Also known as:Uniform Trust Code · Coordinated Universal Time
Written by attorneys — see sources below.
A comprehensive uniform statute that codifies the law of trusts. The statute supplies default rules for trust creation, validity, administration, modification, termination, and the duties and powers of trustees and the rights of beneficiaries.
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Cases
Uniform Acts
Restatements
How its tested
Common Examples
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Special Needs Trust Modification
Ursula Upton created a trust leaving an outright remainder to her grandson. After her death, the grandson suffered a disabling accident that would cause any outright distribution to disqualify him from government benefits. The trustee petitions the court to convert the remainder into a special needs trust. Because the conversion furthers the settlor's purpose of providing for the beneficiary without wasting assets on unnecessary expenses, the court grants the modification.
Spendthrift Trust Termination
Umeko Uchida created a spendthrift trust for her three adult children. Years later all three children, who are competent and in agreement, petition to terminate the trust. The settlor is deceased and unavailable to consent. The court applies the Uniform Trust Code provisions on termination and holds that the beneficiaries may terminate the trust because the spendthrift restraint no longer serves any protective purpose once all interested parties consent.
What must a private trust have to be valid under the UTC?
Under UTC § 402 a private trust requires a definite beneficiary unless it qualifies as a charitable trust or another recognized exception. The beneficiary must be ascertainable now or in the future, either as an individual or as a member of an objectively described class.
Supporting sources
When may a court modify trust terms under the UTC equitable deviation provision?
A court may modify administrative or dispositive provisions if circumstances not anticipated by the settlor make the modification necessary to further the purposes of the trust. This authority extends to converting an outright remainder into a special needs trust when doing so preserves assets and better fulfills the settlor's intent.
Supporting sources
How does the UTC treat acceptance of a trusteeship?
Under UTC § 701 a designated trustee accepts by substantially complying with any method stated in the trust instrument. If the method is not made exclusive, acceptance may also be inferred from conduct such as taking control of trust assets or exercising trustee powers.
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When is a noncharitable purpose trust valid under the UTC?
UTC § 409 permits a noncharitable trust for a specific purpose even without an identifiable beneficiary. The trust remains enforceable only for a limited statutory period, after which any remaining property is distributed according to the statute or the trust terms.
Supporting sources
What renders a trust invalid for lack of beneficiaries under UTC § 404?
A trust fails when its terms expressly disclaim any beneficiaries or direct the trustee to pursue an unlawful or public-policy-violating purpose rather than benefiting identifiable persons. In either case no one holds an enforceable equitable interest, so the arrangement is not a valid trust.