North Dakota Code 59-16.3-02 – Trustee’s authority to convert income trust – Conditions
A trustee, other than an interested trustee, or if two or more persons are acting as trustee, a majority of the trustees who are not an interested trustee, and without the approval of a court, may convert an income trust to a total return unitrust, reconvert a total return unitrust to an income trust, or change the percentage used to calculate the unitrust amount and the method used to determine the fair market value of the trust if:
Terms Used In North Dakota Code 59-16.3-02
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Fair market value: The price at which an asset would change hands in a transaction between a willing, informed buyer and a willing, informed seller.
- following: when used by way of reference to a chapter or other part of a statute means the next preceding or next following chapter or other part. See North Dakota Code 1-01-49
- Individual: means a human being. See North Dakota Code 1-01-49
- Person: means an individual, organization, government, political subdivision, or government agency or instrumentality. See North Dakota Code 1-01-49
- Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
- Trustee: A person or institution holding and administering property in trust.
- written: include "typewriting" and "typewritten" and "printing" and "printed" except in the case of signatures and when the words are used by way of contrast to typewriting and printing. See North Dakota Code 1-01-37
1. The trustee adopts a written policy for the trust providing:
a. In the case of a trust being administered as an income trust, that future distributions from the trust will be unitrust amounts rather than net income; b. In the case of a trust being administered as a total return unitrust, that future distributions from the trust will be net income rather than unitrust amounts; or
c. That the percentage used to calculate the unitrust amount or the method used to determine the fair market value of the trust will be changed as stated in the policy.
2. The trustee sends written notice of its intention to take that action, along with copies of the written policy and this chapter, to:
a. The settlor if living; b. All living individuals who are currently receiving, or eligible to receive, distributions of income of the trust; c. All living individuals who would receive principal of the trust if the trust were to terminate at the time of the giving of such notice, or if the trust does not provide for its termination, all living individuals who would receive, or be eligible to receive, distributions of income or principal of the trust if the persons identified in subdivision b were deceased; and
d. All individuals acting as adviser or protector of the trust.
3. At least one person receiving notice under subdivision b and c of subsection 2, to the best information and belief of the trustee, is legally competent; 4. No individual receiving the notice objects, by written instrument delivered to the trustee, to the proposed action of the trustee within sixty days of receipt of notice.
5. In deciding whether, and to what extent, to exercise the power conferred under this chapter, a trustee may consider all factors relevant to the trust and its beneficiaries, including the following factors to the extent relevant:
a. The size, nature, purpose, and expected duration of the trust; b. The intent of the settlor; c. The identity and circumstances of the beneficiaries; d. The needs for liquidity, regularity of income, and preservation and appreciation of capital; e. The assets held in the trust:
(1) The extent to which they consist of financial assets, interests in closely held enterprises, tangible and intangible personal property, or real property; (2) The extent to which an asset is used by a beneficiary; and
(3) Whether an asset was purchased by the trustee or received from the settlor; f. The net amount allocated to income under the other sections of this chapter and the increase or decrease in the value of the principal assets, which the trustee may estimate as to assets for which market values are not readily available; g. Whether and to what extent the terms of the trust give the trustee the power to invade principal or accumulate income, or prohibit the trustee from invading principal or accumulating income, and the extent to which the trustee has exercised a power from time to time to invade principal or accumulate income; h. The actual and anticipated effect of economic conditions on principal and income and effects of inflation and deflation; and
i. The anticipated tax consequences.