Effective Jan. 1, 2020, the Connecticut Uniform Trust Code (“UTC”) will apply to the creation, administration and termination of trusts in Connecticut. The UTC provides for some exciting opportunities for Connecticut residents to plan for their estates, including significantly extending the permitted duration of trusts, allowing for the protection of assets, and providing flexibility as to appointment of trustees.
The UTC allows for so called “Dynasty Trusts” in that instead of a trust being limited to a short duration of approximately ninety (90) years, the UTC permits trusts to last up to eight hundred (800) years. Typically, Connecticut residents have had to utilize other jurisdictions, including Alaska and Delaware, to establish Dynasty Trusts, but no more!
The new Connecticut UTC also permits flexibility as to separating trustee responsibilities, and appointing different individuals or institutions to handle different aspects of trust administration. For example, one person may be charged with investment-making decisions whereas a different person would have the authority as to distributions.
Finally, and perhaps most exciting for Connecticut residents, is that the new UTC allows for self-settled asset protection trusts. Such a trust is created by a person for his or her own benefit, but shelters the assets from that person’s creditors. There are specific requirements that must be met for the trust to be valid, including being irrevocable, containing specific language preventing the beneficiary from assigning his or her interest in the trust, being governed by Connecticut law, and utilizing an independent trustee (rather than the person setting up the trust as the trustee) for purposes of making distributions of assets to the person that established the trust.
The UTC also contains some new obligations as to trust management and administration, including reporting requirements to beneficiaries. To discuss the potential benefits and implications of the UTC on your estate planning and existing trusts, you can contact Simon J. Lebo at 860-659-0700 for a consultation.