2010 Wyoming Statutes
Title 2 - Wills, Decedents' Estates And Probate Code
Chapter 3 - Fiduciaries

CHAPTER 3 - FIDUCIARIES

 

ARTICLE 1 - IN GENERAL

 

2-3-101. Oath.

 

Before letters testamentary or of administration are issued, the personal representative shall take and subscribe an oath before some officer authorized to administer oaths, that he will perform according to law the duties of executor or administrator, which oath shall be attached to the letters.

 

2-3-102. Bond required; sureties; form; amount; ascertaining value of property.

 

Except as provided by W.S. 2-3-111, every person to whom letters testamentary or of administration are issued shall, before receiving them, execute a bond to the state of Wyoming with two (2) or more sufficient individual sureties or one (1) sufficient corporate surety approved by the district court or the commissioner or clerk. The bond shall be joint and several and the penalty shall not be less than the value of the personal property, and the probable value of the annual rents, profits and issues of real property belonging to the estate. The value shall be ascertained by the district court or the above named officers by examining on oath the party applying and any other person. The sureties shall justify on written oath attached to the bond in an amount equal in the aggregate to the penalty thereof.

 

2-3-103. Letters and bonds to be recorded.

 

All letters testamentary or of administration issued to, and all bonds executed by personal representatives, with the affidavits and certificates thereon, shall be recorded by the clerk of the court.

 

2-3-104. Appointment orders to state qualification time; lapses.

 

Whenever an order appointing a personal representative is made by any district court or officer having authority to make the appointment, the order shall state the time within which the personal representative shall qualify by giving the bond and taking the oath required by law. Upon failure of any personal representative to qualify within the time fixed, his appointment shall lapse and another appointment shall be made.

 

2-3-105. Additional bond required upon sale of real estate; when required.

 

The district court may require an additional bond whenever the sale of any real estate belonging to the estate is ordered, unless it satisfactorily appears that the penalty of the bond given before receiving letters or any bond given in place thereof is equal to the value of the personal property remaining with or that will come into the possession of the personal representative, including the annual rents, profits and issues of real estate, and the probable amount to be realized on the sale of real estate ordered sold.

 

2-3-106. Additional bond required upon sale of real estate; conditions.

 

The additional bond shall be conditioned that the personal representative shall faithfully execute the duties of the trust according to law, and the sureties shall justify as provided in W.S. 2-3-102.

 

2-3-107. Separate bond required from each personal representative.

 

When two (2) or more persons are appointed personal representatives, a separate bond is required from each of them in the same amount as would be required from one.

 

2-3-108. Several recoveries on same bond allowed.

 

The bond shall not be void upon the first recovery. It may be used and recovered upon from time to time by any person aggrieved, in his own name, until the whole penalty is exhausted.

 

2-3-109. Ordering sureties to appear for property value examination; notice to personal representatives; requiring additional security.

 

Before any bond is approved and after its approval, the officer whose duty it is to approve the same, of his own motion or upon the motion of any person interested in the estate, supported by affidavit that the sureties or one (1) or more of them are not worth as much as they have justified to, may order the sureties to appear before him at a designated time and place to be examined touching their property and its value. The officer shall, at the same time, cause a notice to be issued to the personal representative requiring his appearance at the examination. If, upon examination of the sureties and the witnesses who appear, the officer is satisfied that the bond is insufficient, he shall require additional security.

 

2-3-110. When sufficient security not given in time.

 

If sufficient security is not given within the time fixed by the order, the right of the personal representative to the administration shall cease, and the person next entitled to the administration of the estate, shall be appointed to the administration upon execution of a sufficient bond.

 

2-3-111. When no bond required; generally.

 

(a) When it is expressly provided in the will or by statute that no bond be required of the personal representative or when the distributees waive in writing the requirement that a bond be executed, letters testamentary or of administration may issue without the execution and filing of a bond as provided by W.S. 2-3-102.

 

(b) When a bond is waived by will, by statute or by the distributees, sales of real estate may be made and confirmed without a bond unless the court for good cause requires one to be executed.

 

(c) If it appears necessary for any reason at any time afterward, the personal representative may be required to file a bond as in other cases.

 

2-3-112. When no bond required; suspension of powers upon allegation of waste.

 

When a petition is presented praying that a personal representative be required to give further security, or to give bond, where by the terms of the will no bond was originally required, and it is alleged on oath that the personal representative is wasting the property of the estate, the judge or commissioner may by order suspend his powers until the matter can be heard and determined.

 

2-3-113. Requiring further security; petition.

 

Any person interested in any estate may, by verified petition, represent to the court or commissioner that the sureties of a personal representative have become or are becoming insolvent, or that they have removed or are about to remove from the state, or that from any other cause the bond is insufficient, and ask that further security be required.

 

2-3-114. Requiring further security; citation to personal representative; service.

 

If the court or commissioner is satisfied that the matter requires investigation, a citation shall be issued to the personal representative requiring him to appear at a time and place specified to show cause why he should not give further security. The citation shall be served personally on the personal representative at least five (5) days before the return day. If he has absconded or cannot be found it may be served by leaving a copy of it at his place of residence or by such publication as may be ordered.

 

2-3-115. Requiring further security; hearing; order therefor or new bond.

 

At the time appointed the court shall hear the proofs and allegations of the parties. If it satisfactorily appears that the security is insufficient, an order may be made requiring the personal representative to give further security, or to file a new bond in the usual form within a reasonable time, not less than five (5) days.

 

2-3-116. Requiring further security; failure to comply.

 

If the personal representative neglects to comply with the order within the time prescribed, the court shall revoke his letters and his authority shall cease.

 

2-3-117. Ordering further security without application.

 

When it comes to his knowledge that the bond of a personal representative is insufficient, the court or commissioner, without any application, shall cause him to be cited to appear and show cause why he should not give further security, and shall proceed as upon the application of any person interested.

 

2-3-118. Relief of sureties; application; citation and service.

 

When a surety of any personal representative desires to be released from responsibility on account of future acts, he may apply to the court or commissioner for relief. Citation shall be issued to the personal representative and served personally, requiring him to appear at a time and place specified, and to give other security. If he has absconded, left or removed from the state or if he cannot be found after due diligence and inquiry, service may be made as provided in W.S. 2-3-114.

 

2-3-119. Relief of sureties; release order.

 

If new sureties are given to the satisfaction of the court or commissioner, he may order that the sureties who applied for relief shall not be liable on their bond for any subsequent act, default or misconduct of the personal representative.

 

2-3-120. Relief of sureties; revocation of letters.

 

If the personal representative neglects or refuses to give new sureties to the satisfaction of the court or commissioner, unless the surety making the application shall consent to a longer extension of time, the court or commissioner shall by order revoke his letters.

 

2-3-121. Revoking intestacy administration if will later allowed; generally.

 

If, after granting letters of administration on the ground of intestacy, a will of the decedent is duly proved and allowed, the letters of administration shall be revoked and the power of the administrator shall cease, and he shall render an account of his administration within the time directed.

 

2-3-122. Revoking intestacy administration if will later allowed; authority of personal representative.

 

In such case, the personal representative with the will annexed is entitled to demand, sue for, recover and collect all the rights, goods, chattels, debts and effects of the decedent remaining unadministered. He may prosecute to final judgment any suit commenced by the administrator before the revocation of his letters of administration.

 

2-3-123. Remaining personal representatives to continue if one disqualified.

 

If any one (1) of several personal representatives to whom letters are granted dies, becomes incompetent, is convicted of an infamous crime or otherwise becomes incapable of executing the trust, or if letters testamentary or of administration are revoked or annulled with respect to any one (1) personal representative, the remaining personal representative shall complete the execution of the will or administration.

 

2-3-124. New appointment to be made if all personal representatives die; bond; authority.

 

If all personal representatives die or become incapable, or the authority of all of them is revoked, letters testamentary or letters of administration then shall be issued in the same order of preference and manner as provided for the issuance of original letters testamentary or original letters of administration. The personal representative so appointed shall give bond in like penalty, with like sureties and conditions as required of personal representatives, and shall have like authority.

 

2-3-125. Resignation of personal representative; revocation of letters for delay or other cause and new appointment; liability after discharge.

 

Any personal representative may, by writing filed in the district court, resign his appointment at any time, having first settled his accounts and delivered up all the estate to the person appointed to receive the same. If by reason of any delays in such settlement and delivery of the estate or for any other cause the circumstances of the estate or the rights of those interested therein require it, the court may, before settlement of accounts and delivering up of the estate is completed, revoke the letters of the personal representative, and appoint another personal representative, either special or general, in the same manner as for original letters of administration. The personal representative discharged and released, and the sureties on his bonds are not responsible for any act or liability incurred after his discharge, but shall not be relieved of any liability occurring on his bonds prior to his discharge.

 

2-3-126. Acts valid until power revoked.

 

All acts of a personal representative before the revocation of his letters testamentary or of administration are as valid as if the personal representative had continued lawfully to execute the duties of his trust.

 

2-3-127. Suspension of personal representative's powers for waste; order.

 

Whenever the court, commissioner or clerk of court has reason to believe from his own knowledge or from credible information that any personal representative has wasted, embezzled or mismanaged, or is about to waste or embezzle the property of the estate committed to his charge, or has committed or is about to commit a fraud upon the estate, is incompetent to act, has permanently removed from the state, has wrongfully neglected the estate, or has long neglected to perform any act as personal representative, he shall by order suspend the powers of the personal representative until the matter is investigated.

 

2-3-128. Suspension of personal representative's powers for waste; notice to show cause.

 

When suspension is ordered, the personal representative shall be cited to appear and show cause why his letters should not be revoked. If he fails to appear or if upon appearance the court or officer is satisfied there exists cause for his removal, his letters shall be revoked and letters of administration granted anew as the case may require.

 

2-3-129. Suspension of personal representative's powers for waste; hearing and determination.

 

At the hearing any person interested in the estate or the officer making the charge may appear and file his allegations in writing, showing that the personal representative should be removed. The personal representative may answer. The issue raised shall be heard and determined by the court.

 

2-3-130. Suspension of personal representative's powers for waste; notice by publication.

 

If the personal representative has absconded, conceals himself or has absented himself from the state, notice by publication may be given him of the pendency of the proceedings.

 

2-3-131. Suspension of personal representative's powers for waste; compelling attendance and answers.

 

In the proceedings for the removal of a personal representative, the court may compel his attendance by attachment, and may compel him to answer questions on oath touching his administration. Upon his refusal, the court may commit him until he obeys, revoke his letters, or both.

 

2-3-132. Petition for revocation by prior claimant; generally.

 

When letters of administration are granted to any person other than the surviving husband or wife, child, father, mother, brother or sister of the intestate, any one (1) of them who is competent, or any competent person at the written request of any one (1) of them, may obtain the revocation of the letters and be entitled to administration by presenting to the court a petition so praying.

 

2-3-133. Petition for revocation by prior claimant; citation to personal representative.

 

When such petition is filed, the clerk shall issue a citation to the personal representative to appear and answer at the time appointed for the hearing.

 

2-3-134. Petition for revocation by prior claimant; hearing and disposition.

 

At the time appointed, the citation having been duly served and returned, the court shall proceed to hear the allegations and proofs of the parties. If the right of the applicant is established and he is competent, letters of administration shall be granted to him and the letters of the former personal representative revoked.

 

2-3-135. Petition for revocation by prior claimant; prior right of surviving spouse.

 

When letters of administration have been granted to a child, father, brother or sister of the intestate, the surviving spouse may assert his or her prior right and obtain letters of administration and have the letters before granted revoked.

 

2-3-136. Hearing upon affidavit of interested person; authority to order.

 

When it appears by the affidavit of any person interested in the estate that any personal representative, guardian, receiver, assignee or trustee has failed to render his accounts in the manner prescribed by law or as required by the order of the court, or has removed from the state, the court may order a hearing as hereinafter prescribed.

 

2-3-137. Hearing upon affidavit of interested person; citation and service thereof.

 

The court shall make an order fixing the time and place of the hearing. The clerk shall issue citation to be served upon the officer charged as delinquent and upon the heirs, ward, cestui que trust or bondsmen. The citation shall be served by the sheriff upon the person or persons to be served, or by registered mail if personal service cannot be made in the county. The citation shall notify the persons served of the time and place of the hearing.

 

2-3-138. Hearing upon affidavit of interested person; proceedings and disposition.

 

At the hearing the court shall proceed in a summary way to ascertain the facts and the course best calculated to protect the interests of all parties. Upon finding of default or removal from the state, the court may remove the personal representative, guardian, receiver, assignee or trustee and appoint another qualified person to administer the estate, who shall qualify according to law.

 

ARTICLE 2 - UNIFORM PROVISIONS

 

2-3-201. Short title.

 

W.S. 2-3-201 through 2-3-211 may be cited as the "Uniform Fiduciaries Act".

 

2-3-202. Definitions.

 

(a) In this act unless the context or subject matter otherwise requires:

 

(i) "Bank" includes any person or association of persons, whether incorporated or not, carrying on the business of banking;

 

(ii) "Fiduciary" includes a trustee under any trust, expressed, implied, resulting or constructive, personal representative, guardian, conservator, curator, receiver, trustee in bankruptcy, assignee for the benefit of creditors, partner, agent, officer of a corporation, public or private, public officer or any other person acting in a fiduciary capacity for any person, trust or estate;

 

(iii) "Person" includes a corporation, partnership or other association or two (2) or more persons having a joint or common interest;

 

(iv) "Principal" includes any person to whom a fiduciary as such owes an obligation;

 

(v) A thing is done "in good faith" within the meaning of this act, when it is in fact done honestly, whether it be done negligently or not;

 

(vi) As used in the Uniform Fiduciaries Act, "this act" means W.S. 2-3-201 through 2-3-211.

 

2-3-203. Responsibility and rights of persons dealing with fiduciaries.

 

A person who in good faith pays or transfers to a fiduciary any money or other property which the fiduciary as such is authorized to receive is not responsible for the proper application thereof by the fiduciary; and any right or title acquired from the fiduciary in consideration of the payment or transfer is not invalid in consequence of a misapplication by the fiduciary.

 

2-3-204. Liability of bank; payment of checks signed by fiduciary.

 

If a deposit is made in a bank to the credit of a fiduciary as such, the bank is authorized to pay the amount of the deposit or any part thereof upon the check of the fiduciary, signed with the name in which such deposit is entered, without being liable to the principal, unless the bank pays the check with actual knowledge that the fiduciary is committing a breach of his obligation as fiduciary in drawing the check or with knowledge that its action in paying the check amounts to bad faith. If a check is payable to the drawee bank and is delivered to it in payment of or as security for a personal debt of the fiduciary to it, the bank is liable to the principal if the fiduciary in fact commits a breach of his obligation as fiduciary in drawing or delivering the check.

 

2-3-205. Liability of bank; when check drawn on principal by fiduciary.

 

If a check is drawn upon the account of his principal in a bank by a fiduciary who is empowered to draw checks upon his principal's account, the bank is authorized to pay the check without being liable to the principal, unless the bank pays the check with actual knowledge that the fiduciary is committing a breach of his obligation as fiduciary in drawing the check, or with knowledge that its action in paying the check amounts to bad faith. If a check is payable to the drawee bank and is delivered to it in payment of or as security for a personal debt of the fiduciary to it, the bank is liable to the principal if the fiduciary in fact commits a breach of his obligation as fiduciary in drawing or delivering the check.

 

2-3-206. Liability of bank; receiving deposit from fiduciary.

 

If a fiduciary makes a deposit in a bank to his personal credit of checks drawn by him upon an account in his own name as fiduciary, or of checks payable to him as fiduciary, or of checks drawn by him upon an account in the name of his principal if he is empowered to draw checks thereon, or of checks payable to his principal and endorsed by him, if he is empowered to endorse the checks, or if he otherwise makes a deposit of funds held by him as fiduciary, the bank receiving the deposit is not bound to inquire whether the fiduciary is committing thereby a breach of his obligation as fiduciary; and the bank is authorized to pay the amount of the deposit or any part thereof upon the personal check of the fiduciary without being liable to the principal, unless the bank receives the deposit or pays the check with actual knowledge that the fiduciary is committing a breach of his obligation as fiduciary in making the deposit or in drawing the check, or with knowledge that its action in receiving the deposit or paying the check amounts to bad faith.

 

2-3-207. Liability of bank; when check drawn by trustee.

 

When a deposit is made in a bank in the name of two (2) or more persons as trustees and a check is drawn upon the trust account by any trustee or trustees authorized by the other trustee or trustees to draw checks upon the trust account, neither the payee nor other holder nor the bank is bound to inquire whether it is a breach of trust to authorize the trustee or trustees to draw checks upon the trust account, and is not liable unless the circumstances are such that the action of the payee or other holder or the bank amounts to bad faith.

 

2-3-208. Succession of fiduciary powers when bank consolidates with another.

 

In the event of the merger or the consolidation of any bank, banking association, loan and trust company, named as personal representative, trustee under trust agreement, guardian of minors or incompetents, trustee for bond issue, escrow agent, holder of real estate titles, receiver or agent, the successor of the bank, banking association, or loan and trust company, shall by virtue of the merger, consolidation or succession, succeed to all the fiduciary powers, privileges, benefits, obligations, duties and liabilities of its predecessor, and shall carry out all the duties and obligations imposed upon its predecessor as the personal representative, trustee under trust agreement, guardian of minors or incompetents, trustee for bond issue, escrow agent, holder of real estate titles, receiver or agent, as if it had been originally named in the instrument or instruments creating the fiduciary relation.

 

2-3-209. Applicability; generally.

 

The provisions of this act shall not apply to transactions taking place prior to the time when it takes effect.

 

2-3-210. Applicability; rules of law and equity.

 

In any case not provided for in this act, the rules of law and equity, including the law merchant and those rules of law and equity relating to trusts, agency, negotiable instruments and banking, shall continue to apply.

 

2-3-211. Interpretation and construction.

 

This act shall be so interpreted and construed as to effectuate its general purpose to make uniform the law of those states which enact it.

 

ARTICLE 3 - HANDLING OF PROPERTY AND INVESTMENTS

 

2-3-301. Standard for fiduciaries; authority to acquire and retain property and investments.

 

(a) In acquiring, investing, reinvesting, exchanging, retaining, selling and managing property for the benefit of another, a fiduciary shall exercise the judgment and care of a prudent investor as specified under W.S. 4-10-901 through 4-10-913.

 

(b) Within the limitations of the foregoing standard, a fiduciary may:

 

(i) Acquire and retain every kind of property, real, personal or mixed, and every kind of investment, specifically including bonds, debentures and other corporate obligations, and stocks, preferred or common, which persons of prudence, discretion and intelligence acquire or retain for their own account;

 

(ii) Retain property properly acquired, without limitation as to time and without regard to its suitability for original purchase.

 

(c) Any bank as defined by W.S. 13-1-101 or any trust company formed under W.S. 13-5-102, that is acting as a fiduciary or agent may, in its discretion or at the direction of another person who is authorized to direct the investment of money held by the bank or trust company, invest in the securities of an open end or closed end management investment company or investment trust that is registered under the federal Investment Company Act of 1940, as amended. The bank or trust company, or any affiliate thereof, may provide services to the investment trust or investment company, including acting as an investment advisor, manager, sponsor, distributor, custodian, transfer agent or registrar, and may receive reasonable compensation for the services. Provided, however, that with respect to any funds invested, the bank or trust company or its affiliate shall disclose to the persons to whom statements of the account are rendered consistent with the requirements of W.S. 4-10-802(f).

 

2-3-302. Departures from express terms of wills not authorized; "legal investment" or "authorized investment" construed.

 

Nothing contained in W.S. 2-3-301 through 2-3-305 shall be construed as authorizing any departure from, or variation of, the express terms or limitations set forth in any will, agreement, court order or other instrument creating or defining the fiduciary's duties and powers, but the terms "legal investment" or "authorized investment" or words of similar import, as used in any instrument, shall be taken to mean any investment which is permitted by the terms of W.S. 2-3-301.

 

2-3-303. Authority of court to allow deviation from terms.

 

Nothing contained in this act shall be construed as restricting the power of a court of proper jurisdiction to permit a fiduciary to deviate from the terms of any will, agreement or other instrument relating to the acquisition, investment, reinvestment, exchange, retention, sale or management of fiduciary property.

 

2-3-304. Applicability; generally.

 

The provisions of this act shall govern fiduciaries acting under wills, agreements, court orders and other instruments now existing or hereafter made.

 

2-3-305. Applicability; state funds excepted.

 

Nothing contained in this act shall apply to any funds belonging to the state of Wyoming.

 

ARTICLE 4 - TRUST FUNDS

 

2-3-401. Short title.

 

W.S. 2-3-401 through 2-3-403 may be cited as the "Uniform Common Trust Fund Act".

 

2-3-402. Authority to establish; purpose.

 

(a) Any bank or trust company qualified to act as fiduciary in this state may establish and administer common trust funds composed of property permitted by law for investment in trust funds for the purpose of furnishing investments to:

 

(i) Itself as fiduciary;

 

(ii) Itself and others as cofiduciaries;

 

(iii) Any affiliated bank or trust company including any foreign affiliated bank or trust company as fiduciary;

 

(iv) Any affiliated bank or trust company including any foreign affiliated bank or trust company and others as cofiduciaries; or

 

(v) Any combination of the entities listed in paragraphs (i) through (iv) of this subsection.

 

(b) Any bank or trust company may as fiduciary or cofiduciary invest funds which it lawfully holds for investment in interests in common trust funds administered by itself or by any affiliated bank or trust company, if such investment is not prohibited by the instrument, judgment, decree, order, or statute creating or governing the fiduciary relationship, and if, in the case of a cofiduciary, the bank or trust company procures the consent of its cofiduciary in such investment.

 

2-3-403. Accounting.

 

Unless ordered by a court of competent jurisdiction, the bank or trust company operating common trust funds is not required to render a court accounting with regard to these funds, but it may by application to the court secure approval of an accounting on such conditions as the court may establish.

 

2-3-404. Common trust fund distinct from participating fiduciaries.

 

(a) Each common trust fund established hereunder is a separate and distinct entity from the fiduciaries participating in the fund. No fiduciary in administering its and other fiduciaries participation in a common trust fund may be required to make any apportionment or allocation between the principal and income of the fund between the participating fiduciaries different from that made for the common trust fund.

 

(b) No fiduciary participating in a common trust fund, or person having an interest in property invested in the common trust fund, may have or be considered to have any ownership in any particular property of the common trust fund. Each participating fiduciary shall have a proportionate undivided interest in the fund and its income. The ownership of all property of the common trust fund shall be in the trustee of the fund.

 

2-3-405. "Affiliated" defined.

 

For purposes of this article, two (2) or more banks or trust companies are affiliated if they are members of the same affiliated group, within the meaning of section 1504 of the United States Internal Revenue Code.

 

2-3-406. Exemption.

 

The establishment and maintenance of common trust funds under this article are exempt from the provisions of title 17, chapter 4.

 

ARTICLE 5 - MORTGAGE, LEASE OR SALE

 

2-3-501. Authorization by court; generally.

 

Whenever in any estate or guardianship now being administered or that may hereafter be administered, it appears to the court to be for the advantage of the estate or ward to raise money upon a note or notes secured by a mortgage of the real or personal property of any decedent or ward or to make a lease of such real property, or it appears to the court that the homestead of a minor or incompetent is mortgaged and the mortgage thereon is subject to foreclosure, and the guardian does not have sufficient money in the estate of the person to pay the mortgage, the court may as often as occasion therefor shall arise in the administration of the estate or guardianship, on petition, notice and hearing as provided in this article, authorize and direct the executor, administrator or guardian to mortgage the personal or real property, including release and waiver of homestead of the ward, and to execute a note or notes secured by the mortgage, or to lease the real estate, or any part thereof.

 

2-3-502. Authorization by court; contents of petition; hearing; objections; terms, etc., of order.

 

(a) A petition to mortgage or lease under W.S. 2-3-501, or a petition to transfer, sell or assign royalty, overriding royalty, leasehold or other mineral interest, or to lease the mineral interest in the property under W.S. 2-3-503, shall show:

 

(i) The advantage that may accrue to the estate from the lease, mortgage, transfer, sale or assignment;

 

(ii) A general description of the property to be leased, mortgaged, sold or assigned;

 

(iii) The term, rental and general conditions of the proposed lease, transfer, sale or assignment, or the amount, maturity and rate of interest of the proposed mortgage;

 

(iv) The names of the legatees and devisees, if any, and of the heirs of the deceased, or of the minor or incompetent person, lessee, assignee or purchaser, so far as known to the petitioner.

 

(b) Upon the filing of the petition, the court, if it deems the petition sufficient, shall set the matter for hearing and shall direct to what persons and in what manner notice of the hearing shall be given. At the hearing any person interested in the estate may appear and present objections to the proposed lease, mortgage, sale or assignment. If objections are filed to the petition, the court may adjourn the hearing to enable the parties objecting to fully present their reasons and evidence for and against the proposed lease, mortgage, sale or assignment. If no objections are filed, or if upon hearing the objections are deemed insufficient, the court may order the lease, mortgage, transfer, sale or assignment of royalty, overriding royalty, lease or other mineral interest, or lease of the mineral interest in the property, upon the terms, in the amount and for the period as is deemed proper by the court.

 

2-3-503. Authorization by court; transfer of mineral interests; terms.

 

Proceedings may be had in the district court of each Wyoming county in which an estate in probate is being administered or a guardianship proceeding is pending, which involves real property, for authority to transfer, sell or assign royalty, overriding royalty, leasehold or other mineral interest and to lease the mineral content ownership interest in the property of any then deceased person or of any then minor or incompetent person, as distinguished from realty surface leases referred to in W.S. 2-3-501. If it appears to the court that the transfer, sale or assignment of royalty, overriding royalty, leasehold or other mineral interest or execution and delivery of a lease or contract for exploration and development of the affected real property mineral interest of the decedent, minor or incompetent person, will be advantageous to the estate of the decedent, minor or incompetent person the court, may authorize and direct the trustee, executor or administrator of the probate estate or the guardian of the estate of the minor or incompetent person, to transfer, sell or assign the royalty, overriding royalty, leasehold or other mineral interest or to lease the real estate interest or any part thereof for the mineral content purposes stated. Leases may be for primary terms of five (5) years or less as mutually agreed by the parties thereto and for so long thereafter as the mineral content, including but not restricted to oil, gas or other hydrocarbons, shall or can be produced in commercial quantities from the leasehold premises, or for the term of each unit or cooperative agreement to which the lease may be committed with the consent and approval of the court. The lease is not invalid or voidable because its effectiveness may or will extend beyond the term in office of the lessor, trustee, executor, administrator or guardian, or beyond the time of final settlement of the probate estate, or beyond the minority of the minor or the period of incompetency of the incompetent involved. With the consent and approval of the court any royalty, overriding royalty or other mineral interest or a lease may be committed to a unit or cooperative agreement, or to a secondary recovery agreement, for a like term and with like effect.

 

2-3-504. Authorization by court; transfer of mineral interests; prior leases validated.

 

All proceedings of the type herein authorized, which have been heretofore concluded in any court aforesaid, substantially consistent with the procedure herein authorized, and all unexpired leases of the kind specified, previously executed and delivered pursuant to each prior proceeding, substantially in conformity with the provisions hereof, are hereby declared valid, as effectively as if this act had been in force upon the date of each prior proceeding and lease.

 

ARTICLE 6 - PRINCIPAL AND INCOME

 

2-3-601. Repealed By Laws 2001, Ch. 11, 2.

 

 

2-3-602. Repealed By Laws 2001, Ch. 11, 2.

 

 

2-3-603. Repealed By Laws 2001, Ch. 11, 2.

 

2-3-604. Repealed By Laws 2001, Ch. 11, 2.

 

 

2-3-605. Repealed By Laws 2001, Ch. 11, 2.

 

2-3-606. Repealed By Laws 2001, Ch. 11, 2.

 

2-3-607. Repealed By Laws 2001, Ch. 11, 2.

 

 

2-3-608. Repealed By Laws 2001, Ch. 11, 2.

 

 

2-3-609. Repealed By Laws 2001, Ch. 11, 2.

 

 

2-3-610. Repealed By Laws 2001, Ch. 11, 2.

 

2-3-611. Repealed By Laws 2001, Ch. 11, 2.

 

2-3-612. Repealed By Laws 2001, Ch. 11, 2.

 

 

2-3-613. Repealed By Laws 2001, Ch. 11, 2.

 

 

2-3-614. Repealed By Laws 2001, Ch. 11, 2.

 

ARTICLE 7 - SECURITY TRANSFERS

 

2-3-701. Repealed By Laws 1996, ch. 65, 4.

 

2-3-702. Repealed By Laws 1996, ch. 65, 4.

 

2-3-703. Repealed By Laws 1996, ch. 65, 4.

 

2-3-704. Repealed By Laws 1996, ch. 65, 4.

 

2-3-705. Repealed By Laws 1996, ch. 65, 4.

 

2-3-706. Repealed By Laws 1996, ch. 65, 4.

 

2-3-707. Repealed By Laws 1996, ch. 65, 4.

 

2-3-708. Repealed By Laws 1996, ch. 65, 4.

 

2-3-709. Repealed By Laws 1996, ch. 65, 4.

 

2-3-710. Repealed By Laws 1996, ch. 65, 4.

 

2-3-711. Repealed By Laws 1996, ch. 65, 4.

 

ARTICLE 8 - PRINCIPAL AND INCOME

 

2-3-801. Short title.

 

This act shall be known and may be cited as the "Wyoming Uniform Principal and Income Act".

 

2-3-802. Definitions.

 

(a) As used in this act:

 

(i) "Accounting period" means a calendar year unless another twelve-month period is selected by a fiduciary. The term includes a portion of a calendar year or other twelve-month period that begins when an income interest begins or ends when an income interest ends;

 

(ii) "Beneficiary" includes, in the case of a decedent's estate, an heir, legatee and devisee and, in the case of a trust, an income beneficiary and a remainder beneficiary;

 

(iii) "Fiduciary" means a personal representative or a trustee. The term includes an executor, administrator, successor personal representative, special administrator and a person performing substantially the same function;

 

(iv) "Income" means money or property that a fiduciary receives as current return from a principal asset. The term includes a portion of receipts from a sale, exchange or liquidation of a principal asset, to the extent provided in W.S. 2-3-811 through 2-3-825;

 

(v) "Income beneficiary" means a person to whom net income of a trust is or may be payable;

 

(vi) "Income interest" means the right of an income beneficiary to receive all or part of net income, whether the terms of the trust require it to be distributed or authorize it to be distributed in the trustee's discretion;

 

(vii) "Mandatory income interest" means the right of an income beneficiary to receive net income that the terms of the trust require the fiduciary to distribute;

 

(viii) "Net income" means the total receipts allocated to income during an accounting period minus the disbursements made from income during the period, plus or minus transfers under this act to or from income during the period;

 

(ix) "Person" means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture; government, governmental subdivision, agency or instrumentality; public corporation; or any other legal or commercial entity;

 

(x) "Principal" means property held in trust for distribution to a remainder beneficiary when the trust terminates;

 

(xi) "Remainder beneficiary" means a person entitled to receive principal when an income interest ends;

 

(xii) "Terms of a trust" means the manifestation of the intent of a settlor or decedent with respect to the trust, expressed in a manner that admits of its proof in a judicial proceeding, whether by written or spoken words or by conduct;

 

(xiii) "Trustee" includes an original, additional or successor trustee, whether or not appointed or confirmed by a court;

 

(xiv) "This act" means W.S. 2-3-801 through 2-3-834.

 

2-3-803. Fiduciary duties; general principles.

 

(a) In allocating receipts and disbursements to or between principal and income, and with respect to any matter within the scope of W.S. 2-3-806 through 2-3-810, a fiduciary:

 

(i) Shall administer a trust or estate in accordance with the terms of the trust or the will, even if there is a different provision in this act;

 

(ii) May administer a trust or estate by the exercise of a discretionary power of administration given to the fiduciary by the terms of the trust or the will, even if the exercise of the power produces a result different from a result required or permitted by this act, and no inference that the fiduciary has improperly exercised the discretion arises from the fact that the fiduciary has made an allocation contrary to a provision of this act;

 

(iii) Shall administer a trust or estate in accordance with this act if the terms of the trust or the will do not contain a different provision or do not give the fiduciary a discretionary power of administration; and

 

(iv) Shall add a receipt or charge a disbursement to principal to the extent that the terms of the trust and this act do not provide a rule for allocating the receipt or disbursement to or between principal and income.

 

(b) In exercising the power to adjust under W.S. 2-3-804(a) or a discretionary power of administration regarding a matter within the scope of this act, whether granted by the terms of a trust, a will, or this act, a fiduciary shall administer a trust or estate impartially, based on what is fair and reasonable to all of the beneficiaries, except to the extent that the terms of the trust or the will clearly manifest an intention that the fiduciary shall or may favor one (1) or more of the beneficiaries. A determination in accordance with this act is presumed to be fair and reasonable to all of the beneficiaries.

 

2-3-804. Trustee's power to adjust; liability of trustee.

 

(a) Subject to subsections (b) and (c) of this section, a trustee may adjust between principal and income to the extent the trustee considers necessary if the trustee invests and manages trust assets as a prudent investor, the terms of the trust describe the amount that may or must be distributed to a beneficiary by referring to the trust's income, and the trustee determines, after applying the rules in W.S. 2-3-803(a), and considering any power the trustee may have under the trust to invade principal or accumulate income, that the trustee is unable to comply with W.S. 2-3-803(b).

 

(b) In deciding whether and to what extent to exercise the power conferred by subsection (a) of this section, a trustee shall consider all factors relevant to the trust and its beneficiaries, including the following factors to the extent they are relevant:

 

(i) The nature, purpose and expected duration of the trust;

 

(ii) The intent of the settlor;

 

(iii) The identity and circumstances of the beneficiaries;

 

(iv) The needs for liquidity, regularity of income and preservation and appreciation of capital;

 

(v) The assets held in the trust; the extent to which they consist of financial assets, interests in closely held enterprises, tangible and intangible personal property, or real property; the extent to which an asset is used by a beneficiary; and whether an asset was purchased by the trustee or received from the settlor;

 

(vi) The net amount allocated to income under the other sections of this act and the increase or decrease in the value of the principal assets, which the trustee may estimate as to assets for which market values are not readily available;

 

(vii) Whether and to what extent the terms of the trust give the trustee the power to invade principal or accumulate income or prohibit the trustee from invading principal or accumulating income, and the extent to which the trustee has exercised a power from time to time to invade principal or accumulate income;

 

(viii) The actual and anticipated effect of economic conditions on principal and income and effects of inflation and deflation; and

 

(ix) The anticipated tax consequences of an adjustment.

 

(c) A trustee may not make an adjustment:

 

(i) That diminishes the income interest in a trust that requires all of the income to be paid at least annually to a spouse and for which an estate tax or gift tax marital deduction would be allowed, in whole or in part, if the trustee did not have the power to make the adjustment;

 

(ii) That reduces the actuarial value of the income interest in a trust to which a person transfers property with the intent to qualify for a gift tax exclusion;

 

(iii) That changes the amount payable to a beneficiary as a fixed annuity or a fixed fraction of the value of the trust assets;

 

(iv) From any amount that is permanently set aside for charitable purposes under a will or the terms of a trust unless both income and principal are so set aside;

 

(v) If possessing or exercising the power to make an adjustment causes an individual to be treated as the owner of all or part of the trust for income tax purposes, and the individual would not be treated as the owner if the trustee did not possess the power to make an adjustment;

 

(vi) If possessing or exercising the power to make an adjustment causes all or part of the trust assets to be included for estate tax purposes in the estate of an individual who has the power to remove a trustee or appoint a trustee, or both, and the assets would not be included in the estate of the individual if the trustee did not possess the power to make an adjustment;

 

(vii) If the trustee is a beneficiary of the trust; or

 

(viii) If the trustee is not a beneficiary, but the adjustment would benefit the trustee directly or indirectly.

 

(d) If paragraph (c)(v), (vi), (vii) or (viii) of this section applies to a trustee and there is more than one (1) trustee, a cotrustee to whom the provision does not apply may make the adjustment unless the exercise of the power by the remaining trustee or trustees is not permitted by the terms of the trust.

 

(e) A trustee may release the entire power conferred by subsection (a) of this section or may release only the power to adjust from income to principal or the power to adjust from principal to income if the trustee is uncertain about whether possessing or exercising the power will cause a result described in paragraphs (c)(i) through (vi) or (viii) of this section or if the trustee determines that possessing or exercising the power will or may deprive the trust of a tax benefit or impose a tax burden not described in subsection (c) of this section. The release may be permanent or for a specified period, including a period measured by the life of an individual.

 

(f) Terms of a trust that limit the power of a trustee to make an adjustment between principal and income do not affect the application of this section unless it is clear from the terms of the trust that the terms are intended to deny the trustee the power of adjustment conferred by subsection (a) of this section.

 

(g) Nothing in this section or in this act is intended to create or imply a duty to make an adjustment, and a trustee is not liable for not considering whether to make an adjustment or for choosing not to make an adjustment.

 

2-3-805. Notice of proposed action; objections of beneficiary; liability of trustee; proceedings.

 

(a) Unless a trust instrument requires otherwise, a trustee may give notice of proposed action regarding a matter governed by this act as provided in this section. For the purpose of this section, a proposed action includes a course of action and a decision not to take action.

 

(b) If a trustee elects to give notice under this section, the trustee shall mail notice of the proposed action to all beneficiaries who are receiving, or are entitled to receive, income under the trust or to receive a distribution of principal if the trust were terminated at the time the notice is given.

 

(c) Notice of proposed action need not be given to any person who consents in writing to the proposed action. The consent may be executed at any time before or after the proposed action is taken.

 

(d) The notice of proposed action shall state that it is given pursuant to this section and shall state all of the following:

 

(i) The name and mailing address of the trustee;

 

(ii) The name and telephone number of a person who may be contacted for additional information;

 

(iii) A description of the action proposed to be taken and an explanation of the reasons for the action;

 

(iv) The time within which objections to the proposed action can be made, which shall be at least thirty (30) days from the mailing of the notice of proposed action; and

 

(v) The date on or after which the proposed action may be taken or is effective.

 

(e) A beneficiary may object to the proposed action by mailing a written objection to the trustee at the address stated in the notice of proposed action within the time period specified in the notice of proposed action.

 

(f) Except for good cause shown, a trustee is not liable to a beneficiary for an action regarding a matter governed by this act if the trustee does not receive a written objection to the proposed action from the beneficiary within the applicable period and the other requirements of this section are satisfied. If no beneficiary entitled to notice objects under this section, the trustee is not liable to any current or future beneficiary with respect to the proposed action.

 

(g) If the trustee receives a written objection within the applicable period, either the trustee or a beneficiary may petition the court to have the proposed action taken as proposed, taken with modifications, or denied. In the proceeding, a beneficiary objecting to the proposed action has the burden of proving that the trustee's proposed action should not be taken. A beneficiary who has not objected is not estopped from opposing the proposed action in the proceeding. If the trustee decides not to implement the proposed action, the trustee shall notify the beneficiaries of the decision not to take the action and the reasons for the decision, and the trustee's decision not to implement the proposed action does not itself give rise to liability to any current or future beneficiary. A beneficiary may petition the court to have the action taken, and has the burden of proving that it should be taken.

 

2-3-806. Determination and distribution of net income.

 

(a) After a decedent dies, in the case of an estate, or after an income interest in a trust ends, the following rules apply:

 

(i) A fiduciary of an estate or of a terminating income interest shall determine the amount of net income and net principal receipts received from property specifically given to a beneficiary under the rules in W.S. 2-3-808 through 2-3-831 which apply to trustees and the rules in paragraph (v) of this subsection. The fiduciary shall distribute the net income and net principal receipts to the beneficiary who is to receive the specific property;

 

(ii) A fiduciary shall determine the remaining net income of a decedent's estate or a terminating income interest under the rules in W.S. 2-3-808 through 2-3-831 which apply to trustees and by:

 

(A) Including in net income all income from property used to discharge liabilities;

 

(B) Paying from income or principal, in the fiduciary's discretion, fees of attorneys, accountants and fiduciaries; court costs and other expenses of administration; and interest on death taxes, but the fiduciary may pay those expenses from income of property passing to a trust for which the fiduciary claims an estate tax marital or charitable deduction only to the extent that the payment of those expenses from income will not cause the reduction or loss of the deduction; and

 

(C) Paying from principal all other disbursements made or incurred in connection with the settlement of a decedent's estate or the winding up of a terminating income interest, including debts, funeral expenses, disposition of remains, family allowances and death taxes and related penalties that are apportioned to the estate or terminating income interest by the will, the terms of the trust or applicable law.

 

(iii) A fiduciary shall distribute to a beneficiary who receives a pecuniary amount outright the interest or any other amount provided by the will, the terms of the trust, or applicable law from net income determined under paragraph (ii) of this subsection or from principal to the extent that net income is insufficient. If a beneficiary is to receive a pecuniary amount outright from a trust after an income interest ends and no interest or other amount is provided for by the terms of the trust or applicable law, the fiduciary shall distribute the interest or other amount to which the beneficiary would be entitled under applicable law if the pecuniary amount were required to be paid under a will;

 

(iv) A fiduciary shall distribute the net income remaining after distributions required by paragraph (iii) of this subsection in the manner described in W.S. 2-3-807 to all other beneficiaries, including a beneficiary who receives a pecuniary amount in trust, even if the beneficiary holds an unqualified power to withdraw assets from the trust or other presently exercisable general power of appointment over the trust;

 

(v) A fiduciary may not reduce principal or income receipts from property described in paragraph (i) of this subsection because of a payment described in W.S. 2-3-826 or 2-3-827 to the extent that the will, the terms of the trust, or applicable law requires the fiduciary to make the payment from assets other than the property or to the extent that the fiduciary recovers or expects to recover the payment from a third party. The net income and principal receipts from the property are determined by including all of the amounts the fiduciary receives or pays with respect to the property, whether those amounts accrued or became due before, on, or after the date of a decedent's death or an income interest's terminating event, and by making a reasonable provision for amounts that the fiduciary believes the estate or terminating income interest may become obligated to pay after the property is distributed.

 

2-3-807. Distribution to residuary and remainder beneficiaries.

 

(a) Each beneficiary described in W.S. 2-3-806(a)(iv) is entitled to receive a portion of the net income equal to the beneficiary's fractional interest in undistributed principal assets, using values as of the distribution date. If a fiduciary makes more than one (1) distribution of assets to beneficiaries to whom this section applies, each beneficiary, including one who does not receive part of the distribution, is entitled, as of each distribution date, to the net income the fiduciary has received after the date of death or terminating event or earlier distribution date but has not distributed as of the current distribution date.

 

(b) In determining a beneficiary's share of net income, the following rules apply:

 

(i) The beneficiary is entitled to receive a portion of the net income equal to the beneficiary's fractional interest in the undistributed principal assets immediately before the distribution date, including assets that later may be sold to meet principal obligations;

 

(ii) The beneficiary's fractional interest in the undistributed principal assets must be calculated without regard to property specifically given to a beneficiary and property required to pay pecuniary amounts not in trust;

 

(iii) The beneficiary's fractional interest in the undistributed principal assets must be calculated on the basis of the aggregate value of those assets as of the distribution date without reducing the value by any unpaid principal obligation; and

 

(iv) The distribution date for purposes of this section may be the date as of which the fiduciary calculates the value of the assets if that date is reasonably near the date on which assets are actually distributed.

 

(c) If a fiduciary does not distribute all of the collected but undistributed net income to each person as of a distribution date, the fiduciary shall maintain appropriate records showing the interest of each beneficiary in that net income.

 

(d) A fiduciary may apply the rules in this section, to the extent that the fiduciary considers it appropriate, to net gain or loss realized after the date of death or terminating event or earlier distribution date from the disposition of a principal asset if this section applies to the income from the asset.

 

2-3-808. When right to income begins and ends.

 

(a) An income beneficiary is entitled to net income from the date on which the income interest begins. An income interest begins on the date specified in the terms of the trust or, if no date is specified, on the date an asset becomes subject to a trust or successive income interest.

 

(b) An asset becomes subject to a trust:

 

(i) On the date it is transferred to the trust in the case of an asset that is transferred to a trust during the transferor's life;

 

(ii) On the date of a testator's death in the case of an asset that becomes subject to a trust by reason of a will, even if there is an intervening period of administration of the testator's estate; or

 

(iii) On the date of an individual's death in the case of an asset that is transferred to a fiduciary by a third party because of the individual's death.

 

(c) An asset becomes subject to a successive income interest on the day after the preceding income interest ends, as determined under subsection (d) of this section, even if there is an intervening period of administration to wind up the preceding income interest.

 

(d) An income interest ends on the day before an income beneficiary dies or another terminating event occurs, or on the last day of a period during which there is no beneficiary to whom a trustee may distribute income.

 

2-3-809. Apportionment of receipts and disbursements when decedent dies or income interest begins.

 

(a) A trustee shall allocate an income receipt or disbursement other than one to which W.S. 2-3-806(a)(i) applies to principal if its due date occurs before a decedent dies in the case of an estate or before an income interest begins in the case of a trust or successive income interest.

 

(b) A trustee shall allocate an income receipt or disbursement to income if its due date occurs on or after the date on which a decedent dies or an income interest begins and it is a periodic due date. An income receipt or disbursement must be treated as accruing from day to day if its due date is not periodic or it has no due date. The portion of the receipt or disbursement accruing before the date on which a decedent dies or an income interest begins must be allocated to principal and the balance must be allocated to income.

 

(c) An item of income or an obligation is due on the date the payer is required to make a payment. If a payment date is not stated, there is no due date for the purposes of this act. Distributions to shareholders or other owners from an entity to which W.S. 2-3-810 applies are deemed to be due on the date fixed by the entity for determining who is entitled to receive the distribution or, if no date is fixed, on the declaration date for the distribution. A due date is periodic for receipts or disbursements that must be paid at regular intervals under a lease or an obligation to pay interest or if an entity customarily makes distributions at regular intervals.

 

2-3-810. Apportionment when income interest ends.

 

(a) In this section, "undistributed income" means net income received before the date on which an income interest ends. The term does not include an item of income or expense that is due or accrued or net income that has been added or is required to be added to principal under the terms of the trust.

 

(b) When a mandatory income interest ends, the trustee shall pay to a mandatory income beneficiary who survives that date, or the estate of a deceased mandatory income beneficiary whose death causes the interest to end, the beneficiary's share of the undistributed income that is not disposed of under the terms of the trust unless the beneficiary has an unqualified power to revoke more than five percent (5%) of the trust immediately before the income interest ends. In the latter case, the undistributed income from the portion of the trust that may be revoked must be added to principal.

 

(c) When a trustee's obligation to pay a fixed annuity or a fixed fraction of the value of the trust's assets ends, the trustee shall prorate the final payment if and to the extent required by applicable law to accomplish a purpose of the trust or its settlor relating to income, gift, estate or other tax requirements.

 

2-3-811. Character of receipts.

 

(a) In this section, "entity" means a corporation, partnership, limited liability company, regulated investment company, real estate investment trust, common trust fund or any other organization in which a trustee has an interest other than a trust or estate to which W.S. 2-3-811 applies, a business or activity to which W.S. 2-3-813 applies or an asset-backed security to which W.S. 2-3-825 applies.

 

(b) Except as otherwise provided in this section, a trustee shall allocate to income money received from an entity.

 

(c) A trustee shall allocate the following receipts from an entity to principal:

 

(i) Property other than money;

 

(ii) Money received in one (1) distribution or a series of related distributions in exchange for part or all of a trust's interest in the entity;

 

(iii) Money received in total or partial liquidation of the entity; and

 

(iv) Money received from an entity that is a regulated investment company or a real estate investment trust if the money distributed is a capital gain dividend for federal income tax purposes.

 

(d) Money is received in partial liquidation:

 

(i) To the extent that the entity, at or near the time of a distribution, indicates that it is a distribution in partial liquidation; or

 

(ii) If the total amount of money and property received in a distribution or series of related distributions is greater than twenty percent (20%) of the entity's gross assets, as shown by the entity's year-end financial statements immediately preceding the initial receipt.

 

(e) Money is not received in partial liquidation, nor may it be taken into account under paragraph (d)(ii) of this section, to the extent that it does not exceed the amount of income tax that a trustee or beneficiary must pay on taxable income of the entity that distributes the money.

 

(f) A trustee may rely upon a statement made by an entity about the source or character of a distribution if the statement is made at or near the time of distribution by the entity's board of directors or other person or group of persons authorized to exercise powers to pay money or transfer property comparable to those of a corporation's board of directors.

 

2-3-812. Distribution from trust or estate.

 

A trustee shall allocate to income an amount received as a distribution of income from a trust or an estate in which the trust has an interest other than a purchased interest, and shall allocate to principal an amount received as a distribution of principal from such a trust or estate. If a trustee purchases an interest in a trust that is an investment entity, or a decedent or donor transfers an interest in such a trust to a trustee, W.S. 2-3-811 or 2-3-825 applies to a receipt from the trust.

 

2-3-813. Business and other activities conducted by trustee.

 

(a) If a trustee who conducts a business or other activity determines that it is in the best interest of all the beneficiaries to account separately for the business or activity instead of accounting for it as part of the trust's general accounting records, the trustee may maintain separate accounting records for its transactions, whether or not its assets are segregated from other trust assets.

 

(b) A trustee who accounts separately for a business or other activity may determine the extent to which its net cash receipts must be retained for working capital, the acquisition or replacement of fixed assets, and other reasonably foreseeable needs of the business or activity, and the extent to which the remaining net cash receipts are accounted for as principal or income in the trust's general accounting records. If a trustee sells assets of the business or other activity, other than in the ordinary course of the business or activity, the trustee shall account for the net amount received as principal in the trust's general accounting records to the extent the trustee determines that the amount received is no longer required in the conduct of the business.

 

(c) Activities for which a trustee may maintain separate accounting records include:

 

(i) Retail, manufacturing, service and other traditional business activities;

 

(ii) Farming;

 

(iii) Raising and selling livestock and other animals;

 

(iv) Management of rental properties;

 

(v) Extraction of minerals and other natural resources;

 

(vi) Timber operations; and

 

(vii) Activities to which W.S. 2-3-824 applies.

 

2-3-814. Principal receipts.

 

(a) A trustee shall allocate to principal:

 

(i) To the extent not allocated to income under this act, assets received from a transferor during the transferor's lifetime, a decedent's estate, a trust with a terminating income interest or a payer under a contract naming the trust or its trustee as beneficiary;

 

(ii) Money or other property received from the sale, exchange, liquidation or change in form of a principal asset, including realized profit, subject to W.S. 2-3-811 through 2-3-825;

 

(iii) Amounts recovered from third parties to reimburse the trust because of disbursements described in W.S. 2-3-827(a)(vii) or for other reasons to the extent not based on the loss of income;

 

(iv) Proceeds of property taken by eminent domain, but a separate award made for the loss of income with respect to an accounting period during which a current income beneficiary had a mandatory income interest is income;

 

(v) Net income received in an accounting period during which there is no beneficiary to whom a trustee may or must distribute income; and

 

(vi) Other receipts as provided in W.S. 2-3-818 through 2-3-825.

 

2-3-815. Rental property.

 

To the extent that a trustee accounts for receipts from rental property pursuant to this section, the trustee shall allocate to income an amount received as rent of real or personal property, including an amount received for cancellation or renewal of a lease. An amount received as a refundable deposit, including a security deposit or a deposit that is to be applied as rent for future periods, must be added to principal and held subject to the terms of the lease and is not available for distribution to a beneficiary until the trustee's contractual obligations have been satisfied with respect to that amount.

 

2-3-816. Obligation to pay money.

 

(a) An amount received as interest, whether determined at a fixed, variable or floating rate, on an obligation to pay money to the trustee, including an amount received as consideration for prepaying principal, must be allocated to income without any provision for amortization of premium.

 

(b) A trustee shall allocate to principal an amount received from the sale, redemption or other disposition of an obligation to pay money to the trustee more than one (1) year after it is purchased or acquired by the trustee, including an obligation the purchase price or value of which when it is acquired is less than its value at maturity. If the obligation matures within one (1) year after it is purchased or acquired by the trustee, an amount received in excess of its purchase price or its value when acquired by the trust must be allocated to income.

 

(c) This section does not apply to obligations to which W.S. 2-3-819 through 2-3-822, 2-3-824 or 2-3-825 applies.

 

2-3-817. Insurance policies and similar contracts.

 

(a) Except as otherwise provided in subsection (b) of this section, a trustee shall allocate to principal the proceeds of a life insurance policy or other contract in which the trust or its trustee is named as beneficiary, including a contract that insures the trust or its trustee against loss for damage to, destruction of or loss of title to a trust asset. The trustee shall allocate dividends on an insurance policy to income if the premiums on the policy are paid from income, and to principal if the premiums are paid from principal.

 

(b) A trustee shall allocate to income proceeds of a contract that insures the trustee against loss of occupancy or other use by an income beneficiary, loss of income, or, subject to W.S. 2-3-813, loss of profits from a business.

 

(c) This section does not apply to a contract to which W.S. 2-3-819 applies.

 

2-3-818. Insubstantial allocation not required.

 

(a) If a trustee determines that an allocation between principal and income required by W.S. 2-3-819 through 2-3-822 or 2-3-825 is insubstantial, the trustee may allocate the entire amount to principal unless one of the circumstances described in W.S. 2-3-804(c) applies to the allocation. This power may be exercised by a cotrustee in the circumstances described in W.S. 2-3-804(d) and may be released for the reasons and in the manner described in W.S. 2-3-804(e). An allocation is presumed to be insubstantial if:

 

(i) The amount of the allocation would increase or decrease net income in an accounting period, as determined before the allocation, by less than ten percent (10%); or

 

(ii) The value of the asset producing the receipt for which the allocation would be made is less than ten percent (10%) of the total value of the trust's assets at the beginning of the accounting period.

 

2-3-819. Deferred compensation, annuities and similar payments.

 

(a) As used in this section:

 

(i) "Payment" means a payment that a trustee may receive over a fixed number of years or during the life of one (1) or more individuals because of services rendered or property transferred to the payer in exchange for future payments. The term includes a payment made in money or property from the payer's general assets or from a separate fund created by the payer. For the purposes of subsections (d) through (g) of this section, the term also includes any payment from any separate fund, regardless of the reason for the payment;

 

(ii) "Separate fund" includes a private or commercial annuity, an individual retirement account, and a pension, profit-sharing, stock-bonus or stock-ownership plan.

 

(b) To the extent that a payment is characterized by the separate fund as interest, a dividend or a payment made in lieu of interest or a dividend, a trustee shall allocate it to income. The trustee shall allocate to principal the balance of the payment and any other payment received in the same accounting period that is not characterized as interest, a dividend or an equivalent payment.

 

(c) If no part of a payment is characterized by the separate fund as interest, a dividend or an equivalent payment, and all or part of the payment is required to be made, a trustee shall allocate to income ten percent (10%) of the part that is required to be made during the accounting period and the balance to principal. If no part of a payment is required to be made or the payment received is the entire amount to which the trustee is entitled, the trustee shall allocate the entire payment to principal. For purposes of this subsection, a payment is not "required to be made" to the extent that it is made because the trustee exercises a right of withdrawal.

 

(d) Except as otherwise provided in subsection (e) of this section, subsections (f) and (g) of this section shall apply, and subsection (b) and (c) of this section shall not apply in determining the allocation of a payment made from a separate fund to:

 

(i) A trust to which an election to qualify for a marital deduction under section 2056(b)(7) of the Internal Revenue Code has been made;

 

(ii) A trust that qualifies for the marital deduction under section 2056(b)(5) of the Internal Revenue Code; or

 

(iii) A trust which requires payment of all trust income to the trust beneficiaries during the accounting period.

 

(e) Paragraph (d)(i) and subsections (f) and (g) of this section shall not apply if, and to the extent that, the series of payments would, without the application of paragraph (d)(i) of this section, qualify for the marital deduction under section 2056(b)(7)(C) of the Internal Revenue Code.

 

(f) A trustee shall determine the internal income of each separate fund for the accounting period as if the separate fund were a separate trust fund subject to this act. Upon request of the surviving spouse or other trust beneficiaries with the right to all the trust income, the trustee shall demand that the person administering the separate fund distribute the internal income to the trust. The trustee shall allocate a payment from the separate fund to income to the extent of the internal income of the separate fund and distribute that amount to or for the benefit of the surviving spouse or other trust beneficiaries with the right to all the trust income. The trustee shall allocate the balance of the payment to the principal. Upon request of the surviving spouse or other trust beneficiaries with the right to all the trust income, the trustee shall allocate principal to income to the extent the internal income of the separate fund exceeds payments made from the separate fund to the trust during the accounting period.

 

(g) If a trustee cannot determine the internal income of a separate fund but can determine the value of the separate fund, the internal income of the separate fund is deemed to equal three percent (3%) of the fund's value, according to the most recent statement of value preceding the beginning of the accounting period. If the trustee can determine neither the internal income of the separate fund nor the fund's value, the internal income of the fund is deemed to equal the product of the interest rate and the present value of the expected future payments, as determined under section 7520 of the Internal Revenue Code for the month preceding the accounting period for which the computation is made.

 

(h) This section does not apply to payments to which W.S. 2-3-820 applies.

 

2-3-820. Liquidating asset.

 

(a) In this section, "liquidating asset" means an asset whose value will diminish or terminate because the asset is expected to produce receipts for a period of limited duration. The term includes a leasehold, patent, copyright, royalty right and right to receive payments during a period of more than one (1) year under an arrangement that does not provide for the payment of interest on the unpaid balance. The term does not include a payment subject to W.S. 2-3-819, resources subject to W.S. 2-3-821, timber subject to W.S. 2-3-822, an activity subject to W.S. 2-3-824, an asset subject to W.S. 2-3-825 or any asset for which the trustee establishes a reserve for depreciation under W.S. 2-3-828.

 

(b) A trustee shall allocate to income ten percent (10%) of the receipts from a liquidating asset and the balance to principal.

 

2-3-821. Minerals, water and other natural resources.

 

(a) To the extent that a trustee accounts for receipts from an interest in minerals or other natural resources pursuant to this section, the trustee shall allocate them as follows:

 

(i) If received as nominal delay rental or nominal annual rent on a lease, a receipt must be allocated to income;

 

(ii) If received from a production payment, a receipt must be allocated to income if and to the extent that the agreement creating the production payment provides a factor for interest or its equivalent. The balance must be allocated to principal;

 

(iii) If an amount received as a royalty, shut-in-well payment, take-or-pay payment, bonus or delay rental is more than nominal, twenty-seven and one-half percent (27.5%) must be allocated to principal and the balance to income;

 

(iv) If an amount is received from a working interest or any other interest not provided for in paragraph (i), (ii) or (iii) of this subsection, twenty-seven and one-half percent (27.5%) of the net amount received must be allocated to principal and the balance to income.

 

(b) An amount received on account of an interest in water that is renewable must be allocated to income. If the water is not renewable, twenty-seven and one-half percent (27.5%) of the amount must be allocated to principal and the balance to income.

 

(c) This act applies whether or not a decedent or donor was extracting minerals, water or other natural resources before the interest became subject to the trust.

 

(d) If a trust owns an interest in minerals, water or other natural resources on the effective date of this act, the trustee may allocate receipts from the interest as provided in this act or in the manner used by the trustee before the effective date of this act. If the trust acquires an interest in minerals, water or other natural resources after the effective date of this act, the trustee shall allocate receipts as provided in this act.

 

2-3-822. Timber.

 

(a) To the extent that a trustee accounts for receipts from the sale of timber and related products pursuant to this section, the trustee shall allocate the net receipts:

 

(i) To income to the extent that the amount of timber removed from the land does not exceed the estimated rate of growth of the timber during the accounting periods in which a beneficiary has a mandatory income interest;

 

(ii) To principal to the extent that the amount of timber removed from the land exceeds the estimated rate of growth of the timber or the net receipts are from the sale of standing timber;

 

(iii) To or between income and principal if the net receipts are from the lease of timberland or from a contract to cut timber from land owned by a trust, by determining the amount of timber removed from the land under the lease or contract and applying the rules in paragraphs (i) and (ii) of this subsection; or

 

(iv) To principal to the extent that advance payments, bonuses and other payments are not allocated pursuant to paragraph (i), (ii) or (iii) of this subsection.

 

(b) In determining net receipts to be allocated pursuant to subsection (a) of this section, a trustee shall deduct and transfer to principal a reasonable amount for depletion.

 

(c) This act applies whether or not a decedent or transferor was harvesting timber from the property before it became subject to the trust.

 

(d) If a trust owns an interest in timberland on the effective date of this act, the trustee may allocate net receipts from the sale of timber and related products as provided in this act or in the manner used by the trustee before the effective date of this act. If the trust acquires an interest in timberland after the effective date of this act, the trustee shall allocate net receipts from the sale of timber and related products as provided in this act.

 

2-3-823. Property not productive of income.

 

(a) If a marital deduction is allowed for all or part of a trust whose assets consist substantially of property that does not provide the spouse with sufficient income from or use of the trust assets, and if the amounts that the trustee transfers from principal to income under W.S. 2-3-804 and distributes to the spouse from principal pursuant to the terms of the trust are insufficient to provide the spouse with the beneficial enjoyment required to obtain the marital deduction, the spouse may require the trustee to make property productive of income, convert property within a reasonable time or exercise the power conferred by W.S. 2-3-804(a). The trustee may decide which action or combination of actions to take.

 

(b) In cases not governed by subsection (a) of this section, proceeds from the sale or other disposition of an asset are principal without regard to the amount of income the asset produces during any accounting period.

 

2-3-824. Derivatives and options.

 

(a) In this section, "derivative" means a contract or financial instrument or a combination of contracts and financial instruments which gives a trust the right or obligation to participate in some or all changes in the price of a tangible or intangible asset or group of assets, or changes in a rate, an index of prices or rates or other market indicator for an asset or a group of assets.

 

(b) To the extent that a trustee does not account under W.S. 2-3-813 for transactions in derivatives, the trustee shall allocate to principal receipts from and disbursements made in connection with those transactions.

 

(c) If a trustee grants an option to buy property from the trust, whether or not the trust owns the property when the option is granted, grants an option that permits another person to sell property to the trust, or acquires an option to buy property for the trust or an option to sell an asset owned by the trust, and the trustee or other owner of the asset is required to deliver the asset if the option is exercised, an amount received for granting the option must be allocated to principal. An amount paid to acquire the option must be paid from principal. A gain or loss realized upon the exercise of an option, including an option granted to a settlor of the trust for services rendered, must be allocated to principal.

 

2-3-825. Asset-backed securities.

 

(a) In this section, "asset-backed security" means an asset whose value is based upon the right it gives the owner to receive distributions from the proceeds of financial assets that provide collateral for the security. The term includes an asset that gives the owner the right to receive from the collateral financial assets only the interest or other current return or only the proceeds other than interest or current return. The term does not include an asset to which W.S. 2-3-811 or 2-3-819 applies.

 

(b) If a trust receives a payment from interest or other current return and from other proceeds of the collateral financial assets, the trustee shall allocate to income the portion of the payment which the payer identifies as being from interest or other current return and shall allocate the balance of the payment to principal.

 

(c) If a trust receives one (1) or more payments in exchange for the trust's entire interest in an asset-backed security in one (1) accounting period, the trustee shall allocate the payments to principal. If a payment is one (1) of a series of payments that will result in the liquidation of the trust's interest in the security over more than one (1) accounting period, the trustee shall allocate ten percent (10%) of the payment to income and the balance to principal.

 

2-3-826. Disbursements from income.

 

(a) A trustee shall make the following disbursements from income to the extent that they are not disbursements to which W.S. 2-3-806(a)(ii)(B) or (C) applies:

 

(i) One-half (1/2) of the regular compensation of the trustee and of any person providing investment advisory or custodial services to the trustee;

 

(ii) One-half (1/2) of all expenses for accountings, judicial proceedings or other matters that involve both the income and remainder interests;

 

(iii) All of the other ordinary expenses incurred in connection with the administration, management or preservation of trust property and the distribution of income, including interest, ordinary repairs, regularly recurring taxes assessed against principal and expenses of a proceeding or other matter that concerns primarily the income interest; and

 

(iv) Recurring premiums on insurance covering the loss of a principal asset or the loss of income from or use of the asset.

 

2-3-827. Disbursements from principal.

 

(a) A trustee shall make the following disbursements from principal:

 

(i) The remaining one-half (1/2) of the disbursements described in W.S. 2-3-826(a)(i) and (ii);

 

(ii) All of the trustee's compensation calculated on principal as a fee for acceptance, distribution, or termination, and disbursements made to prepare property for sale;

 

(iii) Payments on the principal of a trust debt;

 

(iv) Expenses of a proceeding that concerns primarily principal, including a proceeding to construe the trust or to protect the trust or its property;

 

(v) Premiums paid on a policy of insurance not described in W.S. 2-3-826(a)(iv) of which the trust is the owner and beneficiary;

 

(vi) Estate, inheritance and other transfer taxes, including penalties, apportioned to the trust; and

 

(vii) Disbursements related to environmental matters, including reclamation, assessing environmental conditions, remedying and removing environmental contamination, monitoring remedial activities and the release of substances, preventing future releases of substances, collecting amounts from persons liable or potentially liable for the costs of those activities, penalties imposed under environmental laws or regulations and other payments made to comply with those laws or regulations, statutory or common law claims by third parties and defending claims based on environmental matters.

 

(b) If a principal asset is encumbered with an obligation that requires income from that asset to be paid directly to the creditor, the trustee shall transfer from principal to income an amount equal to the income paid to the creditor in reduction of the principal balance of the obligation.

 

2-3-828. Transfers from income to principal for depreciation.

 

(a) In this section, "depreciation" means a reduction in value due to wear, tear, decay, corrosion or gradual obsolescence of a fixed asset having a useful life of more than one (1) year and the purchase cost or value of such fixed asset is more than that amount provided by section 179 of the United States Internal Revenue Code or subsequent amendment to the Internal Revenue Code.

 

(b) A trustee may transfer to principal a reasonable amount of the net cash receipts from a principal asset that is subject to depreciation, but may not transfer any amount for depreciation:

 

(i) Of that portion of real property used or available for use by a beneficiary as a residence or of tangible personal property held or made available for the personal use or enjoyment of a beneficiary;

 

(ii) During the administration of a decedent's estate; or

 

(iii) Under this section if the trustee is accounting under W.S. 2-3-813 for the business or activity in which the asset is used.

 

(c) An amount transferred to principal need not be held as a separate fund.

 

2-3-829. Transfers from income to reimburse principal.

 

(a) If a trustee makes or expects to make a principal disbursement described in this section, the trustee may transfer an appropriate amount from income to principal in one (1) or more accounting periods to reimburse principal or to provide a reserve for future principal disbursements.

 

(b) Principal disbursements to which subsection (a) of this section applies include the following, but only to the extent that the trustee has not been and does not expect to be reimbursed by a third party:

 

(i) An amount chargeable to income but paid from principal because it is unusually large, including extraordinary repairs;

 

(ii) A capital improvement to a principal asset, whether in the form of changes to an existing asset or the construction of a new asset, including special assessments;

 

(iii) Disbursements made to prepare property for rental, including tenant allowances, leasehold improvements and broker's commissions;

 

(iv) Periodic payments on an obligation secured by a principal asset to the extent that the amount transferred from income to principal for depreciation is less than the periodic payments; and

 

(v) Disbursements described in W.S. 2-3-827(a)(vii).

 

(c) If the asset whose ownership gives rise to the disbursements becomes subject to a successive income interest after an income interest ends, a trustee may continue to transfer amounts from income to principal as provided in subsection (a) of this section.

 

2-3-830. Income taxes.

 

(a) A tax required to be paid by a trustee based on receipts allocated to income must be paid from income.

 

(b) A tax required to be paid by a trustee based on receipts allocated to principal must be paid from principal, even if the tax is called an income tax by the taxing authority.

 

(c) A tax required to be paid by a trustee on the trust's share of an entity's taxable income must be paid proportionately:

 

(i) From income to the extent that receipts from the entity are allocated to income; and

 

(ii) From principal to the extent that:

 

(A) Receipts from the entity are allocated to principal; and

 

(B) The trust's share of the entity's taxable income exceeds the total receipts described in paragraph (i) and subparagraph (ii)(A) of this subsection.

 

(d) For purposes of this section, receipts allocated to principal or income must be reduced by the amount distributed to a beneficiary from principal or income for which the trust receives a deduction in calculating the tax.

 

2-3-831. Adjustments between principal and income because of taxes.

 

(a) A fiduciary may make adjustments between principal and income to offset the shifting of economic interests or tax benefits between income beneficiaries and remainder beneficiaries which arise from:

 

(i) Elections and decisions, other than those described in subsection (b) of this section, that the fiduciary makes from time to time regarding tax matters;

 

(ii) An income tax or any other tax that is imposed upon the fiduciary or a beneficiary as a result of a transaction involving or a distribution from the estate or trust; or

 

(iii) The ownership by an estate or trust of an interest in an entity whose taxable income, whether or not distributed, is includable in the taxable income of the estate, trust or a beneficiary.

 

(b) If the amount of an estate tax marital deduction or charitable contribution deduction is reduced because a fiduciary deducts an amount paid from principal for income tax purposes instead of deducting it for estate tax purposes, and as a result estate taxes paid from principal are increased and income taxes paid by an estate, trust or beneficiary are decreased, each estate, trust or beneficiary that benefits from the decrease in income tax shall reimburse the principal from which the increase in estate tax is paid. The total reimbursement must equal the increase in the estate tax to the extent that the principal used to pay the increase would have qualified for a marital deduction or charitable contribution deduction but for the payment. The proportionate share of the reimbursement for each estate, trust or beneficiary whose income taxes are reduced must be the same as its proportionate share of the total decrease in income tax. An estate or trust shall reimburse principal from income.

 

2-3-832. Judicial control of discretionary powers.

 

(a) A court shall not change a fiduciary's decision to exercise or not to exercise a discretionary power conferred by this act unless it determines that the decision was an abuse of the fiduciary's discretion. A court shall not determine that a fiduciary abused its discretion merely because the court would have exercised the discretion in a different manner or would not have exercised the discretion.

 

(b) The decisions to which subsection (a) of this section applies include:

 

(i) A determination under W.S. 2-3-804(a) of whether and to what extent an amount should be transferred from principal to income or from income to principal;

 

(ii) A determination of the factors that are relevant to the trust and its beneficiaries, the extent to which they are relevant, and the weight, if any, to be given to the relevant factors, in deciding whether and to what extent to exercise the power conferred by W.S. 2-3-804(a).

 

(c) If a court determines that a fiduciary has abused its discretion, the remedy is to restore the income and remainder beneficiaries to the positions they would have occupied if the fiduciary had not abused its discretion, according to the following rules:

 

(i) To the extent that the abuse of discretion has resulted in no distribution to a beneficiary or a distribution that is too small, the court shall require the fiduciary to distribute from the trust to the beneficiary an amount that the court determines will restore the beneficiary, in whole or in part, to his appropriate position;

 

(ii) To the extent that the abuse of discretion has resulted in a distribution to a beneficiary that is too large, the court shall restore the beneficiaries, the trust, or both, in whole or in part, to their appropriate positions by requiring the fiduciary to withhold an amount from one (1) or more future distributions to the beneficiary who received the distribution that was too large or requiring that beneficiary to return some or all of the distribution to the trust;

 

(iii) To the extent that the court is unable, after applying paragraphs (i) and (ii) of this subsection, to restore the beneficiaries, the trust, or both, to the positions they would have occupied if the fiduciary had not abused its discretion, the court may require the fiduciary to pay an appropriate amount from its own funds to one (1) or more of the beneficiaries or the trust or both.

 

(d) Upon a petition by the fiduciary, the court having jurisdiction over the trust or estate shall determine whether a proposed exercise or nonexercise by the fiduciary of a discretionary power conferred by this act will result in an abuse of the fiduciary's discretion. If the petition describes the proposed exercise or nonexercise of the power and contains sufficient information to inform the beneficiaries of the reasons for the proposal, the facts upon which the fiduciary relies, and an explanation of how the income and remainder beneficiaries will be affected by the proposed exercise or nonexercise of the power, a beneficiary who challenges the proposed exercise or nonexercise has the burden of establishing that it will result in an abuse of discretion.

 

2-3-833. Uniformity of application and construction.

 

In applying and construing this uniform act, consideration must be given to the need to promote uniformity of the law with respect to its subject matter among states that enact it.

 

2-3-834. Application of act to existing trusts and estates.

 

This act applies to every trust or decedent's estate existing on the effective date of this act except as otherwise expressly provided in the will or terms of the trust or in this act.

 

ARTICLE 9 - WYOMING UNITRUST ACT

 

2-3-901. Short title.

 

This act shall be known and may be cited as the "Wyoming Unitrust Act".

 

2-3-902. Definitions.

 

(a) As used in this act:

 

(i) "Beneficiary" means a person as defined in W.S. 2-3-802(a)(ii);

 

(ii) "Disinterested person" means a person who is not a "related or subordinate party" as defined in 672(c) of the Internal Revenue Code, with respect to the person then acting as trustee of the trust and excludes the settlor of the trust and any interested trustee;

 

(iii) "Income trust" means a trust, created by either an inter vivos or a testamentary instrument, which directs or permits the trustee to distribute the net income of the trust to one (1) or more persons, either in fixed proportions or in amounts or proportions determined by the trustee. Notwithstanding the foregoing, no trust that otherwise is an "income trust" shall qualify under this act, if it may be subject to taxation under Internal Revenue Code 2001 or 2501, until the expiration of the period for filing the return therefore, including extensions;

 

(iv) "Interested distributee" means a person to whom distributions of income or principal can currently be made who has the power to remove the existing trustee and designate as successor a person who may be a "related or subordinate party", as defined in Internal Revenue Code 672(c) with respect to the distributee;

 

(v) "Interested trustee" means:

 

(A) An individual trustee to whom the net income or principal of the trust can currently be distributed or would be distributed if the trust were then to terminate and be distributed;

 

(B) Any trustee who may be removed and replaced by an interested distributee; or

 

(C) An individual trustee whose legal obligation to support a beneficiary may be satisfied by distributions of income and principal of the trust.

 

(vi) "Total return unitrust" means an income trust which has been created or converted under and meets the provisions of this act;

 

(vii) "Trustee" means all persons acting as trustee of the trust, except where expressly noted otherwise, whether acting in their discretion or on the direction of one (1) or more persons acting in a fiduciary capacity;

 

(viii) "Settlor" means a person as defined in W.S. 4-10-103(a)(xviii);

 

(ix) "Unitrust amount" means an amount computed as a percentage of the fair market value of the trust;

 

(x) "This act" means W.S. 2-3-901 through 2-3-917.

 

2-3-903. Unitrust election by trustee; requirements to make unitrust election.

 

(a) A trustee, other than an interested trustee, or where two (2) or more persons are acting as trustees, a majority of the trustees who are not interested trustees may, in its sole discretion and without the approval of the district court:

 

(i) Elect to release the power to adjust described in W.S. 2-3-804 and to convert an income trust to a total return unitrust;

 

(ii) Reconvert a total return unitrust to an income trust and reinstate the power to adjust described in W.S. 2-3-804; or

 

(iii) Change the percentage used to calculate the unitrust amount or the method used to determine the fair market value of the trust if the following requirements are completed:

 

(A) The trustee adopts a written policy for the trust providing:

 

(I) In the case of a trust being administered as an income trust, that future distributions from the trust will be unitrust amounts rather than net income;

 

(II) In the case of a trust being administered as a total return unitrust, that future distributions from the trust will be net income rather than unitrust amounts; or

 

(III) That the percentage used to calculate the unitrust amount or the method used to determine the fair market value of the trust will be changed as stated in the policy.

 

(b) The trustee shall mail notice of the proposed action to all beneficiaries who are receiving, or are entitled to receive, income under the trust or to receive a distribution of principal if the trust were terminated at the time the notice is given assuming nonexercise of all powers of appointment.

 

(c) Notice of proposed action need not be given to any person who consents in writing to the proposed action. The consent may be executed at any time before or after the proposed action is taken.

 

(d) The written notice of its intention to take action shall include the following:

 

(i) The name and mailing address of the trustee;

 

(ii) The name and telephone number of a person who may be contacted for additional information;

 

(iii) A description of the action proposed to be taken and an explanation of the reasons for the action;

 

(iv) A copy of the trustee's written policy discussed in subparagraph (a)(iii)(A) of this section;

 

(v) The time within which objections to the proposed action can be made, which shall be at least thirty (30) days from the mailing of the notice of proposed action; and

 

(vi) The date on or after which the proposed action may be taken or is effective.

 

(e) A beneficiary may object to the proposed action by mailing a written objection to the trustee stating the objection and the basis or reason for the objection at the address stated in the notice of proposed action within the time period specified in the notice of proposed action.

 

(f) If the trustee receives a written objection stating the basis or reason for the objection within the applicable period, either the trustee or a beneficiary may petition the court to have the proposed action taken as proposed, taken with modifications, or denied.

 

(g) A beneficiary who has not objected is not estopped from opposing the proposed action in the proceeding.

 

(h) If the trustee decides not to implement the proposed action, the trustee shall notify the beneficiaries of the decision not to take the action and the reasons for the decision, and the trustee's decision not to implement the proposed action shall not itself give rise to liability to any current or future beneficiary.

 

2-3-904. Unitrust election where there is no trustee other than an interested trustee; requirements to make unitrust election.

 

(a) If there is no trustee of the trust other than an interested trustee, the interested trustee, or where two (2) or more persons are acting as trustees and are interested trustees, a majority of the interested trustees, in its sole discretion and without the approval of the district court, may:

 

(i) Elect to release the power to adjust described in W.S. 2-3-804 and to convert an income trust to a total return unitrust;

 

(ii) Reconvert a total return unitrust to an income trust and reinstate the power to adjust described in W.S. 2-3-804; or

 

(iii) Change the percentage used to calculate the unitrust amount or the method used to determine the fair market value of the trust if the requirements of W.S. 2-3-903(a) through (f) are completed and the trustee appoints a disinterested person who, in its sole discretion but acting in a fiduciary capacity, determines for the trustee:

 

(A) The percentage to be used to calculate the unitrust amount;

 

(B) The method to be used in determining the fair market value of the trust; and

 

(C) Which assets, if any are to be excluded in determining the unitrust amount.

 

2-3-905. Unitrust election by beneficiary; ability to request trustee action.

 

(a) A beneficiary, who is receiving, or is entitled to receive, income under the trust or to receive a distribution of principal if the trust were terminated, may:

 

(i) Submit to the trustee a written request to convert an income trust to a total return unitrust;

 

(ii) Reconvert a total return unitrust to an income trust; or

 

(iii) Change the percentage used to calculate the unitrust amount pursuant to W.S. 2-3-904.

 

(b) If the trustee declines or fails to act within six (6) months of receipt of the written request, the beneficiary may petition the district court to order the conversion or adjustment.

 

2-3-906. Settlor created unitrust.

 

A settlor may create a trust instrument with terms providing that the trust shall be administered as a total return unitrust under this act. A settlor may also create a trust instrument with terms providing that the trust may be administered as either an income trust or as a total return unitrust under this act in the discretion of the trustee or a trust protector appointed in the trust instrument.

 

2-3-907. Valuations.

 

(a) The fair market value of a trust subject to this act shall be determined, at least annually, using a valuation date or dates or averages of valuation dates as are deemed appropriate except that:

 

(i) The trustee shall not include in the fair market value the value of any residential property or any tangible personal property that the income beneficiary has the right to occupy or use;

 

(ii) The trustee shall not limit or restrict any right of the beneficiary to use the excluded property in accordance with the governing instrument; and

 

(iii) Where the terms of the trust do not provide contrary direction, the trustee shall include in the fair market value the value of:

 

(A) The portion of any private or commercial annuity from which the trustee is receiving distributions as a designated beneficiary of the annuity; and

 

(B) The portion of any individual retirement account and pension, profit-sharing, stock bonus or stock ownership plan retirement account from which the trustee is receiving distributions as a designated beneficiary of the account.

 

(b) Assets for which a fair market value cannot be readily ascertained shall be valued using valuation methods as are deemed reasonable and appropriate as determined in the sole discretion of the trustee. The assets may be excluded from valuation in the sole discretion of the trustee, provided all income received with respect to the assets is distributed to the extent distributable in accordance with the terms of the governing instrument.

 

2-3-908. Unitrust percentages.

 

The percentage to be used in determining the unitrust amount shall be a reasonable current return from the trust, in any event not less than three percent (3%) nor more than five percent (5%), taking into account the intentions of the settlor of the trust as expressed in the governing instrument, the needs of the beneficiaries, general economic conditions, projected current earnings and appreciation for the trust, and projected inflation and its impact on the trust.

 

2-3-909. Treatment and allocation of income.

 

(a) Following the conversion of an income trust to a total return unitrust or upon creation of a total return unitrust by a settlor, the trustee:

 

(i) Shall treat the unitrust amount as if it were net income of the trust for purposes of determining the amount available, from time to time, for distribution from the trust; and

 

(ii) May allocate to trust income for each taxable year of the trust, or portion thereof:

 

(A) Net short-term capital gain described in Internal Revenue Code 1222(5) for the year, or portion thereof, but only to the extent that the amount so allocated together with all other amounts allocated to trust income for the year, or portion thereof does not exceed the unitrust amount for the year, a portion thereof; and

 

(B) Net long-term capital gain described in Internal Revenue Code 1222(7) for the year, or portion thereof, but only to the extent that the amount so allocated together with all other amounts, including amounts described in subparagraph (A) of this paragraph, allocated to trust income for the year, or portion thereof, does not exceed the unitrust amount for the year, or portion thereof.

 

2-3-910. Administration.

 

(a) In administering a total return unitrust, the trustee may, in its sole discretion, but subject to the provisions of the governing instrument, determine:

 

(i) The effective date of the conversion;

 

(ii) The timing of distributions, including provisions for prorating a distribution for a short year in which a beneficiary's right to payments commences or ceases;

 

(iii) Whether distributions are to be made in cash or in kind or partly in cash and partly in kind;

 

(iv) If the trust is reconverted to an income trust, the effective date of the reconversion; and

 

(v) Other administrative issues as may be necessary or appropriate to carry out the purposes of this act.

 

2-3-911. Treatment of underpayments or overpayments.

 

In the event of an underpayment to a beneficiary, the trustee shall pay to a beneficiary within a reasonable time, and in the event of an overpayment to a beneficiary, the trustee shall recover from the beneficiary either by repayment by the beneficiary or by withholding from future distributions to the beneficiary, an amount equal to the difference between the amount properly payable and the amount actually paid.

 

2-3-912. Effect of conversion on governing instrument.

 

Conversion to a total return unitrust under the provisions of this act shall not affect any other provision of the governing instrument, if any, regarding distributions of principal.

 

2-3-913. Situs.

 

(a) This act shall be construed as pertaining to the administration of a trust and shall be available to any trust that is administered in Wyoming under Wyoming law unless:

 

(i) The governing instrument reflects an intention that the beneficiary or beneficiaries are to receive an amount other than a reasonable current return from the trust;

 

(ii) The trust is a trust described in Internal Revenue Code 170(f)(2)(B), 664(d), 2702(a)(3) or 2702(b); or

 

(iii) The governing instrument expressly prohibits use of this act by specific reference to this act.

 

2-3-914. Trustee's liability.

 

Any trustee or disinterested person who in good faith takes or fails to take any action under this act shall not be liable to any person affected by the action or inaction, regardless of whether the person received written notice as provided in this act and regardless of whether the person was under a legal disability at the time of the delivery of the notice. The person's exclusive remedy shall be to obtain an order of the district court directing the trustee to convert an income trust to a total return unitrust, to reconvert from a total return unitrust to an income trust or to change the percentage used to calculate the unitrust amount.

 

2-3-915. Judicial control of discretionary powers.

 

(a) A court shall not change a trustee's decision to exercise or not to exercise a discretionary power conferred by this act unless it determines that the decision was an abuse of the trustee's discretion. A court shall not determine that a trustee abused its discretion merely because the court would have exercised the discretion in a different manner or would not have exercised the discretion.

 

(b) Where a beneficiary elects to challenge an action or nonaction by a trustee or disinterested party under the powers and authority granted in the party under this act, the beneficiary has the burden of establishing, by a preponderance of the evidence, that the actions or nonactions by a trustee or a disinterested party abused the trustee's or the party's discretion. A beneficiary who fails to state a basis or reason for an objection or fails to prove by a preponderance of the evidence the proposed action should be taken or should not be taken shall be liable to all other beneficiaries for damages and costs associated with the objection.

 

2-3-916. Limitation of election.

 

An action shall not be taken under W.S. 2-3-903, 2-3-904 or 2-3-905 more frequently than every two (2) years, unless the district court orders otherwise.

 

2-3-917. Application.

 

This act applies to every trust or decedent's estate existing on July 1, 2007 or created thereafter except as otherwise expressly provided in the will or terms of the trust or in this act.