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B 25-0225

Uniform Directed Trust Act of 2023

25th Council Period (2023-2024) Introduced by Phil Mendelson

Establishes a directed-trust framework that separates decision power from the trustee's duties, clarifies duties and liabilities, and lets settlors assign decisions to experts.

Final Reading
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Bill Summary · B 25-0225

Summary — B 25-0225: Uniform Directed Trust Act of 2023

Status: Final Reading (Dec 17, 2024)
Introduced: March 16, 2023 (Chairman Mendelson)
Committee: Judiciary and Public Safety

Note: The official bill text was not provided. This summary describes the bill’s purpose and the typical provisions found in a “Uniform Directed Trust Act” (UDTA)-style measure and highlights the bill’s legislative timeline. For precise legal obligations and details, consult the enacted text.

Main purpose and intent

The bill establishes a statutory framework authorizing and governing “directed trusts” in the jurisdiction. A directed trust separates (1) the power to make certain trust decisions (held by a “trust director” or similar role) from (2) the trustee’s duties to hold legal title and perform administrative functions. The statute aims to clarify allocation of duties and liabilities among settlors, trustees, trust directors, and beneficiaries to reduce uncertainty and litigation.

Key provisions (typical UDTA elements likely included)

  • Definitions: establishes terms such as “directed trust,” “director,” “trustee,” “direction,” and “beneficiary.”
  • Recognition of directed trusts: permits a trust instrument to empower a person (director) to direct the trustee regarding investments, distributions, tax elections, trust accounts, and other specified matters.
  • Scope of directions: identifies categories of matters that may be directed (investment, distribution, accounting, management, tax elections, etc.) and permits trust drafting to expand/limit directions.
  • Duties and liabilities:
    • Trustee duties: trustee generally must follow a valid direction but retains duties for ministerial/administrative acts and may be liable if it has knowledge that a direction is unlawful or relates to a breach of fiduciary duty.
    • Director duties: directors (when acting in a fiduciary capacity) are subject to fiduciary duties (loyalty, prudence) unless the trust instrument limits or modifies those duties consistent with the Act.
    • Exculpation/indemnification: rules governing exculpatory clauses for directors and trustees, and indemnification where direction is followed in good faith.
  • Acceptance, resignation, removal, and replacement of directors: procedures for a director’s acceptance, resignation, removal by the settlor/trustee/beneficiaries/court, and appointment of successors.
  • Judicial relief and enforcement: permits parties to seek court orders about directions, removal or interpretation, and resolves conflicts between trustees and directors.
  • Choice of law, severability, and effective date: standard provisions specifying applicability to existing and future trusts and survival of provisions if parts are invalidated.

Who is affected

  • Settlors (can choose directed-trust structures in estate plans)
  • Trustees (roles narrowed/clarified; administrative duties remain)
  • Trust directors or advisers (may gain authority and corresponding duties)
  • Beneficiaries (impacted by allocation of decision-making and remedies)
  • Fiduciaries, banks, trust companies, courts, and estate planners

Potential impacts

  • Provides greater flexibility for settlors to allocate decision-making among specialists (investment advisers, distribution committees, tax professionals) while retaining trustee oversight for administration.
  • Reduces litigation risk by clarifying liability rules, but may shift responsibility and create complexity in trust drafting and administration.
  • May affect how trust service providers assess risk and draft agreements.

Legislative timeline (selected actions)

  • 2023-03-16: Introduced by Chairman Mendelson
  • 2023-03-21: Referred to Committee on Judiciary and Public Safety
  • 2024-05-21 / 05-24: Public hearing notice published
  • 2024-06-17: Public hearing held
  • 2024-10-16 / 10-17: Committee mark-up (Judiciary and Public Safety)
  • 2024-11-06: Committee report filed
  • 2024-11-12: First Reading (Council)
  • 2024-11-26 & 12-03: Postponed readings
  • 2024-12-17: Amendment (Pinto) filed; Final Reading

For exact language, defined terms, and any local variations from the model UDTA, review the bill text as enacted.

Compiled from official sources — confirm details with the bill’s official record.

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