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Committee approves trust-code revisions, including raising uneconomic trust threshold to $150,000
Summary
The committee adopted an amendment and recommended House File 360, a broad revision of Minnesota's trust code, for placement on the general register. The bill raises the termination threshold for uneconomic trusts, extends allowable trust duration and clarifies directed-trust, decanting, and estrangement rules.
The Judiciary Finance and Civil Law Committee voted to recommend House File 360, a legislative package revising multiple provisions of Minnesota's trust code, after adopting a technical amendment.
Chair Scott presented the bill and said it originated from years of study by the Minnesota State Bar Association and practitioners. Lauren Baron, an attorney testifying for the bar and practice groups, summarized key reforms: raising the dollar threshold for terminating an uneconomic trust from $50,000 to $150,000; extending the maximum duration for trusts from the default 90 years to 500 years; setting a 120'day period for a person to accept a trusteeship after learning of an appointment; clarifying statutory rules on directed trusts (separating investment and distribution powers) and updates to statutory decanting procedures; and closing a loophole about whether an estranged parent may inherit from an adult child.
Baron told the committee that section 5 raises "the value of terminating an uneconomic trust from $50,000 to $150,000." She described the 500'year choice as a middle-ground approach used by some states to remain competitive in trust formation, while noting Minnesota's rule against perpetuities and rule against alienation limit indefinite retention of specific property.
Committee members asked detailed questions about the purposes and effects of the changes. Members discussed the public-policy rationale of extending trust duration and the interaction with the rule against perpetuities; Baron explained that the rule against alienation prevents indefinite retention of the same property and that the 500'year rule is largely about jurisdictional competitiveness for trust business.
Members also asked about the role and powers of a trust protector; Baron said the bill clarifies fiduciary duties and consolidates distribution powers under a distribution trust advisor rather than leaving those powers in a loosely defined "trust protector" role.
Representative Scott offered a technical amendment designated A1; the committee adopted the amendment by voice vote. Chair Scott then renewed the motion that House File 360 as amended be recommended to pass and be placed on the general register; the committee approved the motion by voice vote and the bill was sent to the general register.
The record shows voice votes and no roll-call tallies.
