Modifying Irrevocable Trusts Using Nonjudicial Settlement...

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Modifying Irrevocable Trusts Using

Nonjudicial Settlement AgreementsStructuring NJSA Wrappers, Relocating Trust Situs, Resolving Disputes, Remedying Trust Construction Issues

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

TUESDAY, SEPTEMBER 18, 2018

Presenting a live 90-minute webinar with interactive Q&A

Alissa B. Gorman, J.D., LL.M. (Taxation), Shareholder, McAndrews Law Offices, Berwyn, Pa.

Miguel Pena, Atty, Law Office of Miguel D. Pena, Esq., Wilmington, Del.

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Modifying Irrevocable Trusts Using NonjudicialSettlement Agreements

Alissa B. Gorman

McAndrews Law Offices, P.C.

[email protected]

Berwyn, Pennsylvania 5

Amending an Irrevocable Trust

6

Irrevocable Trust

• Settlor establishes trust and transfers assets to a trustee for the benefit of an individual

• Permits the settlor to reduce death taxes and transfer wealth in a protective arrangement

• Settlor cannot amend or revoke the trust; gives up all control over property

• Changing circumstances warrant modifications to trust

7

Common Reasons to Modify Improve Administrative Provisions

Modernize Trust

• Appoint Trust Protector• Clarify Trustee Succession• Adjust Trustee Powers• Change Situs/governing

law

• Clarify scrivener’s error• Update Language• Merge trusts• Add Tax Planning

Provisions• Address

incapacity/special needs of beneficiary

• Grantor to non-grantor• Change investment

provisions

8

How Do I Amend anIrrevocable Trust?

• Trust provisions

• Decanting

• Statutory authority

• Judicial and Nonjudicial

9

Authority to Amend

• Trust Provisions

• Power to substitute assets

• Power to terminate if small corpus

• Trustee succession

• Trustee removal and resignation

• Convert to unitrust

• Merge trusts

• Amend for change in law

• Transfer situs

10

Authority to Amend

• Decanting

• Trustee “decants” or pours trust assets into another trust

• Trustee has inherit authority through general trustee powers

• Some states have decanting statutes• Statutes vary in regard to Trustee power

• Some state that beneficial interests of beneficiaries cannot change

• Some require court approval 11

Authority to Amend

• Statutory: Uniform Trust Code

• Intended to streamline existing trust case law and statutes into an updated body of laws governing trusts

• Provides a framework for all 50 states on trust law

• Passed in 31 states and District of Columbia

12

Uniform Trust Code

13

Source: Uniform Law Commission

Uniform Trust Code

• Judicial & Nonjudicial modification

• Nonjudicial: UTC 111, 411(a)

• Agreement between interested persons to modify or terminate a trust without petitioning the court to approve new provisions

• Judicial: UTC 410 – 416

• Court proceeding by interested person to modify or terminate a trust

14

Nonjudicial Amendment

• Nonjudicial Settlement Agreement (NJSA)

• UTC 111

• Modification by Consent

• UTC 411

15

NJSA –UTC §111

Nonjudicial Settlement Agreements

UTC §111

(a) For purposes of this section, “interested persons” means persons whose consent would be required in order to achieve a binding settlement were the settlement to be approved by the court.

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Nonjudicial Settlement Agreements

(b) Except as otherwise provided in subsection (c), interested persons may enter into a binding nonjudicialsettlement agreement with respect to any matter involving a trust.

(c) A nonjudicial settlement agreement is valid only to the extent it does not violate a material purpose of the trust and includes terms and conditions that could be properly approved by the court under this Code or other applicable law.

17

Nonjudicial Settlement Agreements –UTC 111

(d) Matters that may be resolved by a nonjudicial settlement agreement include:

(1) the interpretation or construction of the terms of the trust;

(2) the approval of a trustee’s report or accounting;

(3) direction to a trustee to refrain from performing a particular act or the grant to a trustee of any necessary or desirable power;

(4) the resignation or appointment of a trustee and the determination of a trustee’s compensation;

(5) transfer of a trust’s principal place of administration;

(6) liability of a trustee for an action relating to the trust.

18


(e) Any interested person may request the court to approve a nonjudicial settlement agreement, to determine whether the representation as provided in Article 3 was adequate, and to determine whether the agreement contains terms and conditions the court could have properly approved.

UTC 111 Comment: “resolution of disputes by nonjudicial means is encouraged”

19


• Typically used in situations where settlor passed away, and trustee and beneficiaries agree

• Cannot violate a material purpose of the Trust

• Does not require a court proceeding to approve the settlement agreement

20

NJSA – Interested Person• Who must agree to the amendment?

• UTC §111(a) “Interested Persons”• Does not identify specific parties

• Consent of settlor, trustee, and beneficiaries

• Consent of trustee and beneficiaries

• Consent of settlor and beneficiaries

• Consent of all beneficiaries

• Consent of some beneficiaries

• State trust code may define interested person• UTC 111 in PA: Substitutes “interested persons” with

“Trustee and all beneficiaries”

• When charity involved, state Attorney General typically noticed

21

NJSA – Interested Person

• UTC §103 Definitions

• (3) “Beneficiary” means a person that:• (A) has a present or future beneficial interest in a trust, vested

or contingent; or

• (B) in a capacity other than that of trustee, holds a power of appointment over trust property.

22

NJSA – Interested Person

• Trustee• UTC Comment: …[T]his section does not attempt to

precisely define the “interested persons” whose consent is required to obtain a binding settlement as provided in subsection (a). However, the consent of the trustee would ordinarily be required to obtain a binding settlement with respect to matters involving a trustee’s administration, such as approval of a trustee’s report or resignation.

23

NJSA –Material Purpose

• UTC 411: Spendthrift provision presumed NOT to be a material purpose of the trust. • UTC Comment: “In order to be material, the purpose remaining

to be performed must be of some significance…”

• UTC Comment: “A finding of such a purpose generally requires some showing of a particular concern or objective on the part of the settlor, such as concern with regard to the beneficiary’s management skills, judgment, or level of maturity.”

• Spendthrift language considered boilerplate?

• State differences

• PA: Spendthrift clause is presumed to constitute a material purpose

25

Matters Resolved by NJSA

• Resignation/appointment of Trustee & Trustee compensation

• Transfer of trust situs

• Interpret trust terms

• Grant to Trustee of any power

• Any other matter concerning trust administration

• Include special needs trust for beneficiary with disabilities

• In PA, can modify or terminate a trust by NJSA• Only if trustee and all beneficiaries agree and does

not violate material purpose26

NJSA – Court approval

• Interested persons may petition court to approve NJSA

• Determine if representation was adequate and

• Determine whether the agreement contains terms and conditions the court could have approved.

• If don’t have consent from all interested persons, an interested person can turn a NJSA into a judicial settlement.

• Court is limited to determining whether the beneficiaries were adequately represented and whether the terms of the NJSA are terms that the court could otherwise approve.

• Parties seeking court review beyond the limited review of the NJSA must petition for review under another code provision and not UTC §111. 27

Judicial Approval of NJSA

• Why petition court for approval of NJSA if not required under statute?

• Protection from liability

• Required by corporate trustee

• Charity as beneficiary

• Clarify whether amendment violates material purpose

28

Modification by Consent

• UTC 411(a)• Modification by consent of settlor and all

beneficiaries• Even if inconsistent with material purpose

• Broader authority than NJSA

• Court approval may not be necessary if settlor and all beneficiaries agree (state specific)

• Agent for settlor may consent if the Power of Attorney expressly authorizes such power; Guardian may consent if approved by the court with jurisdiction over guardianship

• Settlor may not represent beneficiary in modification or consent of the Trust

29


• UTC 411(a)

• Allows a trust to be modified or terminated over a trustee’s objection –however, under UTC §410(b) the trustee would have standing to object

• Distribution if consent to terminate – If the trust is terminated by a nonjudicial consent modification, the trustee distributes the property as agreed upon by the beneficiaries

30


• Gift Tax Consequences

• Generally, there is no gift by settlor or beneficiary.

• Settlor joining the beneficiaries in the termination or modification does not cause this to be a gift by the settlor. Treas Reg §20.2038-1(a)(2)

• If termination, provided the beneficiaries agree to distribute the trust property in accordance with their proportionate interests, no gift by a beneficiary to the trust

31


• Estate Tax Inclusion

• Should not cause inclusion in settlor’s estate

• Some practitioners were concerned the settlor’s consent would cause inclusion under 2036 or 2038 (i.e., has the settlor retained the power to modify trust in conjunction with others ).

• In response, the UTC was revised to require that the settlor cannot represent any beneficiaries in the modification or termination of the trust.

32


• Estate Tax Inclusion

• Some states have specifically provided that the settlor has a mere “veto power” – thus the settlor’s power is more passive and should not cause inclusion.

• Some states require court approval even with settlor’s consent

• PLR 201233008 – settlor’s consent to a trust modification pursuant to state statute did not cause the trust assets to be included in the settlor’s gross estate under IRC §§2036 or 2038. 33

Judicial ApprovalModification by Consent

• UTC 411(b)• If all beneficiaries consent (but not settlor), may

petition court to amend trust if not inconsistent with material purpose of trust • Trustee consent not required (can object under

410(b))

• UTC 411(e)• If not all beneficiaries consent, may be approved by

court:• If all beneficiaries had consented, the trust could have

been modified by court; and• Interest of beneficiary who does not consent will be

adequately protected 34

Judicial Approval of Amendment

• UTC 412 – Unanticipated circumstances

• UTC 413 – Cy Pres (charitable trusts)

• UTC 414 – Trust too small to justify administration

• UTC 415 – Correct mistakes/conform to Settlor’s probable intention

• UTC 416 – Achieve Settlor’s tax objectives, divide trusts, merge trusts

35

Representation

• Actual representation - based upon an individual’s relationship to a represented party (Sections 302 and 303 of the Uniform Trust Code)

• Virtual representation - based upon an individual holding substantially identical interests to the represented party (Section 304 of the Uniform Trust Code)

36

Representation by Holder of General Testamentary Power

of Appointment

Section 302 of the Uniform Trust Code provides for the representation of persons whose interests, as permissible appointees, takers in default, or otherwise, are subject to the power, by a holder of a general testamentary power of appointment to the extent there is no conflict of interest between the holder of a general testamentary power of appointment and the person represented with respect to the particular question or dispute.

37

Representation by Fiduciaries and Parents

Section 303 of the Uniform Trust Code provides for representation by fiduciaries and parents to the extent that there is no conflict of interest between the representative and the person represented or among those being represented with respect to a particular question or dispute

•A conservator or guardian may represent and bind the estate that the conservator or guardian controls

•An agent having authority to act with respect to the particular question or dispute may represent and bind the principal

•A trustee may represent and bind the beneficiaries of a trust

•A personal representative of a decedent’s estate may represent and bind persons interested in the estate

•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

38

Representation by Person Having Substantially Identical

Interest

Section 304 of the Uniform Trust Code provides for a minor, incapacitated or unborn individual or person whose identity or location is unknown and not reasonably ascertainable, to be represented and bound by a person having the substantially identical interest with respect to the particular question or dispute, unless the minor, incapacitated or unborn individual or person whose identity or location is unknown and not reasonably ascertainable is otherwise represented, and only to the extent there is no conflict of interest between the representative and the person represented

39

Appointment of Representative

Section 305 of the Uniform Trust Code provides for the appointment of a representative

•If the court determines that an interest is not represented or that the otherwise available representation might be inadequate, the court may appoint a representative to receive notice, give consent, and otherwise represent bind and act on behalf of a minor, incapacitated or unborn individual, or a person whose identity or location is unknown. A representative may be appointed to represent several persons or interests

•A representative may act on behalf of the individual represented with respect to any matter arising under the uniform trust code, whether or not a judicial proceeding concerning the trust is pending

•In making decisions, a representative may consider general benefit accruing to the living members of the individual’s family 40

Limitations on Representation

• Representative must not have a conflict of interest with respect to a particular question at issue in the modification

• A Settlor can never represent a beneficiary in a nonjudicial consent modification

• A parent can represent a minor or unborn child unless a guardian has been appointed by a court

• Some states provide priority between parents who both want to represent a minor child – generally the parent who is a beneficiary of the trust or whose ancestors created the trust has priority

41

Limitations on Representation

• Certain fiduciaries can be actual representatives (i.e. conservator, guardian, agent under power of attorney, trustee with respect to trust beneficiaries, and personal representative with respect to persons interested in the decedents estates)

• Holders of inter vivos or testamentary general powers of appointment can bind potential appointees

42

PA Uniform Trust Act

§ 7710.1. Nonjudicial settlement agreements - UTC 111.

(a) (Reserved).

(b) General rule.--Except as otherwise provided in subsection (c), all beneficiaries and trustees of a trust may enter into a binding nonjudicial settlement agreement with respect to any matter involving the trust. The rules of Subchapter C (relating to representation) shall apply to a settlement agreement under this section.

(c) Exception.--A nonjudicial settlement agreement is valid only to the extent it is not inconsistent with a material purpose of the trust and includes terms and conditions that could be properly approved by the court under this chapter or other applicable law.

43


• (d) Matters that may be resolved.--Matters that may be resolved by a nonjudicial settlement agreement include the following:

• (1) The interpretation or construction of the provisions of a trust instrument.• (2) The approval of a trustee's report or accounting or waiver of the preparation

of a trustee's report or accounting.• (3) Direction to a trustee to perform or refrain from performing a particular act.• (4) The resignation or appointment of a trustee and the determination of a

trustee's compensation.• (5) Transfer of a trust's situs.• (6) Liability or release from liability of a trustee for an action relating to the

trust.• (7) The grant to a trustee of any necessary or desirable power.• (8) The exercise or nonexercise of any power by a trustee.• (9) Questions relating to the property or an interest in property held as part of a

trust.• (10) An action or proposed action by or against a trust or trustee.• (11) The modification or termination of a trust.• (12) An investment decision, policy, plan or program of a trustee.• (13) Any other matter concerning the administration of a trust.

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(e) Request of court.--Any beneficiary or trustee of a trust may request the court to approve a nonjudicial settlement agreement to determine whether the representation as provided in Subchapter C was adequate or whether the agreement contains terms and conditions the court could have properly approved.

45

Taylor case:Modification by Consent

• Edward Winslow Taylor, Intervivos Trust (Pennsylvania)

• Facts: Beneficiaries of trust established by settlor in 1928 brought action to modify Trust by consent under 7740.1(d) (UTC 411(e)) to add a portability clause despite a separate Code Section (7766/UTC 706) on removal and replacement of a trustee. Trust agreement gave beneficiaries the right to appoint a new Trustee upon a vacancy in the trusteeship, which included removal as an example. However, the trust did not contain language addressing trustee removal. Trustee objected, reasoning that beneficiaries cannot achieve a “back door” removal through 7740.1, but must meet the strict requirements of 7766. 46


• Issue: Can beneficiaries of an irrevocable trust without a trustee removal provision consent to modify the Trust to allow the beneficiaries the ability to remove and replace the Trustee at any time where there is a specific code section that addresses removal? • Is the lack of removal provision a material

purpose?

• Is the beneficiaries’ intent relevant to the modification?

47


• Philadelphia Orphans’ Court ruled in favor of trustee.

• Modifying the trust by consent of beneficiaries to include a removal provision, which has its own UTA section, avoids the stricter standards of the removal section, and cannot be used to circumvent those stricter requirements.

• “It clearly was not the manifest intention of the Pennsylvania legislature to allow beneficiaries to remove a trustee based upon their agreement and without satisfying the requirements of section 7766 where the settlor made no provision for trustee removal.

• Taylor, Phila. O.C. No. 3563 IV of 193948

Taylor Case

• Superior Court ruled in favor of the beneficiaries.

• Modification of trust to include portability provision by consent of beneficiaries was proper under 7740.1(d) (UTC 411(d)) despite a separate code section (7766/UTC 706) that addresses Trustee removal• Section 7740.1 is clear and unambiguous on its face.

• Statute does not exclude any modifications. Because the requirements of PEF Code Section 7740.1(d) (UTC 411(d)) were met, the Court approved modification.

• Beneficiaries only seek to modify trust to permit removal, not asking court to remove trustee

• Taylor, 2015 PA Super 199 (Pa. Super. Ct., 2015) 49

Taylor Case

• Supreme Court ruled in favor of the trustee.

• Issue taken up on appeal: “whether the Superior Court erred in holding that trust beneficiaries may circumvent the requirements for removal of a trustee in 20 Pa. C.S.A. § 7766 by amending the Trust Under 20 Pa.C.S.A. §7740.1.”

• “We conclude that the UTA does not permit the removal and replacement of a trustee without Orphans’ Court approval in accordance with section 7766.”

• Trust Under Agreement of Edward Winslow Taylor, Appeal of Wells Fargo Bank, 164 A.3d 1147 (Pa. 2017)

50

Taylor Case

• Each provision of the UTC must be read in conjunction with other provisions.

• In PA, UTA 7766/UTC 706 exclusive provision on removal of trustees.

• Does silence on trustee removal in the trust agreement indicate that settlor did not intend for beneficiaries to have power to remove trustee?

• How is client to know that trustee removal is permissible if drafting attorney does not tell him/her?

51

In re: The Trust ofClarence Hildebrandt

• Clarence Hildebrandt created trust in 2002

• Clarence and brother Wayne named co-trustees

• Clarence’s attorney appointed as successor trustee

• Two senior attorneys of same law firm appointed as alternate successor trustees

• Clarence died in 2004

• In 2015, Wayne, with agreement of beneficiaries, petitioned court to name niece as successor trustee because Clarence’s attorney was deceased

• Court granted petition over law firm’s objection 52

In re: The Trust ofClarence Hildebrandt

• Law firm appealed, arguing that the proposed modification violated a material purpose of the trust

• Appeals court upheld decision.• No definition of material purpose in statute or in Kansas

case law

• No indication that the successor trustee be independent third party

• Kansas and Pennsylvania’s statutes on modification by beneficiary consent and trustee removal statute are very similar• Kansas court did not consider comment to its trustee

removal statute – 706 is exclusive provision on removal of trustees 53

Modifying Irrevocable Trust

Agreements Using Nonjudicial

Settlement Agreements(Other NJSA Statutory Provisions and Variances from

UTC Model, Utilization of NJSA to Relocate Trust

Situs)

Miguel D. Pena

Law Office of Miguel D. Pena, Esq.

(302) 559-4752

[email protected]

Variances

NJSA STATUTORY PROVISIONS AND VARIANCES FROM UTC MODEL OVERVIEW:

• All states (including the District of Columbia) have adopted some version of the UTC with respect to NJSA’s, except for 18 (AK, AZ, CA, CO, CT, DE, GA, HI, ID, IN, IA, LA, NV, OK, RI, SD, TX, WA).

• Many states that have not adopted the UTC have adopted their own statutes providing for NJSA’s.

• In many instances, NJSA statutes in the states that have adopted the UTC have provisions that vary, to some extent from the UTC. There is also variance in the NJSA provisions among the states that have not adopted the UTC, but have adopted their own NJSA statutes.

• Examples of Variances

• Who may enter into a NJSA? “Interested persons”, “Qualified beneficiaries”.

• UTC §111(a) defines an interested person as “persons whose consent would be required in order to achieve a binding settlement were the settlement to be approved by the court”.

• The required parties to a NJSA vary by jurisdiction and is not always clear on what consents are required. However, unless expressly waived consents from all beneficiaries would be required.

56

Variances

• Arizona:

• Ariz. Rev. Stat. §14-1201(28) provides that an interested person includes:

• “Any trustee, heir, devisee, child, spouse, creditor, beneficiary, person holding a

power of appointment and other person who has a property right in or claim

against a trust estate or the estate of a decedent, ward or protected person.

Interested person also includes a person who has priority for appointment as

personal representative and other fiduciaries representing interested persons.

Interested person, as the term relates to particular persons, may vary from time to

time and must be determined according to the particular purposes of, and matter

involved in, any proceeding”.

57

Variances• Delaware:

• 12 Del C., § 3338 provides that “interested persons’’ means persons whose consent would

be required in order to achieve a binding settlement were the settlement to be approved by

the Court of Chancery. With respect to any nonjudicial settlement agreement regarding a

trust, the term ‘‘interested persons” means all whose interest in the trust would be affected

by the proposed nonjudicial settlement agreement, which may include that an interested

person to a NJSA means all persons whose interest in the trust would be affected by the

proposed nonjudicial settlement agreement, which may include:

• Trustees and other fiduciaries, unless they have otherwise signified their consent or

non-objection to the petition by acting as a petitioner or accepting a fiduciary position;

• Trust beneficiaries, who will generally be those with a present interest in the trust and

those whose interest in the trust would vest, without regard to the exercise or non-

exercise of a power of appointment, if the present interest in the trust terminated on

the date the petition is filed;

• The trustor of the trust, if living; and

• All other persons having an interest in the trust according to the express terms of the

trust instrument (such as, but not limited to, holders of powers and persons having

other rights, held in a nonfiduciary capacity, relating to trust property).

• Pennsylvania:

• 20 Pa. Cons. Stat. §7710.1(b) provides, in part that “…all beneficiaries and trustees of a

trust may enter into a binding nonjudicial settlement agreement with respect to any matter

involving the trust”.

58

Variances• Tennessee:

• Tenn. Code Ann. §35-15-111(a) – “…the trustee and the qualified beneficiaries may enter into a binding nonjudicial settlement agreement with respect to any matter involving a trust.”

• Tenn. Code Ann. §35-15-103(24) – “Qualified beneficiary” means a beneficiary who, assuming the nonexercise of all powers of appointment and the nonoccurrence of any event not reasonably expected to occur, on the date the beneficiary’s qualification is determined:

• Is a distributee or permissible distributee of trust income or principal;

• Would be a distributee or permissible distributee of trust income or principal if the interests of the distributes . . . terminated on that date; or

• Would be a distributee or permissible distributee of trust income or principal if the trust terminated on that date.

• Tenn. Code Ann §35-15-110 also provides that a charitable organization expressly designated to receive distributions under the terms of a charitable trust has the rights of a qualified beneficiary if the charitable organization, on the date the charitable organization’s qualification is being determined:

• Is a distributee or a permissible distributee of trust income or principal;

• Would be a distributee or a permissible distributee of trust income or principal if the interests of other distributees or permissible distributees then receiving or eligible to receive distributions terminated on that date without causing the trust to terminate; or

• Would be a distribute or a permissible distribute of trust income or principal if the trust were terminated on that date.

59

Matters that may be addressed through

NJSASome states provide a non-exclusive list of matters that can be addressed by a NJSA:

• Delaware.

• 12 Del. C. § 3338 provides that “. . . interested persons may enter into a binding

nonjudicial settlement agreement with respect to any matter involving a trust . . . .”.

• 12 Del. C. § 3338(d) provides a non-exclusive list of matters that may be resolved by a

nonjudicial settlement agreement:

• The interpretation or construction of the terms of the trust;

• The approval of a trustee’s report or accounting;

• The direction to a trustee to refrain from performing a particular act or the grant to a

trustee of any necessary or desirable power;

• The resignation or appointment of a trustee and the determination of a trustee’s

compensation;

• The transfer of a trust’s principal place of administration; and

• The liability of a trustee for an action relating to the trust.

• Florida.

• Fla. Stat. §736.0111(3) provides that “A nonjudicial settlement may not be used to

produce a result not authorized by other provisions of this code, including, but not

limited to, terminating or modifying a trust in an impermissible manner.”

60


NJSA• Illinois.

• 760 Ill. Comp. Stat. §5/16.1(d)(4)(K) – “The following matters may be resolved by a nonjudicial settlement agreement…. Modification of the terms of the trust pertaining to administration of the trust.”

• Kansas.

• Kan. Stat. Ann. §58a-111(d) states that matters that may be resolved by a nonjudicial settlement agreement are limited to:


• The resignation or appointment of a trustee and the determination of a trustee’s compensation;

• The transfer of a trust’s principal place of administration; and

• Liability of a trustee for an action relating to the trust.

• Massachusetts.

• Mass. Gen Laws. Ch. 203E. §111(d) provides that matters that may be resolved by a NJSA include:

• The interpretation or construction of the terms of a trust;


• Direction to a trustee to refrain from performing a particular act or the grant to a trustee of any necessary or desirable power;


• Transfer of a trust’s principal place of administration.

61


NJSA

• New Hampshire.

• N.H. Rev. Stat. §564-B:1-111(d)(7) provides that “Matters that may be resolved by a nonjudicial settlement agreement include without limitation…. the termination or modification of a trust.”

• North Carolina/South Carolina.

• The Carolinas copy all of the above Massachusetts provisions except for resolving the interpretation or construction of the terms of the trust. N.C.G.S. §36C-1-111(b) and S.C. §62-7-111(b):

• Interested persons may enter into a binding nonjudicial settlement agreement with respect to any of the following matters involving a trust:


• Direction to a trustee to perform or refrain from performing a particular administrative act or the grant to a trustee of any necessary or desirable administrative power, including a power granted under G.S. §36C-8-816;


• Transfer of a trust’s principal place of administration; and

• Liability of a trustee for any action taken under subdivisions (1) through (4) of this subsection. 62


NJSA• Ohio.

• Ohio Rev. Code §5801.10(C)(4)-(6)provides: “Matters that may be resolved by a private

settlement agreement [i.e., NJSA] include, but are not limited to, all of the following:

• Modifying the terms of the trust, if the modification is not inconsistent with any

material purpose of the trust;

• Modifying the terms of the trust in the manner required to qualify the gift under the

terms of the trust for the charitable estate or gift tax deduction permitted by federal

law, including the addition of mandatory governing instrument requirements for a

charitable remainder trust as required by the Internal Revenue Code and regulations

promulgated under it in any case in which the parties interested in the trust have

submitted written agreements to the proposed changes or written disclaimer of

interest; and

• Modifying the terms of the trust in the manner required to qualify any gift under the

terms of the trust for the estate tax marital deduction available to noncitizen spouses,

including the addition of mandatory governing instrument requirements for a

qualified domestic trust under section 2056A of the Internal Revenue Code and

regulations promulgated under it in any case in which the parties interested in the trust

have submitted written agreements to the proposed changes or written disclaimer of

interest.

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