§ 3531. | § 3532. | § 3533. | § 3535. | § 3536. | § 3536. | § 3537. | § 3538. | § 3539. | § 3540. | § 3541. | § 3541. | § 3542. | § 3543. | § 3544. | § 3545. | § 3546. | § 3547. | § 3548. | § 3549.
§ 3531. Renunciation by trustee named in trust instrument; filing and recording.
Whenever, by any will, deed or other instrument, a trustee is named and before the acceptance of the trust the person named as such trustee renounces and declines to perform the duties imposed thereby, the trustee shall make and file in the office of the Register in Chancery of the county where such will, deed or instrument may be probated or recorded a written renunciation setting forth in general terms the instrument of appointment and that trustee has not accepted the trust or exercised any powers or performed any duties thereunder and trustee declines to act under such appointment. The Register in Chancery shall record and index such renunciation in the Chancery docket. (Code 1915, § 3871; 33 Del. Laws, c. 230, § 1; Code 1935, § 4397; 12 Del. C. 1953, § 3531; 70 Del Laws, c. 186, § 1.)
§ 3532. Transfer of stocks, bonds or other corporate securities by trustee; certificate of Register in Chancery.
Upon the transfer by trustees of the stocks, bonds or other securities of any corporation, the certificate of the Register of the Court of Chancery in which such trustee was appointed or other proper public official, according to the form and provisions of § 1572 of this title, shall be sufficient authority to the officers of such corporation to transfer or reissue such stocks, bonds or other securities to such person as such trustee in writing directs. (20 Del. Laws, c. 115, § 5; Code 1915, § 3878; Code 1935, § 4402; 12 Del. C. 1953, § 3532.)
§ 3533. Sale of trust property free from trust; procedure.
Upon petition of any trustee having the legal title to any property, real, personal or mixed, setting forth that the sale and conversion thereof would be for the best interests of the trust estate and the persons beneficially interested in the trust, the Court of Chancery may, by order made thereon in its discretion, except where such sale or conversion has been prohibited by the instrument creating the trust, authorize and direct such trustee to sell the whole or so much as may be proper of such trust property and to transfer and convey the same to the purchaser thereof, absolutely and in fee simple, freed from any trust and without liability on the part of such purchaser as to the application of the purchase money. In cases where the sale or conversion of trust property has not been expressly prohibited by the instrument creating the trust, but the instrument provides that the trustee shall sell or convert only with the consent of 1 or more persons or makes the trustee's power of sale contingent on 1 or more persons joining in its exercise, the Court of Chancery may confer upon the trustee power to make the sale or conversion without such consent or without any 1 or more of such persons joining in the exercise of such power of sale if any 1 or more of the persons required to consent or to join in such exercise of the trustee's power of sale shall be a minor, non compos mentis, have died, unreasonably withhold consent or be absent and unheard of and in the opinion of the Court the sale or conversion is for the best interests of the trust estate and the persons beneficially interested therein. The proceeds of all sales made under the authority of this section shall be held under and subject to the same trusts as those to which the property sold was subject and, in cases where real property is to be sold, the trustee thereof shall first give sufficient bond, with surety to be approved by the Court, for the preservation and protection of the proceeds of such sales for the purposes of the trust and subject to the orders and decrees of the Court in the premises. (20 Del. Laws, c. 115, § 4; Code 1915, § 3879; Code 1935, § 4403; 47 Del. Laws, c. 382, § 1; 12 Del. C. 1953, § 3533.)
ｧ 3534. [Reserved.]
§ 3535. Powers of appointment, rule against perpetuities and restraints on alienation.
The validity of an estate or interest in property created through the exercise of a power of appointment shall, for the purposes of any rule or law against perpetuities, remoteness of vesting, restraint upon the power of alienation or accumulations, be governed by § 501 of Title 25. (12 Del. C. 1953, § 3535.)
§ 3536. Rights of creditors and assignees of beneficiary of trust; spendthrift trusts [Effective until Aug. 1, 2008]
(a) The creditors of a beneficiary of a trust shall have only such rights against such beneficiary's interest in the trust property or the income therefrom as shall not be denied to them by the terms of the instrument creating or defining the trust or by the laws of this State. If such beneficiary has transferred property to the trust in defraud of the beneficiary's creditors the foregoing shall in no way limit the rights of such creditors with respect to the property so transferred. Every interest in trust property or the income therefrom which shall not be subject to the rights of the creditors of the beneficiary, as aforesaid, shall be exempt from execution, attachment, distress for rent and all other legal or equitable process instituted by or on behalf of such creditors and no such creditor shall bring any action at law or in equity against a trustee seeking any remedy directly or indirectly affecting the beneficiary's interest in the trust such as, but not limited to, an order:
(1) Compelling the trustee to notify the creditor of a distribution from the trust;
(2) Compelling the trustee to make a distribution from the trust (whether or not pursuant to an ascertainable standard); or
(3) Prohibiting the trustee from making a distribution from the trust in payment of an expense of the beneficiary.
Every direct or indirect assignment, whether voluntary or involuntary, by a beneficiary of a trust of the beneficiary's interest in the trust property or the income therefrom which is by the terms of the instrument creating or defining the trust unassignable is void. No beneficiary may waive the application of this subsection (a). For purposes of this subsection, the creditors of a beneficiary shall include, but not be limited to, any person having a claim against the beneficiary, the beneficiary's estate or the beneficiary's property by reason of any forced heirship, legitime, marital elective share or similar rights. Notwithstanding the foregoing, a creditor shall have no right against the interest of a beneficiary in a trust solely because such beneficiary has the right to appoint all or part of the trust property to a person or persons (other than the beneficiary, the beneficiary's estate, or creditors of the beneficiary or the beneficiary's estate) by will or by other instrument under which the beneficiary's exercise of the power of appointment would take effect only upon the death of the beneficiary whether or not such power is exercised and a creditor shall have no right against the interest of a beneficiary in a trust solely because the beneficiary has the right to appoint all or part of the trust property to the beneficiary, the beneficiary's estate or creditors of the beneficiary or the beneficiary's estate by will or other instrument under which the beneficiary's exercise of the power of appointment would take effect only upon the death of the beneficiary unless the beneficiary actually exercises such power in favor of the beneficiary, the beneficiary's estate or creditors of the beneficiary or the beneficiary's estate and then only to the extent of such exercise. The provisions of this subsection shall apply to the interest of a trust beneficiary until the actual distribution of trust property to the beneficiary. Regardless of whether a beneficiary has any outstanding creditor, a trustee may directly pay any expense on behalf of such beneficiary to the extent permitted by the governing instrument and may exhaust the income and principal of the trust for the benefit of such beneficiary. A trustee will not be liable to any creditor of a beneficiary for paying the expenses of a beneficiary.
(b) Notwithstanding subsection (a) of this section, a beneficiary entitled to receive all or a part of the income of a trust shall have the right to assign gratuitously in writing, at any time or from time to time, a stated fraction or percentage of the beneficiary's entire remaining income interest in such trust to the State or to any corporation, church, community chest, fund or foundation authorized as a deduction pursuant to §§ 1107, 1108 and 1109 of Title 30 and such assignment shall be valid and binding on all parties irrespective of any restrictions on assignment contained in the instrument creating or defining the trust; provided, however, that this subsection shall not authorize a beneficiary of such a trust to reduce any part of the beneficiary's income interest which is subject to such restrictions on assignment below 50% of what such interest would be if no assignments were made under this subsection. Any interest assigned under this subsection, together with a corresponding portion of the corpus of the trust, shall be treated as a separate share and thereafter no provision of the trust permitting invasion of corpus for the benefit of the assignor shall be exercisable with respect to such share.
(c) Except as provided in subchapter VI of this chapter of this title or if the trustor's sole retained beneficial interest is a right to receive discretionary distributions to reimburse the trustor for income tax liability attributable to the trust (in which case the requesting trustor shall not be considered a beneficiary), if the trustor is also a beneficiary of a trust, a provision restraining the voluntary or involuntary transfer of the trustor's beneficial interest does not prevent the trustor's creditors from satisfying claims from the trustor's interest in the trust to the extent that such interest is attributable to the trustor's contributions thereto.
(d) A beneficiary of a trust shall not be considered a trustor merely because of a lapse, waiver or release of the beneficiary's right to withdraw a part of the trust property if the value of the property that could have been withdrawn by exercising the right of withdrawal in any calendar year does not exceed at the time of the lapse, waiver or release the greater of the amount specified in:
(1) Section 2041(b)(2) or § 2514(e) [26 U.S.C. § 2041(b)(2) or § 2514(e)] of the Internal Revenue Code (26 U.S.C. § 1 et seq.) and any successor provision thereto; or
(2) Section 2503(b) of the Internal Revenue Code [26 U.S.C. § 2503(b)] and any successor provision thereto.
(e) Notwithstanding subsection (a) of this section, a beneficiary of a charitable remainder unitrust or charitable remainder annuity trust as such terms are defined in § 664 of the Internal Revenue Code of 1986 (26 U.S.C. § 664) and any successor provision thereto shall have the right, at any time and from time to time by written instrument delivered to trustee, to release such beneficiary's retained interest in such a trust, in whole or in part, to a charitable organization that has or charitable organizations that have a succeeding beneficial interest in such trust.
(f) A beneficiary eligible to receive distributions from a trust in the trustee's discretion and not pursuant to an ascertainable standard or some other enforceable standard, such as a mandatory right to receive income or principal, has a discretionary interest in the trust. A discretionary interest is neither a property interest nor an enforceable right -- it is a mere expectancy. No creditor may cause a court to foreclose a discretionary interest or require a trustee to make a distribution with respect to a discretionary interest and discretionary interests shall be exempt from execution, attachment, sequestration, distress for rent, and all other legal or equitable process instituted by or on behalf of such creditors. (Code 1915, § 3907(b); 38 Del. Laws, c. 186, § 1; Code 1935, § 4415; 12 Del. C. 1953, § 3536; 52 Del. Laws, c. 199, § 1; 70 Del Laws, c. 186, § 1; 73 Del. Laws, c. 71, § 1; 74 Del. Laws, c. 81, § 4; 75 Del. Laws, c. 97, § 6; 75 Del. Laws, c. 301, § 7; 76 Del. Laws, c. 90, §§ 4, 5.)
§ 3536. Rights of creditors and assignees of beneficiary of trust [Effective Aug. 1, 2008]
(a) Except as expressly provided in subsections (c) and (d) of this section, a creditor of a beneficiary of a trust shall have only such rights against such beneficiary's interest in the trust or the property of the trust as shall be expressly granted to such creditor by the terms of the instrument that creates or defines the trust or by the laws of this State. The provisions of this subsection shall be effective regardless of the nature or extent of the beneficiary's interest or of any action taken or that might be taken by the beneficiary. Every interest in a trust or in trust property or the income therefrom that shall not be subject to the rights of creditors of such beneficiary as provided herein shall be exempt from execution, attachment, distress for rent, foreclosure, and from all other legal or equitable process or remedies instituted by or on behalf of any creditor, including, without limitation, actions at law or in equity against a trustee or beneficiary that seeks a remedy that directly or indirectly affects a beneficiary's interest such as, but not limited to, an order, whether such order be at the request of a creditor or on the court's own motion, that would:
(1) Compel the trustee or beneficiary to notify the creditor of a distribution from the trust;
(2) Compel the trustee or beneficiary to make a distribution from the trust;
(3) Prohibit a trustee from making a distribution from the trust to or for the benefit of the beneficiary; or
(4) Compel the beneficiary to exercise a power of appointment or a power of revocation over the trust.
Every direct or indirect assignment, or act having the effect of an assignment, whether voluntary or involuntary, by a beneficiary of a trust of the beneficiary's interest in the trust or the trust property or the income or other distribution therefrom that is unassignable by the terms of the instrument that creates or defines the trust is void. No beneficiary may waive the application of this subsection (a). For purposes of this subsection (a), the creditors of a beneficiary shall include, but not be limited to, any person that has a claim against the beneficiary, the beneficiary's estate, or the beneficiary's property by reason of any forced heirship, legitime, marital elective share, or similar rights. The provisions of this subsection shall apply to the interest of a trust beneficiary until the actual distribution of trust property to the beneficiary. Regardless of whether a beneficiary has any outstanding creditor, a trustee may make direct payment of any expense on behalf of such beneficiary to the extent permitted by the instrument that creates or defines the trust and may exhaust the income and principal of the trust for the benefit of such beneficiary. A trustee shall not be liable to any creditor of a beneficiary for paying the expenses of a beneficiary.
(b) Notwithstanding subsection (a) of this section, a beneficiary entitled to receive all or a part of the income of a trust shall have the right to assign gratuitously in writing, at any time or from time to time, a stated fraction or percentage of the beneficiary's entire remaining income interest in such trust to the State or to any corporation, church, community chest, fund, or foundation authorized as a deduction pursuant to §§ 1107, 1108, and 1109 of Title 30 and such assignment shall be valid and binding on all parties irrespective of any restrictions on assignment contained in the instrument creating or defining the trust; provided, however, that this subsection shall not authorize a beneficiary of such a trust to reduce any part of the beneficiary's income interest which is subject to such restrictions on assignment below 50% of what such interest would be if no assignments were made under this subsection. Any interest assigned under this subsection, together with a corresponding portion of the corpus of the trust, shall be treated as a separate share and thereafter no provision of the trust permitting invasion of corpus for the benefit of the assignor shall be exercisable with respect to such share.
(c) Except as provided in subchapter VI of this Chapter 12 of this title, if the trustor is also a beneficiary of a trust, a provision that restrains the voluntary or involuntary transfer of the trustor's beneficial interest shall not prevent such trustor's creditors from satisfying their respective claims from the trustor's interest in the trust to the extent that such interest is attributable to the trustor's contributions to the trust. The preceding sentence shall have no application to a trustor if such trustor's sole retained beneficial interest is a right to receive discretionary distributions to reimburse the trustor's income tax liability attributable to the trust. Further, a beneficiary of a trust shall not be considered a trustor of a trust merely because of a lapse, waiver, or release of the beneficiary's right to withdraw a part of the trust property if the value of the property that could have been withdrawn by exercising the right of withdrawal in any calendar year does not exceed at the time of the lapse, waiver, or release the greater of the amount specified in:
(1) Section 2041(b)(2) or § 2514(e) of the Internal Revenue Code of 1986 (26 U.S.C. § 2041(b)(2) or § 2514(e)), or any successor provision thereto; or
(2) Section 2503(b) of the Internal Revenue Code of 1986 (26 U.S.C. § 2503(b)), or any successor provision thereto.
(d) For purposes of subsection (a) of this section, a creditor shall have no right against the interest of a beneficiary of a trust or against the beneficiary or trustee of the trust with respect to such interest unless:
(1) The beneficiary has a power to appoint all or part of the trust property to the beneficiary, the beneficiary's estate, the beneficiary's creditors, or the creditors of the beneficiary's estate by will or other instrument such that the appointment would take effect only upon the beneficiary's death unless the beneficiary actually exercises such power in favor of the beneficiary, the beneficiary's creditors, the beneficiary's estate, or the creditors of the beneficiary's estate but then only to the extent of such exercise.
(2) The beneficiary has a power to appoint all or part of the trust property to the beneficiary, the beneficiary's creditors, the beneficiary's estate, or the creditors of the beneficiary's estate during the beneficiary's lifetime unless the beneficiary actually exercises such power in favor of the beneficiary, the beneficiary's creditors, the beneficiary's estate, or the creditors of the beneficiary's estate but then only to the extent of such exercise.
(3) The beneficiary has the power to revoke the trust in whole or in part during the beneficiary's lifetime and, upon such revocation, the trust or the part thereof so revoked would be possessed by the beneficiary. This paragraph shall have no application to any part of the trust that may not be so revoked by the beneficiary.
(e) Notwithstanding subsection (a) of this section, a beneficiary of a charitable-remainder unitrust or charitable-remainder annuity trust as such terms are defined in § 664 of the Internal Revenue Code of 1986 (26 U.S.C. § 664) and any successor provision thereto, shall have the right, at any time and from time to time, by written instrument delivered to trustee, to release such beneficiary's retained interest in such a trust, in whole or in part, to a charitable organization that has or charitable organizations that have a succeeding beneficial interest in such trust. Notwithstanding subsection (a) of this section, a beneficiary may also disclaim an interest in a trust pursuant to Chapter 6 of this title. (Code 1915, § 3907(b); 38 Del. Laws, c. 186, § 1; Code 1935, § 4415; 12 Del. C. 1953, § 3536; 52 Del. Laws, c. 199, § 1; 70 Del Laws, c. 186, § 1; 73 Del. Laws, c. 71, § 1; 74 Del. Laws, c. 81, § 4; 75 Del. Laws, c. 97, § 6; 75 Del. Laws, c. 301, § 7; 76 Del. Laws, c. 90, §§ 4, 5; 76 Del. Laws, c. 254, § 9.)
§ 3537. Conveyance of realty by infant trustee.
Any person under the age of 18 years, having real estate in trust for others, may, by direction of the Court of Chancery given upon hearing all parties concerned on the petition of those for whom such infant is trustee or of the guardian of such infant, convey and assure such real estate, in such manner as the Court directs, to any other person. Such conveyance shall be as good and effectual in law as if the infant was of full age. Such infant may be compelled to execute such order, in like manner as trustees of full age are compellable to convey or assure trust estates. (Code 1852, § 1947; Code 1915, § 3862; Code 1935, § 4386; 12 Del. C. 1953, § 3537; 58 Del. Laws, c. 511, § 16.)
§ 3538. Testamentary trusts; certification of by Register of Wills to Register in Chancery; record.
(a) When a will that has been probated before the Register of Wills for any of the counties of the State contains a bequest or devise in trust to pay the income arising from any part of the estate of the testator to or for the benefit of a person other than the person named as trustee, the Register of Wills before whom the probate is made shall, within 10 days after the closing of the estate, deliver to the Register in Chancery for that county a certificate setting forth the name and last address of the testator, the date of the probate of the testator's will, the name and address of the trustee appointed thereby and the provisions of the will relating to said trust or trusts. This section shall apply only in those instances:
(1) Where the documents closing the estate show a balance in the hands of the personal representative that can be distributed to the trust in order to fund it; and
(2) That terms exist, as stated in the will, for the creation of the trust.
In those instances where it is clear that no notice of the trust need be given to the Register in Chancery, the Register of Wills shall note on its files that no notice of the trust was given to it and state why.
(b) The Register in Chancery for the several counties shall keep a record in which shall be entered the names of the testators, the names and post-office addresses of the trustees, the dates of their appointment or the dates upon which their trusts become operative and the dates on which their accounts are passed and shall file the certificates delivered to them by the Register of Wills among the records of their offices. (25 Del. Laws, c. 226, § 1; Code 1915, § 3873; Code 1935, § 4399; 12 Del. C. 1953, § 3538; 70 Del Laws, c. 186, § 1; 75 Del. Laws, c. 189, § 3.)
§ 3539. Charitable trust; sale of timber on lands; application of proceeds.
The Court of Chancery may, when in its judgment the exercise thereof will promote the interests of the charity, direct wood or timber growing on land conveyed or devised for charitable uses to be cut and sold and the proceeds applied to repairs or the purchase of lime or other manures and making other improvements of such real estate. This section shall apply only to cases where the whole interest in the land is the subject of charitable uses. (Code 1852, § 1948; Code 1915, § 3881; Code 1935, § 4405; 12 Del. C. 1953, § 3539.)
§ 3540. Powers and duties of certain trustees.
All trustees of any trust governed by the laws of this State whose governing instrument or instruments do not expressly provide that this section shall not apply to such trust are required to act or to refrain from acting so as not to subject the trust to the taxes imposed by §§ 4941 (relating to taxes on self-dealing), 4942 (relating to taxes on failure to distribute income), 4943 (relating to taxes on excess business holdings), 4944 (relating to taxes on investments which jeopardize charitable purpose) or 4945 (relating to taxable expenditures) of the Internal Revenue Code of 1954 [26 U.S.C. §§ 4941-4945], or corresponding provisions of any subsequent United States internal revenue law. (12 Del. C. 1953, § 3540; 58 Del. Laws, c. 88.)
§ 3541. Administration of charitable trusts or noncharitable purpose trusts; cy pres rule [Effective until Aug. 1, 2008]
(a) Subject to subsection (b) of this section, if a particular charitable purpose or noncharitable purpose becomes unlawful under the Constitution of this State or the United States or the trust would otherwise no longer serve any religious, charitable, scientific, literary, educational, or noncharitable purpose:
(1) The trust does not fail in whole or in part;
(2) The trust property does not revert to the trustor or the trustor's successors in interest; and
(3) The Court of Chancery shall modify or terminate the trust and direct that the trust property be applied or distributed, in whole or in part, in a manner consistent with the trustor's charitable or noncharitable purposes, whether or not such purposes be specific or general.
(b) The power of the Court of Chancery to modify or terminate a charitable or noncharitable purpose trust, as provided in subsection (a) of this section, is in all cases subject to a contrary provision in the terms of the trust instrument, whether such contrary provision directs that the trust property be distributed to a charitable or noncharitable beneficiary.
(c) For purposes of this section, a "noncharitable purpose" is a purpose within the meaning of § 3555 of this title. (62 Del. Laws, c. 131, § 1; 70 Del Laws, c. 186, § 1; 72 Del. Laws, c. 388, § 8; 76 Del. Laws, c. 90, § 6.)
§ 3541. Administration of charitable trusts or noncharitable purpose trusts; cy pres rule [Effective Aug. 1, 2008]
(a) Subject to subsection (b) of this section, if a particular charitable purpose or noncharitable purpose becomes unlawful under the Constitution of this State or the United States or the trust would otherwise no longer serve any religious, charitable, scientific, literary, educational, or noncharitable purpose:
(1) The trust does not fail in whole or in part;
(2) The trust property does not revert to the trustor or the trustor's successors in interest; and
(3) The Court of Chancery shall modify or terminate the trust and direct that the trust property be applied or distributed, in whole or in part, in a manner consistent with the trustor's charitable or noncharitable purposes, whether or not such purposes be specific or general.
(b) The power of the Court of Chancery to modify or terminate a charitable or noncharitable purpose trust, as provided in subsection (a) of this section, is in all cases subject to a contrary provision in the terms of the trust instrument, whether such contrary provision directs that the trust property be distributed to a charitable or noncharitable beneficiary.
(c) For purposes of this section, a "noncharitable purpose" is a purpose within the meaning of § 3555 or § 3556 of this title. (62 Del. Laws, c. 131, § 1; 70 Del Laws, c. 186, § 1; 72 Del. Laws, c. 388, § 8; 76 Del. Laws, c. 90, § 6; 76 Del. Laws, c. 254, § 10.)
§ 3542. Termination of small trusts.
(a) Unless otherwise provided by the terms of the trust instrument, and subject to the other subsections of this section, a corporate trustee of a trust who finds that the costs of administration thereof are such that the continuance of the trust would defeat or substantially impair the purpose of the trust, may, after written notice to all interested persons, or their legal or natural guardians, terminate the trust and distribute the trust property to 1 or more of the beneficiaries in the trustee's discretion. No court proceedings or approval is required to effect such a termination.
(b) Any interested person shall have 30 days after receiving written notice in accordance with this section to object to the termination or plan of distribution in writing to such trustee. If the trustee has received no written objection to the proposed termination or plan of distribution within such 30-day period, it may proceed to terminate the trust.
(c) A trustee which receives a written objection to the proposed plan of distribution of a trust within 30 days of the last day on which any interested person received written notice may reformulate the proposed plan of distribution and renotify all interested persons of its intentions. Such renotification shall begin again the 30-day period referred to in subsection (b) of this section.
(d) A trustee which receives a written objection to the termination or plan of distribution of a trust within 30 days of the last day on which any interested person received written notice may proceed to terminate the trust in accordance with the plan of distribution, without court proceeding or approval, notwithstanding the objection, provided that all interested persons have been further notified in writing of such objection, of the trustee's intention to proceed to terminate such trust notwithstanding such objection, and of their right to petition the Court to prevent the termination or modify the plan of distribution within 6 months from the mailing of such further notice, and provided that at least 6 months have elapsed since such further notice was sent by the trustee, or the trustee has received a written waiver of the right to petition the Court from all interested persons.
(e) Any interested person, within 6 months of the mailing of such further notice of the trustee's intention to proceed with termination, notwithstanding an objection, may petition the Court to prevent such termination or modify the plan of distribution, or may send to the trustee a written waiver of such right to petition.
(f) The written notice required by this section shall state:
(1) That the trustee intends to terminate the trust in accordance with this section;
(2) The plan of distribution;
(3) That any interested person may object to such termination or plan of distribution in a writing received by the trustee within 30 days of receipt of such notice by such interested person; and
(4) That the trustee may proceed to terminate the trust, notwithstanding any objection to such termination or plan of distribution, 6 months after the trustee further notifies all interested persons of such objection and its intention to proceed with the termination notwithstanding such objection;
provided, that such notice shall inform interested persons that application may be made to the Court of Chancery to prevent the proposed termination.
(g) For purposes of this section, the term "interested person" means any living person or existing organization who is a current income beneficiary, or who would be a vested remainderman of the trust if the trust were to terminate at the time of the notification, and the Delaware Attorney General in the case of a charitable trust.
(h) The existence of spendthrift or similar protective provisions in a trust shall not make this section inapplicable. (65 Del. Laws, c. 422, § 7; 70 Del. Laws, c. 186, § 1.)
§ 3543. Distribution of estate or trust assets without creation of trust.
If the terms of a will or a writing creating a trust, including, but not limited to an inter vivos trust agreement, provide for the establishment of a trust all the assets of which, due to the circumstances existing at the time the trust is to be established, are required to be distributed to the trust's beneficiary or beneficiaries immediately, the executor, trustee, or other party having possession of the property with which such trust will be established, is authorized to make direct distribution to the beneficiary or beneficiaries of the trust, rather than to the trustee, without the necessity of a Court petition. The receipts of such beneficiaries shall protect the executor, trustee, or other party having possession of the property with which such trust would be established, to the same extent as the receipt of the trustee. (65 Del. Laws, c. 422, § 7; 76 Del. Laws, c. 90, § 7.)
Unless provided otherwise by the terms of the governing instrument or by order of Court, in the absence of actual knowledge of a breach of trust, or information concerning a possible breach of trust that would cause a reasonable person to inquire, a successor trustee appointed in accordance with the terms of the governing instrument or by the Court is under no duty to examine the accounts and records of its predecessor trustee or to inquire into the acts or omissions of its predecessor, is not liable for any failure to seek redress for any act or omission of any predecessor trustee, shall have responsibility only for property which is actually delivered to it by its predecessor and shall have all of the powers and discretions conferred in the governing instrument upon the original trustee. (65 Del. Laws, c. 422, § 7; 66 Del. Laws, c. 376, § 1.)
§ 3545. Limitations on oral trusts; execution requirements for written trusts.
(a) Except as otherwise required by this Code, the creation, modification or revocation of a trust whereby a person other than the trustor acquires or is divested of an interest in the trust the possession or enjoyment of which is contingent upon surviving the trustor shall be void unless such creation, modification or revocation be:
(1) In a writing executed by the trustor and witnessed by at least 1 disinterested person or 2 credible persons, or
(2) In a writing executed by a trustee who is a disinterested person.
For purposes of this section, a disinterested person is one who has no beneficial interest in the trust that would be materially increased or decreased as a result of the creation, modification or revocation of the trust.
(b) A trust created by a writing shall not be void merely because of the application of subsection (a) of this section if such writing was validly executed in compliance with the law, at the time of execution, of the place which serves as the initial place of administration of the trust, or, if the trust is not yet actively administered, the initial situs of the trust. (72 Del. Laws, c. 388, § 1; 74 Del. Laws, c. 271, § 3.)
§ 3546. Limitation on action contesting validity of trusts.
(a) A judicial proceeding to contest whether a trust, or any amendment thereto, was validly created may not be initiated later than the first to occur of:
(1) One hundred twenty days after the date that the trustee notified in writing the person who is contesting the trust of the trust's existence, of the trustee's name and address, of whether such person is a beneficiary, and of the time allowed under this section for initiating a judicial proceeding to contest the trust provided, however, that no trustee shall have any liability under the governing instrument or to any third party or otherwise for failure to provide any such written notice. For purposes of this paragraph, notice shall have been given when received by the person to whom the notice was given and, absent evidence to the contrary, it shall be presumed that delivery to the last known address of such person constitutes receipt by such person.
(2) Two years after the trustor's death;
(3) If the trust was revocable at the trustor's death and the trust was specifically referred to in the trustor's last will, the time in which a petition for review of a will could be filed under this title; or
(4) The date the person's right to contest was precluded by adjudication, consent or other limitation.
(b) Upon the death of the trustor of a trust that was revocable at the time of the trustor's death, the trustee may proceed to distribute the trust property in accordance with the terms of the trust. This distribution may be made without liability unless the trustee has actual knowledge of a pending judicial proceeding to contest the validity of the trust, or is notified by a potential contestant of a possible contest, followed by its initiation within 30 days of such notice.
(c) Until a contest is barred under subsection (a) of this section, a beneficiary of what later turns out to have been an invalid trust is liable to return any distribution received. (72 Del. Laws, c. 388, § 2; 74 Del. Laws, c. 81, § 5; 75 Del. Laws, c. 97, § 7.)
§ 3547. Representation by person having substantially identical interest.
(a) Unless otherwise represented, a minor, incapacitated, or unborn person, or a person whose identity or location is unknown and not reasonably ascertainable (hereinafter referred to as an "unascertainable person"), may for all purposes (including for purposes of any judicial proceeding and for purposes of nonjudicial matters such as, but not limited to, the granting of releases pursuant to § 3588 of this title and measuring the limitation period described in § 3585 of this title) be represented by and bound by another who has a substantially identical interest with respect to the particular question or dispute, but only to the extent that there is no material conflict of interest between the representative and the person represented with respect to the particular question or dispute.
(b) A presumptive remainder beneficiary may represent and bind contingent successor remainder beneficiaries for the same purposes, in the same circumstances, and to the same extent as an ascertainable competent beneficiary may represent and bind a minor, incapacitated, unborn, or unascertainable person. As used in this subsection (b), the term "presumptive remainder beneficiary" means, as of any date, a beneficiary who would receive income or principal of the trust if the trust were to terminate as of that date (without regard to the exercise of any power of appointment) or, if the trust does not provide for its termination, a beneficiary who would receive or be eligible to receive distributions of income or principal of the trust if all of the beneficiaries currently receiving or eligible to receive distributions of income or principal of the trust were deceased.
(c) In the case of a trust having a minor or incapacitated beneficiary who may not be represented by another pursuant to subsection (a) or subsection (b) of this section, the custodial parent or parents or guardian of the property of the beneficiary may represent and bind the beneficiary for purposes of any judicial proceeding or nonjudicial matter pertaining to the trust; provided that, in the case of a custodial parent or parents, there is no material conflict of interest between the minor or incapacitated beneficiary and either of such beneficiary's parents with respect to the particular question or dispute. Furthermore, such representative may, for all purposes, represent and bind an unborn person or unascertainable person who has an interest, with respect to the particular question or dispute, that is substantially identical to the interest of the minor or incapacitated beneficiary represented by the representative, but only to the extent that there is no material conflict of interest between the minor or incapacitated beneficiary represented by the representative and the unborn or unascertainable person with respect to the particular question or dispute. (72 Del. Laws, c. 388, § 3; 76 Del. Laws, c. 90, § 8.)
§ 3548. Limited purpose trust companies; general powers of appointment.
(a) Any power conferred upon a limited purpose trust company formed under Chapter 7 of Title 5 in its capacity as a fiduciary which would, except for this section, constitute in whole or in part a general power of appointment if such power were held by any officer, director or shareholder of the limited purpose trust company may only be exercised in the manner provided in subsection (b) of this section.
(b) A power described in subsection (a) of this section may, to the extent permissible under such power, be exercised as follows:
(1) The limited purpose trust company may exercise the power in favor of a person other than any officer, director or shareholder of the limited purpose trust company.
(2) The limited purpose trust company may only exercise the power in favor of, or for the benefit of (including in discharge of a support obligation), an officer, director or shareholder of the limited purpose trust company to provide for that person's health, education, support or maintenance as described under Internal Revenue Code §§ 2041 and 2514 [26 U.S.C. § 2041 or § 2514].
(3) If the power described in subsection (a) of this section is conferred upon 2 or more fiduciaries, it may be exercised by the fiduciary or fiduciaries who are not disqualified from exercising the power as if such fiduciary or fiduciaries were the only fiduciary or fiduciaries.
(4) If all of the serving fiduciaries are disqualified from exercising a power, the court that would have jurisdiction to appoint a fiduciary under the instrument if there were no fiduciary currently serving may appoint a special fiduciary whose only power is to exercise the power that cannot be exercised by the other fiduciaries by reason of subsection (a) of this section.
(5) Subsection (a) of this section shall not apply to any power to the extent that it is exercisable in favor of:
a. The settlor of a trust that is revocable or amendable by the settlor;
b. A decedent's or settlor's spouse who is a beneficiary of a trust for which a marital deduction has been allowed; or
c. The settlor of a trust holding property that is the subject of a qualified disposition within the meaning of § 3570(7) of this title, unless the settlor has retained a special power of appointment described in § 3570(11)b.2. of this title.
(c) Any power conferred upon a limited purpose trust company in its capacity as a fiduciary to allocate receipts and expenses as between income and principal in favor of an officer, director or shareholder of the limited purpose trust company must be exercised in accordance with Chapter 61 of this title.
(d) "General power of appointment" means any power that would cause income to be taxed to a taxpayer in that taxpayer's individual capacity under § 678 [26 U.S.C. § 678] of the Internal Revenue Code, and any power that would be a general power of appointment, in whole or in part, under § 2041(b)(1) or § 2514(c) of the Internal Revenue Code [26 U.S.C. § 2041(b)(1) or § 2514(c)].
(e) "Internal Revenue Code" means the Internal Revenue Code of 1986 [26 U.S.C. § 1, et seq.], as amended.
(f) "Fiduciary" has the meaning set forth in § 3301 of Title 12.
(g) This section applies to all fiduciary relationships in existence on May 14, 2001 and to all other fiduciary relationships that come into existence after that date. The provisions of this section are declaratory of existing law, and neither modify nor amend existing fiduciary relationships. (73 Del. Laws, c. 37, § 1; 70 Del. Laws, c. 186, § 1.)
§ 3549. Marital deduction gift; compliance with Internal Revenue Code; fiduciary powers.
(a) If a governing instrument contains a marital deduction gift, the governing instrument shall be construed to comply with the marital deduction provisions of the Internal Revenue Code in every respect.
(b) If a governing instrument contains a marital deduction gift, any fiduciary operating under the governing instrument has all the powers, duties, and discretionary authority necessary to comply with the marital deduction provisions of the Internal Revenue Code. The fiduciary shall not take any action or have any power that may impair that deduction, but this does not require the fiduciary to make the election under § 2056(b)(7) or § 2523(f) of the Internal Revenue Code [26 U.S.C. § 2056(b)(7) or § 2523(f)].
(c) For purposes of this section, "marital deduction gift" means a gift intended to qualify for the marital deduction as indicated by a preponderance of the evidence including the governing instrument and extrinsic evidence whether or not the governing instrument is found to be ambiguous.
(d) For purposes of this section, "Internal Revenue Code" means the Internal Revenue Code of 1986 (26 U.S.C. § 1 et seq.), as amended, or any corresponding federal tax statute enacted hereafter. (76 Del. Laws, c. 90, § 9.)
NOTICE: The Delaware Code appearing on this site was prepared by the Division of Research of Legislative Council of the General Assembly with the assistance of the Government Information Center, under the supervision of the Delaware Code Revisors and the editorial staff of LexisNexis, includes all acts up to and including 76 Del. Laws, c. 352, effective July 16, 2008.
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