1. Trust Industry Brief Legislative Update: An Act to Amend Title 18 of the Delaware Code Relating to Insurance
On May 5, 2016, House Bill 273, was created and signed into effect by Delaware Governor Jack Markell.
Delaware’s premium tax for trust-owned Private Placement Life Insurance is now 0% over the first $100,000 in a calendar year.
Contact us to discuss the benefits of placing PPLI into a Delaware directed Trust.
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2. Merger of Trusts: Section 3325(29) of Title 12 to provide expressly that the trustee merger power is available in cases where a new trust is created for the purpose of participation in the merger, as is commonly done to effect a change in the administrative provisions of a trust.
Conflicts of Law Statute: Section 3332 of Title 12 has been modified to codify and expand on the Delaware Supreme Court’s decision in the Peierls1 cases regarding when the law of Delaware governs the administration of a trust transferred to Delaware from another jurisdiction. Generally, Delaware law will govern the administration of a trust while the trust is administered in Delaware. There is one exception to this rule: (i) if the governing instrument expressly provides that the laws of another jurisdiction will govern the administration of the trust, and (ii) the governing instrument also provides that such laws of another jurisdiction will continue to govern administration of the trust regardless of the place of administration.
Attorney-Client Privilege: Section 3333 of Title 12 has been modified to protect communications between a fiduciary and counsel in cases where (i) counsel is retained by the fiduciary and paid by the fiduciary from its own funds and (ii) where the trustee hires counsel in anticipation of litigation despite having paid the expenses out of the trust funds. This is contrast with the hiring of counsel on a routine administrative matter, here the attorney-client privilege would not apply.
1 See In re: Peierls Family Testamentary Trusts, 77 A.3d 223 (Del. 2013)l , 77 A.3d 223 (Del. 2013); In re: Peierls Charitable Lead Unitrust, 77 A.3d 232 (Del. 2013); and In re: Peierls Family Inter Vivos Trusts, 77 A.3d 249 (Del. 2013).

3. Place of Administration: Section 3340 has been added to Title 12 to add a safe harbor regarding certain circumstance in which a trust will be treated as having its place of administration in Delaware. These circumstances include: (i) where the sole trustee is an individual residing in Delaware or a corporation having an office in Delaware, (ii) the trust has more than one trustee, only one of which is a corporation which has an office for conducting trust business in Delaware, or (iii) the trust has more than one trustee, all of whom are in individuals, and the majority of the individuals reside in Delaware. The goal of this Section is clarify when a trustee will be permitted to exercise those powers granted under Title 12.
Decanting Statute Clarification: Section 3528 of Title 12 is revised to reflect the fact that a trustee is permitted to appoint income in further trust to the same extent and subject to the same limitations as trust principal may be appointed under existing law. In addition, this Section is revised to reflect the fact that the same is also available to trustees of revocable trusts which would be deemed irrevocable due to a settlor’s incapacity.
Broadening of the Small Trust Termination Statute: Section 3542 of Title 12 is revised to ensure that the power to terminate a small trust is exercisable by individual trustees as well as corporate trustees.