Delaware General Assembly

Signed 6/30/03

The General Assembly has ended, the current status is the final status.

6/3/03

DeLuca

AN ACT AMENDING TITLE 12 OF THE DELAWARE CODE RELATING TO TRUSTS.

Section 1 of the Act amends Section 3303 in several respects. Subsection (a) is clarified and strengthened by adding a provision that allows a provision in a governing instrument whereby a trustor may authorize a trustee not to inform a beneficiary of the beneficiary's interest in the trust for a period of time. Subsection (b) further clarifies and strengthens the effect of the section in response to recent litigation in a neighboring state and to commentary to the effect that the actions of the governing body of a charity established as a corporation will be given greater deference than those of a trustee of a charitable trust by providing that the terms of the governing instrument of a charitable trust should be given effect unless the enforcement of such terms would be unconstitutional or impossible. By way of illustration and not limitation, it is the intention of the Act that a court not modify the terms of the governing instrument merely because changes in circumstances have occurred that were not foreseen by the trustor, or changes in circumstances have made enforcement of the terms of the governing instrument less practical than had previously been the case. Section 2 clarifies the meaning of the term "affiliated investment." Section 3 clarifies certain existing statutory provisions relating to investment advisers and expands the scope of the statute to cover advisers generally. Section 4 of the Act codifies the circumstances under which so-called no-contest or in terrorem clauses will apply. The Act provides that such clauses will generally be given effect, but that such clauses shall not apply to actions brought by a trustee or personal representative in regard to a will or trust, to actions brought by a beneficiary in which the beneficiary substantially prevails, to agreements among beneficiaries for the purpose of settling a dispute, whether or not then the subject of litigation, in regard to a will or trust, to actions brought by beneficiaries for the purpose of obtaining a construction or interpretation of will or trust instrument, or to actions brought for the purpose of determining whether a proposed or pending motion, petition or other proceeding would constitute a contest within the meaning of subsection (a) of the proposed section. Section 5 provides a rule for the construction or interpretation of a will or trust. In general, the Act provides that the intention or perceived intention of a trustor or testator toward a person who might acquire an interest in an estate or trust only because of gift, bequest or devise by another person is to be disregarded. In this regard the Act would negate the rationale of a number of cases in which courts have construed or interpreted a will or trust based on the perceived intention of the trustor or testator with respect to a person or persons whose right to the property in question exists because of the independent act of a person other than such trustor or testator. The application of the Act may be illustrated by the following examples:

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