CONNECTICUT ADOPTION OF UNIFORM TRUST CODE – FOUR THINGS TO KNOW
Connecticut adopted the Uniform Trust Code (the “UTC”) effective for 2020. The UTC, which has now been adopted in 34 states, including Massachusetts, modernizes Connecticut’s trust laws and provides a framework for directed trusts and asset protection trusts. The changes have benefits, but also may change trustees’ responsibilities. Here are four things to know about CT’s adoption of the UTC.
- Trust Modification and Termination. The new trust laws offer greater flexibility for the modification or termination of irrevocable trusts. Now, a court may modify or terminate an irrevocable trust if the grantor, trustees and beneficiaries all consent.
- Asset Protection Trusts. An asset protection trust is a vehicle for potentially protecting one’s own assets from creditors while retaining the possibility of accessing those assets in the future. An individual may now establish a self-settled asset protection trust with his or her own assets and remain a permissible beneficiary of the trust. Assets held in a properly structured asset protection trust generally are not reachable by creditors.
- Trust Directors. A directed trust facilitates planning for special beneficiary circumstances or special assets, such as a closely held business, by allowing different fiduciaries to be in charge of different aspects of trust administration. Under the new law, a trustee’s responsibilities may be divided among two or more fiduciaries. These so-called “trust directors” may manage different aspects of the trust administration. For example, one family member may be responsible for distributions to beneficiaries as the “distribution director,” while a third party may be responsible for the investment of trust assets as the “investment director.” Trust directors have the same fiduciary duties as trustees.
- Notices to Beneficiaries. Trustees should be aware of changes to notice requirements. The new law requires the trustee to keep certain beneficiaries reasonably informed about the trust, give notices when the trust becomes irrevocable or the trustee changes, and in some circumstances provide annual reports about the trust to the beneficiaries.
If you would like to discuss Connecticut’s Uniform Trust Code, or any other matters related to business law or estate planning, please contact Fournier Legal Services at jfournier@jeflegal.com or 860.670.3535.
Joseph E. Fournier is an Attorney and a CPA who has more than twenty years of experience in a variety of business legal matters, including start-ups and company formations, drafting shareholder and operating agreements, contracts, employment law, commercial litigation, tax planning and audit defense, and mergers and acquisitions (M&A). He also handles estate planning matters, such as business succession planning, wills, trusts, and probate.