beneficiary, or with respect to a charitable interest, the attorney general
or other person that has standing to enforce the charitable interest, the
court may:
(1) Provide instructions to the authorized fiduciary regarding
whether a proposed exercise of the decanting power is permitted under
the uniform trust decanting act and consistent with the fiduciary duties
of the authorized fiduciary;
(2) appoint a special fiduciary and authorize the special fiduciary
to determine whether the decanting power should be exercised under
the uniform trust decanting act and to exercise the decanting power;
(3) approve an exercise of the decanting power;
(4) subject to the limitation set forth in subsection (c), determine
that a proposed or attempted exercise of the decanting power is
ineffective because:
(A) After applying section 22, and amendments thereto, the
proposed or attempted exercise does not or did not comply with the
uniform trust decanting act; or
(B) the proposed or attempted exercise would be or was an abuse
of the fiduciary's discretion or a breach of fiduciary duty;
(5) determine the extent to which section 22, and amendments
thereto, applies to a prior exercise of the decanting power;
(6) provide instructions to the trustee regarding the application of
section 22, and amendments thereto, to a prior exercise of the decanting
power; or
(7) order other relief to carry out the purposes of the uniform trust
decanting act.
(b) On application of an authorized fiduciary, the court may
approve:
(1) An increase in the fiduciary's compensation under section 16,
and amendments thereto; or
(2) a modification under section 18, and amendments thereto, of a
provision granting a person the right to remove or replace the fiduciary.
(c) A proceeding under subsection (a)(4) shall not be commenced
by a person entitled to notice under section 7(c), and amendments
thereto, or by a beneficiary unless such proceeding is commenced
within six months from the day notice is given under section 7(a), and
amendments thereto. Failure to receive notice shall not extend the time
by which such proceeding must be commenced if the authorized
fiduciary acted with reasonable diligence to comply with the
requirements of section 7(c), and amendments thereto.
(d) In a judicial proceeding involving the decanting of a trust, the
court, as justice and equity may require, may award costs and expenses,
including reasonable attorney fees, to any party, to be paid by another
party or from the trust that is the subject of the controversy.
New Sec. 10. An exercise of the decanting power shall be made in
a record signed by an authorized fiduciary. The signed record shall,
directly or by reference to the notice required by section 7, and
amendments thereto, identify the first trust and the second trust or trusts
and state the property of the first trust being distributed to each second
trust and the property, if any, that remains in the first trust.
New Sec. 11. (a) As used in this section:
(1) "Noncontingent right" means a right that is not subject to the
exercise of discretion or the occurrence of a specified event that is not
certain to occur. The term does not include a right held by a beneficiary
if any person has discretion to distribute property subject to the right to
any person other than the beneficiary or the beneficiary's estate.
(2) "Presumptive remainder beneficiary" means a qualified
beneficiary other than a current beneficiary.
(3) "Successor beneficiary" means a beneficiary that is not a HOUSE BILL No. 2172—page 6
qualified beneficiary on the date the beneficiary's qualification is
determined. "Successor beneficiary" does not include a person that is a
beneficiary only because the person holds a nongeneral power of
appointment.
(4) "Vested interest" means a:
(A) Right to a mandatory distribution that is a noncontingent right
as of the date of the exercise of the decanting power;
(B) current and noncontingent right, annually or more frequently,
to a mandatory distribution of income, a specified dollar amount, or a
percentage of value of some or all of the trust property;
(C) current and noncontingent right, annually or more frequently,
to withdraw income, a specified dollar amount, or a percentage of value
of some or all of the trust property;
(D) presently exercisable general power of appointment; or
(E) right to receive an ascertainable part of the trust property on
the trust's termination that is not subject to the exercise of discretion or
to the occurrence of a specified event that is not certain to occur.
(b) Subject to subsection (c) and section 14, and amendments
thereto, an authorized fiduciary that has expanded distributive
discretion over the principal of a first trust for the benefit of one or
more current beneficiaries may exercise the decanting power over the
principal of the first trust.
(c) Subject to section 13, and amendments thereto, in an exercise
of the decanting power under this section, a second trust shall not:
(1) Include as a current beneficiary a person that is not a current
beneficiary of the first trust, except as otherwise provided in subsection
(d);
(2) include as a presumptive remainder beneficiary or successor
beneficiary a person that is not a current beneficiary, presumptive
remainder beneficiary or successor beneficiary of the first trust, except
as otherwise provided in subsection (d); or
(3) reduce or eliminate a vested interest.
(d) Subject to subsection (c)(3) and section 14, and amendments
thereto, in an exercise of the decanting power under this section, a
second trust may be a trust created or administered under the law of any
jurisdiction and may:
(1) Retain a power of appointment granted in the first trust;
(2) omit a power of appointment granted in the first trust, other
than a presently exercisable general power of appointment;
(3) create or modify a power of appointment if the powerholder is
a current beneficiary of the first trust and the authorized fiduciary has
expanded distributive discretion to distribute principal to the
beneficiary; and
(4) create or modify a power of appointment if the powerholder is
a presumptive remainder beneficiary or successor beneficiary of the
first trust, but the exercise of the power may take effect only after the
powerholder becomes, or would have become if then living, a current
beneficiary.
(e) A power of appointment described in subsection (d) may be
general or nongeneral. The class of permissible appointees in favor of
which the power may be exercised may be broader than or different
from the beneficiaries of the first trust.
(f) If an authorized fiduciary has expanded distributive discretion
over part but not all of the principal of a first trust, the fiduciary may
exercise the decanting power under this section over that part of the
principal over which the authorized fiduciary has expanded distributive
discretion.
New Sec. 12. (a) As used in this section, "limited distributive
discretion" means a discretionary power of distribution that is limited to
an ascertainable standard or a reasonably definite standard.
(b) An authorized fiduciary that has limited distributive discretion
over the principal of the first trust for benefit of one or more current
beneficiaries may exercise the decanting power over the principal of
the first trust. HOUSE BILL No. 2172—page 7
(c) Under this section and subject to section 14, and amendments
thereto, a second trust may be created or administered under the law of
any jurisdiction. Under this section, the second trusts, in the aggregate,
shall grant each beneficiary of the first trust beneficial interests that are
substantially similar to the beneficial interests of the beneficiary in the
first trust.
(d) A power to make a distribution under a second trust for the
benefit of a beneficiary who is an individual is substantially similar to a
power under the first trust to make a distribution directly to the
beneficiary. A distribution is for the benefit of a beneficiary if the:
(1) Distribution is applied for the benefit of the beneficiary;
(2) beneficiary is under a legal disability or the trustee reasonably
believes the beneficiary is incapacitated, and the distribution is made as
permitted under the Kansas uniform trust code, K.S.A. 58a-101 et seq.,
and amendments thereto; or
(3) distribution is made as permitted under the terms of the first-
trust instrument and the second-trust instrument for the benefit of the
beneficiary.
(e) If an authorized fiduciary has limited distributive discretion
over part but not all of the principal of a first trust, the fiduciary may
exercise the decanting power under this section over that part of the
principal over which the authorized fiduciary has limited distributive
discretion.
New Sec. 13. (a) As used in this section:
(1) "Beneficiary with a disability" means a beneficiary of a first
trust who the special-needs fiduciary reasonably believes may qualify
for governmental benefits based on disability, whether or not the
beneficiary currently receives those benefits or is an individual who has
been adjudicated as incapacitated.
(2) "Governmental benefits" means financial aid or services from
a state, federal or other public agency.
(3) "Special-needs fiduciary" means, with respect to a trust that
has a beneficiary with a disability:
(A) A trustee or other fiduciary, other than a settlor, that has
discretion to distribute part or all of the principal of a first trust to one
or more current beneficiaries;
(B) if no trustee or fiduciary has discretion under subparagraph
(A), a trustee or other fiduciary, other than a settlor, that has discretion
to distribute part or all of the income of the first trust to one or more
current beneficiaries; or
(C) if no trustee or fiduciary has discretion under subparagraphs
(A) and (B), a trustee or other fiduciary, other than a settlor, that is
required to distribute part or all of the income or principal of the first
trust to one or more current beneficiaries.
(4) "Special-needs trust" means a trust the trustee believes would
not be considered a resource for purposes of determining whether a
beneficiary with a disability is eligible for governmental benefits.
(b) A special-needs fiduciary may exercise the decanting power
under section 11, and amendments thereto, over the principal of a first
trust as if the fiduciary had authority to distribute principal to a
beneficiary with a disability subject to expanded distributive discretion
if:
(1) A second trust is a special-needs trust that benefits the
beneficiary with a disability; and
(2) the special-needs fiduciary determines that exercise of the
decanting power will not be inconsistent with a material purpose of the
first trust.
(c) In an exercise of the decanting power under this section, the
following rules apply:
(1) Notwithstanding section 11(c)(2), and amendments thereto, the
interest in the second trust of a beneficiary with a disability may:
(A) Be a pooled trust as defined by medicaid law for the benefit of
the beneficiary with a disability under 42 U.S.C. § 1396p(d)(4)(C); or
(B) contain payback provisions complying with reimbursement HOUSE BILL No. 2172—page 8
requirements of medicaid law under 42 U.S.C. § 1396p(d)(4)(A).
(2) Section 11(c)(3), and amendments thereto, does not apply to
the interests of the beneficiary with a disability.
(3) Except as affected by any change to the interests of the
beneficiary with a disability, the second trust, or if there are two or
more second trusts, the second trusts in the aggregate, shall grant each
other beneficiary of the first trust beneficial interests in the second
trusts that are substantially similar to the beneficiary's beneficial
interests in the first trust.
New Sec. 14. (a) As used in this section:
(1) "Determinable charitable interest" means a charitable interest
that is a right to a mandatory distribution currently, periodically, on the
occurrence of a specified event or after the passage of a specified time
and is unconditional or will be held solely for charitable purposes.
(2) "Unconditional" means not subject to the occurrence of a
specified event that is not certain to occur, other than a requirement in a
trust instrument that a charitable organization be in existence or qualify
under a particular provision of the United States internal revenue code
of 1986 on the date of the distribution, if the charitable organization
meets the requirement on the date of determination.
(b) If a first trust contains a determinable charitable interest, the
attorney general has the rights of a qualified beneficiary and may
represent and bind the charitable interest.
(c) If a first trust contains a charitable interest, the second trust or
trusts shall not:
(1) Diminish the charitable interest;
(2) diminish the interest of an identified charitable organization
that holds the charitable interest;
(3) alter any charitable purpose stated in the first-trust instrument;
or
(4) alter any condition or restriction related to the charitable
interest.
(d) If there are two or more second trusts, the second trusts shall
be treated as one trust for purposes of determining whether the exercise
of the decanting power diminishes the charitable interest or diminishes
the interest of an identified charitable organization for purposes of
subsection (c).
(e) If a first trust contains a determinable charitable interest, the
second trust or trusts that include a charitable interest pursuant to
subsection (c) shall be administered under the law of this state unless
the:
(1) Attorney general, after receiving notice under section 7, and
amendments thereto, fails to object in a signed record delivered to the
authorized fiduciary within the notice period;
(2) attorney general consents in a signed record to the second trust
or trusts being administered under the law of another jurisdiction; or
(3) court approves the exercise of the decanting power.
(f) The uniform trust decanting act does not limit the powers and
duties of the attorney general under law of this state other than the act.
New Sec. 15. (a) An authorized fiduciary shall not exercise the
decanting power to the extent the first-trust instrument expressly
prohibits exercise of:
(1) The decanting power; or
(2) a power granted by state law to the fiduciary to distribute part
or all of the principal of the trust to another trust or to modify the trust.
(b) Exercise of the decanting power is subject to any restriction in
the first-trust instrument that expressly applies to exercise of:
(1) The decanting power; or
(2) a power granted by state law to a fiduciary to distribute part or
all of the principal of the trust to another trust or to modify the trust.
(c) A general prohibition of the amendment or revocation of a first
trust, a spendthrift clause or a clause restraining the voluntary or
involuntary transfer of a beneficiary's interest does not preclude
exercise of the decanting power. HOUSE BILL No. 2172—page 9
(d) Subject to subsections (a) and (b), an authorized fiduciary may
exercise the decanting power under the uniform trust decanting act
even if the first-trust instrument permits the authorized fiduciary or
another person to modify the first-trust instrument or to distribute part
or all of the principal of the first trust to another trust.
(e) To the extent the creation of a second-trust instrument is
permitted, if a first-trust instrument contains an express prohibition
described in subsection (a) or an express restriction described in
subsection (b), the provision shall be included in the second-trust
instrument.
New Sec. 16. (a) If a first-trust instrument specifies an authorized
fiduciary's compensation, the fiduciary shall not exercise the decanting
power to increase the fiduciary's compensation above the specified
compensation unless:
(1) All qualified beneficiaries of the second trust consent to the
increase in a signed record; or
(2) the increase is approved by the court.
(b) If a first-trust instrument does not specify an authorized
fiduciary's compensation, the fiduciary shall not exercise the decanting
power to increase the fiduciary's compensation above the compensation
permitted by the Kansas uniform trust code, K.S.A. 58a-101 et seq.,
and amendments thereto, unless:
(1) All qualified beneficiaries of the second trust consent to the
increase in a signed record; or
(2) the increase is approved by the court.
(c) A change in an authorized fiduciary's compensation that is
incidental to other changes made by the exercise of the decanting
power is not an increase in the fiduciary's compensation for purposes of
subsections (a) and (b).
New Sec. 17. (a) Except as otherwise provided in this section, a
second-trust instrument shall not relieve an authorized fiduciary from
liability for breach of trust to a greater extent than the first-trust
instrument.
(b) A second-trust instrument may provide for indemnification of
an authorized fiduciary of the first trust or another person acting in a
fiduciary capacity under the first trust for any liability or claim that
would have been payable from the first trust if the decanting power had
not been exercised.
(c) A second-trust instrument shall not reduce fiduciary liability in
the aggregate.
(d) Subject to subsection (c), a second-trust instrument may divide
and reallocate fiduciary powers among fiduciaries, including one or
more trustees, distribution advisors, investment advisors, trust
protectors or other persons, and relieve a fiduciary from liability for an
act or failure to act of another fiduciary as permitted by law of this state
other than the uniform trust decanting act.
New Sec. 18. An authorized fiduciary shall not exercise the
decanting power to modify a provision in a first-trust instrument
granting another person power to remove or replace the fiduciary
unless the:
(a) Person holding the power consents to the modification in a
signed record and the modification applies only to the person;
(b) person holding the power and the qualified beneficiaries of the
second trust consent to the modification in a signed record and the
modification grants a substantially similar power to another person; or
(c) court approves the modification and the modification grants a
substantially similar power to another person.
New Sec. 19. (a) As used in this section:
(1) "Grantor trust" means a trust as to which a settlor of a first
trust is considered the owner under 26 U.S.C. §§ 671 through 677 or 26
U.S.C. § 679.
(2) "Internal revenue code" means the United States internal
revenue code of 1986.
(3) "Nongrantor trust" means a trust that is not a grantor trust. HOUSE BILL No. 2172—page 10
(4) "Qualified benefits property" means property subject to the
minimum distribution requirements of 26 U.S.C. § 401(a)(9), and any
applicable regulations, or to any similar requirements that refer to 26
U.S.C. § 401(a)(9) or the regulations.
(b) An exercise of the decanting power is subject to the following
limitations:
(1) If a first trust contains property that qualified, or would have
qualified but for provisions of the uniform trust decanting act other than
this section, for a marital deduction for purposes of the gift or estate tax
under the internal revenue code or a state gift, estate or inheritance tax,
the second-trust instrument shall not include or omit any term that, if
included in or omitted from the trust instrument for the trust to which
the property was transferred, would have prevented the transfer from
qualifying for the deduction, or would have reduced the amount of the
deduction, under the same provisions of the internal revenue code or
state law under which the transfer qualified.
(2) If the first trust contains property that qualified, or would have
qualified but for provisions of the uniform trust decanting act other than
this section, for a charitable deduction for purposes of the income, gift
or estate tax under the internal revenue code or a state income, gift,
estate or inheritance tax, the second-trust instrument shall not include
or omit any term that, if included in or omitted from the trust
instrument for the trust to which the property was transferred, would
have prevented the transfer from qualifying for the deduction, or would
have reduced the amount of the deduction, under the same provisions
of the internal revenue code or state law under which the transfer
qualified.
(3) If the first trust contains property that qualified, or would have
qualified but for provisions of the uniform trust decanting act other than
this section, for the exclusion from the gift tax described in 26 U.S.C. §
2503(b), the second-trust instrument shall not include or omit a term
that, if included in or omitted from the trust instrument for the trust to
which the property was transferred, would have prevented the transfer
from qualifying under 26 U.S.C. § 2503(b). If the first trust contains
property that qualified, or would have qualified but for provisions of
the uniform trust decanting act other than this section, for the exclusion
from the gift tax described in 26 U.S.C. § 2503(b) by application of 26
U.S.C. § 2503(c), the second-trust instrument shall not include or omit
a term that, if included or omitted from the trust instrument for the trust
to which the property was transferred, would have prevented the
transfer from qualifying under 26 U.S.C. § 2503(c).
(4) If the property of the first trust includes shares of stock in an S
corporation as defined in 26 U.S.C. § 1361 and the first trust is, or but
for provisions of the uniform trust decanting act other than this section
would be, a permitted shareholder under any provision of 26 U.S.C. §
1361, an authorized fiduciary may exercise the power with respect to
part or all of the S-corporation stock only if any second trust receiving
the stock is a permitted shareholder under 26 U.S.C. § 1361(c)(2). If
the property of the first trust includes shares of stock in an S
corporation and the first trust is, or but for provisions of the uniform
trust decanting act other than this section would be, a qualified
subchapter-S trust within the meaning of 26 U.S.C. § 1361(d), the
second-trust instrument shall not include or omit a term that prevents
the second trust from qualifying as a qualified subchapter-S trust.
(5) If the first trust contains property that qualified, or would have
qualified but for provisions of the uniform trust decanting act other than
this section, for a zero inclusion ratio for purposes of the generation-
skipping transfer tax under 26 U.S.C. § 2642(c), the second-trust
instrument shall not include or omit a term that, if included in or
omitted from the first-trust instrument, would have prevented the
transfer to the first trust from qualifying for a zero inclusion ratio under
26 U.S.C. § 2642(c).
(6) If the first trust is directly or indirectly the beneficiary of
qualified benefits property, the second-trust instrument shall not include HOUSE BILL No. 2172—page 11
or omit any term that, if included in or omitted from the first-trust
instrument, would have increased the minimum distributions required
with respect to the qualified benefits property under 26 U.S.C. § 401(a)
(9) and any applicable regulations, or any similar requirements that
refer to 26 U.S.C. § 401(a)(9) or the regulations. If an attempted
exercise of the decanting power violates the preceding sentence, the
trustee is deemed to have held the qualified benefits property and any
reinvested distributions of the property as a separate share from the date
of the exercise of the power and section 22, and amendments thereto,
applies to the separate share.
(7) If the first trust qualifies as a grantor trust because of the
application of 26 U.S.C. § 672(f)(2)(A), the second trust shall not
include or omit a term that, if included in or omitted from the first-trust
instrument, would have prevented the first trust from qualifying under
26 U.S.C. § 672(f)(2)(A).
(8) As used in this paragraph, "tax benefit" means a federal or
state tax deduction, exemption, exclusion, or other benefit not
otherwise listed in this section, except for a benefit arising from being a
grantor trust. Subject to paragraph (9), a second-trust instrument shall
not include or omit a term that, if included in or omitted from the first-
trust instrument, would have prevented qualification for a tax benefit if
the:
(A) First-trust instrument expressly indicates an intent to qualify
for the benefit or the first-trust instrument clearly is designed to enable
the first trust to qualify for the benefit; and
(B) transfer of property held by the first trust or the first trust
qualified, or but for provisions of the uniform trust decanting act other
than this section, would have qualified for the tax benefit.
(9) Subject to paragraph (4):
(A) Except as otherwise provided in paragraph (7), the second
trust may be a nongrantor trust, even if the first trust is a grantor trust;
and
(B) except as otherwise provided in paragraph (10), the second
trust may be a grantor trust, even if the first trust is a nongrantor trust.
(10) An authorized fiduciary shall not exercise the decanting
power if a settlor objects in a signed record delivered to the fiduciary
within the notice period and:
(A) The first trust and a second trust are both grantor trusts, in
whole or in part, the first trust grants the settlor or another person the
power to cause the first trust to cease to be a grantor trust, and the
second trust does not grant an equivalent power to the settlor or other
person; or
(B) the first trust is a nongrantor trust and a second trust is a
grantor trust, in whole or in part, with respect to the settlor, unless the:
(i) Settlor has the power at all times to cause the second trust to
cease to be a grantor trust; or
(ii) first-trust instrument contains a provision granting the settlor
or another person a power that would cause the first trust to cease to be
a grantor trust and the second-trust instrument contains the same
provision.
New Sec. 20. (a) Subject to subsection (b), a second trust may
have a duration that is the same as or different from the duration of the
first trust.
(b) To the extent that property of a second trust is attributable to
property of the first trust, the property of the second trust is subject to
any rules governing maximum perpetuity, accumulation or suspension
of the power of alienation that apply to property of the first trust.
New Sec. 21. An authorized fiduciary may exercise the decanting
power whether or not under the first trust's discretionary distribution
standard the fiduciary would have made or could have been compelled
to make a discretionary distribution of principal at the time of the
exercise.
New Sec. 22. (a) If exercise of the decanting power would be
effective under the uniform trust decanting act except that the second- HOUSE BILL No. 2172—page 12
trust instrument in part does not comply with the act, the exercise of the
power is effective and the following rules apply with respect to the
principal of the second trust attributable to the exercise of the power:
(1) A provision in the second-trust instrument that is not permitted
under the act is void to the extent necessary to comply with this act.
(2) A provision required by the act to be in the second-trust
instrument that is not contained in the instrument is deemed to be
included in the instrument to the extent necessary to comply with the
act.
(b) If a trustee or other fiduciary of a second trust determines that
subsection (a) applies to a prior exercise of the decanting power, the
fiduciary shall take corrective action consistent with the fiduciary's
duties.
New Sec. 23. (a) As used in this section:
(1) "Animal trust" means a trust or an interest in a trust created to
provide for the care of one or more animals.
(2) "Protector" means a person appointed in an animal trust to
enforce the trust on behalf of the animal or, if no such person is
appointed in the trust, a person appointed by the court for that purpose.
(b) The decanting power may be exercised over an animal trust
that has a protector to the extent the trust could be decanted under the
uniform trust decanting act if each animal that benefits from the trust
were an individual, if the protector consents in a signed record to the
exercise of the power.
(c) A protector for an animal has the rights under the uniform trust
decanting act of a qualified beneficiary.
(d) Notwithstanding any other provision of the uniform trust
decanting act, if a first trust is an animal trust, in an exercise of the
decanting power, the second trust shall provide that trust property may
be applied only to its intended purpose for the period the first trust
benefited the animal.
New Sec. 24. A reference in the Kansas uniform trust code, K.S.A.
58a-101 et seq., and amendments thereto, to a trust instrument or terms
of the trust includes a second-trust instrument and the terms of the
second trust.
New Sec. 25. (a) For purposes of law of this state other than the
uniform trust decanting act and subject to subsection (b), a settlor of a
first trust is deemed to be the settlor of the second trust with respect to
the portion of the principal of the first trust subject to the exercise of
the decanting power.
(b) In determining settlor intent with respect to a second trust, the
intent of a settlor of the first trust, a settlor of the second trust and the
authorized fiduciary may be considered.
New Sec. 26. (a) Except as otherwise provided in subsection (c), if
exercise of the decanting power was intended to distribute all the
principal of the first trust to one or more second trusts, later-discovered
property belonging to the first trust and property paid to or acquired by
the first trust after the exercise of the power is part of the trust estate of
the second trust or trusts.
(b) Except as otherwise provided in subsection (c), if exercise of
the decanting power was intended to distribute less than all the
principal of the first trust to one or more second trusts, later-discovered
property belonging to the first trust or property paid to or acquired by
the first trust after exercise of the power remains part of the trust estate
of the first trust.
(c) An authorized fiduciary may provide in an exercise of the
decanting power or by the terms of a second trust for disposition of
later-discovered property belonging to the first trust or property paid to
or acquired by the first trust after exercise of the power.
New Sec. 27. A debt, liability or other obligation enforceable
against property of a first trust is enforceable to the same extent against
the property when held by the second trust after exercise of the
decanting power.
New Sec. 28. In applying and construing this uniform act, HOUSE BILL No. 2172—page 13
consideration shall be given to the need to promote uniformity of the
law with respect to its subject matter among states that enact it.
New Sec. 29. The uniform trust decanting act modifies, limits or
supersedes the electronic signatures in global and national commerce
act, 15 U.S.C. § 7001 et seq., but does not modify, limit or supersede
section 101(c) of that act, 15 U.S.C. § 7001(c), or authorize electronic
delivery of any of the notices described in section 103(b) of that act, 15
U.S.C. § 7003(b).
New Sec. 30. If any provision of the uniform trust decanting act or
its application to any person or circumstance is held invalid, the
invalidity does not affect other provisions or applications of the act that
can be given effect without the invalid provision or application, and to
this end the provisions of the act are severable.
Sec. 31. K.S.A. 2022 Supp. 58a-411 is hereby amended to read as
follows: 58a-411. (a) A noncharitable irrevocable trust may be modified
or terminated upon consent of the settlor and all qualified beneficiaries,
even if the modification or termination is inconsistent with a material
purpose of the trust. A settlor's power to consent to a trust's
modification or termination may be exercised by an attorney in fact
under a power of attorney only to the extent expressly authorized by the
power of attorney or the terms of the trust; by the settlor's conservator
with the approval of the court supervising the conservatorship if an
agent is not so authorized; or by the settlor's guardian with the approval
of the court supervising the guardianship if an agent is not so
authorized and a conservator has not been appointed. This subsection
does not apply to irrevocable trusts created before, or to revocable
trusts that became irrevocable before, January 1, 2003.
(b) A noncharitable irrevocable trust may be terminated upon
consent of all of the qualified beneficiaries if the court concludes that
continuance of the trust is not necessary to achieve any material
purpose of the trust. A noncharitable irrevocable trust may be modified
upon consent of all of the qualified beneficiaries if the court concludes
that modification is not inconsistent with a material purpose of the
trust.
(c) (1) A spendthrift provision in the terms of the trust is not
presumed to constitute a material purpose of the trust.
(2) Application of the rule against perpetuities is not presumed to
constitute a material purpose of the trust.
(d) Upon termination of a trust under subsection (a) or (b), the
trustee shall distribute the trust property as agreed by the qualified
beneficiaries.
(e) If not all of the qualified beneficiaries consent to a proposed
modification or termination of the trust under subsection (a) or (b), the
modification or termination may be approved by the court if the court is
satisfied that:
(1) If all of the qualified beneficiaries had consented, the trust
could have been modified or terminated under this section; and
(2) the interests of a qualified beneficiary who does not consent
will be adequately protected.
Sec. 32. K.S.A. 59-3404 is hereby amended to read as follows: 59-
3404. K.S.A. 59-3401, and amendments thereto, the statutory rule
against perpetuities, does not apply to:
(1) A nonvested property interest or a power of appointment
arising out of a nondonative transfer, except a nonvested property
interest or a power of appointment arising out of a:
(i) a Premarital or postmarital agreement,;
(ii) a separation or divorce settlement,;
(iii) a spouse's election,;
(iv) a similar arrangement arising out of a prospective, existing or
previous marital relationship between the parties,;
(v) a contract to make or not to revoke a will or trust,;
(vi) a contract to exercise or not to exercise a power of
appointment,;
(vii) a transfer in satisfaction of a duty of support,; or HOUSE BILL No. 2172—page 14
(viii) a reciprocal transfer;
(2) a fiduciary's power relating to the administration or
management of assets, including the power of a fiduciary to sell, lease
or mortgage property, and the power of a fiduciary to determine
principal and income;
(3) a power to appoint a fiduciary;
(4) a discretionary power of a trustee to distribute principal before
termination of a trust to a beneficiary having an indefeasibly vested
interest in the income and principal;
(5) a nonvested property interest held by a charity, government or
governmental agency or subdivision, if the nonvested property interest
is preceded by an interest held by another charity, government or
governmental agency or subdivision;
(6) a nonvested property interest in or a power of appointment
with respect to a trust or other property arrangement forming part of a
pension, profit-sharing, stock bonus, health, disability, death benefit,
income deferral or other current or deferred benefit plan for one or
more employees, independent contractors or the beneficiaries or
spouses, to which contributions are made for the purpose of distributing
to or for the benefit of the participants or their beneficiaries or spouses
the property, income or principal in the trust or other property
arrangement, except a nonvested property interest or a power of
appointment that is created by an election of a participant or a
beneficiary or spouse; or
(7) a property interest, power of appointment or arrangement that
was not subject to the common-law rule against perpetuities or is
excluded by another statute of this state; or
(8) a trust in which the governing instrument states that the rule
against perpetuities does not apply to the trust and under which the
trustee or other person to whom the power is properly granted or
delegated has power under the governing instrument, any applicable
statute or the common law to sell, lease or mortgage property for any
period of time beyond the period which would otherwise be required
for an interest created under the governing instrument to vest. This
subsection shall apply to all trusts created by will or inter vivos
agreement executed or amended on or after July 1, 2023, and to all
trusts created by exercise of power of appointment granted under
instruments executed or amended on or after July 1, 2023.
Sec. 33. K.S.A. 2022 Supp. 79-32,109 is hereby amended to read
as follows: 79-32,109. As used in this act, unless the context otherwise
requires:
(a) (1) Any term used in this act shall have the same meaning as
when used in a comparable context in the federal internal revenue code.
Any reference in this act to the "federal internal revenue code" shall
mean the provisions of the federal internal revenue code of 1986, and
amendments thereto, and other provisions of the laws of the United
States relating to federal income taxes, as the same may be or become
effective at any time, or from time to time, for the taxable year.
(2) Any reference in this act to a federal form or schedule, or to a
line number on a federal form or schedule, shall be to such form,
schedule and line number as they existed for tax year 2011 and as
revised thereafter by the internal revenue service. Any such reference
shall include comparable federal forms, schedules, and line numbers
used by non-United States residents when filing their federal income
tax return with the internal revenue service.
(b) "Resident individual" means a natural person who is domiciled
in this state. A natural person who spends in the aggregate more than
six months of the taxable year within this state shall be presumed to be
a resident for purposes of this act in absence of proof to the contrary. A
nonresident individual means an individual other than a resident
individual.
(c) "Resident estate" means the estate of a deceased person whose
domicile was in this state at the time of such person's death.
"Nonresident estate" means an estate other than a resident estate. HOUSE BILL No. 2172—page 15
(d) "Resident trust" means a trust that:
(1) Is administered in this state and that;
(2) was created by or consists of property owned by a person
domiciled in this state on the date the trust or portion of the trust
became irrevocable; and
(3) has at least one income beneficiary who, on the last day of the
taxable year, was a resident of this state.
(e) (1) "Resident partner" means a partner who is a resident
individual, a resident estate, or a resident trust.
(2) "Nonresident partner" means a partner other than a resident
partner.
(f) (1) "Resident beneficiary" means a beneficiary of an estate or
trust which beneficiary is a resident individual, a resident estate, or a
resident trust.
(2) "Nonresident beneficiary" means a beneficiary other than a
resident beneficiary.
(g) "Director" means the director of taxation.
(h) (1) "Modified Kansas source income" means that part of a
nonresident individual's Kansas adjusted gross income as set forth in
K.S.A. 79-32,117, and amendments thereto, derived from sources in
Kansas. Items of income including unemployment compensation, gain,
loss or deduction reflected in Kansas adjusted gross income shall be
considered derived from sources in Kansas to the extent that they are
attributable to:
(A) The ownership of any interest in real or tangible personal
property in this state;
(B) a business, trade, profession or occupation carried on in this
state;
(C) a business, trade, profession or occupation carried on partly
within and partly without this state as determined by the uniform
division of income for tax purposes act as set forth in K.S.A. 79-3271
through 79-3293, and amendments thereto;
(D) the distributive share of partnership income, gain, loss and
deduction determined under this section as if the partnership were a
nonresident individual;
(E) the share of estate or trust income, gain, loss and deduction
determined under K.S.A. 79-32,137, and amendments thereto;
(F) prizes won from lottery games conducted by the Kansas
lottery;
(G) any winnings from parimutuel wagering derived from the
conduct of parimutuel activities within this state; or
(H) income from intangible personal property, including annuities,
dividends, interest, and gains from the disposition of intangible
personal property to the extent that such income is from property
employed in a trade, business, profession or occupation carried on in
Kansas. A nonresident, other than a dealer holding property primarily
for sale to customers in the ordinary course of such dealer's trade or
business, shall not be deemed to carry on a business, trade, profession
or occupation in Kansas solely by reason of the purchase and sale of
property for such nonresident's own account.
(2) "Modified Kansas source income" does not include:
(A) Compensation paid by the United States for service in the
armed forces of the United States, performed during an induction
period by an individual not domiciled in this state; or
(B) such individual's share of distributed or undistributed taxable
income or net operating loss of a corporation which is an electing small
business corporation unless an agreement is filed as provided in K.S.A.
79-32,139, and amendments thereto, in which event, the "modified
Kansas source income" of such nonresident individual shall include
such individual's share of such corporation's distributed and
undistributed taxable income or net operating loss as such share is
determined under the internal revenue code only to the extent, however,
that such income, gain or loss is at the corporate level, derived from
sources within Kansas. HOUSE BILL No. 2172—page 16
Sec. 34. K.S.A. 59-3404 and K.S.A. 2022 Supp. 58a-411 and 79-
32,109 are hereby repealed.
Sec. 35. This act shall take effect and be in force from and after its
publication in the statute book.
I hereby certify that the above BILL originated in the House,
and passed that body
HOUSE concurred in
SENATE amendments __________________________________________________________________
Speaker of the House.
Chief Clerk of the House.
Passed the SENATE
as amended
President of the Senate.
Secretary of the Senate.
APPROVED ______________________________________________________________________________
Governor.