Section 3-913
(a)
If a trust instrument does not excuse the trustee from giving bond, before distributing to a trustee a personal representative may petition the appropriate court to require that the trustee post bond with sureties if the personal representative apprehends that distribution might jeopardize the interests of persons who are not able to protect themselves, and the personal representative may withhold distribution until the court has acted.
(b)
No inference of negligence on the part of the personal representative shall be drawn from his failure to exercise the authority conferred by subsection (a).
Comment
This section is concerned with the fiduciary responsibility of the personal representative to beneficiaries of trusts to which he or she may deliver. Normally, the trustee represents beneficiaries in matters involving third persons, including prior fiduciaries. Yet, the personal representative may apprehend that delivery to the trustee may involve risks for the safety of the fund and for the personal representative. For example, the personal representative may be anxious to see that there is no equivocation about the devisee's willingness to accept the trust, and no problem of preserving evidence of the acceptance. The personal representative may have doubts about the integrity of the trustee, or about the trustee's ability to function satisfactorily. The testator's selection of the trustee may have been based on facts which are still current, or which are of doubtful relevance at the time of distribution. If the risks relate to the question of the trustee's intention to handle the fund without profit for himself or herself, a conflict of interest problem is involved. If the risk relates to the ability of the trustee to manage prudently, a more troublesome question is posed for the personal representative. Is the personal representative not bound to act in the best interests of the beneficiaries?
In many instances involving doubts of this sort, the personal representative probably will want the protection of a Court order. Sections 3-1001 and 3-1002 provide ample authority for an appropriate proceeding in the Court which issued the personal representative's letters.
In other cases, however, the personal representative may believe that he or she may be adequately protected if the acceptance of the trust by the devisee is unequivocal, or if the trustee is bonded. Also, the section complements Section 7-304 by providing that the personal representative may petition an appropriate court to require that the trustee be bonded.
Status of testamentary trustees under the Uniform Probate Code. Under the Uniform Probate Code, the testamentary trustee by construction would be considered a devisee, distributee, and successor to whom title passes at time of the testator's death even though the will must be probated to prove the transfer. The informally probated will is conclusive until set aside and the personal representative may distribute to the trustee under the informally probated will or settlement agreement and the title of the trustee as distributee represented by the instrument or deed of distribution is conclusive until set aside on showing that it is improper. Should the informally probated will be set aside or the distribution to the trustee be shown to be improper, the trustee as distributee would be liable for value received but purchasers for value from the trustee as distributee under an instrument of distribution would be protected. Section 1-201's definition of “distributee” limits the distributee liability of the trustee and substitutes that of the trust beneficiaries to the extent of distributions by the trustee.
As a distributee as defined by 1-201, the testamentary trustee or beneficiary of a testamentary trust is liable to claimants like other distributees, would have the right of contribution from other distributees of the decedent's estate and would be protected by the same time limitations as other distributees (3-1006).
Incident to his or her standing as a distributee of the decedent's estate, the testamentary trustee would be an interested party who could petition for an order of complete settlement by the personal representative or for an order terminating testate administration. The trustee also could appropriately receive the personal representative's account and distribution under a closing statement. As distributee he or she could represent beneficiaries in compromise settlements in the decedent's estate which would be binding upon the trustee and his or her beneficiaries. See Section 3-912.
The general fiduciary responsibilities of the testamentary trustee are not altered by the Uniform Probate Code and the trustee continues to have the duty to collect and reduce to possession within a reasonable time the assets of the trust estate including the enforcement of any claims on behalf of the trust against prior fiduciaries, including the personal representative, and third parties.