The passage of the Massachusetts Uniform Trust Code (MUTC) in July 2012 marked the second major piece of legislation in Massachusetts this year relating to estates and trusts. (The Massachusetts Uniform Probate Code (MUPC) was signed into law on March 31, 2012.) The MUTC includes provisions which are intended to give trustees flexibility in administering trusts and reduce the need for court intervention. The law also clarifies and in some cases enhances the rights of trust beneficiaries.
Trusts that were in place before, on or after the effective date of the MUTC (July 8, 2012) are impacted by most provisions of the law. Some of the MUTC’s provisions may be overridden by the terms of a trust instrument.
While the changes are important to lawyers who specialize in estate planning, they are also crucial for consumers who have trusts as part of their estate plans.
Abbreviated information about some of the MUTC’s key provisions follows:
Trusts that are signed after the effective MUTC date are presumed revocable unless the instrument expressly states that the trust is irrevocable; this is a noteworthy change from the previous law.
Keeping Beneficiaries Informed: A Trustee Requirement
Under this law, a trustee must now keep “qualified beneficiaries” (a new concept under the MUTC) informed of the trust administration and must provide certain information about the trust as requested by beneficiaries. Within 30 days of being appointed a trustee of an irrevocable trust, or within 30 days of a previously-revocable trust becoming irrevocable, the trustee must notify beneficiaries in writing of the trustee’s name and address. These provisions may be waived in the trust document to some extent, which may be desirable for people who establish trusts but are not ready for their family/intended beneficiaries to be privy to the trust’s existence.
This provision essentially protects beneficiaries who are under a legal disability (whether because of age, incapacity or otherwise) by providing a method for them to be represented by other individuals (such as a guardian, trustee, fellow beneficiary or parent). In the past, trust proceedings that could affect the rights of minor, unborn, incapacitated or unascertainable beneficiaries would necessitate a court-appointed guardian ad litem, a process that would cause delay and added expense.
Trust Modification or Termination
A court may approve more liberal modifications or terminations of certain irrevocable trusts provided that all interested parties consent. Trusts may also be combined or divided for tax or other administrative reasons without court approval, and trustees may now terminate a trust with a value of less than $200,000 if the administrative costs do not warrant maintaining the trust. NOTE: Individuals who may not be comfortable with these or other provisions should be sure that their trusts are drafted so as to override these defaults.
Previous to the new law, a trustee could only be removed for cause. Now, the court may remove a trustee if removal serves the best interest of the beneficiaries and is not inconsistent with the material purpose of the trust
Majority Rule Change
Trustees may now act by majority decision. Previously, Massachusetts law required that trustees reach a unanimous decision (unless the trust provided otherwise).
If you have questions about how these or other aspects of the MUTC may affect your estate documents, or if you want to have your trust documents reviewed to understand how they interact with the current law, we are available to help.
Click here to read the May 16, 2012 blog: Massachusetts Uniform Probate Code In Effect