While this may not sound like big news, it is actually very exciting that New Jersey has finally enacted the Uniform Trust Code (UTC) into law. The new law will go into effect on July 17, 2016. When it does, New Jersey will join Pennsylvania, Florida and a majority of other states in adopting most of the provisions of the UTC.
What does this mean for you though? For the most part, if you have have a trust and have ever said to yourself, “The trustees and beneficiaries all agree this is outdated and certain provisions should be modified”, this law is for you!
The best part about the UTC is that it makes it easier to modify a trust without going to court to have it amended. There are obviously certain limitations, but simple things are much easier including:
- like moving the trust from one jurisdiction to another;
- interpreting confusing terms of a trust;
- approving the resignation of a trustee;
- appointing a new trustee;
- granting or removing a trustee power;
- determining trustee compensation;
- approving an accounting;
- terminating a trust (if not inconsistent with terms of trust);
- reforming mistakes; and>
- allowing a parent to bind minor children and unborn children if there is no conflict of interest.
Some other interesting provisions in the new law include:
- Even if a trust says that a beneficiary is not to be told about a trust, the Trustee must respond to the requests of certain beneficiaries and give them a copy of the trust document and other information related to the administration of the trust.
- It clarifies some of the terms of trusts for animals/pets.
- It clarifies the time-frame for a person to contest the validity of a trust.
- It clarifies to what extent and how a trustee can rely on financial advisers.
The new law, while effective starting on July 17, 2016, will apply to all trusts, whenever created. This does not necessarily mean if you have a trust that you need to amend it. However, some people may want to amend the trusts as soon as possible if:
- You really want to restrict your heirs from having the ability to modify the trust; or
- You have a split interest charitable trust based in New Jersey (although it is unclear if the charity or the Attorney General of NJ will consent to this); or
- You know that the trust document has a mistake and you’d rather try to convince the people alive now to fix it than wait for the next generation.