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STATE OF OKLAHOMA
2nd Session of the 59th Legislature (2024)
HOUSE BILL 3962 By: Echols
AS INTRODUCED
An Act relating to trusts; enacting the Oklahoma
Trust Reform Act of 2024; providing for directed
trusts; defining terms; providing that a trust
instrument may provide trust advisor or trust
protector with powers and immunities of truste e;
providing liability limits of excluded fiduciary ;
providing relief from obligations for excluded
fiduciary; providing burden of proof in action
against excluded fiduciary; providing for actions of
an excluded fiduciary in the event of the death of a
grantor; providing guideline for a trust advisor as a
fiduciary; providing liability for an excluded
fiduciary for loss if trust protector a ppointed;
providing powers and discretions of a trust
protector; providing for court and the effect on
trust advisor or trust protect or; clarifying powers
of trust protector when incorporated by reference in
will or trust instrument ; providing that a trust
instrument may provide for a person to act as an
investment trust advisor or a di stribution trust
advisor; providing powers and discretions of
investment trust advisor; providing powers and
discretions of distribution trust adviso r; providing
powers and discretions of fami ly advisor; providing
when notice of the existence of trust is required to
be given to qualified beneficiaries ; providing when
certain notices are required; defining terms for
qualified dispositions into trust; defin ing trust
instrument; defining qualified person; providing
requirements to be considered a qualified perso n;
providing for persons and entities not to be
considered a qualified person; providing for the
appointment, removal, or replacement of co-trustee,
trust advisor, or trust protector ; providing who may
serve as an investment trust advisor; providing that
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a transferor may not serve as a fiduciary; providing
for successor qualified person; providing for
disposition to more than one trustee ; providing that
for dispositions to more than one trust ee, a
qualified disposition may not be treated as other
than a qualified disposition solely because not all
of the trustees are qualified persons ; providing
powers and rights of a transferor and its effect on a
qualified disposition; limiting actions of creditors
to transfers with the intent to defraud; providing
requirements for bringing claim for fraudulent
transfer of settlor's assets ; providing for
disposition by transferor who is a trustee ;
prohibiting certain actions against a trustee,
advisor, or trust preparer; prohibiting an action
against trustee, advisor, or pr eparer of trust
prohibited if action by creditor in certain
circumstances; providing court jurisdiction;
providing for the collection attorneys' fees and
costs in certain circumstances; providing for when
multiple qualified dispositions in same trust
instrument; providing certain exceptions to
application of this act under certain events and
circumstances; providing for avoidance of a q ualified
disposition; providing for discretiona ry interest;
providing that the rules against perpetuities shall
not apply to trusts; providing intent to allow trust
to have perpetual durations; providing for
noncodification; providing for codification; and
providing an effective date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. NEW LAW A new section of law not to be
codified in the Oklahoma Statutes reads as follows:
This act shall be known and cited as the "Oklahoma Trust Reform
Act of 2024".
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SECTION 2. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 1201 of Title 60, unless there
is created a duplication in numbering, rea ds as follows:
A. Sections 2 through 1 5 of this act create and govern directed
trusts.
B. As used in sections 2 through 15 of this act:
1. "Custodial account" means an account, established by a party
with a bank as defined in 26 U.S.C. 408(n), as of January 1, 2006,
or with another person approved by the Internal Revenue Service a s
satisfying the requirements t o be a nonbank trustee or a nonbank
passive trustee set forth in U.S. Treasury Regula tions promulgated
under 26 U.S.C. 408, that is governed by an instrument concerning
the establishment or maintenance, or both, of an individ ual
retirement account, qualifi ed retirement plan, Archer medical
savings account, health savings account, Coverdell education savings
account, or any similar retirement or savings vehicle permitted
under the Internal Revenue Code of 1986, as of January 1, 2006;
2. "Custodial account o wner" means any party who establishes a
custodial account; or has the power to designate the be neficiaries
or appoint the custodian of the custodial account; or otherwise is
the party who possesses the power to direct the inv estment,
disposition, or retent ion of any assets in the custodial account or
name an authorized designee to effect the same;
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3. "Distribution trust advisor " means a fiduciary, given
authority by the instrument to exercise all or any portions of the
powers and discretions set forth in section 13 of this act;
4. "Excluded fiduciary" means any fiduciary excluded from
exercising certain powers under the in strument which powers may be
exercised by the grantor, custodial account owner, trust advisor,
trust protector, trust committee, or oth er persons designated in the
instrument;
5. "Family advisor" means any person whose appointment is
provided for in the governing instrument or by court order who is
authorized to consult with or advis e a fiduciary with re gard to
fiduciary or nonfiduc iary matters and actions, and who may also be
authorized by the governing instrument or court order to otherwise
act in a nonfiduciary capacity.
6. "Fiduciary" means a trustee or custodian under any
instrument, an executor, admin istrator, or personal represent ative
of a decedent's estate, or any other party, includ ing a trust
advisor, a trust protector, or a trust committee, who is acting in a
fiduciary capacity for any person, trust, or estate;
7. "Instrument" means any revocable or irrevocable trust
document created inter vivos or testamentary or any custodial
account agreement whether such document or agreement was created
prior to, on, or after the effective date of this act;
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8. "Investment trust advisor " means a fiduciary, given
authority by the instrumen t to exercise all or any portions of the
powers and discretions set forth in section 11 of this act;
9. "Trust advisor" means either an investment trust advisor or
a distribution trust advisor or, in the case of a custodial account,
a custodial account ow ner or the owner's designee;
10. "Trust protector" means any person whose appointment as
protector is provided for in the instrument. Such person may not be
considered to be acting in a fiduciary capacity except to the exte nt
the governing instrument pro vides otherwise. However, a protector
shall be considered acting in a fiducia ry capacity to the extent
that the person exercises the authority of an investment trust
advisor or a distribution trust advisor;
SECTION 3. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Sect ion 1202 of Title 60, unless there
is created a duplication in numbering, reads as follows:
Any governing instrument providing for a trust advisor or trust
protector may also provide such trust advisor or trust protector
with some, none, or all of the righ ts, powers, privileges, benefits,
immunities, or authorities available to a trustee under Oklahoma law
or under the governing instrument. Unless the governing in strument
provides otherwise, a trust advisor or trust protector has no
greater liability to a ny person than would a trustee holding or
benefiting from the rights, powers, privileges, benefits,
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immunities, or authority provided or allowed by the governing
instrument to such trust ad visor or trust protector.
SECTION 4. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 1203 of Title 60, unless there
is created a duplication in numbering, reads as follows:
A. An excluded fiduciary is not liable, either individually or
as a fiduciary, for any of the following:
1. Any loss that results from compliance with a direction of
the trust advisor, including any loss from the trust advisor
breaching fiduciary responsibilities or acting beyond the t rust
advisor's scope of authority;
2. Any loss that results fr om a failure to take any action
proposed by an excluded fiduciary that requires a prior
authorization of the trust advisor if that excluded fiduciar y timely
sought but failed to obtain that aut horization;
3. Any loss that results from any action or inacti on, except
for gross negligence or willful misconduct, when an excluded
fiduciary is required, pursuant to the trust agreement or any other
reason, to assume the role of trust advisor or trust protector;
4. Any loss that results from relying upon any trus t advisor
for valuation of trust assets; or
5. Any loss that results from any tax filing made or tax
position taken based on the recommendations or instructions received
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from a tax preparer or professional used by the excluded fiduciary
at the direction of the grantor or of another trust fiduciary.
B. Any excluded fiduciary is also relieved from any obligation
to independently value trust assets, to review or evaluate any
direction from a dist ribution trust advisor, or to perform
investment or suitability reviews, inquiries, or investigations or
to make recommendations or evaluations with respect to any
investments to the extent the trust advisor had authority to direct
the acquisition, disposi tion, or retention of the investment. If
the excluded fiduciar y offers such communication to the trust
advisor, trust protector, or any investment person selected by the
investment trust advisor, such action doe s not constitute an
undertaking by the exclu ded fiduciary to monitor or otherwise
participate in actions wi thin the scope of the advisor's authority
or to constitute any duty to do so.
C. Any excluded fiduciary is also relieved of any duty to
communicate with or warn or apprise any beneficiary or t hird party
concerning instances in which the excluded fiduciary would or might
have exercised the excluded fiduciary's own discretion in a manner
different from the manner directed by the trust advisor or trust
protector.
D. Absent contrary provisions in the governing instrument, the
actions of the excluded fiduciary (such as any communications with
the trust advisor and others and carrying out, recording, and
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reporting actions taken at the trust advisor's direct ion) pertaining
to matters within the scope of authority of the trust advisor or
trust protector constitute administrative actions taken by the
excluded fiduciary solely to allow the excluded fiduciary to perform
those duties assigned to the excluded fiduc iary under the governing
instrument, and such administrative actions do not constitute an
undertaking by the excluded fiduciary to monitor, participate, or
otherwise take any fiduciary responsibility for actions within the
scope of authority of the trust a dvisor or trust protector.
E. Nothing in paragraph 2 of subsection A of this section
imposes an obligation or liability with respect to a custodian of a
custodial account.
F. In an action against an excluded fiduciary pursuant to the
provisions of this s ection, the burden to prove the matter by cl ear
and convincing evidence is on the person seeking to h old the
excluded fiduciary liable.
SECTION 5. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 1204 of Title 60, unless there
is created a duplication in numbering, reads as follows:
An excluded fiduciary ma y continue to follow the direction of
the trust advisor upon the incapa city or death of the grantor if the
instrument so allows.
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SECTION 6. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 1205 of Title 60, unless there
is created a duplication in numbering, reads as fo llows:
If one or more trust advisors are given authority by the terms
of a governing instrument to direct, consent to, or di sapprove a
fiduciary's investment or distribution decisions, or proposed
investment or distribution decisions, such trust advisors s hall be
considered to be fiduciaries when exercising such authority. For
investment decisions, so long as there is at least one fiduciary
exercising the authority of the investment adviso r pursuant to
section 12 of this act for the investment, except in th e cases of
willful misconduct or gross negligence by the fiduciary investment
advisor in the selection or monitoring of the nonfiduciary trust
advisors, the governing instrument may provi de that such other trust
advisors acting pursuant to this section are not acting in a
fiduciary capacity. Similarly, for distribution decisions, so long
as there is at least one fiduciary exer cising the authority of the
distribution advisor pursuant to section 13 of this act for the
distribution, except in the case of willf ul misconduct or gross
negligence by the fiduciary distribution advisor in the selection or
monitoring of the nonfiduciary trust advisors, the governing
instrument may provide that such o ther trust advisors acting
pursuant to this section are not acting in a fiduciary capacity.
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SECTION 7. NEW LAW A new section of law to be codified
in the Oklahoma Statu tes as Section 1206 of Title 60, unless there
is created a duplication in numbering, reads as follows:
If an instrument appoints a trust protector, the excluded
fiduciary is not liable for any loss resulting from any action t aken
upon such trust protector' s direction.
SECTION 8. NEW LAW A new se ction of law to be codified
in the Oklahoma Statutes as Section 1207 of Title 60, unless there
is created a duplication in numbering, reads as follows:
The powers and discretions of a trust pr otector are as provided
in the governing instrument a nd may be exercised or not exercised,
in the best interests of the trust, in the sole and absolute
discretion of the trust protector and are binding on all other
persons. The powers and discretion may i nclude the following:
1. Modify or amend the trust in strument to achieve favorable
tax status or respond to changes in the Internal Revenue Code, state
law, or the rulings and regulations thereunder;
2. Increase or decrease the interests of any beneficia ries to
the trust;
3. Modify the terms of any power o f appointment granted by the
trust. However, a modification or amendment may not grant a
beneficial interest to any individual or class of individuals not
specifically provided for under the trust inst rument;
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4. Remove and appoint a trustee, a fiduciary p rovided for in
the governing trust instrument, trust advisor, investment committee
member, or distribution committee member;
5. Terminate the trust;
6. Veto or direct trust distributions;
7. Change situs or governing law of the trust, or both;
8. Appoint a successor trust protector;
9. Interpret terms of the trust instrument at the request of
the trustee;
10. Advise the trustee on matters concerning a beneficiary;
11. Amend or modify the trust i nstrument to take advantage of
laws governing restraint s on alienation, distribution of trust
property, or the administration of the trust;
12. Add to the trust an individual beneficiary or beneficiaries
from a class of indi viduals identified in the gover ning instrument;
13. Add to the trust a charitable ben eficiary or beneficiaries
from a class of charities identified in the trust instrument;
14. Provide other powers and discretions in the gove rning
instrument;
15. Remove a representative;
16. Appoint a representative; and
17. Act as a representative .
B. In addition to the powers and discretions granted to the
trust protector in the governing instrument, the trust protector may
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also exercise any of the powers and discre tions granted to a trust
protector under section 14 of this act to the extent such exe rcise
is not prohibited under the terms of the governing instrument.
SECTION 9. NEW LAW A new section of law to be codified
in the Oklahoma Statut es as Section 1208 of Title 60, unless there
is created a duplication in numbering, reads as foll ows:
By accepting an appointment to serve as a trust advisor or trust
protector of a trust that is subject to the laws of this State, the
trust advisor or the trust protector submits to the jurisdiction of
the courts of this state even if investment adviso ry agreements or
other related agreements provide otherwise, and the trust advisor o r
trust protector may be made a party to any action or proceeding if
issues relate to a decision or action of the trust advisor or trust
protector.
SECTION 10. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 1209 of Title 60, unless there
is created a duplication in numbering , reads as follows:
Any of the powers enumerated in section 8 of this act as they
exist at the time of the signing of a will by a testator o r at the
time of the signing of a trust instrument by a trustor, may be, by
appropriate reference made thereto, inco rporated in whole or in part
in such will or trust instrument, by a clearly expressed intention
of a testator of a will or trustor of a trus t instrument.
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SECTION 11. NEW LAW A new section of law to be codified
in the Oklahoma Statute s as Section 1210 of Title 60, unless there
is created a duplication in numbering, reads as follo ws:
A trust instrument governed by the laws of Oklahoma may provide
for a person to act as an investment trust advisor or a distribution
trust advisor, respect ively, with regard to investmen t decisions or
discretionary distributions. Unless otherwise provided or
restricted by the terms of the governing instrument, any person may
simultaneously serve as a trust advisor and a trust protector.
SECTION 12. NEW LAW A new se ction of law to be codified
in the Oklahoma Statutes as Sectio n 1211 of Title 60, unless there
is created a duplication in numbering, reads as follo ws:
The powers and discretions of an investment trust advisor shall
be as provided in the trust instrument and may be exercised or not
exercised, in the best interests of the trust, in the sole and
absolute discretion of the investment trust advisor and ar e binding
on any other person and any other interested party, fiduciary, and
excluded fiduciary. In additio n to the powers and discretions
granted to the investment trust advisor in the governing instrument,
the investment trust advisor may also exercise a ny of the following
powers and discretions to the extent such exercise is not prohibited
under the terms of the governing instrument:
1. Direct the trustee with respect to the retention, purchase,
sale, exchange, tender, or other transaction affecting the ownership
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thereof or rights therein of trust investments. These powers
include the pledge or encumbrance o f trust property, lending of
trust assets, either secured or u nsecured, at terms defined by the
investment trust advisor to any party including benef iciaries of the
trust and the investment and reinvestment of principal and i ncome of
the trust;
2. Vote proxies for securities held in trust;
3. Select one or more inv estment advisers, managers, or
counselors, including the trustee, and delegate to them any of its
powers;
4. Direct the trustee with respect to any additional po wers and
discretions over inves tment and management of trust assets provided
in the governing instrument; and
5. Direct the trustee as to the value of nonpublicly traded
trust investments;
6. Direct the trustee as to any investment or management power ;
7. Exercise the powers granted to an investment trust advisor
by section 15 of this act.
SECTION 13. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 1212 of Title 60, unless there
is created a duplica tion in numbering, reads as fol lows:
The powers and discretions of a distribution trust adv isor over
any discretionary distributions of in come or principal, including
distributions pursuant to an ascertainable standard or other
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criteria and appointments shall be provided in the trust in strument
and may be exercised or not exercised, in the best interests of the
trust, in the sole and absolut e discretion of the distribution trust
advisor and are bindi ng on any other person and any other interested
party, fiduciary, and excluded fiduciary. Unless the terms of the
governing instrument provide other wise, then, in addition to the
powers and discretions granted to the distribution trust advisor in
the trust instrument, the distribution trust advisor shall direct
the trustee with regard to all discretionary distributions to
beneficiaries and may exercise any of the powers and discretions
granted to a distribution trust advisor in Section 15 of this act.
SECTION 14. NEW LAW A new section of la w to be codified
in the Oklahoma Statutes as Section 1213 of Title 60, unless there
is created a duplication in numbering, reads as follows:
A. The powers and discretions of a family advisor are as
provided in the governing instrument or by court order an d may be
exercised or not exerc ised, in the best interests of the trust, in
the sole and absolute discretion of the family advisor. The powers
and discretions may only include the following:
1. Remove and appoint a trustee, a fiduciary provided for in
the governing trust instrument, t rust advisor, investment committee
member, or distribution c ommittee member;
2. Appoint a trust protector, or a family adviso r;
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3. Advise the trustee on matters concerning any beneficiary;
receive trust accountings, investm ent reports, and other informat ion
from the trustee or to which a beneficiary is entitled; attend
meetings whether in person or by any other means with the trustee,
investment trust advisors, distribution trust advisors, or other
advisors whether in person or by any means, electronic or otherwise;
and to consult with a fiduciary regarding both f iduciary and
nonfiduciary matters or actions, all without any power or discretion
to take any action as a fiduciary; or
4. Provide direction regarding notification of qualified
beneficiaries pursuant to Section 15 of this act.
B. A family advisor is not required to exercise any powers or
discretions under any circumstances. Every action or inaction by a
family advisor is a nonfiduciary action or inaction and a fami ly
advisor is absolutely exclud ed from liability to any other person
for an action or inact ion as a family advisor. A court may review a
family advisor's exercise of the powers described in paragraphs 1,
2, and 4, of subsection A of this section, only if the family
advisor acts dishones tly or with an improper motive but may not
review a family advisor's failure to exercise any powers. A
reasonableness standard may not be applied to any action or inaction
of a family advisor. Other than for the two circumst ances listed
above, a court has no jurisdiction to review a family advisor's
action or inaction.
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C. A family advisor is entitled to compensation as pro vided in
the governing instrument. If the governing instrument does not
provide for or establish compen sation, a family advisor is ent itled
to reasonable compensation for the exercise of the pow ers and
discretions granted to the family advisor pursuant to this title.
SECTION 15. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 1214 of Title 60, unless there
is created a duplication in numberin g, reads as follows:
1. Except as otherwise provided by the te rms of a trust
instrument governing a revocable trust a trustee has no duty to
notify the qualified be neficiaries of the trust's exis tence.
2. Except as otherwise provided by the terms of a tr ust
instrument governing an irrev ocable trust or otherwise directed in
writing by the trustor, trust advisor, or trust protector, the
trustee shall:
a. notify the qualified beneficiaries of the tr ust's
existence and of the right of the qualified
beneficiary to request a copy of the trust inst rument
pertaining to the qualified beneficiary's interest in
the trust within sixty (60) days after the trustee has
accepted trusteeship of the trust, or withi n sixty
(60) days after the date the trus tee acquires
knowledge that a formerly revocable trust has become
irrevocable;
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b. promptly furnish to the qualified beneficiary a copy
of the trust instrument upon request by the quali fied
beneficiary; and
c. promptly respond to a qualified beneficiary's r equest
for information relate d to the administration of the
trust, unless the request is unreasonable under the
circumstances.
3. The trustor, trust advisor, or trust protector, may, by the
terms of the governing i nstrument, or by providing written
directions to the trustee, expand, restrict, eliminate, or otherwise
modify the rights of beneficiaries to information relating to a
trust. Unless otherwise stated in the governing instrumen t, the
direction of the trustor controls in the event of a conflict amon g
written directions provided to the trustee pursuant to this section.
The trustee incurs no liability for a loss or otherwise for relying
upon the written directions, including an ins tance when the
governing instrument of an irrevocable trust does not exp ressly
authorize an expansion , restriction, or other modification of the
rights of beneficiaries to information relating to a trust.
The terms of a trust instrument governing an irrevo cable trust
or written directions provided pursuant to this section may expand,
restrict, eliminate, or otherwise vary the right of a beneficiary to
be informed of the beneficiary's interest in a trust indefinitely or
for a period of time, for example:
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a. a period of time related to the age of a beneficiary;
b. a period of time related to the lifetime of either a
trustor or spouse of a trustor, or both;
c. a period of time related to a term of years or
specific date; and
d. a period of time related to a spe cific event that is
certain to occur.
4. The terms of the governing in strument or written directions
provided pursuant to this section may authorize either the trustor,
trust advisor, or trust protector to appoint a representative for
the purpose of being informed, on behalf of the ben eficiary, of the
beneficiary's interest in a trust for the period of time that the
right of a beneficiary to be informed about a beneficiary's interest
is restricted or eliminated pursuant to this section.
5. The written directions of the trustor, whether made in the
governing instrument or by separate writte n directions made pursuant
to the governing instrument or this section, control and remain in
effect upon the death of the trustor until or unless modified or
revoked by a trust advisor or trust protec tor as permitted by the
governing instrument or the tru stor's written directions in e ffect
at the time of the trustor's death. Subject to paragraph 3 of this
section, the written directions of a trust advisor or trust
protector remain in effect until or u nless a trust advisor or trust
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protector revokes the wri tten directions by providing a writing to
that effect to the trustee.
6. Any beneficiary may waive the right to the notice or
information otherwise required to be furni shed under this section
and, with respect to future reports and other information, may
withdraw a waiver previously given.
7. Before providing information to any qualified beneficiary, a
fiduciary may require that any such qualified beneficiary or
beneficiaries be bound by th e same duty of confidentiality that
binds the fiduciary. If trust information is sought throug h service
of a subpoena on a fiduciary, the fiduciary may petition the court
for an order that makes disclosure of trust information conting ent
upon the receiving party being bound by reasonable conditions to
ensure the protection of confidentiality of tru st information by the
receiving party.
8. The change in the identity of a trustee, occurring as the
result of a mere name change or a merge r, consolidation,
combination, or reorganization of a trustee, does not require
notice.
9. For the purposes of this section, the term, qualified
beneficiary, means a beneficiary that is an entity then in existence
or an individual who is twenty -one (21) years of age or older and
who, on the date the beneficiary's qualification is determined:
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a. is a distributee or permissib le distributee of trust
income or principal;
b. would be a distributee or permissible distributee of
trust income or principal if the i nterests of the
distributees terminated on that date; or
c. would be a distributee or permiss ible distributee of
trust income or principal if the trust terminated on
that date.
However, if the distributee is then unknown because a person
holds a power to change the distributee, the trustee shall give
notice only to the holder of the power.
SECTION 16. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 1301 of Title 60, unless there
is created a duplication in numbering, reads as follows :
A. As used in Sections 17 through 33 of this act:
1. "Claim" means a right to payment, whet her or not the right
is reduced to judgment liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured,
or unsecured;
2. "Creditor" means with respect to a transferor, a person who
has a claim;
3. "Debt" means liability on a claim;
4. "Disposition" means a transfer, conveyance, or assignment of
property, including a change in t he legal ownership of property
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occurring upon the substitution of one trustee for another or the
addition of one or more new trustees, or the exercise of a power so
as to cause a transfer of property to a trustee or trustees. The
term does not include the release or relinquishment of a n interest
in property that theretofore was the subject of a qualified
disposition;
5. "Property" means real property, personal property, and
interests in real or personal property;
6. "Qualified disposition " means a disposition by or from a
transferor to a qualified person or qualified persons, without
consideration or for less than fair market value, by means of a
trust instrument;
7. "Spouse" and "former spouse " means only persons to whom the
transferor was married at, o r before, the time the qualifie d
disposition is made; and
8. "Transferor" means any person as an owner of property as a
holder of a power of app ointment which autho rizes the holder to
appoint in favor of the holder, the holder's creditors, the holder's
estate, or the creditors of the h older's estate or as a trustee,
directly or indirectly, makes a disposition or causes a disposition
to be made.
B. The terms transferor and beneficiary may be any individual,
corporation, partnership, limited liability compa ny, association,
joint stock company, business trust, trust, unincorporated
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organization, or two or more persons having a joint or common
interest.
SECTION 17. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as S ection 1302 of Title 60, unless there
is created a duplication in numbering, reads as follows:
A. For the purposes of Sections 16 through 33 of this act, a
trust instrument is an instrument appointing a qualifie d person or
qualified persons for the proper ty that is the subject of a
disposition, which instrument:
1. Expressly incorporates the law of this state to gover n the
validity, construction, and admini stration of the trust;
2. Is irrevocable, but a trust i nstrument may not be deemed
revocable on account of its inclusion of one or more of the
following:
a. a transferor's power to veto a distribution from the
trust,
b. an inter vivos power of appointment , other than an
inter vivos power exercisable solely by the transferor
in favor of the transferor, t he transferor's
creditors, the transferor's estate, or the creditors
of the transferor's estat e,
c. a testamentary power of appointment ,
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d. the transferor's potential or actual receipt of
income, including rights to such income retained in
the trust instrument,
e. the transferor's poten tial or actual receipt of income
or principal from a cha ritable remainder unitrust or
charitable remainder annuity trust as s uch terms are
defined in Section 664 of the Internal Revenue C ode of
1986, 26 U.S.C. Section 664, as of January 1, 2009;
the transferor's receipt each year of a percentage of
the value as determined from time to time pursuant to
the trust instrument, but not exceeding the amount
that may be defined as income under Section 643(b) of
the Internal Revenue C ode of 1986, 26 U.S. C. Section
643(b), as of January 1, 2009,
f. the transferor's potential or actual receipt or use of
principal if the potential or actual receipt or use of
principal would be the result of a qualified person,
including a qualified person acting at the direct ion
of a trust advisor described in this section, acting
either in the qualified person's sole discretion or
pursuant to an ascertainable stand ard contained in the
trust instrument,
g. the transferor's right to remove a trustee, protector,
or trust advisor and to appoint a new trustee,
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protector, or trust advisor, other than a trustee who
is a related or subordinate pa rty with respect to the
transferor within the meaning of Section 672(c) of the
Internal Revenue Code of 1986 , 26 U.S.C. Section
672(c), as of Januar y 1, 2009,
h. the transferor's potential or actual use of real
property held under a qualified personal resi dence
trust within the meaning of such ter m as described in
the regulations promulgated under Section 2702(c) of
the Internal Revenue Code of 1986, 2 6 U.S.C. Section
2702(c), as of January 1, 2009 ,
i. a pour back provision that pours back to the
transferor's will or revocable trust all or part of
the trust assets,
j. the transferor's potential or actual receipt of income
or principal to pay, in who le or in part, income taxes
due on income of the trust if the potential or actual
receipt of income or princip al is pursuant to a
provision in the trust instrument th at expressly
provides for the payment of the taxes and if the
potential or actual receipt of income or principal
would be the result of a qualified person's acting in
the qualified person's discretion or pursuant to a
mandatory direction in the trust instr ument or acting
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at the direction of an advisor described in Section 19
of this act,
k. the ability, whether pursuant to discretion,
direction, or the grantor's exercise of a testamentary
power of appointment, of a qualified person to pay,
after the death of the transferor, all or any part of
the debts of the transferor outstanding at the time of
the transferor's death, the expenses of administering
the transferor's estate, or any estate or inheritance
tax imposed on or with respect to the transferor's
estate,
l. a transferor's service as a noncontrolling member of a
distribution committee that functions as a
distribution trust advisor, which is a fiduciary,
given authority by the instrument to exercise all or
any portions of the powers and discretions over any
discretionary distributions of income or principa l, or
m. a transferor's enjoyment of a powe r to reacquire the
trust corpus by substituting other property of an
equivalent value within the meaning of
Section675(4)(C) of the Internal Revenue Code of 1986,
26 U.S.C. Section675(4)(C), as of January 1, 2021, and
3. Provides that the interest of the transferor or other
beneficiary in the trust property or the income from the trust
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property may not be tr ansferred, assigned, pledged, or m ortgaged,
whether voluntarily or i nvoluntarily, before the qualified person
distributes the property or income from t he property to the
beneficiary, and such provision of the trust instrument constitutes
a restriction on the transfer of the transferor's be neficial
interest in the trust tha t is enforceable under applicable
nonbankruptcy law within the meaning of Section541(c)(2) of the
Bankruptcy Code, 11 U.S.C. Section541(c)(2), as of January 1, 2009.
B. A disposition by a trustee that is not a qualified person to
a trustee that is a qualified person may not be treated as other
than a qualified disposition solely because the trust instrument
fails to meet the requirements of paragraph 1 of this section.
SECTION 18. NEW LAW A new section of law to be codified
in the Oklahoma Statu tes as Section 1303 of Title 60, unless there
is created a duplication in numbering, reads as follows:
A. For the purposes of Sections 16 through 33 of this act, a
qualified person is:
1. An individual who, except for brief intervals, military
service, attendance at an educational or training institution, or
for absences for good cause shown, resides in this state, whose true
and permanent home is in this state, who does not h ave a present
intention of moving from this state, and who has the intention of
returning to this state when away;
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2. A trust company that is organize d under Oklahoma state law
or under federal law and that has its principal place of business in
this state; or
3. A bank or savings association that possesses and exercises
trust powers, has its principal place of business in this state, and
the deposits of which are insured by the Federal Deposit Insurance
Corporation.
B. Furthermore, a qualified person mu st meet the requirements
as provided in Section 19 of this act.
SECTION 19. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 1304 of Title 60, unless there
is created a duplication in numbering, reads as follows:
A. Except as expressly provided by the terms of a governing
instrument or by a court order, a general law, or a state
jurisdiction provisi on stating that the laws of this state govern is
valid, effective, and conclusive for the trust if all of the
following are true:
1. Some or all of the trust assets are depos ited in this state
or physical evidence of such assets is held in this state and the
trust is being administered by a qualified person in this
subdivision, deposited in this state, inclu des being held in a
checking account, time deposit, certificate of de posit, brokerage
account, trust company fiduciary account, or other similar accoun t
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or deposit that is located in this state including Oklahoma
investments;
2. A trustee is a qualified p erson who is designated as a
trustee under the governing inst rument, a successor trusteeship, or
designated by a court h aving jurisdiction over the tru st; and
3. The administration, for example, physically maintaining
trust records in this state and prepa ring or arranging for the
preparation of, on an exclusive basis or a nonexclusiv e basis, an
income tax return that must be filed by the trust, occurs w holly or
partly in this state.
B. The State of Oklahoma and its courts have jurisdiction over
a trust created in a foreign jurisdiction if the administration of
the trust meets the thr ee requirements set forth in this sectio n.
C. Nothing in this section may be construed to be the exclusive
means of providing a valid effective and conclusive state
jurisdiction provision.
SECTION 20. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 1305 of Title 60, unless there
is created a duplication in numbering, reads as follows:
Neither the transferor nor any other na tural person who is a
nonresident of this state nor an entity that is not author ized by
the law of this state to act as a trustee or whose activities a re
not subject to supervision as provided in Section 18 of this act may
be considered a qualified person. However, nothing in this chapter
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precludes a transferor from appointing, remov ing, or replacing one
or more co-trustees, trust advisors, or trust pro tectors, regardless
of whether or not such trust advisor or trust protector is a
fiduciary.
SECTION 21. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 1306 of Title 60, unless there
is created a duplication in numbering, reads as follows:
Any person may serve as an investment trust advisor ,
notwithstanding that the person is the transferor of the q ualified
disposition, but a transfe ror may not otherwise serve as a fiduciary
under a trust instrument exc ept as stated in paragraph 2 of
subsection A of Section 17 of this act. While serving as an
investment trust advisor of the trust, the person may have all
powers authorized by statu te or by the trust instrument, including
the power to vote by proxy any st ock owned by the trust.
SECTION 22. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 1307 of Title 60, unless there
is created a duplication in numbering, reads as follows:
If a qualified person of a t rust ceases to meet the requirements
of Section 18 of this act, and there remains no trustee that meets
such requirements, such qualified person shall be d eemed to have
resigned as of the time of such cessation, and thereupon the
successor qualified person provided for in the trust instrument
shall become a qualified person of the trust, or in the absence of
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any successor qualified person provided for in the trust instrument,
the circuit court shall, upon application of any interested party,
appoint a successor qualified person.
SECTION 23. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 1308 of Title 60, unless there
is created a duplication in numbering, reads as follows:
In the case of a disposition t o more than one trustee, a
disposition that is otherwise a qua lified disposition may not be
treated as other than a qualified disposition solely because not all
of the trustees are qual ified persons.
SECTION 24. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 1309 of Title 60, unless there
is created a duplication in numbering, reads as follows:
A qualified disposition is subject to Section 25 through Section
30 of this act, notwithstanding a transferor 's retention of any or
all of the powers and rights described in paragraph 2 of Section 17
of this act and the transferor's service as trust advisor pursuant
to Section 21 of this act. The transferor has only such powers and
rights as are conferred by the trust instrument. Except as
permitted by Section 17 and Section 21 of this act, a transferor has
no rights or authority with respect to the property that is the
subject of a qualified disposition or the income therefrom, and any
agreement or understandin g purporting to grant or permit the
retention of any greater ri ghts or authority is void.
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SECTION 25. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 1310 of Title 60, unless there
is created a duplica tion in numbering, reads as follows:
Notwithstanding any other provision of law, no action of any
kind, including an action to enforce a judgment entered by a court
or other body having adjudicative authority, may be brought at law
or in equity for an attachment or other provisional remedy against
property that is the subject of a qualified disposition or for
avoidance of a qualified disposition unless the settlor's transfer
of property was made with the intent to defraud that specific
creditor. This protection, however, only applies to qualified
dispositions totaling up to, but not exceeding, Ten Million Dollars
($10,000,000.00).
SECTION 26. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 1311 of Title 60, unless there
is created a duplication in numbering, reads as follows:
A. A cause of action or claim for relief with respect to a
fraudulent transfer of a settlor's assets under Section 25 of this
act is extinguished unless the action under Section 25 of this act
is brought by a creditor of the settlor who meets one of the
following requirements:
1. Is a creditor of the settl or before the settlor's assets are
transferred to the tru st, and the action under Section 25 of this
act is brought within the l ater of:
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a. two (2) years after the transfer is made , or
b. six (6) months after the transfer is or reaso nably
could have been discovered by the creditor if the
creditor:
(1) can demonstrate that the creditor asserted a
specific claim against the settlor before the
transfer, or
(2) files another action, other than an action under
Section 25 of this act, against the settlor that
asserts a claim based on an act or omission of
the settlor that occurred before the transfer,
and the action described in this subparagraph is
filed within two (2) years after the transfer;
2. Becomes a creditor subsequent to the trans fer into trust,
and the action under Section 25 of this act is brought within tw o
(2) years after the transfer is made;
3. In any action described in Section 25 of this act, the
burden to prove the matter by clear and convincing evidence is upon
the creditor;
4. A person is deemed to have discovered a transfer at the time
a public record of the transfer is made, including the conveyance of
an interest in real property that is recorded in the appropriate
public filing office where the property is located, the filing of a
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financing statement, or the filing of a bill of sale or oth er
transfer instrument regard ing personal property; or
5. The filing of a bill of sale or other transfer instrument
which conveys personal property to a trust which is governed by this
chapter shall be filed in the applicable public filing office
determined as follows:
a. if the transferor is a natural person and is a
resident of this state, the personal property transfer
instrument shall be recorded in the county in this
state where the transferor maintains the transferor's
principal residence, and
b. in all other cases, the personal property transfer
instrument shall be recorded in the county in this
state where the trustee of the trust maintains a
principal residence or principal place of business.
B. This section and Section 25, Section 27, Section 28, and
Section 29 are inseparably interwoven with substantive rights th at a
deprivation of legal rights would result if another jurisdiction's
laws and regulations to the contrary ar e applied to a claim or cause
of action described therein.
SECTION 27. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 1312 of Title 60, unless there
is created a duplication in numbering, reads as fol lows:
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A qualified disposition that is made by means of a disposition
by a transferor who is a trustee is deemed to have been made as of
the time, whether before, on, or after the effective date of this
act, the property that is the subject of the qu alified disposition
was originally transferred to the transferor, or any predecessor
trustee, making the qualif ied disposition in a form that meets the
requirements of paragraphs 2 and 3 of Section 17 of this act.
Further, the provisions of this section apply to determine the date
the transfer is deemed to have been made, notwithstanding tha t the
original transfer was to a trust originally within or outside of the
jurisdiction of Oklahoma.
If property transferred to a spendthrift trust is conveyed to
the settlor or to a beneficiary for the purpose of obtaining a loan
secured by a mortgage or deed of trust on the property and then
reconveyed to the trust wit hin one hundred eighty (180) days of
recording the mortgage or deed of trust, for purposes of paragraph 1
of subsection A of Section 26 of this act, the transfer is
disregarded and the recon veyance relates back to th e date the
property was originally transferred to the trust. The mortgage or
deed of trust on the property is e nforceable against the trust.
SECTION 28. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 1313 of Title 60, unless there
is created a duplication in numbering, reads as follows:
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Notwithstanding any law to the contrary, a creditor, includin g a
creditor whose claim arose before or after a qualified disposition,
or any other person has only such rights with respect to a qualified
disposition as are provided in Section 25 through Section 32 of this
act, and no such creditor nor any other person has any claim or
cause of action against the trustee or advisor, described in Section
20 of this act, of a trust that is the subject of a qualified
disposition, or against any person involved in the counseling,
drafting, preparation, execution, or funding of a trust that is the
subject of a qualified disposition. In addition to the provisions
of Section 33 of this act, at no time is a qualified person
personally liable to a creditor of a transferor or any other person
for distributions made by the qualif ied person, before the creditor
or person notified the qualified person, in writ ing, that a claim or
cause of action existed. This applies regardless of whether the
distributions are made to or for the benefit of the transferor or a
beneficiary during the period in which a creditor or other person
could make a claim as provided in Section 26 of this act.
SECTION 29. NEW LAW A new se ction of law to be codified
in the Oklahoma Statutes as Section 1314 of Title 60, unless there
is created a duplication in numbering, reads as follows:
Notwithstanding any other provi sion of law, no action of any
kind, including an action to enforce a judgment entered by a court
or other body having adjudicative authority, may be brought at law
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or in equity against the trustee or advisor described in Section 20
of this act, of a trust that is the subject of a qual ified
disposition, or against any person involved in the counseling,
drafting, preparation, execution, or funding of a trust that is the
subject of a qualified disposition, if, as of the date such action
is brought, an action by a creditor with respect to such qualified
disposition would be barred under Section 25 through Section 28 of
this act. A court of this state has exclusive jurisdiction ove r an
action brought under a claim for relief that is based on a transfer
of property to a trust that is the s ubject of this section. A court
of this state may award attorney fees and costs to the prevailing
party in such an action. In any action descri bed in this section,
the burden to prove the matter by clear and convincing evid ence is
upon the creditor.
SECTION 30. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 1315 of Title 60, unless there
is created a duplication in numbering, reads as follows:
If more than one qualifie d disposition is made by means of the
same trust instrument:
1. The making of a subsequent qualified disposition shall be
disregarded in determining whether a creditor's claim with respect
to a prior qualified disposition is extinguished as provided in
Section 26 of this act; and
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2. Any distribution to a beneficiary is deemed to have been
made from the latest such qualified disposition.
SECTION 31. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 1316 of Title 60, unless there
is created a duplication in numbering, reads as fol lows:
1. Notwithstanding the provisions of Section 25 through Section
30 of this act, but subject to paragraph 2 of this section, Sections
16 through 33 of this act do not apply in any respect to any pers on
to whom at the time of transfer the transferor i s indebted on
account of an agreement or order of court for the payment of support
or alimony in favor of the transferor's spouse, former spouse, or
children, or for a division or distribution of property in favor of
the transferor's spouse or former spous e, to the extent of the debt.
2. If the transferor is married at the time of the transfer,
the provisions of Section 25 through Section 30 of this act, apply
to:
a. any of the transferor's separa te property transferred
to the trust, and
b. any marital property transferred to the trust if th e
spouse or former spouse was provided with notice in
the form set forth in paragraph 3 of this section, or
executed a written consent to t he transfer after being
provided the information set forth in the notice.
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3. For purposes of the application of this section, a notice of
transfer of property to a trust subje ct to Sections 16 through 33 of
this act:
a. shall also contain the followi ng language in capital
letters, at or near the top of the notice: YOUR
SPOUSE IS CREATING A PERMANENT TRUST INTO WHICH
PROPERTY IS BEING TRANSFERRED. YOUR RIGHTS TO THIS
PROPERTY MAY BE AFFECTED DURING YOUR MARRIAGE, UPON
DIVORCE (INCLUDING THE PAYMENT OF CHILD SUPPORT OR
ALIMONY OR A DIVISION OR DISTRIBUTION OF PROPERTY IN A
DIVORCE), OR AT THE DEATH OF YOUR SPOUSE. YOU HAVE A
VERY LIMITED PERIOD OF TIME TO OBJECT TO THE TR ANSFER
OF PROPERTY INTO THIS TRUST. YOU MAY, UPON REQUEST TO
THE TRUSTEE AT THE ADDRESS BELOW, BE FURNISHED A CO PY
OF THE TRUST DOCUMENT. IF YOU HAVE ANY QUESTIONS, YOU
SHOULD IMMEDIATELY SEEK INDEPENDENT LEGAL ADVICE. IF
YOU FAIL TO OBJECT WITHIN THE R EQUIRED TIME PERIOD,
YOU WILL HAVE CONSENTED TO THE TRANSFER OF PROPERTY
INTO THIS TRUST,
b. shall contain a descrip tion of the property being
transferred to the trust and the name of the trust,
c. may require that any person who is eligible to receive
information pursuant to this section be bound by the
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duty of confidentiality that b inds the trustee before
receiving such information from the trustee, and
d. shall be provided by the transferor, the transferor's
agent, the trustee, or other fiduciary of the trust.
4. If a notice is provided under this section before the
property is transferred, the period to commence an action under
Section 26 of this act shall commence running on the date of the
transfer. If a notice is provided after the date the property is
transferred, the period t o commence an action pursuant to Section 26
of this act commences running on the date the n otice is provided.
5. The exception contained in paragraph 1 of this section does
not apply to any claim for forced heirship or legitime .
SECTION 32. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 1317 of Title 60, unless there
is created a duplication in numbering, reads as follows:
A qualified disposition is avoided only to the e xtent necessary
to satisfy the transferor's debt to the creditor at whose instance
the disposition had been avoided , together with such costs,
including attorney fees, as the court may allow. If any qualified
disposition is avoided as provided in this se ction, then:
1. If the court is satisfied that a qualified person has not
acted in bad faith in accepting or admin istering the property that
is the subject of the qualif ied disposition:
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a. such qualified person has a first and paramount lien
against the property that is the subject of the
qualified disposition in an amount equal to the e ntire
cost, including attorney fees, properly incurred by
such qualified person in the defense of the action or
proceedings to avoid the qualified disposition. It is
presumed that such qualified person did not act in bad
faith merely by accepting such p roperty, and
b. the qualified disposition is avoided subj ect to the
proper fees, costs, preexisting rights, claims, and
interests of such qualified person, and of any
predecessor qualified person that has not acted in bad
faith, and
2. If the court is satisfied that a benefic iary of a trust has
not acted in bad faith, the avoidance of the qualified disposition
is subject to the right of such beneficiary to retain any
distribution made upon the exercise of a trust power or discretion
vested in the qualif ied person or qualified persons of such trust,
which power or discretion was properly ex ercised prior to the
creditor's commencement of an action to avoid the qualified
disposition. It is presumed that the beneficiary, including a
beneficiary who is also a transferor of the trust , did not act in
bad faith merely by creating the trust or by a ccepting a
distribution made in accordance with the terms of the trust.
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SECTION 33. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 1318 of Title 60, unless there
is created a duplication in numbering, reads as follows:
A. The following provisions apply only to discretionary
interests:
1. A discretionary interest is neither a property interest nor
an enforceable right. It is a mere expectancy;
2. No creditor may force a distribution with regard to a
discretionary interest. No creditor may require the trustee to
exercise the trustee's discretion to make a distribution with regard
to a discretionary interest;
3. A court may review a trustee's distribution discretion onl y
if the trustee:
a. acts dishonestly,
b. acts with an improper motive , or
c. fails, if under a duty to do so, to act.
B. A reasonableness standard may not be applied to the exercise
of discretion by the trustee with regard to a discre tionary
interest. Other than for the three circums tances listed in this
subdivision, a court has no jurisdiction to review the trustee's
discretion or to force a distribution.
C. Absent express language to the contrar y, in the event that
the distribution language in a discretionary interest permits
unequal distributions between beneficiaries or distributions to the
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exclusion of other benefi ciaries, the trustee may distribute all of
the accumulated, accrued, or undistri buted income and principal to
one beneficiary in the trustee's discretion.
D. Regardless of whether a beneficiary has any outstanding
creditor, a trustee of a discretionary in terest may directly pay any
expense on behalf of such beneficiary and may exhaus t the income and
principal of the trus t for the benefit of such beneficiary. No
trustee is liable to any creditor for paying the expenses of a
beneficiary of a discretionary i nterest.
SECTION 34. NEW LAW A new section of law to be c odified
in the Oklahoma Statutes as Se ction 1401 of Title 60, unless there
is created a duplication in numbering, reads as follows:
For all trusts created under this title , the rules against
perpetuities shall not apply, it being the intent that trusts
created in Oklahoma may have perpetual durat ion if a timing
provision or limit is not speci fied in the trust document.
SECTION 35. This act shall become effective November 1, 2024.
59-2-9501 JL 01/16/24