GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2021
SESSION LAW 2021-85
SENATE BILL 197
AN ACT to (i) remove the location requirement for holographic wills to align north carolina with all other states recognizing holographic wills, (ii) UPDATE THE DEFINITIONS OF "TERMS OF A TRUST" AND "TRUST INSTRUMENT" and revise THE ARTICLE ON POWER HOLDERS OF TRUSTS, and (iii) CLARIFY THE TRUST EXCLUSION TO THE RULE AGAINST PERPETUITIES and MAKE TECHNICAL changes IN THE SURROUNDING LANGUAGE, as recommended by the general statutes commission.
The General Assembly of North Carolina enacts:
PART I. REMOVE LOCATION REQUIREMENT FOR HOLOGRAPHIC WILLS
SECTION 1.(a) G.S. 28A‑2A‑9 reads as rewritten:
"§ 28A‑2A‑9. Manner of probate of holographic will.
A holographic will may be probated
only in the following manner:
(1) Upon upon the testimony of at least
three competent witnesses that they believe that the will is written entirely
in the handwriting of the person whose will it purports to be, and that the
name of the testator as written in or on, or subscribed to, the will is in the
handwriting of the person whose will it purports to be; andbe.
(2) Upon the testimony of one witness who may, but
need not be, one of the witnesses referred to in subdivision (1) of this
section to a statement of facts showing that the will was found after the
testator's death as required by G.S. 31‑3.4."
SECTION 1.(b) G.S. 31‑3.4 reads as rewritten:
"§ 31‑3.4. Holographic will.
(a) A holographic will is a will that meets all of the following requirements:
(1) Written entirely in the
handwriting of the testator but when all the words appearing on a paper in the
handwriting of the testator are sufficient to constitute a valid holographic
will, the fact that other words or printed matter appear thereon not in the
handwriting of the testator, and not affecting the meaning of the words in such
the handwriting, shall does not affect the validity of
the will, andwill.
(2) Subscribed by the
testator, or with the testator's name written in or on the will in the
testator's own handwriting, andhandwriting.
(3) Found after the testator's death among the
testator's valuable papers or effects, or in a safe‑deposit box or other
safe place where it was deposited by the testator or under the testator's
authority, or in the possession or custody of some person with whom, or some
firm or corporation with which, it was deposited by the testator or under the
testator's authority for safekeeping.
(b) No attesting witness to a holographic will is required."
SECTION 1.(c) This section is effective when it becomes law and applies to estates of decedents dying on or after that date.
PART II. AMENDMENTS TO NC UNIFORM TRUST CODE DEFINITIONS AND ARTICLE ON POWER HOLDERS OF TRUSTS
SECTION 2.(a) G.S. 36C‑1‑103 reads as rewritten:
"§ 36C‑1‑103. Definitions.
The following definitions apply in this Chapter:
…
(20) Terms of a trust. – The
manifestation of the settlor's intent regarding a trust's provisions as
expressed in the trust instrument or established in a judicial proceeding.as
established, determined, or amended by any of the following:
a. A judicial proceeding.
b. A nonjudicial settlement agreement.
c. A nonjudicial modification with the consent of the settlor and all beneficiaries under G.S. 36C‑4‑411(a) or other law.
d. A trustee or other person in accordance with law, including a power holder under Article 8A of this Chapter or a trustee under Article 8B of this Chapter.
(21) Trust instrument. – An
instrument executed by the settlor that contains terms of the trust, including
any amendments to the instrument, and any modifications permitted by court
order.An instrument that contains the terms of a trust.
…."
SECTION 2.(b) G.S. 36C‑1‑105 reads as rewritten:
"§ 36C‑1‑105. Default and mandatory rules.
(a) Except as otherwise provided in the terms of the trust, this Chapter governs the duties and powers of a trustee and a power holder under Article 8A of this Chapter, relations among trustees and those power holders, and the rights and interests of a beneficiary.
(b) The terms of a trust prevail over any provision of this Chapter except:
…
(2) The duty of a trustee or
a power holder under Article 8A of this Chapter to act in good faith and in
accordance with the terms and purposes of the trust and the interests of the
beneficiaries, except as otherwise provided in subsection (c) of this section.follows:
a. This duty is subject to G.S. 36C‑8A‑4 with respect to the trustee.
b. This duty does not apply to the extent the power holder is acting in a nonfiduciary capacity as provided in G.S. 36C‑8A‑3.
…
(6) The effect of an
exculpatory term under G.S. 36C‑10‑1008, except as
otherwise provided in subsection (c) of this section.to the extent the
power holder is acting in a nonfiduciary capacity as provided in G.S. 36C‑8A‑3.
…
(c) The provisions of subdivisions (2) and (6) of
subsection (b) of this section shall not apply to a power holder described in
Article 8A of this Chapter with respect to powers conferred upon the power
holder in a nonfiduciary capacity under G.S. 36C‑8A‑3(a) or under
the terms of the trust."
SECTION 2.(c) Article 8A of Chapter 36C of the General Statutes reads as rewritten:
"Article 8A.
"Powers, Duties, and Liability of a Power Holder Other Than a Trustee; Duty and Liability of a Trustee With Respect to Power Holder's Actions.
"§ 36C‑8A‑1. Definition."Power
holder" defined.
(a) For purposes of this Article, Article:
(1) the The term "power holder"
means a person who described in subdivision (2) of this subsection
that under the terms of a trust has the power to take certain actions with
respect to a trust and who that is not a any of the
following:
a. trustee or a A trustee.
b. A settlor with a power to direct or consent pursuant to G.S. 36C‑8‑808.
c. A person in which a donor creates a power of appointment.
d. A person that has authority to consent to the exercise of a power of appointment.
e. A beneficiary with a power over a trust to the extent the exercise or nonexercise of the power affects the beneficial interest of the beneficiary or another beneficiary represented by a beneficiary under G.S. 36C‑3‑301 through G.S. 36C‑3‑305 with respect to the exercise or nonexercise of the power.
(2) A power holder may be any of the following:
a. One or more individuals.
b. One or more other persons each of which is qualified to exercise trust powers in this State.
c. Any combination of the persons described in sub‑subdivisions a. and b. of this subdivision.
(b) A person is a power holder whether or not the terms of a trust refer to the person as a power holder and, except as otherwise provided in sub‑subdivisions (a)(1)b. and e. of this section, whether or not the person is a beneficiary or settlor of the trust.
"§ 36C‑8A‑2. Powers of a power holder.
(a) The terms of a trust may confer upon a power holder a power to direct or consent to a duty that would normally be required of a trustee, including, but not limited to, a power to direct or consent to the following:
(1) Investments, including
any action relating to investment of all or any one or more of the trust assets
that a trustee is authorized to may take under this Chapter.
(2) Discretionary distributions of trust assets, including distributions to one or more beneficiaries, distribution of one of more trust assets, and termination of the trust by distribution of all of the trust assets.
(3) Any other matter regarding trust administration, including the transfer of the principal place of administration of the trust.
(b) The terms of a trust may
also confer upon the a power holder any other power, including,
but not limited to, the power to do the following:
(1) Modify or amend the trust to do any of the following:
a. Achieve favorable tax status under applicable law.
b. Take advantage of laws governing restraints on alienation or other State laws restricting the terms of the trust, distribution of trust property, or the administration of the trust.
(2) Remove and appoint trustees and power holders.
(3) Increase or decrease the interests of any beneficiary.
(4) Grant a power of
appointment to one or more beneficiaries of the trust or modify the terms of or
terminate a power of appointment granted to a beneficiary by the governing
instrument, except that a grant or modification of a power of appointment may
shall not grant a beneficial interest to any of the following:
a. Any individual or class of individuals not specifically provided for in the trust instrument.
b. The person having the power to grant, modify, or terminate the power of appointment.
c. The estate and creditors of the person having the power to grant, modify, or terminate the power of appointment.
(5) Change the governing law of the trust.
(c) A power holder may exercise any further power appropriate to the exercise or nonexercise of a power granted to the power holder under subsections (a) and (b) of this section.
(d) The powers granted to a power holder under this section are subject to the same provisions of G.S. 36C‑8‑814 regarding discretionary powers and tax savings that are applicable to a trustee in a like position and under similar circumstances.
"§ 36C‑8A‑3. Duty and liability of power holder.
(a) A power holder is a
fiduciary with respect to the powers conferred upon the power holder who, as
such, is required to act in good faith and in accordance with the purposes and
terms of a trust and the interests of the beneficiaries, except a power holder
is not a fiduciary with respect to the following:
(1) A power to remove and appoint a trustee or power
holder.
(2) A power that constitutes a power of appointment
held by a beneficiary of a trust.
(3) A power the exercise or nonexercise of which may
affect only the interests of the power holder and no other beneficiary.
Except as otherwise provided in subsection (f) of this section, a power holder is a fiduciary with respect to the exercise or nonexercise of a power and has the same duty and liability as the following:
(1) If the power is not held jointly with the trustee or another power holder, as a sole trustee in a like position and under similar circumstances.
(2) If the power is held jointly with the trustee or another power holder, as a cotrustee in a like position and under similar circumstances.
(b) A power holder is liable for any loss that
results from breach of fiduciary duty occurring as a result of the exercise or
nonexercise of the power.
(c) The following
provisions applicable to a trustee shall also be applicable to a power holder
with respect to powers conferred upon the power holder as a fiduciary:The
provisions regarding the same duty and liability of a power holder as a trustee
in a like position and under similar circumstances include all of the
following:
(1) The provisions of G.S.
36C‑8‑814 regarding discretionary powers and tax savings.Article
8 of this Chapter regarding the duties of a trustee.
(2) The provisions of G.S. 36C‑10‑1001 through G.S. 36C‑10‑1012 regarding liability of trustees and rights of third persons dealing with trustees.
(3) The provisions of Article 9 of this Chapter regarding the uniform prudent investor rule.
(4) The provisions of G.S. 36C‑7‑703 regarding cotrustees.
(d) Subject to subsection (e) of this section, a power holder shall provide information to a trustee or another power holder to the extent the information is reasonably related both to the powers and duties of a power holder and the powers and duties of the trustee or the other power holder. A trustee or other power holder that acts in reliance on information provided by the power holder is not liable for breach of trust to the extent the breach resulted from the reliance, unless by so acting the trustee or the other power holder engages in intentional misconduct.
(e) A power holder does not have a duty to monitor a trustee or another power holder or inform or give advice to a settlor, beneficiary, trustee, or another power holder concerning an instance in which the power holder might have acted differently than a trustee or another power holder. By taking the action described in this subsection, the power holder does not assume the duty excluded under this subsection.
(f) The terms of a trust may provide that a power holder is a nonfiduciary with respect to the exercise or nonexercise of a power, including the power to achieve the settlor's tax objectives under the Internal Revenue Code. Unless the terms of a trust provide otherwise, the power to remove and appoint a trustee or power holder shall be deemed to be held in a nonfiduciary capacity.
"§ 36C‑8A‑4. Duty and liability of trustee.
(a) If the terms of a trust
confer upon a power holder the power to direct certain actions of the trustee,
the trustee must shall act in accordance with the direction and
is not liable, individually or as a fiduciary, for any loss resulting directly
or indirectly from compliance with the direction direction, unless
compliance with the direction constitutes intentional misconduct on the part of
the trustee.
(b) If the terms of a trust confer upon the power holder the power to consent to certain actions of the trustee, and the power holder does not provide consent within a reasonable time after the trustee has made a timely request for the power holder's consent, the trustee is not liable, individually or as a fiduciary, for any loss resulting directly or indirectly from the trustee's failure to take any action that required the power holder's consent.
(c) If the terms of a trust
confer upon the person a power holder a power other than the
power to direct or to consent to the actions of the trustee, trustee
described in G.S. 36C‑8A‑2(a), the trustee is not liable,
individually or as a fiduciary, for any loss resulting directly or indirectly
from the exercise or nonexercise of the power.
(d) The trustee has no
duty to monitor the conduct of the power holder, provide advice to the power
holder, or consult with the power holder. The trustee is not required to give
notice to any beneficiary of any action taken or not taken by the power holder
whether or not the trustee agrees with the result. Administrative actions taken
by the trustee for the purpose of implementing directions of the power holder,
including confirming that the directions of the power holder have been carried
out, do not constitute monitoring of the power holder nor do they constitute
participation in decisions within the scope of the power holder's authority.A
trustee does not have a duty to monitor a power holder or inform or give advice
to a settlor, beneficiary, trustee, or power holder concerning an instance in
which the trustee might have acted differently from a power holder. By taking
an action described in this subsection, a trustee does not assume a duty
excluded by this subsection.
(e) Subject to subsection (d) of this section, a trustee shall provide information to a power holder to the extent the information is reasonably related both to the powers and duties of the trustee and the powers and duties of the power holder. A power holder that acts in reliance on information provided by a trustee is not liable for a breach of trust to the extent the breach resulted from the reliance, unless by so acting the power holder engages in intentional misconduct.
"§ 36C‑8A‑4.1. Limitations of actions against power holder for breach of trust.
In an action against a power holder for breach of trust, the same limitations of actions apply to the power holder that apply under G.S. 36C‑10‑1005 to an action for breach of trust against a trustee in a like position and under similar circumstances.
"§ 36C‑8A‑4.2. Defenses in action against power holder.
In an action against a power holder for breach of trust, the power holder may assert the same defenses that a trustee in a like position and under similar circumstances could assert in an action for breach of trust against the trustee, including the following:
(1) Reasonable reliance on the terms of a trust pursuant to G.S. 36C‑9‑901(b) and G.S. 36C‑10‑1006.
(2) Reasonable care in ascertaining the happening of an event affecting the administration or distribution of a trust pursuant to G.S. 36C‑10‑1007.
(3) Beneficiary's consent, release, or ratification pursuant to G.S. 36C‑10‑1009.
…
"§ 36C‑8A‑8. Powers of trustee in the
absence of a power holder.Vacancy in the office of the power holder.
(a) If a vacancy occurs in the office of the power holder because the power holder fails or ceases to act for any reason, all of the following apply:
(1) If one or more power holders remain in office, a vacancy in the office of the power holder need not be filled.
(2) If the terms of the trust provide for a successor to the power holder, the person designated by the terms of the trust or appointed under the terms of the trust shall act as the successor power holder.
(3) The During the time when a vacancy
occurs, the trustee shall be vested with any fiduciary power or duty
conferred upon a the power holder by the terms of a the
trust that are described in G.S. 36C‑8A‑2(a) during the time
when no power holder is available to exercise such power or perform such duty
because of absence, illness, or other cause.G.S. 36C‑8A‑2(a).
(4) The court may appoint a power holder whenever the court considers the appointment necessary for the administration of the trust.
(b) A successor power holder shall succeed to all the powers and is subject to the duties and liabilities that were imposed upon the original power holder, unless a contrary intent appears from the governing instrument.
…
"§ 36C‑8A‑12. Power holder's bond.
(a) A bond shall be required for the performance of the power holder's duty only if the terms of a trust require the power holder to provide a bond.
(b) If no bond is required, the provisions of G.S. 36C‑7‑702(a)(3) and (4) applicable to a trustee apply to the power holder, but in no event shall a bond be required of a power holder if the terms of a trust require otherwise.
(c) If a bond is required, the provisions of G.S. 36C‑7‑702(b) and (c) applicable to a trustee apply to the power holder."
SECTION 2.(d) The Revisor of Statutes shall cause to be printed, as annotations to the published General Statutes, all explanatory comments of the drafters of this section as the Revisor may deem appropriate.
SECTION 2.(e) This section is effective when it becomes law and applies to trusts created before, on, or after that date.
PART III. CLARIFY TRUST EXCLUSION TO RULE AGAINST PERPETUITIES
SECTION 3.(a) G.S. 41‑15 reads as rewritten:
"§ 41‑15. Statutory rule against perpetuities.
(a) Except as otherwise
provided in G.S. 41‑23, a A nonvested property interest is
invalid unless:
(1) When the interest is created, it is certain to vest or terminate no later than 21 years after the death of an individual then alive; or
(2) The interest either vests or terminates within 90 years after its creation.
…."
SECTION 3.(b) G.S. 41‑18 reads as rewritten:
"§ 41‑18. Exclusions from statutory rule against perpetuities.
G.S. 41‑15 does not
apply to:to any of the following:
(1) A nonvested property
interest or a power of appointment arising out of a nondonative transfer,
except a nonvested property interest or a power of appointment arising out of:of
any of the following:
a. A premarital or
postmarital agreement;agreement.
b. A separation or divorce settlement;settlement.
c. A spouse's election;election.
d. A similar arrangement
arising out of a prospective, existing, or previous marital relationship
between the parties;parties.
e. A contract to make or not
to revoke a will or trust;trust.
f. A contract to exercise
or not to exercise a power of appointment;appointment.
g. A transfer in
satisfaction of a duty of support; orsupport.
h. A reciprocal transfer;transfer.
(2) A fiduciary's power
relating to the administration or management of assets, including the power of
a fiduciary to sell, lease, or mortgage property, and the power of a fiduciary
to determine principal and income;income.
(3) A power to appoint a fiduciary;fiduciary.
(4) A discretionary power of
a trustee to distribute principal before termination of a trust to a
beneficiary having an indefeasibly vested interest in the income and principal;principal.
(5) A nonvested property
interest held by a charity, government, or governmental agency or subdivision,
if the nonvested property interest is preceded by an interest held by another
charity, government, or governmental agency or subdivision;subdivision.
(6) A nonvested property
interest in or a power of appointment with respect to a trust or other property
arrangement forming part of a pension, profit‑sharing, stock bonus,
health, disability, death benefit, income deferral, or other current or
deferred benefit plan for one or more employees, independent contractors, or
their beneficiaries or spouses, to which contributions are made for the purpose
of distributing to or for the benefit of the participants or their
beneficiaries or spouses the property, income, or principal in the trust or
other property arrangement, except a nonvested property interest or a power of
appointment that is created by an election of a participant or a beneficiary or
spouse;spouse.
(7) A property interest,
power of appointment, or arrangement that was not subject to the common‑law
rule against perpetuities or is excluded by another statute of this State;State.
(8) A property interest or
arrangement subjected to a time limit under Article 14 of Chapter 36A, "Honorary
Trusts; Trusts for Pets; Trusts for Cemetery Lots"; orG.S. 36C‑4‑408
or G.S. 36C‑4‑409.
(9) A property interest or
arrangement subjected to a time limit under Article 3 of this Chapter,
"Time Limits on Options in Gross and Certain Other Interests in Land".Land."
(10) A nonvested property interest in or a power of appointment over property or property interests of a trust to which G.S. 41‑23 applies."
SECTION 3.(c) This section is effective when it becomes law and applies to trusts created before, on, or after August 19, 2007.
PART IV. EFFECTIVE DATE
SECTION 4. Except as otherwise provided, this act is effective when it becomes law.
In the General Assembly read three times and ratified this the 2nd day of July, 2021.
s/ Carl Ford
Presiding Officer of the Senate
s/ Matthew Winslow
Presiding Officer of the House of Representatives
s/ Roy Cooper
Governor
Approved 12:36 p.m. this 8th day of July, 2021