[ §554D-808] Powers to direct.

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A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

(a)While a trust is revocable and the settlor has capacity, the trustee may follow a written direction of the settlor that is contrary to the terms of the trust.

(b)The terms of a trust may confer upon a trustee or other person a power to direct the modification or termination of the trust.

(c)Whenever the terms of a trust direct that an advisor, rather than the trustee, shall have authority for certain fiduciary actions, the standard of care and performance for actions that are within the scope of the advisor's authority under the terms of a trust shall be as follows:

(1)Where one or more persons are given authority by the terms of a trust and accept this authority to direct, consent to, or disapprove a trustee's actual or proposed investment decisions, distribution decisions, or any other decision of the trustee, those persons shall be considered to be advisors and shall have the duties and obligations of fiduciaries when exercising the given authority, unless the trust provides otherwise;

(2)If a trust provides that a trustee is to follow the direction of an advisor and the trustee acts in accordance with the advisor's direction, then, except in cases of wilful misconduct or gross negligence on the part of the trustee so directed, the trustee shall not be liable for any loss resulting directly or indirectly from any such act;

(3)If a trust provides that a trustee is to make decisions with the consent of an advisor, then, except in cases of wilful misconduct or gross negligence on the part of the trustee, the trustee shall not be liable for any loss resulting directly or indirectly from any act taken or omitted as a result of the advisor's failure to provide consent after having been requested to do so by the trustee; and

(4)Whenever a trust provides that a trustee is to follow the direction of an advisor with respect to investment decisions, distribution decisions, or any other decision of the trustee, then, except to the extent that the terms of the trust provide otherwise, the trustee shall have no duty to:

(A)Monitor the conduct of the advisor;

(B)Provide advice to the advisor or consult with the advisor; or

(C)Communicate with, warn, or apprise any beneficiary or third party concerning instances in which the trustee would or might have exercised the trustee's own discretion in a manner different from the manner directed by the advisor.

Absent clear and convincing evidence to the contrary, the actions of the trustee pertaining to matters within the scope of the advisor's authority, such as confirming that the advisor's directions have been carried out and recording and reporting actions taken at the advisor's direction, shall be presumed to be administrative actions taken by the trustee solely to allow the trustee to perform the duties assigned to the trustee under the trust, and the administrative actions shall not be deemed to constitute an undertaking by the trustee to monitor the advisor or otherwise participate in actions within the scope of the advisor's authority.

(d)A person, other than a beneficiary, who holds a power to direct is presumptively a fiduciary who, as such, is required to act in good faith with regard to the purposes of the trust and the interests of the beneficiaries. The holder of a power to direct is liable for any loss that results from breach of a fiduciary duty.

(e)For purposes of this section:

"Advisor" includes a protector that has been granted powers and authority by the terms of a trust, including the power to:

(1)Remove and appoint trustees, advisors, trust committee members, and other protectors;

(2)Modify or amend the trust to achieve a favorable tax status or to facilitate the efficient administration of the trust; and

(3)Modify, expand, or restrict the terms of a power of appointment granted to a beneficiary by the trust.

" Investment decision " means the retention, purchase, sale, exchange, tender, or other transaction affecting the ownership of or rights in any investment, or the valuation of nonpublicly traded investments. [L 2021, c 32, pt of §2]