The New Jersey Uniform Trust Code – Part Two: General Effect – And What is Not Changed by the NJUTC
Although the NJ UTC takes effect 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).
The NJ UTC applies to express trusts, charitable or noncharitable trusts, and trusts created pursuant to a statute, judgment, or decree that requires the trust to be administered in the manner of an express trust. See N.J.S.A. § 3B:31-2.
Under N.J.S.A. § 3B:31-6, “The common law of trusts and principles of equity supplement this act, except to the extent modified by this act or another statute of this State.”
The statute also applies to all judicial proceedings commenced on or after the effective date. N.J.S.A. § 3B:31-84 (a)(2). It applies to judicial proceedings commenced before its effective date unless the court finds that applying a particular provision substantially interferes with the proceedings or prejudice the parties. N.J.S.A. § 3B:31-84 (a)(3). But see In the Matter of the Estate of Violet Nelson, No. BER-P-001-15, 2016 N.J. Super. Unpub. LEXIS 180 (N.J. Super. Ct. Ch. Div., Jan. 27, 2016), rehearing at, 2016 N.J. Super. Unpub. LEXIS 403 (N.J. Super. Ct. Ch. Div. Feb. 22, 2016). Initially the court concluded that, absent ambiguity in the language of a trust, the court cannot resort to extraneous circumstances to explain away what is plainly set forth in the trust. Plaintiffs then moved for reconsideration, arguing that the NJ UTC, under N.J.S.A. §§ 3B:31-31 and 32, allows a court to reform the terms of a trust, even if unambiguous, to conform the terms to the settlor’s probable intent. See In re Nelson, 2016 N.J. Super. Unpub. LEXIS 403 (Ch. Div. Feb. 22, 2016). Upon reconsideration, however, the trial court found that: the new law expressly provides that it shall take effect on July 17, 2016 – a date yet to occur; the NJ UTC “is not and will not be applicable to judicial proceedings commenced and concluded prior to its effective date”; and instead the court “is compelled to apply the law as it exists in deciding disputes presented to it.” 2016 N.J. Super. Unpub. LEXIS 403 at *5. Thus, the motion for reconsideration was denied.
Significantly, in various instances the terms of the trust can override the act. N.J.S.A. § 3B:31-5 (a)-(b). The exceptions are enumerated in subsection (b) of that statutory provision and surveyed in more detail below.
Moreover, the NJ UTC does not change four key statutes dealing with trusts:
- Prudent Investor Act (N.J.S.A. § 3B:20-11.1 et seq.)
- Principal and Income Act (N.J.S.A. § 3B:19B-1 et seq.)
- Compensation of Fiduciaries (N.J.S.A. § 3B:18-1 et seq.)
- Fiduciary Powers (N.J.S.A. § 3B:14-23)
Finally, 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.