HCS HB 241 -- TRUSTS (Smith)

This substitute revises the law governing principal and income
in the administration of trusts.  The substitute:

(1)  Redefines the standards and processes used to determine
which parts of a trust constitute principal and which constitute
income from that principal, as well as trustees' obligations in
administering those trusts;

(2)  Allows trustees discretion in adjusting the trust
portfolio, to do what is fair and reasonable to all
beneficiaries, absent clear intent in the trust to the contrary,
in accordance with the Prudent Investor Act;

(3)  Adopts and sets the "unitrust amount" (the default
mechanism used to determine how much of a portfolio to count as
income) at 3%;

(4)  Repeals the rule against perpetuities as it applies to
trusts, under certain conditions; and

(5)  Reduces the statute of limitations, from 5 years to 2
years, for claims of breach of trust resulting from a trustee's
allocation of income and principal.

FISCAL NOTE:  No impact on state funds.

Missouri House of Representatives
Last Updated November 26, 2001 at 11:43 am