To amend sections 1340.01, 1340.02, 1340.03, 1340.09, 1340.12, 2103.041, 2107.26, 2107.33, and 2109.67, to enact new section 2131.01 and section 1340.031, 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.

(E) "QUALIFIED BENEFICIARY" MEANS A BENEFICIARY WHO IS ENTITLED OR ELIGIBLE TO RECEIVE A DISTRIBUTION OF INCOME OR PRINCIPAL WHETHER PRESENTLY OR AT SOME FUTURE TIME THAT IS PREDICATED UPON THE HAPPENING OF AN EVENT THAT IS CERTAIN. AN EVENT THAT IS CERTAIN INCLUDES, BUT IS NOT LIMITED TO, THE TERMINATION OF AN INTERVENING LIFE ESTATE. IF A TRUST IS SUBJECT TO AMENDMENT OR REVOCATION BY THE GRANTOR, THEN ONLY THE GRANTOR SHALL BE DEEMED TO BE A QUALIFIED BENEFICIARY.

(F) "LEGAL REPRESENTATIVE" INCLUDES, BUT IS NOT LIMITED TO, A PARENT AS A NATURAL GUARDIAN OF A MINOR CHILD UNDER SECTION 2111.08 OF THE REVISED CODE, AN ATTORNEY-AT-LAW, A GUARDIAN APPOINTED PURSUANT TO COURT ORDER, INCLUDING A GUARDIAN OF THE PERSON OR A GUARDIAN OF THE ESTATE, OR A GUARDIAN AD LITEM.

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 THE 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. 1340.031. (A) NOT MORE THAN ONCE EVERY SIX MONTHS, A QUALIFIED BENEFICIARY OR, IF A QUALIFIED BENEFICIARY IS UNDER A LEGAL DISABILITY, A LEGAL REPRESENTATIVE OF THE QUALIFIED BENEFICIARY MAY REQUEST IN WRITING THAT AN INTER VIVOS TRUSTEE FURNISH THE QUALIFIED BENEFICIARY OR LEGAL REPRESENTATIVE A REPORT OF THE MANAGEMENT OF THE INTER VIVOS TRUST AS PROVIDED IN THIS SECTION. WITHIN THIRTY DAYS AFTER RECEIVING THE WRITTEN REQUEST FOR A REPORT OF THE MANAGEMENT OF THE INTER VIVOS TRUST, THE INTER VIVOS TRUSTEE SHALL FURNISH THE QUALIFIED BENEFICIARY OR LEGAL REPRESENTATIVE THAT MADE THE REQUEST A REPORT THAT IS CURRENT TO WITHIN FIVE MONTHS PRIOR TO THE DATE OF THE REQUEST AND THAT SHOWS AN INVENTORY OF THE TRUST PROPERTY AND THE RECEIPTS CREDITED AND EXPENDITURES CHARGED TO INCOME OR PRINCIPAL WITH RESPECT TO THE INTER VIVOS TRUST. IF THE INTER VIVOS TRUSTEE DOES NOT COMPLY WITH THE REQUEST FOR A REPORT UNDER THIS SECTION, THE QUALIFIED BENEFICIARY OR LEGAL REPRESENTATIVE THAT MADE THE REQUEST MAY FILE AN APPROPRIATE ACTION IN A COURT OF COMPETENT JURISDICTION TO COMPEL THE INTER VIVOS TRUSTEE TO FURNISH THE REPORT.

(B) A CURRENT REPORT FURNISHED BY AN INTER VIVOS TRUSTEE UNDER THIS SECTION OR DURING THE USUAL COURSE OF BUSINESS HAS BINDING LEGAL EFFECT REGARDING MATTERS DESCRIBED OR DISCLOSED IN THE REPORT ON THE QUALIFIED BENEFICIARY WHO RECEIVED THE REPORT, ON THE LEGAL REPRESENTATIVE WHO RECEIVED THE REPORT ON BEHALF OF THE QUALIFIED BENEFICIARY WHO IS UNDER LEGAL DISABILITY, AND ON THE HEIRS AND ASSIGNS OF THE QUALIFIED BENEFICIARY WHO RECEIVED THE REPORT UNLESS, NOTWITHSTANDING SECTION 2305.22 OF THE REVISED CODE, THE QUALIFIED BENEFICIARY, THE LEGAL REPRESENTATIVE OF THE QUALIFIED BENEFICIARY, OR ANY OF THE HEIRS OR ASSIGNS OF THE QUALIFIED BENEFICIARY INSTITUTES AN ACTION REGARDING MATTERS DESCRIBED OR DISCLOSED IN THE REPORT AGAINST THE INTER VIVOS TRUSTEE WITHIN TWO YEARS FROM THE DATE THE REPORT IS FURNISHED TO THE QUALIFIED BENEFICIARY OR LEGAL REPRESENTATIVE OF THE QUALIFIED BENEFICIARY.

(C) NO PROVISION IN THIS SECTION ELIMINATES ANY OTHER RIGHTS OR CAUSES OF ACTION THAT A QUALIFIED BENEFICIARY OF AN INTER VIVOS TRUST, A LEGAL REPRESENTATIVE OF A QUALIFIED BENEFICIARY OF AN INTER VIVOS TRUST, OR ANY OF THE HEIRS OR ASSIGNS OF A QUALIFIED BENEFICIARY OF AN INTER VIVOS TRUST MAY HAVE AGAINST THE INTER VIVOS TRUSTEE UNDER ANY OTHER SECTION 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. 2109.67. (A) Unless the will otherwise provides and subject to division (B) of this section, all expenses incurred in connection with the settlement of a decedent's estate, including debts, funeral expenses, estate taxes, penalties concerning taxes, allowances to a surviving spouse, minor children, or both, including, but not limited to, the allowance for support under section 2106.13 of the Revised Code, fees of attorneys and personal representatives, and court costs shall be charged against the principal of the estate.

(B) Unless the will otherwise provides, income from the assets of a decedent's estate after the death of the testator and before distribution, including income from property used to discharge liabilities, shall be determined in accordance with the rules applicable to a trustee under Chapter 1340. of the Revised Code and distributed as follows:

(1) To specific legatees and devisees, the income from the property bequeathed or devised to them respectively, less property taxes, ordinary repairs, interest, and other expenses of management and operation of the property, and an appropriate portion of taxes imposed on income, excluding taxes on capital gains, income in respect of a decedent, and other items allocable to principal, which accrue during the period of administration;

(2)(a) To all other legatees, except as provided in division (B)(3)(2)(b) of this section, the balance of the income, less the balance of property taxes, ordinary repairs, interest, and other expenses of management and operation of all property from which the estate is entitled to income, and taxes imposed on income, excluding taxes on capital gains, income in respect of a decedent, and other items allocable to principal, which accrue during the period of administration, in proportion to their respective interests in the undistributed assets of the estate, computed at times of distribution on the basis of inventory value;

(3)(b) A legatee, other than the testator's surviving spouse, of a pecuniary legacy not in trust shall not be paid interest on the legacy, and the legacy shall not be entitled to receive any part of the income received by the estate during the period of administration as income on the legacy. A legacy to the testator's surviving spouse of a pecuniary amount shall carry with it a proportionate part of the income of the estate from the testator's death to the date of satisfaction, determined in accordance with division (B)(2)(a) of this section.

(C) IF A WILL OR TRUST INSTRUMENT GIVES THE FIDUCIARY DISCRETION IN CREDITING A RECEIPT OR CHARGING AN EXPENDITURE TO INCOME OR PRINCIPAL OR PARTLY TO EACH, NO INFERENCE OF IMPRUDENCE OR PARTIALITY ARISES FROM THE FACT THAT THE FIDUCIARY HAS MADE AN ALLOCATION CONTRARY TO THIS SECTION, SECTION 2109.66, OR 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 DECEDENT'S ESTATE, A TRUST UNDER A WILL, OR PROPERTY PASSING TO A TRUST UNDER A WILL, 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 THE REDUCTION OR LOSS OF THE DEDUCTION.

(E) AS USED IN THIS SECTION, "FEDERAL ESTATE TAX CHARITABLE DEDUCTION," "FEDERAL ESTATE TAX MARITAL DEDUCTION," "OHIO ESTATE TAX CHARITABLE DEDUCTION," AND "OHIO ESTATE TAX MARITAL DEDUCTION" HAVE THE SAME MEANINGS AS IN SECTION 1340.02 OF THE REVISED CODE.

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.