Wrap Up of the 14 Part Series of the New Jersey Uniform Trust Code
On January 19, 2016, the New Jersey Legislature passed, and Governor Christie signed into law, the New Jersey Uniform Trust Code (“NJ UTC”). The new statute became effective as of July 17, 2016, and it is in Chapter 31 of Title 3B of the New Jersey statutes.
Although the NJ UTC became effective on July 17, 2016, it applies to trusts created before, on, or after its effective date. N.J.S.A. § 3B:31-84(a)(1). It also applies to judicial proceedings commenced before its effective date unless the court finds that applying a particular provision substantially interferes with the proceedings or prejudices the parties. N.J.S.A. § 3B:31-84 (a)(3). However, the NJ UTC does not apply to judicial proceedings commenced and concluded prior to its effective date. N.J.S.A. § 3B:31-84(a)(2).
Over the course of the preceding months, the Trust and Estate Litigation team has developed helpful summaries of the new statute. These summaries are available on our blog. As seen in these previous blog posts, the NJ UTC covers a multitude of areas including representation; modification and termination of trusts; creditor’s claims; and duties, powers, and liabilities of trustees.
The following are some noteworthy provisions of the NJ UTC and include links to more in-depth discussion of the provisions on the blog:
Modification/Termination of Trusts: The power of modification enables the court, a settlor, trustee, or beneficiary to change an intended trust term or provision to better effectuate the purpose of the trust. https://archrestatelaw.wpengine.com/hot-trends/the-new-jersey-uniform-trust-code-part-5a-reformation-modification-interpretation-revocation-and-termination-of-trusts/
Nonjudicial Settlement Agreements: While prior to the enactment of the NJ UTC, many trust disputes were settled informally through a nonjudicial settlement agreement, now parties are expressly authorized to use this settlement method. See N.J.S.A. § 3B:31-11. Eliminating the cost and delay of court approval, the NJ UTC authorizes the use of nonjudicial settlement agreements in the following scenarios: (1) interpreting the terms of a trust; (2) approving a trustee’s account; (3) approving or restraining a trustee’s actions; (4) approving the resignation or appointment of a trustee; (5) transferring a trust’s principal place of administration; and (6) establishing a trustee’s liability for an action related to a trust. https://archrestatelaw.wpengine.com/hot-trends/the-new-jersey-uniform-trust-code-part-three-general-provisions-and-definitions-of-the-nj-utc-article-1-including-nonjudicial-agreements-article-1-representation-article-2-and-misce/
Representation: Virtual representation of future interests in New Jersey was fixed by court rule prior to the adoption of the NJ UTC. The NJ UTC provisions regarding virtual representation are similar to the court rule, but are more specific and expansive. The essence of virtual representation remains the same (N.J.S.A. § 3B:31-13(a) provides that notice to one who may represent and bind another person has the same effect as if notice were given directly to the other person). https://archrestatelaw.wpengine.com/hot-trends/the-new-jersey-uniform-trust-code-part-three-general-provisions-and-definitions-of-the-nj-utc-article-1-including-nonjudicial-agreements-article-1-representation-article-2-and-misce/
Jurisdiction: Under the NJ UTC, a trustee can potentially change the principal place of administration of a testamentary trust. A trustee would not need judicial approval so long as the qualified beneficiaries, a distributee or permissible distributee, do not object. Further, a trustee would likely be able to change the principal place of administration of an inter vivos trust. The process would be the same as it is for testamentary trusts. N.J.S.A. § 3B:31-8(d). https://archrestatelaw.wpengine.com/hot-trends/the-new-jersey-uniform-trust-code-part-two-general-effect-and-what-is-not-changed-by-the-njutc/
Trust Terms Prevail: Under Article 1 of the NJ UTC, the terms of a trust prevail over any provision of the statute, with certain exceptions. The statute thus consists of default rules that will apply only if the terms of the trust fail to address a particular issue. N.J.S.A. § 3B:31-5(a). https://archrestatelaw.wpengine.com/hot-trends/the-new-jersey-uniform-trust-code-part-three-general-provisions-and-definitions-of-the-nj-utc-article-1-including-nonjudicial-agreements-article-1-representation-article-2-and-misce/
Notice: Permissible methods of notice or for sending a document include first-class mail, personal delivery, delivery to the person’s last known place of residence or place of business, or a properly directed textual electronic message. See N.J.S.A. § 3B:31-9. In addition, notice required under the NJ UTC or a document required to be sent under the NJ UTC, “need not be provided to a person whose identity or location is unknown to and not reasonably ascertainable by the trustee.” Further, a person can waive notice under the NJ UTC. https://archrestatelaw.wpengine.com/hot-trends/the-new-jersey-uniform-trust-code-part-three-general-provisions-and-definitions-of-the-nj-utc-article-1-including-nonjudicial-agreements-article-1-representation-article-2-and-misce/
Statute of Limitations: Pursuant to N.J.S.A. § 3B:31-84(b), statute of limitations that have commenced to run before the effective date of the NJ UTC, continue to apply even if that statute has been repealed or superseded by the NJ UTC. https://archrestatelaw.wpengine.com/hot-trends/the-new-jersey-uniform-trust-code-part-two-general-effect-and-what-is-not-changed-by-the-njutc/
Secret Trusts: The NJ UTC imposes a duty on the trustee “to respond to the request of a qualified beneficiary of an irrevocable trust who has attained the age of 35 years for a copy of the trust instrument or for other information reasonably related to the administration of the trust.” N.J.S.A. § 3B: 31-67. In other words, the trustee is not required to inform the beneficiary of the existence of a trust until he or she attains the age of 35. Even then, the trustee has no duty to inform the beneficiary, unless approached directly. https://archrestatelaw.wpengine.com/hot-trends/the-new-jersey-uniform-trust-code-part-13-secret-trusts/
In sum, the New Jersey Uniform Trust Code provides a comprehensive set of guidelines as to trusts – but its implementation remains to be seen. We encourage you to review our in-depth summaries of each provision of the new statute. A full index to those summaries can be found here: https://archrestatelaw.wpengine.com/hot-trends/the-new-jersey-uniform-trust-code-part-one-introduction/