55-5-9. Review of assets upon acceptance of trusteeship--Basis for disposition or retention of assets--Interest in closely held entity.

The trustee shall, within a reasonable time after the acceptance of the trusteeship, review trust assets and make and implement decisions concerning the retention and disposition of original pre-existing investments in order to conform to the provisions of this section. The trustee's decision to retain or dispose of an asset may properly be influenced by the asset's special relationship or value to the purposes of the trust or to some or all of the beneficiaries, consistent with the trustee's duty of impartiality.

If a trust owns an interest in a closely held entity, and the trust agreement, or other document signed by the settlor, trust protector, or signed by a majority of the current income or principal beneficiaries, if the settlor is deceased, provides that the trustee has no duty to inquire or review the activities of the closely held entity, no trustee is liable to a beneficiary to the extent that the trustee acted in reliance on the provisions of the trust or court order.

For purposes of this section, the term, closely held entity, means any entity in which the following persons in aggregate own at least twenty percent of the entity:

(1)    The settlor;

(2)    The settlor's grandparents or their descendants;

(3)    The settlor's spouse; or

(4)    Any trust created by anyone of the aforementioned persons.

If a trust was in existence on or before July 1, 2012, and a collateral document relieved the trustee of the duty to inquire or review the activities of a closely held entity as provided in this section, then the trustee may elect to have this section apply upon providing sixty days written notice of the election to the settlor or to the current income or principal beneficiaries if the settlor is deceased.

Source: SL 1995, ch 271, § 9; SL 2009, ch 252, § 32; SL 2012, ch 233, § 22; SL 2021, ch 207, § 13.