Changes to Delaware trust laws were passed by both houses and approved by Governor Carney on June 19, 2019. The amendments concern (1) a fiduciaries ability to appoint agents and assign fiduciary duties to such agents, (2) the power to appoint successor trustees and additional trustees, and (3) the power of trustees to reimburse trustors for income tax liability that is attributable to the trust’s income.
- Section 3322 allows a trustee to appoint an agent similarly to the way a trustee appoints a power of attorney. The trustee has the same standard of care for liability, hiring and firing of agents as normal.
- Section 3325 which gives a trustee a reason to divide a trust along family lines.
- Section 3342 allows trustees to appoint multiple successor trustees, additional trustees and allocate trustee powers. If a trustee is excluded from a power then it has no liability concerning that power.
- Section 3344 clarifies that a trust can reimburse grantors for income tax consequences on a grantor trust.
- Section 3528 clarifies that decanting powers exist if the first trust gives authority to invade principal to make distributions.
- Section 3544 clarifies that a successor trustee has no obligation to confirm validity of modifications or alterations made by former trustee.
The specific updates listed above are the items that as a Trust Officer are interesting and helpful regarding performing the roles and responsibilities of my job. These are welcoming changes, and all add clarity to each section of the act. This is helpful when we encounter complex situations that require creative solutions for our clients. The updates further strengthen consideration to utilizing Delaware law and or making a change and potentially moving their trust to Delaware.
Christopher Carr, Vice President and Trust Officer
The posts expressed are views of FSTC and are not intended as advice or recommendations. For informational purposes only.