BBA Testifies on Trusts & Estates Legislation

We are well into the season of legislative public hearings now, and earlier this month, the Judiciary Committee heard bills related to probate and family law—including two that are of great interest to our Trusts & Estates section.

You may have read previously in this space about each of the bills: The Uniform Trust Decanting Act (UTDA), and the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA).  Each of them was developed by the Uniform Law Commission and then tweaked, mostly to conform with existing Massachusetts statutes, by an independent standing committee of T&E practitioners

Four members of that committee—Marc Bloostein (Ropes & Gray), Renat Lumpau (Choate), Eric Hayes (Goodwin) and Mark Leahy (Burke, Whittum & Leahy LLC)—were able to testify at the hearing, collectively representing the BBA, MBA, and Massachusetts Bankers Association, all of whom are supporting both bills, as well as the standing committee itself.  The UTDA bill (S. 896) was filed by Sen. Cynthia Stone Creem, and companion RUFADAA bills (H. 3368 and S. 936) were filed in the House and Senate by Rep. Jay Livingstone and Sen. Barry Finegold, respectively.

To summarize the case for the two bills:

  • UTDA:
    • Decanting, or the fiduciary exercise of broad discretionary powers of distribution to create new trusts for one or more beneficiaries of an existing trust, is a form of trust modification that’s available to fiduciaries now in Massachusetts.  But while it can be a useful strategy for changing the outdated terms of an otherwise-irrevocable trust—for example, to provide for a beneficiary who becomes disabled after the settlor executes the original trust—the law on decanting in Massachusetts—what can and can’t be done, under what circumstances—is far from clear.
    • The UTDA was designed to create a national framework for practitioners facing questions of how best to accomplish trust decanting, and if it’s adopted here, Massachusetts would join the majority of states with some type of statutory decanting in place.  Massachusetts practitioners would remain free to continue to decant trusts under common law, if that makes the best sense for a client or situation, but they would also have an alternative and clear guidance concerning how to decant properly in accordance with the statute.
  • RUFADAA:
    • This uniform language was developed in response to a lack of guidance as to what happens to a person’s digital assets (think Facebook, e-mails, on-line banking) when they die or become incapacitated. Very few individuals leave clear direction on the handling of these assets and those companies in charge of the on-line accounts have varied and often difficult-to-locate policies—if they have any policies on the matter at all. RUFADAA would add clarity by creating a formal process to determine a fiduciary’s authority to access digital assets while also balancing privacy concerns and limiting unwarranted disclosure of private communications. Since its promulgation in 2015, at least 43 other states have adopted RUFADAA in some form.
    • The bill establishes a hierarchy to determine the preferences of the user:
      • First is a so-called “online tool” by which a user has named someone to manage their digital assets upon death or incapacity.  That person is considered the “designated recipient” under the bill, rather than a fiduciary, and the user could conceivably name a different person for each account.  The user could also direct the provider not to allow any access.
      • Next in the hierarchy is a will or other properly executed document, either allowing or prohibiting access. 
      • Finally, in the absence of either of the above, the provider’s terms-of-service agreement will apply as a default.
    • The bill explicitly covers personal representatives (who manage decedents’ estates), conservators (appointed to assist protected persons), trustees (only for the purpose of managing trust property), and agents acting under power of attorney.

These bills help demonstrate the importance of the BBA’s sections to our development of policy positions: The legislation would not enjoy the BBA endorsement had the Trusts & Estates section not flagged these two issues for us.  We rely heavily on our substantive-law sections to spot issues for us within their practice areas, especially those that our section members feel the BBA ought to speak out on as an organization.
 

—Michael Avitzur
Government Relations Director
Boston Bar Association