The original instrument and the following digest, which constitutes no part of the
legislative instrument, were prepared by Hanna Gettys.
DIGEST
SB 498 Reengrossed 2024 Regular Session Foil
Proposed law (R.S. 9:2348) provides that a special charitable trust may be created when a person
makes a donation inter vivos to the trust in an amount not less than $50 million for purposes of
improving the health and lives of the people of La. and forms the trust pursuant to the provisions of
proposed law. Provides that the special charitable trust may provide for any type of beneficiary,
including an institutional beneficiary as defined in present law.
Proposed law (R.S. 9:2349) provides that subject to any limitations, restrictions, reservations in the
trust, resolution of the trustees, or applicable law, the special charitable trust shall be managed by
the trustees. Provides that the trustee has a fiduciary duty to act in the best interest of the special
charitable trust and its beneficiaries, and shall exercise due diligence in the performance of his duties
pursuant to the provisions of present law.
Proposed law prohibits a trustee, an immediate family member of a trustee, or a business associated
with either, from doing business with or receiving renumeration from the trust except for reasonable
compensation for services as a trustee as provided for in proposed law. Further prohibits a trustee
from engaging in conduct or activity that would be prohibited pursuant to present law as though the
trust were a governmental entity.
Proposed law provides that notwithstanding the provisions of present law, the trustee of a special
charitable trust shall be authorized to delegate the performance of his duties to one or more trustees,
or to an officer, employee, or agent of the trust by resolution of the trustees without requiring a
power of attorney.
Proposed law provides that the delegation of authority shall not relieve the trustee of any
responsibility imposed by law. Provides that the president or equivalent officer, or the trustee, may
delegate powers or duties if an officer is absent or for any other reason deemed sufficient.
Proposed law provides that the officer, employee, or agent is authorized to perform the delegated
duties of the special charitable trust as prescribed by the trustee, and shall be subject to a court of
competent jurisdiction on all matters relating to the performance of his duties.
Proposed law provides that the trustee shall exercise reasonable care, skill, and caution in selecting
an officer, employee, or agent, and in establishing the scope and terms of the delegation consistent
with the purposes of the special charitable trust when delegating performance of his duties authorized
pursuant to proposed law. In the event the trustee discovers a breach of duty, reasonable action under
the circumstance shall be taken to remedy the breach.
Proposed law provides that in performing a delegated function, an officer, employee, or agent of a special charitable trust shall have the same fiduciary duty as the delegating trustee to the special
charitable trust, act in the best interest of the special charitable trust and its beneficiaries, and
exercise due diligence in the performance of his duties within the scope and terms of his delegation.
Proposed law provides that the liability of trustees and officers of a special charitable trust shall be
as provided in proposed law (R.S. 9:2792.1.1).
Proposed law provides that a trustee shall not be held liable under the provisions of proposed law
if he acted in good faith reliance on any of the following:
(1)A report made by a representative of the special charitable trust.
(2)A report made by an appraiser selected with reasonable care by the trustees.
(3)A financial statement or other record represented as accurate by the president or officer in
charge of the financial accounts or records of the special charitable trust.
(4)A written report by a certified public accountant fairly reflecting the financial condition of
the special charitable trust.
Proposed law provides that nothing contained in proposed law shall derogate from the
indemnification authorized pursuant to proposed law (R.S. 9:2350).
Proposed law provides that the trustees, officers, employees, or agents of a special charitable trust
shall be entitled to reasonable compensation as determined by the trustees for services performed on
behalf of the special charitable trust.
Proposed law (R.S. 9:2349.1) provides that a special charitable trust shall comply with the provisions
of present law, including but not limited to, restrictions on influencing legislation and participating
in political campaign activity, and limitations of substantial activities promoting propaganda.
Proposed law provides that a special charitable trust shall not publish or distribute statements or
provide funding, directly or indirectly, relating to, supporting, or opposing a political campaign
regarding any candidate for public office or any campaign regarding a political issue.
Proposed law (R.S. 9:2350) provides that a special charitable trust may indemnify a party to any
action or proceeding, including any action by the special charitable trust, and as set forth in present
law, in either of the following circumstances:
(a)The party is a past or present trustee, officer, employee, or agent of the special charitable
trust.
(b)The party is or was serving, at the request of the special charitable trust, as a trustee, officer,
employee, or agent of another nonprofit, business or foreign special charitable trust,
partnership, joint venture or other enterprise. Proposed law provides that the trustee, officer, employee, or agent shall be entitled to
indemnification of each of the following:
(a)Expenses, reasonable attorney fees, settlements and judgments, and fines.
Proposed law requires that the amounts to be indemnified be reasonably incurred in connection with
the action or proceeding.
Proposed law provisions on indemnification shall apply only if the party both:
(i)Acted in good faith and exercised reasonable care and skill in a manner he reasonably
believed to be in the best interests of the special charitable trust.
(ii)Had reasonable cause to believe his conduct was lawful.
Proposed law provides that in a criminal action or proceeding by the special charitable trust or its
trustees, the indemnification shall be limited to expenses, attorney fees, settlements and judgments,
and the estimated cost of the litigation and shall be reasonably incurred in connection with the
defense of the action.
Proposed law provides that the trustee shall not be entitled to indemnification if found by a court of
competent jurisdiction to be liable for negligence or willful misconduct in the performance of his
duty to the special charitable trust. Provides that the court may find based upon the facts and
circumstances that, notwithstanding the adjudication of liability, the trustee shall be entitled to
indemnification for reasonable expenses as determined by the court.
Proposed law provides that a settlement or judgment, order, conviction, or plea of nolo contendere
shall not create a presumption that the person acted in bad faith and not in the best interest of the
special charitable trust, or, in a criminal action, had reasonable cause to believe that his conduct was
unlawful.
Proposed law provides that a trustee, officer, employee, or agent of a special charitable trust who has
prevailed in any action or proceeding, or in defense of any claim shall be entitled to indemnification
of actual expenses, and reasonable attorney fees which he incurred.
Proposed law provides that the indemnification pursuant to proposed law, unless ordered by the
court, shall be made by the special charitable trust only as authorized and upon a determination that
the person met the applicable standard. Provides that the determination shall be made by a majority
vote of a quorum consisting of trustees who were not parties to the action or proceeding, or by
independent legal counsel, if a quorum of trustees is not obtainable or if directed by a quorum of
disinterested trustees.
Proposed law provides that the expenses incurred in defense of an action or proceeding may be paid
by the special charitable trust in advance of the final disposition if authorized by the trustees in the
manner provided in proposed law, upon receipt of an undertaking by or on behalf of the trustee, officer, employee, or agent to repay such amount unless determined that he is entitled to
indemnification by the special charitable trust as authorized in proposed law.
Proposed law provides that the indemnification provided by proposed law shall not be deemed
exclusive of any rights the person otherwise may be entitled by law, agreement, by-laws, or
authorization of disinterested trustees, both, acting in his official capacity or in another capacity
while holding office.
Proposed law provides that the indemnification shall continue to a person who is no longer a trustee,
officer, employee, or agent and shall inure to the benefit of his heirs and legal representative.
Proposed law provides that a special charitable trust may procure liability insurance on behalf of a
past or present trustee, officer, employee, or agent of the special charitable trust, or a person who is
or was serving at the request of a special charitable trust as a trustee, officer, employee, or agent of
another nonprofit, business or foreign corporation, partnership, joint venture or other enterprise,
acting in a prudent manner in the performance of his duties, notwithstanding the indemnification
provided by a special charitable trust authorized under the provisions of proposed law.
Proposed law (R.S. 9:2350.1) provides that a special charitable trust may be subject to
indemnification, reimbursement claims, assumption of obligations, and liabilities of another entity
to incentivize donations or contributions to the special charitable trust. Proposed law provides that
this provision shall be broadly construed.
Proposed law (R.S. 9:2350.2) provides for application of other code provisions whenever the
provisions of proposed law are silent.
Proposed law provides that the application of other code provisions shall not be applied in a
contradictory manner to proposed law, nor to invalidate a trust authorized pursuant to proposed law,
to adversely affect the tax-exempt status of a special charitable trust, nor to prevent any tax deduction
for contributions to the trust.
Proposed law provides that notwithstanding any provision to the contrary, a special charitable trust
shall be subject to present law provisions of the Uniform Prudent Management of Institutional Funds
Act.
Proposed law provides that a special charitable trust shall be considered an "institution" as defined
in present law and the trust assets shall not be considered funds "held for an institution by a trustee
that is not an institution" pursuant to present law although the special charitable trust has
"individuals" as trustees.
Proposed law provides that the trust may only be amended with court approval. The trust shall not
be amended to relieve a trustee of his fiduciary obligations or to waive a conflict of interest or ethical
rules.
Proposed law (R.S. 9:2792.1.1) provides that a person who serves as a trustee or officer of a special charitable trust qualified as a tax-exempt organization under federal law, and who is compensated
for such services shall not be individually liable for any act or omission resulting in damage or
injury, arising out of the exercise of his judgment in the formation and implementation of policy
while acting as a trustee or officer of the special charitable trust, or arising out of the management
of the affairs of the special charitable trust, provided he was acting in good faith and within the scope
of his official functions and duties, unless such damage or injury was caused by his willful or wanton
misconduct.
Effective upon signature of the governor or lapse of time for gubernatorial action.
(Adds R.S. 9:2348-2350.2 and 2792.1.1)
Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Judiciary A to the original bill
1. Changes the threshold amount in which a special charitable trust may be created from
$1 billion to $50 million.
Senate Floor Amendments to engrossed bill
1. Makes technical amendments.
2. Provides for prohibitions regarding the conduct of certain persons, including the
trustee.
3. Adds prohibitions for trustees engaging in political campaigns.
4. Changes that trusts can be amended only with court approval.