HLS 15RS-974 ENGROSSED
2015 Regular Session
HOUSE BILL NO. 439
BY REPRESENTATIVE NANCY LANDRY
(On Recommendation of the Louisiana State Law Institute)
Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana.
TRUSTS: Provides for revisions to the Trust Code
1 AN ACT
2To amend and reenact R.S. 9:1783(B), 1821, 1822, 1891, 1894, 1904, 1905, 1953, 2026,
3 2028, 2031, 2087(B), 2096, and 2158, and to enact R.S. 9:2047 and 2114.1 and
4 Chapter 1-C of Code Title II of Code Book III of Title 9 of the Louisiana Revised
5 Statutes of 1950, to be comprised of R.S. 9:2263, relative to the Louisiana Trust
6 Code; to provide for who may be trustee; to provide for when testamentary trusts are
7 created; to provide for when inter vivos trusts are created; to provide for creation of
8 classes; to provide for representation; to provide for general rules for classes of
9 beneficiaries; to provide for interest in income for members of the same class; to
10 provide for assignment of interest in trusts and termination of trusts for mixed private
11 and charitable purposes; to provide for termination or modification to prevent
12 impairment of trust purposes and termination of small trusts; to provide for
13 concurrence of settlors in termination; to provide for delegation of the right to
14 amend; to provide for delegating trustee performance; to provide for co-trustees; to
15 provide for the power to adjust by a trustee; to provide for the revocation of inter
16 vivos trusts upon divorce; to provide for the allocation of different powers to
17 different trustees; to provide for trusts for the care of an animal; and to provide for
18 related matters.
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1Be it enacted by the Legislature of Louisiana:
2 Section 1. R.S. 9:1783(B), 1821, 1822, 1891, 1894, 1904, 1905, 1953, 2026, 2028,
32031, 2087(B), 2096, and 2158 are hereby amended and reenacted, and R.S. 9:2047 and
42114.1, and Chapter 1-C of Code Title II of Code Book III of Title 9 of the Louisiana
5Revised Statutes of 1950, comprised of R.S. 9:2263, are hereby enacted to read as follows:
6 §1783. Who may be trustee
7 * * *
8 B. A nonprofit corporation or trust for educational, charitable, or religious
9 purposes that is designated as income or principal beneficiary may serve as trustee
10 of a trust for mixed private or and charitable purposes.
11 Comment - 2015
12 This revision clarifies the law. It provides that certain nonprofit corporations
13 or trusts may in some circumstances serve as trustees of mixed trusts, defined as a
14 trust for "private and charitable purposes." See R.S. 9:1951 (emphasis added). This
15 provision does not purport to specify who may be a trustee of a charitable trust. See
16 R.S. 9:2273.
17 * * *
18 §1821. When testamentary trust created
19 A testamentary trust is created at the moment of the settlor's death, without
20 awaiting the trustee's acceptance of the trust.
21 Comment - 2015
22 This revision clarifies the law. It makes clear that although a trustee's
23 acceptance is ultimately necessary, a testamentary trust is effective before the trustee
24 accepts, as his acceptance is retroactive to the date of the creation of the trust under
25 R.S. 9:1823.
26 §1822. When inter vivos trust created
27 An inter vivos trust is created upon execution of the trust instrument, without
28 regard to the trustee's acceptance.
29 Comment - 2015
30 This revision clarifies the law. It makes clear that although a trustee's
31 acceptance is ultimately necessary, an inter vivos trust is effective before the trustee
32 accepts, as his acceptance is retroactive to the date of the creation of the trust under
33 R.S. 9:1823.
34 * * *
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1 §1891. Creation of class
2 A. Notwithstanding the provisions of R.S. 9:1803, R.S. 9:1831 through 1835,
3 and R.S. 9:1841 through 1847, but subject to the restrictions stated in this Subpart,
4 a person may create an inter vivos or testamentary trust in favor of a class consisting
5 of some or all of his the children, grandchildren, great grandchildren, nieces,
6 nephews, grandnieces, grandnephews, and great grandnieces and great grandnephews
7 of the settlor or of the settlor's current, former, or predeceased spouse, or any
8 combination thereof, although some members of the class are not yet in being at the
9 time of the creation of the trust, provided at least one member of the class is then in
10 being. Such a trust is called a class trust. If the trust instrument so provides, the
11 interest of each beneficiary in the class shall be held in a separate trust after the class
12 has closed.
13 B. If before the application of R.S. 9:1894 the class consists only of
14 members of one generation, the interests of the members of the class shall be equal
15 by roots from their common ancestor, unless the trust instrument provides otherwise.
16 If before the application of R.S. 9:1894 the class consists of persons in more than one
17 generation, their interests shall be equal by heads, unless the trust instrument
18 provides otherwise the class includes members related to the settlor's current, former,
19 or predeceased spouse who are not also related to the settlor, the interests of those
20 members shall be determined as if they were related to the settlor in the same manner
21 as they are related to the settlor's current, former, or predeceased spouse, unless the
22 trust instrument provides otherwise.
23 C. Unless the trust instrument provides otherwise, the interests of the class
24 members shall be determined in the following manner:
25 (1) Before application of R.S. 9:1894, if the class consists solely of
26 descendants of the same degree, the interests of the members of the class shall be
27 determined by roots.
28 (2) In all other cases, the interests of the members of the class shall be
29 determined by heads.
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1 Comments - 2015
2 (a) This revision changes the law to allow for the beneficiaries of a class
3 trust to consist not only of a defined group of the settlor's relations but also of some
4 or all of the same relations of the settlor's current, former, or predeceased spouse.
5 The expansion of the class of allowable beneficiaries is intended to take account of
6 the modern trend of blended families and multiple marriages.
7 (b) In Subsection A of this revision, the phrase "any combination thereof"
8 is retained to make clear that the members of the class may consist of certain
9 members related to the settlor; certain members related to the current, former, or
10 predeceased spouse of the settlor; or a combination of members related to the settlor
11 and the settlor's current, former, or predeceased spouse.
12 (c) In light of the expansion of the potential members of a class trust to
13 include certain members related to the current, former, or predeceased spouse of the
14 settlor, the term "common ancestor" that existed in prior law has been eliminated.
15 Under this revision, when the class consists solely of descendants of the same
16 degree, such as a class of children or a class of grandchildren, the members of the
17 class share by roots, irrespective of whether the members of the class are related to
18 the settlor or the settlor's current, former, or predeceased spouse. When the class,
19 however, includes other relatives as members, the division is made by heads.
20 (d) The power to modify a class trust under R.S. 9:2031 does not allow a
21 person granted the power the authority to add relatives beyond those specified in
22 Subsection A of this Section or beyond the scope of the class as defined by the trust
23 instrument.
24 * * *
25 §1894. Representation
26 If a person dies before the creation of the trust, who would have been a
27 member of the class if he had not died, his descendants shall be considered members
28 of the class by representation unless the instrument otherwise provides. In all cases
29 in which representation is permitted, the division is made by roots. If one root has
30 produced several branches, the subdivision is also made by roots in each branch, and
31 the members of the same branch take by heads.
32 Comment - 2015
33 This revision clarifies the operation of law of representation in the context
34 of a class trust. It reproduces the provisions of Civil Code Article 885.
35 * * *
36 §1904. General rule
37 If the members of one class of the settlor's children or grandchildren are
38 designated beneficiaries of income and members of a different class of his children
39 or grandchildren are designated as beneficiaries of principal, the class of
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1 beneficiaries of income shall be governed by R.S. 9:1899 through 9:1901 and the
2 class of beneficiaries of principal shall be governed by R.S. 9:1902 and 9:1903.
3 Comment - 2015
4 This revision updates this Section on the closing of a class to make it
5 consistent with the general rules on class trusts. See R.S. 9:1891.
6 §1905. Interests in income
7 If members of the same class of the settlor's children or grandchildren are
8 designated beneficiaries of both income and principal, interests in income before the
9 class closes shall be governed by R.S. 9:1899 through 9:1901.
10 Comment - 2015
11 This revision updates this Section on the closing of a class to make it
12 consistent with the general rules on class trusts. See R.S. 9:1891.
13 * * *
14 §1953. Assignment of interest in trust and termination of trust for mixed private and
15 charitable purposes
16 A. A Unless the trust instrument provides otherwise or specifically contains
17 a special needs provision, a private beneficiary of a trust for mixed private and
18 charitable purposes, including a spendthrift trust, may at any time gratuitously assign
19 to a charitable principal beneficiary of the trust a fraction or all of his the private
20 beneficiary's interest in the trust, unless the trust instrument specifically contains a
21 special needs provision or provides otherwise. An interest in a spendthrift trust may
22 be assigned only gratuitously. An interest that is assignable only to a charitable
23 principal beneficiary of the trust shall not be deemed to be subject to voluntary
24 alienation for purposes of R.S. 9:2004.
25 B. If the trust instrument provides for the termination of the trust at the end
26 of the specified term of the private interests, the trust may be terminated early by the
27 charitable principal beneficiary as to the portion of the trust that, for any reason, no
28 longer has a private beneficiary.
29 Comments - 2015
30 (a) This revision allows for practical planning opportunities and techniques,
31 such as the exchange by a beneficiary of the beneficiary's interest in a charitable
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1 remainder trust for an annuity, which may be mutually advantageous to both the
2 charity and the beneficiary. At the same time, however, this Section ensures that a
3 beneficiary of a spendthrift trust is not allowed to onerously transfer his interest and
4 thereby defeat the settlor's intent in establishing the trust.
5 (b) Although the term "special needs provision" is not statutorily defined in
6 the Louisiana Trust Code, it is intended to refer to those provisions in trusts designed
7 to preserve the availability of means-tested governmental benefits for certain
8 beneficiaries.
9 (c) For the process by which a trust is terminated, see R.S. 9:2051.
10 * * *
11 §2026. Change of circumstances Termination or modification to prevent impairment
12 of trust purposes; termination of small trust
13 A. The proper court may order the termination or modification of a trust, in
14 whole or in part, if:
15 (1) The the continuance of the trust unchanged would defeat or substantially
16 impair the purposes of the trust. In the event of termination of a trust under this
17 Subsection, the proper court shall provide for the distribution of the trust property,
18 including principal and undistributed income, to the beneficiaries in a manner that
19 conforms as nearly as possible to the intention of the settlor.
20 (2)B. Except as otherwise provided by the terms of the trust, a trustee has
21 determined that may terminate a trust after obtaining the consent of all beneficiaries
22 or their legal representatives if the market value of a trust is less than one hundred
23 thousand dollars and that, in relation to the costs of administration of the trust, the
24 continuance of the trust unchanged would defeat or substantially impair the purposes
25 of the trust. In such a case, the court may provide for the distribution of the trust
26 property, including principal and undistributed income, to the beneficiaries in a
27 manner which conforms as nearly as possible to the intention of the settlor and the
28 court shall make appropriate provisions for the appointment of a tutor in the case of
29 a minor beneficiary. A natural tutor, without need for a formal tutorship proceeding
30 and concurrence of an undertutor, may consent to the termination of a trust on behalf
31 of a minor.
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1 C. In the event of the termination or modification of a trust under the
2 provisions of this Paragraph Section, the trustee shall not be subject to liability for
3 such termination or modification.
4 Comments - 2015
5 (a) This revision changes the law in part. Prior law allowed for a court to
6 terminate or modify a trust if continuance of the trust unchanged would defeat or
7 substantially impair the purposes of the trust. This revision continues to allow for
8 court-ordered termination or modification in cases in which continuance of the trust
9 unaltered would defeat or substantially impair the purpose of the trust. When such
10 modification or termination occurs, the court shall order distribution of the trust
11 property to the beneficiaries in the way that would conform as closely as possible to
12 the intent of the settlor.
13 (b) Prior law also allowed for court termination or modification of certain
14 small trusts in circumstances where, because of the costs of administration of the
15 trust in relation to its value, continuance of the trust unchanged would defeat or
16 substantially impair the purposes of the trust. This revision now allows for
17 termination by a trustee without approval of the court of small or uneconomical
18 trusts, deemed to be those trusts worth less than one hundred thousand dollars.
19 Unlike prior law, a finding that the cost of administration of the trust would defeat
20 or substantially impair its purposes is no longer necessary. This revision does,
21 however, require a trustee who terminates a trust to obtain in advance the consent of
22 all the affected beneficiaries or their legal representatives. Legal representatives
23 include, but are not limited to, mandataries, curators, and tutors. In an effort to
24 simplify consent to termination, natural tutors may consent without the need for
25 formal proceedings. See, e.g., C.C.P. Art. 3396.9.
26 (c) In all instances, when termination or modification occurs under this
27 Section, the trustee is exonerated from liability for such termination or modification.
28 * * *
29 §2028. Concurrence of settlors in termination
30 Except as otherwise provided by law or the trust instrument, The the consent
31 of all settlors, trustees, and beneficiaries shall not be effective to terminate the trust
32 or any disposition in trust, unless the trust instrument provides otherwise.
33 Comment - 2015
34 This revision signals and highlights the change in R.S. 9:2026 by recognizing
35 that in some limited instances the trustee is allowed, with the consent of the
36 beneficiaries, to terminate a trust.
37 * * *
38 §2031. Delegation of right to amend modify
39 A. A trust instrument may authorize a person other than the settlor who is in
40 being on the date of the creation of the trust to modify the provisions of the trust
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1 instrument in order to add or remove beneficiaries, or modify their rights, if all of the
2 affected beneficiaries are descendants of the person given the power to modify. A
3 beneficiary added pursuant to this Section may be a person who is not in being when
4 the trust is created, provided the individual is in being at the time the power to add
5 is exercised.
6 B. As to a class trust, a trust instrument may authorize a person who is in
7 being on the date of the creation of the trust, or a person who is not yet in being but
8 is a member of the class, to modify the provisions of the trust instrument in order to
9 remove beneficiaries or modify their rights or add only those beneficiaries included
10 within the scope of R.S. 9:1891, if all of the affected beneficiaries are descendants
11 of the person given the power to modify.
12 Comments - 2015
13 (a) This revision clarifies the prior law by providing that in a non-class trust
14 the power to add beneficiaries includes the ability to add those beneficiaries not in
15 existence at the time of the creation of the trust, provided they exist at the time the
16 power to add is exercised. This revision, however, does not allow for the creation
17 of dynasty trusts as the person given the power to add beneficiaries must be in
18 existence at the time of the creation of the trust. Because this Section allows for the
19 addition of beneficiaries, it can have the effect of causing the maximum term for a
20 trust to be extended. Cf. R.S. 9:1831 and 1833.
21 (b) As to a class trust, the power to modify a trust may include only the
22 power to remove beneficiaries, modify their rights, or add those beneficiaries whose
23 addition would not expand the class beyond those allowable members specified in
24 R.S. 9:1891. For instance, the power to add within a class trust may be delegated to
25 a grandchild who is authorized to add his children but not his grandchildren, as the
26 addition of the former would not expand the class beyond those relatives specified
27 in R.S. 9:1891 but the addition of the latter would impermissibly expand the group
28 of class members to include the settlor's great, great grandchildren. In addition, the
29 power to add within a class trust may include the power to reinstate beneficiaries
30 who have previously been removed pursuant to an exercise of this power. The power
31 to modify may be granted either to a person in being on the date of the creation of
32 the trust or to a person not in being but who is a member of the class. For example,
33 in a class trust for "children, grandchildren, and great-grandchildren," the power to
34 remove beneficiaries may be granted to and exercised by an unborn grandchild,
35 provided the beneficiaries removed and the beneficiaries benefitting from the
36 removal are descendants of the person with the power to remove.
37 * * *
38 §2047. Revocation of inter vivos trusts upon divorce
39 A. A divorce of the settlor revokes every provision that may be revoked or
40 modified by the settlor in an inter vivos trust designating or appointing the settlor's
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1 former spouse unless expressly provided otherwise in the trust instrument or in a
2 judgment or a property settlement agreement.
3 B. A trustee with no actual knowledge of the divorce, judgment, or property
4 settlement agreement is not liable for actions taken in good faith regarding the
5 settlor's former spouse.
6 Comments - 2015
7 (a) This provision changes the law. It is consistent with C.C. Art. 1608(5)
8 and based, in part, upon Unif. Prob. Code §2-804 and 760 Ill. Comp. Stat. Ann. 35/1.
9 (b) This provision operates to revoke automatically upon divorce all
10 revocable provisions "designating or appointing the settlor's former spouse." This
11 provision is deliberately broad so as to include not only beneficiary designations but
12 also fiduciary appointments, limited powers of appointment, and other similar
13 designations. This Section recognizes that in most instances a settlor would not want
14 to maintain the designation or appointment of a former spouse. The trust instrument,
15 a court judgment, or the parties in a property settlement agreement may provide to
16 the contrary. Automatic revocation under this Section is applicable only to
17 designations or appointments of a former spouse. It is not applicable to designations
18 or appointments of relatives of the former spouse, whose status under the trust the
19 settlor may wish to maintain. But see Unif. Prob. Code §2-804.
20 (c) This provision is not intended to conflict with trusts governed by federal
21 law and must, in appropriate cases, yield when preempted. Under the Employee
22 Retirement Income Security Act (ERISA), "any and all State laws insofar as they
23 may now or hereafter relate to any employee benefit plan" are preempted by ERISA.
24 29 U.S.C. §1144(a). See also Hillman v. Maretta, 133 S.Ct. 1943 (2013)
25 (recognizing the preempted effect of the Federal Employees' Group Life Insurance
26 Act of 1954 on a Virginia statute that not only revoked beneficiary status for former
27 spouses in contracts for death benefits but also gave a cause of action against the
28 former spouse to the party who would have received death benefits, had federal law
29 not pre-empted).
30 (d) As a matter of law, a trustee is insulated from liability under this Section
31 provided the trustee acts in good faith and does not know of the settlor's divorce or
32 of a judgment or property settlement agreement requiring the trustee to maintain a
33 designation or appointment of the settlor's former spouse.
34 (e) Remarriage of the settlor to the divorced spouse does not serve to revive
35 the designations and appointments of the spouse. But see Unif. Prob. Code
36 §2-804(e).
37 (f) Under this provision, designations or appointments of a former spouse are
38 revoked upon the date of the divorce judgment.
39 * * *
40 §2087. Delegating performance
41 * * *
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1 B.(1) A trustee may, by power of attorney, delegate the performance of
2 ministerial duties and acts that he could not reasonably be required to perform
3 personally and the performance of ministerial duties.
4 (2) A written power of attorney in authentic form, executed granted by a
5 trustee authorizing a mandatary to sell alienate, acquire, lease, or encumber
6 specifically described immovable property at a on specific price terms, shall be
7 considered the delegation of the performance of a ministerial duty as provided by
8 Paragraph (1) of this Subsection.
9 * * *
10 Comments - 2015
11 (a) This revision clarifies the law. It establishes that the trustee's authority
12 to delegate by mandate is not limited solely to "ministerial duties" but includes both
13 "ministerial duties" and also other "acts that he could not reasonably be required to
14 perform," which might include discretionary as well as ministerial duties. Prior to
15 the 2010 amendment, Louisiana jurisprudence on this issue was clear. See, e.g., City
16 of New Orleans v. Cheramie, 509 So. 2d 58 (La. Ct. App. 1st Cir. 1987) (allowing
17 City of New Orleans, as trustee, to delegate to agents the ability to negotiate and
18 lease land held in trust).
19 (b) This revision also makes clear that the acquisition, alienation, lease, or
20 encumbrance of property may be an allowable delegation of a ministerial duty when
21 the discretionary functions of the agent have been removed, such as when a trustee
22 delegates the authority to an agent to consummate a transaction on specific terms.
23 See, e.g., Peter Title, 1 La. Prac. Real Est. §6:44 (2d ed. 2013). When discretionary
24 considerations are involved, a trustee should not delegate authority unless it is to
25 perform an act that he could not reasonably be required to perform personally.
26 (c) The types of actions provided in Paragraph (B)(2) of this Section are an
27 illustrative list of delegable acts and not intended to be exhaustive or comprehensive
28 catalogue.
29 * * *
30 §2096. Co-trustees
31 If there are two or more trustees have the same powers, each shall participate
32 in the administration of the trust and use reasonable care to prevent a co-trustee from
33 committing a breach of trust and shall compel him to redress a breach of trust.
34 Comment - 2015
35 Under this revision, multiple trustees have liabilities and duties with regard
36 to the actions or inactions of their co-trustees, only if the trustees have been granted
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1 the same powers. Trustees granted different powers have no such liabilities and
2 duties with respect to each other and are governed by R.S. 9:2114.1.
3 * * *
4 §2114.1. Allocation of different powers to different trustees
5 A trust instrument may confer different powers upon different trustees, in
6 which case each trustee acts independently with respect to those powers conferred
7 upon him. As to powers not conferred upon him, he shall have no duties or liabilities
8 as to the actions or inactions of the other trustees.
9 Comment - 2015
10 This provision is new. It changes the law insofar as it allows a trust
11 instrument to confer different powers upon each of multiple trustees. For instance,
12 a trust instrument may grant one trustee the power to invest and another trustee the
13 power to make distributions. In such a case, each trustee has fiduciary duties to the
14 beneficiaries for matters within his control but no duties or liabilities with respect to
15 the actions or inactions of the other trustees, unless the trust instrument provides
16 otherwise. When the same powers are conferred upon multiple trustees, the
17 provisions of R.S. 9:2096, 2113, and 2114 govern.
18 * * *
19 §2158. Power to adjust
20 A. Subject to the limitations set forth in this Subpart, a A trustee may make
21 an adjustment between principal and income when the interest of one or more
22 beneficiaries is defined by reference to the "income" of a trust, and the trustee
23 determines, after taking into account the allocations for the year under Subpart D of
24 this Part, that the adjustment is necessary in order for the trustee to satisfy his duty
25 to be fair and reasonable to all the beneficiaries, taking into account the purposes of
26 the trust.
27 B. When income is distributed during the year, the income can be
28 determined based on the adjustment to be made for the year. The adjustment to be
29 made for the year can be determined in a way that causes the total amount distributed
30 to the income beneficiary during the year to be equal to a percentage of the value of
31 the trust property at the end of the prior year or at the end of an average of up to three
32 prior years.
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1 C. The authority to make an adjustment under this Section is subject to the
2 limitations set forth hereafter in this Subpart.
3 Comment - 2015
4 This revision clarifies the law insofar as it establishes that an income-only
5 trust may operate in a manner similar to a unitrust.
6 * * *
7 CHAPTER 1-C. TRUST FOR THE CARE AND BENEFIT OF AN ANIMAL
8 §2263. Trust for the care of an animal
9 A. A trust may be created to provide for the care of one or more animals that
10 are in being and ascertainable on the date of the creation of the trust.
11 B. The trust instrument may designate a caregiver for each animal. An
12 animal's caregiver will have the custody of the animal and be responsible for its care.
13 If no caregiver is designated or if the designated or appointed caregiver is unable or
14 unwilling to serve, the trustee shall appoint or act as the caregiver.
15 C. The trust instrument may designate a person to enforce the provisions of
16 the trust. If no person is designated or if the designated person is unable or unwilling
17 to serve, the settlor or any of his successors or a caregiver may enforce the trust.
18 D. Trust property may be used only for the care of each animal and for
19 reasonable compensation and expenses of the trustee and the caregiver.
20 E. If the proper court determines that the value of the trust substantially
21 exceeds the amount required to care for each animal and for reasonable
22 compensation and expenses of the trustee and the caregiver, the court may terminate
23 the trust as to the excess portion.
24 F. The trust shall terminate upon the death of the last surviving animal
25 provided for in the trust instrument.
26 G. The trust instrument may designate a person to receive the property upon
27 partial or complete termination of the trust. In the absence of a designation, the trust
28 property shall be distributed upon termination to the settlor, if living, or to the
29 settlor's successors.
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1 H. A trust instrument that provides for the care of one or more animals shall
2 be liberally construed to sustain its effectiveness and to fulfill the intent of the settlor.
3 I. Unless otherwise required by the trust instrument or the proper court, a
4 trustee is not required to post security or provide an accounting.
5 J. In all matters for which no provision is made in this Section, a trust for the
6 care of an animal shall be governed by the provisions of the Louisiana Trust Code.
7 Comments - 2015
8 (a) This Section is new. It is modeled, in part, on a similar provision in the
9 Uniform Trust Code, as well as language from the Uniform Probate Code and the
10 laws from a variety of other states. See, e.g., Unif. Trust Code §408; Unif. Prob.
11 Code §2-907; 12 Del. C. §3555; Cal. Prob. Code §15212; N.C. Stat. §36C-4-408;
12 Tex. Prop. Code Ann. §112.037; Fla. Stat. Ann. §736.0408.
13 (b) This Section provides a simple and alternative way for an individual to
14 provide for the care of an animal. To that extent, this Section creates a unique
15 exception to a foundational principle of Louisiana law and allows an animal to serve
16 as the beneficiary of a trust, through a mechanism sometimes referred to as a
17 "statutory pet trust." It thus constitutes an exception to the ordinary requirement that
18 a beneficiary be a natural or juridical person. See, e.g., R.S. 9:1801. Individuals
19 may still provide for animals by using a traditional trust wherein a settlor can make
20 a gift of an animal to an individual who is designated as an income beneficiary in a
21 trust instrument. The trust instrument may then provide that the trustee will
22 distribute income to the beneficiary as is necessary, provided that the beneficiary
23 exercises care for the animal. Moreover, an individual may also provide for an
24 animal by making a donation to an individual with an accompanying charge that the
25 donee care for an animal.
26 (c) Under this Section, only animals that are "in being" are allowable
27 beneficiaries of an animal trust. The general requirements of the Louisiana Trust
28 Code that the beneficiary be sufficiently designated and that the beneficiary be "in
29 being and ascertainable" on the date of the creation of the trust apply. See R.S.
30 9:1801 and 1803. An unborn animal is deemed to be "in being and ascertainable"
31 if it is born alive. See R.S. 9:1803.
32 (d) This Section contemplates the existence of a tetrapartite, rather than
33 tripartite relationship, under which there exists a settlor, trustee, caregiver, and
34 beneficiary. Under this Section, the settlor maintains the traditional role and
35 function under the Louisiana Trust Code, R.S. 9:1761 through 1764. The animal
36 serves as the beneficiary. The trustee's role is to exercise his duties with respect to
37 the money or other trust property used for the care of the animal. The caregiver is
38 the party responsible for the care and custody of the animal.
39 (e) Under a traditional trust, the beneficiary has the ability to enforce the
40 trust and compel the trustee to perform his duties. In the context of a trust for the
41 benefit of an animal, no human beneficiary exists. Consequently, this Section allows
42 for the appointment of an individual in the trust to enforce the trust and to ensure that
43 the trustee is appropriately discharging his duties. In the absence of the designation
44 of a person to enforce the trust or if the person designated is absent, deceased, or
45 refuses to serve, the trust provisions may be enforced by the caregiver or the settlor,
46 if living, or the settlor's successors.
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1 (f) Under this Section, a court has authority to terminate the trust in part if
2 the trust property "substantially exceeds" the amount required to care for each animal
3 and for reasonable compensation and expenses of the trustee and the caregiver. This
4 provision is modeled on Section 2-907(c)(6) of the Uniform Probate Code rather than
5 Section 408(3) of the Uniform Trust Code. The standard of care that the animal had
6 received prior to the creation of the trust should be considered by a court in
7 ascertaining whether the trust property "substantially exceeds" what is necessary.
8 (g) A trust may be created for one or multiple animals. Under this Section,
9 the trust terminates upon the death of the last surviving animal. Thus, this Section
10 creates specific exception to the general provisions of the Louisiana Trust Code
11 specifying a maximum term for a trust. See, e.g., R.S. 9:1831, 1832, and 1833.
12 (h) Upon partial or complete termination of a trust, the trust property is
13 distributed to the person named in the trust, who may be a natural or juridical person
14 or the trustee of another trust. If the trust does not provide for a recipient upon
15 partial or complete termination, the trust property shall be distributed to the settlor,
16 if living, or to the settlor's successors.
17 (i) As with the creation of any trust, no particular language need be used to
18 create an animal trust, provided the intent to do so is clear. See R.S. 9:1753. Thus,
19 a statement in a will as simple as, "I leave $10,000 for the care of my dog" or "I
20 leave $10,000 to my dog" should be sufficient to establish an animal trust under this
21 Section.
22 (j) Despite the stand-alone nature of this Section, resort to the background
23 rules of the Louisiana Trust Code is necessary in some instances. Thus, the attempt
24 to provide for every possible contingency under this Section has been avoided and,
25 under the last provision of this Section, reference is made to the rules of the
26 Louisiana Trust Code, mutatis mutandis, when relevant.
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
HB 439 Engrossed 2015 Regular Session Nancy Landry
Abstract: This bill revises and augments the Louisiana Revised Statues of 1950 relative
to the Louisiana Trust Code, and authorizes the creation of trusts for pets.
Present law (R.S. 9:1783) provides for those who may serve as a trustee of a trust.
Proposed law provides that a nonprofit corporation or trust for educational, charitable, or
religious purposes that is designated as income or principal beneficiary may serve as trustee
of a trust for mixed private and charitable purposes.
Present law (R.S. 9:1821) provides that a testamentary trust is created at the moment of the
settlor's death without need for the trustee's acceptance of the trust.
Proposed law clarifies that a testamentary trust is created at the moment of the settlor's death.
Present law (R.S. 9:1822) provides that an inter vivos trust is created upon execution of the
trust instrument without need for the trustee's acceptance.
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Proposed law clarifies that an inter vivos trust is created upon execution of the trust
instrument.
Present law (R.S. 9:1891) provides that a testator can create a trust in favor of a class
consisting of some or all of his children, grandchildren, great grandchildren, nieces,
nephews, grandnieces, grandnephews, and great grandnieces and great grandnephews, or any
combination thereof, although some members of the class are not yet in being at the time of
the creation of the trust so long as at least one member of the class is then in being.
Proposed law adds that a testator can create an inter vivos or testamentary trust in favor of
a class consisting of some or all of the children, grandchildren, great grandchildren, nieces,
nephews, grandnieces, grandnephews, and great grandnieces and great grandnephews of the
settlor or of the settlor's current, former, or predeceased spouse. If the class includes such
members who are not also related to the settlor, the interests of those members shall be
determined as if they were related to the settlor in the same manner as they are related to the
settlor's current, former, or predeceased spouse, unless the trust instrument provides
otherwise. Unless the trust instrument provides otherwise, the interests of the class members
shall be determined that if the class consists solely of descendants of the same degree, the
interests of the members of the class shall be determined by roots before the application of
R.S. 9:1894. For all other cases, the interests of the members of the class shall be
determined by heads.
Present law (R.S. 9:1894) provides that if a person dies before the creation of the trust in
which he would have been a member of a class if he had not died, his descendants shall be
considered members of the class by representation unless the instrument otherwise provides.
Proposed law provides that in all cases where representation is permitted, the division is
made by roots. If one root has produced several branches, the subdivision is also made by
roots in each branch, and the members of the same branch take by heads.
Present law (R.S. 9:1904) provides the general rule that if the members of one class of the
settlor's children or grandchildren are designated beneficiaries of income and members of
a different class of his children or grandchildren are designated as beneficiaries of principal,
the class of beneficiaries of income shall be governed by R.S. 9:1899 through 1901 and the
class of beneficiaries of principal shall be governed by R.S. 9:1902 and 1903.
Proposed law clarifies that if members of one class are designated beneficiaries of income
and members of a different class are designated as beneficiaries of principal, the class of
beneficiaries of income are governed by R.S. 9:1899 through 1901 and the class of
beneficiaries of principal are governed by R.S. 9:1902 and 1903.
Present law (R.S. 9:1905) provides that if members of the same class of the settlor's children
or grandchildren are designated beneficiaries of both income and principal, interests in
income before the class closes shall be governed by R.S. 9:1899 through 1901.
Proposed law clarifies that if members of the same class are designated beneficiaries of both
income and principal, interests in income before the class closes shall be governed by R.S.
9:1899 through 1901.
Present law (R.S. 9:1953) provides for the assignment of interest in trust and termination of
trust for mixed private and charitable purposes.
Proposed law provides that unless the trust instrument provides otherwise or specifically
contains a special needs provision, a private beneficiary of a trust for mixed private and
charitable purposes may at any time assign to a charitable principal beneficiary of the trust
a fraction or all of the private beneficiary's interest in the trust. An interest in a spendthrift
trust may be assigned only gratuitously. Also, if the trust instrument provides for the
termination of the trust at the end of the specified term of the private interests, the trust may
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HB NO. 439
be terminated early by the charitable principal beneficiary as to the portion of the trust that
no longer has a private beneficiary.
Present law (R.S. 9:2026) provides that the proper court may order the termination or
modification of a trust, in whole or in part, if the continuance of the trust unchanged would
defeat or substantially impair the purposes of the trust. It also provides that if a trustee has
determined that the market value of a trust is less than $100,000 and that, in relation to the
costs of administration of the trust, the continuance of the trust unchanged would defeat or
substantially impair the purposes of the trust. In such a case, the court may provide for the
distribution of the trust property, including principal and undistributed income, to the
beneficiaries in a manner which conforms as nearly as possible to the intention of the settlor,
and the court shall make appropriate provisions for the appointment of a tutor in the case of
a minor beneficiary. In the event of the termination or modification of a trust under the
provisions of this Paragraph, the trustee shall not be subject to liability for such termination
or modification.
Proposed law retains present law, in part, and provides that after obtaining the consent of all
beneficiaries or their legal representatives, a trustee may terminate a trust if the market value
of the trust is less than $100,000, and that a natural tutor, without need for a formal tutorship
proceeding and concurrence of an undertutor, can consent to the termination of a trust on
behalf of a minor. In the event of the termination or modification of a trust, the trustee shall
not be subject to liability for such termination or modification.
Present law (R.S. 9:2031) provides that a trust instrument may authorize a person other than
the settlor to modify the provisions of the trust instrument in order to add or remove
beneficiaries, or modify their rights, if all of the affected beneficiaries are descendants of the
person given the power to modify.
Proposed law provides that a trust instrument can authorize a person who is in being on the
date of the creation of the trust to modify the provisions of the trust instrument to add or
remove beneficiaries, or modify their rights if all of the affected beneficiaries are
descendants of the person given the power to modify. A beneficiary added can be a person
who is not in being when the trust is created, provided the individual is in being at the time
the power to add is exercised.
Proposed law (R.S. 9:2047) provides that a divorce of the settlor revokes every provision
that may be revoked or modified by the settlor in an inter vivos trust designating or
appointing the settlor's former spouse unless expressly provided otherwise in the trust
instrument or in a judgment or a property settlement agreement. A trustee with no actual
knowledge of the divorce, judgment, or property settlement agreement is not liable for
actions taken in good faith regarding the settlor's former spouse.
Present law (R.S. 9:2087) provides for a trustee's delegation of his duties.
Proposed law provides that a trustee may, by power of attorney, delegate the performance
of acts that he could not reasonably be required to perform personally and the performance
of ministerial duties. A power of attorney granted by a trustee authorizing a mandatary to
alienate, acquire, lease, or encumber specifically described property at a specified price is
permitted.
Present law (R.S. 9:2096) provides that if there are two or more trustees, each shall
participate in the administration of the trust and use reasonable care to prevent a co-trustee
from committing a breach of trust and shall compel him to redress a breach of trust.
Proposed law clarifies that if there are two or more trustees with the same powers, each shall
participate in the administration of the trust and use reasonable care to prevent a co-trustee
from committing a breach of trust and shall compel him to redress a breach of trust.
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Proposed law (R.S. 9:2114.1) provides that a trust instrument may confer different powers
upon different trustees and each trustee acts independently with respect to those powers
conferred upon him. For those powers he does not have, the trustee shall have no duties or
liabilities as to the actions or inactions of the other trustees.
Present law (R.S. 9:2158) provides that a trustee may make an adjustment between principal
and income when the interest of one or more beneficiaries is defined by reference to the
"income" of a trust, and the trustee determines, after taking into account the allocations for
the year, that the adjustment is necessary in order for the trustee to satisfy his duty to be fair
and reasonable to all the beneficiaries, taking into account the purposes of the trust.
Proposed law provides that when income is distributed during the year, the income can be
determined based on the adjustment to be made for the year. The adjustment to be made can
be determined in a way that causes the total amount distributed to the income beneficiary
during the year to be equal to a percentage of the value of the trust property at the end of the
prior year or at the end of an average of up to three prior years.
Proposed law (R.S. 9:2263) provides for the creation of a trust for the care of an animal.
(Amends R.S. 9:1783(B), 1821, 1822, 1891, 1894, 1904, 1905, 1953, 2026, 2028, 2031,
2087(B), 2096, and 2158; Adds R.S. 9:2047, 2114.1, and 2263)
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