§ 18-4-24 - Termination of small trusts. - Rhode Island Statutes

SECTION 18-4-24

   § 18-4-24  Termination of small trusts.– (a) Any corporate trustee authorized to serve as a trustee under chapter 3.1 oftitle 19, which is a trustee of any inter vivos or testamentary trust, may, inits sole discretion, or, if there is a cotrustee or cotrustees, after havingobtained the approval of any cotrustee, terminate the trust in whole or inpart, if the current market value of the trust principal is less than twohundred thousand dollars ($200,000). The existence of any spendthrift orsimilar protective provision shall not preclude termination of that trust.

   (b) The trust principal and income on hand, less fees andexpenses, shall be distributed to one or more beneficiaries and remaindermen,or their legal representative, in the proportions and amounts that the trusteein its discretion determines to be appropriate under the circumstances, givingconsideration to the terms of the trust and the interests of the incomebeneficiaries and remaindermen. The recipient shall release the trustee ortrustees from liability upon distribution of the amounts held.

   (2) The interest of a minor beneficiary, or any portion ofthe interest, may be converted into qualifying property and distributed to acustodian pursuant to the Rhode Island Uniform Transfers to Minors Act, chapter7 of this title, or similar acts in other states.

   (3) Any trust qualifying for the marital deduction underappropriate provisions of the Internal Revenue Code, 26 U.S.C. § 1 etseq., shall be distributed only to the surviving spouse of the decedent orsettlor.

   (4) Any trust qualifying for the charitable deduction underappropriate provisions of the Internal Revenue Code, 26 U.S.C. § 1 etseq., shall be distributed only to the appropriate charity or charities or in amanner to assure the continued qualification of the distribution for thecharitable deduction. The trustee shall not be required to look into theapplication by the charity of the amount distributed.

   (c) The termination may occur only after written notice sentby certified mail to all interested persons who then have an interest in thetrust, or their legal or natural guardians. The term "interested person" meansany living person or existing organization who is a current income beneficiaryor who would be a vested remainderman of the trust if the trust were toterminate at the time of the notification.

   (2) The written notice required by this section shall:

   (i) State that the trustee intends to terminate the trust inaccordance with this section;

   (ii) Include a schedule of current trust assets and describethe plan of distribution;

   (iii) Set forth all rights of the interested person to objectto the termination or plan of distribution as set forth in subsection (d) ofthis section; and

   (iv) State that the trustee may proceed to terminate thetrust, notwithstanding any objection to the termination or plan of distribution.

   (d) Any interested person shall have thirty (30) days afterreceiving written notice in accordance with subsection (c) of this section toobject to the termination of the trust or the plan of distribution in writingto the trustee, stating the grounds for the objection. If the trustee hasreceived no written objection to the proposed termination or plan ofdistribution within the thirty (30) day period, it may proceed to terminate thetrust, subject to the waiting period contained in subdivision (4) of thissubsection.

   (2) A trustee receiving a written objection to the proposedtermination or plan of distribution from an interested person within thirty(30) days of the person's receipt of written notice may: (i) reformulate theproposed plan, or (ii) state its intention to proceed with the original plan ofdistribution. The trustee shall then re-notify all interested persons of itsintentions in a writing sent by certified mail. The re-notification shall beginagain the thirty (30) day period referred to in subdivision (1) of thissubsection.

   (3) A trustee receiving a written objection to the proposedreformulated plan of distribution from an interested person within thirty (30)days of the person's receipt of written notice of the reformulated plan mayproceed to terminate the trust in accordance with the plan, without courtproceeding or approval, notwithstanding the objection, provided that allinterested persons have been further notified in writing sent by certified mailof:

   (i) The objection;

   (ii) The trustee's intention to proceed to terminate thetrust, notwithstanding the objection; and

   (iii) Their right to petition the superior court to preventthe termination of the trust or to modify the plan of distribution.

   (4) Any interested person, within three (3) months of themailing of the initial or the further notice of the trustee's intention toproceed with the termination, notwithstanding an objection, may petition thesuperior court to prevent termination or modify the plan of distribution or maysend the trustee a written waiver of the right to petition. The trustee shallnot distribute the assets of the trust until three (3) months from the date ofthe receipt by the last interested person to receive notice or the furtherwritten notice as provided in subdivision (3) of this subsection.

   (e) Superior court approval of a termination of a small trustshall be required whenever there is no corporate trustee. An individual trusteemay petition the superior court after notice to all interested personsaccording to the notice provisions in subsection (c) of this section. The courtshall make an order of distribution of the trust property which shall specifythe appropriate share of each interested person who is to share in the proceedsof the trust, taking into account the interests of income beneficiaries orremaindermen so as to conform as nearly as possible the intention of the trustor testator. The superior court, in addition, may make any other and furtherorders that it deems proper or necessary to protect the interests of thebeneficiaries and of the trustee. All provisions of subsection (b) of thissection shall apply to terminations under this subsection.

   (f) Notwithstanding any other provision contained in thissection, any corporate trustee of a trust may seek superior court approval ofthe termination, and after submission of a principal accounting, be released,along with any cotrustee, from all liability with respect to the trust.