Bill Text: GA SB131 | 2009-2010 | Regular Session | Engrossed
Bill Title: The Revised Georgia Trust Code of 2009; comprehensively revise provisions relating to trusts
Spectrum: Slight Partisan Bill (Republican 3-1)
Status: (Passed) 2010-07-01 - Effective Date [SB131 Detail]
Download: Georgia-2009-SB131-Engrossed.html
09 LC 34
2181S(SCS)
ate
Bill 131
By:
Senators Hamrick of the 30th, Cowsert of the 46th, Crosby of the 13th and Tarver
of the 22nd
AS
PASSED SENATE
A
BILL TO BE ENTITLED
AN ACT
AN ACT
To
amend Title 53 of the Official Code of Georgia Annotated, relating to wills,
trusts, and estates, so as to provide a short title; to comprehensively revise
provisions relating to trusts, charitable trusts, trustees, and trust
investments; to provide for general provisions relating to trusts; to provide
for the creation and validity of express trusts; to provide for revocable
trusts; to provide for reformation, modification, division, consolidation, and
termination of trusts; to provide for creditors' claims and spendthrift and
discretionary provisions; to provide for testamentary additions to trusts; to
provide for implied trusts; to provide for creation by deed to acquire
beneficial interest; to provide for charitable trusts; to provide for trustees,
their appointment, and their compensation; to provide for resignation and
removal; to provide for interim accounting and final accounting; to provide for
trustees' duties and powers, certification or trusts, and registration and
deposit of securities; to provide for trustee liability; to provide for foreign
entities and non-residents acting as trustees; to provide for trust investments;
to enact the Georgia Principal and Income Act; to provide for appointment at the
beginning and end of income interest; to provide for allocation of receipts
during administration of trust; to provide for related matters; to amend Code
Section 7-1-242 of the Official Code of Georgia Annotated, relating to
restrictions on corporate fiduciaries, so as to provide that nonprofit
corporations and other entities may lawfully act as a fiduciary; to repeal
conflicting laws; and for other purposes.
BE
IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION
1.
This
Act shall be known and may be cited as "The Revised Georgia Trust Code of
2009."
SECTION
2.
Title
53 of the Official Code of Georgia Annotated, relating to wills, trusts, and
estates, is amended by repealing in its entirety Chapter 12, relating to trusts,
and inserting in its place the following:
"CHAPTER
12
ARTICLE 1
ARTICLE 1
53-12-1.
Except
to the extent it would impair vested rights and except as otherwise provided by
law, the provisions contained in this chapter shall apply to any trust
regardless of the date it was created.
53-12-2.
As
used in this chapter the term:
(1)
'Ascertainable standard' means a standard relating to an individual's health,
education, support, or maintenance within the meaning of Section 2041(b)(1)(A)
or 2514(c)(1) of the federal Internal Revenue Code of 1986.
(2)
'Beneficiary' means a person for whose benefit property is held in trust,
regardless of the nature of the interest, and includes any beneficiary, whether
vested or contingent, born or unborn, ascertained or unascertained.
(3)
'Express trust' means a trust as described in Code Section
53-12-20.
(4)
'Grantor' means settlor.
(5)
'Implied trust ' means a resulting trust as described in Code Section 53-12-130
or a constructive trust as described in Code Section 53-12-132.
(6)
'Person' means an individual, corporation, partnership, association, joint-stock
company, business trust, unincorporated organization, limited liability company,
or other legal entity, including any of the foregoing acting as a
fiduciary.
(7)
'Property' means any type of property, whether real or personal, tangible or
intangible, legal or equitable.
(8)
'Qualified beneficiary' means a living individual or other existing person who,
on the date of determination of beneficiary status:
(A)
Is a distributee or permissible distributee of trust income or
principal;
(B)
Would be a distributee or permissible distributee of trust income or principal
if the interests of the distributees described in subparagraph (A) of this
paragraph terminated on that date without causing the trust to terminate;
or
(C)
Would be a distributee or permissible distributee of trust income or principal
if the trust terminated on that date.
(9)
'Settlor' means the person who creates the trust, including a testator in the
case of a testamentary trust. The terms 'grantor' and 'trustor' mean the same
as 'settlor.'
(10)
'Trust' means an express trust or an implied trust.
(11)
'Trust instrument' means the document or documents, including any testamentary
instrument, that contains the trust provisions.
(12)
'Trust property' means property the legal title to which is held by the trustee.
The term also includes choses in action, claims, and contract rights, including
a contractual right to receive death benefits as designated beneficiary under a
policy of insurance, contract, employees' trust or other arrangement. The terms
'trust corpus' and 'trust res' mean the same as 'trust property.'
(13)
'Trustee' means the person or persons holding legal title to the property in
trust.
(14)
'Trustor' means settlor.
53-12-3.
Except
to the extent that the principles of common law and equity governing trusts are
modified by this chapter or another provision of law, those principles remain
the law of the state.
53-12-4.
(a)
As to real property, the validity of a trust is determined by the law of the
situs of the real property.
(b)
As to all other property, the validity of a trust is determined by:
(1)
The law of the jurisdiction designated in the trust instrument unless the effect
of the designation is contrary to the public policy of the jurisdiction having
the most significant relationship to the matter at issue; or
(2)
In the absence of an effective designation in the trust instrument, the law of
the jurisdiction having the most significant relationship to the matter at
issue.
53-12-5.
The
meaning and effect of the trust provisions are determined by:
(a)
The law of the jurisdiction designated in the trust instrument unless the effect
of the designation is contrary to the public policy of the jurisdiction having
the most significant relationship to the matter at issue; or
(b)
In the absence of an effective designation in the trust instrument, the law of
the jurisdiction having the most significant relationship to the matter at
issue.
53-12-6.
(a)
Trusts are peculiarly subjects of equity jurisdiction. Suits by or against a
trustee which sound at law may be filed in a court of law.
(b)
Actions concerning the construction, administration, or internal affairs of a
trust shall be maintained in superior court except as otherwise provided in Code
Section 15-9-127.
(c)
Any action by or against the trustee or to which the trustee is a party may be
maintained in any court having jurisdiction over the parties and the subject
matter except as provided in subsection (b) of this Code section.
53-12-7.
(a)
The effect of the provisions of this chapter and Chapters 13 through 15 may be
varied by the trust instrument except:
(1)
As to any requirements in Article 2 of this chapter relating to the creation and
validity of express trusts;
(2)
As to the effect of the rules as provided in Article 5 of this chapter relating
to spendthrift trusts;
(3)
As to the power of the beneficiaries to modify a trustee's compensation as
provided in Code Section 53-14-6;
(4)
As to the duty of a trustee to administer the trust and to exercise
discretionary powers in good faith, as provided in Code Sections 53-14-30 and
53-14-38;
(5)
As to the effect of a provision relieving a trustee from liability, as provided
in Code Section 53-14-53; and
(6)
As to the periods of limitation on actions, as provided in Code Sections
53-12-25 and 53-14-57.
(b)
Nothing in a trust instrument shall prohibit or limit a court from taking any
actions authorized by the provisions of this chapter or Chapters 13 through 15
or as otherwise provided by law.
ARTICLE
2
53-12-20.
(a)
An express trust shall be created or declared in writing and signed by the
settlor or an agent for the settlor acting under a power of attorney containing
express authorization.
(b)
An express trust shall have each of the following elements, ascertainable with
reasonable certainty:
(1)
An intention by a settlor to create a trust;
(2)
Trust property;
(3)
Except for charitable trusts, a beneficiary who is reasonably ascertainable at
the time of the creation of the trust or reasonably ascertainable within the
period of the rule against perpetuities;
(4)
A trustee; and
(5)
Trustee duties specified in the writing or provided by law.
(c)
The requirement that a trust have a reasonably ascertainable beneficiary is
satisfied if under the trust instrument the trustee or some other person has the
power to select the beneficiaries based on a standard or in the discretion of
the trustee or other person.
53-12-21.
(a)
No formal words are necessary to create an express trust.
(b)
Words otherwise precatory in nature will create a trust only if they are
sufficiently imperative to show a settlor's intention to impose enforceable
duties on a trustee, and if all other elements of an express trust are
present.
53-12-22.
(a)
A trust may be created for any lawful purpose.
(b)
A condition in terrorem shall be void unless there is a direction in the trust
instrument as to the disposition of the property if the condition in terrorem is
violated, in which event the direction in the trust instrument shall be carried
out.
53-12-23.
A
person has capacity to create an inter vivos trust to the extent that person has
legal capacity to transfer title to property inter vivos. A person has capacity
to create a testamentary trust to the extent that person has legal capacity to
devise or bequeath property by will.
53-12-24.
No
trust is invalid or terminated and no merger of title to trust property occurs
merely because the trustee or trustees are the same person or persons as the
beneficiary or beneficiaries of the trust.
53-12-25.
(a)
Transfer of property to a trust requires a transfer of legal title to the
trustee.
(b)
For any interest in real property to become trust property in a trust of which
any transferor is a trustee, the instrument of conveyance shall additionally be
recorded in the appropriate real property records.
53-12-26.
Property
may be added to an existing trust from any source in any manner if the addition
is not prohibited by the trust instrument and the property is acceptable to the
trustee.
53-12-27.
When
the construction of an express trust is at issue, the court may hear parol
evidence of the circumstances surrounding the settlor at the time of the
execution of the trust and parol evidence to explain all ambiguities, both
latent and patent.
53-12-28.
(a)
A trust may be created to provide for the care of an animal that is alive during
the settlor's lifetime. The trust terminates upon the death of the animal or, if
the trust was created to provide for the care of more than one animal alive
during the settlor's lifetime, upon the death of the last surviving
animal.
(b)
A trust authorized by this Code section may be enforced by a person appointed in
the trust instrument or, if no person is so appointed, by a person appointed by
the court. A person having an interest in the welfare of the animal may request
the court to appoint a person to enforce the trust or to remove a person
appointed.
(c)
Upon termination of a trust authorized by this Code section, the trustee shall
transfer any unexpended trust property in the following order:
(1)
As directed in the trust instrument;
(2)
If the trust was created in a nonresiduary clause in the settlor's will or in a
codicil to the settlor's will, under the residuary clause in the settlor's will;
and
(3)
If no taker is produced by the application of paragraph (1) or (2) of this
subsection, to the settlor, if living, and if not to the settlor's heirs, as
determined under Code Section 53-2-1.
ARTICLE
3
53-12-40.
(a)
A settlor shall have no power to modify or revoke a trust in the absence of an
express reservation of such power.
(b)
A power to revoke will be deemed to include a power to modify and an
unrestricted power to modify will be deemed to include a power to
revoke.
(c)
Any revocation or modification of an express trust must be in writing and signed
by the settlor.
53-12-41.
In
exercising a power to modify the trust instrument, the settlor may not enlarge
the duties or liabilities of the trustee without the trustee's express
consent.
53-12-42.
A
trustee is not liable for failing to act in accordance with the terms and
conditions of an amendment or revocation of a trust of which the trustee had no
notice.
53-12-43.
(a)
A settlor's powers with respect to revocation, amendment, or distribution of
trust property may be exercised by an agent under a power of attorney only to
the extent expressly authorized by the trust instrument and the
power.
(b)
A settlor's powers with respect to revocation, amendment, or distribution of
trust property may be exercised by the settlor's conservator only as provided in
Code Section 29-5-23.
53-12-44.
No
trust shall be considered to be revocable merely because the life beneficiary
has a reversion in or a power of appointment over assets of the trust or because
the life beneficiary's heirs or estate have a remainder interest
therein.
53-12-45.
(a)
Any judicial proceeding to contest the validity of a trust that was revocable
immediately before the settlor's death must be commenced within two years of the
settlor's death.
(b)
Upon the death of the settlor of a trust that was revocable immediately before
the settlor's death, the trustee may proceed to distribute the trust property in
accordance with the trust provisions. The trustee is not subject to liability
for doing so unless:
(1)
The trustee knows of a pending judicial proceeding contesting the validity of
the trust; or
(2)
A potential contestant has notified the trustee in writing of a possible
judicial proceeding to contest the trust and a judicial proceeding is commenced
within 60 days after the contestant sent the notification.
(c)
A beneficiary of a trust that is determined to have been invalid is liable to
return any distribution received.
ARTICLE
4
53-12-60.
(a)
If it is proved by clear and convincing evidence that the trust provisions were
affected by a mistake of fact or law, whether in expression or inducement, the
court may reform the trust provisions, even if unambiguous, to conform the
provisions to the settlor's intention.
(b)
A petition for reformation may be filed by the trustee or any beneficiary, or,
in the case of an unfunded testamentary trust, the personal representative of
the settlor's estate.
(c)
Notice of a petition for reformation of the trust shall be given to the trustee
and all beneficiaries.
53-12-61.
The
trust instrument may confer upon a trustee or other person a power to modify the
trust.
53-12-62.
(a)
The court may:
(1)
Modify the administrative or dispositive provisions of a trust if, owing to
circumstances not known to or anticipated by the settlor, compliance with the
provisions of the trust would defeat or substantially impair the accomplishment
of the purposes of the trust;
(2)
Modify the administrative provisions of a trust if continuation of the trust
under its existing provisions would impair the trust's administration;
or
(3)
Modify the trust by the appointment of an additional trustee or special
fiduciary if the court considers the appointment necessary for the
administration of the trust.
(b)
A petition for modification may be filed by the trustee or any beneficiary or,
in the case of an unfunded testamentary trust, the personal representative of
the settlor's estate.
(c)
Notice of a petition to modify the trust shall be given to the trustee and all
beneficiaries.
(d)
The court may modify the trust regardless of whether it contains spendthrift or
other similar protective provisions.
(e)
An order for modification shall conform as nearly as practicable to the
intention of the settlor.
53-12-63.
(a)
The court may order the division of a single trust into two or more trusts or
the consolidation of two or more trusts into a single trust if the division or
consolidation:
(1)
Is consistent with the intent of the settlor with regard to any trust to be
consolidated or divided;
(2)
Would facilitate administration of the trust or trusts; and
(3)
Would be in the best interest of all beneficiaries.
(b)
A petition for division or consolidation may be filed by the trustee or any
beneficiary or, in the case of an unfunded testamentary trust, the personal
representative of the settlor's estate.
(c)
Notice of a petition to divide or consolidate a trust or trusts shall be given
to the trustee and all beneficiaries of each trust.
(d)
Subsection (a) of this Code section may apply to one or more trusts created by
the same or different instruments or by the same or different
persons.
(e)
Subsection (a) of this Code section shall not limit the right of the trustee
acting in accordance with the applicable provisions of the governing instrument
to divide or consolidate trusts.
53-12-64.
(a)
The trust instrument may confer upon a trustee or other person a power to
terminate the trust.
(b)
The court may terminate a trust and order distribution of the trust property
if:
(1)
The costs of administration are such that the continuance of the trust, the
establishment of the trust if it is to be established, or the distribution from
a probate estate would defeat or substantially impair the purposes of the
trust;
(2)
The purpose of the trust has been fulfilled or become illegal or impossible of
fulfillment; or
(3)
Owing to circumstances not known to or anticipated by the settlor, the
continuance of the trust would defeat or substantially impair the accomplishment
of the purposes of the trust.
(c)
A petition for termination may be filed by the trustee or any beneficiary or, in
the case of an unfunded testamentary trust, the personal representative of the
settlor's estate.
(d)
Notice of a petition to terminate the trust shall be given to the trustee, all
beneficiaries, any holder of a power of appointment over the trust property, and
such other persons as the court may direct.
(e)
The court may terminate the trust regardless of whether it contains spendthrift
or other similar protective provisions.
(f)
Distribution of the trust property under the order for termination shall be made
to or among the current beneficiaries and the vested remainder beneficiaries,
or, if there are no vested remainder beneficiaries, among the current
beneficiaries and the contingent remainder beneficiaries. The order shall
specify the appropriate share, if any, of each current and remainder beneficiary
who is to share in the proceeds of the trust, so as to conform as nearly as
practicable to the intention of the settlor or testator. The order may direct
that the interest of a minor beneficiary, or any portion thereof, be converted
into qualifying property and distributed to a custodian pursuant to Article 5 of
Chapter 5 of Title 44, 'The Georgia Transfers to Minors Act.'
53-12-65.
(a)
After notice to the qualified beneficiaries, the trustee of a trust consisting
of trust property either having a total value less than $50,000.00 or for which
the trustee's annual fee for administering the trust is 5 percent or more of the
market value of the principal assets of the trust as of the last day of the
preceding trust accounting year may terminate the trust if the trustee concludes
that the value of the trust property is insufficient to justify the cost of
administration.
(b)
The court may modify or terminate a trust or remove a trustee and appoint a
different trustee if it determines that the value of the trust property is
insufficient to justify the cost of administration.
(c)
Upon termination of a trust under this Code section, the trustee shall
distribute the trust property in a manner consistent with the purposes of the
trust.
(d)
This Code section shall not apply to an easement for conservation.
ARTICLE
5
53-12-80.
(a)
As used in this Code section, the term 'spendthrift provision' means a provision
in a trust instrument that prohibits transfers of a beneficiary's interest in
the income or principal or both.
(b)
A spendthrift provision is valid only if it prohibits both voluntary and
involuntary transfers.
(c)
A term of a trust providing that the interest of a beneficiary is held subject
to a spendthrift trust, or words of similar import, is sufficient to restrain
both voluntary and involuntary transfer of the beneficiary's interest in the
manner set forth in this article.
(d)
A beneficiary may not transfer an interest in a trust in violation of a valid
spendthrift provision and, except as otherwise provided in this Code section, a
creditor or assignee of the beneficiary may not reach the interest or a
distribution by the trustee before its receipt by the beneficiary.
(e)
A spendthrift provision is not valid as to the following claims against a
beneficiary's right to a current distribution to the extent the distribution
would be subject to garnishment under the laws of this state if the distribution
were disposable earnings:
(1)
Alimony or child support;
(2)
Taxes or other governmental claims; or
(3)
Judgments for necessaries.
The
ability of a creditor or assignee to reach a beneficiary's interest under this
subsection will not apply to the extent it would disqualify the trust as a
special needs trust established pursuant to 42 U.S.C. Sections 1396p(d)(4)(A),
1396p(d)(4)(C).
(f)
A provision in a trust instrument that a beneficiary's interest shall terminate
or become discretionary upon an attempt by the beneficiary to transfer it, an
attempt by the beneficiary's creditors to reach it, or upon the bankruptcy or
receivership of the beneficiary shall be valid except to the extent of the
proportion of trust property attributable to that beneficiary's
contribution.
(g)
If a beneficiary is also a contributor to the trust, a spendthrift provision is
not valid as to that beneficiary to the extent of the proportion of trust
property attributable to that beneficiary's contribution. This subsection shall
not apply to a special needs trust established pursuant to 42 U.S.C. Sections
1396p(d)(4)(A) or 1396p(d)(4)(C).
(h)
Notwithstanding any other provision in this Code section, a spendthrift
provision in a pension or retirement arrangement described in sections 401, 403,
404, 408, 408A, 409, 414, or 457 of the federal Internal Revenue Code of 1986,
is valid with reference to the entire interest of the beneficiary in the income,
principal or both, even if the beneficiary is also a contributor of trust
property, except where a claim is made pursuant to a qualified domestic
relations order as defined in 26 U.S.C. Section 414(p).
53-12-81.
A
transferee or creditor of a beneficiary may not compel the trustee to pay any
amount that is payable only in the trustee's discretion regardless of whether
the trustee is also a beneficiary. This Code section does not apply to the
extent of the proportion of trust property attributable to the beneficiary's
contribution.
53-12-82.
Whether
or not the trust instrument contains a spendthrift provision, the following
rules apply:
(1)
During the lifetime of the settlor, the property of a revocable trust is subject
to claims of the settlor's creditors;
(2)
With respect to an irrevocable trust, creditors or assignees of the settlor may
reach the maximum amount that can be distributed to or for the settlor's benefit
during the settlor's life or that could have been distributed to or for the
settlor's benefit immediately prior to the settlor's death. If a trust has more
than one settlor, the amount the creditors or assignees of a particular settlor
may reach may not exceed the settlor's interest in the portion of the trust
attributable to that settlor's contribution; and
(3)
After the death of a settlor, and subject to the settlor's right to direct the
source from which liabilities will be paid, the property of a trust that was
revocable at the settlor's death or had become irrevocable as a result of the
settlor's incapacity is subject to claims of the settlor's creditors to the
extent the probate estate is inadequate. Payments that would not be subject to
the claims of the settlor's creditors if made by way of beneficiary designation
to persons other than the settlor's estate shall not be made subject to such
claims by virtue of this subsection unless otherwise provided in the trust
instrument.
53-12-83.
The
holder of a power of withdrawal, during the period that the power may be
exercised, is treated in the same manner as the settlor of a revocable trust to
the extent of the property subject to the power. The lapse, release, or waiver
of a power of withdrawal shall not cause the holder to be treated as a settlor
of the trust.
ARTICLE
6
Part 1
Part 1
53-12-100.
This
part shall be known and may be cited as the 'Georgia Testamentary Additions to
Trusts Act.'
53-12-101.
(a)
A devise or bequest, the validity of which is determinable by the law of this
state, may be made by a will to the trustee or trustees of a trust established
or to be established by the testator or by the testator and some other person or
persons or by some other person or persons, including a funded or unfunded life
insurance trust, even if the trustor has reserved any or all rights of ownership
of the insurance contracts, if the trust is identified in the testator's will
and its provisions are set forth in a written instrument, other than a will,
executed before or concurrently with the execution of the testator's will or in
the valid last will of a person who has predeceased the testator, regardless of
the existence, size, or character of the corpus of the trust and notwithstanding
the requirements of paragraph (2) of subsection (b) of Code Section 53-12-20.
The devise or bequest shall not be invalid because the trust is amendable or
revocable or both or because the trust was amended after the execution of the
will or after the death of the testator.
(b)
Unless the testator's will provides otherwise, the property so devised or
bequeathed:
(1)
Shall not be deemed to be held under a testamentary trust of the testator but
shall become a part of the trust to which it is devised or bequeathed;
and
(2)
Shall be administered and disposed of in accordance with the provisions of the
instrument or will setting forth the terms of the trust, including any
amendments thereto made before or after the testator's death.
(c)
Unless the testator's will provides otherwise, a revocation or termination of
the trust before the death of the testator shall cause the devise or bequest to
lapse.
53-12-102.
The
trustee or trustees of a trust established by the testator or others as provided
in Code Section 53-12-101 shall not be required to inquire into or audit the
actions of the executor or executors of the testator's estate or to make any
claim against the executor or executors unless specifically directed to do so by
the settlor or settlors in the trust instrument. In the event that the trustee
or trustees are authorized or directed by the settlor or settlors in the trust
instrument to pay or advance any part or all of the trust property to the
executor or executors of the testator's estate for the payment of debts, taxes,
and expenses of administration of the testator's estate, the trustee or trustees
shall not be liable for the application of the trust property so paid or
advanced and shall not be liable for any act done or omitted to be done by the
executor or executors with regard to the trust property.
53-12-103.
This
part shall apply to all devises or bequests made in the will of a testator dying
on or after May 31, 1968, whether the will is executed before or after such
date. This part shall not invalidate a devise or bequest to a trustee made by a
will executed prior to May 31, 1968, by a testator dying prior to such
date.
Part
2
53-12-120.
A
trust under a testator's will may be designated as the beneficiary of the
testator's qualified retirement plan, individual retirement account, other
retirement plan, or life insurance policies on the life of the testator so long
as the testator's will is admitted to probate in solemn form, whether the
designation occurs before or after the execution of the will. Unless the
beneficiary designation provides otherwise, the designation of a trust under a
will as beneficiary shall not be treated as the designation of the testator's
estate as beneficiary nor shall such property, once delivered to the trustee
under the testator's will, be deemed to be part of the testator's
estate.
ARTICLE
7
53-12-130.
A
resulting trust is a trust implied for the benefit of the settlor or the
settlor's successors in interest when it is determined that the settlor did not
intend that the holder of the legal title to the trust property also should have
the beneficial interest in the property, under any of the following
circumstances:
(1)
A trust is created but fails, in whole or in part, for any reason;
(2)
A trust is fully performed without exhausting all the trust property;
or
(3)
A purchase money resulting trust as defined in subsection (a) of Code Section
53-12-132 is established.
53-12-131.
(a)
A purchase money resulting trust is a resulting trust implied for the benefit of
the person paying consideration for the transfer to another person of legal
title to real or personal property.
(b)
Except as provided in subsection (c) of this Code section, the payment of
consideration as provided in subsection (a) of this Code section shall create a
presumption in favor of a resulting trust, but such presumption is rebuttable by
a preponderance of the evidence.
(c)
If the payor of consideration and transferee of the property as provided in
subsection (a) of this Code section are husband and wife, parent and child, or
siblings, a gift shall be presumed, but such presumption is rebuttable by clear
and convincing evidence.
53-12-132.
(a)
A constructive trust is a trust implied whenever the circumstances are such that
the person holding legal title to property, either from fraud or otherwise,
cannot enjoy the beneficial interest in the property without violating some
established principle of equity.
(b)
The person claiming the beneficial interest in the property may be found to have
waived the right to a constructive trust by subsequent ratification or long
acquiescence.
53-12-133.
In
all cases in which a trust is sought to be implied, the court may hear parol
evidence of the nature of the transaction, the circumstances, and the conduct of
the parties, either to imply or rebut the trust.
ARTICLE
8
53-12-150.
As
used in this article, the term:
(1)
'Deed' means and includes any written agreement, declaration of trust, or other
instrument which creates a trust estate in the trustee or trustees named therein
and sets forth the terms and conditions of the trust and which indicates an
intention, either expressly or by implication, that the trust estate created
therein should be subject to this article, but the term shall not include a
warranty deed, quitclaim deed, bill of sale, or other instrument that conveys
title to property to a trustee, merely by virtue of such fact
alone.
(2)
'Estate' means any alienable interest in property, legal or equitable, freehold
or nonfreehold, possessory or nonpossessory.
(3)
'Property' means and includes improved or unimproved property, real or personal,
leaseholds, mortgages, notes, or other obligations secured by property or any
interest therein, or other interests in such property.
53-12-151.
The
owners of property located in this state or persons desiring to acquire
beneficial ownership of such property may create by deed an estate therein and
in the improvements made thereon and in the property to be acquired, for the
benefit of themselves and such other persons, whether sui juris or not, who may
contribute to the improvement or development or acquisition of the property and
their assigns or transferees, provided that the deed creating the estate shall
provide for the improvement or development of the property covered thereby or
for the acquisition of the property and the trustee or trustees therein named
and their successors shall have some active duty to perform in and about the
trust property or the management or control of the same. The deed creating the
estate shall be recorded as provided in Code Section 53-12-152. When such an
estate is created, the legal title to the property and all the property added
thereto or substituted therefor shall vest and remain in the trustee or trustees
named and his or their successors, in accordance with the terms of the deed,
with all the powers conferred thereby upon the trustee, and shall not during the
continuance of the estate pass to or vest in the beneficiaries. At the end of 25
years from the date of the deed creating the estate, the title to such of the
property as may then belong to the estate shall vest in the beneficiaries; and,
if the deed creating the estate so provides, a renewal of the estate may be made
at the end of the 25 years, upon the terms and conditions and in the manner
therein set forth, for a like period; provided, however, that in the alternative
to the period of 25 years and the renewal thereof, if the deed so provides, the
estate may be created for any period of time specified therein which does not
extend beyond any number of lives in being and 21 years thereafter.
53-12-152.
(a)
The deed creating a trust estate as provided in Code Section 53-12-151 shall,
within 30 days of the execution thereof, be filed by the trustee in the office
of the clerk of the superior court of the county in which the principal office
of the trust is located. The trustee shall concurrently pay to the clerk the fee
prescribed in Code Section 15-6-77. Upon the deed being filed with the clerk and
the fees being paid, the clerk shall forthwith deliver to the trustee or his
attorney two certified copies of the deed, the filing of the clerk thereon, and
a receipt for the costs which have been paid to the clerk.
(b)
Upon receiving the two certified copies of the deed, the trustee or his or her
attorney shall present the same to the Secretary of State and shall concurrently
therewith pay $5.00 to the Secretary of State for the use of the state. The
Secretary of State shall thereupon attach to one of the certified copies of the
deed a certificate in substantially the following form:
STATE
OF GEORGIA
OFFICE
OF THE SECRETARY OF STATE
This
is to certify that a copy of the attached certified copy of a deed, declaration,
or agreement of trust dated _______________________, by and between
__________________________ as grantor(s) and _______________________ as
trustee(s), which states that the trustee(s) may use the name of
_______________________, has been duly filed in the office of the Secretary of
State and the fees paid therefor, as provided by law.
WITNESS
my hand and official seal this ______ day of ______________, ____.
___________________
Secretary of State
Secretary of State
(c)
The certified copy of the deed, together with the certificate of the Secretary
of State thereon, shall be received as evidence in any court or proceeding as
evidence of the existence of the trust and of its nature, terms, and
conditions.
(d)
The Secretary of State, at any time, upon the request of any person, shall make
and certify additional copies of the deed, filing of the clerk, and certificate
of the Secretary of State, upon payment to him of a fee of $1.00, plus 10¢
per 100 words for copying, and the additional certified copies shall be likewise
admitted in evidence with like force and effect.
(e)
Any amendment of a deed shall be filed with the clerk of the superior court and
the Secretary of State in the same manner and under the same conditions required
in the filing of the original deed, and the fees payable upon the filing shall
be computed as if the filing were of an original deed.
53-12-153.
If
the deed creating a trust estate under Code Section 53-12-151 so provides, the
trustee or trustees may conduct and transact the affairs of the trust estate
under a business or trade name, which name shall be set forth in the deed. The
name may include the word 'trust' but may not include the words 'trust
company.'
53-12-154.
When
an estate is created pursuant to Code Section 53-12-151 and from time to time
thereafter, the trustee or trustees shall issue such certificates of beneficial
interest as may be provided for by the deed to the persons who are beneficially
interested in the estate or who become so interested therein in accordance with
the provisions of the deed. The certificates shall pass and be transferred as
personalty and in the same manner as shares of stock in corporations and shall
be subject to levy and sale under attachment or execution or any other process
in like manner as shares of stock. The trustee or person in charge of the estate
representing the trustee shall be subject to the same demand as that provided by
Code Sections 11-8-112 and 9-13-58 for the levying officer to make upon the
officers of a corporation. Persons having claims against the estate may enforce
the same by action against the trustee or trustees thereof in like manner as
actions against corporations, and service thereof may be perfected by serving
the trustee or trustees, if residents of this state, and if not, then by
publication. The venue of such actions shall be the same as that of similar
actions against private corporations, but neither the trustees nor the
beneficiaries of the estate shall be personally or individually liable therefor
except in cases where officers and stockholders of private corporations would be
liable under the law.
53-12-155.
The
trustee or trustees of a trust created under Code Section 53-12-151 shall have
sole and exclusive management and control of the property, in accordance with
the terms of the deed creating the estate. The exercise by the trustee or
trustees of any power granted or conferred by the deed, including the power to
lease, encumber, and sell, when exercised in accordance with the terms thereof,
shall be as valid and effective to all intents and purposes as if the trustee or
trustees were the sole and exclusive owners of the property in his or their own
right. The trustee or trustees may resign or be removed and their successors may
be appointed in the manner and in accordance with the terms fixed by the deed
creating the estate. The same rights, powers, and title over and to the property
shall belong to and be vested in the new trustee or trustees as are conferred
upon the original trustee or trustees by the deed creating the estate. The death
of a trustee shall not operate to cast title upon his heirs, devisees,
executors, or administrators, but the same shall vest in his successor, when
appointed.
53-12-156.
In
addition to investments in any property, as such word is defined in Code Section
53-12-150, the trustee or trustees of a trust created under Code Section
53-12-151 may invest any funds of the trust estate in investments authorized to
be made by trustees under the laws of this state; provided, however, that the
deed creating the estate may further limit or expand the powers and authority of
the trustee or trustees with respect to investments, including the power to
invest in property located outside this state. The trustee or trustees are
authorized and empowered, in accordance with the terms of the deed creating the
estate, from corpus or from income or from both, to repurchase or redeem any
issued and outstanding certificates of beneficial interest.
53-12-157.
Each
trust created pursuant to this article shall make a return to the Secretary of
State, upon the creation of the trust and annually thereafter, in the same
manner and embracing the same information, insofar as applicable, as returns by
corporations which are required to be made under Articles 1 and 16 of Chapter 2
of Title 14, including the provisions with regard to fees, penalty for
noncompliance, and recording and certifying of copies of the
returns.
53-12-158.
Upon
the termination of the estate created under Code Section 53-12-151, the legal
title to all the property belonging to the estate which is then undisposed of
shall pass to and vest in the persons who are, at that time, the beneficiaries
of the estate, in shares corresponding with their respective interest as
beneficiaries.
53-12-159.
(a)
Any trust created pursuant to this article may be merged into a domestic
corporation for profit organized under the laws of this state and subject to
Title 14 if the deed creating the trust expressly authorizes the
merger.
(b)
With respect to the required procedure for the merger and the rights of
dissenting shareholders:
(1)
The trust shall comply with any applicable provisions of the deed creating the
trust and with the following Code sections, as if the trust were a domestic
corporation:
(A)
Subsection (b) of Code Section 14-2-1103, relating to director approval of a
plan of merger, as if the trustee or trustees of the trust were a board of
directors of a domestic corporation;
(B)
Subsections (c) through (i) of Code Section 14-2-1103, relating to shareholder
approval, and Code Sections 14-2-1301 through 14-2-1332, relating to rights of
dissenting shareholders, as if the holders of certificates of beneficial
interest in the trust were shareholders of a domestic corporation;
and
(C)
Code Sections 14-2-1105 and 14-2-1105.1, relating to execution of articles of
merger and filing of the articles, together with other required documents, with
the Secretary of State; and
(2)
The domestic corporation into which the trust is merged shall comply with the
provisions of Title 14 relating to the merger of domestic corporations, in the
same manner as if the trust being merged into it were a domestic
corporation.
(c)
Upon compliance with the requirements of this Code section and the filing of
articles of merger providing for a merger of the trust into a domestic
corporation in the manner provided in Code Sections 14-2-1105 and 14-2- 1105.1,
the Secretary of State shall treat the merger as if it were a merger of
corporations under Code Sections 14-2-1105 and 14-2-1105.1.
(d)
If the Secretary of State issues a certificate of merger, the merger shall
become effective as of the time of delivery to the Secretary of State of the
articles of merger so certified, as provided in Code Section 14-2-1105, or at
such later time and date as the articles specify, not to exceed 60 days from the
date of delivery of the articles to the Secretary of State. When the merger has
become effective:
(1)
The trust and the domestic corporation into which the trust is merged shall be a
single domestic corporation;
(2)
The separate existence of the trust shall cease;
(3)
The domestic corporation shall continue to have all the rights, privileges,
immunities, and powers and shall be subject to all the duties and liabilities of
a corporation organized under Title 14;
(4)
The domestic corporation shall thereupon and thereafter possess all the rights,
privileges, immunities, and franchises, of a public as well as of a private
nature, of the trust; and all property, real, personal, and mixed, all debts due
on whatever account, including subscriptions to shares, all other choses in
action, and all and every other interest of or belonging to or due to the trust
shall be taken and deemed to be transferred to and vested in the domestic
corporation without further act or deed; and the title to any real property or
any interest therein vested in the trust shall not revert or be in any way
impaired by reason of the merger;
(5)
The domestic corporation shall thenceforth be responsible and liable for all the
liabilities and obligations of the trust. Any claim existing or action or
proceeding pending by or against the trust may be prosecuted as if the merger
had not taken place, or the domestic corporation may be substituted in its
place. Neither the rights of creditors nor any liens upon the property of the
trust shall be impaired by the merger; and
(6)
The articles of incorporation of the domestic corporation shall be deemed to be
amended to the extent, if any, that changes in its articles of incorporation are
stated in the plan of
merger."
SECTION
3.
Said
title is further amended by replacing Chapter 13, which has been repealed, with
a new Chapter 13 to read as follows:
"CHAPTER
13
ARTICLE 1
ARTICLE 1
53-13-1.
(a)
Except to the extent it would impair vested rights and except as otherwise
provided by law, the provisions contained in this chapter shall apply to any
trust regardless of the date it was created.
(b)
Nothing in a trust instrument shall prohibit or limit a court from taking any
actions authorized by the provisions in this chapter or elsewhere in the laws of
this state.
(c)
Except to the extent that the principles of common law and equity governing
trusts are modified by this chapter or any other provision of law, such
principles remain the law of the state.
53-13-2.
As
used in this chapter, the term:
(1)
'Person' means an individual, corporation, partnership, association, joint-stock
company, business trust, unincorporated organization, limited liability company,
or other legal entity, including any of the foregoing acting as a
fiduciary.
(2)
'Property' means any type of property, whether real or personal, tangible or
intangible, legal or equitable.
(3)
'Settlor' means the person who creates the trust, including a testator in the
case of a testamentary trust. The terms 'grantor' and 'trustor' mean the same
as 'settlor.'
(4)
'Trust' means an express trust or an implied trust.
(5)
'Trust property' means property the legal title to which is held by the trustee.
The term also includes choses in action, claims, and contract rights, including
a contractual right to receive death benefits as designated beneficiary under a
policy of insurance, contract, employees' trust or other arrangement. The terms
'trust corpus' and 'trust res' mean the same as 'trust property.'
(6)
'Trust res' means trust property.
(7)
'Trustee' means the person or persons holding legal title to the property in
trust.
53-13-3.
(a)
A charitable trust is one in which the settlor provides that the trust property
shall be used for charitable purposes.
(b)
Charitable purposes include the following:
(1)
The relief of poverty;
(2)
The advancement of education;
(3)
The advancement of ethics and religion;
(4)
The advancement of health;
(5)
The advancement of science and the arts and humanities;
(6)
The protection and preservation of the environment;
(7)
The improvement, maintenance, or repair of cemeteries, other places of
disposition of human remains, and memorials;
(8)
The prevention of cruelty to animals;
(9)
Governmental purposes; and
(10)
Other similar subjects having for their object the relief of human suffering or
the promotion of human civilization.
(c)
If the settlor provides for both charitable and noncharitable purposes, the
provisions relating to the charitable purposes shall be governed by this
article.
53-13-4.
The
settlor of a charitable trust may retain the power to select the charitable
purposes or charitable beneficiaries, or may grant the trustee or any other
person the power to select charitable purposes or charitable beneficiaries or to
engage in the charitable purposes, without rendering the trust void for
indefiniteness.
53-13-5.
If
a charitable trust or gift cannot be executed in the manner provided by the
settlor or donor, the superior court shall exercise equitable powers in such a
way as will as nearly as possible effectuate the intention of the settlor or
donor.
53-13-6.
A
charitable trust is valid even though under the trust provisions it is to
continue for an indefinite or unlimited period.
53-13-7.
In
all cases in which the rights of beneficiaries under a charitable trust are
involved, the Attorney General or the district attorney of the circuit in which
the major portion of trust res lies shall represent the interests of the
beneficiaries and the interests of this state as parens patriae in all legal
matters pertaining to the administration and disposition of such trust. The
Attorney General or the district attorney may bring or defend actions and,
insofar as an action of this nature may be deemed an action against the state,
the state expressly gives its consent thereto. The venue of such actions may be
in any county in the state in which a substantial number of persons who are the
beneficiaries of the trust reside. Process shall be directed to the Attorney
General or to the district attorney of the circuit in which the major portion of
the trust res lies. Service may be perfected by mailing a copy of the petition
and process by the clerk of the superior court of the county in which it is
filed to the Attorney General or to the district attorney of the circuit in
which the major portion of the trust res lies. Any judgment determining rights
under any charitable trusts shall be binding on the beneficiaries if the
Attorney General or the district attorney of the circuit in which the major
portion of the trust res lies is a party and is served as provided in this Code
section.
53-13-8.
(a)
The effect of the provisions of this chapter and Chapters 12, 14, and 15 may be
varied by the trust instrument except:
(1)
As to any requirements in Article 2 of Chapter 12 relating to the creation and
validity of express trusts;
(2)
As to the effect of the rules as provided in Article 5 of Chapter 12 relating to
spendthrift trusts;
(3)
As to the power of the beneficiaries to modify a trustee's compensation as
provided in Code Section 53-14-6;
(4)
As to the duty of a trustee to administer the trust and to exercise
discretionary powers in good faith, as provided in Code Sections 53-14-30 and
53-14-38;
(5)
As to the effect of a provision relieving a trustee from liability, as provided
in Code Section 53-14-53; and
(6)
As to the periods of limitation on actions, as provided in Code Sections
53-12-25 and 53-14-57.
(b)
Nothing in a trust instrument shall prohibit or limit a court from taking any
actions authorized by the provisions of this chapter or Chapters 12, 14, and 15
or as otherwise provided by law.
ARTICLE
2
Part 1
Part 1
53-13-20.
Notwithstanding
any provision therein to the contrary and except as provided in Code Section
53-13-21, the articles of incorporation of any corporation which is a private
foundation, as defined in Section 509 of the federal Internal Revenue Code,
shall be amended automatically as of the later of the date of incorporation or
January 1, 1972, to provide that the corporation shall:
(1)
Not engage in any act of self-dealing, as defined in Section 4941(d) of the
federal Internal Revenue Code, which would give rise to any liability for the
tax imposed by Section 4941 of the federal Internal Revenue Code;
(2)
Not retain any excess business holdings, as defined in Section 4943(c) of the
federal Internal Revenue Code, which would give rise to any liability for the
tax imposed by Section 4943 of the federal Internal Revenue Code;
(3)
Not make any investments which would jeopardize the carrying out of any of the
exempt purposes of the corporation, within the meaning of Section 4944 of the
federal Internal Revenue Code, so as to give rise to any liability for the tax
imposed by Section 4944 of the federal Internal Revenue Code;
(4)
Not make any taxable expenditures, as defined in Section 4945(d) of the federal
Internal Revenue Code, which would give rise to any liability for the tax
imposed by Section 4945 of the federal Internal Revenue Code; and
(5)
Distribute for the purpose specified in its articles of incorporation for each
taxable year amounts at least sufficient to avoid any liability for the tax
imposed by Section 4942 of the federal Internal Revenue Code.
53-13-21.
Any
corporation which is a private foundation, as defined in Section 509 of the
federal Internal Revenue Code, may amend its articles of incorporation expressly
to exclude the application of Code Section 53-13-20 or any portion thereof in
the manner provided by Article 10 of Chapter 2 of Title 14 or Article 8 of
Chapter 3 of Title 14, whichever is applicable.
53-13-22.
Nothing
contained in Code Sections 53-13-20 and 53-13-21 shall cause or be construed to
cause a forfeiture or reversion of any of the property of a corporation which is
subject to such Code sections.
53-13-23.
With
respect to property held by a corporation which is a private foundation, as
defined in Section 509 of the federal Internal Revenue Code, and which is
subject to conditions which permit distributions to the extent of the net income
of the property each year but do not permit distributions of the property or any
part thereof itself, the directors of the corporation may elect to distribute so
much of the property as may be necessary to enable the corporation to avoid
liability for any tax imposed by Section 4942 of the federal Internal Revenue
Code in the same manner as if the corporation were a trust described in Code
Section 53-13-43 and the property were the only property held in the trust and
as if the directors were the trustees of the trust.
53-13-24.
Nothing
in Code Sections 53-13-20 through 53-13-23 shall impair the rights and powers of
the courts or the Attorney General of this state with respect to any
corporation.
Part
2
53-13-40.
Notwithstanding
any provision therein to the contrary and except as provided in Code Section
53-13-42, the governing instrument of any trust which is a private foundation,
as defined in Section 509 of the federal Internal Revenue Code, a charitable
trust, as defined in Section 4947(a)(1) of the federal Internal Revenue Code, or
a split-interest trust, as defined in Section 4947(a)(2) of the federal Internal
Revenue Code, shall be amended automatically as of the later of the inception of
the trust or January 1, 1972, to include provisions which prohibit the trustees
of the trust from:
(1)
Engaging in any act of self-dealing, as defined in Section 4941(d) of the
federal Internal Revenue Code, which would give rise to any liability for the
tax imposed by Section 4941 of the federal Internal Revenue
Code;
(2)
Retaining any excess business holdings, as defined in Section 4943(c) of the
federal Internal Revenue Code, which would give rise to any liability for the
tax imposed by Section 4943 of the federal Internal Revenue Code;
(3)
Making any investments which would jeopardize the carrying out of any of the
exempt purposes of the trust, within the meaning of Section 4944 of the federal
Internal Revenue Code, so as to give rise to any liability for the tax imposed
by Section 4944 of the federal Internal Revenue Code; and
(4)
Making any taxable expenditures, as defined in Section 4945(d) of the federal
Internal Revenue Code, which would give rise to any liability for the tax
imposed by Section 4945 of the federal Internal Revenue Code;
provided,
however, that in the case of a split-interest trust, as defined in Section
4947(a)(2) of the federal Internal Revenue Code, paragraphs (1) through (4) of
this Code section shall apply only to the extent required by Section 4947 of the
federal Internal Revenue Code.
53-13-41.
Notwithstanding
any provision therein to the contrary and except as provided in Code Section
53-13-42, the governing instrument of any trust which is a private foundation,
as defined in Section 509 of the federal Internal Revenue Code, or which is a
charitable trust, as defined in Section 4947(a)(1) of the federal Internal
Revenue Code, shall be amended automatically as of the later of the inception of
the trust or January 1, 1972, to include a provision which requires the trustees
to distribute, for the purposes specified in the governing instrument, for each
taxable year, amounts at least sufficient to avoid any liability for the tax
imposed by Section 4942 of the federal Internal Revenue Code.
53-13-42.
The
trustees of any trust which is a private foundation, as defined in Section 509
of the federal Internal Revenue Code, a charitable trust, as defined in Section
4947(a)(1) of the federal Internal Revenue Code, or a split-interest trust, as
defined in Section 4947(a)(2) of the federal Internal Revenue Code, may, without
judicial proceedings, amend the governing instrument of the trust expressly to
exclude the application of Code Section 53-13-40 or 53-13-41, or both, by
executing a written amendment to the trust and filing a duplicate original of
the amendment with the Attorney General of this state, whereupon the Code
section or Code sections, as the case may be, shall not apply to the
trust.
53-13-43.
(a)
With respect to any trust which is a private foundation, as defined in Section
509 of the federal Internal Revenue Code, or a charitable trust, as defined in
Section 4947(a)(1) of the federal Internal Revenue Code, the governing
instrument of which permits distributions to the extent of the net income of the
trust each year but does not permit distributions from trust principal, the
trustees of the trust may elect, without judicial proceedings and
notwithstanding any provision to the contrary contained in the governing
instrument of the trust, to distribute in any year, for the purposes specified
in the governing instrument, that amount from the principal of the trust which,
when added to the income of the trust available for distribution during such
year, will enable the trust to avoid any liability for the tax imposed by
Section 4942 of the federal Internal Revenue Code, by filing a written election,
which may be a continuing one, with the Attorney General of this state to have
this Code section and Code Section 53-13-23 apply to the trust. A distribution
from trust principal pursuant to the election shall only be in the form of cash
or securities which are either listed or admitted to unlisted trading privileges
upon any stock exchange or are quoted regularly in any newspaper or newspapers
having a general circulation in this state.
(b)
Any election made under subsection (a) of this Code section may be revoked at
any time by filing written notice of revocation with the Attorney General of
this state.
53-13-44.
Nothing
contained in Code Sections 53-13-40 through 53-13-43 shall cause or be construed
to cause a forfeiture or reversion of any of the property of a trust which is
subject to such Code sections or to make the purposes of the trust impossible of
accomplishment.
53-13-45.
Nothing
in Code Sections 53-13-40 through 53-13-43 shall impair the rights and powers of
the courts or the Attorney General of this state with respect to any
trust."
SECTION
4.
Said
title is further amended by replacing Chapter 14, which has been repealed with a
new Chapter 14 to read as follows:
"CHAPTER
14
ARTICLE 1
Part 1
ARTICLE 1
Part 1
53-14-1.
As
used in this chapter, the term:
(1)
'Ascertainable standard' means a standard relating to an individual's health,
education, support, or maintenance within the meaning of Section 2041(b)(1)(A)
or 2514(c)(1) of the federal Internal Revenue Code of 1986.
(2)
'Beneficiary' means a person for whose benefit property is held in trust,
regardless of the nature of the interest, and includes any beneficiary, whether
vested or contingent, born or unborn, ascertained or unascertained.
(3)
'Express trust' means a trust as described in Code Section
53-12-10.
(4)
'Person' means an individual, corporation, partnership, association, joint-stock
company, business trust, unincorporated organization, limited liability company,
or other legal entity, including any of the foregoing acting as a
fiduciary.
(5)
'Property' means any type of property, whether real or personal, tangible or
intangible, legal or equitable.
(6)
'Qualified beneficiary' means a living individual or other existing person who,
on the date of determination of beneficiary status:
(A)
Is a distributee or permissible distributee of trust income or
principal;
(B)
Would be a distributee or permissible distributee of trust income or principal
if the interests of the distributees described in subparagraph (A) of this
paragraph terminated on that date without causing the trust to terminate;
or
(C)
Would be a distributee or permissible distributee of trust income or principal
if the trust terminated on that date.
(7)
'Settlor' means the person who creates the trust, including a testator in the
case of a testamentary trust. The terms 'grantor' and 'trustor' mean the same
as 'settlor.'
(8)
'Trust' means an express trust or an implied trust.
(9)
'Trust instrument' means the document or documents, including any testamentary
instrument, that contains the trust provisions.
(10)
'Trust property' means property the legal title to which is held by the trustee.
The term also includes choses in action, claims, and contract rights, including
a contractual right to receive death benefits as designated beneficiary under a
policy of insurance, contract, employees' trust or other arrangement. The terms
'trust corpus' and 'trust res' mean the same as 'trust property.'
(11)
'Trust res' means trust property.
(12)
'Trustee' means the person or persons holding legal title to the property in
trust.
53-14-2
A
trustee must have legal capacity under Georgia law to acquire, hold, and
transfer title to property. An individual is eligible to serve as a trustee
regardless of citizenship or residency. If the trustee is a corporation,
partnership or other entity, it must have the power to act as a trustee in
Georgia.
53-14-3
(a)
A settlor may appoint trustees or grant that power to others, including trust
beneficiaries.
(b)
A trust shall never fail for want of a trustee.
(c)
If the trust instrument names a person to fill a vacancy or provides a method of
appointing a trustee, any vacancy shall be filled or appointment made as
provided in the trust instrument.
(d)
If all the qualified beneficiaries are sui juris, or if some of the qualified
beneficiaries are not sui juris but all have a guardian or conservator, the
qualified beneficiaries may appoint a trustee by unanimous consent. For
purposes of this paragraph a parent may represent and bind the parent's minor or
unborn child if a conservator or guardian for the child has not been appointed
and there is no conflict of interest between the parent and the child with
respect to the appointment of a trustee.
(e)
In all other cases, the court, on petition of an interested person, may appoint
any number of trustees consistent with the intention of the settlor and the
interests of the beneficiaries.
(f)
The petition provided for in subsection (e) of this Code section shall be served
upon all qualified beneficiaries or their guardians or conservators. The court
shall appoint a guardian ad litem for each non-sui juris beneficiary who has no
guardian or conservator and service of notice of the petition shall be made on
such guardian ad litem.
(g)
A trustee appointed as a successor trustee shall have all the authority of the
original trustee.
53-14-4.
(a)
The acceptance of a trust is necessary to constitute a person as trustee.
Acceptance may be effected by acts as well as words. After acceptance, the
trustee may not decline the trusteeship.
(b)
Except as otherwise provided in subsection (c) of this Code section, a person
designated as trustee accepts the trusteeship:
(1)
By substantially complying with a method of acceptance provided in the trust
instrument; or
(2)
If the trust instrument does not provide a method or the method provided in the
trust instrument is not expressly made exclusive, by accepting delivery of the
trust property, exercising powers or performing duties as trustee, or otherwise
indicating acceptance of the trusteeship.
(c)
A person designated as trustee, without accepting the trusteeship, may act to
preserve the trust property if, as soon as practicable, the person rejects or
declines the trusteeship.
53-14-5.
(a)
A trustee is not required to give a bond to secure performance of the trustee's
duties unless:
(1)
The trust instrument requires a bond; or
(2)
A bond is found by the court to be necessary to protect the interests of
beneficiaries or creditors of the trust, even though the trust instrument waives
the requirement of a bond.
(b)
Even though a bond has been required pursuant to subsection (a) of this Code
section or the trust instrument requires a bond, the court may excuse the
requirement, reduce or increase the amount of a bond, release a surety, or
permit the substitution of another bond with the same or different
sureties.
(c)
The cost of any bond shall be charged against the trust.
(d)
If a bond is required, the bond shall be:
(1)
Secured by an individual who is a domiciliary of this state or by a licensed
commercial surety authorized to transact business in this state;
(2)
Payable to the court for the benefit of interested persons as their interests
may appear;
(3)
Conditioned upon the faithful discharge of the trustee's duties;
and
(4)
If imposed by the court, in an amount and with sureties and liabilities as
required by the court.
(e)
Any other law to the contrary:
(1)
A financial institution, trust company, national or state bank, savings bank, or
savings and loan association described in Code Section 7-1-242 that seeks to
serve as a trustee under any trust created under or governed by the laws of this
state is not required to give bond for the faithful performance of its duties
unless its combined capital, surplus, and undivided profits are less than $3
million as reflected in its last statement filed with the Comptroller of the
Currency of the United States or the commissioner of banking and
finance;
(2)
In every case in which the trustee of any trust is required to give bond for the
faithful performance of the trustee's duties in such fiduciary capacity, the
bond shall be in a value equal to double the value of the trust estate;
provided, however, that the trustee may give bond in an amount equal to the
value of the trust estate if the bond is secured by a licensed commercial surety
authorized to transact business in this state. For purposes of this paragraph,
the term 'trust estate' shall exclude real property and improvements thereon
held by the trustee in a fiduciary capacity; provided, however, that upon the
conversion of any such real property into personalty, the trustee shall give a
new bond including the value of the personalty into which the real property has
been converted.
(f)
The trustee and any surety shall be held and deemed joint and several obligors
and may be subjected jointly and severally to liability in the same action. No
prior judgment establishing the liability of the trustee shall be necessary
before an action is brought against the sureties on the bond.
(g)
When a judgment has been obtained against the principal and surety or sureties
on the bond of a trustee, a levy may be made upon any property of any defendant
in fi. fa.
(h)
A court of competent jurisdiction shall be authorized to enter a judgment and to
issue a writ of execution against the principal and surety or sureties on the
bond of a trustee and shall be further authorized to grant judgment and
execution in favor of the surety or sureties against the principal upon payment
of the judgment by the surety or sureties.
(i)
Failure to comply with this Code section shall not make void or voidable or
otherwise affect an act or transaction of a trustee with any third
party.
53-14-6.
The
authority of cotrustees to act on behalf of the trust shall be as
follows:
(1)
A power vested in two or more trustees may only be exercised by their unanimous
action, provided, however, that a cotrustee may delegate to one or more other
cotrustees the performance of ministerial
acts;
(2)
If a vacancy occurs in the office of a cotrustee, the remaining cotrustee or
cotrustees may act unless or until the vacancy is filled; and
(3)
While a cotrustee is unable to act because of inaccessibility, illness, or other
temporary incapacity, the remaining cotrustee or cotrustees may act as if they
were the only trustees when necessary to accomplish the purposes of the
trust.
53-14-7.
(a)
The effect of the provisions of this chapter and Chapters 12, 13, and 15 may be
varied by the trust instrument except:
(1)
As to any requirements in Article 2 of Chapter 12 relating to the creation and
validity of express trusts;
(2)
As to the effect of the rules as provided in Article 5 of Chapter 12 relating to
spendthrift trusts;
(3)
As to the power of the beneficiaries to modify a trustee's compensation as
provided in Code Section 53-14-6;
(4)
As to the duty of a trustee to administer the trust and to exercise
discretionary powers in good faith, as provided in Code Sections 53-14-30 and
53-14-38;
(5)
As to the effect of a provision relieving a trustee from liability, as provided
in Code Section 53-14-53; and
(6)
As to the periods of limitation on actions, as provided in Code Sections
53-12-25 and 53-14-57.
(b)
Nothing in a trust instrument shall prohibit or limit a court from taking any
actions authorized by the provisions of this chapter or Chapters 12, 13, and 15
or as otherwise provided by law.
Part
2
53-14-20.
(a)
Trustees shall be compensated in accordance with either the trust instrument or
any separate written agreement between the trustee and the settlor. After the
settlor's death or incapacity or while the trust is irrevocable, the trust
instrument or the agreement relating to the trustee's compensation may be
modified as follows:
(1)
If all the qualified beneficiaries are sui juris, or if some of the qualified
beneficiaries are not sui juris but all of them have a guardian or conservator,
the trustee and the sui juris qualified beneficiaries and the guardians or
conservators of non-sui juris qualified beneficiaries may by unanimous consent
modify the trust instrument or agreement relating to the trustee's compensation
without receiving the approval of any court; and
(2)
If one or more of the non-sui juris qualified beneficiaries has no guardian or
conservator, and all of the other qualified beneficiaries, including the
guardians or conservators of non-sui juris qualified beneficiaries, and the
trustee are in agreement, any sui juris qualified beneficiary or the guardian or
conservator of a non-sui juris beneficiary or the trustee shall petition the
court to approve a modification of the trust instrument or agreement relating to
the trustee's compensation. The court shall appoint a guardian ad litem for
each non-sui juris beneficiary who does not have a guardian or conservator and
service of notice of the petition for modification of the trustee's compensation
shall be made on each such guardian ad litem. The court shall hold a hearing
and shall either allow or deny the modification that is requested in the
petition.
(b)
If there is no provision for trustee compensation in the trust instrument and
there is no separate written agreement between the trustee and the settlor
relating to the trustee's compensation, a separate written agreement relating to
the trustee's compensation may be entered into between the trustee and the
qualified beneficiaries as follows:
(1)
If all the qualified beneficiaries are sui juris or if some of the qualified
beneficiaries are not sui juris but the all of them have a guardian or
conservator, the trustee and the sui juris qualified beneficiaries and the
guardians or conservators of non-sui juris beneficiaries may by unanimous
consent enter into an agreement relating to the trustee's compensation without
receiving the approval of any court;
(2)
If one or more of the non-sui juris qualified beneficiaries has no guardian or
conservator, and all of the other qualified beneficiaries including the
guardians or conservators of non-sui juris qualified beneficiaries, and the
trustee are in agreement, any sui juris qualified beneficiary or the guardian or
conservator of a non-sui juris beneficiary or the trustee shall petition the
court to approve an agreement relating to the trustee's compensation. The court
shall appoint a guardian ad litem for each non-sui juris beneficiary who does
not have a guardian or conservator and service of notice of the petition for
approval of the agreement shall be made on each such guardian ad litem. The
court shall hold a hearing and shall either allow or deny the agreement that is
requested in the petition.
(c)
In cases other than those described in subsections (a) and (b) of this Code
section, the trustee shall be entitled to compensation as follows:
(1)
With respect to a corporate trustee, its published fee schedule provided such
fees are reasonable under the circumstances; and
(2)
With respect to an individual Trustee:
(A)
One percent of cash and the fair market value of any other principal asset
received upon the initial funding of the trust and at such time as additional
principal assets are received; and
(B)
An annual fee calculated in accordance with the following schedule based upon
the cash and the market value of the other principal assets valued as of the
last day of the trust accounting year prorated based on the length of service by
the trustee during that year.
Percentage
Fee
|
Market
Value
|
1.75
percent / year on the
first $
500,000.00
|
|
1.25
percent / year on the
next $
500,000.00
|
|
1.00
percent / year on the
next $
1,000,000.00
|
|
0.85
percent / year on the
next $
3,000,000.00
|
|
0.50
percent / year on values
over $
5,000,000.00
|
53-14-21.
Unless
any separate written agreement provides otherwise:
(1)
Each cotrustee shall be compensated as specified by the terms of the trust, as
each trustee may have agreed or in accordance with a published fee schedule and
such compensation among cotrustees shall not be apportioned unless they shall
agree otherwise; and
(2)
The annual fee paid pursuant to subparagraph (c)(2)(B) of Code Section 53-14-20
shall be apportioned among trustees and successor trustees according to the
proportion of time each rendered services during the year.
53-14-22.
(a)
A trustee who is receiving compensation as described in subsection (c) of Code
Section 53-14-20 may petition the court for compensation that is greater than
the compensation allowed under that subsection. Service of notice of the
petition for extra compensation shall be made on all qualified beneficiaries or
their guardians or conservators. The court shall appoint a guardian ad litem
for each non-sui juris qualified beneficiary who does not have a guardian or
conservator and service of notice of the petition for modification of the
trustee's compensation shall be made on each such guardian ad
litem.
(b)
After hearing any objection, the court shall allow such extra compensation as
the court deems reasonable. The allowance of extra compensation shall be
conclusive as to all parties in interest.
53-14-23.
A
trustee is entitled to be reimbursed out of the trust property for reasonable
expenses that were properly incurred in the administration of the
trust.
53-14-24.
(a)
Any trustee may receive compensation for services, as specified in this
subsection, from a corporation or other business enterprise, where the trust
estate owns an interest in the corporation or other business enterprise,
provided that:
(1)
The services provided by the trustee to the corporation or other business
enterprise are of a managerial, executive, or business advisory
nature;
(2)
The compensation received for the services is reasonable; and
(3)
The services are performed and the trustee is paid pursuant to a contract
executed by the trustee and the corporation or business enterprise, which
contract is approved by a majority of those members of the board of directors or
other similar governing authority of the corporation or business enterprise who
are not officers or employees of the trustee and are not related to the trustee
and provided, further, the contract is approved by the court.
(b)
Any trustee receiving compensation from a corporation or other business
enterprise for services to it as described in subsection (a) of this Code
section shall not receive extra compensation in respect to such services as
provided in Code Section 53-14-22; provided, however, that nothing in this Code
section shall prohibit the receipt by the trustee of extra compensation for
services rendered in respect to other assets or matters involving the trust
estate.
(c)
Nothing in this Code section shall prohibit the receipt by trustees of normal
commissions and compensation for the usual services performed by trustees
pursuant to law or pursuant to any fee agreement executed by the
settlor.
(d)
The purpose of this Code section is to enable additional compensation to be paid
to trustees for business management and advisory services to corporations and
business enterprises pursuant to contract, without the necessity of petitioning
for extra compensation pursuant to Code Section 53-14-22.
Part
3
53-14-40.
(a)
A trustee may resign:
(1)
In the manner and under the circumstances described in the trust
instrument;
(2)
Upon petition to the court showing that all of the qualified beneficiaries are
sui juris or that of the non-sui juris qualified beneficiaries have guardians or
conservators and that all the qualified beneficiaries or their guardians or
conservators have agreed in writing to the resignation; or
(3)
If all the sui juris qualified beneficiaries and their guardians or conservators
are not in agreement, or if one or more of the qualified beneficiaries is not
sui juris and has no guardian or conservator, upon petition to the court showing
to the satisfaction of the court that:
(A)
The trustee is unable to continue serving as trustee due to age, illness,
infirmity, or similar reason;
(B)
Greater burdens have devolved upon the office of trustee than those which were
originally contemplated or should have been contemplated when the trust was
accepted and the assumption of the additional burdens would work a hardship upon
the trustee;
(C) Disagreement exists between one or more of the beneficiaries of the trust and the trustee in respect to the trustee's management of the trust, which disagreement and conflict appear detrimental to the best interests of the trust;
(C) Disagreement exists between one or more of the beneficiaries of the trust and the trustee in respect to the trustee's management of the trust, which disagreement and conflict appear detrimental to the best interests of the trust;
(D)
The resignation of the trustee will result in or permit substantial financial
benefit to the trust;
(E)
The resigning trustee is one of two or more acting trustees and the cotrustee or
cotrustees will continue in office with no detriment to the trust contemplated;
or
(F)
The resignation would not be disadvantageous to the trust.
(b)
The petition to the court provided for in paragraph (3) of subsection (a) of
this Code section shall be served upon all qualified beneficiaries or their
guardians or conservators. The court shall appoint a guardian ad litem for each
non-juris beneficiary who does not have a guardian or conservator and service of
notice of the petition for resignation shall be made on each such guardian ad
litem.
(c)
The resignation of a trustee shall not relieve the trustee from liability for
any actions prior to the resignation except to the extent the trustee is
relieved by the court in the appropriate proceeding, or to the extent relieved
by the trust instrument.
(d)
If the resignation would create a vacancy required to be filled, then the
resignation shall not be effective until the successor accepts the
trust.
53-14-41.
(a)
A trustee may be removed:
(1)
In accordance with the provisions of the trust instrument; or
(2)
Upon petition to the court by any interested person showing good
cause.
(b)
In the discretion of the court, in order to protect the trust property or the
interests of any beneficiary, on its own motion or on motion of a cotrustee or
other interested person, the court may compel the trustee whose removal is being
sought to surrender trust property to a cotrustee or to a receiver or temporary
trustee pending a decision on a petition for removal of a trustee or pending
appellate review of such decision. To the extent the court deems necessary, the
powers of the trustee also may be suspended.
ARTICLE
2
53-14-60.
(a)
At any time following 12 months from the date of acceptance of a trust, but not
more frequently than once every 12 months, a trustee may petition the court to
approve an interim accounting, relieving the trustee from liability for the
period covered by the interim accounting.
(b)
The petition shall set forth:
(1)
The name and address of the trustee;
(2)
Any provisions of the trust relating to matters that will be covered by the
interim accounting;
(3)
The beneficiaries of the trust, specifying any beneficiary believed to be in
need of a guardian ad litem;
(4)
The period which the accounting covers;
(5)
A statement of receipts and disbursements of the trust that have occurred since
the trustee's acceptance of the trust or since the effective date of the last
accounting;
(6)
In a separate schedule, the principal on hand at the beginning of the accounting
period and the status at that time of its investment; the investments received
from the settlor and still held; additions to principal during the accounting
period, with dates and sources of acquisition; investments collected, sold, or
charged off during the accounting period, with the consequent loss or gain and
whether credited to principal or income; investments made during the accounting
period, with the date, source, and cost of each; deductions from the principal
during the accounting period, with the date and purpose of each; and principal
on hand at the end of the accounting period, how invested, and the estimated
market value of each investment;
(7)
In a separate schedule, the income on hand at the beginning of the accounting
period and in what form held; income received during the accounting period,
when, and from what source; income paid out during the accounting period, when,
to whom, and for what purpose; and income on hand at the end of the accounting
period and how invested;
(8)
A statement of the assets and liabilities of the trust as of the end of the
accounting period; and
(9)
Other information reasonably necessary to explain or understand the
accounting.
(c)
The petition shall be served as provided by law on the beneficiaries of the
trust and the surety on the trustee's bond, if any.
(d)
Upon review of the petition and after considering any objections thereto and any
evidence presented, the court may approve the trustee's interim accounting or
enter judgment granting appropriate relief. If no objection to the petition is
filed within the time allowed by law after service, or if the parties consent,
the petition may be approved without notice, hearing, or further proceedings.
The final judgment of the court shall be binding on all parties.
(e)
Costs and expenses, including reasonable attorney's fees of the trustee, shall
be taxed against the trust, unless otherwise directed by the court.
53-14-61.
(a)
If the trustee resigns, is removed, or dies, or upon the termination of the
trust, a beneficiary or the successor trustee may petition the court to require
the trustee or the trustee's personal representative to appear before the court
for a final accounting. Alternatively, the trustee or the trustee's personal
representative may petition the court to approve a final accounting relieving
the trustee from liability for the period covered by the final accounting. The
settlement period shall begin from the acceptance of the trusteeship by the
trustee or the end of the period covered by the last interim
accounting.
(b)
The petition shall set forth:
(1)
The name and address of the trustee;
(2)
The beneficiaries of the trust, specifying any beneficiary believed to be in
need of a guardian ad litem;
(3)
The period which the accounting covers; and
(4)
If the petition is filed by the trustee or the trustee's personal
representative, the petition shall also include the information required to be
filed by trustees in conjunction with the approval of an interim accounting as
set forth in subsection (b) of Code Section 53-14-60.
(c)
The petition shall be served as provided by law on the beneficiaries, the
trustee, the trustee's personal representative, if any, and the surety on the
trustee's bond, if any.
(d)
Upon review of the trustee's final accounting and after considering any
objections thereto and any evidence presented, the court may approve the final
accounting or enter judgment granting appropriate relief. If no objection to
the petition is filed within the time allowed by law after service, or if the
parties consent, the petition may be approved without notice, hearing, or
further proceedings. The final judgment of the court shall be binding on all
parties.
(e)
Costs and expenses, including reasonable attorney's fees of the trustee, shall
be taxed against the trust, unless otherwise directed by the court.
53-14-62.
Nothing
in this article shall restrict the right of any party to seek an equitable
accounting.
ARTICLE
3
Part 1
Part 1
53-14-80.
(a)
The duties contained in this part are in addition to and not in limitation of
the common law duties of the trustee, except to the extent inconsistent
therewith.
(b)
Upon acceptance of a trusteeship, the trustee shall administer the trust in good
faith, in accordance with its provisions and purposes.
53-14-81.
In
administering a trust, the trustee shall exercise the judgment and care of a
prudent person acting in a like capacity and familiar with such matters,
considering the purposes, provisions, distribution requirements, and other
circumstances of the trust.
53-14-82.
(a)
Within 60 days after the date of creation of an irrevocable trust or of the date
on which a revocable trust becomes irrevocable, the trustee shall notify the
qualified beneficiaries of the trust of the existence of the trust and the name
and mailing address of the trustee. In full satisfaction of this obligation,
the trustee may deliver the notice to the guardian or conservator of any non
sui-juris beneficiary.
(b)
All irrevocable trusts in existence on the effective date of this part will be
deemed to have waived this provision unless the trust instrument says
otherwise.
53-14-83.
(a)
On reasonable request by any qualified beneficiary or the guardian or
conservator of a non-sui juris qualified beneficiary, the trustee shall provide
the qualified beneficiary with a report of information, to the extent relevant
to that beneficiary's interest, about the assets, liabilities, receipts, and
disbursements of the trust, the acts of the trustee, and the particulars
relating to the administration of the trust, including the trust provisions that
describe or affect that beneficiary's interest.
(b)(1)
A trustee shall account at least annually, at the termination of the trust, and
upon a change of trustees, to each qualified beneficiary of an irrevocable trust
to whom income is required or authorized in the trustee's discretion to be
distributed currently, and to any person who may revoke the trust. At the
termination of the trust, the trustee shall also account to each remainder
beneficiary. Upon a change of trustees, the trustee shall also account to the
successor trustee. In full satisfaction of this obligation, the trustee may
deliver the accounting to the guardian or conservator of any qualified
beneficiary who is non-sui juris.
(2)
An accounting furnished to a qualified beneficiary pursuant to paragraph (1) of
this subsection shall contain a statement of receipts and disbursements of
principal and income that have occurred during the last complete fiscal year of
the trust or since the last accounting to that beneficiary and a statement of
the assets and liabilities of the trust as of the end of the accounting
period;
(c)
A trustee is not required to report information or account to a qualified
beneficiary who has waived in writing the right to a report or accounting and
has not withdrawn that waiver;
(d)
Subsections (a) and (b) of this Code section shall not apply to the extent that
the terms of the trust provide otherwise or the settlor of the trust directs
otherwise in a writing delivered to the trustee.
(e)
Nothing in this Code section shall affect the power of a court to require or
excuse an accounting.
53-14-84.
A
trustee shall distribute all net income derived from the trust at least
annually.
53-14-85.
A
trustee is under no duty to investigate the resources of any beneficiary when
determining whether to distribute trust property to that
beneficiary.
53-14-86.
(a)
A trustee shall administer the trust solely in the interests of the
beneficiaries.
(b)
This Code section does not preclude the following transactions, if fair to the
beneficiaries:
(1)
An agreement between a trustee and a beneficiary relating to the appointment or
compensation of the trustee;
(2)
Payment of reasonable compensation to the trustee; or
(3)
Performing and receiving reasonable compensation for performing services of a
managerial, executive, or business advisory nature for a corporation or other
business enterprise, where the trust estate owns an interest in the corporation
or other business enterprise,
53-14-87.
Except
to the extent that the governing instrument clearly manifests an intention that
the trustee shall or may favor one or more of the beneficiaries, a trustee shall
administer a trust impartially based on what is fair and reasonable to all of
the beneficiaries and with due regard to the respective interests of income
beneficiaries and
remainder
beneficiaries.
Part
2
53-14-100.
Notwithstanding
the breadth of discretion granted to a trustee in the trust instrument,
including the use of such terms as 'absolute', 'sole', or 'uncontrolled', the
trustee shall exercise a discretionary power in good faith.
53-14-101.
(a)
As used in this Code section, the term 'fiduciary' means the one or more
personal representatives of the estate of a decedent or the one or more trustees
of a testamentary or inter vivos trust, whichever in a particular case is
appropriate.
(b)
A trustee of an express trust, without court authorization, is
authorized:
(1)
To sell, exchange, grant options upon, partition, or otherwise dispose of any
property or interest therein which the fiduciary may hold from time to time, at
public or private sale or otherwise, with or without warranties or
representations,
upon such
terms and conditions, including credit, and for such consideration as the
fiduciary deems advisable and to transfer and convey the property or interest
therein which is at the disposal of the fiduciary, in fee simple absolute or
otherwise, free of all trust. The party dealing with the fiduciary shall not be
under a duty to follow the proceeds or other consideration
received;
(2)
To invest and reinvest in any property which the fiduciary deems advisable,
including, but not limited to, common or preferred stocks, bonds, debentures,
notes, mortgages, or other securities, in or outside the United States;
insurance contracts on the life of any beneficiary or of any person in whom a
beneficiary has an insurable interest or in annuity contracts for any
beneficiary; any real or personal property; investment trusts, including the
securities of or other interests in any open-end or closed-end management
investment company or investment trust registered under the federal Investment
Company Act of 1940, 15 U.S.C. Section 80a-1, et seq.; and participations in
common trust funds;
(3)
To the extent and upon such terms and conditions and for such periods of time as
the fiduciary shall deem necessary or advisable, to continue or participate in
the operation of any business or other enterprise, whatever its form or
organization, including, but not limited to, the power:
(A)
To effect incorporation, dissolution, or other change in the form of the
organization of the business or enterprise;
(B)
To dispose of any interest therein or acquire the interest of others
therein;
(C)
To contribute or invest additional capital thereto or to lend money thereto in
any such case upon such terms and conditions as the fiduciary shall approve from
time to time; and
(D)
To determine whether the liabilities incurred in the conduct of the business are
to be chargeable solely to the part of the trust set aside for use in the
business or to the trust as a whole.
In
all cases in which the fiduciary is required to file accounts in any court or in
any other public office, it shall not be necessary to itemize receipts,
disbursements, and distributions of property; but it shall be sufficient for the
fiduciary to show in the account a single figure or consolidation of figures,
and the fiduciary shall be permitted to account for money and property received
from the business and any payments made to the business in lump sum without
itemization;
(4)
To form a corporation or other entity and to transfer, assign, and convey to the
corporation or entity all or any part of the trust property in exchange for the
stock, securities, obligations of or other interests in any such corporation or
entity, and to continue to hold the stock, securities, obligations, and
interests;
(5)
To continue any farming operation and to do any and all things deemed advisable
by the fiduciary in the management and maintenance of the farm and the
production and marketing of crops and dairy, poultry, livestock, orchard, and
forest products, including, but not limited to, the following
powers:
(A)
To operate the farm with hired labor, tenants, or sharecroppers;
(B)
To lease or rent the farm for cash or for a share of the crops;
(C)
To purchase or otherwise acquire farm machinery, equipment, and
livestock;
(D)
To construct, repair, and improve farm buildings of all kinds needed, in the
fiduciary's judgment, for the operation of the farm;
(E)
To make or obtain loans or advances at the prevailing rate or rates of interest
for farm purposes, such as for production, harvesting, or marketing; or for the
construction, repair, or improvement of farm buildings; or for the purchase of
farm machinery, equipment, or livestock;
(F)
To employ approved soil conservation practices, in order to conserve, improve,
and maintain the fertility and productivity of the soil;
(G)
To protect, manage, and improve the timber and forest on the farm and to sell
the timber and forest products when it is to the best interest of the
trust;
(H)
To ditch, dam, and drain damp or wet fields and areas of the farm when and where
needed;
(I)
To engage in the production of livestock, poultry, or dairy products and to
construct such fences and buildings and to plant pastures and crops as may be
necessary to carry on such operations;
(J)
To market the products of the farm; and
(K)
In general, to employ good husbandry in the farming operation;
(6)
To manage real property:
(A)
To improve, manage, protect, and subdivide any real property;
(B)
To dedicate, or withdraw from dedication, parks, streets, highways, or
alleys;
(C)
To terminate any subdivision or part thereof;
(D)
To borrow money for the purposes authorized by this paragraph for the periods of
time and upon the terms and conditions as to rates, maturities, and renewals as
the fiduciary shall deem advisable and to mortgage or otherwise encumber the
property or part thereof, whether in possession or reversion;
(E)
To lease the property or part thereof, the lease to commence at the present or
in the future, upon the terms and conditions, including options to renew or
purchase, and for the period or periods of time as the fiduciary deems advisable
even though the period or periods may extend beyond the duration of the
trust;
(F)
To make gravel, sand, oil, gas, and other mineral leases, contracts, licenses,
conveyances, or grants of every nature and kind which are lawful in the
jurisdiction in which the property lies;
(G)
To manage and improve timber and forests on the property, to sell the timber and
forest products, and to make grants, leases, and contracts with respect
thereto;
(H)
To modify, renew, or extend leases;
(I)
To employ agents to rent and collect rents;
(J)
To create easements and to release, convey, or assign any right, title, or
interest with respect to any easement on the property or part
thereof;
(K)
To erect, repair, or renovate any building or other improvement on the property
and to remove or demolish any building or other improvement in whole or in part;
and
(L)
To deal with the property and every part thereof in all other ways and for such
other purposes or considerations as it would be lawful for any person owning the
same to deal with the property either in the same or in different ways from
those specified elsewhere in this paragraph;
(7)
To lease personal property of the trust or part thereof, the lease to commence
at the present or in the future, upon the terms and conditions, including
options to renew or purchase, and for the period or periods of time as the
fiduciary deems advisable even though the period or periods may extend beyond
the duration of the trust;
(8)(A)
To pay debts, taxes, assessments, compensation of the fiduciary and other
expenses incurred in the collection, care, administration, and protection of the
trust; and
(B)
To pay from the trust all charges that the fiduciary deems necessary or
appropriate to comply with laws regulating environmental conditions and to
remedy or ameliorate any such conditions which the fiduciary determines
adversely affect the trust or otherwise are liabilities of the trust and to
apportion all such charges among the several bequests and trusts and the
interests of the beneficiaries in such manner as the fiduciary deems fair,
prudent, and equitable under the circumstances.
(9)
To receive additional property from any source and to administer the additional
property as a portion of the appropriate trust under the management of the
fiduciary, provided that the fiduciary shall not be required to receive the
property without the fiduciary's consent;
(10)
In dealing with one or more fiduciaries of the estate or any trust created by
the decedent or the settlor or any spouse or child of the decedent or settlor
and irrespective of whether the fiduciary is a personal representative or
trustee of such other estate or trust:
(A)
To sell real or personal property of the estate or trust to such fiduciary or to
exchange such property with such fiduciary upon such terms and conditions as to
sale price, terms of payment, and security as shall seem advisable to the
fiduciary; and the fiduciary shall be under no duty to follow the proceeds of
any such sale; and
(B)
To borrow money from the estate or trust for such periods of time and upon such
terms and conditions as to rates, maturities, renewals, and securities as the
fiduciary shall deem advisable for the purpose of paying debts of the decedent
or settlor, taxes, the costs of the administration of the estate or trust, and
like charges against the estate or trust or any part thereof or of discharging
any other liabilities of the estate or trust and to mortgage, pledge, or
otherwise encumber such portion of the estate or trust as may be required to
secure the loan or loans and to renew the loans;
(11)
To borrow money for such periods of time and upon such terms and conditions as
to rates, maturities, renewals, and security as the fiduciary shall deem
advisable for the purpose of paying debts, taxes, or other charges against the
trust or any part thereof, and to mortgage, pledge, or otherwise encumber such
portion of the trust as may be required to secure the loan or loans; and to
renew existing loans either as maker or endorser;
(12)
To make loans or advances for the benefit or the protection of the
trust;
(13)
To vote shares of stock or other ownership interests owned by the trust, in
person or by proxy, with or without power of substitution;
(14)
To hold a security in the name of a nominee or in other form without disclosure
of the fiduciary relationship, so that title to the security may pass by
delivery; but the fiduciary shall be liable for any act of the nominee in
connection with the security so held;
(15)
To exercise all options, rights, and privileges to convert stocks, bonds,
debentures, notes, mortgages, or other property into other stocks, bonds,
debentures, notes, mortgages, or other property; to subscribe for other or
additional stocks, bonds, debentures, notes, mortgages, or other property; and
to hold the stocks, bonds, debentures, notes, mortgages, or other property so
acquired as investments of the trust so long as the fiduciary shall deem
advisable;
(16)
To unite with other owners of property similar to any which may be held at any
time in the trust, in carrying out any plan for the consolidation or merger,
dissolution or liquidation, foreclosure, lease, or sale of the property or the
incorporation or reincorporation, reorganization or readjustment of the capital
or financial structure of any corporation, company, or association the
securities of which may form any portion of an estate or trust; to become and
serve as a member of a shareholders' or bondholders' protective committee; to
deposit securities in accordance with any plan agreed upon; to pay any
assessments, expenses, or sums of money that may be required for the protection
or furtherance of the interest of the beneficiaries of any trust with reference
to any such plan; and to receive as investments of the trust any securities
issued as a result of the execution of such
plan;
(17)
To adjust the interest rate from time to time on any obligation, whether secured
or unsecured, constituting a part of the trust;
(18)
To continue any obligation, whether secured or unsecured, upon and after
maturity, with or without renewal or extension, upon such terms as the fiduciary
shall deem advisable, without regard to the value of the security, if any, at
the time of the continuance;
(19)
To foreclose, as an incident to the collection of any bond, note, or other
obligation, any deed to secure debt or any mortgage, deed of trust, or other
lien securing the bond, note, or other obligation and to bid in the property at
the foreclosure sale or to acquire the property by deed from the mortgagor or
obligor without foreclosure; and to retain the property so bid in or taken over
without foreclosure;
(20)
To carry such insurance coverage as the fiduciary shall deem
advisable;
(21)
To collect, receive, and issue receipts for rents, issues, profits, and income
of the trust;
(22)(A)
To compromise, adjust, mediate, arbitrate, or otherwise deal with and settle
claims involving the trust or the trustee; and
(B)
To compromise, adjust, mediate, arbitrate, bring or defend actions on, abandon,
or otherwise deal with and settle claims in favor of or against the trust as the
fiduciary shall deem advisable; the fiduciary's decision shall be conclusive
between the fiduciary and the beneficiaries of the trust and the person against
or for whom the claim is asserted, in the absence of fraud by such persons, and,
in the absence of fraud, bad faith, or gross negligence of the fiduciary, shall
be conclusive between the fiduciary and the beneficiaries of the trust;
and
(C)
To compromise all debts, the collection of which are doubtful, belonging to the
trust when such settlements will advance the interests of those
represented;
(23)
To employ and compensate, out of income or principal or both and in such
proportion as the fiduciary shall deem advisable, persons deemed by the
fiduciary needful to advise or assist in the administration of any trust,
including, but not limited to, agents, accountants, brokers, attorneys at law,
attorneys in fact, investment brokers, rental agents, realtors, appraisers, and
tax specialists; and to do so without liability for any neglect, omission,
misconduct, or default of the agent or representative, provided such person was
selected and retained with due care on the part of the fiduciary;
(24)
To acquire, receive, hold, and retain undivided the principal of several trusts
created by a single instrument until division shall become necessary in order to
make distributions; to hold, manage, invest, reinvest, and account for the
several shares or parts of shares by appropriate entries in the fiduciary's
books of account and to allocate to each share or part of share its
proportionate part of all receipts and expenses; provided, however, that this
paragraph shall not defer the vesting in possession of any share or part of
share of the trust;
(25)
To set up proper and reasonable reserves for taxes, assessments, insurance
premiums, depreciation, obsolescence, amortization, depletion of mineral or
timber properties, repairs, improvements, and general maintenance of buildings
or other property out of rents, profits, or other income received;
(26)
To value assets of the trust and to distribute them in cash or in kind, or
partly in cash and partly in kind, in divided or undivided interests, as the
fiduciary finds to be most practical and in the best interest of the
distributees, the fiduciary being able to distribute types of assets differently
among the distributees;
(27)
To transfer money or other property distributable to a beneficiary who is under
age 21, an adult for whom a guardian or conservator has been appointed, or an
adult who the fiduciary reasonably believes is incapacitated by distributing
such money or property directly to the beneficiary or applying it for the
beneficiary's benefit, or by:
(A)
Distributing it to the beneficiary's conservator or, if the beneficiary does not
have a conservator, the beneficiary's guardian;
(B)
Distributing it to the beneficiary's custodian under the Georgia Transfers to
Minors Act or similar state law and for that purpose creating a custodianship
and designating a custodian;
(C)
Distributing it to the beneficiary's custodial trustee under the Uniform
Custodial Trust Act, and, for that purpose, creating a custodial trust;
or
(D)
Distributing it to any other person, whether or not appointed guardian or
conservator by any court, who shall, in fact, have the care and custody of the
person of the beneficiary;
The
fiduciary shall not be under any duty to see to the application of the
distributions so made if the fiduciary exercised due care in the selection of
the person, including the beneficiary, to whom the payments were made; and the
receipt of the person shall be full acquittance to the fiduciary;
(28)
To make, modify, and execute contracts and other instruments, under seal or
otherwise, as the fiduciary deems advisable; and
(29)
To serve without making and filing inventory and appraisement, without filing
any annual or other returns or reports to any court, and without giving bond;
but, in addition to any rights the beneficiaries may have under subsection (b)
of 53-14-83, the fiduciary shall furnish to the income beneficiaries, at least
annually, a statement of receipts and disbursements.
53-14-102.
A
corporate fiduciary, without authorization by the court, may exercise the
following powers:
(1)
To retain stock or other securities of its own issue received on the creation of
the trust or later contributed to the trust, including the securities into which
the securities originally received or contributed may be converted or which may
be derived therefrom as a result of merger, consolidation, stock dividends,
splits, liquidations, and similar procedures. The corporate fiduciary may
exercise by purchase or otherwise any rights, warrants, or conversion features
attaching to any such securities. The authority described in this paragraph
shall:
(A)
Apply to the exchange or conversion of stock or securities of the corporate
fiduciary's own issue, whether or not any new stock or securities received in
exchange therefor are substantially equivalent to those originally
held;
(B)
Apply to the continued retention of all new stock and securities resulting from
merger, consolidation, stock dividends, splits, liquidations, and similar
procedures and received by virtue of such conversion or exchange of stock or
securities of the corporate fiduciary's own issue, whether or not the new stock
or securities are substantially equivalent to those originally received by the
fiduciary;
(C)
Have reference, inter alia, to the exchange of such stock or securities for
stock or securities of any holding company which owns stock or other interests
in one or more other corporations including the corporate fiduciary, whether the
holding company is newly formed or already existing and whether or not any of
the corporations own assets identical or similar to the assets of or carry on a
business identical or similar to the corporation whose stock or securities were
previously received by the fiduciary and the continued retention of stock or
securities, or both, of the holding company; and
(D)
Apply regardless of whether any of the corporations have officers, directors,
employees, agents, or trustees in common with the corporation whose stock or
securities were previously received by the fiduciary.
(2)
To borrow money from its own banking department for such periods of time and
upon such terms and conditions as to rates, maturities, renewals, and security
as the fiduciary shall deem advisable for the purpose of paying debts, taxes, or
other charges against the estate or any trust or any part thereof, and to
mortgage, pledge, or otherwise encumber such portion of the estate or any trust
as may be required to secure the loan or loans; and to renew existing loans
either as maker or endorser.
53-14-103.
(a)
By an expressed intention of the testator or settlor contained in a will or in
an instrument in writing whereby an express trust is created, any or all of the
powers or any portion thereof enumerated in this part, as they exist at the time
of the signing of the will by the testator or at the time of the signing by the
first settlor who signs the trust instrument, may be, by appropriate reference
made thereto, incorporated in the will or other written instrument with the same
effect as though such language were set forth verbatim in the
instrument.
(b)
At any time after the execution of a revocable trust, the settlor or anyone who
is authorized by the trust instrument to modify the trust may incorporate any or
all of the powers or any portion thereof enumerated in this article, as they
exist at the time of the incorporation.
(c)
Incorporation of one or more of the powers contained in this article, by
reference to the appropriate portion of Code Section 53-14-101, shall be in
addition to and not in limitation of the common-law or statutory powers of the
fiduciary.
(d)(1)
A provision in any will or trust instrument which incorporates powers by
citation to Georgia Laws 1973, page 846; Code 1933, Section 108-1204 (Harrison);
or former Code Section 53-15-3 or 53-12-232 which were in effect at the time the
trust was created and which was valid under the law in existence at the time the
will was signed by the testator or at the time of the signing by the first
settlor who signs the trust instrument shall be effective notwithstanding the
subsequent repeal of such statute.
(2)
A provision in any will or trust instrument which was signed by the testator or
by the first settlor to sign after June 30, 1991, but before July 1, 1992, and
which incorporates powers by citation to former Code Section 53-15-3 in effect
on the date of such signing shall be deemed to mean and refer to the
corresponding powers contained in former Code Section 53-12-232.
(e)
If any or all of the powers contained in this article are incorporated by
reference into a will by a testator:
(1)
The term 'trust' includes the estate held by the personal
representative;
(2)
The terms 'trustee' or 'fiduciary' include the personal representative;
and
(3)
The term 'beneficiaries of the trust' includes distributees of the
estate.
53-14-104.
The
qualified beneficiaries of a trust that omits any of the powers in Code Section
53-14-101 may by unanimous consent authorize but not require the court to grant
to the trustee those powers. With respect to any qualified beneficiary who is
non-sui juris, such consent may be given by the duly appointed conservator, if
any, or if none, by the duly appointed guardian, if any, or if none, by either
parent in the case of a minor, or, if none, by a guardian ad litem appointed to
represent the non-sui juris qualified beneficiary.
Part
3
53-14-120.
(a)
Subject to subsection (c) of this Code section, and unless the trust provisions
expressly indicate that a rule in this subsection does not apply:
(1)
A person other than a settlor who is a beneficiary and trustee of a trust that
confers on the trustee a power to make discretionary distributions to or for the
trustee's personal benefit may exercise the power only in accordance with an
ascertainable standard; and
(2)
A trustee may not exercise a power to make discretionary distributions to
satisfy a legal obligation of support that the trustee personally owes another
person.
(b)
A power whose exercise is limited or prohibited by subsection (a) of this Code
section may be exercised by a majority of the remaining trustees whose exercise
of the power is not so limited or prohibited. If the power of all trustees is so
limited or prohibited, the court may appoint a special fiduciary with authority
to exercise the power.
(c)
Subsection (a) of this Code section does not apply to:
(1)
A power held by the settlor's spouse who is the trustee of a trust for which a
marital deduction, as defined in Section 2056(b)(5) or 2523(e) of the federal
Internal Revenue Code of 1986, was previously allowed;
(2)
Any trust during any period that the trust may be revoked or amended by its
settlor; or
(3)
A trust if contributions to the trust qualify for the annual exclusion under
Section 2503(c) of the federal Internal Revenue Code of 1986.
Part
4
53-14-130.
(a)
The trustee may present a certification of trust to any person other than a
beneficiary in lieu of providing a copy of the trust instrument to establish the
existence or the trust provisions.
(b)
The certification of trust as provided for in subsection (a) of this Code
section shall contain some or all the following information:
(1)
That the trust exists and the date of the trust and any amendments;
(2)
The identity of each settlor;
(3)
The identity and address of each current trustee and, if more than one, the
number and identity of those required to exercise the powers of the
trustee;
(4)
The relevant powers of the trustee and any restrictions or limitations on those
powers;
(5)
The revocability or irrevocability of the trust;
(6)
How trust property should be titled;
(7)
Except as specifically disclosed in the certification, that the transaction at
issue requires no consent or action by any person other than the certifying
trustee; and
(8)
Such other information as the trustee deems appropriate.
(c)
A certification of trust:
(1)
Must be signed by each trustee;
(2)
Must state that the trust has not been revoked, modified, or amended in any
manner that would cause the representations contained in the certification to be
incorrect; and
(3)
Need not contain the dispositive provisions of the trust.
(d)
The recipient of a certification of trust may require the trustee to furnish
copies of those excerpts from the original trust instrument and any amendments
that designate the trustee and confer upon the trustee the power to act in the
pending transaction.
(e)
A person who acts in reliance upon the certification of trust without knowledge
that any information therein is incorrect is not liable to any person for so
acting and may assume without inquiry that the information is
correct.
(f)
A person who in good faith enters into a transaction in reliance upon the
certification of trust may enforce the transaction as if the information in the
certification were correct.
(g)
A person making a demand for the trust instrument in addition to a certification
of trust or excerpts is liable for damages, including court costs and attorney's
fees, if the court determines that the demand was not made in good
faith.
(h)
This Code section shall not limit the right of a person to obtain a copy of the
trust instrument in a judicial proceeding concerning the trust.
(i)
A certification of trust in recordable form may be recorded in the office of the
clerk of superior court.
Part
5
53-14-140.
Whenever
a bank or trust company is duly authorized to act and is acting as a fiduciary,
which term shall include an executor, administrator, trustee, guardian, or
conservator and has a nominee or nominees in whose name securities, including,
without limitation, bonds, stocks, notes, and other evidences of title to
intangible personal property, held as a fiduciary, may be registered, it shall
be lawful to register securities in the name of the nominee or nominees without
mention of the fiduciary relationship in the instrument evidencing the
securities or on the books of the issuer of the same, provided
that:
(1)
The records of the corporate fiduciary shall at all times clearly show that the
securities are held by the corporate fiduciary in its capacity as fiduciary,
together with the beneficial owner or owners thereof and all facts relating to
its ownership, possession, and holding thereof; and
(2)
The corporate fiduciary shall not be relieved of liability for the safe custody,
control, and proper distribution of the securities by reason of the registration
of same in the name of any nominee.
53-14-141.
If
two or more fiduciaries are acting jointly in reference to any securities, it
shall be lawful to register the property in the name of any nominee or any joint
corporate fiduciary. In the event that more than one corporate fiduciary is
acting, it shall be lawful to register securities in the name of any nominee of
any one of the corporate fiduciaries.
53-14-142.
(a)
Any fiduciary holding securities in its fiduciary capacity, any bank or trust
company holding securities as a custodian or managing agent, and any bank or
trust company holding securities as custodian for a fiduciary, is authorized to
deposit or arrange for the deposit of the securities in a clearing corporation,
as defined in Article 8 of Title 11. When the securities are deposited,
certificates representing securities of the same class of the same issuer may be
merged and held in bulk, in the name of the nominee of the clearing corporation,
with any other such securities deposited in the clearing corporation by any
person, regardless of the ownership of the securities, and certificates of small
denominations may be merged into one or more certificates of larger
denomination. The records of the fiduciary and the records of the bank or trust
company acting as custodian, as managing agent, or as custodian for a fiduciary
shall at all times show the name of the party for whose account the securities
are deposited. Title to the securities may be transferred by bookkeeping entry
on the books of the clearing corporation without physical delivery of
certificates representing the securities.
(b)
A bank or trust company depositing securities pursuant to this Code section
shall be subject to such rules and regulations as, in the case of state
chartered institutions, the commissioner of banking and finance and, in the case
of national banking associations, the comptroller of the currency may from time
to time issue.
(c)
A bank or trust company acting as custodian for a fiduciary, on demand by the
fiduciary, shall certify in writing to the fiduciary the securities deposited by
the bank or trust company in the clearing corporation for the account of the
fiduciary. A fiduciary, on demand by any party to a judicial proceeding for the
settlement of the fiduciary's account or on demand by the attorney for the
party, shall certify in writing to the party the securities deposited by the
fiduciary in the clearing corporation for its account as the
fiduciary.
(d)
This Code section shall apply to any fiduciary holding securities in its
fiduciary capacity and to any bank or trust company holding securities as a
custodian, managing agent, or custodian for a fiduciary acting on April 13,
1973, or acting thereafter, regardless of the date of the agreement, instrument,
or court order by which it is appointed and regardless of whether or not the
fiduciary, custodian, managing agent, or custodian for a fiduciary owns capital
stock of the clearing corporation.
ARTICLE
4
53-14-143.
The
trustee is accountable to the beneficiary for the trust property. A violation by
the trustee of any duty that the trustee owes the beneficiary is a breach of
trust.
53-14-144.
(a)
If a trustee commits a breach of trust, or threatens to commit a breach of
trust, a beneficiary shall have a cause of action to seek:
(1)
To recover damages;
(2)
To compel the trustee to perform the trustee's duties;
(3)
To require an accounting;
(4)
To enjoin the trustee from committing a breach of trust;
(5)
To compel the trustee to redress a breach of trust by payment of money or
otherwise;
(6)
To appoint a temporary trustee to take possession of the trust property and
administer the trust or to suspend a trustee with or without the appointment of
a temporary trustee;
(7)
To remove the trustee; and
(8)
To reduce or deny compensation of the trustee.
(b)
When trust assets are misapplied and can be traced in the hands of persons
affected with notice of the misapplication, the trust shall attach to the
assets. A creditor of a trust may follow assets in the hands of beneficiaries
even if they were received without notice.
(c)
The remedy set forth in subsection (c) of Code Section 53-15-23 is the exclusive
remedy for an abuse of discretion as provided in Code Sections 53-15-21 and
53-15-22.
(d)
The provision of remedies for breach of trust does not prevent resort to any
other appropriate remedy provided by statute or common law.
53-14-145.
(a)
A trustee who commits a breach of trust is personally chargeable with any
damages resulting from the breach of trust, including but not limited
to:
(1)
Any loss or depreciation in value of the trust property as a result of the
breach of trust, with interest;
(2)
Any profit made by the trustee through the breach of trust, with
interest;
(3)
Any amount that would reasonably have accrued to the trust or beneficiary if
there had been no breach of trust, with interest; and
(4)
In the discretion of the court, expenses of litigation, including reasonable
attorney's fees incurred in bringing an action on the breach or threat to commit
a breach.
(b)
If the trustee is liable for interest, then the amount of the liability for
interest shall be the greater of the following amounts:
(1)
The amount of interest that accrues at the legal rate on judgments;
or
(2)
The amount of interest actually received.
53-14-146.
(a)
No provision in a trust instrument is effective to relieve the trustee of
liability for breach of trust committed in bad faith or with reckless
indifference to the interests of the beneficiaries.
(b)
A trustee of a revocable trust is not liable to a beneficiary for any act
performed or omitted pursuant to written direction from a person holding the
power to revoke, including a person to whom the power to direct the trustee is
delegated. If the trust is revocable in part, then this subsection applies with
respect to the interest of the beneficiary in that part of the trust
property.
(c)
Whenever a trust reserves to the settlor or vests in an advisory or investment
committee or in any other person, including a cotrustee, to the exclusion of one
or more trustees, authority to direct the making or retention of any investment,
the excluded trustee shall be liable, if at all, only as a ministerial agent and
not as trustee for any loss resulting from the making or retention or any
investment pursuant to the authorized direction.
53-14-147.
(a)
A successor trustee is liable to the beneficiary for breach of trust involving
acts or omissions of a predecessor trustee only if the successor
trustee:
(1)
Knows or reasonably should have known of a situation constituting a breach of
trust committed by the predecessor trustee and the successor trustee improperly
permits it to continue;
(2)
Neglects to take reasonable steps to compel the predecessor to deliver the trust
property to the successor trustee; or
(3)
Neglects to take reasonable steps to redress a breach of trust committed by the
predecessor trustee in a case where the successor trustee knows or reasonably
should have known of the predecessor trustee's breach.
(b)
A trustee succeeding a trustee who was also the settlor is not liable to the
beneficiary for any action taken or omitted to be taken by the prior trustee nor
does such successor trustee have a duty to institute any action against such
prior trustee or to file any claim against such prior trustee's estate for any
of the prior trustee's acts or omissions as trustee. This subsection applies
only with respect to a trust or any portion of a trust that was revocable by the
settlor during the time that the settlor served as trustee and committed the act
or omission.
53-14-148.
(a)
A trustee is liable to the beneficiary for a breach committed by a cotrustee if
the trustee:
(1)
Participates in a breach of trust committed by the cotrustee;
(2)
Improperly delegates the administration of the trust to the
cotrustee;
(3)
Approves, knowingly acquiesces in, or conceals a breach of trust committed by
the cotrustee;
(4)
Negligently enables the cotrustee to commit a breach of trust; or
(5)
Neglects to take reasonable steps to compel the cotrustees to redress a breach
of trust in a case where the trustee knows or reasonably should have known of
the breach of trust.
(b)
If two or more cotrustees are jointly liable to the beneficiary, each cotrustee
is entitled to contribution from the other, as determined by the degree of each
co-trustee's fault.
53-14-149.
(a)
A trustee may maintain an action against a cotrustee to:
(1)
Compel the cotrustee to perform duties required under the trust;
(2)
Enjoin the cotrustee from committing a breach of trust; or
(3)
Compel the cotrustee to redress a breach of trust committed by the
cotrustee.
(b)
The provision of remedies for breach of trust does not prevent resort to any
other appropriate remedy provided by statute or common law.
53-14-150.
(a)
Unless a claim is previously barred by adjudication, consent, limitation, or
otherwise, if a beneficiary has received a written report that adequately
discloses the existence of a claim against the trustee for breach of trust, the
claim is barred as to that beneficiary unless a proceeding to assert the claim
is commenced within two years after receipt of the report. A report adequately
discloses existence of a claim if it provides sufficient information so that the
beneficiary knows of the claim or reasonably should have inquired into the
existence of the claim. If the beneficiary has not received a report which
adequately discloses the existence of a claim against the trustee for breach of
trust, the claim is barred as to that beneficiary unless a proceeding to assert
the claim is commenced within six years after the beneficiary discovered, or
reasonably should have discovered, the subject of the claim.
(b)
A successor trustee's claim against a predecessor trustee is barred unless a
proceeding to assert the claim is commenced within two years after the successor
trustee takes office.
(c)
A trustee's claim against a cotrustee is barred unless a proceeding to assert
the claim is commenced within two years after the date the cause of action
against the cotrustee arises.
53-14-151.
(a)
A trustee shall not be personally liable on any warranty made in any conveyance
unless the intention to create a personal liability is distinctly
expressed.
(b)
Unless otherwise provided in the contract, a trustee is not personally liable on
contracts properly entered into in the trustee's fiduciary capacity unless the
trustee fails to reveal the trustee's representative capacity in the
contract.
(c)
A judgment rendered in an action brought against the trust shall impose no
personal liability on the trustee or the beneficiary.
ARTICLE
5
53-14-170.
As
used in this article, the term:
(1)
'Foreign entity' means:
(A)
Any financial institution whose deposits are federally insured which is
organized or existing under the laws of any state of the United States, other
than Georgia, or any subsidiary of such financial institution;
(B)
Any other corporation organized or existing under the laws of any state of the
United States which borders upon this state, specifically, Florida, Alabama,
Tennessee, North Carolina, or South Carolina; and
(C)
Any federally chartered financial institution whose deposits are federally
insured having its principal place of business in any state of the United
States, other than Georgia, or any subsidiary of such financial
institution.
(2)
'Nonresident' means an individual who does not reside in Georgia.
53-14-171.
(a)
Any nonresident who is eligible to serve as a trustee under Code Section 53-14-3
may act as a trustee in this state pursuant to the terms of this Code
section.
(b)
Any nonresident trustee who acts as a trustee in this state shall be deemed to
have consented to service upon the Secretary of State of any summons, notice, or
process in connection with any action or proceeding in the courts of this state
growing out of or based upon any act or failure to act on the part of the
trustee unless the trustee shall designate as the agent for such service some
person who may be found and served with notice, summons, or process in this
state by a designation to be filed, from time to time, in the office of the
Secretary of State, giving the name of the agent and the place in this state
where the agent may be found and served.
(c)
If a nonresident trustee fails to designate a person who may be found and served
with summons, notice, or process in this state, service of summons, notice, or
process shall be made upon the trustee by serving a copy of the petition or
other pleading, with process attached thereto on the Secretary of State. The
service shall be sufficient service upon the nonresident trustee, provided that
notice of the service and a copy of the petition and process is forthwith sent
by registered or certified mail or statutory overnight delivery by the plaintiff
or the plaintiff's agent to the trustee, in the state where the trustee resides,
and the return receipt is appended to the summons or other process and filed
with the summons, petition, and other papers in the court where the action is
pending. The Secretary of State shall charge and collect a fee as set out in
Code Section 45-13-26 for service of process on him under this Code
section.
53-14-172.
(a)
Any foreign entity may act in this state as trustee, executor, administrator,
guardian, or any other like or similar fiduciary capacity, whether the
appointment is by law, will, deed, inter vivos trust, security deed, mortgage,
deed of trust, court order, or otherwise without the necessity of complying with
any law of this state relating to the qualification of foreign entities to do
business in this state or the licensing of foreign entities to do business in
this state, except as provided in this article, and notwithstanding any
prohibition, limitation, or restriction contained in any other law of this
state, provided only that:
(1)
The foreign entity is eligible to act as a fiduciary in this state under Code
Section 7-1-242; and
(2)
The foreign entity is authorized to act in the fiduciary capacity in the state
in which it is incorporated or organized, or, if the foreign entity is a
national banking association, in the state in which it has its principal place
of business.
(b)
Any foreign entity seeking to exercise fiduciary powers in this state, upon
qualifying in this state to act in any of such fiduciary capacities, shall not
be required by law to give bond, if bond is relieved by the instrument, law, or
court order in which such entity has been designated to act in such fiduciary
capacity.
(c)
Nothing in this article shall be construed to prohibit or make unlawful any
activity in this state by a bank or other entity which is not incorporated or
organized under the laws of this state or by a national bank which does not have
its principal place of business in this state, which activity would be lawful in
the absence of this article.
53-14-173.
A
foreign entity, insofar as it acts in a fiduciary capacity in this state
pursuant to this article, shall not be required to obtain a certificate of
authority to transact business in this state as required by Article 15 of
Chapter 2 of Title 14, but no such foreign entity shall establish or maintain in
this state a place of business, branch office, or agency for the conduct in this
state of business as a fiduciary.
53-14-174.
(a)
Prior to the time when any foreign entity acts pursuant to the authority of this
article in any fiduciary capacity in this state, the foreign entity shall file
with the Secretary of State a verified statement which shall state:
(1)
The correct name of the foreign entity;
(2)
The name of the state under the laws of which it is incorporated or organized,
or, if the foreign entity is a national banking association, a statement of that
fact;
(3)
The address of its principal business office;
(4)
In what fiduciary capacity it desires to act in this state;
(5)
That it is authorized to act in a similar fiduciary capacity in the state in
which it is incorporated or organized, or, if it is a national banking
association, in which it has its principal place of business, and the basis on
which it is eligible to act as a fiduciary in Georgia under Code Section
7-1-242; and
(6)
The name and address of a person who may be found and served with notice,
summons, or process in this state and who is designated by the foreign entity as
its agent for such service.
(b)
The statement provided for in subsection (a) of this Code section shall be
verified by an officer of the foreign entity, and there shall be filed with it
such certificates of public officials and copies of documents certified by
public officials as may be necessary to show that the foreign entity is
authorized to act in a fiduciary capacity similar to those in which it desires
to act in this state, in the state in which it is incorporated or organized, or,
if it is a national banking association, in which it has its principal place of
business.
(c)
Any foreign entity that acts as a trustee in this state shall be deemed to have
consented to service upon the Secretary of State of any summons, notice, or
process in connection with any action or proceeding in the courts of this state
growing out of or based upon any act or failure to act on the part of the
trustee unless the trustee shall designate as the agent for such service some
person who may be found and served with notice, summons, or process in this
state by a designation to be filed, from time to time, in the office of the
Secretary of State, giving the name of the agent and the place in this state
where the agent may be found and served.
(d)
If a foreign entity fails to designate a person who may be found and served with
summons, notice, or process in this state, service of summons, notice, or
process shall be made upon the foreign entity by serving a copy of the petition
or other pleading, with process attached thereto on the Secretary of State. The
service shall be sufficient service upon the foreign entity, provided that
notice of the service and a copy of the petition and process is forthwith sent
by registered or certified mail or statutory overnight delivery by the plaintiff
or the plaintiff's agent to the foreign entity at the address that is on file
with the Secretary of State and the return receipt is appended to the summons or
other process and filed with the summons, petition, and other papers in the
court where the action is pending. The Secretary of State shall charge and
collect a fee as set out in Code Section 45-13-26 for service of process on him
under this Code
section."
SECTION
5.
Said
title is further amended by replacing Chapter 15, which has been repealed, with
a new Chapter 15 to read as follows:
"CHAPTER
15
ARTICLE 1
Part 1
ARTICLE 1
Part 1
53-15-1.
(a)
Except to the extent it would impair vested rights and except as otherwise
provided by law, the provisions contained in this chapter shall apply to any
trust regardless of the date it was created.
(b)
Nothing in a trust instrument shall prohibit or limit a court from taking any
actions authorized by the provisions in this chapter or elsewhere in the laws of
this state.
(c)
Except to the extent that the principles of common law and equity governing
trusts are modified by this chapter or any other provision of law, such
principles remain the law of the state.
53-12-2.
As
used in this chapter, the term:
(1)
'Beneficiary' means a person for whose benefit property is held in trust,
regardless of the nature of the interest, and includes any beneficiary, whether
vested or contingent, born or unborn, ascertained or unascertained.
(2)
'Express trust' means a trust as described in Code Section
53-12-10.
(3)
'Person' means an individual, corporation, partnership, association, joint-stock
company, business trust, unincorporated organization, limited liability company,
or other legal entity, including any of the foregoing acting as a
fiduciary.
(4)
'Property' means any type of property, whether real or personal, tangible or
intangible, legal or equitable.
(5)
'Settlor' means the person who creates the trust, including a testator in the
case of a testamentary trust. The terms 'grantor' and 'trustor' mean the same
as 'settlor.'
(6)
'Trust' means an express trust or an implied trust.
(7)
'Trust instrument' means the document or documents, including any testamentary
instrument, that contains the trust provisions.
(8)
'Trust property' means property the legal title to which is held by the trustee.
The term also includes choses in action, claims, and contract rights, including
a contractual right to receive death benefits as designated beneficiary under a
policy of insurance, contract, employees' trust or other arrangement. The terms
'trust corpus' and 'trust res' mean the same as 'trust property.'
(9)
'Trustee' means the person or persons holding legal title to the property in
trust.
53-15-3.
(a)
In investing and managing trust property, a trustee shall exercise the judgment
and care under the circumstances then prevailing of a prudent person acting in a
like capacity and familiar with such matters, considering the purposes,
provisions, and distribution requirements of the trust.
(b)
Among the factors that a trustee shall consider in investing and managing trust
assets are such of the following as are relevant to the trust or its
beneficiaries:
(1)
General economic conditions;
(2)
The possible effect of inflation or deflation;
(3)
Anticipated tax consequences;
(4)
The attributes of the portfolio,
(5)
The expected return from income and appreciation;
(6)
Needs for liquidity, regularity of income, and preservation or appreciation of
capital;
(7)
An asset's special relationship or special value, if any, to the purposes of the
trust or to one or more of the beneficiaries or to the settlor;
(8)
The anticipated duration of the trust; and
(9)
Any special circumstances.
(c)
Any determination of liability for investment performance shall consider not
only the performance of a particular investment but also the performance of the
portfolio as a whole and as a part of an overall investment strategy having risk
and return objectives reasonably suited to the trust.
(d)
A trustee who has special investment skills or expertise has a duty to use those
special skills or expertise. A trustee who is named trustee in reliance upon
the trustee's representation that the trustee has special investment skills or
expertise will be held liable for failure to make use of that degree of skill or
expertise.
(e)
A trustee may invest in any kind of property or type of investment consistent
with the standards of this article.
(f)
A trustee that is a bank or trust company shall not be precluded from acquiring
and retaining the securities of or other interests in an investment company or
investment trust because the bank or trust company or an affiliate provides
services to the investment company or investment trust as investment adviser,
custodian, transfer agent, registrar, sponsor, distributor, manager, or
otherwise and receives compensation for such services.
53-15-4.
A
trustee shall reasonably manage the risk of concentrated holdings of assets in a
trust by diversifying or by using other appropriate mechanisms, except as
otherwise provided in this Code section, as follows:
(1)
The duty imposed by this Code section shall not apply if the trustee reasonably
determines that, because of special circumstances, the purposes of the trust are
better served without complying with the duty;
(2)
The trustee shall not be liable for failing to comply with the duty imposed by
this Code section to the extent that the terms of the trust instrument limit or
waive the duty; and
(3)
Except as provided in this paragraph, the duty imposed by this Code section
shall apply on or after January 1, 2011. With respect to any trust that is or
becomes irrevocable before January 1, 2011, the duty imposed by this Code
section shall not apply:
(A)
To the trust to the extent such trust instrument directs or permits the trustee
to retain, invest, exchange or reinvest assets without regard to any duty to
diversify, without the need to diversify or create a diversity of investments,
or without liability for either depreciation or failing to diversify, or
contains other similar language expressing a settlor's intent to provide similar
discretion to the trustee; or
(B)
Absent gross neglect, with respect to an asset that was transferred to the
trustee of such trust by any settlor or gratuitous transferor.
53-15-5.
Within
a reasonable time after accepting a trusteeship or receiving trust assets, a
trustee shall review the trust assets and make and implement decisions
concerning the retention and disposition of assets, in order to bring the trust
portfolio into compliance with the purposes, provisions, distributions
requirements, and other circumstances of the trust and with the requirements of
this article.
53-15-6.
Compliance
with the investment rules of this part is determined in light of the facts and
circumstances existing at the time of a trustee's decision or action and not by
hindsight.
53-15-7.
The
following terminology or comparable language in the provisions of a trust,
unless otherwise limited or modified, authorizes any investment or strategy
permitted under this chapter: 'investments permissible by law for investment of
trust funds,' 'legal investments,' 'authorized investments,' 'using the judgment
and care under the circumstances then prevailing that persons of prudence,
discretion, and intelligence exercise in the management of their own affairs,
not in regard to speculation but in regard to the permanent disposition of their
funds, considering the probable income as well as the probable safety of their
capital,' 'prudent man rule,' 'prudent trustee rule,' 'prudent person rule,' and
'prudent investor rule.'
53-15-8.
This
article shall apply to trusts existing on and created after its effective date.
As applied to trusts existing on its effective date, this article governs only
decisions or actions occurring after that date.
53-15-9.
(a)
A trustee may delegate investment and management functions that a prudent
trustee of comparable skills could properly delegate under the circumstances.
The trustee shall exercise reasonable care, skill, and caution in:
(1)
Selecting an agent;
(2)
Establishing the scope and terms of the delegation consistent with the purposes
and provisions of the trust; and
(3)
Reviewing periodically the agent's actions in order to monitor the agent's
performance and compliance with the terms of the delegation.
(b)
In performing a delegation function, an agent owes a duty to the trust to
exercise reasonable care to comply with the terms of the
delegation.
(c)
A trustee who complies with the requirements of subsection (a) of this Code
section, and who takes reasonable steps to compel an agent to whom the function
was delegated to redress a breach of duty to the trust, is not liable to the
beneficiaries of the trust or to the trust for the decisions or actions of the
agent to whom the function was delegated.
(d)
By accepting the delegation of a trust function from the trustee of a trust that
is subject to the laws of this state, an agent waives the defense of lack of
personal jurisdiction and submits to the jurisdiction of this
state.
53-15-10.
(a)
The effect of the provisions of this chapter and Chapters 12, 13, and 14 may be
varied by the trust instrument except:
(1)
As to any requirements in Article 2 of Chapter 12 relating to the creation and
validity of express trusts;
(2)
As to the effect of the rules as provided in Article 5 of Chapter 12 relating to
spendthrift trusts;
(3)
As to the power of the beneficiaries to modify a trustee's compensation as
provided in Code Section 53-14-6;
(4)
As to the duty of a trustee to administer the trust and to exercise
discretionary powers in good faith, as provided in Code Sections 53-14-30 and
53-14-38;
(5)
As to the effect of a provision relieving a trustee from liability, as provided
in Code Section 53-14-53; and
(6)
As to the periods of limitation on actions, as provided in Code Sections
53-12-25 and 53-14-57.
(b)
Nothing in a trust instrument shall prohibit or limit a court from taking any
actions authorized by the provisions of this chapter or Chapters 12, 13, and 14
or as otherwise provided by law.
Part
2
53-15-20.
In
allocating receipts and disbursements to or between principal and income and
with respect to any matter within the scope of Article 2 of this chapter, the
following shall apply:
(1)
A trustee shall administer a trust in accordance with the governing instrument,
even if there is a different provision in Article 2 of this
chapter;
(2)
A trustee may administer a trust by the exercise of a discretionary power of
administration regarding a matter within the scope of Article 2 of this chapter
given to the trustee by the governing instrument, even if the exercise of the
power produces a result different from a result required or permitted by Article
2 of this chapter. No inference that the trustee has improperly exercised the
discretionary power shall arise from the fact that the trustee has made an
allocation contrary to a provision of Article 2 of this chapter;
(3)
A trustee shall administer a trust in accordance with Article 2 of this chapter
if the governing instrument does not contain a different provision or does not
give the trustee a discretionary power of administration regarding a matter
within the scope of Article 2 of this chapter; and
(4)
A trustee shall add a receipt or charge a disbursement to principal to the
extent that the governing instrument and Article 2 of this chapter do not
provide a rule for allocating the receipt or disbursement to or between
principal and income.
53-15-21.
(a)
Subject to subsections (c) and (f) of this Code section, a trustee may adjust
between principal and income by allocating an amount of income to principal or
an amount of principal to income to the extent the trustee considers appropriate
if:
(1)
The governing instrument describes what may or must be distributed to a
beneficiary by referring to the trust's income; and
(2)
The trustee determines, after applying the rules in Code Section 53-15-20, that
the trustee is unable to comply with Code Section 53-14-87.
(b)
In deciding whether and to what extent to exercise the power conferred by
subsection (a) of this Code section, a trustee may consider, among other things,
all of the following:
(1)
The size of the trust;
(2)
The nature and estimated duration of the trust;
(3)
The liquidity and distribution requirements of the trust;
(4)
The needs for regular distributions and preservation and appreciation of
capital;
(5)
The expected tax consequences of an adjustment;
(6)
The net amount allocated to income under this chapter and the increase or
decrease in the value of the principal assets, which the trustee may estimate as
to assets for which market values are not readily available;
(7)
The assets held in the trust; the extent to which they consist of financial
assets, interests in closely held enterprises, and tangible and intangible
personal property or real property; the extent to which an asset is used by a
beneficiary; and whether an asset was purchased by the trustee or received from
the settlor or testator;
(8)
To the extent reasonably known to the trustee, the needs of the beneficiaries
for present and future distributions authorized or required by the governing
instrument;
(9)
Whether and to what extent the governing instrument gives the trustee the power
to invade principal or accumulate income or prohibits the trustee from invading
principal or accumulating income, and the extent to which the trustee has
exercised a power from time to time to invade principal or accumulate
income;
(10)
The intent of the settlor or testator; and
(11)
The actual and anticipated effect of economic conditions on principal and income
and effects of inflation and deflation on the trust.
(c)
A trustee may not make an adjustment under this Code section if any of the
following apply:
(1)
The adjustment would change the amount payable to a beneficiary as a fixed
annuity or a fixed fraction of the value of the trust
assets;
(2)
The adjustment is from trust funds which are permanently set aside for
charitable purposes under the governing instrument and for which a federal
charitable, estate or gift tax deduction has been taken, unless both income and
principal are so set aside;
(3)
If:
(A)
Possessing or exercising the power to make an adjustment would cause an
individual to be treated as the owner of all or part of the trust for federal
income tax purposes; and
(B)
The individual would not be treated as the owner if the trustee did not possess
the power to make an adjustment;
(4)
If:
(A)
Possessing or exercising the power to make an adjustment would cause all or part
of the trust assets to be subject to federal estate, gift, or
generation-skipping transfer tax with respect to an individual; and
(B)
The assets would not be subject to federal estate, gift, or generation-skipping
tax with respect to the individual if the trustee did not possess the power to
make an adjustment;
(5)
If the trustee is a beneficiary of the trust; or
(6)
If the trust has been converted under Code Section 53-15-22.
(d)
If paragraph (5), (6), or (7) of subsection (c) of this Code section applies to
a trustee and there is more than one trustee, a cotrustee to whom the provision
does not apply may make the adjustment unless the exercise of the power by the
remaining trustee or trustees is prohibited by the governing
instrument.
(e)(1)
If paragraph (2) of this subsection applies, a trustee may release any of the
following:
(A)
The entire power conferred by subsection (a) of this Code section;
(B)
The power to adjust from income to principal; or
(C)
The power to adjust from principal to income.
(2)
A release under paragraph (1) of this subsection is permissible if either of the
following apply:
(A)
The trustee is uncertain about whether possessing or exercising the power will
cause a result described in paragraphs (1) through (6) of subsection (c) of this
Code section; or
(B)
The trustee determines that possessing or exercising the power will or may
deprive the trust of a tax benefit or impose a tax burden not described in
subsection (c) of this Code section.
(3)
The release may be permanent or for a specified period, including a period
measured by the life of an individual.
(f)
A governing instrument which limits the power of a trustee to make an adjustment
between principal and income does not affect the application of this Code
section unless it is clear from the governing instrument that it is intended to
deny the trustee the power of adjustment conferred by subsection (a) of this
Code section.
53-15-22.
(a)
Unless expressly prohibited by the trust instrument, a trustee may release the
power to adjust under Code Section 53-15-21 and convert a trust into a unitrust
as described in this Code section if all of the following apply:
(1)
The trustee determines that the conversion will enable the trustee to better
carry out the intent of the settlor or testator and the purposes of the
trust;
(2)
The trustee gives written notice of the trustee's intention to release the power
to adjust and to convert the trust into a unitrust and of how the unitrust will
operate, including what initial decisions the trustee will make under this Code
section, to:
(A)
The settlor, if living;
(B)
All living persons who are currently receiving or eligible to receive
distributions of income of the trust; and
(C)
Without regard to the exercise of any power of appointment, all living persons
who would receive principal of the trust if the trust were to terminate at the
time of the giving of such notice and all living persons who would receive or be
eligible to receive distributions of income or principal of the trust if the
interests of all of the beneficiaries currently eligible to receive income under
subparagraph (B) of this paragraph were to terminate at the time of the giving
of such notice.
If
a beneficiary is not sui juris, such notice shall be given to the beneficiary's
conservator, if any, and if the beneficiary has no conservator, to the
beneficiary's guardian, including, in the case of a minor beneficiary, the
beneficiary's natural guardian;
(3)
At least one person receiving notice under each of subparagraphs (B) and (C) of
paragraph (2) of this subsection is legally competent; and
(4)
No beneficiary objects to the conversion to a unitrust in a writing delivered to
the trustee within 60 days of the mailing of the notice under paragraph (2) of
this subsection.
(b)(1)
The trustee may petition the superior court to order the conversion to a
unitrust.
(2)
A beneficiary may request a trustee to convert to a unitrust. If the trustee
does not convert, the beneficiary may petition the superior court to order the
conversion.
(3)
The court shall order conversion if the court concludes that the conversion will
enable the trustee to better carry out the intent of the settlor or testator and
the purposes of the trust.
(c)
In deciding whether to exercise the power to convert to a unitrust as provided
by subsection (a) of this Code section, a trustee may consider, among other
things, all of the following:
(1)
The size of the trust;
(2)
The nature and estimated duration of the trust;
(3)
The liquidity and distribution requirements of the trust;
(4)
The needs for regular distributions and preservation and appreciation of
capital;
(5)
The expected tax consequences of the conversion;
(6)
The assets held in the trust; the extent to which they consist of financial
assets, interests in closely held enterprises, and tangible and intangible
personal property or real property; and the extent to which an asset is used by
a beneficiary;
(7)
To the extent reasonably known to the trustee, the needs of the beneficiaries
for present and future distributions authorized or required by the governing
instrument;
(8)
Whether and to what extent the governing instrument gives the trustee the power
to invade principal or accumulate income or prohibits the trustee from invading
principal or accumulating income and the extent to which the trustee has
exercised a power from time to time to invade principal or accumulate income;
and
(9)
The actual and anticipated effect of economic conditions on principal and income
and effects of inflation and deflation on the trust.
(d)
After a trust is converted to a unitrust, all of the following
apply:
(1)
The trustee shall follow an investment policy seeking a total return for the
investments held by the trust, whether the return is to be derived
from:
(A)
Appreciation of capital;
(B)
Earnings and distributions from capital; or
(C)
Both appreciation of capital and earnings and distributions from
capital;
(2)
The trustee shall make regular distributions in accordance with the governing
instrument construed in accordance with the provisions of this Code
section;
(3)
The term 'income' in the governing instrument shall mean an annual unitrust
distribution equal to 4 percent of the net fair market value of the trust's
assets or the payout percentage ordered under paragraph (1) of subsection (g) of
this Code section, whether such assets would be considered income or principal
under other provisions of this chapter, averaged over the lesser
of:
(A)
The three preceding years; or
(B)
The period during which the trust has been in existence;
(4)
The trustee can determine the fair market value of the property in the trust by
appraisal or other reasonable method or estimate; and
(5)
The fair market value of the trust property shall not include the value of any
residential property or any tangible personal property that, as of the first
business day of the current valuation year, one or more of the current
beneficiaries of the trust have or had the right to occupy or have had the right
to possess or control, other than in his or her capacity as trustee of the
trust, and instead the right of occupancy or the right to possession or control
shall be deemed to be the unitrust amount with respect to such residential
property.
(e)
The trustee may in the trustee's discretion from time to time determine all of
the following:
(1)
The effective date of a conversion to a unitrust;
(2)
The provisions for prorating a unitrust distribution for a short year in which a
beneficiary's right to payments commences or ceases;
(3)
The frequency of unitrust distributions during the year;
(4)
The effect of other payments from or contributions to the trust on the trust's
valuation;
(5)
Whether to value the trust's assets annually or more frequently;
(6)
What valuation dates to use;
(7)
How frequently to value nonliquid assets and whether to estimate their value;
and
(8)
Any other matters necessary for the proper functioning of the
unitrust.
(f)(1)
Expenses which would be deducted from income if the trust were not a unitrust
may not be deducted from the unitrust distribution.
(2)
The unitrust distribution shall be paid from net income, as such term would be
determined if the trust were not a unitrust. To the extent net income is
insufficient, the unitrust distribution shall be paid from net realized
short-term capital gains. To the extent income and net realized short-term
capital gains are insufficient, the unitrust distribution shall be paid from net
realized long-term capital gains. To the extent income and net realized
short-term and long-term capital gains are insufficient, the unitrust
distribution shall be paid from the principal of the trust.
(g)
The trustee or, if the trustee declines to do so, a beneficiary may petition the
superior court to:
(1)
Select a payout percentage different from 4 percent but not lower than 3 percent
or higher than 5 percent;
(2)
Provide for a distribution of net income, as would be determined if the trust
were not a unitrust, in excess of the unitrust distribution if such distribution
is necessary to preserve a tax benefit;
(3)
Average the valuation of the trust's net assets over a period other than three
years; or
(4)
Reconvert from a unitrust. Upon a reconversion, the power to adjust under Code
Section 53-15-21 shall be revived.
(h)
A conversion to a unitrust does not affect a provision in the governing
instrument directing or authorizing the trustee to distribute principal or
authorizing a beneficiary to withdraw a portion or all of the
principal.
(i)
A trustee may not convert a trust into a unitrust in any of the following
circumstances:
(1)
If payment of the unitrust distribution would change the amount payable to a
beneficiary as a fixed annuity or a fixed fraction of the value of the trust
assets;
(2)
If the unitrust distribution would be made from trust funds which are
permanently set aside for charitable purposes under the governing instrument and
for which a federal charitable, estate or gift tax deduction has been taken,
unless both income and principal are so set aside;
(3)
If:
(A)
Possessing or exercising the power to convert would cause an individual to be
treated as the owner of all or part of the trust for federal income tax
purposes; and
(B)
The individual would not be treated as the owner if the trustee did not possess
the power to convert; or
(5)
If:
(A)
Possessing or exercising the power to convert would cause all or part of the
trust assets to be subject to federal estate, gift, or generation-skipping
transfer tax with respect to an individual; and
(B)
The assets would not be subject to federal estate, gift, or generation-skipping
transfer tax with respect to the individual if the trustee did not possess the
power to convert.
(j)(1)
If paragraph (4) or (5) of subsection (i) of this Code section applies to a
trustee and there is more than one trustee, a cotrustee to whom the provision
does not apply may convert the trust unless the exercise of the power by the
remaining trustee or trustees is prohibited by the governing instrument;
and
(2)
If paragraph (4) or (5) of subsection (i) of this Code section applies to all
the trustees, the trustees may petition the superior court to direct a
conversion.
(k)(1)
A trustee may release the power conferred by subsection (a) of this Code section
to convert to a unitrust if either of the following apply:
(A)
The trustee is uncertain about whether possessing or exercising the power to
convert will cause a result described in paragraph (4) or (5) of subsection (i)
of this Code section; or
(B)
The trustee determines that possessing or exercising the power to convert will
or may deprive the trust of a tax benefit or impose a tax burden not described
in subsection (i) of this Code section.
(2)
The release of the power to convert may be permanent or for a specified period,
including a period measured by the life of an individual.
53-15-23.
(a)
A court shall not change a trustee's decision to exercise or not to exercise a
discretionary power conferred by this chapter unless it determines that the
decision was an abuse of the trustee's discretion.
(b)
The decisions to which subsection (a) of this Code section apply
include:
(1)
A determination of whether and to what extent an amount should be transferred
from principal to income or from income to principal; and
(2)
A determination of the factors that are relevant to the trust and its
beneficiaries, the extent to which they are relevant, and the weight, if any, to
be given to the relevant factors in deciding whether and to what extent to
exercise the power conferred by this chapter.
(c)
If a court determines that a trustee has abused its discretion regarding a
discretionary power conferred by Code Section 53-15-21 or 53-15-22, the remedy
is to restore the income and remainder beneficiaries to the positions they would
have occupied if the trustee had not abused its discretion, according to the
following rules:
(1)
To the extent that the abuse of discretion has resulted in no distribution to a
beneficiary or a distribution which is too small, the court shall require the
trustee to distribute from the trust to the beneficiary an amount that the court
determines will restore the beneficiary, in whole or in part, to the
beneficiary's appropriate position;
(2)
To the extent that the abuse of discretion has resulted in a distribution to a
beneficiary which is too large, the court shall restore the beneficiaries, the
trust, or both, in whole or in part, to their appropriate positions by requiring
the trustee to withhold an amount from one or more future distributions to the
beneficiary who received the distribution that was too large or requiring that
beneficiary or that beneficiary's estate to return some or all of the
distribution to the trust, notwithstanding a spendthrift or similar
provision;
(3)
If the abuse of discretion concerns the power to convert a trust into a
unitrust, the court shall require the trustee either to convert into a unitrust
or to reconvert from a unitrust; and
(4)
To the extent that the court is unable, after applying paragraphs (1), (2), and
(3) of this subsection, to restore the beneficiaries, the trust, or both to the
positions they would have occupied if the trustee had not abused its discretion,
the court may require the trustee to pay an appropriate amount from its own
funds to one or more of the beneficiaries, the trust, or both.
(d)
No provision of this Code section or Code Section 53-15-21 or 53-15-22 is
intended to require a trustee to make an adjustment under Code Section 53-15-21
or a conversion under Code Section 53-15-22.
53-15-24.
(a)
The following provisions shall apply to a trust which by its governing
instrument requires the distribution at least annually of a unitrust amount
equal to a fixed percentage of not less than three nor more than five percent
per year of the net fair market value of the trust's assets, valued at least
annually, such trust to be referred to as an 'express total return
unitrust':
(1)
The unitrust amount may be determined by reference to the net fair market value
of the trust's assets in one year or more than one year;
(2)
Distribution of such a fixed percentage unitrust amount is considered a
distribution of all of the income of the total return unitrust and shall not be
considered a fundamental departure from applicable state law, regardless of
whether the total return unitrust is created and governed by Section 53-15-22
above or by the provisions of the governing instrument;
(3)
Such a distribution of the fixed percentage of not less than three percent nor
more than five percent is considered to be a reasonable apportionment of the
total return of a total return unitrust;
(4)
The governing instrument may or may not grant discretion to the trustee to adopt
a consistent practice of treating capital gains as part of the unitrust
distribution, to the extent that the unitrust distribution exceeds the net
accounting income, or it may specify the ordering of such classes of
income;
(5)
Unless the trust provisions specifically provide otherwise, or grant discretion
to the trustee as set forth above, a distribution of the unitrust amount shall
be considered to have been made from the following sources in order of
priority:
(A)
From net accounting income determined as if the trust were not a
unitrust;
(B)
From ordinary income not allocable to net accounting income;
(C)
From net realized short-term capital gains;
(D)
From net realized long-term capital gains; and
(E)
From the principal of the trust estate; and
(6)
The trust document may provide that assets used by the trust beneficiary, such
as a residence property or tangible personal property, may be excluded from the
net fair market value for computing the unitrust amount. Such use may be
considered equivalent to the 'income' or unitrust amount.
(b)
A trust which provides for a fixed percentage payout in excess of five percent
per year shall be considered to have paid out all of the income of the total
return unitrust, and to have paid out principal of the said trust to the extent
that the fixed percentage payout exceeds five percent per year.
(c)
This Code section shall be effective for trusts established and wills executed
on or after July 1, 2009.
ARTICLE
2
Part 1
Part 1
53-15-40.
This
article shall be known and may be cited as the 'Georgia Principal and Income
Act.'
53-15-41.
As
used in this article, the term:
(1)
'Accounting period' means a calendar year unless another 12-month period is
selected by a fiduciary. Such term includes a portion of a calendar year or
other 12-month period that begins when an income interest begins or ends when an
income interest ends.
(2)
'Beneficiary' includes, in the case of a decedent's estate, an heir and devisee
and, in the case of a trust, an income beneficiary and a remainder
beneficiary.
(3)
'Fiduciary' means a personal representative or a trustee. Such term includes an
executor, administrator, successor personal representative, special
administrator, and a person performing substantially the same
function.
(4)
'Income' means money or property that a fiduciary receives as current return
from a principal asset. Such term includes a portion of receipts from a sale,
exchange, or liquidation of a principal asset, to the extent provided in Part 4
of this article.
(5)
'Income beneficiary' means a person to whom net income of a trust is or may be
payable.
(6)
'Income interest' means the right of an income beneficiary to receive all or
part of net income, whether the trust provisions require it to be distributed or
authorize it to be distributed in the trustee's discretion.
(7)
'Mandatory income interest' means the right of an income beneficiary to receive
net income that the trust provisions require the fiduciary to
distribute.
(8)
'Net income' means the total receipts allocated to income during an accounting
period minus the disbursements made from income during the period, plus or minus
transfers under this article to or from income during the period.
(9)
'Person' means an individual, corporation, business trust, estate, trust,
partnership, limited liability company, association, joint venture, government;
governmental subdivision, agency, or instrumentality; public corporation, or any
other legal or commercial entity.
(10)
'Principal' means property held in trust for distribution to a remainder
beneficiary when the trust terminates.
(11)
'Terms of the trust' means the manifestation of the intent of a settlor or
decedent with respect to the trust, expressed in a manner that admits of its
proof in a judicial proceeding.
(12)
'Trustee' includes an original, additional, or successor trustee, whether or not
appointed or confirmed by a court.
Part
2
53-15-60.
(a)
If a beneficiary is to receive a pecuniary amount outright from a trust after an
income interest ends, and no interest is provided for by the terms of the trust,
the pecuniary amount usually bears interest at the legal rate after the
expiration of 12 months from the date the income interest
terminates.
(b)
The general rule in subsection (a) of this Code section shall be subservient to
the equity and necessity of a particular case.
53-15-61.
Expenses
incurred in connection with the settlement of a decedent's estate or the winding
up of a terminating income interest, including interest and penalties concerning
taxes, fees of attorneys and personal representatives and trustees and court
costs, may be charged against the principal or income in the discretion of the
personal representative or trustee.
Part
3
53-15-80.
(a)
An income beneficiary is entitled to net income from the date on which the
income interest begins. An income interest begins on the date specified in the
terms of the trust or, if no date is specified, on the date an asset becomes
subject to a trust or successive income interest.
(b)
An asset becomes subject to a trust:
(1)
On the date it is transferred to the trust in the case of an asset that is
transferred to a trust during the transferor's life;
(2)
On the date of a testator's death in the case of an asset that becomes subject
to a trust by reason of a will, even if there is an intervening period of
administration of the testator's estate; or
(3)
On the date of an individual's death in the case of an asset that is transferred
to a fiduciary by a third party because of the individual's death.
(c)
An asset becomes subject to a successive income interest on the day after the
preceding income interest ends, as determined under subsection (d) of this Code
section, even if there is an intervening period of administration to wind up the
preceding income interest.
(d)
An income interest ends on the day before an income beneficiary dies or another
terminating event occurs, or on the last day of a period during which there is
no beneficiary to whom a trustee may distribute income.
53-15-81.
(a)
A trustee shall allocate an income receipt or disbursement to principal if its
due date occurs before a decedent dies in the case of an estate or before an
income interest begins in the case of a trust or successive income
interest.
(b)
A trustee shall allocate an income receipt or disbursement to income if its due
date occurs on or after the date on which a decedent dies or an income interest
begins and it is a periodic due date. An income receipt or disbursement must be
treated as accruing from day to day if its due date is not periodic or it has no
due date. The portion of the receipt or disbursement accruing before the date on
which a decedent dies or an income interest begins must be allocated to
principal and the balance must be allocated to income.
(c)
An item of income or an obligation is due on the date the payer is required to
make a payment. If a payment date is not stated, there is no due date for the
purposes of this Code section. Distributions to shareholders or other owners
from an entity to which Code Section 53-13-100 applies are deemed to be due on
the date fixed by the entity for determining who is entitled to receive the
distribution or, if no date is fixed, on the declaration date for the
distribution. A due date is periodic for receipts or disbursements that must be
paid at regular intervals under a lease or an obligation to pay interest or if
an entity customarily makes distributions at regular intervals.
53-15-82.
(a)
As used in this Code section, the term 'undistributed income' means net income
received before the date on which an income interest ends. Such term does not
include an item of income or expense that is due or accrued or net income that
has been added or is required to be added to principal under the terms of the
trust.
(b)
When a mandatory income interest ends, the trustee shall pay to a mandatory
income beneficiary who survives that date, or the estate of a deceased mandatory
income beneficiary whose death causes the interest to end, the beneficiary's
share of the undistributed income that is not disposed of under the terms of the
trust unless the beneficiary has an unqualified power to revoke more than five
percent of the trust immediately before the income interest ends. In the latter
case, the undistributed income from the portion of the trust that may be revoked
must be added to principal.
(c)
When a trustee's obligation to pay a fixed annuity or a fixed fraction of the
value of the trust's assets ends, the trustee shall prorate the final payment if
and to the extent required by applicable law to accomplish a purpose of the
trust or its settlor relating to income, gift, estate, or other tax
requirements.
Part
4
Subpart 1
Subpart 1
53-15-100.
(a)
As used in this Code section, the term 'entity' means a corporation,
partnership, limited liability company, regulated investment company, real
estate investment trust, common trust fund, or any other organization in which a
trustee has an interest other than a trust or estate to which Code Section
53-13-101 applies, a business or activity to which Code Section 53-13-102
applies, or an asset-backed security to which Code Section 53-13-131
applies.
(b)
Except as otherwise provided in this Code section, a trustee shall allocate to
income money received from an entity.
(c)
A trustee shall allocate the following receipts from an entity to
principal:
(1)
Property other than money;
(2)
Money received in one distribution or a series of related distributions in
exchange for part or all of a trust's interest in the entity;
(3)
Money received in total or partial liquidation of the entity; and
(4)
Money received from an entity that is a regulated investment company or a real
estate investment trust if the money distributed is a capital gain dividend for
federal income tax purposes.
(d)
Money is received in partial liquidation:
(1)
To the extent that the entity, at or near the time of a distribution, indicates
that it is a distribution in partial liquidation; or
(2)
If the total amount of money and property received in a distribution or series
of related distributions is greater than 20 percent of the entity's gross
assets, as shown by the entity's year-end financial statements immediately
preceding the initial receipt.
(e)
Money is not received in partial liquidation, nor may it be taken into account
under paragraph (2) of subsection (d) of this Code section, to the extent that
it does not exceed the amount of income tax that a trustee or beneficiary must
pay on taxable income of the entity that distributes the money.
(f
) A trustee may rely upon a statement made by an entity about the source or
character of a distribution if the statement is made at or near the time of
distribution by the entity's board of directors or other person or group of
persons authorized to exercise powers to pay money or transfer property
comparable to those of a corporation's board of directors.
53-15-101.
A
trustee shall allocate to income an amount received as a distribution of income
from a trust or an estate in which the trust has an interest other than a
purchased interest and shall allocate to principal an amount received as a
distribution of principal from such a trust or estate. If a trustee purchases an
interest in a trust that is an investment entity, or a decedent or donor
transfers an interest in such a trust to a trustee, Code Section 53-15-100 or
53-15-131 apply to a receipt from the trust.
53-15-102.
(a)
If a trustee who conducts a business or other activity determines that it is in
the best interest of all the beneficiaries to account separately for the
business or activity instead of accounting for it as part of the trust's general
accounting records, the trustee may maintain separate accounting records for its
transactions, whether or not its assets are segregated from other trust
assets.
(b)
A trustee who accounts separately for a business or other activity may determine
the extent to which its net cash receipts must be retained for working capital,
the acquisition or replacement of fixed assets, and other reasonably foreseeable
needs of the business or activity, and the extent to which the remaining net
cash receipts are accounted for as principal or income in the trust's general
accounting records. If a trustee sells assets of the business or other activity,
other than in the ordinary course of the business or activity, the trustee shall
account for the net amount received as principal in the trust's general
accounting records to the extent the trustee determines that the amount received
is no longer required in the conduct of the business.
(c)
Activities for which a trustee may maintain separate accounting records shall
include:
(1)
Retail, manufacturing, service, and other traditional business
activities;
(2)
Farming;
(3)
Raising and selling livestock and other animals;
(4)
Management of rental properties;
(5)
Extraction of minerals and other natural resources;
(6)
Timber operations; and
(7)
Activities to which Code Section 53-13-130 applies.
Subpart
2
53-15-120.
A
trustee shall allocate to principal:
(1)
To the extent not allocated to income under this article, assets received from a
transferor during the transferor's lifetime, a decedent's estate, a trust with a
terminating income interest, or a payer under a contract naming the trust or its
trustee as beneficiary;
(2)
Money or other property received from the sale, exchange, liquidation, or change
in form of a principal asset, including realized profit, subject to the
provisions of this article;
(3)
Amounts recovered from third parties to reimburse the trust because of
disbursements described in paragraph (7) of subsection (a) of Code Section
53-15-151 or for other reasons to the extent not based on the loss of
income;
(4)
Proceeds of property taken by eminent domain, but a separate award made for the
loss of income with respect to an accounting period during which a current
income beneficiary had a mandatory income interest is income;
(5)
Net income received in an accounting period during which there is no beneficiary
to whom a trustee may or must distribute income; and
(6)
Other receipts as provided in this article.
53-15-121.
To
the extent that a trustee accounts for receipts from rental property pursuant to
this Code section, the trustee shall allocate to income an amount received as
rent of real or personal property, including an amount received for cancellation
or renewal of a lease. An amount received as a refundable deposit, including a
security deposit or a deposit that is to be applied as rent for future periods,
must be added to principal and held subject to the terms of the lease and is not
available for distribution to a beneficiary until the trustee's contractual
obligations have been satisfied with respect to that amount.
53-15-122.
(a)
An amount received as interest, whether determined at a fixed, variable, or
floating rate, on an obligation to pay money to the trustee, including an amount
received as consideration for prepaying principal, must be allocated to income
without any provision for amortization of premium.
(b)
A trustee shall allocate to principal an amount received from the sale,
redemption, or other disposition of an obligation to pay money to the trustee
more than one year after it is purchased or acquired by the trustee, including
an obligation whose purchase price or value when it is acquired is less than its
value at maturity. If the obligation matures within one year after it is
purchased or acquired by the trustee, an amount received in excess of its
purchase price or its value when acquired by the trust must be allocated to
income.
(c)
This Code section shall not apply to an obligation to which Code Section
53-15-125, 53-15-126, 53-15-127, 53-15-128, 53-15-130, or 53-15-131
applies.
53-15-123.
(a)
Except as otherwise provided in subsection (b) of this Code section, a trustee
shall allocate to principal the proceeds of a life insurance policy or other
contract in which the trust or its trustee is named as beneficiary, including a
contract that insures the trust or its trustee against loss for damage to,
destruction of, or loss of title to a trust asset. The trustee shall allocate
dividends on an insurance policy to income if the premiums on the policy are
paid from income, and to principal if the premiums are paid from
principal.
(b)
A trustee shall allocate to income proceeds of a contract that insures the
trustee against loss of occupancy or other use by an income beneficiary, loss of
income, or, subject to Section 53-15-102, loss of profits from a
business.
(c)
This section does not apply to a contract to which Code Section 53-15-125
applies.
53-15-124.
If
a trustee determines that an allocation between principal and income required by
Code Section 53-15-125, 53-15-126, 53-15-127, 53-15-128, or 53-15-131 is
insubstantial, the trustee may allocate the entire amount to principal unless
one of the circumstances described in Code Section 53-15-21 applies to the
allocation. Such power may be exercised by a cotrustee in the circumstances
described in Code Section 53-15-21 and may be released for the reasons and in
the manner described in such Code section. An allocation is presumed to be
insubstantial if:
(1)
The amount of the allocation would increase or decrease net income in an
accounting period, as determined before the allocation, by less than 10 percent;
or
(2)
The value of the asset producing the receipt for which the allocation would be
made is less than 10 percent of the total value of the trust's assets at the
beginning of the accounting period.
53-15-125.
(a)
As used in this Code section, the term:
(1)
'Payment' means a payment that a trustee may receive over a fixed number of
years or during the life of one or more individuals because of services rendered
or property transferred to the payer in exchange for future payments. Such term
includes a payment made in money or property from the payer's general assets or
from a separate fund created by the payer. Such term also includes any payment
from a separate fund, regardless of the reason for the payment.
(2)
'Separate fund' includes a private or commercial annuity, an individual
retirement account, and a pension, profit-sharing, stock-bonus, or
stock-ownership plan.
(b)
To the extent that a payment is characterized as interest or a dividend or a
payment made in lieu of interest or a dividend, a trustee shall allocate it to
income. The trustee shall allocate to principal the balance of the payment and
any other payment received in the same accounting period that is not
characterized as interest, a dividend, or an equivalent payment.
(c)
If no part of a payment is characterized as interest, a dividend, or an
equivalent payment, and all or part of the payment is required to be made, a
trustee shall allocate to income 10 percent of the part that is required to be
made during the accounting period and the balance to principal. If no part of a
payment is required to be made or the payment received is the entire amount to
which the trustee is entitled, the trustee shall allocate the entire payment to
principal. For purposes of this subsection, a payment is not required to be made
to the extent that it is made because the trustee exercises a right of
withdrawal.
(d)
Except as otherwise provided in subsection (e) of this Code section, subsections
(f) and (g) of this Code section apply, and subsections (b) and (c) of this
Code section do not apply, in determining the allocation of a payment made from
a separate fund to:
(1)
A trust to which an election to qualify for a marital deduction under Section
2056(b)(7) of the federal Internal Revenue Code of 1986 has been made;
or
(2)
A trust that qualifies for the marital deduction under Section 2056(b)(5) of the
federal Internal Revenue Code of 1986.
(e)
Subsections (d), (f), and (g) of this Code section do not apply if and to the
extent that the series of payments would, without the application of subsection
(d) of this Code section, qualify for the marital deduction under Section
2056(b)(7)(C) of the federal Internal Revenue Code of 1986.
(f)
A trustee shall determine the internal income of each separate fund for the
accounting period as if the separate fund were a trust subject to this act.
Upon request of the surviving spouse, the trustee shall demand of the person
administering the separate fund that this internal income be distributed to the
trust. The trustee shall allocate a payment from the separate fund to income to
the extent of the internal income of the separate fund and distribute that
amount to the surviving spouse. The trustee shall allocate the balance to
principal. Upon request of the surviving spouse, the trustee shall allocate
principal to income to the extent the internal income of the separate fund
exceeds payments made from the separate fund to the trust during the accounting
period.
(g)
If a trustee cannot determine the internal income of a separate fund but can
determine the value of the separate fund, the internal income of the separate
fund is deemed to equal to 4 percent of the fund's value, according to the most
recent statement of value preceding the beginning of the accounting period. If
the trustee can determine neither the internal income of the separate fund nor
the fund's value, the internal income of the fund is deemed to equal the product
of the interest rate and the present value of the expected future payments, as
determined under Section 7520 of the federal Internal Revenue Code of 1986 for
the month preceding the accounting period for which the computation is
made.
(h)
This Code section shall not apply to payments to which Code Section 53-15-126
applies.
53-15-126.
(a)
As used in this Code section, the term 'liquidating asset' means an asset whose
value will diminish or terminate because the asset is expected to produce
receipts for a period of limited duration. Such term includes a leasehold,
patent, copyright, royalty right, and right to receive payments during a period
of more than one year under an arrangement that does not provide for the payment
of interest on the unpaid balance. Such term does not include a payment subject
to Code Section 53-15-125, resources subject to Code Section 53-15-127, timber
subject to Code Section 53-15-128, an activity subject to Code Section
53-15-130, an asset subject to Code Section 53-15-131, or any asset for which
the trustee establishes a reserve for depreciation under Section
53-15-152.
(b)
A trustee shall allocate to income 10 percent of the receipts from a liquidating
asset and the balance to principal.
53-15-127.
(a)
To the extent that a trustee accounts for receipts from an interest in minerals
or other natural resources pursuant to this Code section, the trustee shall
allocate them as follows:
(1)
If received as nominal delay rental or nominal annual rent on a lease, a receipt
must be allocated to income;
(2)
If received from a production payment, a receipt must be allocated to income if
and to the extent that the agreement creating the production payment provides a
factor for interest or its equivalent. The balance must be allocated to
principal;
(3)
If an amount received as a royalty, shut-in-well payment, take-or-pay payment,
bonus, or delay rental is more than nominal, 90 percent must be allocated to
principal and the balance to income; and
(4)
If an amount is received from a working interest or any other interest not
provided for in paragraph (1), (2), or (3) of this Code section, 90 percent of
the net amount received must be allocated to principal and the balance to
income.
(b)
An amount received on account of an interest in water that is renewable must be
allocated to income. If the water is not renewable, 90 percent of the amount
must be allocated to principal and the balance to income.
(c)
This Code section applies whether or not a decedent or donor was extracting
minerals, water, or other natural resources before the interest became subject
to the trust.
(d)
If a trust owns an interest in minerals, water, or other natural resources on
July 1, 2009, the trustee may allocate receipts from the interest as provided in
this Code section or in the manner used by the trustee before July 1, 2009. If
the trust acquires an interest in minerals, water, or other natural resources
after July 1, 2009, the trustee shall allocate receipts from the interest as
provided in this Code section.
53-15-128.
(a)
To the extent that a trustee accounts for receipts from the sale of timber and
related products pursuant to this Code section, the trustee shall allocate the
net receipts:
(1)
To income to the extent that the amount of timber removed from the land does not
exceed the rate of growth of the timber during the accounting periods in which a
beneficiary has a mandatory income interest;
(2)
To principal to the extent that the amount of timber removed from the land
exceeds the rate of growth of the timber or the net receipts are from the sale
of standing timber;
(3)
To or between income and principal if the net receipts are from the lease of
timberland or from a contract to cut timber from land owned by a trust, by
determining the amount of timber removed from the land under the lease or
contract and applying the rules in paragraphs (1) and (2) of this subsection;
or
(4)
To principal to the extent that advance payments, bonuses, and other payments
are not allocated pursuant to paragraph (1), (2), or (3) of this
subsection.
(b)
In determining net receipts to be allocated pursuant to subsection (a) of this
Code section, a trustee shall deduct and transfer to principal a reasonable
amount for depletion.
(c)
This Code section shall apply whether or not a decedent or transferor was
harvesting timber from the property before it became subject to the
trust.
(d)
If a trust owns an interest in timberland on July 1, 2009, the trustee may
allocate net receipts from the sale of timber and related products as provided
in this Code section or in the manner used by the trustee before July 1, 2009.
If the trust acquires an interest in timberland after July 1, 2009, the trustee
shall allocate net receipts from the sale of timber and related products as
provided in this Code section.
53-15-129.
(a)
If a marital deduction is allowed for all or part of a trust whose assets
consist substantially of property that does not provide the spouse with
sufficient income from or use of the trust assets, and if the amounts that the
trustee transfers from principal to income under Code Section 53-15-21 and
distributes to the spouse from principal pursuant to the terms of the trust are
insufficient to provide the spouse with the beneficial enjoyment required to
obtain the marital deduction, the spouse may require the trustee to make
property productive of income, convert property within a reasonable time, or
exercise the power conferred by Code Section 53-15-21. The trustee may decide
which action or combination of actions to take.
(b)
In cases not governed by subsection (a) of this Code section, proceeds from the
sale or other disposition of an asset are principal without regard to the amount
of income the asset produces during any accounting period.
53-15-130.
(a)
As used in this Code section, the term 'derivative' means a contract or
financial instrument or a combination of contracts and financial instruments
which gives a trust the right or obligation to participate in some or all
changes in the price of a tangible or intangible asset or group of assets, or
changes in a rate, an index of prices or rates, or other market indicator for an
asset or a group of assets.
(b)
To the extent that a trustee does not account under Code Section 53-13-102 for
transactions in derivatives, the trustee shall allocate to principal receipts
from and disbursements made in connection with those transactions.
(c)
If a trustee grants an option to buy property from the trust, whether or not the
trust owns the property when the option is granted, grants an option that
permits another person to sell property to the trust, or acquires an option to
buy property for the trust or an option to sell an asset owned by the trust, and
the trustee or other owner of the asset is required to deliver the asset if the
option is exercised, an amount received for granting the option must be
allocated to principal. An amount paid to acquire the option must be paid from
principal. A gain or loss realized upon the exercise of an option, including an
option granted to a settlor of the trust for services rendered, must be
allocated to principal.
53-15-131.
(a)
As used in this Code section, the term 'asset-backed security' means an asset
whose value is based upon the right it gives the owner to receive distributions
from the proceeds of financial assets that provide collateral for the security.
Such term includes an asset that gives the owner the right to receive from the
collateral financial assets only the interest or other current return or only
the proceeds other than interest or current return. Such term does not include
an asset to which Code Section 53-15-100 or 53-15-125 applies.
(b)
If a trust receives a payment from interest or other current return and from
other proceeds of the collateral financial assets, the trustee shall allocate to
income the portion of the payment which the payer identifies as being from
interest or other current return and shall allocate the balance of the payment
to principal.
(c)
If a trust receives one or more payments in exchange for the trust's entire
interest in an asset-backed security in one accounting period, the trustee shall
allocate the payments to principal. If a payment is one of a series of payments
that will result in the liquidation of the trust's interest in the security over
more than one accounting period, the trustee shall allocate 10 percent of the
payment to income and the balance to principal.
ARTICLE
5
53-15-150.
(a)
A trustee shall make the following disbursements from income:
(1)
One-half of the regular compensation of the trustee and of any person providing
investment advisory or custodial services to the trustee;
(2)
One-half of all court costs, attorney's fees, and other fees and expenses for
accountings, judicial proceedings, or other matters that involve both the income
and remainder interests;
(3)
All of the other ordinary expenses incurred in connection with the
administration, management, or preservation of trust property and the
distribution of income, including interest, ordinary repairs, regularly
recurring taxes assessed against principal, and court costs, attorney's fees,
and other fees and expenses of a proceeding or other matter that concerns
primarily the income interest; and
(4)
Recurring premiums on insurance covering the loss of a principal asset or the
loss of income from or use of the asset.
(b)
Any of the above disbursements made in connection with judicial proceedings may
be varied by the order of the court.
(c)
All other disbursements shall be made from principal.
53-15-151.
(a)
A trustee shall make the following disbursements from principal:
(1)
The remaining one-half of the disbursements described in paragraphs (1) and (2)
of subsection (a) of Code Section 53-15-156;
(2)
All of the trustee's compensation calculated on principal as a fee for
acceptance, distribution, or termination, and disbursements made to prepare
property for sale;
(3)
Payments on the principal of a trust debt;
(4)
Court costs, attorney's fees, and other fees and expenses of a proceeding that
concerns primarily principal, including a proceeding to construe the trust or to
protect the trust or its property;
(5)
Premiums paid on a policy of insurance not described in Section 501(4) of the
federal Internal Revenue Code of 1986, of which the trust is the owner and
beneficiary;
(6)
Estate, inheritance, and other transfer taxes, including penalties, apportioned
to the trust; and
(7)
Disbursements related to environmental matters, including reclamation, assessing
environmental conditions, remedying and removing environmental contamination,
monitoring remedial activities and the release of substances, preventing future
releases of substances, collecting amounts from persons liable or potentially
liable for the costs of those activities, penalties imposed under environmental
laws or regulations and other payments made to comply with those laws or
regulations, statutory or common law claims by third parties, and defending
claims based on environmental matters.
(b)
Any of the above disbursements provided for in subsection (a) of this Code
section made in connection with judicial proceedings may be varied by the order
of the court.
(c)
If a principal asset is encumbered with an obligation that requires income from
that asset to be paid directly to the creditor, the trustee shall transfer from
principal to income an amount equal to the income paid to the creditor in
reduction of the principal balance of the obligation.
53-15-152.
(a)
As used in this Code section, the term 'depreciation' means a reduction in value
due to wear, tear, decay, corrosion, or gradual obsolescence of a fixed asset
having a useful life of more than one year.
(b)
A trustee may transfer to principal a reasonable amount of the net cash receipts
from a principal asset that is subject to depreciation but may not transfer any
amount for depreciation:
(1)
Of that portion of real property used or available for use by a beneficiary as a
residence or of tangible personal property held or made available for the
personal use or enjoyment of a beneficiary;
(2)
During the administration of a decedent's estate; or
(3)
Under this Code section if the trustee is accounting under Section 403 of the
federal Internal Revenue Code of 1986 for the business or activity in which the
asset is used.
(c)
An amount transferred to principal need not be held as a separate
fund.
53-15-153.
Wherever
a charge that is properly allocable to income has been made or is expected to be
made from principal because of the unusually large nature of the charge or
otherwise, the trustee may transfer an appropriate amount from income to
principal in one or more accounting periods to reimburse principal or to provide
a reserve for future principal disbursements.
53-15-154.
(a)
A tax required to be paid by a trustee based on receipts allocated to income
shall be paid from income.
(b)
A tax required to be paid by a trustee based on receipts allocated to principal
shall be paid from principal, even if the tax is called an income tax by the
taxing authority.
(c)
A tax required to be paid by a trustee on the trust's share of an entity's
taxable income shall be paid:
(1)
From income to the extent that receipts from the entity are allocated only to
income;
(2)
From principal to the extent that receipts from the entity are allocated only to
principal;
(3)
Proportionately from principal and income to the extent that receipts from the
entity are allocated to both income and principal; and
(4)
From principal to the extent that the tax exceeds the total receipts from the
entity.
(d)
After applying subsections (a) through (c) of this Code section, the trustee
must adjust income or principal receipts to the extent that its taxes are
reduced because it receives a deduction for payments made to a
beneficiary.
53-15-155.
(a)
A fiduciary may make adjustments between principal and income to offset the
shifting of economic interests or tax benefits between income beneficiaries and
remainder beneficiaries which arise from:
(1)
Elections and decisions, other than those described in subsection (b) of this
Code section, that the fiduciary makes from time to time regarding tax
matters;
(2)
An income tax or any other tax that is imposed upon the fiduciary or a
beneficiary as a result of a transaction involving or a distribution from the
estate or trust; or
(3)
The ownership by an estate or trust of an interest in an entity whose taxable
income, whether or not distributed, is includable in the taxable income of the
estate, trust, or a beneficiary.
(b)
If the amount of an estate tax marital deduction or charitable contribution
deduction is reduced because a fiduciary deducts an amount paid from principal
for income tax purposes instead of deducting it for estate tax purposes, and as
a result estate taxes paid from principal are increased and income taxes paid by
an estate, trust, or beneficiary are decreased, each estate, trust, or
beneficiary that benefits from the decrease in income tax shall reimburse the
principal from which the increase in estate tax is paid. The total reimbursement
must equal the increase in the estate tax to the extent that the principal used
to pay the increase would have qualified for a marital deduction or charitable
contribution deduction but for the payment. The proportionate share of the
reimbursement for each estate, trust, or beneficiary whose income taxes are
reduced must be the same as its proportionate share of the total decrease in
income tax. An estate or trust shall reimburse principal from
income."
SECTION
6.
Code
Section 7-1-242 of the Official Code of Georgia Annotated, relating to
restrictions on corporate fiduciaries, is amended by revising subsection (a) as
follows:
"(a)
No corporation, partnership, or other
business
association
entity
may lawfully act as a fiduciary in this state except:
(1)
A financial institution authorized to act in such capacity pursuant to the
provisions of Georgia law;
(2)
A trust company;
(3)
A national bank or a state bank lawfully doing a banking business in this state
and authorized to act as a fiduciary under the laws of the United States or
another state;
(4)
A savings bank or savings and loan association lawfully doing a banking business
in this state and authorized to act as a fiduciary under the laws of the United
States or another state;
(5)
Attorneys at law licensed to practice in this state, whether
incorporated
organized
as a professional corporation or otherwise;
(6)
An investment adviser registered pursuant to the provisions of 15 U.S.C. Section
80b-3 or Chapter 5 of Title 10, provided this exception shall not authorize an
investment adviser to act in any fiduciary capacity subject to the provisions of
Title 53, relating to wills, trusts, and the administration of
estates, or
Title 29, relating to guardianships and
conservatorships;
or
(7)
A securities broker or dealer registered pursuant to the provisions of 15 U.S.C.
Section 78o or Chapter 5 of Title 10 acting in such fiduciary capacity
incidental to and as a consequence of its broker or dealer
activities;
or
(8)
A nonprofit
corporation."
SECTION
7.
All
laws and parts of laws in conflict with this Act are repealed.