2006 New York Code - Powers, Duties And Limitations

 
  §  11-1.11  Limited  power  of  fiduciary to amend trust for certain tax
                purposes
    (a) Unless  expressly  prohibited  by  the  terms  of  the  instrument
  creating  an  express  trust, the terms of the trust instrument shall be
  deemed to include the following provision granting  the  trustee,  which
  term  as  defined in paragraph (h) of this section may mean the executor
  or administrator, a limited power to amend:
    "The trustees shall have the limited power to amend the administrative
  and other provisions of the trust which have no significant  dispositive
  effects  within  the  meaning  of  paragraph  (i)  of this section on an
  interest described in such paragraph, by an acknowledged  instrument  in
  writing, in order to:
    (i)  achieve  a  qualified reformation of a reformable interest into a
  qualified interest for purposes of the charitable deduction as permitted
  by section 2055(e)(3)  or  2522(c)(4)  of  the  United  States  Internal
  Revenue  Code  ("Code")  and  the  regulations  thereto,  or  achieve  a
  reformation of a charitable remainder trust permitted by section 664  of
  the Code and the regulations thereto;
    (ii)  meet  the  requirements  of  a  qualified  domestic  trust for a
  surviving spouse who is  not  a  citizen  of  the  United  States  under
  sections  2056(d)  and 2056A(a) of the Code and the regulations thereto;
  and
    (iii) meet the  requirements  of  a  personal  residence  trust  under
  section  2702(a)(3)  or  to  meet the definition of a qualified interest
  under section 2702(b) of the Code, and the regulations thereto."
    (b) (1) No trustee may exercise any power created under paragraph  (a)
  of  this  section  with  respect  to  any  trust that is exempt from tax
  imposed by the provisions of chapter 13 of the Code or has an  inclusion
  ratio,  as  defined  in  section  2642(a)  of  the  Code, of zero if the
  exercise of such power would cause such trust to lose  in  whole  or  in
  part  its exemption from the tax imposed by the provisions of chapter 13
  of the Code or cause such trust to have an inclusion ratio,  as  defined
  in section 2642(a) of the Code, of more than zero.
    (2)  If  the  creator  of  an  express trust or a beneficiary (whether
  current, future or contingent) of income  or  principal  of  an  express
  trust  is serving as a trustee of the express trust, the creator or such
  beneficiary cannot participate in the exercise of  the  power  to  amend
  such express trust pursuant to this section. If two or more trustees are
  serving,  the  power to amend such express trust may be exercised by the
  trustees who are not so disqualified.
    (c) Such amendment shall be embodied in one or  more  writings  signed
  and  acknowledged  in  the manner required by the laws of this state for
  the recording of a conveyance of real property by the trustee and  filed
  in  the  office  of  the clerk of the court having jurisdiction over the
  instrument. At least thirty (30) days prior to such  filing,  notice  of
  such  amendment, together with a copy of the amendment, shall be sent by
  registered or certified mail, return receipt requested, or  by  personal
  delivery  to  all persons interested in the trust, or to the guardian of
  the  property,  committee,  conservator,  adult  guardian,  or  personal
  representative  of any such persons under a disability, or to the parent
  or person with whom a minor  resides.  Such  notice  shall  include  the
  following  statement:  "If you wish to object to the proposed amendment,
  you should notify  the  trustee  (executor  or  administrator)  of  your
  objections  in  a writing signed and acknowledged by you before a notary
  in the manner required by the laws of the state  of  New  York  for  the
  recording  of a conveyance of real property. Such written objection must
  be  personally  delivered  or  mailed  to  the  trustee   (executor   or
  administrator)   by   registered   or  certified  mail,  return  receipt
  requested, within thirty (30) days of  the  date  when  the  notice  was
  personally  delivered  or  mailed  to  you.  If no such objection to the
  proposed amendment is made by any person interested in the  trust,  such
  amendment  will  become  effective  upon  its filing in the court having
  jurisdiction over the trust." Proof by  affidavit  of  such  mailing  or
  delivery  of  the  notice or by signed acknowledgement of receipt by the
  person noticed, shall be filed in the office of the clerk of  the  court
  where such amendment is filed prior to or simultaneously with the filing
  of  such  amendment. If it appears by affidavit that the name or address
  of any person interested in the trust is unknown, mailing to such person
  of the notice shall not be required.
    (d) Such amendment shall be  effective  upon  filing  as  required  by
  paragraph  (c)  of  this  section, provided that no written objection to
  such amendment, signed and acknowledged in the manner  required  by  the
  laws  of the state for the recording of a conveyance of real property by
  any person interested in the trust, has  been  received  prior  to  such
  filing  by  the  trustee,  by  personal  delivery  or  by  registered or
  certified mail, return receipt requested. If no such  written  objection
  has  been  received  by  the  trustee  prior to such filing, no judicial
  proceeding or consent of any person interested in  the  trust  shall  be
  required.
    (e) Unless otherwise provided in the amendment, the amendment shall be
  deemed  to  have  been effective in the case of a will as of the date of
  death of the decedent, and in the case of any other  instrument  on  the
  date it became irrevocable.
    (f)  The  limited  power  to  amend  granted  by this section shall be
  exercised only if acted upon by all of the trustees, except as otherwise
  provided by subparagraph (b)(2) of this section.
    (g) For  the  purposes  of  this  section,  the  phrase  "all  persons
  interested in the trust" shall mean all the persons upon whom service of
  process would be required in a proceeding for the judicial settlement of
  the  account  of  the trustee, taking into account section three hundred
  fifteen of the surrogate's court procedure act.
    (h) In any case where the Code requires  that  an  election  or  other
  action  be  made  or  taken  by the executor or if no trustee of a trust
  under a will has qualified, the term "trustee" as used in  this  section
  shall mean the executor or administrator of an estate. In any such case,
  the  trustee  shall  comply  with  any  action  taken by the executor or
  administrator under this section.
    (i) An amendment pursuant to paragraph (a) of this  section  shall  be
  conclusively  deemed  to have "no significant dispositive effect" if the
  difference between the actuarial value determined as  of  the  effective
  date of the amendment
    (i)  of  the  interest  reformed  pursuant  to  subparagraph (a)(i) or
  (a)(ii) qualifying for the marital  or  charitable  deduction  which  is
  involved in a reformation pursuant to subparagraph (a)(i) or (a)(ii); or
    (ii)  of  the  interest  retained  by the transferor or any applicable
  family member reformed pursuant to subparagraph  (a)(iii)  in  order  to
  qualify  as a "personal residence trust" or a "qualified interest" under
  section 2702 of the Code;
  and the actuarial  value  of  the  respective  interest  prior  to  such
  amendment  does  not  exceed five percent of the actuarial value of such
  pre-amendment interest.
    (j) The term "trust" shall include an arrangement treated as a "trust"
  for the purposes of the Code.
    (k) The fact that a testamentary trust cannot be revoked,  altered  or
  amended  by  reason  of  the testator's death, or that the will or trust
  instrument states that the trust is irrevocable and/or cannot be altered
  or amended, shall not be deemed to  constitute  an  express  prohibition
  within  the  meaning  of  the phrase "unless expressly prohibited by the
  terms of the instrument creating an express trust."
    (l)  References to sections of the United States Internal Revenue Code
  or Code shall refer to the United States Internal Revenue Code  of  1986
  as  amended  from  time  to  time,  or  to  corresponding  provisions of
  subsequent internal revenue laws, and  regulations  thereto;  and  shall
  also refer to corresponding provisions of state law.