AN ACT TO AMEND TITLES 12 AND 25 OF THE DELAWARE CODE RELATING TO DECEDENTS’ ESTATES AND PROPERTY.

Section 1 of this Act amends § 3323 of Title 12 to clarify: (1) that powers vested in 2 fiduciaries or nonfiduciaries must be exercised by agreement of both (that is, unanimously), while actions of 3 or more fiduciaries must be exercised by a majority; and (2) how these rules also apply when fiduciaries or nonfiduciaries are designating 1 or more of them to perform ministerial functions on behalf of all of them. In particular, Section 1 of this Act clarifies that when 2 fiduciaries or nonfiduciaries are serving, they can designate 1 of them to perform ministerial functions on behalf of both of them—in other words, that the statute’s existing mention of such designation being available to a majority does not mean that it is available only when there are 3 or more fiduciaries or nonfiduciaries serving. Section 1 of the Act also clarifies (in subsection (a) of § 3323) that the non-liability of fiduciaries or nonfiduciaries who dissent from an action of the majority (if the dissent is evidenced in writing and delivered to the majority) applies only with respect to such action. Section 1 of the Act also reorganizes and rewords § 3323 to reflect current stylistic and formatting preferences. Section 2 of this Act amends § 3325(29) of Title 12 to allow the trustee to select the governing instrument of either the transferor trust or the transferee trust (those two terms being defined in § 3341 of Title 12) in the context of a merger. The purpose of this amendment is to allow flexibility and improve administrative ease so that the name, EIN, account numbers, and other identifying information of the trust may remain unchanged post-merger. Section 3 of this Act amends § 3326 of Title 12 to: (1) Expand the definition of “officeholder” to include those who are empowered to appoint another officeholder; (2) Add a cross-reference to new § 3327A of Title 12 so that the definition of “officeholder” in § 3326 will also apply to § 3327A; and (3) Reorganize and reword § 3326 to reflect current stylistic and formatting preferences. Section 4 of this Act amends Title 12 by moving the language of § 3336 of Title 12 to new § 3327A of Title 12 and by adding provisions to new § 3327A that expand the subject matter of § 3336. More specifically, new § 3327A: (1) Replaces “trustee” with “officeholder” or “trustee or other officeholder” to parallel §§ 3326 and 3327 of Title 12, so that § 3327A will address the appointment of officeholders generally, and not just the appointment of trustees; (2) For trusts that are not continuing (that is, for trusts to which § 3327A(a)(1) —the existing subject matter of § 3336—does apply), changes the current language so that the appointment mechanism to appoint a distributing trustee can also be used where needed to appoint an officeholder other than a trustee; (3) For such distributing trusts, changes the current language so that the appointment of a distributing trustee or other officeholder is accomplished by unanimous consent, rather than by unanimous vote, because “vote” implies procedural formalities that ought not be necessary in such a situation; (4) For trusts that are continuing (that is, for trusts to which § 3327A(a)(1) —the existing subject matter of § 3336—does not apply), creates a new procedure for the appointment of a trustee or other officeholder where there is a vacancy, without the approval of the Court of Chancery, by unanimous consent of certain beneficiaries, but subject to any restrictions that the governing instrument imposes on the appointee; (5) Emphasizes that the unanimous consent required under § 3327A(c) and (d) may be achieved via representation by one or more designated representatives under § 3339 of Title 12 or by one or more virtual representatives under § 3547 of Title 12; (6) Provides expressly that, subject to certain conditions, § 3327A also applies to the appointment of a trustee or other officeholder where another officeholder is supposed to fill a vacancy but has failed to do so within 60 days of being notified of the vacancy; (7) Confirms that, unless a trustee vacancy is required by law to be filled, nothing within § 3327A shall be construed to require filling trustee or other officeholder vacancies when not expressly required by the trust’s governing instrument; and (8) Confirms that nothing within § 3327A shall be construed to limit the appointment of a trustee or other officeholder by a modification of a trust under § 3342 of Title 12 or by a nonjudicial settlement agreement under § 3338 of Title 12. Section 5 of this Act amends § 3341 of Title 12 to allow the trustee to select the governing instrument of either the transferor trust or the transferee trust in the context of a merger in order to align with the amendment made in Section 2 of this Act. Section 6 of this Act amends § 3345 of Title 12 to include references to both the trustee or adviser of a trust, in each place in the statute where only the trustee was formerly referenced, to avoid any potential ambiguity about the statute’s application to beneficiary well-being trusts that are drafted to provide that the trustee shall provide beneficiary well-being programs at the direction of or with the consent of an adviser. Section 6 of this Act also shortens the first sentence of § 3345(d) of Title 12—the original introductory sentence was intended to convey that the statute is applicable where the trustee is directed by an adviser, but this introductory sentence is no longer necessary in light of the other changes to this statute that more directly spell out the dynamic of a directed trust. It is noted for the sake of clarity, however, that this shortening of the first sentence of § 3345(d) of Title 12 does not change that actions taken under § 3345(d) remain subject to applicable fiduciary duties. Section 6 of this Act also clarifies § 3345(d)(3) of Title 12 that payment for beneficiary well-being programs to a trustee or affiliate or adviser is permitted only if the governing instrument expressly authorizes such payment. Section 6 of this act also amends § 3345(d)(3) of Title 12 by deleting the word “fiduciary” as modifying the term “compensation” to reflect that some advisers who are not fiduciaries may receive compensation (and not to have any effect on whether a trustee or adviser is or is not a fiduciary). Section 6 of this Act also adds the word “prior” before the word “disclosure” in the last clause of § 3345(d)(3) of Title 12 to clarify that payment for beneficiary well-being programs to a trustee or affiliate or adviser is permitted without prior notice or prior disclosure to any beneficiary of the trust. Section 7 of this Act amends § 504 of Title 25 to coordinate one of the methods for opting out of the effect of § 504(a) upon the exercise of a power of appointment. The amendment is that the instrument of exercise of a power of appointment should make express reference to the provisions of § 501(a) of Title 25 and should expressly state that it shall not apply to the exercise of the power in order to effectuate the opt-out of § 504(a). This change replaces the prior provision that referred generally to § 501, rather than specifically to § 501(a). Section 8 of this Act provides an effective date.