By Mr. Dempsey of Haverhill, petition (accompanied by bill, House, No. 1381) of Brian S. Dempsey relative to the administration of trusts.  The Judiciary.

The Commonwealth of Massachusetts

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PETITION OF:

Brian S. Dempsey

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In the Year Two Thousand and Seven.

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An Act relating to the administration of trusts.

    Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1.  Chapter 209 of the General Laws as appearing in the 2004 Official Edition is hereby amended by inserting after Section 14B the following new section:

Section 14C.  Generation-Skipping Transfer Tax: Division of Trusts, Definitions.

        (a)   Whenever, by virtue of an allocation of a generation-skipping transfer tax exemption ( or exemptions, in the case of more than one transferor), property held or to be held in a trust would otherwise be partially exempted from the generation-skipping transfer tax, a trustee is hereby authorized, without prior approval or leave of any court, i) to divide the trust into separate trusts, whether or not equal, and ii) to allocate property and the generation-skipping transfer tax exemption among such separate trusts, in order to create trust that are either wholly exempt from or wholly subject to the generation-skipping transfer tax.  The trust shall be severed on a fractional basis, but the separate trusts need not be funded with a pro rata portion of each asset held by the undivided trust.  The trusts may be funded on a non-pro rata basis provided funding is based on either the fair market value of the assets on the date of funding or in a manner that fairly reflects the net appreciation or depreciation in the value of the assets measure from the date of death to the date of funding.

        (b)   Any trust or trusts created pursuant to this section shall be treated as separate trusts to be held, administered and accounted for separately, but they shall remain substantially identical in all respects to the original trust.

        (c)   No liabilities shall be imposed on any trustee who in good faith takes or fails to take any action authorized by this section.

        (d)   This section applies to any trust that is subject or may become subject to the generation-skipping transfer tax.

        (e)   The following definitions shall apply to this section:

        (1)   “Generation-Skipping Transfer Tax” means the tax imposed under Chapter 13 of the Internal Revenue Code of 1986 (as amended from time to time) or any successor provisions of future Internal Revenue laws;

        (2)   “Trust” means any trust, with additions thereto, whenever and however created, or any separate share of a trust, and without limitation any arrangement, other than an estate, which, although not a trust, has substantially the same effect as a trust (including by way of illustration, but not limitation, life estates, remainders, estates for years, and insurance and annuity contracts; and

        (3)   “Trustee” means an original, additional or successor trustee, whether or not appointed by the court, and, in the case of an arrangement which is not a trust but is treated as a trust for purposes of the generation-skipping transfer tax, includes, without limitation, each person in actual or constructive possession of the property subject to such arrangement.