Bill Text: NJ S1272 | 2018-2019 | Regular Session | Introduced


Bill Title: Clarifies procedures for resignation, removal, and succession of fiduciaries.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2018-02-01 - Introduced in the Senate, Referred to Senate Judiciary Committee [S1272 Detail]

Download: New_Jersey-2018-S1272-Introduced.html

SENATE, No. 1272

STATE OF NEW JERSEY

218th LEGISLATURE

INTRODUCED FEBRUARY 1, 2018

 


 

Sponsored by:

Senator  NILSA CRUZ-PEREZ

District 5 (Camden and Gloucester)

 

 

 

 

SYNOPSIS

     Clarifies procedures for resignation, removal, and succession of fiduciaries.

 

CURRENT VERSION OF TEXT

     As introduced.

 


An Act concerning fiduciaries, amending various parts of the statutory law, and supplementing Title 3B of the New Jersey Statutes.

 

     Be It Enacted by the Senate and General Assembly of the State of New Jersey:

 

     1.    N.J.S.3B:14-18 is amended to read as follows:

     3B:14-18.   Discharge, resignation and removal from office of fiduciary; account; allowances. 

     a.     A fiduciary acting under a governing instrument, including a fiduciary appointed under a will to perform a particular trust, may resign from office at any time and for any reason if the governing instrument expressly authorizes such resignation.  Such resignation shall be effective upon:

     (1)   compliance with the terms, if any, set forth in the governing instrument;

     (2)   delivery of written notice of resignation to each cofiduciary;

     (3)   compliance with the procedures set forth in section 6 of P.L.      , c.      (C.        ) (pending before the Legislature as this bill) if the fiduciary was appointed by a Surrogate of this State; and

     (4)   the appointment and acceptance of a successor fiduciary if no cofiduciary has authority to continue with the administration or the governing instrument requires the appointment of a successor fiduciary.

     The resigning fiduciary shall be entitled to commissions for the period of the fiduciary's service in accordance with the provisions of this Title.  Nothing in this subsection shall be deemed to preclude a fiduciary from applying to the Superior Court for discharge from office in accordance with subsection c. of this section.

     b.    A fiduciary acting under a governing instrument, including a fiduciary appointed by a will to perform a particular trust, may be removed from office without leave of court at any time and for any reason if the governing instrument expressly authorizes such removal.  Such removal shall be effective upon:

     (1)   compliance with the terms, if any, set forth in the governing instrument;

     (2)   delivery of written notice of removal to the fiduciary and to any cofiduciary;

     (3)   compliance with the procedures set forth in section 6 of P.L.      , c.      (C.        ) (pending before the Legislature as this bill) if the fiduciary was appointed by a Surrogate of this State; and

     (4)   the appointment and acceptance of a successor fiduciary if no cofiduciary has authority to continue with the administration or the governing instrument requires the appointment of a successor fiduciary.

     The removed fiduciary shall be entitled to commissions for the period of the fiduciary's service in accordance with the provisions of this Title.  Nothing in this subsection shall be deemed to preclude a fiduciary from applying to the Superior Court for discharge from office in accordance with subsection c. of this section.

     c.     A fiduciary may be discharged from the further duties of [his] the fiduciary's office by the court.

     The court shall examine into the matter and if sufficient cause appears, the court may grant the discharge unless it will be prejudicial to the estate, trust, or persons interested therein or for any other reason the discharge ought not to be granted.  If the fiduciary is discharged, the court shall make orders respecting the fiduciary's commissions as may be just and equitable.

     d.    A [discharge so granted shall discharge the] fiduciary who resigns or is removed in accordance with the provisions of the governing instrument, or a fiduciary who is discharged by the court, shall be discharged [of] from all the further duties of [his] the fiduciary's office except accounting for and paying over the money and assets with which [he] the fiduciary is chargeable by virtue of [his] the fiduciary's office.  Nothing in this section shall be deemed to require the filing of a judicial accounting if an instrument settling or waiving an account is permitted by and executed in accordance with the provisions of N.J.S.3B:17-13.

     [If the fiduciary is discharged, the court shall make orders respecting his commissions as may be just and equitable.]

(cf: N.J.S.3B:14-18)

 

     2.    N.J.S.3B:14-19 is amended to read as follows:

     3B:14-19.   Discharge from particular trust; effect.  Where a fiduciary is appointed by a will to perform a particular trust thereunder, [he] the fiduciary may be discharged from the performance thereof by the court as provided in subsection c. of N.J.S.3B:14-18.

     The court may grant the discharge and the fiduciary shall be relieved of all further duties and liabilities with respect to the trust [, except accounting for and paying over to his successor all moneys or assets pertaining to the trust, for which he is accountable] as provided in subsection d. of N.J.S.3B:14-18.

(cf: N.J.S.3B:14-19)

 

     3.    N.J.S.3B:14-20 is amended to read as follows:

     3B:14-20.   Discharge of one or more joint fiduciaries.  When there is more than one fiduciary they may all, or any one or more of

them, resign, be removed, or be discharged in accordance with the provisions of N.J.S.3B:14-18.

(cf: N.J.S.3B:14-20)

 

     4.    N.J.S.3B:14-21 is amended to read as follows:

     3B:14-21.   The court may remove a fiduciary from office when the fiduciary:

     a.     After due notice of an order or judgment of the court so directing, neglects or refuses, within the time fixed by the court, to file an inventory, render an account, or give security or additional security;

     b.    After due notice of any other order or judgment of the court made under its proper authority, neglects or refuses to perform or obey the order or judgment within the time fixed by the court;

     c.     Embezzles, wastes, or misapplies any part of the estate for which the fiduciary is responsible, or abuses the trust and confidence reposed in the fiduciary;

     d.    No longer resides nor has an office in the State and neglects or refuses to proceed with the administration of the estate and perform the duties required;

     e.     Is incapacitated for the transaction of business; or

     f.     Neglects or refuses, as one of two or more fiduciaries, to perform the required duties or to join with the other fiduciary or fiduciaries in the administration of the estate or trust for which they are responsible whereby the proper administration and settlement of the estate or trust is or may be hindered or prevented.

(cf: P.L.2013, c.103, s.44)

 

     5.    N.J.S.3B:14-22 is amended to read as follows:

     3B:14-22.   Discharge or removal not to release fiduciary or sureties from certain liabilities.  The resignation, discharge or removal of a fiduciary for any cause authorized by this article, including a fiduciary who resigns or is removed in the manner set forth in the governing instrument, shall not release or discharge [him] the fiduciary or [his] the fiduciary's surety or sureties, or any of them, from liability for the estate or trust, or any part thereof, which has been received or ought to have been received by [him or them] the fiduciary, or for any neglect, default, miscarriage or breach of trust in the execution of [his] the fiduciary's office.

(cf: N.J.S.3B:14-22)

 

     6.    (New section)  a.  If the fiduciary seeking to resign pursuant to subsection a. of N.J.S.3B:14-18, or the fiduciary sought to be removed pursuant to subsection b. of N.J.S.3B:14-18, was appointed by the Surrogate, there shall be filed with the Surrogate:

     (1)   a copy of the will or other governing instrument which expressly authorized resignation or removal of the fiduciary;

     (2)   proof of compliance with the terms, if any, set forth in the governing instrument; and

     (3)   proof that written notice of the removal or the intent to resign has been served on all interested persons at least 20 days prior to filing with the Surrogate.

     b.    The Surrogate shall discharge the resigning or removed fiduciary if the Surrogate determines:

     (1)   there is compliance with the terms set forth in the governing instrument;

     (2)   either written consent has been obtained from each interested person or notice has been properly served on each interested person and no opposition has been filed; and

     (3)   either there is no need to appoint a successor fiduciary or a successor fiduciary has accepted appointment and is being appointed by the Surrogate simultaneously with the discharge of the resigning or removed fiduciary.

     c.     The written notice required under subsection a. of this section shall be served by certified or registered mail, return receipt requested, upon all interested persons.  Such notice shall advise the interested person of the fiduciary's removal or intent to resign and that any opposition to the resignation or removal must be provided to the Surrogate in writing within 20 days of the mailing of the notice.

     d.    As used in this section "interested person" means:

     (1)   each fiduciary then serving, and the proposed successor fiduciary, if any, to the fiduciary sought to be discharged; and

     (2)   each person having an interest in income or principal whom it would be necessary to join as a party in a proceeding for the judicial settlement of the fiduciary's account.  If such person has not attained the age of majority or is otherwise incapacitated, notice shall be served on the person's legal representative, agent under a durable power of attorney or, in the case of a minor with no legal representative or agent under a durable power of attorney, the minor's parent.

 

     7.    This act shall take effect immediately.

 

 

STATEMENT

 

     This bill would clarify the procedures for the resignation or removal of a fiduciary when such action is expressly permitted by a governing instrument, such as a will.  The bill would additionally clarify that Surrogates may grant such applications under certain circumstances.

     Many governing instruments are currently drafted to include a specific provision permitting fiduciaries to resign from office or establishing the authority to discharge a fiduciary and appoint a successor.  Under current law, procedures for processing applications for resignation or removal pursuant to such provisions may be unclear.  This bill would establish certain standards for such applications by providing that the resignation or removal would become effective when any relevant terms in the governing instrument have been complied with, written notice is delivered to any cofiduciaries, and a successor is appointed if there is no cofiduciary authorized to continue the administration or if the governing instrument requires appointment of a successor.

     Additionally, the bill would expressly permit Surrogates to accept resignations and effectuate removals of fiduciaries appointed by the Surrogate when the action is authorized by the governing instrument and there is no opposition to the application by any interested person.  The bill would require that certain documents be filed with the Surrogate, including a copy of the governing instrument, proof of compliance with any relevant terms in the governing instrument, and proof that notice of the intended action was sent to all interested parties by certified or registered mail at least 20 days prior to filing the action.  The notice would advise the interested person of the intended action and that any objections must be provided to the Surrogate in writing within 20 days of the mailing.

     As used in the bill, "interested person" includes all serving fiduciaries, any successors, and any person having an interest in income or principal whom it would be necessary to join as a party in a proceeding for the judicial settlement of the fiduciary's account.

     Nothing in the bill would preclude a fiduciary from applying to the Superior Court for discharge as provided under current law.

     It is the sponsor's belief that this bill will help reduce the costs of administering estates and testamentary trusts.

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