To amend sections 1340.01, 1340.02, 1340.03, 1340.09, 1340.12, 2103.041, 2107.26, 2107.33, and 5731.39, to enact new section 2131.01, and to repeal section 2131.01 of the Revised Code to revise the Probate Laws.

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

Sec. 1340.01. As used in sections 1340.01 to 1340.13 of the Revised Code:

(A) "Income beneficiary" means the person to whom income is presently payable or for whom it is accumulated for distribution as income.

(B) "Inventory value" means the cost of property purchased by the trustee and the market value of other property at the time it became subject to the trust, but, in the case of property which THAT passes or has passed to the trust as the result of a decedent's death, the trustee may use any value finally determined for the purposes of an estate or inheritance tax.

(C) "Remainderman REMAINDERPERSON" means the person entitled to principal, including income which THAT has been accumulated and added to principal.

(D) "Trustee" means an inter vivos or testamentary trustee and includes an original trustee and any successor or added trustee.

Sec. 1340.02. (A) A trust shall be administered with due regard to the respective interests of income beneficiaries and remaindermen REMAINDERPERSONS. A trust is so administered with respect to the allocation of receipts and expenditures if a receipt is credited or an expenditure is charged to income or principal or partly to each IN ONE OF THE FOLLOWING MANNERS:

(1) In accordance with the terms of the trust instrument, notwithstanding contrary provisions of sections 1340.01 to 1340.13 of the Revised Code;

(2) In the absence of any contrary terms of the trust instrument, in accordance with sections 1340.01 to 1340.13 of the Revised Code;

(3) If neither of the preceding rules of administration is applicable,.

(B) IN EXERCISING A DISCRETIONARY POWER OF ADMINISTRATION REGARDING A MATTER WITHIN THE SCOPE OF SECTIONS 1340.01 TO 1340.13 OF THE REVISED CODE, WHETHER GRANTED BY THE TERMS OF THE TRUST INSTRUMENT OR BY THOSE SECTIONS, A TRUSTEE SHALL ADMINISTER THE TRUST in accordance with what is reasonable and equitable in view of the interests of those entitled to income as well as those entitled to principal, and in view of the manner in which men PERSONS of ordinary prudence, discretion, and judgment would act in the management of their own affairs.

(B)(C) If the trust instrument gives the trustee discretion in crediting a receipt or charging an expenditure to income or principal or partly to each, unless the terms of the trust instrument otherwise expressly provide, the trustee shall exercise such discretion in accordance with the principles of sections 1340.01 to 1340.13 of the Revised Code, but in the event of a bona fide doubt as to the applicability of sections 1340.01 to 1340.13 of the Revised Code, any allocation made by the trustee in good faith shall be binding on all persons having any interest in the trust NO INFERENCE OF IMPRUDENCE OR PARTIALITY ARISES FROM THE FACT THAT THE TRUSTEE HAS MADE AN ALLOCATION CONTRARY TO SECTIONS 1340.01 TO 1340.13 OF THE REVISED CODE.

(D) A FIDUCIARY MAY CREDIT A RECEIPT OR CHARGE AN EXPENDITURE TO INCOME OR PRINCIPAL WITH RESPECT TO A TRUST, OR PROPERTY PASSING TO A TRUST, THAT IS ELIGIBLE FOR A FEDERAL OR OHIO ESTATE TAX MARITAL DEDUCTION OR ESTATE TAX CHARITABLE DEDUCTION ONLY TO THE EXTENT THAT THE CREDIT OF THE RECEIPT OR CHARGE OF THE EXPENDITURE WILL NOT CAUSE A MATERIAL REDUCTION OR LOSS OF THE DEDUCTION.

(E) AS USED IN THIS SECTION:

(1) "FEDERAL ESTATE TAX CHARITABLE DEDUCTION" MEANS THE ESTATE TAX CHARITABLE DEDUCTION ALLOWED BY SUBTITLE B, CHAPTER 11 OF THE "INTERNAL REVENUE CODE OF 1986," 26 U.S.C.A. 2055, AS AMENDED.

(2) "FEDERAL ESTATE TAX MARITAL DEDUCTION" MEANS THE ESTATE TAX MARITAL DEDUCTION ALLOWED BY SUBTITLE B, CHAPTER 11 OF THE "INTERNAL REVENUE CODE OF 1986," 26 U.S.C.A. 2056, AS AMENDED.

(3) "OHIO ESTATE TAX CHARITABLE DEDUCTION" MEANS THE ESTATE TAX CHARITABLE DEDUCTION ALLOWED BY DIVISION (A) OF SECTION 5731.17 OF THE REVISED CODE.

(4) "OHIO ESTATE TAX MARITAL DEDUCTION" MEANS THE ESTATE TAX MARITAL DEDUCTION ALLOWED BY DIVISION (A) OF SECTION 5731.15 OF THE REVISED CODE.

Sec. 1340.03. (A) Income is the return in money or property derived from the use of principal, including return as FOLLOWS:

(1) Rent of real or personal property, including sums received for cancellation or renewal of a lease;

(2) Interest on money lent, including sums received as consideration for the privilege of prepayment of principal except as provided in section 1340.06 of the Revised Code on bond premium and bond discount;

(3) Income earned during administration of a decedent's estate as provided in section 2109.67 of the Revised Code;

(4) Corporate distributions as provided in section 1340.05 of the Revised Code;

(5) Accrued increment on bonds or other obligations issued at a discount as provided in section 1340.06 of the Revised Code;

(6) Receipts from business and farming operations as provided in section 1340.07 of the Revised Code;

(7) Receipts from disposition of natural resources as provided in sections 1340.08 and 1340.09 of the Revised Code;

(8) Receipts from other principal subject to depletion as provided in section 1340.10 of the Revised Code;

(9) Receipts from disposition of underproductive property as provided in section 1340.11 of the Revised Code.

(B) Principal is the property that has been set aside by the owner or the person legally empowered so that it is held in trust eventually to be delivered to a remainderman REMAINDERPERSON while the return or use of the principal is in the meantime taken or received by or held for accumulation for an income beneficiary. Principal includes any of the following:

(1) Consideration received by the trustee on the sale or other transfer of principal or on repayment of a loan or as a refund or replacement or change in the form of principal;

(2) Proceeds of property taken on eminent domain proceedings;

(3) Proceeds of insurance upon property forming part of the principal except proceeds of insurance upon a separate interest of an income beneficiary;

(4) Stock dividends, receipts on liquidation of a corporation, and other corporate distributions as provided in section 1340.05 of the Revised Code;

(5) Receipts from the disposition of corporate securities as provided in section 1340.06 of the Revised Code;

(6) Royalties and other receipts from disposition of natural resources as provided in sections 1340.08 and 1340.09 of the Revised Code;

(7) Receipts from other principal subject to depletion as provided in section 1340.10 of the Revised Code;

(8) Any profit resulting from any change in the form of principal except as provided in section 1340.11 of the Revised Code on underproductive property;

(9) Receipts from disposition of underproductive property as provided in section 1340.11 of the Revised Code;

(10) Any allowances for depreciation established under section 1340.07 and division (A)(2) of section 1340.12 of the Revised Code.

(C) After determining income and principal in accordance with the terms of the trust instrument or of sections 1340.01 to 1340.13 of the Revised Code, the trustee shall charge to income or principal expenses and other charges as provided in section 1340.12 of the Revised Code.

Sec. 1340.09. If any part of the principal consists of land from which merchantable timber may be removed, the receipts from taking the timber from the land shall be allocated in accordance with division (A)(3)(B) of section 1340.02 of the Revised Code.

Sec. 1340.12. (A) The following charges shall be made against income:

(1) Ordinary expenses incurred in connection with the administration, management, or preservation of the trust property, including regularly recurring taxes assessed against any portion of the principal, water rates, premiums on insurance taken upon the interests of the income beneficiary, remainderman REMAINDERPERSON, or trustee, interest paid by the trustee, and ordinary repairs;

(2) A reasonable allowance for depreciation on property subject to depreciation under generally accepted accounting principles, but no allowance shall be made for depreciation of that portion of any real property used by a beneficiary as a residence or for depreciation of any property held by the trustee on the effective date of this section OCTOBER 20, 1987, for which the trustee is not then making an allowance for depreciation;

(3) Not less than half of court costs, attorney's fees, and other fees on periodic judicial accounting, unless the court directs otherwise;

(4) Court costs, attorney's fees, and other fees on other accountings or judicial proceedings if the matter primarily concerns the income interest, unless the court directs otherwise;

(5) Not less than half of the trustee's regular compensation, whether based on a percentage of principal or income, and all expenses reasonably incurred for current management of principal and application of income, unless a court otherwise directs;

(6) Any tax levied upon receipts defined as income under sections 1340.01 to 1340.13 of the Revised Code or the trust instrument and payable by the trustee.

(B) If charges against income are of unusual amount, the trustee may, by means of reserves or other reasonable means, MAY charge them over a reasonable period of time and withhold from distribution sufficient sums to regularize distributions.

(C) The following charges shall be made against principal:

(1) Trustee's compensation not chargeable to income under divisions (A)(4) and (5) of this section, special compensation of trustees, expenses reasonably incurred in connection with principal, court costs and attorney's fees primarily concerning matters of principal, and trustee's compensation computed on principal as an acceptance, distribution, or termination fee;

(2) Charges not provided for in division (A) of this section, including the cost of investing and reinvesting principal; the payment on principal of an indebtedness, including a mortgage amortized by periodic payments of principal; expenses for preparation of property for rental or sale; and, unless the court directs otherwise, expenses incurred in maintaining or defending any action to construe the trust or, TO protect it THE TRUST or the TRUST property, or TO assure the title of any trust property;

(3) Extraordinary repairs or expenses incurred in making a capital improvement to principal, including special assessments, but a trustee may establish an allowance for depreciation out of income to the extent permitted by division (A)(2) of this section and by section 1340.07 of the Revised Code;

(4) Any tax levied upon profit, gain, or other receipts allocated to principal, notwithstanding denomination of the tax as an income tax by the taxing authority;

(5) If an estate or inheritance tax is levied in WITH respect of TO a trust in which both an income beneficiary and a remainderman REMAINDERPERSON have an interest, any amount apportioned to the trust, including penalties, even though the income beneficiary also has rights in the principal.

(D) Regularly recurring charges payable from income shall be apportioned to the same extent and in the same manner that income is apportioned under section 1340.04 of the Revised Code.

Sec. 2103.041. In any action involving the judicical JUDICIAL sale of real property for the purpose of satisfying the claims of creditors of an owner of an interest in the property, the spouse of the owner may be made a party to the action, and the dower interest of the spouse, whether inchoate or otherwise, may be subjected to the sale without the consent of the spouse. The court shall determine the present value and priority of the dower interest, using the American experience table of mortality as the basis for determining the value, IN ACCORDANCE WITH SECTION 2131.01 OF THE REVISED CODE and shall award the spouse a sum of money equal to the present value of the dower interest, to be paid out of the proceeds of the sale according to the priority of the interest. To the extent that the owner and his THE OWNER'S spouse are both liable for the indebtedness, the dower interest of the spouse is subordinate to the claims of their common creditors.

Sec. 2107.26. When an original will is lost, spoliated, or destroyed subsequent to BEFORE OR AFTER the death of a testator, or before the death of such testator if the testator's lack of knowledge of such loss, spoliation, or destruction can be proved by clear and convincing testimony, or after he became incapable of making a will by reason of insanity, and such will cannot be produced in the probate court in as complete a manner as the originals of last wills and testaments which are actually produced therein for probate, the PROBATE court may SHALL admit such THE lost, spoliated, or destroyed will to probate, if such court is satisfied the will was executed according to the law in force at the time of its execution and not revoked at the death of the testator BOTH OF THE FOLLOWING APPLY:

(A) THE PROPONENT OF THE WILL ESTABLISHES BY CLEAR AND CONVINCING EVIDENCE BOTH OF THE FOLLOWING:

(1) THE WILL WAS EXECUTED WITH THE FORMALITIES REQUIRED AT THE TIME OF EXECUTION BY THE JURISDICTION IN WHICH IT WAS EXECUTED.

(2) THE CONTENTS OF THE WILL.

(B) NO PERSON OPPOSING THE ADMISSION OF THE WILL TO PROBATE ESTABLISHES BY A PREPONDERANCE OF THE EVIDENCE THAT THE TESTATOR HAD REVOKED THE WILL.

Sec. 2107.33. (A) A will shall be revoked by IN THE FOLLOWING MANNERS:

(1) BY the testator by tearing, canceling, obliterating, or destroying it with the intention of revoking it, or by;

(2) BY some person, AT THE REQUEST OF THE TESTATOR AND in the testator's presence, or by TEARING, CANCELING, OBLITERATING, OR DESTROYING IT WITH THE INTENTION OF REVOKING IT;

(3) BY SOME PERSON TEARING, CANCELING, OBLITERATING, OR DESTROYING IT PURSUANT TO the testator's express written direction, or by;

(4) BY some other written will or codicil, executed as prescribed by sections 2107.01 to 2107.62 of the Revised Code, or by THIS CHAPTER;

(5) BY some other writing that is signed, attested, and subscribed in the manner provided by those sections THIS CHAPTER. A

(B) A will that has been declared valid and is in the possession of a probate judge may also MAY be revoked according to division (C) of section 2107.084 of the Revised Code.

(B)(C) If a testator removes a will that has been declared valid and is in the possession of a probate judge pursuant to section 2107.084 of the Revised Code from the possession of the judge, the declaration of validity that was rendered no longer has any effect.

(C)(D) If after executing a will, a testator is divorced, obtains a dissolution of marriage, has his THE TESTATOR'S marriage annulled, or, upon actual separation from his THE TESTATOR'S spouse, enters into a separation agreement pursuant to which the parties intend to fully and finally settle their prospective property rights in the property of the other, whether by expected inheritance or otherwise, any disposition or appointment of property made by the will to the former spouse or to a trust with powers created by or available to the former spouse, any provision in the will conferring a general or special power of appointment on the former spouse, and any nomination in the will of the former spouse as executor, trustee, or guardian, shall be revoked unless the will expressly provides otherwise.

(D)(E) Property prevented from passing to a former spouse or to a trust with powers created by or available to the former spouse because of revocation by this section shall pass as if the former spouse failed to survive the decedent, and other provisions conferring some power or office on the former spouse shall be interpreted as if the spouse failed to survive the decedent. If provisions are revoked solely by this section, they shall be deemed to be revived by the testator's remarriage with the former spouse or upon the termination of a separation agreement executed by them.

(E)(F) A bond, agreement, or covenant made by a testator, for a valuable consideration, to convey property previously devised or bequeathed in a will, does not revoke the devise or bequest. The property passes by the devise or bequest, subject to the remedies on the bond, agreement, or covenant, for a specific performance or otherwise, against the devisees or legatees, that might be had by law against the heirs of the testator, or his THE TESTATOR'S next of kin, if the property had descended to them.

(F)(G) A TESTATOR'S REVOCATION OF A WILL SHALL BE VALID ONLY IF THE TESTATOR, AT THE TIME OF THE REVOCATION, HAS THE SAME CAPACITY AS THE LAW REQUIRES FOR THE EXECUTION OF A WILL.

(H) As used in this section:

(1) "Trust with powers created by or available to the former spouse" means a trust that is revocable by the former spouse, with respect to which the former spouse has a power of withdrawal, or with respect to which the former spouse may take a distribution that is not subject to an ascertainable standard but does not mean a trust in which those powers of the former spouse are revoked by section 1339.62 of the Revised Code or similar provisions in the law of another state.

(2) "Ascertainable standard" means a standard that is related to a trust beneficiary's health, maintenance, support, or education.

Sec. 2131.01. PRESENT VALUES FOR PROBATE MATTERS SHALL BE THE VALUES DETERMINED FOR OHIO ESTATE TAX PURPOSES PURSUANT TO DIVISION (B) OF SECTION 5731.01 OF THE REVISED CODE.

Sec. 5731.39. (A) No corporation organized or existing under the laws of this state shall transfer on its books or issue a new certificate for any share of its capital stock registered in the name of a decedent, or in trust for a decedent, or in the name of a decedent and another person or persons, without the GIVING written consent NOTICE of THE TRANSFER TO the tax commissioner.

(B) No safe deposit company, trust company, financial institution as defined in division (A) of section 5725.01 of the Revised Code, or other corporation or person, having in possession, control, or custody a deposit standing in the name of a decedent, or in trust for a decedent, or in the name of a decedent and another person or persons, shall deliver or transfer an amount in excess of three-fourths of the total value of such THE deposit, including accrued interest and dividends, as of the date of THE decedent's death, without the GIVING written consent NOTICE of THE DELIVERY OR TRANSFER TO the tax commissioner. The written consent of NOTICE TO the tax commissioner need not be obtained GIVEN prior to the delivery or transfer of amounts having a value of three-fourths or less of said THAT total value.

(C) No life insurance company shall pay the proceeds of an annuity or matured endowment contract, or of a life insurance contract payable to the estate of a decedent, or of any other insurance contract taxable under Chapter 5731. of the Revised Code THIS CHAPTER, without the GIVING written consent NOTICE of THE PAYMENT TO the tax commissioner. Any life insurance company may pay the proceeds of any insurance contract not specified in this division (C) without the GIVING written consent NOTICE of THE PAYMENT TO the tax commissioner.

(D) No trust company or other corporation or person shall pay the proceeds of any death benefit, retirement, pension, or profit sharing plan in excess of two thousand dollars, without the GIVING written consent NOTICE of THE PAYMENT TO the tax commissioner. Such THE trust company or other corporation or person, however, may pay the proceeds of any death benefit, retirement, pension, or profit-sharing plan which THAT consists of insurance on the life of the decedent payable to a beneficiary other than the estate of the insured without the GIVING written consent NOTICE of THE PAYMENT TO the tax commissioner.

(E) No safe deposit company, trust company, financial institution as defined in division (A) of section 5725.01 of the Revised Code, or other corporation or person, having in possession, control, or custody securities, assets, or other property (, including the shares of the capital stock of, or other interest in, such THAT safe deposit company, trust company, financial institution as defined in division (A) of section 5725.01 of the Revised Code, or other corporation) OR PERSON, standing in the name of a decedent, or in trust for a decedent, or in the name of a decedent and another person or persons, and the transfer of which is taxable under Chapter 5731. of the Revised Code THIS CHAPTER, shall deliver or transfer any such OF THOSE securities, assets, or other property which THAT have a value as of the date of decedent's death in excess of three-fourths of the total value thereof, without the GIVING written consent NOTICE of THE DELIVERY OR TRANSFER TO the tax commissioner. The written consent of NOTICE NEED NOT BE GIVEN TO the tax commissioner need not be obtained prior to the delivery or transfer of any such OF THOSE securities, assets, or other property having a value of three-fourths or less of said THAT total value.

(F) No safe deposit company, financial institution as defined in division (A) of section 5725.01 of the Revised Code, or other corporation or person having possession or control of a safe deposit box or similar receptacle standing in the name of a decedent or in the name of the decedent and another person or persons, or to which the decedent had a right of access, except when such THAT safe deposit box or other receptacle stands in the name of a corporation or partnership, or in the name of the decedent as guardian or executor, shall deliver any of the contents thereof OF THE SAFE DEPOSIT BOX OR SIMILAR RECEPTACLE unless the safe deposit box or similar receptacle has been opened and inventoried in the presence of the tax commissioner or the commissioner's agent, and a written consent to transfer issued; provided, however, that a safe deposit company, financial institution, or other corporation or person having possession or control of a safe deposit box may deliver wills, deeds to burial lots, and insurance policies to a representative of the decedent, but that a representative of the safe deposit company, financial institution, or other corporation or person must supervise the opening of the box and make a written record of the wills, deeds, and policies removed. Such THE written record shall be included in the tax commissioner's inventory records.

(G) THE TAX COMMISSIONER SHALL ISSUE A WRITTEN ACKNOWLEDGMENT OF RECEIPT OF A WRITTEN NOTICE GIVEN TO THE TAX COMMISSIONER PURSUANT TO DIVISIONS (A) TO (E) OF THIS SECTION AND OF THE OPENING AND INVENTORY OF THE CONTENTS OF A SAFE DEPOSIT BOX OR SIMILAR RECEPTACLE IN THE PRESENCE OF THE TAX COMMISSIONER OR THE TAX COMMISSIONER'S AGENT PURSUANT TO DIVISION (F) OF THIS SECTION, SOLELY TO EVIDENCE THE RECEIPT OR PRESENCE. THE TAX COMMISSIONER SHALL NOT CONDITION THE ISSUANCE OF THE WRITTEN ACKNOWLEDGMENT ON ANY REQUIREMENT STATED OUTSIDE THIS SECTION.

(H) Notwithstanding any provision of this section:

(1) The tax commissioner may authorize any delivery or transfer or waive any of the foregoing requirements OF DIVISIONS (A) TO (F) OF THIS SECTION under such terms and conditions as THAT the commissioner may prescribe;.

(2) An adult care facility, as defined in section 3722.01 of the Revised Code, or a home, as defined in section 3721.10 of the Revised Code, may transfer or use the money in a personal needs allowance account in accordance with section 5111.112 of the Revised Code without the written consent of the tax commissioner, and without the account having been opened and inventoried in the presence of the commissioner or the commissioner's agent.

(I) Failure to comply with this section shall render such A safe deposit company, trust company, life insurance company, financial institution as defined in division (A) of section 5725.01 of the Revised Code, or other corporation or person liable for the amount of the taxes and interest due under the provisions of Chapter 5731. of the Revised Code THIS CHAPTER on the DELIVERY OR transfer of such THE stock, deposit, proceeds of an annuity or matured endowment contract or, of a life insurance contract payable to the estate of a decedent, or other OF ANOTHER insurance contract taxable under Chapter 5731. of the Revised Code THIS CHAPTER, proceeds of any death benefit, retirement, pension, or profit sharing plan in excess of two thousand dollars, or securities, assets, or other property of any resident decedent, and in addition thereto, to a penalty of not less than five hundred or more than five thousand dollars.