H. B. 4711
(By Delegates Rowe, Wills, C. White
and Amores)
[Introduced February 25, 2000; referred to the
Committee on the Judiciary.]
A BILL to amend and reenact section twelve, article five, chapter
forty-four of the code of West Virginia, one thousand nine
hundred thirty-one, as amended, relating to the distribution
of assets in satisfaction of pecuniary bequests or transfers
in trust of a pecuniary amount or formula; authorizing
fiduciaries to enter into certain agreements; validating
certain agreements; and providing for discretionary division
of trusts for tax administrative or other purposes.
Be it enacted by the Legislature of West Virginia:
That section twelve, article five, chapter forty-four of the
code of West Virginia, one thousand nine hundred thirty-one, as
amended, be amended and reenacted to read as follows:
ARTICLE 5. GENERAL PROVISIONS AS TO FIDUCIARIES.
§44-5-12. Distribution of assets in satisfaction of pecuniary
bequests; authority of fiduciaries to enter into certain agreements; validating certain agreements;
providing for discretionary division of trusts for
tax, administrative or other purposes.
(a) Where a will, trust or other governing instrument
authorizes or directs the fiduciary to satisfy wholly or partly
in kind a pecuniary bequest or a separate trust to be funded by
a pecuniary amount or formula unless the will, trust or other
governing instrument shall otherwise expressly provide, the
assets selected by the fiduciary for that purpose shall be valued
at their respective values on the date or dates of their
distribution, and in the case of any pecuniary bequests or
separate trusts established under the will or trust by a
pecuniary amount or formula if the pecuniary bequest or separate
trust is not entirely funded or an amount necessary to fund the
bequest or trust completely is not irrevocably set aside within
fifteen months after the date of the testator's or grantor's
death, the fiduciary shall allocate to the bequest or trust a
prorata share of the income earned by the estate of the testator
or grantor or such other fund from which the bequest or trust is
to be funded between the date of death of the testator or grantor
and the date or dates of the funding.
(b) Whenever a fiduciary under the provisions of a will,
trust or other governing instrument is required to satisfy a
pecuniary bequest or transfer in trust in favor of the testator's or donor's spouse and is authorized to satisfy such the bequest
or transfer by selection and distribution of assets in kind, and
the will, trust or other governing instrument further provides
that the assets to be so distributed shall or may be valued by
some standard other than their fair market value on the date of
distribution, the fiduciary, unless the will, trust or other
governing instrument otherwise specifically directs, shall
distribute assets, including cash, fairly representative of
appreciation or depreciation in the value of all property
available for distribution in satisfaction of such the pecuniary
bequest or transfer. This section shall not apply to prevent a
fiduciary from carrying into effect the provisions of the will,
trust or other governing instrument that the fiduciary, in order
to implement such a bequest or transfer, must distribute assets,
including cash, having an aggregate fair market value at the date
or dates of distribution amounting to no less than the amount of
the pecuniary bequest or transfer as finally determined for
federal estate tax purposes.
(c) (1) Any fiduciary having discretionary powers under a
will or other governing instrument with respect to the selection
of assets to be distributed in satisfaction of a pecuniary
bequest or transfer in trust in favor of the testator's or
donor's spouse, shall be authorized to enter into agreements with
the commissioner of internal revenue of the United States of America and other taxing authorities requiring the fiduciary to
exercise the fiduciary's discretion so that cash and other
properties distributed in satisfaction of such the bequest or
transfer in trust will be fairly representative of the
appreciation or depreciation in value of all property then
available for distribution in satisfaction of such the bequest or
transfer in trust and any such agreement heretofore entered into
after April one, one thousand nine hundred sixty-four, is hereby
validated. Any such The fiduciary shall be authorized to enter
into any other agreement not in conflict with the express terms
of the will, trust or other governing instrument that may be
necessary or advisable in order to secure for federal estate tax
purposes the appropriate marital deduction or other deduction or
exemption available under the internal revenue laws of the United
States of America, and to do and perform all acts incident to
such purpose.
(2) Unless ordered by a court of competent jurisdiction, the
bank or trust company operating such a common trust fund, as
provided for in section six of this article, shall not be
required to render an accounting with regard to such the fund,
before any fiduciary commissioner but it may, by application to
the circuit court of the county in which is located the principal
place of business of said bank or trust company, secure the
approval of an accounting in such condition as the court may fix: Provided, That nothing herein shall be interpreted as relieving
any fiduciary acquiring, holding or disposing of an interest in
any common trust fund from making an accounting as required by
law with respect of such the interest.
(d) The fiduciary of any trust created by will, trust or
other governing instrument shall have discretionary power from
time to time without need of court approval to divide the trust
or trusts for purposes of the generation skipping transfer tax
("GST") of section 2601 of the Internal Revenue code of 1986, as
amended, or any similar or successor law of like import, or for
any other tax, administrative or other purposes. In exercising
this authority for inclusion ratio, marital deduction election,
reverse qualified terminal interest property election or other
GST or other tax purposes, the power shall be exercised in a
manner that complies with applicable internal revenue code
treasury regulations or other requirements for accomplishing the
intended purposes. In the event that division is made for
purposes of separating assets with respect to which the federal
estate tax marital deduction election is to be made from those as
to which such election is not to be made, the division shall be
done on a fractional or percentage basis and the assets of the
trust or other fund to be divided shall be valued for purposes of
the division on the date or dates of division.
NOTE: The purpose of this bill is to bring this statute into
compliance with applicable federal tax law, and to give West
Virginia residents options now available under federal tax law.
Changes in §44-5-12(a) extend the pecuniary bequest language
to trusts, and brings the section into compliance with federal
law.
Language is deleted in §§44-5-12(b) and (c) to expand
availability of federal tax deductions or exemptions to trusts
for other family members, rather then limiting applicability only
to the marital trusts. Language is added to ensure applicability
to transfers in trust regardless of what instrument is used to
create the trust.
§44-5-12(d) is created to bring the statute into compliance
with federal tax law.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.