H. B. No. 83 As Introduced

Representative Hughes

A BILL

To enact section 2109.361 of the Revised Code to 1
require the probate court, upon application by a 2
fiduciary or interested party, to determine the 3
fairness of an agreement requiring a fiduciary to 4
pay a percentage of an inheritance or a dollar 5
amount to any person other than the beneficiary 6
and to allow the probate court to approve, modify, 7
or invalidate the agreement. 8

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

       Section 1. That section 2109.361 of the Revised Code be 9
enacted to read as follows: 10

       Sec. 2109.361. (A) As used in this section, "third-party 11
distribution" means the distribution by a fiduciary of an estate 12
or trust of the assets of that estate or trust when both of the 13
following apply: 14

        (1) The fiduciary makes the distribution to either of the 15
following persons: 16

        (a) The transferee of a beneficiary; 17

        (b) Any person pursuant to an agreement, request, or 18
instruction of a beneficiary or pursuant to a legal claim against 19
a beneficiary. 20

        (2) The distribution is the subject of an agreement between a 21
beneficiary and any person that requires the fiduciary to pay a 22
percentage of an inheritance or a dollar amount to any person 23
other than the beneficiary. 24

       (B) Prior to making a third-party distribution, the fiduciary 25
or an interested party may file an application for the approval of 26
a third-party distribution with the probate court. An application 27
filed pursuant to this division shall identify the person to whom 28
the third-party distribution is to be made, disclose the basis for 29
making the third-party distribution, and include a copy of any 30
written agreement between the affected beneficiary and the person 31
to whom the third-party distribution is to be made. 32

       (C)(1) If a fiduciary makes a third-party distribution 33
without the prior approval of the probate court, that fiduciary 34
shall be liable to the affected beneficiary, up to the full amount 35
of the third-party distribution, unless either of the following 36
applies: 37

       (a) The beneficiary, in writing directly to the fiduciary, 38
waives the fiduciary's liability or consents to the third-party 39
distribution. 40

       (b) The third-party distribution is disclosed on a fiduciary 41
accounting filed with the probate court with notice of the 42
accounting to the beneficiary, and the beneficiary fails to file 43
exceptions to the third-party distribution. 44

       (2) The probate court may reduce or eliminate a fiduciary's 45
liability under division (C)(1) of this section to the extent that 46
the fiduciary establishes to the satisfaction of the court that 47
the amount and allocation of the third-party distribution was just 48
and equitable under the circumstances. The court shall review the 49
agreement that gave rise to the third-party distribution in the 50
same manner as if the fiduciary or an interested party filed an 51
application pursuant to division (B) of this section prior to the 52
third-party distribution. 53

       (D) The probate court shall hold a hearing on an application 54
filed under division (B) of this section. The court shall serve 55
notice of the hearing on all interested parties at least fifteen 56
days prior to the hearing in a manner as ordered by the court. Any 57
notice that is required or permitted by this section shall be 58
served, and the right to receive any notice may be waived, in 59
accordance with the Rules of Civil Procedure. 60

       (E) The probate court may find the agreement that is the 61
subject of an application filed under division (B) of this section 62
to be invalid and unenforceable, in whole or in part, or the 63
probate court may approve the third-party distribution, in whole 64
or in part, as the court determines is just and equitable. To the 65
extent that the application is approved, the court shall determine 66
whether the third-party distribution is properly charged solely 67
against the beneficiary's share of the estate or trust or whether 68
some or all of the third-party distribution is properly charged 69
against the residue of the affected estate or trust. Without 70
limitation, the court may consider any of the following factors in 71
evaluating the application: 72

       (1) The amount or percentage of the affected beneficiary's 73
share that would be the subject of the proposed third-party 74
distribution measured against the reasonable value of any goods or 75
services the person to whom the third-party distribution would be 76
made provided to the beneficiary or to the estate or trust; 77

       (2) Whether the agreement, request, or instructions of the 78
affected beneficiary were procured by duress, fraud, 79
misrepresentation, undue influence, or other unfair means. 80

Section 1. That section 2109.361 of the Revised Code be	9
enacted to read as follows:	10

Sec. 2109.361. (A) As used in this section, "third-party	11
distribution" means the distribution by a fiduciary of an estate	12
or trust of the assets of that estate or trust when both of the	13
following apply:	14

(1) The fiduciary makes the distribution to either of the	15
following persons:	16

(b) Any person pursuant to an agreement, request, or	18
instruction of a beneficiary or pursuant to a legal claim against	19
a beneficiary.	20

(2) The distribution is the subject of an agreement between a	21
beneficiary and any person that requires the fiduciary to pay a	22
percentage of an inheritance or a dollar amount to any person	23
other than the beneficiary.	24

(B) Prior to making a third-party distribution, the fiduciary	25
or an interested party may file an application for the approval of	26
a third-party distribution with the probate court. An application	27
filed pursuant to this division shall identify the person to whom	28
the third-party distribution is to be made, disclose the basis for	29
making the third-party distribution, and include a copy of any	30
written agreement between the affected beneficiary and the person	31
to whom the third-party distribution is to be made.	32

(C)(1) If a fiduciary makes a third-party distribution	33
without the prior approval of the probate court, that fiduciary	34
shall be liable to the affected beneficiary, up to the full amount	35
of the third-party distribution, unless either of the following	36
applies:	37

(a) The beneficiary, in writing directly to the fiduciary,	38
waives the fiduciary's liability or consents to the third-party	39
distribution.	40

(b) The third-party distribution is disclosed on a fiduciary	41
accounting filed with the probate court with notice of the	42
accounting to the beneficiary, and the beneficiary fails to file	43
exceptions to the third-party distribution.	44

(2) The probate court may reduce or eliminate a fiduciary's	45
liability under division (C)(1) of this section to the extent that	46
the fiduciary establishes to the satisfaction of the court that	47
the amount and allocation of the third-party distribution was just	48
and equitable under the circumstances. The court shall review the	49
agreement that gave rise to the third-party distribution in the	50
same manner as if the fiduciary or an interested party filed an	51
application pursuant to division (B) of this section prior to the	52
third-party distribution.	53

(D) The probate court shall hold a hearing on an application	54
filed under division (B) of this section. The court shall serve	55
notice of the hearing on all interested parties at least fifteen	56
days prior to the hearing in a manner as ordered by the court. Any	57
notice that is required or permitted by this section shall be	58
served, and the right to receive any notice may be waived, in	59
accordance with the Rules of Civil Procedure.	60

(E) The probate court may find the agreement that is the	61
subject of an application filed under division (B) of this section	62
to be invalid and unenforceable, in whole or in part, or the	63
probate court may approve the third-party distribution, in whole	64
or in part, as the court determines is just and equitable. To the	65
extent that the application is approved, the court shall determine	66
whether the third-party distribution is properly charged solely	67
against the beneficiary's share of the estate or trust or whether	68
some or all of the third-party distribution is properly charged	69
against the residue of the affected estate or trust. Without	70
limitation, the court may consider any of the following factors in	71
evaluating the application:	72

(1) The amount or percentage of the affected beneficiary's	73
share that would be the subject of the proposed third-party	74
distribution measured against the reasonable value of any goods or	75
services the person to whom the third-party distribution would be	76
made provided to the beneficiary or to the estate or trust;	77

(2) Whether the agreement, request, or instructions of the	78
affected beneficiary were procured by duress, fraud,	79
misrepresentation, undue influence, or other unfair means.	80