ARIZONA
HOUSE OF REPRESENTATIVES
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SB 1204: trusts and estates |
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PRIME SPONSOR: Senator Worsley, LD 25 BILL STATUS: Caucus & COW |
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Relating to probate proceedings and trust
instruments.
Provisions
Probate Proceedings
1. Asserts that the Arizona Rules of Probate Procedure rather than the Arizona Rules of Civil Procedure govern formal estates, trusts and protective proceedings, with exceptions. (Sec. 1)
2. Clarifies that a penalty clause for contesting a will is unenforceable in either proceedings or actions if probable cause exists for the contest, proceedings or actions. (Sec. 2)
3. Provides a devisee with four months, after notice of an informal probate, to commence a formal probate proceeding. (Sec. 3)
4. Specifies that publication for formal probate must be made at least three times before the hearing, the first of which must be 14 days before the hearing. (Sec. 4)
Trust Instruments
5. Asserts that a penalty clause for contesting a trust instrument is unenforceable in either proceedings or actions if probable cause exists for the contest, proceedings or action. (Sec. 5, 6)
6. Modifies the definition of mandatory distribution to include a distribution amount for a stated age and a distribution made pursuant to the exercise of a power of withdrawal. (Sec. 7)
7. Specifies that a person is not considered a qualified beneficiary, distributee or other beneficiary for certain reporting requirements of a trust instrument if specific distributions of property have already been made or satisfied. (Sec. 8)
8. Clarifies that recipients of a certification of trust who acts in good faith can require a trustee to furnish copies of excerpts from the trust instrument. (Sec. 10)
9. Prohibits a person from requiring a trustee to furnish copies of excerpts from the trust instrument unless the person provides a verified statement of reasonable basis for the request. (Sec. 10)
10. Specifies that a person is not liable for acting in reliance of a certification of trust without actual knowledge that any representations contained in the certification are incorrect. (Sec. 10)
11. States that actual knowledge of trust terms cannot be solely inferred from the fact that a copy of the trust is held by an employee of the person relying on a certification of trust. (Sec. 10)
12. States that a person who demands a trust instrument or excerpts in addition to a certification of trust is liable for costs, expenses and attorney fees if the person did not act in good faith or did not comply with statutory requirements. (Sec. 10)
13. Clarifies that a person's right to obtain a copy of a trust instrument in a judicial proceeding includes excerpts from the trust instrument. (Sec. 10)
Miscellaneous
14. Makes technical and conforming changes. (Sec. 3, 4, 7, 8, 9, 10)
Current Law
A.R.S Title 14 governs the requirements and procedures for probate proceedings relating to wills, trusts instruments and other protective filings for guardianship and conservatorship of vulnerable individuals. A.R.S § 14-1304 states that the Arizona Rules of Civil Procedures govern formal proceedings under Title 14 unless otherwise provided.
A.R.S. § 14-2517 states that a penalty clause for contesting a will or instituting other proceedings is unenforceable if probable cause exists for that action. A.R.S. § 14-3306 stipulates that on the issuance of an informal probate statement, the applicant has 30 days to give a copy of the will and written information of the will's admission to probate to all heirs and devisees. The heir is provided with four months from the receipt of the information to commence a formal probate proceeding. A.R.S. § 14-3403 outlines notice requirements in a formal probate proceeding providing that the petitioner must give notice one time at least 14 days before the hearing by publication to all individuals whose identity or address is unknown.
A.R.S. § 14-10506 provides that a creditor or assignee of a beneficiary is permitted to reach a mandatory distribution of income or principal if the trustee has not made the distribution to the beneficiary within a reasonable period after the mandated distribution date, unless the trust authorizes the delay. Mandatory distribution is defined as a distribution of income or principal that the trustee is required to make to a beneficiary under term of the trust, including a distribution on the termination of the trust. A.R.S. § 14-10813 requires a trustee to keep qualified beneficiaries of a trust reasonably informed about the administration of the trust and of material facts necessary for them to protect their interests. The trustee must promptly provide qualified beneficiaries certain information or reports that follow outlined requirements.
A.R.S. § 14-11013 allows a trustee to furnish a certification of trust, rather than a copy of the trust instrument, to a person other than a beneficiary. A recipient of a certification of trust is permitted to require the trustee to furnish copies of trust instrument excerpts designating the trustee and conferring on the trustee the power to act in a pending transaction. A person is not liable for acting in reliance of a certification of trust without knowledge that any representations contained in the certification are incorrect. Knowledge of trust terms cannot be solely inferred from the fact that a copy of the trust instrument is held by the person relying on the certification. A person making a demand for the trust instrument in addition to the certification is liable for damages if the court determines the person did not act in good faith.
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Fifty-third Legislature SB 1204
Second Regular Session Version 2: Caucus & COW
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