Title 45a, Title 45a: Probate Courts and Procedure

Secs. 45a-536 to 45a-539. Reserved for future use. PART VI POWERS IN TRUST INSTRUMENTS ACT

Sec. 45a-540. (Formerly Secs. 45-100a to 45-100c). Powers in trust instruments act. Sections 45-100a to 45-100c, inclusive, are repealed, except said sections shall continue in effect insofar as any instrument executed prior to January 1, 1970, incorporated said sections. (1967, …

Sec. 45a-541. Short title: Connecticut Uniform Prudent Investor Act. Sections 45a-541 to 45a-541l, inclusive, may be cited as the “Connecticut Uniform Prudent Investor Act”. (P.A. 97-140, S. 1.)

Sec. 45a-541a. Prudent investor rule. (a) Except as provided in subsection (b) of this section, a trustee who invests and manages trust assets owes a duty to the beneficiaries of the trust to comply with the prudent investor rule, as set forth in sections 45a-541 to 45a-541l, inc…

Sec. 45a-541b. Standard of care. Portfolio strategy. Risk and return objectives. (a) A trustee shall invest and manage trust assets as a prudent investor would, by considering the purposes, terms, distribution requirements and other circumstances of the trust. In satisfying this …

Sec. 45a-541c. Diversification. A trustee shall diversify the investments of the trust unless the trustee reasonably determines that, because of special circumstances, the purposes of the trust are better served without diversifying. (P.A. 97-140, S. 4.)

Sec. 45a-541d. Duties at inception of trusteeship. Within a reasonable time after accepting a trusteeship or receiving trust assets, a trustee shall review the trust assets and make and implement decisions concerning the retention and disposition of assets, in order to bring the …

Sec. 45a-541e. Loyalty. A trustee shall invest and manage the trust assets solely in the interest of the beneficiaries. (P.A. 97-140, S. 6.)

Sec. 45a-541f. Impartiality. If a trust has two or more beneficiaries, the trustee shall act impartially in investing and managing the trust assets, taking into account any differing interests of the beneficiaries. (P.A. 97-140, S. 7.)

Sec. 45a-541g. Investment costs. In investing and managing trust assets, a trustee may only incur costs that are appropriate and reasonable in relation to the assets, the purposes of the trust and the skills of the trustee. (P.A. 97-140, S. 8.)

Sec. 45a-541h. Reviewing compliance. The prudent investor rule expresses a standard of conduct, not outcome. Compliance with the prudent investor rule is determined in light of the facts and circumstances existing at the time of a trustee's decision or action. (P.A. 97-140, S. 9.…

Sec. 45a-541i. Delegation of investment and management functions. (a) A trustee may delegate investment and management functions that a prudent trustee of comparable skills could properly delegate under the circumstances. The trustee shall exercise reasonable care, skill and caut…

Sec. 45a-541j. Language invoking standards of act. The following terms or comparable language in a trust instrument, unless otherwise limited or modified by the instrument, authorizes any investment or strategy permitted under sections 45a-541 to 45a-541l, inclusive: “Investments…

Sec. 45a-541k. Uniformity of application and construction. Sections 45a-541 to 45a-541l, inclusive, shall be applied and construed to effectuate their general purpose to make uniform the law with respect to the subject of said sections among the states enacting them. (P.A. 97-140…

Sec. 45a-541l. Applicability. Sections 45a-541 to 45a-541l, inclusive, apply to trusts existing on and created after October 1, 1997. As applied to trusts existing on October 1, 1997, sections 45a-541 to 45a-541l, inclusive, govern only decisions or actions occurring after that d…

Sec. 45a-542. Short title: Connecticut Principal and Income Act. Sections 45a-542 to 45a-542ff, inclusive, may be cited as the “Connecticut Principal and Income Act (1999)”. (P.A. 99-164, S. 1, 36.) History: P.A. 99-164 effective January 1, 2000.

Sec. 45a-542a. Definitions. As used in sections 45a-542 to 45a-542ff, inclusive: (1) “Accounting period” means a calendar year unless another twelve-month period is selected by a fiduciary. The term includes a portion of a calendar year or other twelve-month period that begins wh…

Sec. 45a-542aa. Transfers from income to reimburse principal. (a) If a trustee makes or expects to make a principal disbursement described in this section, the trustee may transfer an appropriate amount from income to principal in one or more accounting periods to reimburse princ…

Sec. 45a-542b. Fiduciary duties. (a) In allocating receipts and disbursements to or between principal and income, and with respect to any matter within the scope of sections 45a-542d to 45a-542h, inclusive, a fiduciary: (1) Shall administer a trust or estate in accordance with th…

Sec. 45a-542bb. Income taxes. (a) A tax required to be paid by a trustee based on receipts allocated to income must be paid from income. (b) A tax required to be paid by a trustee based on receipts allocated to principal must be paid from principal, even if the tax is called an i…

Sec. 45a-542c. Trustee's power to adjust. (a) A trustee may adjust between principal and income to the extent the trustee considers necessary if the trustee invests and manages trust assets as a prudent investor, the terms of the trust describe the amount that may or must be dist…

Sec. 45a-542cc. Adjustments between principal and income as result of taxes. (a) A fiduciary may make adjustments between principal and income to offset the shifting of economic interests or tax benefits between income beneficiaries and remainder beneficiaries which arise from: (…

Sec. 45a-542d. Determination and distribution of income interest of decedent's estate or in trust after trust ends. After a decedent dies, in the case of an estate, or after an income interest in a trust ends, the following rules apply: (1) A fiduciary of an estate or of a termin…

Sec. 45a-542dd. Uniformity of application and construction. In applying and construing sections 45a-542 to 45a-542ff, inclusive, consideration must be given to the fact that this is a uniform law and the need to promote uniformity of the law with respect to its subject matter amo…

Sec. 45a-542e. Distribution to beneficiaries. (a) Each beneficiary described in subdivision (4) of section 45a-542d is entitled to receive a portion of the net income equal to the beneficiary's fractional interest in undistributed principal assets, using values as of the distribu…

Sec. 45a-542ee. Severability clause. If any provision of sections 45a-542 to 45a-542ff, inclusive, or their application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of said sections which can be given effect withou…

Sec. 45a-542f. Right to income. (a) An income beneficiary is entitled to net income from the date on which the income interest begins. An income interest begins on the date specified in the terms of the trust or, if no date is specified, on the date an asset becomes subject to a …

Sec. 45a-542ff. Application to existing trust or decedent's estate. Sections 45a-542 to 45a-542ff, inclusive, apply to every trust or decedent's estate existing on or after January 1, 2000, except as otherwise expressly provided in the will or terms of the trust or in said sectio…

Sec. 45a-542g. Apportionment of receipts and disbursements when decedent dies or interest income begins. (a) A trustee shall allocate an income receipt or disbursement other than one to which subdivision (1) of section 45a-542d applies to principal if its due date occurs before a…

Sec. 45a-542h. Apportionment when income interest ends. (a) In this section, “undistributed income” means net income received before the date on which an income interest ends. The term does not include an item of income or expense that is due or accrued or net income that has bee…

Sec. 45a-542i. Character of receipts. (a) In this section, “entity” means a corporation, partnership, limited liability company, regulated investment company, real estate investment trust, common trust fund or any other organization in which a trustee has an interest other than a…

Sec. 45a-542j. Distribution from trust or estate. A trustee shall allocate to income an amount received as a distribution of income from a trust or an estate in which the trust has an interest other than a purchased interest, and shall allocate to principal an amount received as …

Sec. 45a-542k. Business and other activities conducted by trustee. (a) If a trustee who conducts a business or other activity determines that it is in the best interest of all the beneficiaries to account separately for the business or activity instead of accounting for it as par…

Sec. 45a-542l. Principal receipts. A trustee shall allocate to principal: (1) To the extent not allocated to income under sections 45a-542 to 45a-542ff, inclusive, assets received from a transferor during the transferor's lifetime, a decedent's estate, a trust with a terminating …

Sec. 45a-542m. Rental property. To the extent that a trustee accounts for receipts from rental property pursuant to this section, the trustee shall allocate to income an amount received as rent of real or personal property, including an amount received for cancellation or renewal…

Sec. 45a-542n. Obligation to pay money. (a) An amount received as interest, whether determined at a fixed, variable or floating rate, on an obligation to pay money to the trustee, including an amount received as consideration for prepaying principal, must be allocated to income w…

Sec. 45a-542o. Insurance policies and similar contracts. (a) Except as otherwise provided in subsection (b) of this section, a trustee shall allocate to principal the proceeds of a life insurance policy or other contract in which the trust or its trustee is named as beneficiary, …

Sec. 45a-542p. Insubstantial allocations not required. If a trustee determines that an allocation between principal and income required by section 45a-542q, 45a-542r, 45a-542s, 45a-542t or 45a-542w is insubstantial, the trustee may allocate the entire amount to principal unless o…

Sec. 45a-542q. Deferred compensation, annuities and similar payments. Separate funds. (a) In this section: (1) “Payment” means a payment that a trustee may receive over a fixed number of years or during the life of one or more individuals because of services rendered or property …

Sec. 45a-542r. Liquidating asset. (a) In this section, “liquidating asset” means an asset whose value will diminish or terminate because the asset is expected to produce receipts for a period of limited duration. The term includes a leasehold, patent, copyright, royalty right and…

Sec. 45a-542s. Minerals, water and other natural resources. (a) To the extent that a trustee accounts for receipts from an interest in minerals or other natural resources pursuant to this section, the trustee shall allocate them as follows: (1) If received as nominal delay rental…

Sec. 45a-542t. Timber. (a) To the extent that a trustee accounts for receipts from the sale of timber and related products pursuant to this section, the trustee shall allocate the net receipts: (1) To income to the extent that the amount of timber removed from the land does not e…

Sec. 45a-542u. Property not productive of income. (a) If a marital deduction is allowed for all or part of a trust whose assets consist substantially of property that does not provide the spouse with sufficient income from or use of the trust assets, and if the amounts that the t…

Sec. 45a-542v. Derivatives and options. (a) In this section, “derivative” means a contract or financial instrument or a combination of contracts and financial instruments which gives a trust the right or obligation to participate in some or all changes in the price of a tangible …

Sec. 45a-542w. Asset-backed securities. (a) In this section, “asset-backed security” means an asset whose value is based upon the right it gives the owner to receive distributions from the proceeds of financial assets that provide collateral for the security. The term includes an…

Sec. 45a-542x. Disbursements from income. A trustee shall make the following disbursements from income to the extent that they are not disbursements to which subparagraph (B) or (C) of subdivision (2) of section 45a-542d applies: (1) One-half of the regular compensation of the tr…