Session of 2025
HOUSE BILL No. 2235
By Committee on Financial Institutions and Pensions
Requested by Representative Hoheisel
2-4
AN ACT concerning financial institutions; relating to the technology-
enabled fiduciary financial institutions act; making the act part of the
state banking code; defining certain terms; reducing the fiduciary
financial institution charter application fee; providing due dates for
reports to the office of the state bank commissioner; exempting
fiduciary financial institutions from certain records retention
requirements; authorizing the issuance of certificates and trust
certificates; providing for the supervision of fiduciary financial
institutions by the bank commissioner; including Kansas nonprofit
corporations as qualified charities for purposes of the fiduciary
financial institution income tax credit; amending K.S.A. 9-542, 9-2303,
9-2307, 9-2309, 9-2310, 9-2311, 9-2312 and 9-2322 and K.S.A. 2024
Supp. 9-2301 and 79-32,283 and repealing the existing sections.
Be it enacted by the Legislature of the State of Kansas:
Section 1. K.S.A. 9-542 is hereby amended to read as follows: 9-542.
Articles 5, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20 and, 21 and 23
of chapter 9 of the Kansas Statutes Annotated, and K.S.A. 74-3004, 74-
3005, 74-3006, 75-1304, 75-1305 and, 75-1306, and 75-1308, and K.S.A.
9-814, 9-815, 9-816, 9-1141, 9-1409, 9-1725, 9-1726, 9-1810, 9-1811, 9-
1919, 9-1920, 9-1921 and 9-2019, and amendments thereto, shall
constitute and may be cited as the state banking code.
Sec. 2. K.S.A. 2024 Supp. 9-2301 is hereby amended to read as
follows: 9-2301. (a) The provisions of K.S.A. 9-2301 through 9-2327, and
amendments thereto, shall be known and may be cited as the technology-
enabled fiduciary financial institutions act. The technology-enabled
fiduciary financial institutions act shall be a part of and supplemental to
chapter 9 of the Kansas Statutes Annotated, and amendments thereto.
(b) For purposes of the technology-enabled fiduciary financial
institutions act:
(1) "Act" means the technology-enabled fiduciary financial
institutions act;
(2) "alternative asset" means professionally managed investment
assets that are not publicly traded, including, but not limited to, private
equity, venture capital, leveraged buyouts, special situations, structured
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credit, private debt, private real estate funds and natural resources,
including any economic or beneficial interest therein and any items that
may be held by an alternative asset custody account;
(3) "alternative asset custody account" means an account created by
the owner of an alternative asset that designates a fiduciary financial
institution as custodian or agent and into which the owner transfers,
electronically or otherwise, content, materials, data, information,
documents, reports and contracts in any form, including, without
limitation, evidence of ownership, subscription agreements, private
placement memoranda, limited partnership agreements, limited liability
company agreements, stock agreements in companies and attendant
documents (including investor questionnaire, side letters, regulatory
filings, confidentiality agreements, legal opinions, capitalization tables,
joinder agreements, business plans and offering memorandums),
certificates, depositary receipts, currency, operating agreements, financial
statements, annual and quarterly reports, capital account statements, tax
statements, correspondence from the general partner, manager or
investment advisor of the alternative asset, an investment contract as
defined in K.S.A. 17-12a102(28)(E), and amendments thereto, any digital
or hard copy representation of the foregoing, including smart contracts,
and any digital asset as defined in K.S.A. 58-4802, and amendments
thereto, controllable electronic record, controllable account or
controllable payment intangible whether such information and evidence of
ownership is in hard copy form or a representation of such information
that ownership is stored in a computer readable format from which the
custodian may create and issue a certificate to the beneficial owner;
(4) "charitable beneficiaries" means one or more charities,
contributions to which are allowable as a deduction pursuant to section
170 of the federal internal revenue code that are designated as
beneficiaries of a fidfin trust"certificate" means a certificate representing
the beneficial ownership of a trust or an asset held in an alternative asset
custody account that may be implemented by a digitization process,
including a machine-based system in which a record of ownership and
transactions is maintained with the use of distributed ledger technology,
smart contracts, peer-to-peer networks or other technologies that can
generate a digital replication of the certificate which digital replication
may be divided by such machine-based system as necessary to represent
one or more beneficial owners and which may be secured, accessed or
transferred by means of private keys, electronic signatures or other
analogues comprised of code, script or programming language. Each
digital certificate or divided replication thereof, may, depending on its
terms, constitute a digital asset as defined in K.S.A. 58-4802, and
amendments thereto, a controllable electronic record, a controllable
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account or a controllable payment intangible and to the extent involved in
a transaction shall be subject to K.S.A. 84-1-301, and amendments thereto;
(5) "controllable account" means an account as defined in K.S.A. 84-
9-102(a)(2)(A) through (D), and amendments thereto, evidenced by a
controllable electronic record that provides that the account debtor
undertakes to pay the person who has control of the controllable
electronic record;
(6) "controllable electronic record" means a record as defined in
K.S.A. 84-9-102(a)(69), and amendments thereto, stored in an electronic
medium that may be subject to control by:
(A) Giving a person:
(i) Power to avail such person of substantially all the benefit from the
electronic record; and
(ii) exclusive power to:
(a) Prevent others from availing themselves of substantially all the
benefit from the electronic record; and
(b) transfer control of the electronic record to another person or
cause another person to obtain control of another controllable electronic
record as a result of the transfer of the electronic record; and
(B) enabling the person readily to identify in any way, including by
name, identifying number, cryptographic key, office or account number, as
having the powers specified in subparagraph (A).
"Controllable electronic record" does not include a controllable
account, a controllable payment intangible, a deposit account, an
electronic copy of a record evidencing chattel paper, an electronic
document of title, electronic money, investment property or a transferable
record.
(7) "controllable payment intangible" means a payment intangible as
defined in K.S.A. 84-9-102(a)(61), and amendments thereto, evidenced by
a controllable electronic record that provides that the account debtor
undertakes to pay the person who has control of the controllable
electronic record;
(8) "custodial services" means the safekeeping and management of an
alternative asset custody account, including the execution of customer
instructions, serving as agent, issuing depositary receipts, fund
administrative services and overall decision-making and management of
the account by a fiduciary financial institution and "custodial services"
shall be deemed to involve the exercise of fiduciary and trust powers;
(6)(9) "director" means a person designated as a member of the board
of directors pursuant to K.S.A. 9-2306, and amendments thereto;
(7)(10) "economic growth zone" means an incorporated community
with a population of not more than 5,000 people located within one of the
following counties: Allen, Anderson, Barber, Bourbon, Brown, Chase,
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Chautauqua, Cherokee, Cheyenne, Clark, Clay, Cloud, Coffey, Comanche,
Decatur, Doniphan, Edwards, Elk, Ellsworth, Gove, Graham, Grant, Gray,
Greeley, Greenwood, Hamilton, Harper, Harvey, Haskell, Hodgeman,
Jackson, Jewell, Kearny, Kingman, Kiowa, Labette, Lane, Lincoln, Linn,
Logan, Marion, Marshall, Meade, Mitchell, Montgomery, Morris, Morton,
Nemaha, Neosho, Ness, Norton, Osborne, Ottawa, Pawnee, Phillips, Pratt,
Rawlins, Republic, Rice, Rooks, Rush, Russell, Scott, Sheridan, Sherman,
Smith, Stafford, Stanton, Stevens, Sumner, Trego, Thomas, Wabaunsee,
Wallace, Washington, Wichita, Wilson or Woodson;
(8)(11) "excluded fiduciary" means a fiduciary financial institution in
its capacity as trustee of a fidfin trust, provided that a fiduciary financial
institution shall only be deemed an "excluded fiduciary" to the extent the
fiduciary financial institution is excluded from exercising certain powers
under the instrument that may be exercised by the trust advisor or other
persons designated in the instrument;
(9)(12) "fidfin," "fidfin services" or "fidfin transactions" means the
financing of a fidfin trust or the acquisition of alternative assets on behalf
of and through a fidfin trust, or both, as provided in K.S.A. 9-2311, and
amendments thereto, including loans, extensions of credit and direct
investments;
(10)(13) "fidfin trust" means a trust created to facilitate the delivery
of fidfin services by a fiduciary financial institution;
(11)(14) "fiduciary" means a trustee, a trust advisor or a custodian of
an alternative asset custody account appointed under an instrument that is
acting in a fiduciary capacity for any person, trust or estate;
(12)(15) "instrument" means any document creating a fidfin trust or
alternative asset custody account;
(13)(16) "officer" means a person who participates or has authority to
participate, other than in the capacity of a director, in major policymaking
functions of a bank, trust company or fiduciary financial institution,
whether or not the officer has an official title or if the officer is serving
without salary or other compensation. "Officer" includes the chairperson
of the board, president, vice president, cashier, secretary and treasurer of a
bank, trust company or fiduciary financial institution;
(14)(17) "organizer" means a person who filed the fiduciary financial
institution formation documents;
(15)(18) "out-of-state bank" means a national or state bank, savings
and loan association or savings bank not incorporated under the laws of
Kansas;
(16)(19) "out-of-state financial institution" means an out-of-state
bank or an out-of-state trust company;
(17)(20) "out-of-state trust company" means a national or state trust
company not incorporated under the laws of Kansas;
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(18)(21) "qualified charities" means the same as defined in K.S.A.
79-32,283, and amendments thereto;
(22) (A) "qualified investment" means the purchase or development,
in the aggregate, of at least 10,000 square feet of commercial, industrial,
multiuse or multifamily real estate in the economic growth zone where the
fiduciary financial institution maintains its principal office pursuant to
K.S.A. 9-2309, and amendments thereto, provided that such community
has committed to develop the necessary infrastructure to support a
"qualified investment." A "qualified investment":
(i) May include, as part of satisfying the square footage requirements,
the suitable office space of such fiduciary financial institution, as provided
in K.S.A. 9-2309, and amendments thereto, if owned by the fiduciary
financial institution;
(ii) shall be exempt from the provisions and limitations of K.S.A. 9-
1102, and amendments thereto;
(iii) may be retained by a fiduciary financial institution for as long as
the fiduciary financial institution operates in this state; and
(iv) may be sold, transferred or otherwise disposed of, including a
sale or transfer to an affiliate of the fiduciary financial institution, if the
fiduciary financial institution continues to maintain its principal office in
an economic growth zone pursuant to K.S.A. 9-2309, and amendments
thereto;
(B) notwithstanding the foregoing provisions, if a fiduciary financial
institution leases any portion of a qualified investment made by another
fiduciary financial institution as the lessee fiduciary financial institution's
suitable office space:
(i) The lessee fiduciary financial institution shall make, or cause to be
made, a qualified investment in an economic growth zone other than the
economic growth zone where such fiduciary financial institution maintains
its principal office;
(ii) the leased square footage shall count toward the square footage
requirement applicable to a qualified investment under this section, if such
lease has an initial term of not less than five years; and
(iii) the square footage requirement otherwise applicable to a
qualified investment of the lessee fiduciary financial institution shall be
reduced from 10,000 square feet to 5,000 square feet;
(19)(23) "technology-enabled fiduciary financial institution" or
"fiduciary financial institution" means any limited liability company,
limited partnership or corporation that:
(A) Is organized to perform any one or more of the activities and
services authorized by this act;
(B) has been authorized to conduct business as a fiduciary financial
institution under this chapter pursuant to the provisions of K.S.A. 9-2302,
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and amendments thereto;
(C) has made, committed to make or caused to be made a qualified
investment; and
(D) has committed, in or as a part of the application provided in
K.S.A. 9-2302, and amendments thereto, to conduct any fidfin transactions
in accordance with K.S.A. 9-2311, and amendments thereto, including the
distributions required therein;
(20)(24) "trust" means a trust created pursuant to the Kansas uniform
trust code, K.S.A. 58a-101 et seq., and amendments thereto, or a trust
created or otherwise authorized to transact business pursuant to the
Kansas business trust act of 1961, K.S.A. 17-2707 et seq. 17-2030, and
amendments thereto, the beneficial ownership of which may be
represented by a trust certificate;
(21)(25) "trust advisor" means a fiduciary granted authority by an
instrument to exercise, consent, direct, including the power to direct as
provided in K.S.A. 58a-808, and amendments thereto, or approve all or
any portion of the powers and discretion conferred upon the trustee of a
fidfin trust, including the power to invest the assets of a fidfin trust or
make or cause distributions to be made from such fidfin trust; and
(22)(26) the definitions of K.S.A. 9-701, and amendments thereto,
apply to fiduciary financial institutions except as otherwise provided in
this act.
Sec. 3. K.S.A. 9-2303 is hereby amended to read as follows: 9-2303.
(a) An application for a fiduciary financial institution charter shall include
a nonrefundable fee to be remitted in a manner prescribed by the
commissioner. Until July 1, 2025, the application fee shall be $250,000.
On and after July 1, 2025, the application fee shall be $100,000 $50,000.
The expense of every annual regular fiduciary financial institution
examination, together with the expense of administering fiduciary
financial institution laws, including salaries, travel expenses, third-party
fees for consultants or other entities necessary to assist the commissioner,
supplies and equipment, shall be paid by the fiduciary financial institutions
of this state. Prior to the beginning of each fiscal year, the commissioner
shall make an estimate of the fiduciary financial institution expenses to be
incurred by the office of the state bank commissioner during such fiscal
year in an amount not less than $1,000,000. The commissioner shall
allocate and assess each fiduciary financial institution in this state on the
basis of such fiduciary financial institution's total fidfin transaction
balances, consisting of the aggregate fidfin financing balances of the
fiduciary financial institution reflected in the last December 31 report filed
with the commissioner pursuant to K.S.A. 9-1704, and amendments
thereto. If a fiduciary financial institution has no fidfin transaction
balances, but such fiduciary financial institution is otherwise providing
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custodial services or trust services, the commissioner shall allocate and
assess such fiduciary financial institution in a manner the commissioner
deems reasonable and appropriate. A fiduciary financial institution that has
no fidfin transaction balances and no alternative asset custody accounts
reflected in the last December 31 report filed with the commissioner may
be granted inactive status by the commissioner. The annual assessment
shall not exceed $10,000 for such an inactive fiduciary financial
institution. The annual fee shall be first assessed for the year immediately
following the year the fiduciary financial institution received authority to
engage in fidfin transactions, custodial services and trust business and for
each year thereafter.
(b) (1) A statement of each assessment made under the provisions of
subsection (a) shall be sent by the commissioner on July 1 or the next
business day thereafter to each fiduciary financial institution. When the
commissioner issues such a statement, payment shall be made within 15
business days after the date the statement was sent in a manner prescribed
by the commissioner, which may include such installment periods as the
commissioner deems appropriate but not more frequently than monthly.
(2) The commissioner shall remit all moneys received from such fees
and assessments to the state treasurer in accordance with the provisions of
K.S.A. 75-4215, and amendments thereto. Upon receipt of each such
remittance, the state treasurer shall deposit the entire amount in the state
treasury and credit 75% of each remittance to the bank commissioner fee
fund and 25% to the technology-enabled fiduciary financial institutions
development and expansion fund established in K.S.A. 9-2324, and
amendments thereto.
Sec. 4. K.S.A. 9-2307 is hereby amended to read as follows: 9-2307.
(a) A fiduciary financial institution shall make a report to the
commissioner pursuant to the provisions of K.S.A. 9-1704, and
amendments thereto, except that such report required by K.S.A. 9-1704(b),
and amendments thereto, shall not be due until March 1 of each year. All
other financial reports of a fiduciary financial institution shall be due not
earlier than 60 days after the request for such report is made by the
commissioner. In making such a report, a fiduciary financial institution
shall:
(1) Report the fiduciary financial institution's fidfin transactions
pursuant to generally accepted accounting principles; and
(2) calculate such fiduciary financial institution's capital solvency by
including the value of all tangible and intangible assets owned by the
fiduciary financial institution, regardless of use.
(b) In regulating, supervising and examining a fiduciary financial
institution, the state banking board and the commissioner shall:
(1) Consider that the collateral or underlying assets associated with
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fidfin transactions are volatile in nature and that such volatility has been
accepted by the members and customers of the fiduciary financial
institution;
(2) respect the form, treatment and character of fidfin transactions
under the laws of this state notwithstanding the treatment or
characterization of such transactions under generally accepted accounting
principles or for tax purposes;
(3) evaluate whether available capital, including the agreement of a
fiduciary financial institution's members to contribute capital pursuant to
K.S.A. 9-2305, and amendments thereto, exceeds the fiduciary financial
institution's obligations, determined in accordance with generally accepted
accounting principles;
(4) evaluate the background and qualifications of a fiduciary financial
institution's executive officers and directors, the internal controls and audit
processes enacted by the fiduciary financial institution and adherence to its
policies and procedures;
(5) evaluate the profitability of a fiduciary financial institution in
accordance with subsection (c);
(6) evaluate a fiduciary financial institution's compliance with
applicable state and federal laws; and
(7) evaluate a fiduciary financial institution's information technology
systems, policies and practices.
(c) Profitability shall not be a consideration in evaluating a fiduciary
financial institution if sufficient capital and equity exist in the business,
including, without limitation, membership capital, surplus, undivided
profits and commitments by members to contribute additional capital to
the fiduciary financial institution pursuant to K.S.A. 9-2305, and
amendments thereto, to satisfy the fiduciary financial institution's
obligations.
(d) The provisions of K.S.A. 9-1130(b), and amendments thereto, and
K.A.R. 17-12-2 shall not apply to a fiduciary financial institution.
Sec. 5. K.S.A. 9-2309 is hereby amended to read as follows: 9-2309.
(a) A fiduciary financial institution shall:
(1) Maintain suitable office space in an economic growth zone, as
defined in K.S.A. 9-2301, and amendments thereto, for fidfin transactions,
custodial services and trust business and for the storage of, and access to,
fiduciary financial institution records;
(2) employ, engage or contract with at least three employees to
provide services for the fiduciary financial institution in Kansas related to
the powers of the fiduciary financial institution and to facilitate the
examinations required by this act; and
(3) perform fidfin transactions, custodial services and trust business
in Kansas, and a fiduciary financial institution may also engage in fidfin
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transactions, custodial services and trust business in other states to the
extent permitted by applicable law.
(b) As used in this section, the term "suitable office space" means at
least 2,000 square feet of class A office space located in an economic
growth zone selected by the fiduciary financial institution that the
fiduciary financial institution utilizes as such fiduciary financial
institution's principal office.
(c) The fiduciary financial institution's principal office shall:
(1) Be in premises distinct and divided from the office space of any
other entity;
(2) be located in an economic growth zone selected by the fiduciary
financial institution;
(3) have the name, charter and certificate of authority of the fiduciary
financial institution prominently displayed;
(4) have access to premises in or adjacent to the office space
sufficient to facilitate on-site examinations and supervision by the state
banking board or commissioner;
(5) to the extent the fiduciary financial institution maintains hard
copies of any documents required to be maintained under this chapter,
have a secure fireproof file cabinet that contains all such hard copies; and
(6) to the extent the fiduciary financial institution maintains any
record electronically, have a secure computer terminal or other secure
electronic device that provides access to such records, including account
information, as necessary to facilitate an efficient and effective
examination.
(d) Fidfin transactions, custodial services and trust business is
deemed to have been performed in Kansas for purposes of this section if
fidfin transaction or custodial service agreements are approved or signed
in this state on behalf of the fiduciary financial institution and at least three
of the following acts are performed by a technology platform wholly or
partly operated in this state:
(1) Annual account reviews;
(2) annual investment reviews;
(3) trust or custodial accounting;
(4) account correspondence;
(5) reviewing and signing trust account or custodial account tax
returns; or
(6) distributing account statements.
Sec. 6. K.S.A. 9-2310 is hereby amended to read as follows: 9-2310.
Any fiduciary financial institution is hereby authorized to exercise by its
board of directors or duly authorized officers or agents, subject to law, the
following powers:
(a) To engage in fidfin transactions in accordance with K.S.A. 9-
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2311, and amendments thereto;
(b) to receive, retain and manage alternative asset custody accounts in
accordance with K.S.A. 9-2313, and amendments thereto, and to issue
certificates associated with such accounts or the underlying alternative
assets; and
(c) to engage in trust business as defined in K.S.A. 9-701, and
amendments thereto, as incidental to the activities in subsections (a) and
(b), including, as trustee, issuing trust certificates on behalf of a trust.
Sec. 7. K.S.A. 9-2311 is hereby amended to read as follows: 9-2311.
(a) If authorized by the terms of an instrument as such term is defined in
K.S.A. 9-2301, and amendments thereto, a fiduciary financial institution
may:
(1) Extend financing, such as through loans or extensions of credit to
a fidfin trust when:
(A) The fiduciary financial institution serves as trustee of the
borrowing fidfin trust;
(B) the financing is collateralized or supported by the assets of such
fidfin trust;
(C) the financing is nonrecourse as to the fiduciary financial
institution's customer and is not otherwise guaranteed by such customer;
(D) the fiduciary financial institution agrees, in the applicable
financing agreement or other written document, that the fiduciary financial
institution is providing financing in a fiduciary capacity; and
(E) the fiduciary financial institution agrees that such fiduciary
financial institution will manage the collateral or assets underlying the
financing in a fiduciary capacity; and
(2) acquire or invest in an alternative asset on behalf of and through a
fidfin trust; and
(3) undertake such actions with regard to a trust as defined in K.S.A.
9-2301, and amendments thereto.
(b) The financing of a fidfin trust pursuant to subsection (a)(1) and
(a)(2) shall be considered a fiduciary finance or fidfin transaction.
(c) If authorized or directed by the terms of an instrument, no
fiduciary financial institution shall be deemed to have a conflict of interest,
to have violated a duty to a fidfin trust or the beneficiaries thereof or to
have engaged in self-dealing by entering into a fidfin transaction.
(d) The combination rules provisions of K.S.A. 9-1104(f), and
amendments thereto, shall be inapplicable to a fiduciary financial
institution's fidfin transactions regardless of the identity of the fidfin trust
beneficiary if:
(1) The borrower is a fidfin trust; and
(2) the fiduciary financial institution serves as trustee of the
borrowing fidfin trust.
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(e) A fiduciary financial institution that engages in a fidfin transaction
shall be a fiduciary. Subject to the duties and standards of utmost care and
loyalty that are associated with serving as a fiduciary, a fiduciary financial
institution shall be deemed to be exercising fiduciary powers. All income
generated by such fidfin transactions, including interest and investment
income, shall be deemed to be income derived from the exercise of such
fiduciary powers.
(f) A fiduciary financial institution that engages in fidfin transactions
shall distribute, cause to be distributed or otherwise facilitate the
distribution of the required distribution amount as provided by this section.
For purposes of this section, "required distribution amount" means cash,
beneficial interests or other assets with a value equal to 2.5% of such
fiduciary financial institution's fidfin transactions originated during the
calendar year. Such transactions shall exclude any renewals, extensions of
credit or accruals associated with transactions made in a prior calendar
year, less any credit available to such fiduciary financial institution
pursuant to K.S.A. 9-2302, and amendments thereto. The required
distribution amount shall be distributed as follows:
(1) (A) To the department of commerce:
Required distribution amount Percentage to department of commerce
$0 to $500,000 90%
$500,001 to $1,000,000 50%
Above $1,000,000 10%
(B) the amounts specified in subparagraph (A) shall apply to
fiduciary financial institutions chartered prior to January 1, 2023. For
fiduciary financial institutions chartered after such date, the department of
commerce may publish one or more schedules in the Kansas register as the
department of commerce deems reasonably necessary to facilitate
economic growth and development in one or more economic growth
zones. No such schedule shall be effective until after its publication in the
Kansas register. The department of commerce shall timely submit any
schedule published under this section to the commissioner. The
commissioner shall provide a copy of such schedule to any applicant for a
fiduciary financial institution charter prior to the issuance of such charter.
A fiduciary financial institution shall be subject to the schedule in
existence on the date such fiduciary financial institution's charter is issued
and shall not be subject to any schedules published after such date; and
(C) the department of commerce shall remit all distributions under
this subsection to the state treasurer in accordance with the provisions of
K.S.A. 75-4215, and amendments thereto. Upon receipt of each such
remittance, the state treasurer shall deposit the entire amount in the state
treasury to the credit of the technology-enabled fiduciary financial
institutions development and expansion fund established in K.S.A. 9-2324,
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and amendments thereto; and
(2) the balance of the required distribution amount shall be distributed
to one or more qualified charities as defined in K.S.A. 2024 Supp. 79-
32,283, and amendments thereto, as shall be selected by the fiduciary
financial institution. An economic growth zone or qualified charity shall
have no obligation to repay any distributions received under this act or to
make any contributions to a fiduciary financial institution.
(g) The form, treatment and character of fidfin transactions under the
laws of this state shall be respected for all purposes of this act
notwithstanding the treatment or characterization of such transactions
under generally accepted accounting principles or for tax purposes.
(h) A fiduciary financial institution shall disclose to a customer the
information required by rules and regulations adopted by the
commissioner pursuant to K.S.A. 9-2322, and amendments thereto, to
ensure that the customer is informed regarding the nature of the customer's
transactions with the fiduciary financial institution, taking into account the
level of sophistication of the customer.
Sec. 8. K.S.A. 9-2312 is hereby amended to read as follows: 9-2312.
(a) Subject to the requirements of K.S.A. 9-2309(d), and amendments
thereto, a fiduciary financial institution may:
(1) Employ attorneys, accountants, investment advisors, agents or
other persons, even if they are affiliated or associated with the fiduciary
financial institution, to advise or assist the fiduciary financial institution in
the performance of such fiduciary financial institution's fidfin transactions,
custodial services and trust business and act without independent
investigation upon such recommendations;
(2) employ one or more agents to perform any act of fidfin
transactions, custodial services or trust business;
(3) license internet-related services, including web services, software,
mobile applications, technology-enabled platforms and processes to or
from affiliates, third parties, other fiduciary financial institutions and their
affiliates;
(4) license fidfin products and forms, as defined in K.S.A. 9-2321,
and amendments thereto, to or from other fiduciary financial institutions
and their affiliates;
(5) perform any services that a fiduciary financial institution is
authorized to perform under the laws of this state on behalf of another
fiduciary financial institution; and
(6) employ another fiduciary financial institution to perform any
services that a fiduciary financial institution is authorized to perform under
the laws of this state.
(b) A party engaged by a fiduciary financial institution pursuant to
subsection (a) shall not be deemed to have engaged in fidfin transactions,
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custodial services or trust business in this state nor shall such party be
deemed a trust service office of the fiduciary financial institution under
K.S.A. 9-2108, and amendments thereto, or a trust facility or out-of-state
facility under K.S.A. 9-2111, and amendments thereto, by reason of
providing services to a fiduciary financial institution or licensing products,
platforms, systems or processes to such fiduciary financial institution.
(c) A fiduciary financial institution that provides services or licenses
fidfin products or forms pursuant to subsection (a) shall not be deemed a
trust service office of the fiduciary financial institution that has acquired
such services or licensed such products or forms.
(d) If a fiduciary financial institution offers its technology-enabled
platform to provide fidfin services to residents of other states, neither the
marketing, use and deployment of such platform by parties in other states
nor the origination of fidfin services through such platform shall constitute
an out-of-state trust facility under K.S.A. 9-2111, and amendments thereto,
if the fiduciary financial institution complies with the provisions of K.S.A.
9-2309, and amendments thereto.
(e) A fiduciary financial institution shall provide notice to the
commissioner pursuant to the provisions of K.S.A. 9-2103(a)(12), and
amendments thereto, if such fiduciary financial institution engages a party
pursuant to the provisions of subsection (a).
(f) Whenever a fiduciary financial institution causes to be performed
for such fiduciary financial institution, by contract or otherwise, any
service authorized under this act or the state banking code, such
performance shall be subject to regulation, supervision and examination by
the commissioner to the same extent as if such service was being
performed by the fiduciary financial institution itself.
Sec. 9. K.S.A. 9-2322 is hereby amended to read as follows: 9-2322.
(a) Pursuant to K.S.A. 9-1713, and amendments thereto, the commissioner
shall adopt rules and regulations on or before January 1, 2022, as are
necessary to administer this act and supervise and examine a fiduciary
financial institution.
(b) The office of the state bank commissioner may enter into
contracts for technical assistance and professional services as are
necessary to administer the provisions of this act and to meet the deadline
for the adoption of rules and regulations provided by this section. Such
contracts shall be exempt from the requirements of K.S.A. 75-3739, 75-
37,102 and 75-37,132, and amendments thereto, or any other statute
relating to the procurement of such services.
Sec. 10. K.S.A. 2024 Supp. 79-32,283 is hereby amended to read as
follows: 79-32,283. (a) For taxable years commencing after December 31,
2020, there shall be allowed as a credit against the tax liability of a
fiduciary financial institution imposed pursuant to the Kansas income tax
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act or the privilege tax imposed upon a fiduciary financial institution
pursuant to article 11 of chapter 79 of the Kansas Statutes Annotated, and
amendments thereto, in an amount equal to the qualified charitable
distributions made in connection with the fiduciary financial institution's
fidfin activities during such taxable year if the fiduciary financial
institution maintained such fiduciary financial institution's principal office
in an economic growth zone during such taxable year in accordance with
the provisions of K.S.A. 9-2309, and amendments thereto.
(b) For purposes of this section:
(1) "Economic growth zone" and "fidfin" means the same as defined
in K.S.A. 9-2301, and amendments thereto;
(2) "qualified charitable distributions" means distributions of cash,
beneficial interests or other assets to one or more qualified charities having
an aggregate value equal to at least 2.5% of the fiduciary financial
institution's transactions originated during the taxable year. Such
transactions shall exclude any renewals, extensions of credit or accruals
associated with transactions made in a prior taxable year; and
(3) (A) "qualified charities" means one or more:
(i) Charities, in to which contributions are allowable as a deduction
pursuant to section 170 of the federal internal revenue code if such
charities have:; or
(ii) Kansas nonprofit corporations regardless of their federal income
tax treatment.
(B) Such "qualified charities" shall have:
(A)(i) Been organized pursuant to a charter promulgated by the
department of commerce for the purposes of making distributions for the
benefit of economic growth zones;
(B)(ii) committed in writing to utilize the entire amount of the
qualified charitable distributions, excluding reasonable administrative
expenses, exclusively for the benefit of charitable causes located in one or
more economic growth zones or postsecondary educational institutions as
defined in K.S.A. 74-3201b, and amendments thereto; and
(C)(iii) agreed to provide an annual report to the department of
commerce detailing qualified distributions received during such year,
distributions made pursuant to this subparagraph (B) and the remaining
balance of qualified distributions as of the end of the reporting year.
(C) The requirements of subparagraph (A)(B)(i) shall not apply to a
charity, contributions to which are allowable as a deduction pursuant to
section 170 of the federal internal revenue code, that has committed in
writing to utilize the entire amount of the qualified charitable distributions,
excluding reasonable administrative expenses, exclusively for the benefit
of the economic growth zone identified in K.S.A. 9-2325(a)(2), and
amendments thereto.
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(c) No credit shall be allowed under this section if the fiduciary
financial institution's tax return on which the credit is claimed is not timely
filed, including any extension.
(d) A distribution or remittance to the department of commerce
pursuant to K.S.A. 9-2311, and amendments thereto, shall be deemed a
qualified charitable distribution for purposes of this section.
(e) A fiduciary financial institution shall not be required to ensure that
qualified charitable distributions are made solely for the benefit of the
economic growth zones where such fiduciary financial institution has:
(1) Established such fiduciary financial institution's principal office
pursuant to K.S.A. 9-2309, and amendments thereto; or
(2) made qualified investments as defined in K.S.A. 9-2301, and
amendments thereto. Qualified charitable distributions may be made for
the benefit of any one or more economic growth zones.
(f) If a fiduciary financial institution is a pass-through entity for
Kansas tax purposes and the credit allowed by this section for a taxable
year is greater than the fiduciary financial institution's tax liability against
which the tax credit may be applied, a member of the entity or any other
party who is required to report such income on a Kansas income tax return
is entitled to a tax credit equal to the tax credit determined for the fiduciary
financial institution for the taxable year in excess of the fiduciary financial
institution's tax liability under the Kansas income tax act or privilege tax
under article 11 of chapter 79 of the Kansas Statutes Annotated, and
amendments thereto, for the taxable year multiplied by the percentage of
the fiduciary financial institution's distributive income to which the
member is entitled. Tax credits allowed and earned under this section shall
not be sold, assigned, conveyed or otherwise transferred.
(g) If the amount of a tax credit allowed a member or other party
under this section exceeds the taxpayer's income tax liability for the
taxable year in which the tax credit is allowed, the amount thereof that
exceeds such tax liability may be carried over for deduction from the
taxpayer's income or privilege tax liability in the next succeeding taxable
year or years until the total amount of the tax credit has been deducted
from tax liability, except that no such tax credit shall be carried over for
deduction after the 5
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taxable year succeeding the taxable year in which
the tax credit is first allowed.
(h) In any taxable year, a fiduciary financial institution shall pay the
greater of the qualified charitable distributions made during such taxable
year or the tax liability of a fiduciary financial institution imposed
pursuant to the Kansas income tax act or the privilege tax imposed upon a
fiduciary financial institution pursuant to article 11 of chapter 79 of the
Kansas Statutes Annotated, and amendments thereto.
(i) This section shall be a part of and supplemental to the Kansas
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income tax act.
Sec. 11. K.S.A. 9-542, 9-2303, 9-2307, 9-2309, 9-2310, 9-2311, 9-
2312 and 9-2322 and K.S.A. 2024 Supp. 9-2301 and 79-32,283 are hereby
repealed.
Sec. 12. This act shall take effect and be in force from and after its
publication in the statute book.
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