CHAPTER 59-09GENERAL PROVISIONS AND DEFINITIONS59-09-01. (101) Short title. Chapters 59-09, 59-10, 59-11, 59-12, 59-13, 59-14, 59-15,59-16, 59-17, 59-18, and 59-19 may be cited as the North Dakota Uniform Trust Code.59-09-02. (102) Scope.1.Except as provided in subsection 2, chapters 59-09, 59-10, 59-11, 59-12, 59-13,<br>59-14, 59-15, 59-16, 59-17, 59-18, and 59-19 apply to express trusts, whether<br>charitable or noncharitable and testamentary or inter vivos, and to trusts created<br>pursuant to a statute or a judgment or decree that requires the trust to be<br>administered in the manner of an express trust.2.Chapters 59-09, 59-10, 59-11, 59-12, 59-13, 59-14, 59-15, 59-16, 59-17, 59-18, and<br>59-19 do not apply to:a.A trust that is part of an employee benefit arrangement or an individual<br>retirement account.b.A trust account established under a qualified tuition savings program pursuant<br>to section 6-09-38.c.Trust accounts maintained on behalf of clients or customers by licensed service<br>professionals, including trust accounts maintained by attorneys pursuant to the<br>North Dakota Rules of Professional Conduct and by real estate brokers<br>pursuant to chapter 43-23.d.An endowment care fund established by a cemetery authority pursuant to<br>chapter 23-21.e.Funds maintained by public bodies as defined by chapter 1-07 or other<br>governmental unit entities.f.Trust funds held for a single business transaction or an escrow arrangement.g.Trusts created by a depository agreement with a financial institution.h.An account maintained under the North Dakota Uniform Transfers to Minors<br>Act as contained in chapter 47-24.1.i.A fund maintained pursuant to court order in conjunction with a bankruptcy<br>proceeding or a business liquidation.j.A voting trust described in chapter 10-19.1.k.Funds maintained to manage proceeds from class actions.l.A trust created solely to secure the performance of an obligation.m.A trust created on behalf of a resident of a residential facility.n.A trust managed by a nonprofit association for disabled individuals under<br>42 U.S.C. 1396p(d)(4), as in effect on the effective date of chapters 59-09,<br>59-10, 59-11, 59-12, 59-13, 59-14, 59-15, 59-16, 59-17, 59-18, and 59-19 and<br>under the rules adopted by the department of human services.o.A resulting or constructive trust.Page No. 159-09-03. (103) Definitions. Any term not specifically defined in this section has themeaning provided in title 30.1. Unless the context otherwise requires, in chapters 59-09, 59-10,<br>59-11, 59-12, 59-13, 59-14, 59-15, 59-16, 59-17, 59-18, and 59-19:1."Action", with respect to an act of a trustee, includes a failure to act.2."Ascertainable standard" means a standard relating to an individual's health,<br>education, support, or maintenance within the meaning of section 2041(b)(1)(A) or<br>2514(c)(1) of the Internal Revenue Code.3."Beneficiary" means a person that:a.Has a present or future beneficial interest in a trust, vested or contingent,<br>including the owner of an interest by assignment or transfer; orb.In a capacity other than that of a trustee, holds a power of appointment over<br>trust property.4."Charitable trust" means a trust, or portion of a trust, created for a charitable purpose<br>described in subsection 1 of section 59-12-05.5."Conservator" is as defined in section 30.1-01-06.6."Distributee" means any person who receives property of a trust from a trustee,<br>other than as a creditor or purchaser.7."Environmental law" means a federal, state, or local law, rule, regulation, or<br>ordinance relating to protection of the environment.8."Guardian" is as defined in section 30.1-01-06.9."Interests of the beneficiaries" means the beneficial interests provided in the terms of<br>the trust.10."Internal Revenue Code" means the Internal Revenue Code of 1986, or<br>corresponding future provisions of federal tax law.11."Irrevocable" means if used in reference to a trust, a trust that is not revocable,<br>including a formerly revocable trust that has become irrevocable, whether by the<br>death of a settlor or otherwise.12."Jurisdiction", with respect to a geographic area, includes a state or country.13."Permissible distributee" means a beneficiary who is currently eligible to receive<br>distributions of trust income or principal, whether the distribution is mandatory or<br>discretionary.14."Power of withdrawal" means a presently exercisable general power of appointment<br>other than a power:a.Exercisable by a trustee and limited by an ascertainable standard; orb.Exercisable by another person only upon consent of the trustee or a person<br>holding an adverse interest.15."Property" means anything that may be the subject of ownership, whether real or<br>personal, legal or equitable, or any interest therein.16."Qualified beneficiary":Page No. 2a.Means a beneficiary who, on the date the beneficiary's qualification is<br>determined:(1)Is a permissible distributee of trust income or principal;(2)Would be a permissible distributee of trust income or principal if the<br>interests of the distributees described in paragraph 1 terminated on that<br>date without causing the trust to terminate; or(3)Would be a permissible distributee of trust income or principal if the trust<br>terminated on that date.b.Does not include a contingent distributee or a contingent permissible distributee<br>of trust income or principal whose interest in the trust is not reasonably<br>expected to vest.17."Record" means information that is enshrined on a tangible medium or which is<br>stored in an electronic or other medium and is retrievable in perceivable form.18."Revocable", as applied to a trust, means revocable by the settlor without the<br>consent of the trustee or a person holding an adverse interest.19."Settlor" means a person, including a testator, that creates, or contributes property to<br>a trust and if more than one person creates or contributes property to a trust, each<br>person is a settlor of the portion of the trust property attributable to that person's<br>contribution except to the extent another person has the power to revoke or withdraw<br>that portion.20."Signed" means:a.That the signature of a person, which may be a facsimile affixed, engraved,<br>printed, placed, stamped with indelible ink, transmitted by a facsimile<br>telecommunication or electronically, or in any other manner reproduced on the<br>record, is placed on a record or instrument with the present intention to<br>authenticate the record or instrument.b.With respect to a record or instrument required by this chapter to be filed with<br>the clerk of court, that:(1)The record or instrument has been signed by a person authorized to do<br>so by this chapter or by the trust instrument; and(2)The signature and the record or instrument are communicated by a<br>method or medium acceptable to the clerk of court.21."Special needs trust" means special needs trust as defined in section 59-08-01.22."Spendthrift provision" means a term of a trust which restrains either the voluntary or<br>involuntary or both the voluntary and involuntary transfer of a beneficiary's interest<br>and does not include or prevent a disclaimer of an interest of a beneficiary.23."State" means a state of the United States, the District of Columbia, Puerto Rico, the<br>United States Virgin Islands, or any territory or insular possession subject to the<br>jurisdiction of the United States.24."Terms of a trust" means the manifestation of the settlor's intent regarding a trust's<br>provisions as expressed in the trust instrument or as may be established by other<br>evidence that would be admissible in a judicial proceeding.Page No. 325."Trust instrument" means a record signed by the settlor that contains terms of the<br>trust, including any amendments to the record and any modifications permitted by<br>court order or by binding nonjudicial settlement agreement.26."Trustee" includes an original, additional, and successor trustee, and a cotrustee,<br>whether or not appointed or confirmed by a court.59-09-04. (104) Knowledge.1.Subject to subsection 2, a person has knowledge of a fact if the person has actual<br>knowledge of a fact; has received a notice or notification of a fact; or from all the<br>facts and circumstances known to the person at the time in question, has reason to<br>know a fact.2.An organization that conducts activities through employees has notice or knowledge<br>of a fact involving a trust only from the time the information was received by an<br>employee having responsibility to act for the trust, or would have been brought to the<br>employee's attention if the organization had exercised reasonable diligence.Anorganization exercises reasonable diligence if the organization maintains reasonable<br>routines for communicating significant information to the employee having<br>responsibility to act for the trust and there is reasonable compliance with the<br>routines. Reasonable diligence does not require an employee of the organization to<br>communicate information unless the communication is part of the individual's regular<br>duties or the individual knows a matter involving the trust would be materially<br>affected by the information.59-09-05. (105) Default and mandatory rules.1.Except as otherwise provided in the terms of the trust, this title governs the duties<br>and powers of a trustee, relations among trustees, and the rights and interests of a<br>beneficiary.2.The terms of a trust prevail over any provision of this title except:a.The requirements for creating a trust;b.The duty of a trustee to act in good faith and in accordance with the purposes of<br>the trust;c.The requirement that a trust and its terms be for the benefit of its beneficiaries,<br>and that the trust have a purpose that is lawful and possible to achieve;d.The power of the court to modify or terminate a trust under sections 59-12-10,<br>59-12-11, 59-12-12, 59-12-13, 59-12-14, 59-12-15, and 59-12-16;e.The effect of a spendthrift provision and the rights of certain creditors and<br>assignees to reach a trust as provided in chapter 59-13;f.The power of the court under section 59-15-02 to require, dispense with, or<br>modify or terminate a bond;g.The power of the court under subsection 2 of section 59-15-08 to adjust a<br>trustee's compensation specified in the terms of the trust which is unreasonably<br>low or high;h.The effect of an exculpatory term under section 59-18-08;i.The rights under sections 59-18-10, 59-18-11, 59-18-12, and 59-18-13 of a<br>person other than a trustee or beneficiary;Page No. 4j.Periods of limitation for commencing a judicial proceeding;k.The power of the court to take such action and exercise such jurisdiction as<br>may be necessary in the interests of justice; andl.The subject matter jurisdiction of the court and venue for commencing a<br>proceeding as provided in section 59-10-04.59-09-06. (106) Common law of trusts - Principles of equity. The common law oftrusts and principles of equity supplement chapters 59-09, 59-10, 59-11, 59-12, 59-13, 59-14,<br>59-15, 59-16, 59-17, 59-18, and 59-19, except to the extent modified by chapters 59-09, 59-10,<br>59-11, 59-12, 59-13, 59-14, 59-15, 59-16, 59-17, 59-18, and 59-19 or another statute of this<br>state.59-09-07. (107) Governing law. The meaning and effect of the terms of a trust aredetermined by the law of the jurisdiction designated in the terms or, in the absence of a<br>controlling designation in the terms of the trust, the law of the jurisdiction having the most<br>significant relationship to the matter at issue.59-09-08. (108) Principal place of administration.1.Without precluding other means for establishing a sufficient connection with the<br>designated jurisdiction, terms of a trust designating the principal place of<br>administration are valid and controlling if a trustee's principal place of business is<br>located in or a trustee is a resident of the designated jurisdiction, or all or part of the<br>administration occurs in the designated jurisdiction.2.A trustee is under a continuing duty to administer the trust at a place appropriate to<br>its purposes, its administration, and the interests of the beneficiaries.3.Without precluding the right of the court to order, approve, or disapprove a transfer,<br>the trustee, in furtherance of the duty prescribed by subsection 2, may transfer the<br>trust's principal place of administration to another state or to a jurisdiction outside of<br>the United States.4.The trustee shall notify the qualified beneficiaries of a proposed transfer of a trust's<br>principal place of administration or a proposed transfer of some or all of the trust<br>property to a successor trustee not less than sixty days before initiating the transfer.<br>The notice of proposed transfer must include the name of the jurisdiction to which<br>the principal place of administration is to be transferred; the address and telephone<br>number at the new location at which the trustee can be contacted; an explanation of<br>the reasons for the proposed transfer; the date on which the proposed transfer is<br>anticipated to occur; and the date, not less than sixty days after the giving of the<br>notice, by which the qualified beneficiary must notify the trustee of an objection to<br>the proposed transfer.5.The authority of a trustee under this section to transfer a trust's principal place of<br>administration or a proposed transfer of some or all of the trust property to a<br>successor trustee terminates if a majority of the qualified beneficiaries notify the<br>trustee of an objection to the proposed transfer on or before the date specified in the<br>notice.6.In connection with a transfer of the trust's principal place of administration, the<br>trustee may transfer some or all of the trust property to a successor trustee<br>designated in the terms of the trust or appointed pursuant to section 59-15-04.59-09-09. (109) Methods and waiver of notice.Page No. 51.Notice to a person under chapters 59-09, 59-10, 59-11, 59-12, 59-13, 59-14, 59-15,<br>59-16, 59-17, 59-18, and 59-19 or the sending of a document to a person under<br>chapters 59-09, 59-10, 59-11, 59-12, 59-13, 59-14, 59-15, 59-16, 59-17, 59-18, and<br>59-19 must be accomplished in a manner reasonably suitable under the<br>circumstances and likely to result in receipt of the notice or document. Permissible<br>methods of notice or for sending a document include first-class mail, personal<br>delivery, delivery to the person's last-known place of residence or place of business,<br>or a properly directed electronic message.2.Notice otherwise required under chapters 59-09, 59-10, 59-11, 59-12, 59-13, 59-14,<br>59-15, 59-16, 59-17, 59-18, and 59-19 or a document otherwise required to be sent<br>under chapters 59-09, 59-10, 59-11, 59-12, 59-13, 59-14, 59-15, 59-16, 59-17,<br>59-18, and 59-19 does not need to be provided to a person whose identity or<br>location is unknown to and not reasonably ascertainable by the trustee.3.Notice under chapters 59-09, 59-10, 59-11, 59-12, 59-13, 59-14, 59-15, 59-16,<br>59-17, 59-18, and 59-19 or the sending of a document under chapters 59-09, 59-10,<br>59-11, 59-12, 59-13, 59-14, 59-15, 59-16, 59-17, 59-18, and 59-19 may be waived<br>by the person to be notified or sent the document.4.Notice of a judicial proceeding must be given as provided in the applicable North<br>Dakota Rules of Civil Procedure or as provided under section 30.1-03-01.59-09-10. (110) Others treated as qualified beneficiaries.1.A charitable organization expressly designated to receive distributions under the<br>terms of a charitable trust has the rights of a qualified beneficiary under chapters<br>59-09, 59-10, 59-11, 59-12, 59-13, 59-14, 59-15, 59-16, 59-17, 59-18, and 59-19 if<br>the charitable organization, on the date the charitable organization's qualification is<br>being determined:a.Is a permissible distributee of trust income or principal;b.Would be a permissible distributee of trust income or principal upon the<br>termination of the interests of other distributees or permissible distributees then<br>receiving or eligible to receive distributions; orc.Would be a permissible distributee of trust income or principal if the trust<br>terminated on that date.2.A person appointed to enforce a trust created for the care of an animal or another<br>noncharitable purpose as provided in section 59-12-08 or 59-12-09 has the rights of<br>a qualified beneficiary under chapters 59-09, 59-10, 59-11, 59-12, 59-13, 59-14,<br>59-15, 59-16, 59-17, 59-18, and 59-19.3.The attorney general of this state has the rights of a qualified beneficiary with<br>respect to a charitable trust having its principal place of administration in this state.59-09-11. (111) Nonjudicial settlement agreements.1.For purposes of this section, "interested persons" means a trustee and persons<br>whose consent would be required in order to achieve a binding settlement were the<br>settlement to be approved by the court.2.Except as otherwise provided in subsection 3, interested persons may enter into a<br>binding nonjudicial settlement agreement with respect to any matter involving a trust.3.A nonjudicial settlement agreement is valid only to the extent it does not violate a<br>material purpose of the trust and includes terms and conditions that could bePage No. 6properly approved by the court under chapters 59-09, 59-10, 59-11, 59-12, 59-13,<br>59-14, 59-15, 59-16, 59-17, 59-18, and 59-19 or other applicable law. A spendthrift<br>provision in the terms of a trust is presumed to constitute a material purpose of the<br>trust.4.Matters that may be resolved by a nonjudicial settlement agreement include the<br>interpretation or construction of the terms of the trust, the approval of a trustee's<br>report or accounting, direction to a trustee to refrain from performing a particular act<br>or the grant to a trustee of any necessary or desirable power, the resignation or<br>appointment of a trustee and the determination of a trustee's compensation, transfer<br>of a trust's principal place of administration, liability of a trustee for an action relating<br>to the trust, the extent or waiver of bond of a trustee, and the criteria for distribution<br>to a beneficiary where the trustee is given discretion.5.Any interested person may request the court to approve a nonjudicial settlement<br>agreement to determine whether the representation as provided in chapter 59-11<br>was adequate and to determine whether the agreement contains terms and<br>conditions the court could have properly approved.59-09-12.(112) Rules of construction.The rules of construction that apply to theinterpretation of and disposition of property by will or other governing instrument provided for<br>under chapter 30.1-09.1 also apply as appropriate to the interpretation of the terms of a trust and<br>the disposition of the trust property.Page No. 7Document Outlinechapter 59-09 general provisions and definitions
CHAPTER 59-09GENERAL PROVISIONS AND DEFINITIONS59-09-01. (101) Short title. Chapters 59-09, 59-10, 59-11, 59-12, 59-13, 59-14, 59-15,59-16, 59-17, 59-18, and 59-19 may be cited as the North Dakota Uniform Trust Code.59-09-02. (102) Scope.1.Except as provided in subsection 2, chapters 59-09, 59-10, 59-11, 59-12, 59-13,<br>59-14, 59-15, 59-16, 59-17, 59-18, and 59-19 apply to express trusts, whether<br>charitable or noncharitable and testamentary or inter vivos, and to trusts created<br>pursuant to a statute or a judgment or decree that requires the trust to be<br>administered in the manner of an express trust.2.Chapters 59-09, 59-10, 59-11, 59-12, 59-13, 59-14, 59-15, 59-16, 59-17, 59-18, and<br>59-19 do not apply to:a.A trust that is part of an employee benefit arrangement or an individual<br>retirement account.b.A trust account established under a qualified tuition savings program pursuant<br>to section 6-09-38.c.Trust accounts maintained on behalf of clients or customers by licensed service<br>professionals, including trust accounts maintained by attorneys pursuant to the<br>North Dakota Rules of Professional Conduct and by real estate brokers<br>pursuant to chapter 43-23.d.An endowment care fund established by a cemetery authority pursuant to<br>chapter 23-21.e.Funds maintained by public bodies as defined by chapter 1-07 or other<br>governmental unit entities.f.Trust funds held for a single business transaction or an escrow arrangement.g.Trusts created by a depository agreement with a financial institution.h.An account maintained under the North Dakota Uniform Transfers to Minors<br>Act as contained in chapter 47-24.1.i.A fund maintained pursuant to court order in conjunction with a bankruptcy<br>proceeding or a business liquidation.j.A voting trust described in chapter 10-19.1.k.Funds maintained to manage proceeds from class actions.l.A trust created solely to secure the performance of an obligation.m.A trust created on behalf of a resident of a residential facility.n.A trust managed by a nonprofit association for disabled individuals under<br>42 U.S.C. 1396p(d)(4), as in effect on the effective date of chapters 59-09,<br>59-10, 59-11, 59-12, 59-13, 59-14, 59-15, 59-16, 59-17, 59-18, and 59-19 and<br>under the rules adopted by the department of human services.o.A resulting or constructive trust.Page No. 159-09-03. (103) Definitions. Any term not specifically defined in this section has themeaning provided in title 30.1. Unless the context otherwise requires, in chapters 59-09, 59-10,<br>59-11, 59-12, 59-13, 59-14, 59-15, 59-16, 59-17, 59-18, and 59-19:1."Action", with respect to an act of a trustee, includes a failure to act.2."Ascertainable standard" means a standard relating to an individual's health,<br>education, support, or maintenance within the meaning of section 2041(b)(1)(A) or<br>2514(c)(1) of the Internal Revenue Code.3."Beneficiary" means a person that:a.Has a present or future beneficial interest in a trust, vested or contingent,<br>including the owner of an interest by assignment or transfer; orb.In a capacity other than that of a trustee, holds a power of appointment over<br>trust property.4."Charitable trust" means a trust, or portion of a trust, created for a charitable purpose<br>described in subsection 1 of section 59-12-05.5."Conservator" is as defined in section 30.1-01-06.6."Distributee" means any person who receives property of a trust from a trustee,<br>other than as a creditor or purchaser.7."Environmental law" means a federal, state, or local law, rule, regulation, or<br>ordinance relating to protection of the environment.8."Guardian" is as defined in section 30.1-01-06.9."Interests of the beneficiaries" means the beneficial interests provided in the terms of<br>the trust.10."Internal Revenue Code" means the Internal Revenue Code of 1986, or<br>corresponding future provisions of federal tax law.11."Irrevocable" means if used in reference to a trust, a trust that is not revocable,<br>including a formerly revocable trust that has become irrevocable, whether by the<br>death of a settlor or otherwise.12."Jurisdiction", with respect to a geographic area, includes a state or country.13."Permissible distributee" means a beneficiary who is currently eligible to receive<br>distributions of trust income or principal, whether the distribution is mandatory or<br>discretionary.14."Power of withdrawal" means a presently exercisable general power of appointment<br>other than a power:a.Exercisable by a trustee and limited by an ascertainable standard; orb.Exercisable by another person only upon consent of the trustee or a person<br>holding an adverse interest.15."Property" means anything that may be the subject of ownership, whether real or<br>personal, legal or equitable, or any interest therein.16."Qualified beneficiary":Page No. 2a.Means a beneficiary who, on the date the beneficiary's qualification is<br>determined:(1)Is a permissible distributee of trust income or principal;(2)Would be a permissible distributee of trust income or principal if the<br>interests of the distributees described in paragraph 1 terminated on that<br>date without causing the trust to terminate; or(3)Would be a permissible distributee of trust income or principal if the trust<br>terminated on that date.b.Does not include a contingent distributee or a contingent permissible distributee<br>of trust income or principal whose interest in the trust is not reasonably<br>expected to vest.17."Record" means information that is enshrined on a tangible medium or which is<br>stored in an electronic or other medium and is retrievable in perceivable form.18."Revocable", as applied to a trust, means revocable by the settlor without the<br>consent of the trustee or a person holding an adverse interest.19."Settlor" means a person, including a testator, that creates, or contributes property to<br>a trust and if more than one person creates or contributes property to a trust, each<br>person is a settlor of the portion of the trust property attributable to that person's<br>contribution except to the extent another person has the power to revoke or withdraw<br>that portion.20."Signed" means:a.That the signature of a person, which may be a facsimile affixed, engraved,<br>printed, placed, stamped with indelible ink, transmitted by a facsimile<br>telecommunication or electronically, or in any other manner reproduced on the<br>record, is placed on a record or instrument with the present intention to<br>authenticate the record or instrument.b.With respect to a record or instrument required by this chapter to be filed with<br>the clerk of court, that:(1)The record or instrument has been signed by a person authorized to do<br>so by this chapter or by the trust instrument; and(2)The signature and the record or instrument are communicated by a<br>method or medium acceptable to the clerk of court.21."Special needs trust" means special needs trust as defined in section 59-08-01.22."Spendthrift provision" means a term of a trust which restrains either the voluntary or<br>involuntary or both the voluntary and involuntary transfer of a beneficiary's interest<br>and does not include or prevent a disclaimer of an interest of a beneficiary.23."State" means a state of the United States, the District of Columbia, Puerto Rico, the<br>United States Virgin Islands, or any territory or insular possession subject to the<br>jurisdiction of the United States.24."Terms of a trust" means the manifestation of the settlor's intent regarding a trust's<br>provisions as expressed in the trust instrument or as may be established by other<br>evidence that would be admissible in a judicial proceeding.Page No. 325."Trust instrument" means a record signed by the settlor that contains terms of the<br>trust, including any amendments to the record and any modifications permitted by<br>court order or by binding nonjudicial settlement agreement.26."Trustee" includes an original, additional, and successor trustee, and a cotrustee,<br>whether or not appointed or confirmed by a court.59-09-04. (104) Knowledge.1.Subject to subsection 2, a person has knowledge of a fact if the person has actual<br>knowledge of a fact; has received a notice or notification of a fact; or from all the<br>facts and circumstances known to the person at the time in question, has reason to<br>know a fact.2.An organization that conducts activities through employees has notice or knowledge<br>of a fact involving a trust only from the time the information was received by an<br>employee having responsibility to act for the trust, or would have been brought to the<br>employee's attention if the organization had exercised reasonable diligence.Anorganization exercises reasonable diligence if the organization maintains reasonable<br>routines for communicating significant information to the employee having<br>responsibility to act for the trust and there is reasonable compliance with the<br>routines. Reasonable diligence does not require an employee of the organization to<br>communicate information unless the communication is part of the individual's regular<br>duties or the individual knows a matter involving the trust would be materially<br>affected by the information.59-09-05. (105) Default and mandatory rules.1.Except as otherwise provided in the terms of the trust, this title governs the duties<br>and powers of a trustee, relations among trustees, and the rights and interests of a<br>beneficiary.2.The terms of a trust prevail over any provision of this title except:a.The requirements for creating a trust;b.The duty of a trustee to act in good faith and in accordance with the purposes of<br>the trust;c.The requirement that a trust and its terms be for the benefit of its beneficiaries,<br>and that the trust have a purpose that is lawful and possible to achieve;d.The power of the court to modify or terminate a trust under sections 59-12-10,<br>59-12-11, 59-12-12, 59-12-13, 59-12-14, 59-12-15, and 59-12-16;e.The effect of a spendthrift provision and the rights of certain creditors and<br>assignees to reach a trust as provided in chapter 59-13;f.The power of the court under section 59-15-02 to require, dispense with, or<br>modify or terminate a bond;g.The power of the court under subsection 2 of section 59-15-08 to adjust a<br>trustee's compensation specified in the terms of the trust which is unreasonably<br>low or high;h.The effect of an exculpatory term under section 59-18-08;i.The rights under sections 59-18-10, 59-18-11, 59-18-12, and 59-18-13 of a<br>person other than a trustee or beneficiary;Page No. 4j.Periods of limitation for commencing a judicial proceeding;k.The power of the court to take such action and exercise such jurisdiction as<br>may be necessary in the interests of justice; andl.The subject matter jurisdiction of the court and venue for commencing a<br>proceeding as provided in section 59-10-04.59-09-06. (106) Common law of trusts - Principles of equity. The common law oftrusts and principles of equity supplement chapters 59-09, 59-10, 59-11, 59-12, 59-13, 59-14,<br>59-15, 59-16, 59-17, 59-18, and 59-19, except to the extent modified by chapters 59-09, 59-10,<br>59-11, 59-12, 59-13, 59-14, 59-15, 59-16, 59-17, 59-18, and 59-19 or another statute of this<br>state.59-09-07. (107) Governing law. The meaning and effect of the terms of a trust aredetermined by the law of the jurisdiction designated in the terms or, in the absence of a<br>controlling designation in the terms of the trust, the law of the jurisdiction having the most<br>significant relationship to the matter at issue.59-09-08. (108) Principal place of administration.1.Without precluding other means for establishing a sufficient connection with the<br>designated jurisdiction, terms of a trust designating the principal place of<br>administration are valid and controlling if a trustee's principal place of business is<br>located in or a trustee is a resident of the designated jurisdiction, or all or part of the<br>administration occurs in the designated jurisdiction.2.A trustee is under a continuing duty to administer the trust at a place appropriate to<br>its purposes, its administration, and the interests of the beneficiaries.3.Without precluding the right of the court to order, approve, or disapprove a transfer,<br>the trustee, in furtherance of the duty prescribed by subsection 2, may transfer the<br>trust's principal place of administration to another state or to a jurisdiction outside of<br>the United States.4.The trustee shall notify the qualified beneficiaries of a proposed transfer of a trust's<br>principal place of administration or a proposed transfer of some or all of the trust<br>property to a successor trustee not less than sixty days before initiating the transfer.<br>The notice of proposed transfer must include the name of the jurisdiction to which<br>the principal place of administration is to be transferred; the address and telephone<br>number at the new location at which the trustee can be contacted; an explanation of<br>the reasons for the proposed transfer; the date on which the proposed transfer is<br>anticipated to occur; and the date, not less than sixty days after the giving of the<br>notice, by which the qualified beneficiary must notify the trustee of an objection to<br>the proposed transfer.5.The authority of a trustee under this section to transfer a trust's principal place of<br>administration or a proposed transfer of some or all of the trust property to a<br>successor trustee terminates if a majority of the qualified beneficiaries notify the<br>trustee of an objection to the proposed transfer on or before the date specified in the<br>notice.6.In connection with a transfer of the trust's principal place of administration, the<br>trustee may transfer some or all of the trust property to a successor trustee<br>designated in the terms of the trust or appointed pursuant to section 59-15-04.59-09-09. (109) Methods and waiver of notice.Page No. 51.Notice to a person under chapters 59-09, 59-10, 59-11, 59-12, 59-13, 59-14, 59-15,<br>59-16, 59-17, 59-18, and 59-19 or the sending of a document to a person under<br>chapters 59-09, 59-10, 59-11, 59-12, 59-13, 59-14, 59-15, 59-16, 59-17, 59-18, and<br>59-19 must be accomplished in a manner reasonably suitable under the<br>circumstances and likely to result in receipt of the notice or document. Permissible<br>methods of notice or for sending a document include first-class mail, personal<br>delivery, delivery to the person's last-known place of residence or place of business,<br>or a properly directed electronic message.2.Notice otherwise required under chapters 59-09, 59-10, 59-11, 59-12, 59-13, 59-14,<br>59-15, 59-16, 59-17, 59-18, and 59-19 or a document otherwise required to be sent<br>under chapters 59-09, 59-10, 59-11, 59-12, 59-13, 59-14, 59-15, 59-16, 59-17,<br>59-18, and 59-19 does not need to be provided to a person whose identity or<br>location is unknown to and not reasonably ascertainable by the trustee.3.Notice under chapters 59-09, 59-10, 59-11, 59-12, 59-13, 59-14, 59-15, 59-16,<br>59-17, 59-18, and 59-19 or the sending of a document under chapters 59-09, 59-10,<br>59-11, 59-12, 59-13, 59-14, 59-15, 59-16, 59-17, 59-18, and 59-19 may be waived<br>by the person to be notified or sent the document.4.Notice of a judicial proceeding must be given as provided in the applicable North<br>Dakota Rules of Civil Procedure or as provided under section 30.1-03-01.59-09-10. (110) Others treated as qualified beneficiaries.1.A charitable organization expressly designated to receive distributions under the<br>terms of a charitable trust has the rights of a qualified beneficiary under chapters<br>59-09, 59-10, 59-11, 59-12, 59-13, 59-14, 59-15, 59-16, 59-17, 59-18, and 59-19 if<br>the charitable organization, on the date the charitable organization's qualification is<br>being determined:a.Is a permissible distributee of trust income or principal;b.Would be a permissible distributee of trust income or principal upon the<br>termination of the interests of other distributees or permissible distributees then<br>receiving or eligible to receive distributions; orc.Would be a permissible distributee of trust income or principal if the trust<br>terminated on that date.2.A person appointed to enforce a trust created for the care of an animal or another<br>noncharitable purpose as provided in section 59-12-08 or 59-12-09 has the rights of<br>a qualified beneficiary under chapters 59-09, 59-10, 59-11, 59-12, 59-13, 59-14,<br>59-15, 59-16, 59-17, 59-18, and 59-19.3.The attorney general of this state has the rights of a qualified beneficiary with<br>respect to a charitable trust having its principal place of administration in this state.59-09-11. (111) Nonjudicial settlement agreements.1.For purposes of this section, "interested persons" means a trustee and persons<br>whose consent would be required in order to achieve a binding settlement were the<br>settlement to be approved by the court.2.Except as otherwise provided in subsection 3, interested persons may enter into a<br>binding nonjudicial settlement agreement with respect to any matter involving a trust.3.A nonjudicial settlement agreement is valid only to the extent it does not violate a<br>material purpose of the trust and includes terms and conditions that could bePage No. 6properly approved by the court under chapters 59-09, 59-10, 59-11, 59-12, 59-13,<br>59-14, 59-15, 59-16, 59-17, 59-18, and 59-19 or other applicable law. A spendthrift<br>provision in the terms of a trust is presumed to constitute a material purpose of the<br>trust.4.Matters that may be resolved by a nonjudicial settlement agreement include the<br>interpretation or construction of the terms of the trust, the approval of a trustee's<br>report or accounting, direction to a trustee to refrain from performing a particular act<br>or the grant to a trustee of any necessary or desirable power, the resignation or<br>appointment of a trustee and the determination of a trustee's compensation, transfer<br>of a trust's principal place of administration, liability of a trustee for an action relating<br>to the trust, the extent or waiver of bond of a trustee, and the criteria for distribution<br>to a beneficiary where the trustee is given discretion.5.Any interested person may request the court to approve a nonjudicial settlement<br>agreement to determine whether the representation as provided in chapter 59-11<br>was adequate and to determine whether the agreement contains terms and<br>conditions the court could have properly approved.59-09-12.(112) Rules of construction.The rules of construction that apply to theinterpretation of and disposition of property by will or other governing instrument provided for<br>under chapter 30.1-09.1 also apply as appropriate to the interpretation of the terms of a trust and<br>the disposition of the trust property.Page No. 7Document Outlinechapter 59-09 general provisions and definitions
CHAPTER 59-09GENERAL PROVISIONS AND DEFINITIONS59-09-01. (101) Short title. Chapters 59-09, 59-10, 59-11, 59-12, 59-13, 59-14, 59-15,59-16, 59-17, 59-18, and 59-19 may be cited as the North Dakota Uniform Trust Code.59-09-02. (102) Scope.1.Except as provided in subsection 2, chapters 59-09, 59-10, 59-11, 59-12, 59-13,<br>59-14, 59-15, 59-16, 59-17, 59-18, and 59-19 apply to express trusts, whether<br>charitable or noncharitable and testamentary or inter vivos, and to trusts created<br>pursuant to a statute or a judgment or decree that requires the trust to be<br>administered in the manner of an express trust.2.Chapters 59-09, 59-10, 59-11, 59-12, 59-13, 59-14, 59-15, 59-16, 59-17, 59-18, and<br>59-19 do not apply to:a.A trust that is part of an employee benefit arrangement or an individual<br>retirement account.b.A trust account established under a qualified tuition savings program pursuant<br>to section 6-09-38.c.Trust accounts maintained on behalf of clients or customers by licensed service<br>professionals, including trust accounts maintained by attorneys pursuant to the<br>North Dakota Rules of Professional Conduct and by real estate brokers<br>pursuant to chapter 43-23.d.An endowment care fund established by a cemetery authority pursuant to<br>chapter 23-21.e.Funds maintained by public bodies as defined by chapter 1-07 or other<br>governmental unit entities.f.Trust funds held for a single business transaction or an escrow arrangement.g.Trusts created by a depository agreement with a financial institution.h.An account maintained under the North Dakota Uniform Transfers to Minors<br>Act as contained in chapter 47-24.1.i.A fund maintained pursuant to court order in conjunction with a bankruptcy<br>proceeding or a business liquidation.j.A voting trust described in chapter 10-19.1.k.Funds maintained to manage proceeds from class actions.l.A trust created solely to secure the performance of an obligation.m.A trust created on behalf of a resident of a residential facility.n.A trust managed by a nonprofit association for disabled individuals under<br>42 U.S.C. 1396p(d)(4), as in effect on the effective date of chapters 59-09,<br>59-10, 59-11, 59-12, 59-13, 59-14, 59-15, 59-16, 59-17, 59-18, and 59-19 and<br>under the rules adopted by the department of human services.o.A resulting or constructive trust.Page No. 159-09-03. (103) Definitions. Any term not specifically defined in this section has themeaning provided in title 30.1. Unless the context otherwise requires, in chapters 59-09, 59-10,<br>59-11, 59-12, 59-13, 59-14, 59-15, 59-16, 59-17, 59-18, and 59-19:1."Action", with respect to an act of a trustee, includes a failure to act.2."Ascertainable standard" means a standard relating to an individual's health,<br>education, support, or maintenance within the meaning of section 2041(b)(1)(A) or<br>2514(c)(1) of the Internal Revenue Code.3."Beneficiary" means a person that:a.Has a present or future beneficial interest in a trust, vested or contingent,<br>including the owner of an interest by assignment or transfer; orb.In a capacity other than that of a trustee, holds a power of appointment over<br>trust property.4."Charitable trust" means a trust, or portion of a trust, created for a charitable purpose<br>described in subsection 1 of section 59-12-05.5."Conservator" is as defined in section 30.1-01-06.6."Distributee" means any person who receives property of a trust from a trustee,<br>other than as a creditor or purchaser.7."Environmental law" means a federal, state, or local law, rule, regulation, or<br>ordinance relating to protection of the environment.8."Guardian" is as defined in section 30.1-01-06.9."Interests of the beneficiaries" means the beneficial interests provided in the terms of<br>the trust.10."Internal Revenue Code" means the Internal Revenue Code of 1986, or<br>corresponding future provisions of federal tax law.11."Irrevocable" means if used in reference to a trust, a trust that is not revocable,<br>including a formerly revocable trust that has become irrevocable, whether by the<br>death of a settlor or otherwise.12."Jurisdiction", with respect to a geographic area, includes a state or country.13."Permissible distributee" means a beneficiary who is currently eligible to receive<br>distributions of trust income or principal, whether the distribution is mandatory or<br>discretionary.14."Power of withdrawal" means a presently exercisable general power of appointment<br>other than a power:a.Exercisable by a trustee and limited by an ascertainable standard; orb.Exercisable by another person only upon consent of the trustee or a person<br>holding an adverse interest.15."Property" means anything that may be the subject of ownership, whether real or<br>personal, legal or equitable, or any interest therein.16."Qualified beneficiary":Page No. 2a.Means a beneficiary who, on the date the beneficiary's qualification is<br>determined:(1)Is a permissible distributee of trust income or principal;(2)Would be a permissible distributee of trust income or principal if the<br>interests of the distributees described in paragraph 1 terminated on that<br>date without causing the trust to terminate; or(3)Would be a permissible distributee of trust income or principal if the trust<br>terminated on that date.b.Does not include a contingent distributee or a contingent permissible distributee<br>of trust income or principal whose interest in the trust is not reasonably<br>expected to vest.17."Record" means information that is enshrined on a tangible medium or which is<br>stored in an electronic or other medium and is retrievable in perceivable form.18."Revocable", as applied to a trust, means revocable by the settlor without the<br>consent of the trustee or a person holding an adverse interest.19."Settlor" means a person, including a testator, that creates, or contributes property to<br>a trust and if more than one person creates or contributes property to a trust, each<br>person is a settlor of the portion of the trust property attributable to that person's<br>contribution except to the extent another person has the power to revoke or withdraw<br>that portion.20."Signed" means:a.That the signature of a person, which may be a facsimile affixed, engraved,<br>printed, placed, stamped with indelible ink, transmitted by a facsimile<br>telecommunication or electronically, or in any other manner reproduced on the<br>record, is placed on a record or instrument with the present intention to<br>authenticate the record or instrument.b.With respect to a record or instrument required by this chapter to be filed with<br>the clerk of court, that:(1)The record or instrument has been signed by a person authorized to do<br>so by this chapter or by the trust instrument; and(2)The signature and the record or instrument are communicated by a<br>method or medium acceptable to the clerk of court.21."Special needs trust" means special needs trust as defined in section 59-08-01.22."Spendthrift provision" means a term of a trust which restrains either the voluntary or<br>involuntary or both the voluntary and involuntary transfer of a beneficiary's interest<br>and does not include or prevent a disclaimer of an interest of a beneficiary.23."State" means a state of the United States, the District of Columbia, Puerto Rico, the<br>United States Virgin Islands, or any territory or insular possession subject to the<br>jurisdiction of the United States.24."Terms of a trust" means the manifestation of the settlor's intent regarding a trust's<br>provisions as expressed in the trust instrument or as may be established by other<br>evidence that would be admissible in a judicial proceeding.Page No. 325."Trust instrument" means a record signed by the settlor that contains terms of the<br>trust, including any amendments to the record and any modifications permitted by<br>court order or by binding nonjudicial settlement agreement.26."Trustee" includes an original, additional, and successor trustee, and a cotrustee,<br>whether or not appointed or confirmed by a court.59-09-04. (104) Knowledge.1.Subject to subsection 2, a person has knowledge of a fact if the person has actual<br>knowledge of a fact; has received a notice or notification of a fact; or from all the<br>facts and circumstances known to the person at the time in question, has reason to<br>know a fact.2.An organization that conducts activities through employees has notice or knowledge<br>of a fact involving a trust only from the time the information was received by an<br>employee having responsibility to act for the trust, or would have been brought to the<br>employee's attention if the organization had exercised reasonable diligence.Anorganization exercises reasonable diligence if the organization maintains reasonable<br>routines for communicating significant information to the employee having<br>responsibility to act for the trust and there is reasonable compliance with the<br>routines. Reasonable diligence does not require an employee of the organization to<br>communicate information unless the communication is part of the individual's regular<br>duties or the individual knows a matter involving the trust would be materially<br>affected by the information.59-09-05. (105) Default and mandatory rules.1.Except as otherwise provided in the terms of the trust, this title governs the duties<br>and powers of a trustee, relations among trustees, and the rights and interests of a<br>beneficiary.2.The terms of a trust prevail over any provision of this title except:a.The requirements for creating a trust;b.The duty of a trustee to act in good faith and in accordance with the purposes of<br>the trust;c.The requirement that a trust and its terms be for the benefit of its beneficiaries,<br>and that the trust have a purpose that is lawful and possible to achieve;d.The power of the court to modify or terminate a trust under sections 59-12-10,<br>59-12-11, 59-12-12, 59-12-13, 59-12-14, 59-12-15, and 59-12-16;e.The effect of a spendthrift provision and the rights of certain creditors and<br>assignees to reach a trust as provided in chapter 59-13;f.The power of the court under section 59-15-02 to require, dispense with, or<br>modify or terminate a bond;g.The power of the court under subsection 2 of section 59-15-08 to adjust a<br>trustee's compensation specified in the terms of the trust which is unreasonably<br>low or high;h.The effect of an exculpatory term under section 59-18-08;i.The rights under sections 59-18-10, 59-18-11, 59-18-12, and 59-18-13 of a<br>person other than a trustee or beneficiary;Page No. 4j.Periods of limitation for commencing a judicial proceeding;k.The power of the court to take such action and exercise such jurisdiction as<br>may be necessary in the interests of justice; andl.The subject matter jurisdiction of the court and venue for commencing a<br>proceeding as provided in section 59-10-04.59-09-06. (106) Common law of trusts - Principles of equity. The common law oftrusts and principles of equity supplement chapters 59-09, 59-10, 59-11, 59-12, 59-13, 59-14,<br>59-15, 59-16, 59-17, 59-18, and 59-19, except to the extent modified by chapters 59-09, 59-10,<br>59-11, 59-12, 59-13, 59-14, 59-15, 59-16, 59-17, 59-18, and 59-19 or another statute of this<br>state.59-09-07. (107) Governing law. The meaning and effect of the terms of a trust aredetermined by the law of the jurisdiction designated in the terms or, in the absence of a<br>controlling designation in the terms of the trust, the law of the jurisdiction having the most<br>significant relationship to the matter at issue.59-09-08. (108) Principal place of administration.1.Without precluding other means for establishing a sufficient connection with the<br>designated jurisdiction, terms of a trust designating the principal place of<br>administration are valid and controlling if a trustee's principal place of business is<br>located in or a trustee is a resident of the designated jurisdiction, or all or part of the<br>administration occurs in the designated jurisdiction.2.A trustee is under a continuing duty to administer the trust at a place appropriate to<br>its purposes, its administration, and the interests of the beneficiaries.3.Without precluding the right of the court to order, approve, or disapprove a transfer,<br>the trustee, in furtherance of the duty prescribed by subsection 2, may transfer the<br>trust's principal place of administration to another state or to a jurisdiction outside of<br>the United States.4.The trustee shall notify the qualified beneficiaries of a proposed transfer of a trust's<br>principal place of administration or a proposed transfer of some or all of the trust<br>property to a successor trustee not less than sixty days before initiating the transfer.<br>The notice of proposed transfer must include the name of the jurisdiction to which<br>the principal place of administration is to be transferred; the address and telephone<br>number at the new location at which the trustee can be contacted; an explanation of<br>the reasons for the proposed transfer; the date on which the proposed transfer is<br>anticipated to occur; and the date, not less than sixty days after the giving of the<br>notice, by which the qualified beneficiary must notify the trustee of an objection to<br>the proposed transfer.5.The authority of a trustee under this section to transfer a trust's principal place of<br>administration or a proposed transfer of some or all of the trust property to a<br>successor trustee terminates if a majority of the qualified beneficiaries notify the<br>trustee of an objection to the proposed transfer on or before the date specified in the<br>notice.6.In connection with a transfer of the trust's principal place of administration, the<br>trustee may transfer some or all of the trust property to a successor trustee<br>designated in the terms of the trust or appointed pursuant to section 59-15-04.59-09-09. (109) Methods and waiver of notice.Page No. 51.Notice to a person under chapters 59-09, 59-10, 59-11, 59-12, 59-13, 59-14, 59-15,<br>59-16, 59-17, 59-18, and 59-19 or the sending of a document to a person under<br>chapters 59-09, 59-10, 59-11, 59-12, 59-13, 59-14, 59-15, 59-16, 59-17, 59-18, and<br>59-19 must be accomplished in a manner reasonably suitable under the<br>circumstances and likely to result in receipt of the notice or document. Permissible<br>methods of notice or for sending a document include first-class mail, personal<br>delivery, delivery to the person's last-known place of residence or place of business,<br>or a properly directed electronic message.2.Notice otherwise required under chapters 59-09, 59-10, 59-11, 59-12, 59-13, 59-14,<br>59-15, 59-16, 59-17, 59-18, and 59-19 or a document otherwise required to be sent<br>under chapters 59-09, 59-10, 59-11, 59-12, 59-13, 59-14, 59-15, 59-16, 59-17,<br>59-18, and 59-19 does not need to be provided to a person whose identity or<br>location is unknown to and not reasonably ascertainable by the trustee.3.Notice under chapters 59-09, 59-10, 59-11, 59-12, 59-13, 59-14, 59-15, 59-16,<br>59-17, 59-18, and 59-19 or the sending of a document under chapters 59-09, 59-10,<br>59-11, 59-12, 59-13, 59-14, 59-15, 59-16, 59-17, 59-18, and 59-19 may be waived<br>by the person to be notified or sent the document.4.Notice of a judicial proceeding must be given as provided in the applicable North<br>Dakota Rules of Civil Procedure or as provided under section 30.1-03-01.59-09-10. (110) Others treated as qualified beneficiaries.1.A charitable organization expressly designated to receive distributions under the<br>terms of a charitable trust has the rights of a qualified beneficiary under chapters<br>59-09, 59-10, 59-11, 59-12, 59-13, 59-14, 59-15, 59-16, 59-17, 59-18, and 59-19 if<br>the charitable organization, on the date the charitable organization's qualification is<br>being determined:a.Is a permissible distributee of trust income or principal;b.Would be a permissible distributee of trust income or principal upon the<br>termination of the interests of other distributees or permissible distributees then<br>receiving or eligible to receive distributions; orc.Would be a permissible distributee of trust income or principal if the trust<br>terminated on that date.2.A person appointed to enforce a trust created for the care of an animal or another<br>noncharitable purpose as provided in section 59-12-08 or 59-12-09 has the rights of<br>a qualified beneficiary under chapters 59-09, 59-10, 59-11, 59-12, 59-13, 59-14,<br>59-15, 59-16, 59-17, 59-18, and 59-19.3.The attorney general of this state has the rights of a qualified beneficiary with<br>respect to a charitable trust having its principal place of administration in this state.59-09-11. (111) Nonjudicial settlement agreements.1.For purposes of this section, "interested persons" means a trustee and persons<br>whose consent would be required in order to achieve a binding settlement were the<br>settlement to be approved by the court.2.Except as otherwise provided in subsection 3, interested persons may enter into a<br>binding nonjudicial settlement agreement with respect to any matter involving a trust.3.A nonjudicial settlement agreement is valid only to the extent it does not violate a<br>material purpose of the trust and includes terms and conditions that could bePage No. 6properly approved by the court under chapters 59-09, 59-10, 59-11, 59-12, 59-13,<br>59-14, 59-15, 59-16, 59-17, 59-18, and 59-19 or other applicable law. A spendthrift<br>provision in the terms of a trust is presumed to constitute a material purpose of the<br>trust.4.Matters that may be resolved by a nonjudicial settlement agreement include the<br>interpretation or construction of the terms of the trust, the approval of a trustee's<br>report or accounting, direction to a trustee to refrain from performing a particular act<br>or the grant to a trustee of any necessary or desirable power, the resignation or<br>appointment of a trustee and the determination of a trustee's compensation, transfer<br>of a trust's principal place of administration, liability of a trustee for an action relating<br>to the trust, the extent or waiver of bond of a trustee, and the criteria for distribution<br>to a beneficiary where the trustee is given discretion.5.Any interested person may request the court to approve a nonjudicial settlement<br>agreement to determine whether the representation as provided in chapter 59-11<br>was adequate and to determine whether the agreement contains terms and<br>conditions the court could have properly approved.59-09-12.(112) Rules of construction.The rules of construction that apply to theinterpretation of and disposition of property by will or other governing instrument provided for<br>under chapter 30.1-09.1 also apply as appropriate to the interpretation of the terms of a trust and<br>the disposition of the trust property.Page No. 7Document Outlinechapter 59-09 general provisions and definitions
