Role of directors; petitioning court for instructions

(a) Except as otherwise provided in this article, with respect to a power of direction, a trust director shall have the same fiduciary duty and liability in the exercise or nonexercise of the power of direction as a trustee in a like position and under similar circumstances. (b) Where a trust director individually holds a power of direction, the trust director shall not have the liability of a cotrustee, whether under Code Section 53-12-305 or otherwise, with respect to a trustee or other trust director. Where a trust director holds a power of direction jointly with a trustee or other trust director, the trust director shall have the liability of a cotrustee, whether under Code Section 53-12-305 or otherwise, with respect to a trustee or other trust director regarding the actions of that trustee or other trust director that are within the scope of the jointly held power. 947 53-12-503 WILLS, TRUSTS, AND ESTATES 53-12-503 (c) Except as otherwise provided in the trust instrument, a trust director shall not have the duties imposed by Code Section 53-12-242 and subsection (b) of Code Section 53-12-243. (d) Without limiting the scope of subsection (a) of this Code section: (1) The trust instrument may vary a trust director’s duty or liability to the same extent the trust instrument could vary the duty or liability of a trustee in a like position and under similar circumstances; (2) An action against a trust director for breach of trust must be commenced within the same limitation period as under Code Section 53-12-307 for an action for breach of trust against a trustee in a like position and under similar circumstances; and (3) A report or accounting shall have the same effect on the limitation period for an action against a trust director for breach of trust that the report or accounting would have under Code Section 53-12-307 in an action for breach of trust against a trustee in a like position and under similar circumstances. (e) A trust instrument may make the existence of a trust director’s power of direction contingent upon the occurrence of certain events, including a request to the trust director from a beneficiary or other similar party. A trust instrument may also provide that a trust director’s power of direction terminates or is rescinded upon the occurrence of certain events, including but not limited to the passage of a specified period of time after a request. For purposes of Code Section 53-12-501, when a power of direction is contingent upon a request to a trust director from a person identified in the trust instrument, such person shall be deemed to hold a power of appointment. (f ) A trust instrument may empower a trust director to delegate a power of direction to a trustee and provide that, upon written acceptance of such delegation by the trustee, the trustee shall assume the fiduciary duties and liabilities conferred by the power of direction until such time as the trust director or trustee terminates the delegation by written notice. Except as otherwise provided in the trust instrument, during the time a power of direction is delegated in accordance with this subsection, the trust director making such delegation shall not be subject to a fiduciary obligation to monitor the trustee’s exercise or nonexercise of the delegated power. (g) Subject to subsection (j) of this Code section, a trust director shall: (1) Keep trustees and other trust directors reasonably informed of the exercise or nonexercise of the trust director’s power of direction to the extent such exercise or nonexercise is relevant to the party’s powers and duties regarding the trust; and 948 53-12-503 (2) Respond to reasonable requests from trustees and other trust directors for information to the extent such information is relevant to the party’s powers and duties regarding the trust. (h) A trust director acting in reliance on information provided by a trustee or another trust director shall not be liable for a breach of trust to the extent the breach resulted from such reliance, unless the trust director acts in bad faith. (i) Except as otherwise provided in the trust instrument, if a trust director is licensed, certified, or otherwise authorized or permitted by law other than this article to provide health care in the ordinary course of the trust director’s business or practice of a profession, to the extent the trust director acts in such capacity, the trust director shall have no duty or liability under this article. (j)(1) Except as otherwise provided in the trust instrument, a trust director shall not have a duty to: (A) Monitor a trustee or another trust director regarding matters outside the scope of the trust director’s powers of direction; or (B) Inform or give advice to a settlor, beneficiary, trustee, or another trust director concerning an instance in which the director might have acted differently from a trustee or another trust director. (2) By taking one of the actions described in paragraph (1) of this subsection, a trust director does not assume any of the duties excluded by this subsection. (k) A trust instrument may impose a duty or liability on a trust director in addition to the duties and liabilities under this Code section. (l) A trust director that has reasonable doubt about a duty imposed by this Code section may petition the court for instructions. (m) A trust director shall be subject to the same rules as a trustee in a like position and under similar circumstances in the exercise or nonexercise of a power of direction regarding: (1) A payback provision in the trust necessary to comply with the reimbursement requirements of Medicaid law in Section 1917 of the Social Security Act, 42 U.S.C. Section 1396p(d)(4)(A), as amended, and regulations issued thereunder; and (2) A charitable interest in the trust. History. — Code 1981, § 53-12-503, enacted by Ga. L. 2018, p. 262, § 25/HB 121; Ga. L. 2020, p. 377, § 1-90/HB 865. The 2020 amendment, effective Janu- ary 1, 2021, in subsection (a), substituted ‘‘article’’ for ‘‘Code section’’, substituted ‘‘, a’’ for ‘‘: (1) A’’, deleted ‘‘; and’’, and deleted paragraph (a)(2) which read: ‘‘The trust 949 53-12-503 WILLS, TRUSTS, AND ESTATES instrument may vary the trust director’s duty or liability to the same extent the trust instrument could vary the duty or liability of a trustee in a like position and under similar circumstances’’; added subsections (b), (c), and (d) and redesignated former subsections (b) through (i) as present subsections (e) through (l); in subsection (e), deleted ‘‘, but not limited to,’’ following ‘‘included’’ and added the last 53-12-504 two sentences; added the last sentence in subsection (f ); substituted ‘‘subsection (j)’’ for ‘‘subsection (g)’’ in subsection (g); substituted ‘‘the trust director acts in bad faith’’ for ‘‘by so acting the trust director engages in willful misconduct’’ in subsection (h); substituted ‘‘does’’ for ‘‘shall’’ in paragraph (j)(2); and added subsection (m). 53-12-504. Directed trustees; role; trustee’s duty as to directed trustee; petitioning court for instructions. (a) Unless compliance by the directed trustee would clearly constitute an act committed in bad faith on the part of the directed trustee, a directed trustee shall take reasonable action to comply with a trust director’s exercise or nonexercise of a power of direction and shall not be liable for such action. A directed trustee must not comply with a trust director’s exercise or nonexercise of a power of direction to the extent that compliance by the directed trustee would clearly constitute an act committed in bad faith. (b) For purposes of subsection (a) of this Code section, a direction from a trust director shall be within the scope of the trust director’s powers of direction if the directed trustee believes in good faith that the direction is within the trust director’s powers of direction. (c) Subject to subsection (f ) of this Code section, a directed trustee shall: (1) Except as provided otherwise in the trust instrument, provide information to a trust director as if the trust director were a beneficiary of an irrevocable trust to whom income is required or authorized in the trustee’s discretion to be distributed; and (2) Respond to reasonable requests from a trust director for information to the extent such information is relevant to the trust director’s powers and duties regarding the trust. (d) A directed trustee acting in reliance on information provided by a trust director shall not be liable for a breach of trust to the extent the breach resulted from such reliance, unless by so acting the directed trustee acts in bad faith. (e) A trustee shall not be liable for a failure to sufficiently report or provide information to a beneficiary or other party when such failure is related to the failure of a trust director to provide information to the trustee. (f )(1) Except as otherwise provided in the trust instrument, a trustee shall not have a duty to: 950 53-12-504 (A) Monitor, investigate, review, or evaluate a trust director, including a trust director’s actions or inactions; (B) Provide any accountings, reports, or other information to a trust director beyond that required by subsection (c) of this Code section; (C) Advise a trust director regarding the scope, nature, execution, standard of care, potential liability, or other aspects of their status as trust director; (D) If compliance with a direction from the trust director would constitute an act committed in bad faith, take any action in response to such direction other than the refusal to comply with such direction; (E) Attempt to compel a trust director to act or not act; (F) Petition the court regarding a trust director’s action, inaction, capacity, or any similar matter; or (G) Inform or give advice to a settlor, beneficiary, trustee, or trust director concerning an instance in which the trustee might have acted differently from the trust director. (2) By taking one of the actions described in paragraph (1) of this subsection, a directed trustee does not assume any of the duties excluded by this subsection. (g) An exercise of a power of direction under which a trust director may release a trustee from liability for breach of trust shall not be effective if the release was induced in bad faith or by the provision of false or incomplete information by the trustee. (h) A trust instrument may impose a duty or liability on a directed trustee in addition to the duties and liabilities under this Code section. (i) A directed trustee that has reasonable doubt about a duty imposed by this Code section may petition the court for instructions. History. — Code 1981, § 53-12-504, enacted by Ga. L. 2018, p. 262, § 25/HB 121; Ga. L. 2020, p. 377, § 1-91/HB 865. The 2020 amendment, effective January 1, 2021, in subsection (a), substituted ‘‘an act committed in bad faith’’ for ‘‘willful misconduct’’ and added the last sentence; in subsection (b), substituted ‘‘For purposes of subsection (a)’’ for ‘‘Subject to subsection (e)’’, substituted ‘‘direction from a trust director shall be within the scope of the trust director’s powers of direction if the directed trustee believes in good faith that the direction is within the trust director’s powers of direction’’ for ‘‘shall: (1) Account at least annually to a trust director as if the trust director were a qualified beneficiary of an irrevocable trust to whom income is required or authorized in the trustee’s discretion to be distributed; and (2) Respond to reasonable requests from a trust director for information to the extent such information is relevant to the party’s interest in or trust director’s powers and duties regarding the trust’’; added subsections (c) and (h) and redesignated former subsections (c) through (g) as subsections (d) through (g) 951 53-12-504 WILLS, TRUSTS, AND ESTATES and (i); substituted ‘‘acts in bad faith’’ for ‘‘engages in willful misconduct’’ in subsection (d); in subsection (f ), substituted ‘‘subsection (c) of this Code section’’ for ‘‘subsection (b) of this Code Section’’ in subparagraph (f )(1)(B), substituted ‘‘If compliance with a direction from the trust director would constitute an act committed in bad faith, take any action in re- 53-12-506 sponse to such direction’’ for ‘‘Take any action in response to willful misconduct by the trust director’’ in subparagraph (f )(1)(D), substituted ‘‘from’’ for ‘‘than’’ in subparagraph (f )(1)(G), and substituted ‘‘this subsection’’ for ‘‘this Code section’’ in paragraph (f )(2); and substituted ‘‘in bad faith or by’’ for ‘‘by willful misconduct or’’ in subsection (g). 53-12-505. Relief from duty and liability.