The 2015 Minnesota State Legislature has revised and restated Minn. Stat. 501B.16 et seq., known as the statute for Trust Instruction Proceedings or the "TIP Statute." The revised TIP Statute is being reenacted as part of the state's new Uniform Trust Code and will go into effect on January 1, 2016.
The recently passed revisions to the TIP Statute will:
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- Enable petitioners to proceed based upon in rem or personal jurisdiction. In rem jurisdiction is generally available in Minnesota when trust assets are located or deemed to be located in Minnesota, bearing in mind that intangible assets are deemed to be located where the trustee is located.
- Expand the parties in interest who may seek instructions or participate in TIP proceedings.
- Expressly provide that corporate trustees located in Minnesota may use the TIP portion of Minnesota's Uniform Trust Code but are not subject to its provisions generally, which are intended to apply to traditional trustees of personal trusts. The revised statute defines a corporate trust agreement as "any indenture, pooling and servicing agreement, collateral agency agreement, or other contractual arrangement that establishes an express trust either before or upon the occurrence of an event of default and was entered into with a trustee as a party to facilitate a commercial transaction for the issuance of debt or equity securities or for the creation of other similar rights or interests, whether or not the securities are subject to any securities laws, including but not limited to the Trust Indenture Act of 1939, as amended."
As such, the new law expressly recognizes that financial institutions serving in corporate trustee capacities to facilitate financing transactions are not subject to the general fiduciary duties of most traditional trustees. The revised statute follows modern case law where corporate trustees are only held accountable for the express contractual rights and powers that they have undertaken under the governing trust documents and are not held to all other general notions of trust law that were developed in the context of traditional trust relationships.
Maslon regularly represents financial institutions acting in various corporate trustee capacities in a wide variety of matters, including Trust Instruction Proceedings. We are monitoring this legislation and will post further updates as they become available. Please contact us with any related questions you may have.