Many posts on this blog will make reference to the Uniform Trust Code (the “UTC”), so it’s appropriate to discuss what exactly is the UTC and how it will impact this blogand provide a link back in future posts.
Historical Approach
In the U.S. federal system, both the states and the federal government have the power to enact laws. Some areas, like immigration and civil rights, are largely covered by federal laws. Other areas, like divorce and family matters, are primarily covered by state laws.
So, what about trust law? Trust law falls primarily to the states. This has left us with a hodgepodge of very different state laws which apply to trusts depending on where a trust is located. The laws that apply to the administration of a trust that is located in Oregon were very different than the laws that apply to the administration of a trust that is located in Tennessee.
The Push Towards Uniformity Among State Laws
Throughout the 1900’s, as American society became more mobile and interstate commerce increased, there were calls for greater uniformity of laws among the states. In steps the National Conference of Commissioners on Uniform State Laws (NCUSL).
NCUSL promotes uniformity in state laws through the use of Uniform State Laws. NCUSL drafts a uniform law on a particular area, for example adoption, and then promulgates the uniform law, the Uniform Adoption Act, to the states and encourages the states to adopt the uniform law. Each state can then decide to adopt the uniform law exactly as it is drafted, adopt a modified version of the uniform law, or simply not adopt the uniform law at all.
The Uniform Trust Code
In 2000, NCUSL drafted a uniform law for trusts, the Uniform Trust Code, and encouraged the states to adopt the UTC. As the Prefatory Notes to the UTC state, the impetus behind the Uniform Trust Code is the increased use of trusts in estate planning: “This greater use of the trust, and consequent rise in the number of day-to-day questions involving trusts, has led to a recognition that the trust law in many States is thin. It has also led to a recognition that the existing Uniform Acts relating to trusts, while numerous, are fragmentary.”
The goal of the Uniform Trust Code is to provide “precise, comprehensive, and easily accessible guidance on trust law questions. On issues on which States diverge or on which the law is unclear or unknown, the Code will for the first time provide a uniform rule.”
Adoption by the States
As of the date of this post, 31 states and the District of Columbia have enacted a version of the Uniform Trust Code. The states that have enacted a version of the Uniform Trust Code are Alabama, Arizona, Arkansas, Florida, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Jersey, New Hampshire, New Mexico, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Utah, Vermont, Virginia, West Virginia, Wisconsin, and Wyoming.
When the UTC was drafted there were already comprehensive trust statutes in California, Georgia, Indiana, Texas, and Washington. There are many similarities between the UTC and the comprehensive trust statutes in California, Georgia, Indiana, Texas, and Washington.
How Will the UTC Impact this Blog?
Since the Uniform Trust Code has been adopted in a majority of the states, most of the posts on this blog will look at the administration of trusts through the lens of the UTC. The trend toward state uniformity in trust law will continue (legislation to adopt a version of the UTC is currently pending in Illinois) and framing the discussion on this blog with the UTC will have the broadest application to trust beneficiaries, trustees, and CPA’s and investment managers who work with trust clients.
