H. B. 2768
(By Mr. Speaker, Mr. Kiss, and Delegates Staton and Keener)
[Introduced March 6, 2001; Referred to the
Committee on the Judiciary.]
A BILL to amend and reenact section twelve, article five, chapter
forty-four of the code of West Virginia, one thousand nine
hundred thirty-one, as amended, relating to the distribution
of assets in satisfaction of pecuniary bequests or transfers
in trust of a pecuniary amount or formula; providing for
discretionary division of trusts for tax or administrative
purposes and making certain changes to comply with federal tax
law.
Be it enacted by the Legislature of West Virginia:
That section twelve, article five, chapter forty-four of the
code of West Virginia, one thousand nine hundred thirty-one, as
amended,
be amended and reenacted, to read as follows:
ARTICLE 5. GENERAL PROVISIONS AS TO FIDUCIARIES.
§44-5-12. Distribution of assets in satisfaction of pecuniary
bequests; authority of fiduciaries to enter into certain agreements; validating certain agreements;
providing for discretionary division of trusts for
certain purposes.
(a) Where a will, trust or other governing instrument
authorizes or directs the fiduciary to satisfy wholly or partly in
kind a pecuniary bequest or a separate trust to be funded by a
pecuniary amount or pursuant to a specified formula unless the
will, trust or other governing instrument shall otherwise expressly
provide, the assets selected by the fiduciary for that purpose
shall be valued at their respective values on the date or dates of
their distribution, and in the case of any pecuniary bequests or
separate trusts established under such will or trust by a pecuniary
amount or formula if such pecuniary bequest or separate trust is
not entirely funded or an amount necessary to fund such bequest or
trust completely is not irrevocably set aside within fifteen months
folowing the date of the testator's or grantor's death, the
fiduciary shall allocate to such bequest or trust a pro rata share
of the income earned by the estate of the testator or grantor or
such other fund from which such bequest or trust is to be funded
between the date of death of the testator or grantor and the date
or dates of such funding.
(b) Whenever a fiduciary under the provisions of a will, trust
or other governing instrument is required to satisfy a pecuniary
bequest or transfer in trust in favor of the testator's or donor's spouse and is authorized to satisfy such bequest or transfer by
selection and distribution of assets in kind, and the will, trust
or other governing instrument further provides that the assets to
be so distributed shall or may be valued by some standard other
than their fair market value on the date of distribution, the
fiduciary, unless the will, trust
or other governing instrument
otherwise specifically directs, shall distribute assets, including
cash, fairly representative of appreciation or depreciation in the
value of all property available for distribution in satisfaction of
such pecuniary bequest or transfer. This section shall does not
apply to prevent a fiduciary from carrying into effect the
provisions of the will, trust
or other governing instrument that
the fiduciary, in order to implement such a bequest or transfer,
must distribute assets, including cash, having an aggregate fair
market value at the date or dates of distribution amounting to no
less than the amount of the pecuniary bequest or transfer as
finally determined for federal estate tax purposes.
(c) Any fiduciary having discretionary powers under a will or
other governing instrument with respect to the selection of assets
to be distributed in satisfaction of a pecuniary bequest or
transfer in trust in favor of the testator's or donor's spouse,
shall be is authorized to enter into agreements with the
commissioner of internal revenue of the United States of America
and other taxing authorities requiring the fiduciary to exercise the fiduciary's discretion so that cash and other properties
distributed in satisfaction of such bequest or transfer in trust
will be fairly representative of the appreciation or depreciation
in value of all property then available for distribution in
satisfaction of such bequest or transfer in trust and any such
agreement heretofore entered into after April one, one thousand
nine hundred sixty-four, is hereby validated. Any such fiduciary
shall be authorized to enter into any other agreement not in
conflict with the express terms of the will, trust
or other
governing instrument that may be necessary or advisable in order to
secure for federal estate tax purposes the appropriate marital
deduction or other deduction or exemption available under the
internal revenue laws of the United States of America, and to do
and perform all acts incident to such purpose.
Unless ordered by a court of competent jurisdiction, the bank
or trust company operating such common trust fund, as provided for
in section six of this article, shall not be required to render an
accounting with regard to such fund, before any fiduciary
commissioner but it may, by application to the circuit court of the
county in which is located the principal place of business of said
bank or trust company, secure the approval of an accounting in such
condition as the court may fix: Provided, That nothing herein shall
be interpreted as relieving any fiduciary acquiring, holding or
disposing of an interest in any common trust fund from making an accounting as required by law with respect of such interest.
(d) The fiduciary of any trust created by will, trust or other
governing instrument has discretionary power from time to time
without the need of court approval to divide the applicable trust
or trusts for purposes of the federal generation skipping transfer
tax of section 2601 of the Internal Revenue Code of 1986, as
amended, or for any similar or successor law of like import, or for
any other tax or administrative purposes. In exercising this
authority for any inclusion ratio, marital deduction election,
reverse qualified terminal interest property election, generation
skipping transfer skipping tax or other tax purposes, the power
shall be exercised in a manner complies with any applicable
provisions of the internal revenue code or pertinent treasury
regulations or other requirements for accomplishing the intended
purposes. In the event such division is made for purposes of
separating those assets with respect to which the federal estate
tax marital deduction election is to be made from those assets as
to which that election is not to be made, the division shall be
done on a fractional or percentage basis and the assets of the
trust or other fund or property to be divided shall be valued for
purposes of this division on the date or dates such division is
made.
NOTE: The purpose of this Bill is to bring this section with
applicable tax law, and to give West Virginia residents options now available under Federal tax law. The Bill extends pecuniary
bequest language to trusts, expands the availability of Federal tax
deductions or exemptions to trusts for other family members, rather
than limiting applicability only to marital trusts. The Bill makes
other changes to bring current State law into compliance with
Federal tax law.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.