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      • Legislative Proposals for 2019

        Assignments for Benefit of Creditors (2019-01)

        Proposed by Bankruptcy Creditor-Debtor Rights Committee

        Approved by the Board of Governors on September 26, 2018   

        This legislative proposal would revise and update Chapter 426 of the Revised Statutes of Missouri (Assignment for Benefit of Creditors). An ABC involves the assignment of all of an individual's or company's assets to a third-party assignee. The assignee, who holds legal and equitable title to the company’s assets in trust by virtue of the assignment, is empowered to sell the assets and distribute the proceeds to the company’s creditors pursuant to priorities established by state law.

        The proposed legislation sets jurisdiction and venue in the circuit courts. It provides procedures for the recovery and distribution of assets to the assignor's creditors. The legislation would supplant common law assignments. The legislation would provide the required and prohibited provisions for a valid ABC. The legislation would define the rights, powers and duties of the assignor and assignee. The legislation would regulate the priority and processing of claims against the assignor for an orderly liquidation of the assignor's non-exempt assets.

        The current ABC statutes were written in 1909 and have not been substantively revised since 1939. Other states, such as Florida, California, and New York, have drafted and adopted comprehensive and modern statutory schemes for ABCs. Chapter 426 of the Missouri statues is out of date and rarely used by practitioners.   

        House Bill 939, sponsored by Representative Louis Riggs
        Senate Bill 422, sponsored by Senator Bill White

        Draft Legislative Proposal (2019-01)

         



        Qualified Spousal Trusts (2019-02)

        Proposed by the Probate and Trust Division
        Approved by the Board of Governors on September 26, 2018

        This proposal provides for a technical amendment to § 456.950 based on a need to (1) clarify the revocability of a Qualified Spousal Trust, (2) harmonize the terms in the statute with the bankruptcy code, and (3) clarify the funding of separate shares within a qualified spousal trust.

        Accordingly, pursuant to the proposal, during the joint lives of the settlors or of the sole surviving settlor all property transferred to, or held by, the trust is held and administered in one trust for the benefit of both settlors, which may be revocable by either settlor or both settlors while both are alive, and by one settlor after the death or incapacity of the other.

        All property at any time held in a qualified spousal trust, without regard to how such property was titled prior to it being so held, shall be exempt from attachment and execution to the extent of any settlor’s interest, right, or power therein, except from the claims of the settlors’ joint creditors.

        This proposal specifies that property may be held in, or transferred to, a settlor’s separate share of a trust by designation under the terms of the trust or the titling of property that refers to the separate share of the trust or its trustee as owner.

        Draft Legislative Proposal (2019-02)

         



        Revised Decanting Statute (2019-03)

        Proposed by the Probate and Trust Division
        Approved by the Board of Governors on September 26, 2018

        In 2011, the Missouri General Assembly enacted a “decanting” statute (456.4-419, RSMo). A decanting statute authorizes distributions to be made from one trust (the “first trust”) to another trust (the “second trust”) if certain conditions are met. Missouri’s decanting statute has been very useful to Missouri citizens because it allows greater flexibility to address circumstances that might have changed since the first trust was executed. For example, a second trust can contain provisions necessary to address changes in tax laws, where the first trust may not have included such provisions. Additionally, a second trust can include provisions for a beneficiary with special needs, which may not have been included in the first trust.

        Several points are clarified in the proposal, including:

        • the modification of a first trust into a second trust;
        • the permissible distributees of a second trust;
        • the use of powers of appointment in the second trust;
        • how a second trust may be used for disabled beneficiaries;
        • how a second trust may hold S-corporation stock;
        • the notifications given to the beneficiaries of the first and second trusts; and
        • how a second trust may affect the rules governing perpetuities.


        Several of the proposed amendments are based on provisions of the Uniform Trust Decanting Act (UTDA).

        Senate Bill 418, sponsored by Senator Bill White 
        House Bill 1041, sponsored by Representative David Evans  

        Draft Legislative Proposal (2019-03)