Kansas first state to enact new Uniform Trust Code

Northwestern Financial Review, Jul 15-Jul 31, 2002

Kansas has become the first state to enact the Uniform Trust Code, a new uniform law which provides a comprehensive model for codifying the law on trusts. The legislation was signed into law by Gov. Bill Graves and becomes effective in Kansas on January 1, 2003. The code was drafted by the National Conference of Commissioners on Uniform State Laws.

Trusts are used to transfer property to beneficiaries without probate and, in some cases, to reduce adverse tax consequences. The use of trusts, both in family estate planning and commercial transactions, has increased in recent years. This has resulted in a corresponding rise in the number of day-to-day questions involving trusts and the recognition that trust law in many states is quite thin.

"The enactment of the Uniform Trust Code in Kansas is an important first step for updating trust law nationwide," says Michelle Clayton, NCCUSL. "While many states continue to rely on the common law in trust matters, the Trust Code provides a comprehensive set of statutory rules on trusts, providing individuals with a readily available source for determining the law on trusts."

The code is a default statute and contains basic default rules that govern voluntary trusts. The code contains provisions on the creation of trusts, representation, day-to-day administration, and their modification and termination. With only limited exceptions, anyone who creates a trust may spell out how the trust is to be administered and distributed. The exceptions include the requirements for creating a trust, the duty of a trustee to act in good faith, and the requirement that a trust and its terms be for the benefit of its beneficiaries.