A4736

An Act concerning termination of trusteeship and supplementing chapter 70 of Title 3B of the New Jersey Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Statutory Settlement of Trustee’s Administration.

a. A trustee may settle its account pursuant to this section if:

(1) the trust terminates in whole or in part;

(2) the trustee ceases to serve for any reason; or

(3) the trustee seeks discharge for an interim accounting period when it will continue to serve as trustee.

b. When a trustee elects to proceed pursuant to this section, the trustee shall, within a reasonable time, give notice of a request for settlement of its account in the manner and to the extent required by section 1 of P.L.2015, c.276 (C.3B:31-9 and C.3B:31-10) to:

(1) the qualified beneficiaries of the trust;

(2) any other beneficiary who has sent the trustee a request for notice;

(3) any person who has the notification rights of a qualified beneficiary under section 1 of P.L.2015, c.276 (C.3B:31-10); and

(4) any co-trustee, successor trustee, adviser, or other fiduciary.

c. The trustee may also provide notice to any other person who the trustee reasonably believes may have an interest in the trust.

d. The notice under this section shall provide:

(1) The reason for providing the notice;

(2) To the extent applicable, the proposed distribution of the net assets of the trust, including the distributees and proportions to be distributed;

(3) To the extent applicable, an estimate of disbursements anticipated to be made prior to distribution, including legal fees and trustee fees, if any;

(4) Trust account statements showing all transactions, including the trust property, liabilities, receipts, and disbursements, including the source and amount of the trustee’s compensation, a listing of the trust assets and if feasible, the respective fair market value of all assets for the six months prior to the date a trust terminates, the cessation of the trustee’s service, or the end of the interim accounting period, or for the entire term of the trust if the term of the trust is shorter than the six-month period;

(5) A statement that the trustee seeks settlement of its account of the trust, including the period of time for which the trustee seeks discharge of its account of the trust, and that clearly and conspicuously states that claims against a trustee, including claims under section 1 of P.L.2015, c.276 (C.3B:31-71 through C.3B:31-81 and C.3B:31-45), will be forever barred if no objections are received within the time period described in subsection f. of this section;

(6) The name and mailing address of the trustee; and

(7) The name and telephone number of a person who may be contacted for additional information.

e. A person provided notice under subsection b. or c. of this section may object to the settlement of a trustee’s account by notifying the trustee in writing within 60 days after the notice was sent. If the person provided notice makes timely objections to the settlement of the trustee’s account, the trustee or the person making the objections may:

(1) submit the written objection to the court and commence a proceeding for its resolution; or

(2) resolve the objections by nonjudicial settlement agreement under section 1 of P.L.2015, c.276 (C.3B:31-11).

f. (1) If no timely objections are raised under subsection e. of this section, or if objections are raised and subsequently resolved as provided by subsection e. of this section, the settlement of the trustee’s account shall be deemed approved. If the trust is terminating or the trustee is ceasing to serve as trustee, any assets held in trust shall, within a reasonable time thereafter, be distributed subject to payment of expenses. If the notice relates to an interim accounting period, the assets shall continue to be administered in trust subject to payment of expenses.

g. The trustee may rely upon the written statement of a person receiving notice that the person does not object.

h. (1) When settlement of a trustee’s final account is deemed approved pursuant to this section for a terminated trust or with respect to the duties of a trustee who ceased to serve, each person who was sent notice pursuant to this section is barred from bringing a claim against the trustee or challenging the distribution of assets of the trust to the same extent and with the same preclusive effect as if the court had entered a final, unappealable judgment allowing the trustee’s final account in accordance with section 1 of P.L.2015, c.276 (C.3B:17-8).

(2) When settlement of a trustee’s interim account is deemed approved pursuant to this section, each person who was sent notice pursuant to this section is barred from bringing a claim against the trustee for the period of the interim account to the same extent and with the same preclusive effect as if the court had entered a final, unappealable judgment allowing the trustee’s interim account in accordance with section 1 of P.L.2015, c.276 (C.3B:17-8).

i. Nothing in this section shall preclude a trustee from proceeding under section 1 of P.L.2015, c.276 (C.3B:17-3, C.3B:17-10, or C.3B:31-11). If a trustee proceeds in accordance with the terms of this section, the trustee will have no requirement to file a release or discharge in accordance with section 1 of P.L.2015, c.276 (C.3B:17-1)

2. This act shall take effect on the 180^th day following enactment.

STATEMENT

This bill authorizes the trustee of a trust, under certain circumstances, to terminate service without filing a formal accounting with the court or obtaining release agreements from beneficiaries.

Currently, in order to terminate service, the trustee must file a request with the Superior Court and submit an accounting of the trust assets. In the alternative, the trustee may terminate service by obtaining a release from all trust beneficiaries, as long as the beneficiaries have reached the age of majority and are not incapacitated. In the view of the sponsor, these procedures may be time consuming, costly, and delay distribution of the trust assets.

This bill would provide another alternative. It applies when a trust terminates in whole or in part; a trustee ceases to serve for any reason; or a trustee seeks discharge for an interim accounting period when the trustee will continue to serve as trustee. Under the bill, a trustee is required to provide notice to the trust beneficiaries and any other fiduciary. The notice sets out the proposed distribution of the trust assets; the disbursements to be made prior to distribution, including any legal fees and trustee fees; trust account statements showing liabilities, receipts and disbursements; a statement that the trustee seeks settlement of its account of the trust, and that clearly states that claims against a trustee will be forever barred if no objections are received within 60 days after the notice is sent; and names and contact information for the trustee and another person who may be contacted for additional information.

The bill provides that a person may object to the settlement of a trustee’s account by notifying the trustee in writing within 60 days after the notice was sent. If the person provided notice makes timely objections to the settlement of the trustee’s account, the trustee or the person making the objections may submit the written objection to the court and commence a proceeding for its resolution or resolve the objections by nonjudicial settlement agreement pursuant to statute.

Under the bill, if no timely objections are raised or if objections are raised and subsequently resolved, the settlement of the trustee’s account will be deemed approved. If the trust is terminating or the trustee is ceasing to serve as trustee, any assets held in trust will, within a reasonable time, be distributed subject to payment of expenses. If the notice relates to an interim accounting period, the assets will continue to be administered in trust subject to payment of expenses.

The bill provides that when settlement of a trustee’s final account or interim account is deemed approved for a terminated trust or with respect to the duties of a trustee who ceased to serve, each person who was sent notice is barred from bringing a claim against the trustee or challenging the distribution of assets of the trust to the same extent and with the same preclusive effect as if the court had entered a final judgment in the matter allowing the trustee’s final account.