Estate Planning, Probate and Trust Section
Oklahoma’s New Trust Law
By Michael L. Nemec

On May 23, 2008, the 51st Oklahoma Legislature passed and the governor signed, as part of a much larger bill, nine new provisions to be added to Title 60 of the Oklahoma Statutes.1 They supplement the existing Oklahoma Trust Act.2 No provisions of the Trust Act were repealed. The new sections are to be numbered Section 1101 through Section 1109 of Title 60. The provisions of these new sections (with some exceptions) correspond to Sections 103, 104, 106, 108, 109, 201, 202, 203 and 204 of the Uniform Trust Code drafted by the National Conference of Commissioners on Uniform State Laws as amended in 2005.3 The new sections of Title 60 affect key terms and concepts used in the Trust Act. They also enact important rules respecting the administration of trusts and the ability of the court to be involved in the administration of trusts. Because the new sections were not enacted as part of a comprehensive revision of Oklahoma’s law of trusts, some of the provisions do not fit precisely into existing Oklahoma law. While the new provisions often refer to “this act,” it is assumed that they are intended to be interpreted to refer to the existing Trust Act and not just to the legislation of which they are a part.

Section 1101 defines terms that are important in interpreting and administering the law of trusts. Among them are “beneficiary,” “qualified beneficiary,” “person,” “property,” “terms of a trust” and “ascertainable standard.”

In Section 1101 a “beneficiary” is defined as a person who has a present or future beneficial interest in a trust, vested or contingent, or who, in a capacity other than that of trustee, holds a power of appointment over trust property. This definition is not the same as other definitions of “beneficiary” currently found in Title 60.4

The phrase “qualified beneficiary” is defined, unless the trust instrument provides otherwise, as a distributee or permissible distributee of a present interest in trust income or principal, or who has a vested remainder interest in the trust, is a charitable organization expressly entitled to receive benefits under the terms of a charitable trust, a person appointed to enforce a trust created for the care of an animal or for another noncharitable purpose, or the attorney general of Oklahoma with respect to a charitable trust having its principal place of administration in Oklahoma. This definition is not the language of the Uniform Trust Code. Instead, it came from the version of the Uniform Trust Code that was introduced by the Oklahoma Bar Association in the 2004 session of the Oklahoma Legislature, but was not enacted.

Oklahoma considers animals to be property not persons.5 While the Legislature did not adopt Section 408 of the Uniform Trust Code which allows the creation of a trust for the care of an animal, by implication in defining a “qualified beneficiary” to include a person appointed to enforce a trust created for an animal, the Legislature seems to have adopted the rule that a trust in Oklahoma can be established for the benefit of an animal despite the language of the Trust Act which provides that a trust may only be created for a “person.”6

A “person” is broadly defined in Section 1101.7 Here too there is a difference between the Section 1101 definition and definitions found elsewhere in the Oklahoma Statutes.8

In Section 1101, the word “property” is defined as “anything that may be the subject of ownership, whether real or personal, legal or equitable, or any interest therein.” While they may not be inconsistent, we now have differing definitions of this significant word.9

“Terms of a trust” is defined to include the literal language of the trust instrument and the manifestation of the settlor’s intent regarding a trust’s provisions as may be established by evidence that would be admissible in a judicial proceeding.10

According to the new law, an “ascertainable standard” is “a standard relating to an individual’s health, education, support, or maintenance within the meaning of Section 2041(b) 1 (A) or 2514(c) (1) of the Internal Revenue Code of 1986, as in effect or as later amended.” This phrase shows up in Section 1101 in the definition of “power of withdrawal.” There a “power of withdrawal” is defined as a presently exercisable general power of appointment other than a power exercisable by a trustee “which is limited by an ascertainable standard related to a beneficiary-trustee’s health, education, maintenance or support, or which is exercisable by another person only upon consent of the trustee or person holding an adverse interest.” Under existing law,11 the holder of a power of withdrawal over trust property can have the rights of the settlor of a revocable trust over the property subject to the power of withdrawal unless otherwise provided in the trust instrument.

Section 1102 creates a standard by which an organization is deemed to have knowledge or notice or (perhaps more important) not to have knowledge or notice of a fact. In the comments to Section 104 of the Uniform Trust Code, the drafters state that “notice to an organization is not necessarily achieved by giving notice to a branch office. Nor does the organization necessarily acquire knowledge at the moment the notice arrives in the organization’s mailroom. Rather, the organization has notice or knowledge of a fact only when the information is received by an employee having responsibility to act for the trust, or would have been brought to the employee’s attention had the organization exercised reasonable diligence.” This new law puts the responsibility on the beneficiary to be sure that an employee of a corporate trustee having responsibility to act for the trust receives notice of any material fact the beneficiary thinks affects the administration of the trust. This section should be read in conjunction with Okla. Stat. tit. 60, §175.57 E. where the statute of limitations for a breach of trust begins to run against a beneficiary when a report or statement from a trustee provides “sufficient information” so that the beneficiary “knows or reasonably should have inquired into” the existence of a claim against the trustee. Paragraph 3 of Section 1102 says that a person has knowledge of a fact when the person has reason to know it from all the facts and circumstances in their possession at the time in question.12

Section 1105 specifies how “notice” is given. The manner of giving notice is open ended13 but includes first class mail, personal delivery, delivery to the person’s last known place of residence or place of business, or through a properly directed electronic message. E-mail, properly directed, should be acceptable notice. Notice is not required for a person whose identity or location is unknown and not reasonably ascertainable by the trustee. Paragraph C of Section 1105 provides that a person can waive a notice otherwise required.

Section 1104 creates the concept of the “principal place of administration” of a trust. The new statute creates a presumption that the principal place of administration of the trust designated in the trust instrument is the “principal place of administration” if a trustee’s principal place of business is located in or a trustee resides in the jurisdiction or all or part of the administration of the trust occurs in the jurisdiction named in the trust. Further, the new language found in Section 1104 implies that, among its other powers, the district court has the authority to order, approve or disapprove a transfer of the principal place of administration of a trust.14

The new law establishes a rule that the trustee is under a continuing duty to administer the trust at a place that is appropriate to the trust’spurposes, its administration and the interests of the beneficiary.15 This language should cause every trustee in Oklahoma to look at whether he, she or it is in compliance with this rule. Despite the express language of the instrument, if the trustee concludes that the facts and circumstances dictate that a different jurisdiction is a more appropriate place to administer the trust, the trustee can attempt to move the principal place of the administration of the trust to another state or outside the country. The new statute sets out a mechanism by which the trustee can change the principal place of administration of the trust without court approval. Nevertheless, an objection from a qualified beneficiary will require the court to approve the transfer of the principal place of administration.16

Section 1103 states an underlying rule for the administration of trusts. It provides that “the common law of trusts and principles of equity supplement this act, except to the extent modified by this act or another statute of this State.” In the comment to Section 106 of the Uniform Trust Code, the drafters say “the common law of trusts is not static, but includes the contemporary and evolving rules of decision developed by the Courts in exercise of their power to adapt the law to new situations and changing conditions. It also includes traditional and broad equitable jurisdiction of the Court, which the Code in no way restricts.”17 This section is a complement to Okla. Stat. tit. 60, §175.50 which provides that any statute repealed by the Trust Act which abrogated or restated the common law caused the common law rule to be reinstated and re-established to the extent not amended by the Trust Act.

Section 1106 sets out a rule that the court may intervene in the administration of a trust to the extent that its jurisdiction is invoked by an interested person or as provided by law. Under paragraph C of Section 1106, “a judicial proceeding involving a trust may relate to any matter involving the trust’s administration, including a request for instructions and an action to declare rights.” This supplements and enlarges the authority of the court under current Oklahoma law.18

Section 1107 brings trustees and trust beneficiaries, or at least a trust beneficiary’s beneficial interest in the trust, within the jurisdiction of Oklahoma courts regarding trust matters.

Section 1109 redefines and expands which district courts have venue over trust administration.19 This new language enables a judicial proceeding involving a trust to be brought in the county in Oklahoma in which the trust’s principal place of administration is or will be located and if the trust is created by will and the estate is not yet closed, the county in which the decedent’s estate is being administered. When there is no trustee, a trust action can be brought in a county in Oklahoma in which a beneficiary resides, in a county in which trust property is located, and if the trust is created by will in the county in which the decedent’s estate was or is being administered.

The new provisions will be effective Nov. 1, 2008. Presumably the new sections apply to existing trusts as well as to all trusts created after the effective date of the act.20

1. Senate Bill No. 1708. The new provisions of Title 60 can be found at Sections 278 through 286 on pages 261 through 268 of S. B. No. 1708.
2. Okla. Stat. tit. 60, §175.1, et seq.
3. The Uniform Trust Code can be found on the Web site of the National Conference of Commissioners on Uniform State Laws: www.nccusl.org.
4. See Okla. Stat. tit. 60, §§175.3 K and 175.102 (2).
5. Okla. Stat. tit. 60, §2.
6. Okla. Stat. tit. 60, §175.6.
7. “ ‘Person’ means an individual; corporation; business trust; estate; trust; partnership; limited liability company; association; joint venture; government; governmental subdivision, agency, or instrumentality; public corporation; or any other legal or commercial entity.” Section 1101, paragraph 10.
8. See Okla. Stat. tit. 25, §16 and Okla. Stat. tit. 60, §175.3A.
9. See Okla. Stat. tit. 60, §§ 1 through 9.
10. This Section states the existing common law in Oklahoma. See Crowell v. Shelton, 948 P.2d 313 (Okla. 1997) and In re Living Trust of Reid, 46 P.3d 188 (Okla. Ct. App. 2002).
11. Okla. Stat. tit. 60, §175.57 E. 3.
12. Contrast this language with Okla. Stat. tit. 25, §§ 10 through 13.
13. “Notice to a person under this act or the sending of a document to a person under this act must be accomplished in a manner reasonably suitable under the circumstances and likely to result in the receipt of the notice or document.” Section 1105 A.
14.  Section 1104 C.
15. Section 1104 B.
16. Section 1104 E.
17. Comment to Uniform Trust Code §106.
18. See Okla. Stat. tit. 60, §175.23 which provides that a court may construe the provisions of any trust instrument, determine the law applicable to a trust, determine the powers, duties and liability of a trustee, determine the existence or nonexistence of facts affecting the administration of a trust, require an accounting by trustees, surcharge a trustee, and in its discretion supervise the administration of a trust.
19. See Okla. Stat. tit. 60, § 175.23 B which confines venue to the county in which the trustee resides.
20. Okla. Stat. tit. 60, §175.53.

About The Author

Michael L. Nemec is a shareholder in the law firm of Hall, Estill, Hardwick, Gable, Golden & Nelson PC. He is a member of the Tulsa Title and Probate Lawyers and received the Golden Rule Award from the Tulsa County Bar Association in July 2006.

Oklahoma’s New Trust Law
Published OBJ 79 1809 (August 9, 2008)