Alert March 14, 2012

Changes to Massachusetts Laws Governing Trusts

There are two new statutes, one which has been enacted and is scheduled to take effect in March and one which is pending before the legislature, that will change many of the ways that trusts have traditionally been administered.  The Massachusetts Uniform Probate Code (the “MUPC”) was signed into law in 2008, but its effective date has been postponed several times.  It is currently scheduled to take effect on March 31, 2012.  The MUPC includes provisions that add flexibility to the administration of trusts while at the same time imposing new duties on trustees.  Trustees of irrevocable trusts, including those that became irrevocable prior to the date the law takes effect, are required to notify the trust beneficiaries of certain events, such as the appointment of a new trustee, and to make accounts and other information available upon request.  The MUPC allows trustees and beneficiaries to enter into court-approved compromise agreements to resolve issues regarding the terms or administration of the trust.  It also allows parents to represent the interests of their minor and unborn children in numerous matters involving the trust, as long as there is no conflict between the interests of the parents and children. 

A bill is pending before the Massachusetts legislature to enact the Massachusetts Uniform Trust  Code (the “MUTC”).  If enacted, the MUTC will replace the trust provisions of the MUPC.  Like the MUPC, the MUTC gives the trustees more flexibility in administering trusts.  It allows trustees and beneficiaries to enter into agreements to resolve a range of issues involving the trust but does not require that these agreements be approved by the court.  It empowers trust beneficiaries to petition the court to modify the terms of a trust and/or remove and replace a trustee.  The MUTC also allows parents to represent their minor and unborn children.  Trustees of irrevocable trusts are required under the MUTC to notify the trust beneficiaries when a trustee is appointed and to send annual accounts to all beneficiaries.  This is also true for new trusts unless the statutory requirements are specifically waived by the terms of the trust. 

In many instances, the provisions of the statutes can be overridden by the terms of a trust instrument.  While trusts may be easier to administer, there may be provisions and requirements in the statutes that you would not want.  If so, it will be important to amend your revocable trust instruments.  If you would like to discuss how the statutes will affect your trusts or a possible amendment to your trust, or if you have established an irrevocable trust or are the trustee or beneficiary of an irrevocable trust, we are available to talk with you about the effect of the new laws on the trust, the trustee and the beneficiaries.

We would also be happy to discuss with you how you might take advantage of the opportunities presented by the 2010 Tax Relief Act in the context of your individual estate plan.