Senate
Study
Bill
3036
-
Introduced
SENATE
FILE
_____
BY
(PROPOSED
COMMITTEE
ON
JUDICIARY
BILL
BY
CHAIRPERSON
ZAUN)
A
BILL
FOR
An
Act
relating
to
the
Iowa
trust
code,
including
the
creation
1
of
directed
trusts,
the
transfer
of
trust
assets
into
2
other
trusts,
and
requirements
related
to
notices
to
3
beneficiaries.
4
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
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Section
1.
Section
633A.1102,
Code
2020,
is
amended
by
1
adding
the
following
new
subsections:
2
NEW
SUBSECTION
.
6A.
“Distribution
trust
director”
means
3
any
person
given
authority
by
an
instrument
to
exercise
all
or
4
any
portion
of
the
powers
and
discretions
set
forth
in
section
5
633A.4810.
Except
as
provided
in
the
trust
instrument,
the
6
distribution
trust
director
shall
have
the
same
fiduciary
duty
7
and
liability
in
the
exercise
or
nonexercise
of
such
powers
8
and
discretions
as
the
trustee
would
in
the
absence
of
such
9
directory
powers.
10
NEW
SUBSECTION
.
6B.
“Excluded
fiduciary”
means
any
11
fiduciary
excluded
from
exercising
certain
powers
under
an
12
instrument
which
powers
may
be
exercised
by
the
settlor,
trust
13
director,
trust
protector,
or
other
persons
designated
in
the
14
instrument.
15
NEW
SUBSECTION
.
10A.
“Investment
trust
director”
means
any
16
person
given
authority
by
an
instrument
to
exercise
all
or
any
17
portion
of
the
powers
and
discretions
set
forth
in
section
18
633A.4809.
Except
as
provided
in
the
trust
instrument,
the
19
investment
trust
director
shall
have
the
same
fiduciary
duty
20
and
liability
in
the
exercise
or
nonexercise
of
such
powers
21
and
discretions
as
the
trustee
would
in
the
absence
of
such
22
directory
powers.
23
NEW
SUBSECTION
.
19A.
“Trust
director”
means
either
an
24
investment
trust
director
or
a
distribution
trust
director.
25
NEW
SUBSECTION
.
19B.
“Trust
protector”
means
any
person
26
given
authority
by
an
instrument
to
exercise
all
or
any
portion
27
of
the
powers
and
discretions
set
forth
in
section
633A.4805.
28
A
trust
protector
shall
not
be
considered
to
be
acting
in
29
a
fiduciary
capacity
except
to
the
extent
the
governing
30
instrument
provides
otherwise.
However,
a
trust
protector
31
shall
be
considered
to
be
acting
in
a
fiduciary
capacity
to
32
the
extent
that
the
trust
protector
exercises
the
authority
or
33
powers
of
a
trust
director.
34
Sec.
2.
Section
633A.1102,
subsection
7,
Code
2020,
is
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amended
to
read
as
follows:
1
7.
“Fiduciary”
includes
a
personal
representative,
executor,
2
administrator,
guardian,
conservator,
and
trustee
,
and
trust
3
director
.
4
Sec.
3.
Section
633A.4207,
subsection
2,
Code
2020,
is
5
amended
to
read
as
follows:
6
2.
If
In
addition
to
any
powers
granted
to
a
trustee,
the
7
terms
of
the
trust
may
confer
upon
a
person
other
than
the
8
settlor
of
a
revocable
trust
director
the
power
to
direct
9
certain
actions
of
the
trustee
,
the
trustee
shall
act
in
10
accordance
with
an
exercise
of
the
power
unless
the
trustee
11
knows
the
attempted
exercise
violates
the
terms
of
the
trust
12
or
the
trustee
knows
that
the
person
holding
the
power
is
not
13
competent
and
to
take
such
other
actions
with
respect
to
the
14
trust
as
set
forth
in
sections
633A.4801
through
633A.4810
.
15
A
person’s
status
as
a
trust
director
or
trust
protector
16
under
Iowa
law
shall
be
determined
on
the
basis
of
the
powers
17
granted
and
not
on
the
name
given
to
such
person
in
the
trust
18
instrument.
19
Sec.
4.
Section
633A.4207,
subsection
3,
Code
2020,
is
20
amended
by
striking
the
subsection.
21
Sec.
5.
Section
633A.4213,
Code
2020,
is
amended
by
adding
22
the
following
new
subsection:
23
NEW
SUBSECTION
.
8.
Notwithstanding
anything
in
this
24
chapter
to
the
contrary,
if
a
trust
instrument,
or
a
trust
25
protector
authorized
by
the
trust
instrument,
designates
that
a
26
notice,
accounting,
or
report
may
be
delivered
to
the
settlor
27
or
to
a
designated
representative
on
behalf
of
a
beneficiary
28
prior
to
such
beneficiary’s
twenty-fifth
birthday,
then,
29
to
the
extent
there
is
no
conflict
of
interest
between
the
30
representative
and
the
beneficiary,
all
notices,
accountings,
31
and
reports
served
on
such
representative
with
respect
to
such
32
period
will
have
the
same
effect
as
if
such
beneficiary
had
33
been
served
directly.
34
Sec.
6.
NEW
SECTION
.
633A.4215
Distributions
in
further
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trust.
1
1.
As
used
in
this
section:
2
a.
“First
trust”
means
a
trust
from
which
income
or
3
principal
is
transferred
into
the
second
trust.
4
b.
“Restricted
trustee”
means
a
trustee
of
the
first
trust
5
if
such
trustee
is
a
beneficiary
of
the
first
trust
or
if
such
6
trustee
has
the
power
to
change
the
trustees
of
the
first
trust
7
within
the
meaning
of
subsection
5.
8
c.
“Second
trust”
means
a
trust
into
which
the
income
or
9
principal
of
the
first
trust
has
been
transferred.
10
2.
Unless
the
terms
of
the
governing
instrument
expressly
11
provide
otherwise,
if
a
trustee
of
the
first
trust
has
12
discretion
under
the
terms
of
a
governing
instrument
to
make
a
13
distribution
of
income
or
principal
to
or
for
the
benefit
of
14
one
or
more
beneficiaries
of
the
first
trust,
whether
or
not
15
restricted
by
any
standard,
then
the
trustee,
independently
or
16
with
court
approval,
may
appoint
part
or
all
of
the
income
or
17
principal
subject
to
the
trustee’s
discretion
in
favor
of
a
18
trustee
of
a
second
trust
under
a
governing
instrument
separate
19
from
the
governing
instrument
of
the
first
trust.
Before
20
exercising
the
trustee’s
discretion
to
appoint
and
distribute
21
assets
to
a
second
trust,
the
trustee
of
the
first
trust
shall
22
determine
whether
the
appointment
is
necessary
or
desirable
23
after
taking
into
account
the
purposes
of
the
first
trust,
the
24
terms
and
conditions
of
the
second
trust,
and
the
consequences
25
of
the
distribution.
In
addition,
the
following
apply
to
all
26
appointments
made
under
this
section:
27
a.
The
second
trust
may
only
have
as
beneficiaries
one
or
28
more
of
the
beneficiaries
of
the
first
trust
to
or
for
whom
29
a
discretionary
distribution
of
income
or
principal
may
be
30
made
from
the
first
trust,
or
to
or
for
whom
a
distribution
of
31
income
or
principal
may
be
made
in
the
future
from
the
first
32
trust
at
a
time
or
upon
the
happening
of
an
event
specified
33
under
the
first
trust.
34
b.
No
restricted
trustee
of
the
first
trust
may
exercise
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such
authority
over
the
first
trust
to
the
extent
that
doing
so
1
could
have
any
of
the
following
effects:
2
(1)
Benefiting
the
restricted
trustee
as
a
beneficiary
3
of
the
first
trust,
unless
the
exercise
of
such
authority
is
4
limited
by
an
ascertainable
standard
based
on
or
related
to
5
health,
education,
maintenance,
or
support.
6
(2)
Removing
restrictions
on
discretionary
distributions
to
7
a
beneficiary
imposed
by
the
governing
instrument
under
which
8
the
first
trust
was
created,
except
that
a
provision
in
the
9
second
trust
which
limits
distributions
by
an
ascertainable
10
standard
based
on
or
related
to
the
health,
education,
11
maintenance,
or
support
of
any
such
beneficiary
is
permitted,
12
as
is
a
distribution
to
a
trust
established
pursuant
to
42
13
U.S.C.
§1396p(d)(4).
14
c.
No
restricted
trustee
of
the
first
trust
may
exercise
15
such
authority
over
the
first
trust
to
the
extent
that
doing
16
so
would
have
the
effect
of
increasing
the
distributions
that
17
can
be
made
from
the
second
trust
to
the
restricted
trustees
of
18
the
first
trust
or
to
a
beneficiary
who
may
change
the
trustees
19
of
the
first
trust
within
the
meaning
of
subsection
5
compared
20
to
the
distributions
that
can
be
made
to
such
trustee
or
21
beneficiary,
as
the
case
may
be,
under
the
first
trust,
unless
22
the
exercise
of
such
authority
is
limited
by
an
ascertainable
23
standard
based
on
or
related
to
health,
education,
support,
24
or
maintenance
within
the
meaning
of
section
2041(b)(1)(A)
or
25
2514(c)(1)
of
the
Internal
Revenue
Code.
26
d.
The
provisions
of
paragraphs
“a”
and
“b”
only
apply
to
27
restrict
the
authority
of
a
trustee
if
either
a
trustee,
or
28
a
beneficiary
who
may
change
the
trustee,
is
a
United
States
29
citizen
or
domiciliary
under
the
Internal
Revenue
Code,
or
the
30
trust
owns
property
that
would
be
subject
to
United
States
31
estate
or
gift
taxes
if
owned
directly
by
such
a
person.
32
e.
In
the
case
of
any
trust
contributions
which
have
been
33
treated
as
gifts
qualifying
for
the
exclusion
from
gift
tax
34
described
in
section
2503(b)
of
the
Internal
Revenue
Code,
by
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reason
of
the
application
of
section
2503(c)
of
the
Internal
1
Revenue
Code,
the
governing
instrument
for
the
second
trust
2
shall
provide
that
the
beneficiary’s
remainder
interest
shall
3
vest
no
later
than
the
date
upon
which
such
interest
would
have
4
vested
under
the
terms
of
the
governing
instrument
for
the
5
first
trust.
6
f.
The
exercise
of
such
authority
may
not
reduce
any
income
7
interest
of
any
income
beneficiary
of
any
of
the
following
8
trusts:
9
(1)
A
trust
for
which
a
marital
deduction
has
been
taken
for
10
federal
tax
purposes
under
section
2056
or
2523
of
the
Internal
11
Revenue
Code,
or
for
state
tax
purposes
under
any
comparable
12
provision
of
applicable
state
law.
13
(2)
A
charitable
remainder
trust
under
section
664
of
the
14
Internal
Revenue
Code.
15
(3)
A
grantor
retained
annuity
or
unitrust
trust
under
16
section
2702
of
the
Internal
Revenue
Code.
17
g.
The
exercise
of
such
authority
does
not
apply
to
trust
18
property
subject
to
a
presently
exercisable
power
of
withdrawal
19
held
by
a
trust
beneficiary
to
whom,
or
for
the
benefit
of
20
whom,
the
trustee
has
authority
to
make
distributions,
unless
21
after
the
exercise
of
such
authority,
the
beneficiary’s
power
22
of
withdrawal
is
unchanged
with
respect
to
the
trust
property.
23
h.
The
exercise
of
such
authority
is
not
prohibited
by
a
24
provision
in
the
governing
instrument
that
prohibits
amendment
25
or
revocation
of
the
trust.
26
i.
Any
appointment
made
by
a
trustee
shall
be
considered
27
a
distribution
by
the
trustee
pursuant
to
the
trustee’s
28
distribution
powers
and
authority.
29
j.
Notwithstanding
the
foregoing
provisions
of
this
30
subsection,
the
governing
instrument
of
the
second
trust
31
may
grant
a
power
of
appointment
to
one
or
more
of
the
32
beneficiaries
of
the
second
trust
who
are
beneficiaries
of
33
the
first
trust.
The
power
of
appointment
may
include
the
34
power
to
appoint
trust
property
to
the
holder
of
the
power
of
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appointment,
the
holder’s
creditors,
the
holder’s
estate,
the
1
creditors
of
the
holder’s
estate,
or
any
other
person,
whether
2
or
not
that
person
is
a
trust
beneficiary.
3
l.
This
section
applies
to
any
trust
administered
under
4
the
laws
of
this
state,
including
a
trust
whose
governing
5
jurisdiction
is
transferred
to
this
state.
6
3.
Any
action
that
may
not
be
taken
by
a
trustee
of
the
7
first
trust
by
reason
of
the
restrictions
in
subsection
2,
8
paragraph
“b”
,
may
instead
be
taken
by
any
other
trustee
of
the
9
first
trust
who
is
not
so
restricted,
or,
if
none,
by
the
next
10
available
party
who
can
be
a
successor
trustee
and
who
is
not
11
so
restricted.
12
4.
The
second
trust
may
be
a
trust
created
or
administered
13
under
the
laws
of
any
jurisdiction,
within
or
without
the
14
United
States.
15
5.
For
the
purposes
of
subsection
2,
a
beneficiary
shall
16
be
considered
to
have
the
power
to
change
the
trustees
if
the
17
beneficiary
can,
alone
or
with
others,
name
such
beneficiary
18
as
a
trustee
or
can
remove
a
trustee
and
replace
that
trustee
19
with
a
new
trustee
who
is
the
beneficiary
or
who
is
related
or
20
subordinate,
as
defined
in
section
672
of
the
Internal
Revenue
21
Code,
to
the
beneficiary.
22
6.
The
exercise
of
the
power
to
distribute
the
income
23
or
principal
of
the
trust
under
this
section
shall
be
by
an
24
instrument
in
writing,
signed
and
acknowledged
by
the
trustee,
25
and
filed
with
the
records
of
the
trust.
The
trustee
of
the
26
first
trust
may
notify
the
beneficiaries
of
the
first
trust,
in
27
writing,
prior
to
the
effective
date
of
the
trustee’s
exercise
28
of
the
power
under
this
section.
A
copy
of
the
exercise
of
this
29
authority
and
the
second
trust
agreement
shall
satisfy
this
30
notice
provision.
For
the
purposes
of
this
section,
the
term
31
“beneficiaries”
means
those
persons
who
would
be
entitled
to
32
notice
and
a
copy
of
the
first
trust
instrument
under
section
33
633A.4213.
34
7.
The
exercise
of
the
power
to
distribute
the
income
or
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principal
of
the
trust
under
this
section
shall
be
considered
1
the
exercise
of
a
power
of
appointment,
excluding
the
power
to
2
appoint
the
trustee,
the
trustee’s
creditors,
the
trustee’s
3
estate,
or
the
creditors
of
the
trustee’s
estate.
4
8.
The
power
under
this
section
may
not
be
exercised
to
5
suspend
the
power
to
alienate
trust
property
or
extend
the
6
first
trust
beyond
the
permissible
period
of
any
rule
against
7
perpetuities
applicable
to
the
first
trust.
8
Sec.
7.
NEW
SECTION
.
633A.4801
Governing
instrument
9
may
provide
trust
director
or
trust
protector
with
powers
and
10
immunities
of
trustee.
11
Any
governing
instrument
providing
for
a
trust
director
12
or
trust
protector
may
also
provide
such
trust
director
13
or
trust
protector
with
some,
none,
or
all
of
the
rights,
14
powers,
privileges,
benefits,
immunities,
or
authorities
15
available
to
a
trustee
under
the
law
of
this
state
or
under
16
the
governing
instrument.
Unless
the
governing
instrument
17
provides
otherwise,
a
trust
director
or
trust
protector
has
no
18
greater
liability
to
any
person
than
would
a
trustee
holding
19
or
benefiting
from
the
rights,
powers,
privileges,
benefits,
20
immunities,
or
authority
provided
or
allowed
by
the
governing
21
instrument
to
such
trust
director
or
trust
protector.
22
Sec.
8.
NEW
SECTION
.
633A.4802
Liability
limits
of
excluded
23
fiduciary.
24
1.
An
excluded
fiduciary
is
not
liable,
either
individually
25
or
as
a
fiduciary,
for
any
of
the
following:
26
a.
Any
loss
that
results
from
compliance
with
a
direction
of
27
the
trust
director,
including
any
loss
from
the
trust
director
28
breaching
fiduciary
responsibilities
or
acting
beyond
the
trust
29
director’s
scope
of
authority.
30
b.
Any
loss
that
results
from
a
failure
to
take
any
31
action
proposed
by
an
excluded
fiduciary
that
requires
prior
32
authorization
of
the
trust
director
if
that
excluded
fiduciary
33
timely
sought
but
failed
to
obtain
that
authorization.
34
c.
Any
loss
that
results
from
any
action
or
inaction
of
35
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the
excluded
fiduciary,
except
for
gross
negligence
or
willful
1
misconduct,
when
the
excluded
fiduciary
is
required,
pursuant
2
to
the
trust
agreement
or
any
other
reason,
to
assume
the
role
3
of
trust
director
or
trust
protector.
4
2.
An
excluded
fiduciary
is
relieved
of
any
obligation
5
to
review
or
evaluate
any
direction
from
a
trust
director
or
6
to
perform
investment
or
suitability
reviews,
inquiries,
or
7
investigations
or
to
make
recommendations
or
evaluations
with
8
respect
to
any
investments
to
the
extent
the
trust
director
9
had
authority
to
direct
the
acquisition,
disposition,
or
10
retention
of
the
investment.
If
the
excluded
fiduciary
offers
11
recommendations
or
evaluations
with
respect
to
any
investments
12
to
the
trust
director,
trust
protector,
or
any
investment
13
advisor
selected
by
the
investment
trust
director,
such
action
14
may
not
be
deemed
to
constitute
an
undertaking
by
the
excluded
15
fiduciary
to
monitor
or
otherwise
participate
in
actions
within
16
the
scope
of
the
trust
director’s
authority
or
to
constitute
17
any
duty
to
do
so.
18
3.
An
excluded
fiduciary
is
relieved
of
any
duty
to
19
communicate
with,
warn,
or
apprise
any
beneficiary
or
third
20
party
concerning
instances
in
which
the
excluded
fiduciary
may
21
have
exercised
the
excluded
fiduciary’s
own
discretion
in
a
22
manner
different
from
the
manner
directed
by
the
trust
director
23
or
trust
protector.
24
4.
Absent
contrary
provisions
in
the
governing
instrument,
25
the
actions
of
the
excluded
fiduciary
pertaining
to
matters
26
within
the
scope
of
authority
of
the
trust
director
or
trust
27
protector
shall
be
deemed
to
be
administrative
actions
taken
by
28
the
excluded
fiduciary
solely
to
allow
the
excluded
fiduciary
29
to
perform
those
duties
assigned
to
the
excluded
fiduciary
30
under
the
governing
instrument,
and
such
administrative
31
actions
shall
not
be
deemed
to
constitute
an
undertaking
by
32
the
excluded
fiduciary
to
monitor,
participate,
or
otherwise
33
take
on
any
fiduciary
responsibility
for
actions
within
the
34
scope
of
authority
of
the
trust
director
or
trust
protector.
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For
purposes
of
this
subsection,
“administrative
actions”
shall
1
include
communications
with
the
trust
director
or
others
and
2
carrying
out,
recording,
or
reporting
actions
taken
at
the
3
trust
director’s
direction.
4
5.
In
an
action
against
an
excluded
fiduciary
pursuant
to
5
the
provisions
of
this
section,
the
burden
to
prove
the
matter
6
by
clear
and
convincing
evidence
is
on
the
person
seeking
to
7
hold
the
excluded
fiduciary
liable.
8
Sec.
9.
NEW
SECTION
.
633A.4803
Death
of
settlor.
9
An
excluded
fiduciary
may
continue
to
follow
the
direction
10
of
the
trust
director
upon
the
incapacity
or
death
of
the
11
settlor
if
the
instrument
so
allows.
12
Sec.
10.
NEW
SECTION
.
633A.4804
Excluded
fiduciary’s
13
liability
for
loss
if
trust
protector
appointed.
14
If
an
instrument
appoints
a
trust
protector,
the
excluded
15
fiduciary
is
not
liable
for
any
loss
resulting
from
any
action
16
taken
upon
the
trust
protector’s
direction.
17
Sec.
11.
NEW
SECTION
.
633A.4805
Powers
and
discretions
of
18
trust
protector.
19
1.
The
powers
and
discretions
of
a
trust
protector
are
as
20
provided
in
the
governing
instrument
and
may
be
exercised
or
21
not
exercised,
in
the
best
interests
of
the
trust,
in
the
sole
22
and
absolute
discretion
of
the
trust
protector
and
are
binding
23
on
all
other
persons.
Except
as
otherwise
provided
in
the
24
governing
instrument,
the
trust
protector
may
do
all
of
the
25
following:
26
a.
Modify
or
amend
the
trust
instrument
to
achieve
favorable
27
tax
status
or
respond
to
changes
in
the
Internal
Revenue
Code,
28
state
law,
or
the
rulings
and
regulations
thereunder.
29
b.
Increase
or
decrease
the
interests
of
any
beneficiaries
30
to
the
trust.
31
c.
Modify
the
terms
of
any
power
of
appointment
granted
32
by
the
trust.
However,
a
modification
or
amendment
shall
33
not
grant
a
beneficial
interest
to
any
individual
or
class
34
of
individuals
not
specifically
provided
for
under
the
trust
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instrument.
1
d.
Remove
and
appoint
a
trustee,
trust
director,
or
other
2
person
designated
in
the
governing
trust
instrument.
3
e.
Terminate
the
trust.
4
f.
Veto
or
direct
trust
distributions.
5
g.
Change
situs
of
the
trust.
6
h.
Change
the
governing
law
of
the
trust.
7
i.
Appoint
a
successor
trust
protector.
8
j.
Interpret
terms
of
the
trust
instrument
at
the
request
9
of
the
trustee.
10
k.
Advise
the
trustee
on
matters
concerning
a
beneficiary.
11
l.
Amend
or
modify
the
trust
instrument
to
take
advantage
of
12
laws
governing
restraints
on
alienation,
distribution
of
trust
13
property,
or
the
administration
of
the
trust.
14
m.
Provide
direction
regarding
notification
of
qualified
15
beneficiaries
pursuant
to
section
633A.4213.
16
n.
Add
to
the
trust
an
individual
beneficiary
or
17
beneficiaries
from
a
class
of
individuals
identified
in
the
18
governing
instrument.
19
o.
Add
to
the
trust
a
charitable
beneficiary
or
20
beneficiaries
from
a
class
of
charities
identified
in
the
trust
21
instrument.
22
p.
Provide
other
powers
and
discretions
in
the
governing
23
instrument.
24
2.
The
powers
referenced
in
subsection
1,
paragraphs
“e”
,
25
“f”
,
and
“l”
,
may
be
granted
notwithstanding
the
provisions
of
26
sections
633A.2201
through
633A.2208.
27
Sec.
12.
NEW
SECTION
.
633A.4806
Submission
to
court
28
jurisdiction
——
effect
on
trust
director
or
trust
protector.
29
By
accepting
an
appointment
to
serve
as
a
trust
director
or
30
trust
protector
of
a
trust
that
is
subject
to
the
laws
of
this
31
state,
the
trust
director
or
the
trust
protector
submits
to
the
32
jurisdiction
of
the
courts
of
Iowa
even
if
investment
advisory
33
agreements
or
other
related
agreements
provide
otherwise.
The
34
trust
director
or
trust
protector
may
be
made
a
party
to
any
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action
or
proceeding
if
a
decision
or
action
of
the
trust
1
director
or
trust
protector
affects
a
trust
that
is
subject
to
2
the
laws
of
this
state.
3
Sec.
13.
NEW
SECTION
.
633A.4807
Powers
of
trust
director
4
incorporated
by
reference
in
will
or
trust
instrument.
5
Any
of
the
powers
enumerated
in
section
633A.4805,
as
they
6
exist
at
the
time
of
the
signing
of
a
will
by
a
testator
or
at
7
the
time
of
the
signing
of
a
trust
instrument
by
a
settlor,
8
may
be,
by
appropriate
reference
made
thereto,
incorporated
in
9
whole
or
in
part
in
such
will
or
trust
instrument,
by
a
clearly
10
expressed
intention
of
a
testator
of
a
will
or
settlor
of
a
11
trust
instrument.
12
Sec.
14.
NEW
SECTION
.
633A.4808
Investment
trust
director
13
or
distribution
trust
director
provided
for
in
trust
instrument.
14
A
trust
instrument
governed
by
the
laws
of
this
state
may
15
provide
for
a
person
to
act
as
an
investment
trust
director
16
or
a
distribution
trust
director
with
regard
to
investment
17
decisions
or
discretionary
distributions,
respectively.
Unless
18
otherwise
provided
by
the
terms
of
the
governing
instrument,
a
19
person
may
simultaneously
serve
as
a
trust
director
and
a
trust
20
protector.
21
Sec.
15.
NEW
SECTION
.
633A.4809
Powers
and
discretions
of
22
investment
trust
director.
23
The
powers
and
discretions
of
an
investment
trust
director
24
shall
be
provided
in
the
trust
instrument
and
may
be
exercised
25
or
not
exercised,
in
the
best
interests
of
the
trust,
in
the
26
sole
and
absolute
discretion
of
the
investment
trust
director
27
and
are
binding
on
any
other
person
and
any
other
interested
28
party,
fiduciary,
and
excluded
fiduciary.
Unless
the
terms
29
of
the
governing
instrument
provide
otherwise,
the
investment
30
trust
director
has
the
power
to
do
all
of
the
following:
31
1.
Direct
the
trustee
with
respect
to
the
retention,
32
purchase,
sale,
exchange,
tender,
or
other
transaction
33
affecting
the
ownership
thereof
or
rights
therein
of
trust
34
investments.
These
powers
include
the
pledge
or
encumbrance
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of
trust
property,
lending
of
trust
assets,
either
secured
or
1
unsecured,
at
terms
defined
by
the
investment
trust
director,
2
to
any
party
including
beneficiaries
of
the
trust,
and
the
3
investment
and
reinvestment
of
principal
and
income
of
the
4
trust.
5
2.
Vote
proxies
for
securities
held
in
trust.
6
3.
Select
one
or
more
investment
directors,
managers,
or
7
counselors,
including
the
trustee,
and
delegate
to
them
any
of
8
the
investment
trust
director’s
powers.
9
4.
Direct
the
trustee
with
respect
to
any
additional
powers
10
and
discretions
over
investment
and
management
of
trust
assets
11
provided
in
the
governing
instrument.
12
5.
Direct
the
trustee
as
to
the
value
of
nonpublicly
traded
13
trust
investments.
14
6.
Direct
the
trustee
as
to
any
investment
or
management
15
power
referenced
in
sections
633A.4401
and
633A.4402.
16
Sec.
16.
NEW
SECTION
.
633A.4810
Powers
and
discretions
of
17
distribution
trust
director.
18
The
powers
and
discretions
of
a
distribution
trust
director
19
over
any
discretionary
distributions
of
income
or
principal,
20
including
distributions
pursuant
to
an
ascertainable
standard
21
or
other
criteria
and
appointments
pursuant
to
section
22
633A.4215,
shall
be
provided
in
the
trust
instrument
and
may
23
be
exercised
or
not
exercised,
in
the
best
interests
of
the
24
trust,
in
the
sole
and
absolute
discretion
of
the
distribution
25
trust
director
and
are
binding
on
any
other
person
and
any
26
other
interested
party,
fiduciary,
and
excluded
fiduciary.
27
Unless
the
terms
of
the
document
provide
otherwise,
the
28
distribution
trust
director
shall
direct
the
trustee
with
29
regard
to
all
discretionary
distributions
to
beneficiaries
30
and
may
direct
appointments
pursuant
to
section
633A.4215.
31
The
distribution
trust
director
may
also
provide
direction
32
regarding
notification
of
qualified
beneficiaries
pursuant
to
33
section
633A.4213.
34
Sec.
17.
LEGISLATIVE
INTENT.
It
is
the
intent
of
the
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general
assembly
that
the
provisions
of
this
Act
enacting
1
section
433A.4215
is
declaratory
of
the
common
law
of
this
2
state
permitting
distributions
in
further
trust
and
shall
be
3
liberally
construed
to
effectuate
the
intent
to
maintain
such
4
common
law
authority.
Section
433A.4215,
as
enacted
by
this
5
Act,
shall
not
be
construed
to
abridge
the
right
of
any
trustee
6
who
has
power
to
distribute
income
or
principal
in
further
7
trust
which
arises
under
the
terms
of
the
first
trust
or
any
8
statute
or
common
law
applicable
to
such
trust.
9
Sec.
18.
CODE
EDITOR
DIRECTIVE.
The
Code
editor
may
10
organize
the
provisions
of
this
Act
enacting
sections
633A.4801
11
through
633A.4810
as
a
new
part
under
subchapter
IV
in
chapter
12
633A.
13
EXPLANATION
14
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
15
the
explanation’s
substance
by
the
members
of
the
general
assembly.
16
This
bill
relates
to
the
Iowa
trust
code.
The
bill
codifies
17
the
concept
of
decanting,
which
generally
allows
trustees
to
18
appoint
part
or
all
of
the
income
or
principal
subject
to
their
19
discretion
in
favor
of
a
trustee
of
a
second
trust.
The
second
20
trust
may
be
a
trust
created
or
administered
under
the
laws
of
21
any
jurisdiction,
within
or
without
the
United
States.
22
The
bill
creates
and
empowers
new
positions
in
the
trusts
23
area,
including
distribution
trust
directors,
excluded
24
fiduciaries,
investment
trust
directors,
trust
directors,
and
25
trust
protectors.
26
The
bill
defines
“distribution
trust
director”
as
any
person
27
given
authority
by
the
instrument
to
exercise
all
or
any
28
portion
of
the
powers
and
discretions
set
forth
in
new
Code
29
section
633A.4810.
30
The
bill
defines
“excluded
fiduciary”
as
any
fiduciary
31
excluded
from
exercising
certain
powers
under
the
instrument
32
which
powers
may
be
exercised
by
the
settlor,
trust
director,
33
trust
protector,
or
other
persons
designated
in
the
instrument.
34
The
bill
defines
“investment
trust
director”
as
any
person
35
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given
authority
by
the
instrument
to
exercise
all
or
any
1
portion
of
the
powers
and
discretions
set
forth
in
new
Code
2
section
633A.4809.
3
The
bill
defines
“trust
director”
as
either
an
investment
4
trust
director
or
a
distribution
trust
director.
5
The
bill
defines
“trust
protector”
as
any
person
given
6
authority
by
the
instrument
to
exercise
all
or
any
portion
7
of
the
powers
and
discretions
set
forth
in
new
Code
section
8
633A.4805.
9
The
bill
amends
the
definition
of
“fiduciary”
in
Code
10
section
633A.1102
to
include
“trust
director”.
11
The
bill
also
amends
Code
section
633A.4207
to
instead
12
provide
for
powers
to
be
granted
to
a
trust
director.
The
13
bill
further
modifies
Code
section
633A.4207
to
indicate
a
14
person’s
status
as
a
trust
director
or
trust
protector
is
to
15
be
determined
by
the
powers
granted
to
such
person,
not
the
16
language
in
the
governing
instrument.
17
The
bill
strikes
Code
section
633A.4207(3),
which
stated
a
18
person
other
than
a
beneficiary
who
held
the
power
to
direct
19
was
presumptively
a
fiduciary
and
was
liable
for
any
loss
that
20
resulted
from
a
breach
of
the
person’s
fiduciary
duty.
21
The
bill
adds
a
new
subsection
to
Code
section
633A.4213.
22
This
new
subsection
provides
that
if
a
trust
instrument,
or
a
23
trust
protector
authorized
by
the
trust
instrument,
designates
24
that
a
notice,
accounting,
or
report
may
be
delivered
to
the
25
settlor
or
to
a
designated
representative
on
behalf
of
a
26
beneficiary
prior
to
such
beneficiary’s
25th
birthday,
then,
27
to
the
extent
there
is
no
conflict
of
interest
between
the
28
representative
and
the
beneficiary,
all
notices,
accountings,
29
and
reports
served
on
such
representative
with
respect
to
such
30
period
will
have
the
same
effect
as
if
such
beneficiary
had
31
been
served
directly.
32
The
bill
limits
a
trustee’s
decanting
ability
in
several
33
ways.
First,
decanting
is
allowed
when
a
trustee
has
34
discretion
under
the
terms
of
a
governing
instrument
to
make
a
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distribution
of
income
or
principal
to
or
for
the
benefit
of
1
one
or
more
beneficiaries
of
a
trust.
2
Second,
before
exercising
the
trustee’s
discretion
to
3
appoint
and
distribute
assets
to
a
second
trust,
the
trustee
4
of
the
first
trust
must
determine
whether
the
appointment
is
5
necessary
or
desirable
after
taking
into
account
the
purposes
6
of
the
first
trust,
the
terms
and
conditions
of
the
second
7
trust,
and
the
consequences
of
the
distribution.
8
Third,
the
bill
limits
a
restricted
trustee’s
decanting
9
ability.
The
trustee
of
the
first
trust
is
a
“restricted
10
trustee”
if
such
trustee
is
a
beneficiary
of
the
first
trust
or
11
if
a
beneficiary
of
the
first
trust
has
a
power
to
change
the
12
trustees
within
the
meaning
of
Code
section
633A.4215(5).
The
13
bill
provides
a
restricted
trustee
is
prohibited
from
decanting
14
the
trust
if
doing
so
could
benefit
the
restricted
trustee
as
15
a
beneficiary
of
the
first
trust,
unless
the
exercise
of
such
16
authority
is
limited
by
an
ascertainable
standard
related
to
17
health,
education,
maintenance,
or
support.
The
bill
also
18
provides
a
restricted
trustee
is
prohibited
from
decanting
the
19
trust
if
doing
so
could
remove
restrictions
on
discretionary
20
distributions
to
a
beneficiary
imposed
by
the
governing
21
instrument
under
which
the
first
trust
was
created,
except
that
22
a
provision
in
the
second
trust
which
limits
distributions
by
23
an
ascertainable
standard
related
to
the
health,
education,
24
maintenance,
or
support
of
any
such
beneficiary
is
permitted,
25
as
is
a
distribution
to
a
trust
established
pursuant
to
42
26
U.S.C.
§1396p(d)(4).
27
Fourth,
the
second
trust
may
only
have
as
beneficiaries
28
one
or
more
of
the
beneficiaries
of
the
first
trust
to
or
for
29
whom
a
discretionary
distribution
of
income
or
principal
may
30
be
made
from
the
first
trust,
or
to
or
for
whom
a
distribution
31
of
income
or
principal
may
be
made
in
the
future
from
the
first
32
trust
at
a
time
or
upon
the
happening
of
an
event
specified
33
under
the
first
trust.
34
Fifth,
no
restricted
trustee
of
the
first
trust
may
exercise
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authority
over
the
first
trust
to
the
extent
that
doing
so
1
would
have
the
effect
of
increasing
the
distributions
that
can
2
be
made
from
the
second
trust
to
the
restricted
trustees
of
the
3
first
trust
or
to
a
beneficiary
who
may
change
the
trustees
of
4
the
first
trust
compared
to
the
distributions
that
can
be
made
5
to
such
trustee
or
beneficiary,
as
the
case
may
be,
under
the
6
first
trust,
unless
the
exercise
of
such
authority
is
limited
7
by
an
ascertainable
standard
related
to
health,
education,
8
support,
or
maintenance
within
the
meaning
of
section
9
2041(b)(1)(A)
or
2514(c)(1)
of
the
Internal
Revenue
Code.
10
Sixth,
in
the
case
of
any
trust
contributions
which
have
11
been
treated
as
gifts
qualifying
for
the
exclusion
from
gift
12
tax
described
in
section
2503(b)
of
the
Internal
Revenue
Code,
13
by
reason
of
the
application
of
section
2503(c)
of
the
Internal
14
Revenue
Code,
the
governing
instrument
for
the
second
trust
15
is
to
provide
that
the
beneficiary’s
remainder
interest
shall
16
vest
no
later
than
the
date
upon
which
such
interest
would
have
17
vested
under
the
terms
of
the
governing
instrument
for
the
18
first
trust.
19
Seventh,
the
exercise
of
such
authority
may
not
reduce
any
20
income
interest
of
any
income
beneficiary
of
a
charitable
21
remainder
trust
under
section
664
of
the
Internal
Revenue
Code,
22
a
grantor
retained
annuity
or
unitrust
trust
under
section
2702
23
of
the
Internal
Revenue
Code,
or
a
trust
for
which
a
marital
24
deduction
has
been
taken
for
federal
tax
purposes
under
section
25
2056
or
2523
of
the
Internal
Revenue
Code,
or
for
state
tax
26
purposes
under
any
comparable
provision
of
applicable
state
27
law.
28
Eighth,
the
exercise
of
such
authority
does
not
apply
29
to
trust
property
subject
to
a
presently
exercisable
power
30
of
withdrawal
held
by
a
trust
beneficiary
to
whom,
or
for
31
the
benefit
of
whom,
the
trustee
has
authority
to
make
32
distributions,
unless
after
the
exercise
of
such
authority,
the
33
beneficiary’s
power
of
withdrawal
is
unchanged
with
respect
to
34
the
trust
property.
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Ninth,
the
exercise
of
such
authority
may
not
suspend
the
1
power
to
alienate
trust
property
or
extend
the
first
trust
2
beyond
the
permissible
period
of
any
rule
against
perpetuities
3
applicable
to
the
first
trust.
4
The
bill
contains
a
provision
describing
the
legislative
5
intent
of
the
new
decanting
section.
The
new
Code
section
6
is
to
be
declaratory
of
the
common
law
of
this
state,
which
7
permits
distributions
in
further
trust,
and
is
to
be
liberally
8
construed
to
effectuate
such
intent.
In
addition,
the
bill
9
provides
that
no
provision
of
the
new
decanting
section
is
to
10
be
construed
to
abridge
the
right
of
any
trustee
who
has
the
11
power
to
distribute
income
or
principal.
12
The
bill
provides
that
any
governing
instrument
providing
13
for
a
trust
director
or
trust
protector
may
also
provide
such
14
trust
director
or
trust
protector
with
some,
none,
or
all
15
of
the
rights,
powers,
privileges,
benefits,
immunities,
or
16
authorities
available
to
a
trustee
under
Iowa
law
or
under
the
17
governing
instrument.
The
bill
also
limits
the
liability
of
18
trust
directors
and
trust
protectors
to
no
greater
than
that
19
of
a
trustee
holding
or
benefiting
from
the
rights,
powers,
20
privileges,
benefits,
immunities,
or
authority
provided
or
21
allowed
by
the
governing
instrument,
unless
the
governing
22
instrument
provides
otherwise.
23
The
bill
places
limitations
on
the
liability
of
an
excluded
24
fiduciary.
The
bill
provides
an
excluded
fiduciary
is
not
25
liable
for
any
loss
that
results
from
compliance
with
a
26
direction
of
the
trust
director;
any
loss
that
results
from
a
27
failure
to
take
any
action
proposed
by
an
excluded
fiduciary
28
that
requires
prior
authorization
of
the
trust
director
if
that
29
excluded
fiduciary
timely
sought
but
failed
to
obtain
that
30
authorization;
and
any
loss
that
results
from
any
action
or
31
inaction
of
the
excluded
fiduciary,
except
for
gross
negligence
32
or
willful
misconduct,
when
the
excluded
fiduciary
is
required,
33
pursuant
to
the
trust
agreement
or
any
other
reason,
to
assume
34
the
role
of
trust
director
or
trust
protector.
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In
terms
of
other
limitations
on
the
liability
of
an
excluded
1
fiduciary,
the
bill
states
an
excluded
fiduciary
is
relieved
2
of
any
obligation
to
review
or
evaluate
any
direction
from
a
3
trust
director
or
to
perform
investment
or
suitability
reviews,
4
or
to
make
recommendations
or
evaluations
with
respect
to
any
5
investments
to
the
extent
the
trust
director
had
authority
6
to
direct
the
acquisition,
disposition,
or
retention
of
the
7
investment.
The
bill
provides
if
the
excluded
fiduciary
offers
8
recommendations
to
the
trust
director,
trust
protector,
or
any
9
investment
advisor
selected
by
the
investment
trust
director,
10
with
respect
to
any
investments,
such
action
may
not
be
deemed
11
to
constitute
an
undertaking
by
the
excluded
fiduciary
to
12
monitor
or
otherwise
participate
in
actions
within
the
scope
of
13
the
trust
director’s
authority.
14
The
bill
also
relieves
the
excluded
fiduciary
from
any
duty
15
to
communicate
with,
warn,
or
apprise
any
beneficiary
or
third
16
party
concerning
instances
in
which
the
excluded
fiduciary
may
17
have
exercised
the
excluded
fiduciary’s
own
discretion
in
a
18
manner
different
from
the
manner
directed
by
the
trust
director
19
or
trust
protector.
20
The
bill
provides,
absent
contrary
provisions
in
the
21
governing
instrument,
the
actions
of
the
excluded
fiduciary
22
pertaining
to
matters
within
the
scope
of
authority
of
23
the
trust
director
or
trust
protector
shall
be
deemed
to
24
be
administrative
actions
taken
by
the
excluded
fiduciary
25
solely
to
allow
the
excluded
fiduciary
to
perform
those
26
duties
assigned
to
the
excluded
fiduciary
under
the
governing
27
instrument.
Pursuant
to
the
bill,
such
administrative
actions
28
shall
not
be
deemed
to
constitute
an
undertaking
by
the
29
excluded
fiduciary
to
monitor,
participate,
or
otherwise
take
30
on
any
fiduciary
responsibility
for
actions
within
the
scope
of
31
authority
of
the
trust
director
or
trust
protector.
32
In
terms
of
the
relationship
between
excluded
fiduciaries
33
and
trust
protectors,
the
bill
states
that
if
an
instrument
34
appoints
a
trust
protector,
the
excluded
fiduciary
is
not
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_____
liable
for
any
loss
resulting
from
any
action
taken
upon
the
1
trust
protector’s
direction.
2
The
bill
sets
out
that
in
an
action
against
an
excluded
3
fiduciary,
the
burden
to
prove
the
matter
by
clear
and
4
convincing
evidence
is
on
the
person
seeking
to
hold
the
5
excluded
fiduciary
liable.
6
The
bill
provides
that,
upon
the
incapacity
or
death
of
7
the
settlor,
an
excluded
fiduciary
may
continue
to
follow
the
8
direction
of
the
trust
director
if
the
instrument
so
allows.
9
The
bill
states
the
powers
and
discretions
of
a
trust
10
protector
are
as
provided
in
the
governing
instrument
and
11
may
be
exercised
or
not
exercised,
in
the
best
interests
of
12
the
trust,
in
the
sole
and
absolute
discretion
of
the
trust
13
protector.
The
bill
describes
actions
trust
protectors
may
14
take,
unless
the
governing
instrument
states
otherwise.
15
The
bill
also
addresses
the
jurisdiction
of
Iowa
courts
over
16
trust
directors
and
trust
protectors.
The
bill
states
that
17
by
accepting
an
appointment
to
serve
as
a
trust
director
or
18
trust
protector
of
a
trust
that
is
subject
to
the
laws
of
this
19
state,
the
trust
director
or
the
trust
protector
submits
to
the
20
jurisdiction
of
the
courts
of
Iowa
even
if
investment
advisory
21
agreements
or
other
related
agreements
provide
otherwise.
22
The
bill
allows
any
of
the
powers
enumerated
in
new
Code
23
section
633A.4805,
as
such
powers
exist
at
the
time
of
the
24
signing
of
a
will
by
a
testator
or
at
the
time
of
the
signing
25
of
a
trust
instrument
by
a
settlor,
to
be
incorporated
in
such
26
will
or
trust
instrument,
by
a
clearly
expressed
intention
of
a
27
testator
of
a
will
or
settlor
of
a
trust
instrument.
28
The
bill
permits
a
person
to
simultaneously
serve
as
a
trust
29
director
and
a
trust
protector.
30
The
bill
states
the
powers
and
discretions
of
an
investment
31
trust
director
shall
be
provided
in
the
trust
instrument
and
32
may
be
exercised
or
not
exercised,
in
the
best
interests
of
the
33
trust,
in
the
sole
and
absolute
discretion
of
the
investment
34
trust
director.
The
bill
describes
actions
investment
trust
35
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directors
may
take,
unless
the
governing
instrument
states
1
otherwise.
2
The
bill
provides
the
powers
and
discretions
of
a
3
distribution
trust
director
over
any
discretionary
4
distributions
of
income
or
principal,
including
distributions
5
pursuant
to
an
ascertainable
standard
or
other
criteria
and
6
appointments
pursuant
to
new
Code
section
633A.4215,
shall
be
7
provided
in
the
trust
instrument
and
may
be
exercised
or
not
8
exercised,
in
the
best
interests
of
the
trust,
in
the
sole
and
9
absolute
discretion
of
the
distribution
trust
director.
The
10
bill
indicates
that,
unless
the
terms
of
the
document
provide
11
otherwise,
the
distribution
trust
director
is
to
direct
the
12
trustee
with
regard
to
all
discretionary
distributions
to
13
beneficiaries.
In
addition,
the
bill
allows
the
distribution
14
trust
director
to
provide
direction
regarding
notification
of
15
qualified
beneficiaries
pursuant
to
Code
section
633A.4213.
16
The
bill
allows
the
Code
editor
to
organize
the
provisions
of
17
the
bill
enacting
new
Code
sections
633A.4801
through
633A.4810
18
as
a
new
part
under
subchapter
IV
in
Code
chapter
633A.
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