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- 2024 Oklahoma Legislation – Part II
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2024 Oklahoma Legislation – Part II
Oklahoma Uniform Directed Trust Act of 2024
Oklahoma Trust Act (Amended) – Title 60 O.S. §§ 175.01 – 175.57 (Effective 11/1/2024)
Registration and Pre-Registration – Transfer of License Plates – Contracts and Agreements for Electronic System – Title 47 O.S. § 1111.2 (Effective 9/1/2024)
By Pauli Loeffler
Oklahoma Uniform Directed Trust Act of 2024.
The Oklahoma’s legislators passed the “Oklahoma Uniform Directed Trust Act of 2024” during the last legislative session. I will refer to this Act as the “2024 Uniform Trust Act” or 2024 UTA. Like the Uniform Special Deposits Act that I covered in the August 2024 Legal Briefs, this is another Act promulgated by the Uniform Laws Committee. The 2024 UTA is found in Title 60 O.S. §§ 1201A – 1217. Its provisions take effect November 1, 2024. Note that the Oklahoma Trust Act (“OK Trust Act” or “OTA”) is also in Title 60 O.S. §§ 175.01 – 175.57. This Act still exists, but certain sections have been repealed or amended. The legislature also passed the Oklahoma Qualified Dispositions into Trust Act codified in Title 60 O.S. §§ 1301-1390 effective November 1, 2024, which I will not cover. I will note new § 1401 in Title 60 Trusts – Non Application of Rules Against Perpetuities is effective November 1, 2024. Inasmuch as all attorneys groan at the mere mention of the Rules Against Perpetuities, I will only mention the statute and leave it to an estate planner or your bank counsel to explain. Another new statute is Title 60 O.S. § 1402 – Trustee and Qualified Beneficiaries – Binding Nonjudicial Settlement Agreement – Validity – Matters that May be Resolved – Request of Approval from Court.
Let’s start with the 2024 UTA. I strongly suggest making a strong pot of coffee to keep you awake as we explore this Act.
Section 1202 provides definitions of terms used under the 2024 UTA. “Breach of trust” means a violation by a trust director or trustee of a duty imposed on that director or trustee by the terms of trust, the 2024 UTA, or laws of this state other than the 2024 UTA.
I read at least a couple of trusts each week sent by bankers who have questions regarding trusts provided by customers. The 2024 UTA has definitions that I have not encountered before: “Directed trust,” “Directed trustee, and “Power of direction.” The definition for the first term means “a trust for which the terms of the trust grant a power of direction; the second term means a trustee that is subject to a trust director’s power of direction; and the third term means a power over a trust granted by the terms of the trust to the extent the power is exercisable while the person is NOT serving as trustee. It includes a power over investment, management, or distribution of trust property or trust administration.
Section 1203 provides that the 2024 UTA applies to a trust whenever created that has its principal place of administration in Oklahoma if the trust is created before November 1, 2024, provided the decision or action occurs on or after the Act’s effective date, and 2) if the principal place of administration is changed to Oklahoma on or after the effective date the 2024 UTA applies only to a decision or action occurs on or after the date of change. In other words, we are talking about an existing trust.
Section 1205 defines “power of appointment” as a power that enables a person acting in a nonfiduciary capacity, e.g., a non-trustee, to designate a recipient of an ownership interest in or another power of appointment over trust property. The 2024 UTA does not apply to a power of appointment, a power to appoint or remove a trustee or trust director, power of a settlor over a trust with the power to revoke the trust. A power to designate a recipient of an ownership interest in power of appointment over trust property while not a trustee is a power of appointment rather than a power of direction.
Section 1206 permits a trust to grant a power of direction to a trust director and a trust director may exercise or nonexercise a power of direction. Under the 2024 UTA, Trust directors with joint powers must act by majority decision. I know bankers aren’t going to be thrilled with this provision. Of course, the trust could include language allowing trust co-directors to act independently if more than one trust director is named, and this would negate the Act’s requirement. I note § 175.17 of the OTA in subsection C. specifically allows a current co-trustee to execute a power of attorney naming another current co-trustee to act on his or her behalf. You will find a Template on the OBA Legal Links web page under Templates, Forms, and Charts under the subheading “Trusts.” Even though § 1208 of the 2024 UTA states that trust directors have the same fiduciary duty and liability as a trustee, I am unsure whether the co-trustee POA under the OTA can be used.
Section 1208 provides that a trust director has the same fiduciary duty and liability as a trustee. Section 1210 requires a trust director to provide a trustee or another trust director with information.
Under § 1211, unless required by terms in the trust, a trustee has no duty to monitor a trust director, inform or give advice to a settlor, beneficiary, trustee or trust director.
Oklahoma Trust Act.
Turning now to the OK Trust Act § 175.24 – Powers of Trustees – Bond – Payment from Trust – Legal Proceedings – Attorney-Client Relationship was amended effective November 1, 2024. Most of the changes are minor, dealing with gender neutrality such as the use of spouse rather than husband or wife. However, Subsection B. is new.
1. In the exercise of its authority under paragraph 9 of subsection A of this section, a trustee may pay, from the assets of the trust, reasonable compensation and costs incurred in connection with employment of attorneys, accountants, agents, and brokers reasonably necessary in the administration of the trust estate.
2. In the event of any legal proceeding regarding the trust, a trustee may pay the costs or attorney fees incurred in any proceeding from the assets of the trust without the approval of any person and without court authorization unless otherwise ordered by the court in such legal proceeding.
3. Unless expressly provided otherwise in a written employment agreement, the creation of an attorney-client relationship between an attorney and a person serving as a fiduciary shall not impose upon the attorney any duties or obligations to other persons interested in the estate, trust estate, or other fiduciary property, even though fiduciary funds may be used to compensate the attorney for legal services rendered to the fiduciary. This paragraph is intended to be declaratory of the common law and governs relationships in existence between attorneys and persons serving as fiduciaries and any such relationship hereafter created.
4. Whenever an attorney-client relationship exists between an attorney and a fiduciary, communications between the attorney and the fiduciary shall be subject to attorney-client privilege unless waived by the fiduciary, even though fiduciary funds may be used to compensate the attorney for legal services rendered to the fiduciary. The existence of a fiduciary relationship between a fiduciary and a beneficiary does not constitute or give rise to any waiver of the privilege for communications between the attorney and the fiduciary.
C. The following rules of administration shall be applicable to all express trusts but such rules shall not be exclusive of those otherwise imposed by law unless contrary to these rules:
1. Where a trustee is authorized to sell or dispose of land, such authority shall include the right to sell or dispose of part thereof, whether the division is horizontal, vertical, or made in any other way, or undivided interests therein;
2. Where a trustee is authorized by the trust agreement creating the trust or by law to pay or apply capital money subject to the trust for any purpose or in any manner, the trustee shall have and shall be deemed always to have had power to raise the money required by selling, converting, calling in, or mortgaging or otherwise encumbering all or any part of the trust property for the time being in possession;
3. A trustee shall have a lien and may be reimbursed with interest for, or pay or discharge out of the trust property, either principal or income or both, all advances made for the benefit or protection of the trust or its property and all expenses, losses, and liabilities, not resulting from the negligence of the trustee, incurred in or about the execution or protection of the trust or because of the trustee holding or ownership of any property subject thereto; and
4. When the happening of any event, including marriage, divorce, attainment of a certain age, performance of educational requirements, death, or any other event, affects distribution of income or principal of trust estates, the trustees shall not be liable for mistakes of fact prior to the actual knowledge or written notice of such fact.
D. The powers, duties, and responsibilities stated in the Oklahoma Trust Act or the Oklahoma Uniform Prudent Investor Act shall not be deemed to exclude other implied powers, duties, or responsibilities not inconsistent herewith.
E. The trustee shall pay all taxes and assessments levied or assessed against the trust estate or the trustee by governmental taxing or assessing agencies.
F. No trustee shall be required to give bond unless the instrument creating the trust, or a court of competent jurisdiction in its discretion upon the application of an interested party, requires a bond to be given.
Section 175.47 – Duration of Trust is amended with regard to Subsection C. effective November 1, 2024, with regard to the Rule Against Perpetuities in line with § 1401, discussed above:
C. Except as provided in this section, the common law rule against perpetuities shall not apply to a trust subject to the trust laws of this state.
Section 175.57 – Breach of Trust – Accounting and Approval
A. A violation by a trustee of a duty the trustee owes a beneficiary is a breach of trust.
B. To remedy a breach of trust that has occurred or may occur, the court may:
1. Compel the trustee to perform the trustee’s duties;
2. Enjoin the trustee from committing a breach of trust;
3. Compel the trustee to redress a breach of trust by payment of money or otherwise;
4. Order a trustee to account;
5. Appoint a receiver or temporary trustee to take possession of the trust property and administer the trust;
6. Suspend or remove the trustee;
7. Reduce or deny compensation to the trustee;
8. Subject to subsection I of this section, void an act of the trustee, impose an equitable lien or a constructive trust on trust property, or trace trust property wrongfully disposed of and recover the property or its proceeds; or
9. Grant any other appropriate remedy.
C. A beneficiary may charge a trustee who commits a breach of trust with the amount required to restore the value of the trust property and trust distributions to what they would have been had the breach not occurred, or, if greater, the profit that the trustee made by reason of the breach.
D. In a judicial proceeding involving a trust, the court may in its discretion, as justice and equity may require, award costs and expenses, including reasonable attorney fees, to any party, to be paid by another party or from the trust which is the subject of the controversy.
E. 1. For purposes of this subsection, “accounting” means any interim or final report or other statement provided by a trustee reflecting all transactions, receipts, and disbursements during the reporting period and a list of assets as of the end of the period covered by the report or statement.
2. For any trust that is before a district court under subsection A of Section 175.23 of this title, the trustee may submit an accounting and seek approval of the accounting by the court. Such accounting and the final approval by a district court, whether or not such accounting is contested, shall be conclusive against all persons interested in the trust, and the trustee, absent fraud, intentional misrepresentation, or material omission, shall be released and discharged from any and all liability as to all matters set forth in the accounting.
3. If a trust is not before a district court under subsection A of Section 175.23 of this title and if no objection has been made by a beneficiary who is an eligible distributee or permissible distributee of the trust’s income or principal within one hundred eighty (180) days after a copy of the trustee’s accounting has been provided to such beneficiaries together with written notice of the provisions of this section, the distribution beneficiary is deemed to have approved such accounting of the trustee, and the trustee, absent fraud, intentional misrepresentation, or material omission, shall be released and discharged from any and all liability to all beneficiaries of the trust as to all matters set forth in such accounting.
4. If paragraphs 2 and 3 of this subsection do not apply, absent fraud, intentional misrepresentation, or material omission, an action to recover for breach of trust against a trustee who is a resident of this state or who has its principal place of business in this state, or an officer, director, or employee of such trustee may be commenced only within two (2) years of a trustee’s accounting for the period of the breach. In the case of fraud, intentional misrepresentation, or material omission, the limitation period shall not commence until discovery of the breach of trust.
5. For the purpose of this subsection, a beneficiary is deemed to have received a report or other statement:
a. in the case of an adult, if it is received by the adult personally, or if the adult lacks capacity, if it is received by the adult’s conservator, guardian, or agent with authority, or
b. in the case of a minor, if it is received by the minor’s guardian or conservator or, if the minor does not have a guardian or conservator, if it is received by a parent of the minor who does not have a conflict of interest.
6. Except as otherwise provided by the terms of a trust, while the trust is revocable and the settlor has capacity to revoke, the rights of the beneficiaries are held by, and the duties of the trustee are owed exclusively to, the settlor; the rights to be held by and owed to the beneficiaries arise only upon the settlor’s death or incapacity. The trustee may follow a written direction of the settlor, even if contrary to the terms of the trust. The holder of a presently exercisable power of withdrawal or a testamentary general power of appointment has the rights of a settlor of a revocable trust under this section to the extent of the property subject to the power.
F. 1. A term of the trust relieving a trustee of liability for breach of trust is unenforceable to the extent that it:
a. relieves a trustee of liability for breach of trust committed in bad faith or with reckless indifference to the purposes of the trust or the interest of the beneficiaries, or
b. was inserted as the result of an abuse by the trustee of a fiduciary or confidential relationship to the settlor.
2. An exculpatory term drafted by or on behalf of the trustee is presumed to have been inserted as a result of an abuse of a fiduciary or confidential relationship unless the trustee proves that the exculpatory term is fair under the circumstances and that its existence and contents were adequately communicated to the settlor.
G. A beneficiary may not hold a trustee liable for a breach of trust if the beneficiary, while having capacity, consented to the conduct constituting the breach, released the trustee from liability for the breach, or ratified the transaction constituting the breach, unless:
1. The beneficiary at the time of the consent, release, or ratification did not know of the beneficiary’s rights and of the material facts that the trustee knew, or with the exercise of reasonable inquiry, the beneficiary should have known, and that the trustee did not reasonably believe that the beneficiary knew; or
2. The consent, release, or ratification of the beneficiary was induced by improper conduct of the trustee.
H. 1. Except as otherwise agreed, a trustee is not personally liable on a contract properly entered into in the trustee’s fiduciary capacity in the course of administration of the trust if the trustee in the contract discloses the fiduciary capacity.
2. A trustee is personally liable for obligations arising from ownership or control of trust property, or for torts committed in the course of administering a trust, only if the trustee is personally at fault, whether negligently or intentionally.
3. A trustee who does not join in exercising a power held by three or more trustees is not liable to third persons for the consequences of the exercise of the power. A dissenting trustee who joins in an action at the direction of the majority co-trustees is not liable to third persons for the action if the dissenting trustee expressed the dissent in writing to any other co-trustee at or before the time the action was taken.
4. A claim based on a contract entered into by a trustee in the trustee’s fiduciary capacity, on an obligation arising from ownership or control of trust property, or on a tort committed in the course of administering a trust, may be asserted against the trust in a judicial proceeding against the trustee in the trustee’s fiduciary capacity, whether or not the trustee is personally liable on the claim.
I. 1. A person who in good faith assists a trustee or who in good faith and for value deals with a trustee without knowledge that the trustee is exceeding or improperly exercising the trustee’s powers is protected from liability as if the trustee properly exercised the power.
2. Dealing in good faith with another person with knowledge that the other person is a trustee does not place a third person on notice to inquire into the extent of the trustee’s powers or the propriety of their his or her exercise.
3. A person who in good faith deals with another person with knowledge that the other person is a trustee is not solely on that account placed on notice to inquire into the extent of the trustee’s powers or the propriety of their his or her exercise or to see to the proper application of assets of the trust paid or delivered to a trustee.
4. A person who in good faith assists a former trustee or who for value and in good faith deals with a former trustee without knowledge that the person is no longer a trustee is protected from liability as if the former trustee were still a trustee.
5. The protection provided by this section to persons assisting or dealing with a trustee is secondary to that provided under comparable provisions of other laws relating to commercial transactions or to the transfer of securities by fiduciaries.
You will note that I have highlighted Subsection E. 6. The reason for the emphasis it that this provision allows the settlor of the trust to indorse a check payable to the Trust and deposit the check into an account owned by the settlor that is not under the trust. It also allows the settlor to name a non-trustee as an authorized signer on the Trust account or add a deputy to a safe deposit box leased by the Trust. You will find a template for adding a non-trustee authorized signer to a Trust account as well as one to add a deputy to a safe deposit box on the Legal Links web page noted above.
Title 47 O.S. § 1111.2 Registration and Pre-Registration – Effective September 1, 2024.
A. The license plate and certificate of registration shall be issued to, and remain in the name of, the owner of the vehicle registered and the license plates shall not be transferable between motor vehicle owners. When a vehicle is sold or transferred in the state, the following registration procedures shall apply:
1. When a current and valid Oklahoma motor vehicle license plate has been obtained for use on a motor vehicle and the vehicle has been sold or otherwise transferred to a new owner, the license plate shall be removed from the vehicle and retained by the original plate owner;
2. In the event an owner purchases, trades, exchanges, or otherwise acquires another vehicle of the same license registration classification, Service Oklahoma shall authorize the transfer of the current and valid license plate previously obtained by the owner to the replacement vehicle for the remainder of the current registration period. In the event the owner acquires a vehicle requiring payment of additional registration fees, the owner shall request a transfer of the license plate to the newly acquired vehicle and pay the difference in registration fees. The fee shall be calculated on a monthly prorated basis. The owner shall not be entitled to a refund:
a. when the registration fee for the vehicle to which the plate(s) is to be assigned is less than the registration fee for that vehicle to which the license plate(s) was last assigned, or
b. if the owner does not have or does not acquire another vehicle to which the license plate may be transferred;
4. When a lender or lender’s agent repossesses a vehicle and the license plate has not been removed in accordance with this section, the lender or lender’s agent shall not be subject to the provisions of this section and the license plate shall be considered removable personal property and may be reclaimed from the repossessed vehicle…
6. a. Within two (2) business days of the date of sale or transfer of the motor vehicle, either the seller or the purchaser of the motor vehicle shall complete the pre-registration of the vehicle by submitting documentation to Service Oklahoma or a licensed operator identifying the motor vehicle subject to the sale or transfer, purchaser information, and any associated state-issued license plate on the vehicle. Pre-registration may be accomplished either in person at Service Oklahoma or a licensed operator location or by means of an electronic transaction or online system established by Service Oklahoma in accordance with Section 1132B of this title.
B. 1. The new owner of a motor vehicle shall, within two (2) months from the date of vehicle purchase or acquisition, make application to record the registration of the vehicle with Service Oklahoma or the licensed operator and shall pay all taxes and fees provided by law.
2. Any person failing to register a motor vehicle by timely transferring the license plate as provided by this section shall pay the penalty levied in Section 1132 of this title.
C. A surviving spouse, desiring to operate a vehicle devolving from a deceased spouse, shall present an application for certificate of title to Service Oklahoma or the licensed operator in his or her name within two (2) months of obtaining ownership. Service Oklahoma or the licensed operator shall then transfer the license plate to the surviving spouse.
More Deceased Customer Q&As
By Pauli Loeffler
Distributions after probate has closed.
Q. Sole account owner is deceased. The husband brings in the “Decree of Settlement of Final Account, Adjudication of Heirship and Distribution of Estate” that lists him as the estate’s personal representative and the beneficiary of the estate.
Hypothetically, if he never set up an estate account for his wife, could he indorse the check made payable to the estate as personal representative and convert it to a check made payable to himself?
This isn’t happening. This is just a discussion that our bank officers were having.
A. If the probate has been settled and the husband brings in the document you described, the bank now has documentation of the accountholder’s death and of the husband’s authority to claim the account for the estate. The bank can issue its cashier’s check payable to “Estate of [decedent’s name], [husband’s name], Personal Representative,” and he can indorse it as it is issued, add his own personal indorsement, and exchange it for a check payable to himself.
The bank would want to retain a copy of the court order.
Safe deposit box, no probate
Q. We have a deceased safe deposit box customer. There are four living children. There is a will but no probate. Is there a way all others can allow just one of them to enter the safe deposit box without them?
A. The heirs will all need to sign the § 906. A.2 affidavit of heirs which is available on the OBA Legal Links web page under Templates, Forms, and Charts. All heirs under the will must either be present when the box is opened or designate an agent to act for them. You will find a Template for Appointment of Agent on the Legal Links web page as well. The § 906 A. 2 affidavit is the appropriate affidavit to use, and it will need to be signed by whoever is/are the residuary heir(s) under the will. If a trust is the residuary heir under the will, the only person who must sign the Affidavit would be the current trustee.