REPRESENTATIVES Willamowski, Book, Cates, DeBose, DePiero, Domenick, C. Evans, Gilb, Hagan, Harwood, Kearns, Oelslager, Otterman, S. Patton, T. Patton, Schmidt, Seitz, J. Stewart, Taylor, Trakas

To amend sections 1337.091, 1339.411, 1339.412,

1

1339.66, and 2109.62 and to enact section 1339.621

2

of the Revised Code to provide for distribution of

3

the trust estate upon a probate court's

4

termination of small trusts and representation in

5

a trust, to specify the circumstances for the

6

revocation or nonrevocation of a power of attorney

7

upon the termination of the marriage between the

8

principal and the principal's spouse as attorney

9

in fact or upon their entering into a separation

10

agreement, to specify when the forfeiture or

11

postponement provisions of a spendthrift provision

12

in an inter vivos or testamentary trust apply to a

13

property interest that qualifies as a qualified

14

terminable interest property deduction, and to

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specify when such a trust may require or permit

16

the accumulation for more than one year of any

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income of property that qualifies as such an

18

interest.

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BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 1337.091, 1339.411, 1339.412,	20
1339.66, and 2109.62 be amended and section 1339.621 of the	21
Revised Code be enacted to read as follows:	22

Sec. 1337.091.  (A) The death or adjudged incompetency of any	23
principal who has executed a power of attorney in writing does not	24
revoke the power and authority of the attorney in fact who,	25
without actual knowledge of the death or adjudged incompetency of	26
the principal, acts in good faith under the power of attorney. Any	27
action so taken, unless otherwise invalid or unenforceable, inures	28
to the benefit of and binds the principal and the principal's	29
heirs, devisees, and personal representatives.	30

(B)(1) An affidavit,that is executed by the attorney in fact	31
stating that the attorney in fact did not have, at the time of	32
doing an act pursuant to the power of attorney, actual knowledge	33
of the revocation of the power of attorney by the principal, or	34
the revocation of the power of attorney by death or adjudged	35
incompetency of the principal is, in the absence of fraud,	36
conclusive proof of the nonrevocation of the power of attorney at	37
thatthe time. Ifof the attorney in fact doing an act pursuant to	38
the power of attorney if the affadavit contains the following:	39

(a) A statement that the attorney in fact, at the time of	40
doing an act pursuant to the power of attorney, had no actual	41
knowledge of the revocation of the power of attorney by the	42
principal;	43

(b) A statement that the attorney in fact, at the time of	44
doing an act pursuant to the power of attorney, had no actual	45
knowledge of the revocation of the power of attorney by death or	46
adjudged incompetency of the principal;	47

(c) One of the following statements, whichever is applicable:

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(i) The attorney in fact was never married to the principal.

49

(ii) The attorney in fact was married to the principal, the	50
marriage has been terminated, and the power of attorney states	51
that the power of attorney is not revoked by reason of law due to	52
the termination of the marriage between the principal and the	53
attorney in fact.	54

(iii) The attorney in fact is married to the principal, a	55
separation agreement has been entered into between the principal	56
and the attorney in fact in which they intend to fully and finally	57
settle each spouse's prospective property rights in the property	58
of the other, and the power of attorney states that the power of	59
attorney is not revoked by reason of law due to the existence of a	60
separation agreement of that nature entered into between the	61
principal and the attorney in fact.	62

(2) If the exercise of the power of attorney requires the	63
execution and delivery of any instrument that is recordable, the	64
affidavit whenthat is executed under division (B)(1) of this	65
section, if acknowledged before a notary public in the same manner	66
as a deed, is likewise recordable.	67

(C) This section shall not be construed to alter or affect	68
any provision for revocation contained in any power of attorney.	69
This section shall not be construed to affect any provision of a	70
power of attorney that indicates, consistent with section 1337.09	71
of the Revised Code, that the authority of the attorney in fact is	72
exercisable by the attorney in fact as provided in the power of	73
attorney notwithstanding the later disability, incapacity, or	74
adjudged incompetency of the principal.	75

Sec. 1339.411.  (A)(1) Except as provided in divisions	76
(A)(2), (3), and (4) of this section, a spendthrift provision in	77
an instrument that creates an inter vivos or testamentary trust	78
shall not cause any forfeiture or postponement of any interest in	79
property that satisfies both of the following:	80

(a) It is granted to a surviving spouse of the testator or	81
other settlor.	82

(b) It qualifies for the federal estate tax marital deduction	83
allowed by Subtitle B, Chapter 11, of the "Internal Revenue Code	84
of 1986," 26 U.S.C.A. 2056, as amended, or the estate tax marital	85
deduction allowed by division (A) of section 5731.15 of the	86
Revised Code, or the qualified terminable interest property	87
deduction allowed by division (B) of section 5731.15 of the	88
Revised Code.	89

(2) Division (A)(1) of this section does not apply if an	90
instrument that creates an inter vivos or testamentary trust	91
expressly states the intention of the testator or other settlor	92
that obtaining a marital deduction or a qualified terminable	93
interest property deduction as described in division (A)(1)(b) of	94
this section is less important than enforcing the forfeiture or	95
postponement of the interest in property in accordance with the	96
spendthrift provision in the instrument.	97

(3) Division (A)(1) of this section applies only to the	98
forfeiture or postponement portions of a spendthrift provision and	99
does not apply to any portion of a spendthrift provision that	100
prohibits a beneficiary from assigning, alienating, or otherwise	101
disposing of any beneficial interest in a trust or prohibits a	102
creditor of a beneficiary from attaching or otherwise encumbering	103
the trust estate.	104

(4) Division (A)(1) of this section does not apply to any	105
beneficiary of an inter vivos or testamentary trust other than the	106
surviving spouse of the testator or other settlor or to any inter	107
vivos or testamentary trust of which the surviving spouse of the	108
testator or other settlor is a beneficiary if an interest in	109
property does not qualify for a marital deduction or a qualified	110
terminable interest property deduction as described in division	111
(A)(1)(b) of this section.	112

(B)(1) Except as provided in divisions (B)(2) and (3) of this	113
section, if an instrument creating an inter vivos or testamentary	114
trust includes a spendthrift provision and the trust holds shares	115
in an S corporation, the spendthrift provision shall not cause any	116
forfeiture or postponement of any beneficial interest, income,	117
principal, or other interest in the shares of the S corporation	118
held by the trust. For purposes of division (B)(1) of this	119
section, "S corporation" has the same meaning as in section 1361	120
of the "Internal Revenue Code of 1986," 26 U.S.C. 1361.	121

(2) Division (B)(1) of this section does not apply if an	122
instrument that creates an inter vivos or testamentary trust	123
expressly states the intention of the testator or other settlor	124
that maintenance of the corporation's status as an S corporation	125
is less important than enforcing the forfeiture or postponement of	126
any beneficial interest, income, principal, or other interest in	127
the S corporation shares in accordance with the spendthrift	128
provision in the instrument.	129

(3) Division (B)(1) of this section applies only to the	130
forfeiture or postponement portions of a spendthrift provision and	131
does not apply to any portion of a spendthrift provision that	132
prohibits a beneficiary from assigning, alienating, or otherwise	133
disposing of any beneficial interest in a trust or prohibits a	134
creditor of a beneficiary from attaching or otherwise encumbering	135
the trust estate.	136

(C)(1) Except as provided in divisions (C)(2) and (3) of this	137
section, a spendthrift provision in an instrument that creates an	138
inter vivos or testamentary trust shall not cause any forfeiture	139
or postponement of any interest in property that satisfies both of	140
the following:	141

(a) It is granted to a person who is a skip person under the	142
federal generation-skipping transfer tax imposed by Subtitle B,	143
Chapter 13, of the "Internal Revenue Code of 1986," 26 U.S.C.A.	144
2601-2663, as amended.	145

(b) It qualifies as a nontaxable gift under section 2642(c)	146
of the "Internal Revenue Code of 1986," 26 U.S.C.A. 2642(c).	147

(2) Division (C)(1) of this section does not apply if an	148
instrument that creates an inter vivos or testamentary trust	149
expressly states the intention of the testator or other settlor	150
that qualifying as a nontaxable trust gift as described in	151
division (C)(1)(b) of this section is less important than	152
enforcing the forfeiture or postponement of the interest in	153
property in accordance with the spendthrift provision in the	154
instrument.	155

(3) Division (C)(1) of this section applies only to the	156
forfeiture or postponement portions of a spendthrift provision and	157
does not apply to any portion of a spendthrift provision that	158
prohibits a beneficiary from assigning, alienating, or otherwise	159
disposing of any beneficial interest in a trust or prohibits a	160
creditor of a beneficiary from attaching or otherwise encumbering	161
the trust estate.	162

(D) Divisions (A), (B), and (C) of this section are intended	163
to codify certain fiduciary and trust law principles relating to	164
the interpretation of a testator's or other settlor's intent with	165
respect to the provisions of a trust. Divisions (A), (B), and (C)	166
of this section apply to trust instruments executed prior to and	167
existing on the effective date of this amendmentAugust29, 2000,	168
and to trust instruments executed on or after the effective date	169
of this amendmentAugust29, 2000.	170

Sec. 1339.412.  (A) Except as provided in division (B) of	171
this section, an instrument that creates an inter vivos or	172
testamentary trust shall not require or permit the accumulation	173
for more than one year of any income of property that satisfies	174
both of the following:	175

(1) The property is granted to a surviving spouse of the	176
testator or other settlor.	177

(2) The property qualifies for the federal estate tax marital	178
deduction allowed by subtitle B, Chapter 11 of the "Internal	179
Revenue Code of 1986," 26 U.S.C. 2056, as amended, or the estate	180
tax marital deduction allowed by division (A) of section 5731.15	181
of the Revised Code, or the qualified terminable interest property	182
deduction allowed by division (B) of section 5731.15 of the	183
Revised Code.	184

(B)(1) Division (A) of this section does not apply if an	185
instrument that creates an inter vivos or testamentary trust	186
expressly states the intention of the testator or other settlor	187
that obtaining a marital deduction or a qualified terminable	188
interest property deduction as described in division (A)(2) of	189
this section is less important than requiring or permitting the	190
accumulation of income of property in accordance with a provision	191
in the instrument that requires or permits the accumulation for	192
more than one year of any income of property.	193

(2) Division (A) of this section does not apply to any	194
beneficiary of an inter vivos or testamentary trust other than the	195
surviving spouse of the testator or other settlor or to any inter	196
vivos or testamentary trust of which the surviving spouse of the	197
testator or other settlor is a beneficiary if an interest in	198
property does not qualify for a marital deduction or a qualified	199
terminable interest property deduction as described in division	200
(A)(2) of this section.	201

(C)(1) The trustee of a trust that qualifies for an estate	202
tax marital deduction for federal or Ohio estate tax purposes and	203
that is the beneficiary of an individual retirement account has a	204
fiduciary duty, in regard to the income distribution provision of	205
the trust, to withdraw and distribute the income of the individual	206
retirement account, at least annually, to the surviving spouse of	207
the testator or other settlor.	208

(2) A trustee's fiduciary duty as described in division	209
(C)(1) of this section is satisfied if the terms of the trust	210
instrument expressly provide the surviving spouse a right to	211
withdraw all of the assets from the trust or a right to compel the	212
trustee to withdraw and distribute the income of the individual	213
retirement account to the surviving spouse.	214

(D) Divisions (A), (B), and (C)(1) of this section are	215
intended to codify existing fiduciary and trust law principles	216
relating to the interpretation of a testator's or other settlor's	217
intent with respect to the income provisions of a trust. Divisions	218
(A), (B), and (C) of this section apply to trust instruments	219
executed prior to and existing on October 1, 1996, or executed	220
thereafter. The trustee of a trust described in division (A) or	221
(B) of this section, in a written trust amendment, may elect to	222
not apply divisions (A) and (B) of this section to the trust. Any	223
election of that nature, when made, is irrevocable.	224

Sec. 1339.621.  If a principal executes a power of attorney	225
designating the principal's spouse as the attorney in fact for the	226
principal and if after executing the power of attorney, the	227
principal and the principal's spouse are divorced, obtain a	228
dissolution or annulment of their marriage, or enter into a	229
separation agreement pursuant to which they intend to fully and	230
finally settle each spouse's prospective property rights in the	231
property of the other, the designation in the power of attorney of	232
the spouse or former spouse of the principal to act as attorney in	233
fact for the principal is revoked, unless the power of attorney	234
provides otherwise. The subsequent remarriage of the principal to	235
the principal's former spouse, or the termination of a separation	236
agreement between the principal and the principal's spouse, does	237
not revive a power of attorney that is revoked under this section.	238

Sec. 1339.66.  (A)(1) Upon the filing of a motion by a	239
trustee with the court that has jurisdiction over the trust, upon	240
the provision of reasonable notice to all beneficiaries who are	241
known and in being and who have vested or contingent interests in	242
the trust, and after holding a hearing, the court may terminate	243
the trust, in whole or in part, if it determines that all of the	244
following apply:	245

(a) It is no longer economically feasible to continue the	246
trust.	247

(b) The termination of the trust is for the benefit of the	248
beneficiaries.	249

(c) The termination of the trust is equitable and practical.

250

(d) The current value of the trust is less than one hundred	251
thousand dollars.	252

(2) The existence of a spendthrift or similar provision in a	253
trust instrument or will does not preclude the termination of a	254
trust pursuant to this section.	255

(B) If property is to be distributed from an estate being	256
probated to a trust and the termination of the trust pursuant to	257
this section does not clearly defeat the intent of the testator,	258
the probate court has jurisdiction to order the outright	259
distribution of the property or to make the property custodial	260
property under sections 1339.31 to 1339.39 of the Revised Code. A	261
probate court may so order whether the application for the order	262
is made by an inter vivos trustee named in the will of the	263
decedent or by a testamentary trustee.	264

(C) Upon the termination of a trust pursuant to this section,	265
the probate court shall order the distribution of the trust estate	266
in accordance with any provision specified in the trust instrument	267
for the premature termination of the trust. If there is no	268
provision of that nature in the trust instrument, the probate	269
court shall order the distribution of the trust estate among the	270
beneficiaries of the trust in accordance with their respective	271
beneficial interests and in a manner that the court determines to	272
be equitable. For purposes of ordering the distribution of the	273
trust estate among the beneficiaries of the trust under this	274
division, the court shall consider all of the following:	275

(1) The existence of any agreement among the beneficiaries	276
with respect to their beneficial interests;	277

(2) The actuarial values of the separate beneficial interests	278
of the beneficiaries;	279

(3) Any expression of preference of the beneficiaries that is	280
contained in the trust instrument.	281

(D) Unless otherwise represented or bound, a minor, an	282
incapacitated or unborn person, or a person whose identity or	283
location is unknown and is not reasonably ascertainable may be	284
represented by or bound by another person who has a substantially	285
identical interest in the trust as that minor, incapacitated or	286
unborn person, or person whose identity or location is unknown and	287
is not reasonably ascertainable, but only to the extent that there	288
is no conflict of interest between the person who is represented	289
or bound and the person who represents or binds that person. As	290
used in this division, "minor" means a person who is under	291
eighteen years of age.	292

Sec. 2109.62.  (A)(1) Upon the filing of a motion by a	293
trustee with the court that has jurisdiction over the trust, upon	294
the provision of reasonable notice to all beneficiaries who are	295
known and in being and who have vested or contingent interests in	296
the trust, and after holding a hearing, the court may terminate	297
the trust, in whole or in part, if it determines that all of the	298
following apply:	299

(a) It is no longer economically feasible to continue the	300
trust.	301

(b) The termination of the trust is for the benefit of the	302
beneficiaries.	303

(c) The termination of the trust is equitable and practical.

304

(d) The current value of the trust is less than one hundred	305
thousand dollars.	306

(2) The existence of a spendthrift or similar provision in a	307
trust instrument or will does not preclude the termination of a	308
trust pursuant to this section.	309

(B) If property is to be distributed from an estate being	310
probated to a trust and the termination of the trust pursuant to	311
this section does not clearly defeat the intent of the testator,	312
the probate court has jurisdiction to order the outright	313
distribution of the property or to make the property custodial	314
property under sections 1339.31 to 1339.39 of the Revised Code. A	315
probate court may so order whether the application for the order	316
is made by an inter vivos trustee named in the will of the	317
decedent or by a testamentary trustee.	318

(C) Upon the termination of a trust pursuant to this section,	319
the probate court shall order the distribution of the trust estate	320
in accordance with any provision specified in the trust instrument	321
for the premature termination of the trust. If there is no	322
provision of that nature in the trust instrument, the probate	323
court shall order the distribution of the trust estate among the	324
beneficiaries of the trust in accordance with their respective	325
beneficial interests and in a manner that the court determines to	326
be equitable. For purposes of ordering the distribution of the	327
trust estate among the beneficiaries of the trust under this	328
division, the court shall consider all of the following:	329

(1) The existence of any agreement among the beneficiaries	330
with respect to their beneficial interests;	331

(2) The actuarial values of the separate beneficial interests	332
of the beneficiaries;	333

(3) Any expression of preference of the beneficiaries that is	334
contained in the trust instrument.	335

(D) Unless otherwise represented or bound, a minor, an	336
incapacitated or unborn person, or a person whose identity or	337
location is unknown and is not reasonably ascertainable may be	338
represented by or bound by another person who has a substantially	339
identical interest in the trust as that minor, incapacitated or	340
unborn person, or person whose identity or location is unknown and	341
is not reasonably ascertainable, but only to the extent that there	342
is no conflict of interest between the person who is represented	343
or bound and the person who represents or binds that person. As	344
used in this division, "minor" means a person who is under	345
eighteen years of age.	346

Section 2. That existing sections 1337.091, 1339.411,	347
1339.412, 1339.66, and 2109.62 of the Revised Code are hereby	348
repealed.	349