N.Y. Estates, Powers & Trusts Law § 11-1.11: Limited power of fiduciary to amend trust for certain tax

§ 11-1.11 Limited power of fiduciary to amend trust for certain tax

purposes

(a) Unless expressly prohibited by the terms of the instrument

creating an express trust, the terms of the trust instrument shall be

deemed to include the following provision granting the trustee, which

term as defined in paragraph (h) of this section may mean the executor

or administrator, a limited power to amend:

"The trustees shall have the limited power to amend the administrative

and other provisions of the trust which have no significant dispositive

effects within the meaning of paragraph (i) of this section on an

interest described in such paragraph, by an acknowledged instrument in

writing, in order to:

(i) achieve a qualified reformation of a reformable interest into a

qualified interest for purposes of the charitable deduction as permitted

by section 2055(e)(3) or 2522(c)(4) of the United States Internal

Revenue Code ("Code") and the regulations thereto, or achieve a

reformation of a charitable remainder trust permitted by section 664 of

the Code and the regulations thereto;

(ii) meet the requirements of a qualified domestic trust for a

surviving spouse who is not a citizen of the United States under

sections 2056(d) and 2056A(a) of the Code and the regulations thereto;

and

(iii) meet the requirements of a personal residence trust under

section 2702(a)(3) or to meet the definition of a qualified interest

under section 2702(b) of the Code, and the regulations thereto."

(b) (1) No trustee may exercise any power created under paragraph (a)

of this section with respect to any trust that is exempt from tax

imposed by the provisions of chapter 13 of the Code or has an inclusion

ratio, as defined in section 2642(a) of the Code, of zero if the

exercise of such power would cause such trust to lose in whole or in

part its exemption from the tax imposed by the provisions of chapter 13

of the Code or cause such trust to have an inclusion ratio, as defined

in section 2642(a) of the Code, of more than zero.

(2) If the creator of an express trust or a beneficiary (whether

current, future or contingent) of income or principal of an express

trust is serving as a trustee of the express trust, the creator or such

beneficiary cannot participate in the exercise of the power to amend

such express trust pursuant to this section. If two or more trustees are

serving, the power to amend such express trust may be exercised by the

trustees who are not so disqualified.

(c) Such amendment shall be embodied in one or more writings signed

and acknowledged in the manner required by the laws of this state for

the recording of a conveyance of real property by the trustee and filed

in the office of the clerk of the court having jurisdiction over the

instrument. At least thirty (30) days prior to such filing, notice of

such amendment, together with a copy of the amendment, shall be sent by

registered or certified mail, return receipt requested, or by personal

delivery to all persons interested in the trust, or to the guardian of

the property, committee, conservator, adult guardian, or personal

representative of any such persons under a disability, or to the parent

or person with whom a minor resides. Such notice shall include the

following statement: "If you wish to object to the proposed amendment,

you should notify the trustee (executor or administrator) of your

objections in a writing signed and acknowledged by you before a notary

in the manner required by the laws of the state of New York for the

recording of a conveyance of real property. Such written objection must

be personally delivered or mailed to the trustee (executor or

administrator) by registered or certified mail, return receipt

requested, within thirty (30) days of the date when the notice was

personally delivered or mailed to you. If no such objection to the

proposed amendment is made by any person interested in the trust, such

amendment will become effective upon its filing in the court having

jurisdiction over the trust." Proof by affidavit of such mailing or

delivery of the notice or by signed acknowledgement of receipt by the

person noticed, shall be filed in the office of the clerk of the court

where such amendment is filed prior to or simultaneously with the filing

of such amendment. If it appears by affidavit that the name or address

of any person interested in the trust is unknown, mailing to such person

of the notice shall not be required.

(d) Such amendment shall be effective upon filing as required by

paragraph (c) of this section, provided that no written objection to

such amendment, signed and acknowledged in the manner required by the

laws of the state for the recording of a conveyance of real property by

any person interested in the trust, has been received prior to such

filing by the trustee, by personal delivery or by registered or

certified mail, return receipt requested. If no such written objection

has been received by the trustee prior to such filing, no judicial

proceeding or consent of any person interested in the trust shall be

required.

(e) Unless otherwise provided in the amendment, the amendment shall be

deemed to have been effective in the case of a will as of the date of

death of the decedent, and in the case of any other instrument on the

date it became irrevocable.

(f) The limited power to amend granted by this section shall be

exercised only if acted upon by all of the trustees, except as otherwise

provided by subparagraph (b)(2) of this section.

(g) For the purposes of this section, the phrase "all persons

interested in the trust" shall mean all the persons upon whom service of

process would be required in a proceeding for the judicial settlement of

the account of the trustee, taking into account section three hundred

fifteen of the surrogate's court procedure act.

(h) In any case where the Code requires that an election or other

action be made or taken by the executor or if no trustee of a trust

under a will has qualified, the term "trustee" as used in this section

shall mean the executor or administrator of an estate. In any such case,

the trustee shall comply with any action taken by the executor or

administrator under this section.

(i) An amendment pursuant to paragraph (a) of this section shall be

conclusively deemed to have "no significant dispositive effect" if the

difference between the actuarial value determined as of the effective

date of the amendment

(i) of the interest reformed pursuant to subparagraph (a)(i) or

(a)(ii) qualifying for the marital or charitable deduction which is

involved in a reformation pursuant to subparagraph (a)(i) or (a)(ii); or

(ii) of the interest retained by the transferor or any applicable

family member reformed pursuant to subparagraph (a)(iii) in order to

qualify as a "personal residence trust" or a "qualified interest" under

section 2702 of the Code;

and the actuarial value of the respective interest prior to such

amendment does not exceed five percent of the actuarial value of such

pre-amendment interest.

(j) The term "trust" shall include an arrangement treated as a "trust"

for the purposes of the Code.

(k) The fact that a testamentary trust cannot be revoked, altered or

amended by reason of the testator's death, or that the will or trust

instrument states that the trust is irrevocable and/or cannot be altered

or amended, shall not be deemed to constitute an express prohibition

within the meaning of the phrase "unless expressly prohibited by the

terms of the instrument creating an express trust."

(l) References to sections of the United States Internal Revenue Code

or Code shall refer to the United States Internal Revenue Code of 1986

as amended from time to time, or to corresponding provisions of

subsequent internal revenue laws, and regulations thereto; and shall

also refer to corresponding provisions of state law.