Title 3B, Title 3B: ADMINISTRATION OF ESTATES--DECEDENTS AND OTHERS

3B:19B-12. Business and other activities conducted by trustee 12. 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 busine…

3B:19B-13. Principal receipts 13. Principal Receipts. A trustee shall allocate to principal: a. To the extent not allocated to income under this act, assets received from a transferor during the transferor's lifetime, a decedent's estate, a trust with a terminating income interes…

3B:19B-14. Rental property 14. 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 cancell…

3B:19B-15. Obligation to pay money 15. 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, shall …

3B:19B-16. Insurance policies and similar contracts 16. 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 o…

3B:19B-17. Deferred compensation, retirement benefits, annuities, and similar payments 17. Deferred Compensation, Retirement Benefits, Annuities, and Similar Payments. a. As used in this section, "payment" means a payment that a trustee may receive over a fixed period of time or …

3B:19B-18. Liquidating asset 18. Liquidating Asset. a. As used 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, cop…

3B:19B-19. Minerals, water and other natural resources 19. 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 follo…

3B:19B-2. Definitions 2. Definitions. As used in this act: "Accounting period" means a calendar year unless another 12-month period is selected by a fiduciary. The term includes a portion of a calendar year or other 12-month period that begins when an income interest begins or en…

3B:19B-20. Timber 20. 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…

3B:19B-21. Property not productive of income 21. 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 asse…

3B:19B-22. Derivatives and options 22. Derivatives and Options. a. As used 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 chan…

3B:19B-23. Asset-backed securities 23. Asset-backed Securities. a. As used 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…

3B:19B-24. Disbursements from income 24. Disbursements from Income. A trustee shall make the following disbursements from income to the extent that they are not disbursements to which paragraph (1) or (2) of subsection b. of section 5 of this act applies: a. commissions allowed b…

3B:19B-25. Disbursements from principal 25. Disbursements from Principal. a. A trustee shall make the following disbursements from principal: (1) commissions allowed by law to a trustee on principal receipts or distributions or on termination of the trust estate; (2) the remainin…

3B:19B-26. Transfers from income to principal for depreciation 26. Transfers from Income to Principal for Depreciation. a. As used in this section, "depreciation" means a reduction in value due to wear, tear, decay, corrosion or gradual obsolescence of a fixed asset having a usef…

3B:19B-27. Transfer from income to reimburse principal 27. Transfer 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 m…

3B:19B-28. Income taxes 28. Income Taxes. a. A tax required to be paid by a trustee based on receipts allocated to income shall be paid from income. b. A tax required to be paid by a trustee based on receipts allocated to principal shall be paid from principal, even if the tax is…

3B:19B-29. Uniformity of application and construction 29. Uniformity of Application and Construction. In applying and construing this act, consideration shall be given to the fact that this is a uniform act, and there is a need to promote uniformity of the act with respect to its…

3B:19B-3. Fiduciary duties; general principles 3. Fiduciary Duties; General Principles. a. In allocating receipts and disbursements to or between principal and income, and with respect to any matter within the scope of sections 5 through 9 of this act, a fiduciary: (1) shall admi…

3B:19B-30. Application of act to existing and future trusts and estates 30. Application of Act to Existing and Future Trusts and Estates. This act applies to every trust or decedent's estate existing on or after the effective date of this act, except as otherwise expressly provid…

3B:19B-31. Judicial control of discretionary powers 31. Judicial Control of Discretionary Powers. a. A court shall not change a fiduciary's decision to exercise or not to exercise a discretionary power conferred by this act unless it determines that the decision was an abuse of d…

3B:19B-4 Trustee's power to adjust. 4. Trustee's Power to Adjust. a. A trustee may adjust between principal and income if the terms of the trust describe the amount that may or shall be distributed to a beneficiary by referring to the trust's income and the trustee determines, af…

3B:19B-5. Determination and distribution of net income 5. Determination and Distribution of Net Income. After a decedent dies, in the case of an estate or after an income interest in a trust ends, the following rules apply: a. A fiduciary of an estate or of a terminating income i…

3B:19B-6. Distribution to residuary and remainder beneficiaries 6. Distribution to Residuary and Remainder Beneficiaries. a. Each beneficiary described in subsection d. of section 5 of this act is entitled to receive a portion of the net income equal to the beneficiary's fraction…

3B:19B-7. When right to income begins and ends 7. When Right to Income Begins and Ends. 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 i…

3B:19B-8. Apportionment of receipts and disbursements when decedent dies or income interest begins 8. Apportionment of Receipts and Disbursements When Decedent Dies or Income Interest Begins. a. A trustee shall allocate an income receipt or disbursement, other than one to which s…

3B:19B-9. Apportionment when income interest ends 9. Apportionment When Income Interest Ends. a. As used 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…

3B:20-1 Definitions 3B:20-1. Definitions. As used in this chapter: a. "Trust instrument" means and includes a will, deed, agreement, court order or other instrument pursuant to which money or other property is entrusted to a fiduciary; b. "Fiduciary" means an individual or corpor…

3B:20-10 Investments by court order upon change in conditions 3B:20-10. Investments by court order upon change in conditions. If the court finds that by reason of a change in conditions which has occurred since the creation of the trust or which may be reasonably foreseen, the ob…

3B:20-11.1 Short title 1. Sections 1 through 12 of this 1997 amendatory and supplementary act shall be known and may be cited as the "Prudent Investor Act." L.1997,c.26,s.1.

3B:20-11.10 Delegation of investment, management functions by fiduciary 10. a. A fiduciary may delegate investment and management functions that a prudent fiduciary of comparable skills could properly delegate under the circumstances. The fiduciary shall exercise reasonable care,…

3B:20-11.11 Construction of terms 11. The following terms or comparable language in a trust instrument, unless otherwise limited or modified by that instrument, shall be construed as authorizing any investment or strategy permitted under this act: "investments permissible by law …

3B:20-11.12 Applicability of act 12. This act shall apply to and govern trusts existing on and created after its effective date. As applied to trusts existing on its effective date, this act governs only actions or omissions occurring after that date. L.1997,c.26,s.12.

3B:20-11.2 Compliance by fiduciary with prudent investor rule 2. a. Except as provided in subsection b. of this section, a fiduciary 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 this a…

3B:20-11.3 Investments, management of trust assets by fiduciary 3. a. A fiduciary 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 standard, th…

3B:20-11.4 Diversification of investments 4. A fiduciary shall diversify the investments of the trust unless the fiduciary reasonably determines that, because of special circumstances, the purposes of the trust are better served without diversifying. L.1997,c.26,s.4.

3B:20-11.5 Assets to be managed in interest of beneficiaries 5. A fiduciary shall invest and manage the trust assets solely in the interest of the beneficiaries. L.1997,c.26,s.5.

3B:20-11.6 Impartiality of fiduciary 6. If a trust has two or more beneficiaries, the fiduciary shall act impartially in investing and managing the trust assets, taking into account any differing interests of the beneficiaries. L.1997,c.26,s.6.

3B:20-11.7 Review of trust assets 7. Within six months after accepting trust assets, the fiduciary shall review the trust assets and shall make and implement decisions concerning the retention and disposition of assets received at the inception of the trust, in order to bring the…

3B:20-11.8 Incurrence of costs by fiduciary 8. In investing and managing trust assets, a fiduciary may only incur costs that are appropriate and reasonable in relation to the assets, the purposes of the trust, and the skills of the fiduciary. A fiduciary who delegates investment …

3B:20-11.9 Rule expresses standard of conduct 9. The prudent investor rule expresses a standard of conduct, not outcome. Compliance with the rule is determined in light of the facts and circumstances existing at the time of the fiduciary's decision or action. L.1997,c.26,s.9.

3B:20-18 Authority to exchange or convert securities 3B:20-18. Authority to exchange or convert securities. Except as otherwise provided in the trust instrument, a fiduciary who holds securities in a trust estate issued by a corporation which has been recapitalized or reorganized…

3B:20-19 Fiduciary as issuing corporation 3B:20-19. Fiduciary as issuing corporation. An exchange or conversion of securities may be made pursuant to this article notwithstanding that the fiduciary which holds the securities in a trust estate is the same corporation which issued …

3B:20-21. Definitions As used in this article: a. "Banking institution" includes State chartered banks and national banking associations; b. "Bank holding company" means a bank holding company as defined in the Bank Holding Company Act of 1956 (Act of May 9, 1956, 70 Stat. 1933, …

3B:20-22. Authority to exchange or convert When a bank holding company which is a corporation acquires 80% or more of the outstanding capital stock of a banking institution, any shares of the capital stock of the banking institution held in a trust estate by a fiduciary may be ex…