TRUSTS Flashcards
WIKI LINKS
WIKI LINKS
https: //en.wikipedia.org/wiki/English_trust_law
https: //en.wikipedia.org/wiki/Equity_(law)
https: //en.wikipedia.org/wiki/Equitable_remedy
https: //en.wikipedia.org/wiki/Legal_remedy
https: //en.wikipedia.org/wiki/Court_of_equity
https: //en.wikipedia.org/wiki/Court_of_Chancery
https: //en.wikipedia.org/wiki/Estate_(law)
https: //en.wikipedia.org/wiki/Legal_maxim
https: //en.wikipedia.org/wiki/Bundle_of_rights
https: //en.wikipedia.org/wiki/Property_law
https: //en.wikipedia.org/wiki/Title_(property)
https: //en.wikipedia.org/wiki/English_tort_law
https: //en.wikipedia.org/wiki/Bankruptcy_in_the_United_States
https: //en.wikipedia.org/wiki/Contract
https: //en.wikipedia.org/wiki/Laches_(equity)
https: //en.wikipedia.org/wiki/Estoppel
https: //en.wikipedia.org/wiki/Set-off_(law)
https: //en.wikipedia.org/wiki/Doctrine_of_marshalling
https: //en.wikipedia.org/wiki/Unconscionability
https: //en.wikipedia.org/wiki/Hotchpot
https: //en.wikipedia.org/wiki/Equitable_conversion
https: //en.wikipedia.org/wiki/Tracing_(law)
See also Law portal Court of equity Case law Common law Court of Chancery Delaware Court of Chancery Economic equity Equitable remedy Ex aequo et bono Inequity aversion Maxims of equity Politics (Aristotle) Restitution Statutory law Trust Law Undue influence Unjust enrichment
https://en.wikipedia.org/wiki/Bundle_of_rights The main rights in the title bundle are usually: Exclusive possession Exclusive use and enclosure Acquisition Conveyance, including by bequest Access easement Hypothecation Partition
YOUTUBE LINKS
YOUTUBE LINKS
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Settlor
In law a settlor is a person who settles property into a trust arrangement for the benefit of beneficiaries.
In some legal systems, a settlor is also referred to as a trustor, or occasionally, a grantor or donor.
Where the trust is a testamentary trust, the settlor is usually referred to as the testator.
The settlor may also be the trustee of the trust (where he declares that he holds his own property on trusts) or a third party may be the trustee (where he transfers the property to the trustee on trusts).
In British common law it has been held, controversially, that where a trustee declares an intention to transfer trust property to a trust of which he is one of several trustees, that is a valid settlement notwithstanding the property is not vested in the other trustees.[2]
καταπιστευματοδόχος
TRUSTEE
From κατα- + εμπίστευμα
Executor
An executor is a legal term referring to a person named by the maker of a will or nominated by the testator to carry out the instructions of the will.
Typically, the executor is the person responsible for “offering the will for probate”, although it is not required that they fulfill this.
The executor’s duties also include
1. disbursing property to the beneficiaries as designated in the will…
2. obtaining information of potential heirs,
collecting and arranging for payment of debts of the estate and…
3. approving or disapproving creditors’ claims.
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What Is an Executor? An executor (or executrix) of an estate is an individual appointed to administer the estate of a deceased person. The executor's main duty is to carry out the instructions to manage the affairs and wishes of the deceased person's estate. The executor is appointed either by the testator of the will (the individual who makes the will) or by a court, in cases wherein there was no prior appointment.
How Executors Work
The executor is responsible for making sure all assets in the will are accounted for, along with transferring these assets to the correct party (parties). Assets can include financial holdings, such as stocks, bonds, or money market investments; real estate; direct investments; or even collectibles like art. The executor has to estimate the value of the estate by using either the date of death value or the alternative valuation date, as provided in the Internal Revenue Code (IRC).
The executor also needs to ensure that all the debts of the deceased are paid off, including any taxes. The executor is legally obligated to meet the wishes of the deceased and act in the interest of the deceased.2 The executor can be almost anyone but is usually a lawyer, accountant or family member, with the only restriction being that he or she must be over the age of 18 and have no prior felony convictions.
Some people agree to be an executor thinking that it will be years before they have to do any work. However, doing the job properly means going to work immediately. In the words of Jim Morrison, “The future’s uncertain, and the end is always near,” so agreeing to be an executor means that your legal responsibility could be called upon at any time.
To be prepared, you should:
Make sure the testator is keeping a list of assets and debts, including bank accounts, investment accounts, insurance policies, real estate, and so on.
Know where the original will and the asset list is being held and how to access them.
Know the names and contact details of attorneys or agents named by the testator, and what their function is.
Discuss the testator’s wishes as far as a funeral or memorial service, including instructions for burial or cremation.
Discuss the will with the testator and, if possible, with the beneficiaries in order to minimize problems in the future.
Have a copy of all these documents.
KEY TAKEAWAYS
An executor is the person who administers a person’s estate upon their death.
The primary duty is to carry out the wishes of the deceased person based on instructions spelled out in their will or trust documents, ensuring that assets are distributed to the intended beneficiaries.
Being an executor is a large responsibility where potential hazards and complications may arise.
An executor will make sure estate taxes are calculated, necessary forms are filed, and tax payments are made.
They will also assist the attorney with the estate.
Additionally, the executor acts as a legal conveyor who designates where the donations will be sent using the information left in bequests, whether they be sent to charity or other organizations.
In most circumstances, the executor is the representative of the estate for all purposes, and has the ability to sue or be sued on behalf of the estate.
The executor holds legal title to the estate property, but may not use the title or property for their own benefit, unless permitted by the terms of the will.
A person who deals with a deceased person’s property without proper authority is known as an executor de son tort. Such a person’s actions may subsequently be ratified by the lawful executors or administrators if the actions do not contradict the substantive provisions of the deceased’s will or the rights of heirs at law.
When there is no will, a person is said to have died intestate—”without testimony.” As a result, there is no tangible “testimony” to follow, and hence there can be no executor. If there is no will or the executors named in a will do not wish to act, an administrator of the deceased’s estate may instead be appointed.
The generic term for executors or administrators is personal representative.
In England and Wales, when a person dies intestate in a nursing home, and has no family members who can be traced, those responsible for their care automatically become their executors.
Under Scottish law, a personal representative of any kind is referred to as an executor, using executor nominate to refer to an executor and executor dative to an administrator.
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The Executor Checklist: 7 Tasks Before They Die
KEY TAKEAWAYS
One common trouble many executors overlook: dispersing personal possessions that have little financial value but great sentimental value.
If the testator keeps electronic track of the estate annually, the executor will have a good snapshot of assets when it’s needed.
An executor should have a record of the testator’s online presence to deactivate accounts.
- Know the Location of the Will and Other Documents
This is an obvious and vital first step. The executor’s job is easier if the testator keeps the original will, deeds, partnership documents, insurance policies, or other important papers in an agreed-upon location (whether in the home or a safe deposit box) and keeps copies at a backup location. The copies can be held directly by the executor or by the testator’s lawyer.
Remember that access to a safe deposit box could be restricted at the death of the testator. It is helpful if more than one person, such as a spouse, has been registered as having access to the box.
- Make Property and Accounts Joint, Where Appropriate
If the testator has a spouse, they would likely prefer that assets flow immediately through to the widow or widower if possible. The simplest way to ensure this is to set all accounts as joint and make sure that properties and titles are in both names (which also works for business enterprises involving a partner). This has the added benefit of reducing the size of the estate as long as both parties do not die simultaneously.
The executor should also have the testator confirm that the correct beneficiary is named for accounts that demand a specification, such as pensions, retirement accounts, insurance policies, and so on. If the testator has gone through a divorce, remarried, outlived a child, or experienced some similarly significant event, the list of beneficiaries will likely need updating.
- Record the Testator’s Preferences
Does the testator want a large wake or a small cremation ceremony? Are there charities they want to support after all the beneficiaries die? These preferences need to be in writing and signed by the testator. - Create a Possessions List and Assign Recipients
There is one common trouble many executors overlook: dispersing personal possessions that have little financial value but great sentimental value. Working with the testator, an executor can create a rough draft of a list for dispersal of personal items, as well as a system of distribution. Also, have the testator write their reasoning for who got what gift. Sharing the list with those involved may eliminate problems.
Important:
The executor should have the testator confirm that the correct beneficiary is named for such accounts as pensions, retirement accounts, and insurance policies.
The main benefit of working from this list is that the executor can track gifts given before the death of the testator as many people begin dispersing personal items as they age. High-net-worth people also frequently give financial gifts before death. Organized dispersal can make an executor’s job easier and help balance issues of fairness.
- Set Up a Yearly Accounting Sheet and Updating Schedule
Computers have made it much easier to track changes in accounts and possessions. If the testator keeps electronic track of the estate annually, the executor will have a good snapshot of assets when it’s needed. This e-document will also cut the time spent looking for that gold watch the testator gave to a grandchild or tracking funds that were supposedly in a now-empty investment account. - Have a Sealed Online Accounts Document
In the digital age, an executor should also have a record of the testator’s online presence (Facebook, Paypal, eBay, and so on) to deactivate accounts. The same ends can be met through presenting a death certificate to many of the above or similar sites, but the document simplifies work for the executor. - Know the Relevant Professionals
Executors should be familiar with the accountant, lawyer, and other professionals the testator employs. They may have further advice specific to the testator’s situation, such as diverse partnerships and complicated ownership of property.
The Bottom Line
Preparation will greatly reduce the complications of being an executor. Taking the steps above, while the testator is still alive will also help make sure that the executor carries out the testator’s wishes. Testators can also be proactive about setting up such processes to make their executor’s job easier.
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Inheritance Tax
An inheritance or estate tax is a tax paid by a person who inherits money or property or a levy on the estate (money and property) of a person who has died.[1]
International tax law distinguishes between an estate tax and an inheritance tax—an estate tax is assessed on the assets of the deceased, while an inheritance tax is assessed on the legacies received by the estate’s beneficiaries. However, this distinction is not always observed; for example, the UK’s “inheritance tax” is a tax on the assets of the deceased, and strictly speaking is therefore an estate tax.
For historical reasons, the term death duty is still used colloquially (though not legally) in the UK and some Commonwealth countries.
Estate (Law)
An estate, in common law, is the net worth of a person at any point in time alive or dead. It is the sum of a person’s assets – legal rights, interests and entitlements to property of any kind – less all liabilities at that time. The issue is of special legal significance on a question of bankruptcy and death of the person. (See inheritance.)
Depending on the particular context, the term is also used in reference to an estate in land or of a particular kind of property (such as real estate or personal estate). The term is also used to refer to the sum of a person’s assets only.
The equivalent in civil law legal systems is patrimony.
Main article: Estate in land
In land law, the term “estate” is a remnant of the English feudal system, which created a complex hierarchy of estates and interests in land. The allodial or fee simple interest is the most complete ownership that one can have of property in the common law system. An estate can be an estate for years, an estate at will, a life estate (extinguishing at the death of the holder), an estate pur auter vie (a life interest for the life of another person) or a fee tail estate (to the heirs of one’s body) or some more limited kind of heir (e.g. to heirs male of one’s body).
Fee simple estates may be either fee simple absolute or defeasible (i.e. subject to future conditions) like fee simple determinable and fee simple subject to condition subsequent; this is the complex system of future interests (q.v.) which allows concepts of trusts and estates to elide into actuarial science through the use of life contingencies.
Estate in land can also be divided into estates of inheritance and other estates that are not of inheritance. The fee simple estate and the fee tail estate are estates of inheritance; they pass to the owner’s heirs by operation of law, either without restrictions (in the case of fee simple), or with restrictions (in the case of fee tail). The estate for years and the life estate are estates not of inheritance; the owner owns nothing after the term of years has passed, and cannot pass on anything to his or her heirs.
Legal estates and interests are called rights “in rem”, and said to be “good against the world”.
Superimposed on the legal estate and interests in land, English courts also created “equitable interests” over the same legal interests. These obligations are called trusts which will be enforceable in a court. A trustee is the person who holds the legal title to property, while the beneficiary is said to have an equitable interest in the property.
Equitable Interest
An equitable interest is an “interest held by virtue of an equitable title (a title that indicates a beneficial interest in property and that gives the holder the right to acquire formal legal title) or claimed on equitable grounds, such as the interest held by a trust beneficiary.”
The equitable interest is a right in equity that may be protected by an equitable remedy.
This concept exists only in systems influenced by the common law (connotation 2) tradition, such as New Zealand, England, Canada, Australia and the United States.
An equitable remedy is a legal process under the jurisdiction of a court of equity to interpret the will of the settlor to settle to any controversies or determine any breaches of trust by the trustee or his assigns, between the trustee, his assigns and the beneficial interest holders.
The “court of chancery” is the court defined by the “will” to adjudicate any trust controversies between the trustees, his assigns and beneficiaries.
Equity
The English common law was principally developed and administered in the central royal courts: the Court of King’s Bench, the Court of Common Pleas, and the Exchequer. Equity was the name given to the law which was administered in the Court of Chancery.
In jurisdictions following the English common law system, equity is the body of law which was developed in the English Court of Chancery and which is now administered concurrently with the common law.
Court of Equity
A court of equity, equity court or chancery court is a court that is authorized to apply principles of equity, as opposed to those of law, to cases brought before it.
These courts began with petitions to the Lord Chancellor of England. Equity courts “handled lawsuits and petitions requesting remedies other than damages, such as writs, injunctions, and specific performance”. Most equity courts were eventually “merged with courts of law”.
United States bankruptcy courts are the one example of a US federal court which operates as a court of equity.
The Court of Chancery was a court of equity in England and Wales that followed a set of loose rules to avoid the slow pace of change and possible harshness (or “inequity”) of the common law.
The Chancery had jurisdiction over all matters of equity, including trusts, land law, the estates of lunatics and the guardianship of infants.
Keeper of the King’s Conscience
Keeper of the King’s Conscience was a position in the English judiciary before the advent of parliamentary representative democracy. The person appointed as Keeper of the King’s Conscience was usually a bishop. He was responsible for overseeing the international affairs of the monarchy and for delivering justice on behalf of the king.[1] Today this position has become the Lord Chancellor.[2][3] During the period beginning from William the Conqueror to Henry VIII of England, the person holding the Keeper of the King’s Conscience post also held high position in the church.
Land Law
English property law refers to the law of acquisition, sharing and protection of valuable assets in England and Wales. While part of the United Kingdom, many elements of Scots property law are different. In England, property law encompasses four main topics:
English land law, or the law of “real property”
English trusts law
English personal property law
United Kingdom intellectual property law
Property in land is the domain of the law of real property.
The law of personal property is particularly important for commercial law and insolvency.
Trusts affect everything in English property law.
Intellectual property is also an important branch of the law of property.
For unregistered land see Unregistered land in English law.
Testamentary Trust
A testamentary trust is created by a will and arises after the death of the settlor.
A testamentary trust (sometimes referred to as a will trust or trust under will) is a trust which arises upon the death of the testator, and which is specified in his or her will. A will may contain more than one testamentary trust, and may address all or any portion of the estate.[1]
Inter Vivos Trust
An inter vivos trust is created during the settlor’s lifetime by a trust instrument.
Usually for ones own benefit, in the event of incapacity.
Establishes the will of the person while they are of sound mind, in the event their mind is incapacitated.
Legal Title (Legal Owner)
The trustee is the legal owner (legal title holder) of the property in trust, as fiduciary for the beneficiary or beneficiaries who is/are the equitable owner(s) of the trust property.
Statutory Corporation
A statutory corporation is a corporation created by the state.
Their precise nature varies by jurisdiction, thus, they might be ordinary companies/corporations owned by a government with or without other shareholders, or they might be a body without shareholders that is controlled by national or sub-national government to the (in some cases minimal) extent provided for in the creating legislation.
Bodies described in the English language as “statutory corporations” exist in the following countries in accordance with the associated descriptions (where provided).
At the Federal level, a small number of corporations are created by Congress. Prior to the District of Columbia being granted the ability to issue corporate charters in the late 19th century, corporations operating in the District required a congressional charter. With limited exceptions, most corporations created by Congress are not federally chartered, but are simply created as District of Columbia corporations as a result of the enabling law.
There are a number of federally chartered corporations that still exist. Some relatively famous ones include the Boy Scouts of America, each of the Federal Reserve Banks, and the Federal Deposit Insurance Corporation. The basic advantage for being federally chartered is that no other corporation anywhere in the United States is allowed to have the same name.
Deceased
The person who has died, as used in the handling of his/her estate, probate of will and other proceedings after death.
departure from life, not including civil death.
Devise
A testamentary disposition of land or realty; a gift of real property by the last will and testament of the donor.
The term “devise” is properly restricted to real property, and is not applicable to testamentary dispositions of personal property, which are properly called”bequests” or “legacies.” But this distinction will not be allowed in law- to defeat the purpose of a testator; and all of these terms may be construed interchangeably or applied indifferently to either real or personal property, if the context shows that such was the intention of the testator.
Devises are contingent or vested; that is, after the death of the testator. Contingent, when the vesting of any estate in the devisee is made to depend upon some future event, in which case, if the event never occur, or until it does occur,no estate vests under the devise. But, when the future event is referred to merely to determine the time at which the devisee shall come into the use of the estate, this does not hinder the vesting of the estate at the death of the testator.
A general devise is one which passeslands of the testator without a particular enumeration or description of them ; as, a devise of “all my lands” or “all my other lands.” In a more restricted sense, a general devise is one which grants a parcel of land without the addition of any words to show how great an estate is meant to be given, or without words indicating either a grant in perpetuity or a grant for a limited term; in this case it is construed as granting a life estate.
Specific devises are devises of lands particularly specified in the terms of the devise, as opposed to general and residuary devises of land, in which the local or other particular descriptions are not expressed. For example, “I devise my Hendon Hall estate” is a specific devise :but “I devise all my lands,” or, “all other my lands,” is a general devise or a residuary devise. But all devises are (in effect) specific, even residuary devises being so.
A conditional devise is one which depends upon the occurrence of some uncertain event, by which it is either to take effect or be defeated.
Probate
The act or process of proving a will.
From Latin - probō present infinitive probāre perfect active probāvī supine probātum first conjugation Verb From probus (“good, virtuous”) I approve, commend I test, inspect I demonstrate, prove I acquit, exonerate.
Example
Si probare possemus Ligarium in Africa omnino non fuisse.
If we could prove that Ligarius was not at all in Africa.
probus feminine proba neuter probum comparative probior first/second-declension adjective Adjective good, serviceable, excellent, superior, able (morally) upright, honest, virtuous, moral.
From Proto-Indo-European *probʰwo- (“being in front”)
from *pro- (“forward”) + *bʰuH- (“to be”).
See also prōsum.
Cognate with Sanskrit प्रभु (prabhu, “excellent, foremost, potent”).
From Proto-Indo-European *bʰuH- Root *bʰuH- (perfective) Root (“to become, grow, appear”)
The proof before an ordinary, surrogate, register, or other duly authorized person that a document produced before him for official recognition and registration, and alleged to be the last will and testament of a certain deceased person, is such in reality. The copy of the will, made out in parchment or due form, under the seal of the ordinary or court of probate, and usually delivered to the executor or administrator of the deceased, together with a certificate of the will’s having been proved, is also commonly called the “probate.” In the canon law, “probate” consisted of probatio, the proof of the will by the executor, and approbation, the approbation given by the ecclesiastical judge to the proof.
The English noun “probate” derives directly from the Latin verb probare,[8] to try, test, prove, examine,[9] more specifically from the verb’s past participle nominative neuter probatum,[10] “having been proved”. Historically during many centuries a paragraph in Latin of standard format was written by scribes of the particular probate court below the transcription of the will, commencing with the words (for example):
Probatum Londini fuit huismodi testamentum coram venerabili viro (name of approver) legum doctore curiae prerogativae Cantuariensis…
(“A testament of such a kind was proved at London in the presence of the venerable man ….. doctor of law at the Prerogative Court of Canterbury…”)
The official proving of a will.
Recognition
Ratification; confirmation ; an acknowledgment that something done by another person in one’s name had one’s authority. An inquiry conducted by a chosen body of men, not sitting as part of the court, into the facts in dispute in a case at law; these “recognitors” preceded the jurymen of mod- ern times, and reported their recognition or verdict to the court
Registration
Recording; inserting in an official register; the act of making a list, catalogue, schedule, or register, particularly of an official character, or of making entries therein.
Administrator
In the most usual sense of the word, is a person to whom letters of administration, that is, an authority to administer the estate of a deceased per- son, have been granted by the proper court.
He resembles an executor, but…
“being appointed by the court, and not by the deceased”
1. he has to give security for the due administration of the estate
2. by entering into a bond with sureties
3. called the administration bond.
An administrator bond (administration bond) is a form of insurance that assures a person who is the administrator of a will acts legally and ethically and protects those in the will against fraud.
It is often written as a bond of administrator or executor and is very similar to an executor bond.
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By the law of Scotland (“The Father”) is what is called the “administrator-in-law” for his children.
As such, he is ipso jure their (“Tutor while they are Pupils”)
and their (“Curator during their Minority”)
The father’s power extends over whatever estate may descend to his children, unless where that estate has been placed by the donor or grantor under the charge of special trustees or managers.
This “Power in the Father) ceases by the child’s (“discontinuing to reside with him”), unless he continues (“to live at the father’s expense”); and with regard to daughters, it ceases on their marriage, the husband being the legal curator of his wife.
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A public administrator is an officer authorized by the statute law of several of the states to superintend the settlement of estates of persons dying without relatives entitled to administer.
In the civil law. A manager or conductor of affairs, especially the affairs of another, in his name or behalf. A manager of public affairs in behalf of others.
This will was proved at London before the worshipful Sir Richard Raines, knight, Doctor of Laws, Master Keeper or Commissary of the Prerogative Court of Canterbury, lawfully constituted, on the twenty third day of the month of June in the year of our Lord one thousand six hundred and ninety seven, by the oath of Mary Bathurst, relict and executrix named in the said will, to whom administration was granted of all and singular the goods, rights and credits of the said deceased, sworn on the holy Gospel of God to well and faithfully administer the same. It has been examined”.
Administrators Bond
An administrator bond (administration bond) is a form of insurance that assures a person who is the administrator of a will acts legally and ethically and protects those in the will against fraud. It is often written as a bond of administrator or executor and is very similar to an executor bond.
An administration bond is a bond that is posted on behalf of an administrator of an estate to provide assurance that he or she will conduct their duties according to the provisions of the will and/or the legal requirements of the jurisdiction. The bond covers any financial losses to the estate due to dishonest or improper acts by the administrator.
How an Administration Bond Works
An administrator is appointed to handle the estates of individuals who died without a valid will or who had a will but not an executor. An administrator is also appointed by a probate court to oversee the deceased’s estate if the principal executor dies, has been removed from the role, or has declined to serve. The administrator is tasked with paying bills to creditors and outstanding tax liabilities to the government and distributing the assets of the estate to beneficiaries who are deemed entitled under the law. To ensure that these agents do not mismanage the estate, the court requires an administration bond.
An administration bond is obtained by an appointed administrator from a surety company. The surety runs background and credit checks on the applicant before approving the bond which is presented to the court. The bond provides assurance that the estate will be handled ethically and legally, and assets will be distributed according to the wishes of the deceased. The bond, then, protects creditors and beneficiaries, not the administrator, from any negligent, fraudulent, or erroneous acts of the appointed agent.
If it is found that the administrator did not follow the wishes of the deceased or act in accordance with the law, a claim may be filed against the administration bond. The surety company will compensate the individual(s) that filed the claim if it turns out to be valid. The administrator must repay the surety for any funds disbursed to the claimant(s). In cases in which the administrator defaults or declares bankruptcy, then the surety is responsible for compensating the project owner for any financial loss.
The total bond amount is based on the total value of the estate. The cost or premium paid for an administration bond is determined by the personal credit of the administrator. The bond is not always required by the probate court, however. If a financial institution is appointed as the administrator of an estate, then an administration bond is not required. Also, if there is a valid will or other estate planning document in place which states to not have a bond, an administration bond will not be requested.
Renouncing Probate
Refuseing to take upon one’s self the office of executor or executrix. Refuseing to take out probate under a will wherein one has been appointed executor or executrix.
Revocation of Probate
A term for recalling a will that has been granted probate that happens as a newer will is found or another substantial cause.
Personal Representative
In common law jurisdictions, a personal representative or legal personal representative is a person appointed by a court to administer the estate of another person. If the estate being administered is that of a deceased person, the personal representative is either an executor if the deceased person left a will or an administrator of an intestate estate.
In other situations, the personal representative may be a (“guardian or trustee”), or other position.
As a fiduciary, a personal representative has the duties of loyalty, candor or honesty, and good faith. In the United States, punctilio of honor, or the highest standard of honor, is the level of scrupulousness that a fiduciary must abide by.
In either case of a deceased estate, a probate court of competent jurisdiction issues a finding of fact, including that a will has or has not been filed, and that an executor or administrator has been appointed. These are often referred to as “letters testamentary”, “letters of administration” or “letters of representation”, as the case may be. These documents, with the appropriate death certificate, are often the only license a person needs to do the banking, stock trading, real estate transactions, and other actions necessary to marshal and dispose of the deceased’s estate in the name of the estate itself.
Death Certificate
The phrase death certificate can refer either to a document issued by a medical practitioner certifying the deceased state of a person or, popularly, to a document issued by a person such as a registrar of vital statistics that declares the date, location and cause of a person’s death as later entered in an official register of deaths.
Intestacy
Intestacy is the condition of the estate of a person who dies without having made a valid will or other binding declaration.[1] Alternatively this may also apply where a will or declaration has been made, but only applies to part of the estate; the remaining estate forms the “intestate estate”. Intestacy law, also referred to as the law of descent and distribution, refers to the body of law (statutory and case law) that determines who is entitled to the property from the estate under the rules of inheritance.
Intestacy has a limited application in those jurisdictions that follow civil law or Roman law because the concept of a will is itself less important; the doctrine of forced heirship automatically gives a deceased person’s next-of-kin title to a large part (forced estate) of the estate’s property by operation of law, beyond the power of the deceased person to defeat or exceed by testamentary gift. A forced share (or legitime) can often only be decreased on account of some very specific misconduct by the forced heir. In matters of cross-border inheritance, the “laws of succession” is the commonplace term covering testate and intestate estates in common law jurisdictions together with forced heirship rules typically applying in civil law and Sharia law jurisdictions. After the Statute of Wills 1540, Englishmen (and unmarried or widowed women) could dispose of their lands and real property by a will. Their personal property could formerly be disposed of by a testament, hence the hallowed legal merism last will and testament.
Common law sharply distinguished between real property and chattels. Real property for which no disposition had been made by will passed by the law of kinship and descent; chattel property for which no disposition had been made by testament was escheat to the Crown, or given to the Church for charitable purposes. This law became obsolete as England moved from being a feudal to a mercantile society, and chattels more valuable than land were being accumulated by townspeople.
Escheat
Escheat /ɪsˈtʃiːt/[1][2] is a common law doctrine that transfers the real property of a person who died without heirs to the Crown or state. It serves to ensure that property is not left in “limbo” without recognized ownership. It originally applied to a number of situations where a legal interest in land was destroyed by operation of law, so that the ownership of the land reverted to the immediately superior feudal lord.
The term “escheat” derives ultimately from the Latin ex-cadere, to “fall-out”, via mediaeval French escheoir.[3] The sense is of a feudal estate in land falling-out of the possession by a family into possession by the overlord.
In feudal England, escheat referred to the situation where the tenant of a fee (or “fief”) died without an heir or committed a felony. In the case of such demise of a tenant-in-chief, the fee reverted to the King’s demesne permanently, when it became once again a mere tenantless plot of land, but could be re-created as a fee by enfeoffment to another of the king’s followers. Where the deceased had been subinfeudated by a tenant-in-chief, the fee reverted temporarily to the crown for one year and one day by right of primer seisin after which it escheated to the over-lord who had granted it to the deceased by enfeoffment. From the time of Henry III, the monarchy took particular interest in escheat as a source of revenue.
At the Norman Conquest of England all the land of England was claimed as the personal possession of William the Conqueror under allodial title. The monarch thus became the sole “owner” of all the land in the kingdom, a position which persists to the present day. He then granted it out to his favoured followers, who thereby became tenants-in-chief, under various contracts of feudal land tenure. Such tenures, even the highest one of “feudal barony”, never conferred ownership of land but merely ownership of rights over it, that is to say ownership of an estate in land. Such persons are therefore correctly termed “land-holders” or “tenants” (from Latin teneo to hold), not owners. If held freely, that is to say by freehold, such holdings were heritable by the holder’s legal heir. On the payment of a premium termed feudal relief to the treasury, such heir was entitled to demand re-enfeoffment by the king with the fee concerned.
Where no legal heir existed, the logic of the situation was that the fief had ceased to exist as a legal entity, since being tenantless no one was living who had been enfeoffed with the land, and the land was thus technically owned by either the crown or the immediate overlord (where the fee had been subinfeudated by the tenant-in-chief to a mesne lord, and perhaps the process of subinfeudation had been continued by a lower series of mesne-lords) as ultimus heres. Logically therefore it was in the occupation of the crown alone, that is to say in the royal demesne. This was the basic operation of an escheat (excadere), a failure of heirs.
Escheat could also take place if a tenant was outlawed or convicted of a felony, when the King could exercise the ancient right of wasting the criminal’s land for a year and a day, and after that the land would return to the lord. (However, one guilty of treason (rather than felony) forfeited all lands to the King. John and his heirs frequently insisted on seizing terrae Normannorum, “lands of the Normans”, the English land of those who preferred to be Normans rather than Englishmen when the victories of Philip Augustus forced a proclamation of allegiance.) Since disavowal of a feudal bond was considered a felony, lords could escheat land from those who refused to be true to their feudal services. On the other hand, there were tenants who were sluggish in performing their duties, while not being outright rebellious against the lord. Remedies in the courts against this sort of thing, even in Bracton’s day, were available, but were considered laborious and frequently ineffectual in compelling the desired performance. The commonest mechanism would be distraint, also called distress (districtio): the lord would seize some chattel, and hold it until performance was achieved. This practice had been dealt with in the 1267 Statute of Marlborough. Even so, it remained the most common extrajudicial method applied by the lords at the time of Quia Emptores.[4]
Thus, under English common law, there were two main ways an escheat could happen:
A person’s property escheated if he was convicted of a felony (but not treason, when the property was forfeited to the Crown). If the person was executed for the crime, his heirs were attainted, i.e. ineligible to inherit. In most common-law jurisdictions, this type of escheat has been abolished outright, for example in the United States under Article 3 § 3 of the United States Constitution, which states that attainders for treason do not give rise to posthumous forfeiture, or “corruption of blood”.
If a person had no heir to receive their property under a will or under the laws of intestacy, then any property he owned at death would escheat. This rule has been replaced in most common-law jurisdictions by bona vacantia or a similar concept.
Bond Vacantia
Bona vacantia (Latin for “ownerless goods”) is a legal concept associated with property that has no owner. It exists in various jurisdictions, with consequently varying application, but with origins mostly in English law.
Assets of dissolved companies that have failed to be distributed.
Assets of dissolved unincorporated associations that have failed to be distributed.
Assets of the estates of deceased persons that have failed to be distributed due to intestacy and a lack of known persons entitled to inherit.
Some failed trust property
Incorporated Association
A voluntary group or union (also sometimes called a voluntary organization, common-interest association,[1]:266 association, or society) is a group of individuals who enter into an agreement, usually as volunteers, to form a body (or organization) to accomplish a purpose.[2] Common examples include trade associations, trade unions, learned societies, professional associations, and environmental groups.
(an unincorporated body) is a non-juristic person whose members ‘are’ responsible for the financial acts of the association.
In many jurisdictions no formalities are necessary to start an association. In some jurisdictions, there is a minimum for the number of persons starting an association.
Some jurisdictions require that the association register with the police or other official body to inform the public of the association’s existence. This could be a tool of political control or intimidation, and also a way of protecting the economy from fraud.
In many such jurisdictions, only a registered association (or in the UK an incorporated body) is a juristic person whose members are not responsible for the financial acts of the association.
Probate
To test or prove a will.
Who has 1st right of claim to trust property.
probità f (invariable)
probity
honesty
From Middle French probité,
from Latin probitas (“uprightness, honesty”)
from probus (“good, excellent, honest”)
see probe, prove.
probity (countable and uncountable, plural probities)
Integrity, especially of the quality of having strong moral principles; honesty and decency.
For verb: Latin probare (“to test, examine, prove”), from probus (“good”).
For noun: Late Latin proba (“a proof”), from probare (“to test, examine, prove”); Doublet of proof. Spanish tienta (“a surgeon's probe”) from tentar (“try, test”); see tempt.
Probe
(figuratively) An investigation or inquiry.
(medically) Any of various medical instruments used to explore wounds, organs, etc.
(figuratively) Something which penetrates something else, as though to explore; something which obtains information.
proba f (genitive probae); first declension
(Late Latin)
test, trial
proof, evidence
From Latin probare
From Latin probus
from Proto-Indo-European *pro-bʰwo-
(“being in front”),
from *pro- (“being in front”),
extended form of the root
*per (“through, forward”) + *bʰuH- (“to be”).
Proto-Indo-European *bʰuH- (perfective)
to become, grow, appear.
Having strong moral principles; honest, decent, virtuous. From probus (“good, virtuous”)
probō (present infinitive probāre, perfect active probāvī, supine probātum); first conjugation
I approve, commend.
I test, inspect.
I demonstrate, prove.
I acquit, exonerate.
------------------- Latin probus feminine proba neuter probum good, serviceable, excellent, superior, able (morally) upright, honest, virtuous.
From Proto-Indo-European *probʰwo-
(“being in front”),
from *pro- (“forward”) + *bʰuH- (“to be”).
See also prōsum.
prōsum present infinitive prōdesse perfect active prōfuī, future participle prōfutūrus irregular conjugation
(with a dative) I am useful or of use, do good, help, benefit, serve, profit.
(of medicines) I am good or beneficial.
From prō- + sum (“I am”)
I am in front (1st claim)
———————
PROOF
From Middle English proof, from Old French prove, from Late Latin proba (“a proof”), from Latin probare (“to prove”); see prove.
(countable) An effort, process, or operation designed to establish or discover a fact or truth; an act of testing; a test; a trial.
(uncountable) The degree of evidence which convinces the mind of any truth or fact, and produces belief; a test by facts or arguments which induce, or tend to induce, certainty of the judgment; conclusive evidence; demonstration.
TRIAL Of or pertaining to three. "Three" as an adjective. Three test. Consisting of three. Of the Father, and the Son and the Holy Spirit.
From Latin triālis,
an adjective formed from trēs (“three”) + -ālis.
tres m, f
(cardinal) three
-ālis m, f (neuter -āle); third declension
Used to form adjectives of relationship from nouns or numerals.
The suffix -ālis is added to a noun or numeral to form an adjective of relationship to that noun.
Examples:
duo (“two”) + -alis → duālis (“that contains two”)
nātūra (“nature”) + -alis → nātūrālis (“natural”)
rēx (“king, ruler”) + -alis → rēgālis (“regal, royal”)
Unincorporated association
“Unincorporated association” means an unincorporated group of two or more persons joined by mutual consent for a common lawful purpose, whether organized for profit or not.
(an unincorporated body) is a non-juristic person whose members ‘are’ responsible for the financial acts of the association.
If the purpose for the association is to benefit the public in some way, and does not include earning a profit, the association’s members have formed an unincorporated nonprofit association. People form nonprofit unincorporated associations all the time; often without being aware of it. For example, if you and several of your neighbors get together to help raise funds to keep your local library branch open, you’ve formed an unincorporated nonprofit association.
Now, if the lawful purpose they’ve joined together to accomplish includes earning a profit, their association is automatically a partnership or joint venture for tax and most other legal purposes. For example, if two people get together and decide to operate a food truck, they’ve formed a partnership, even if they file no paperwork.
If an unincorporated association’s purpose is charitable, educational, and/or scientific in nature, it can qualify as a Section 501(c)(3) organization (also called a public charity). Contributions to Section 501(c)(3)s are tax deductible. If an unincorporated charitable nonprofit has less than $5,000 in annual revenues, it may function as a 501(c)(3) without applying for IRS recognition of its status. However, as a practical matter, it may be difficult to obtain contributions without an IRS determination letter officially recognizing the nonprofit as a Section 5010(c)(3) organization.
The biggest drawback to the unincorporated nonprofit association, and the reason nonprofits often abandon this form in favor of a nonprofit corporation, is that it has no separate legal existence apart from its members. Because it is not respected as a separate legal entity, its members generally can be personally liable for its debts and liabilities. Some states, such as California, give some limited liability to nonprofit association members; but it’s not as good as the protection obtainable from a nonprofit corporation. Moreover, unless your state law contains an “enabling statute” granting such rights entities, an unincorporated association cannot hold or receive property, or sign contracts, in its own name.
Because of these limitations, nonprofit unincorporated associations are usually used to accomplish limited short-term goals, such as raising funds for a library. Nonprofits with long-term missions should usually incorporate. For more on incorporating, see Nolo’s article, Five Reasons to Incorporate Your Nonprofit.
An ‘unincorporated association’ is an organisation set up through an agreement between a group of people who come together for a reason other than to make a profit (for example, a voluntary group or a sports club).
You don’t need to register an unincorporated association, and it doesn’t cost anything to set one up.
Individual members are personally responsible for any debts and contractual obligations.
If you make a profit
If the association does start trading and makes a profit, you’ll need to pay Corporation Tax and file a Company Tax Return in the same way as a limited company.
Corporation (Incorporated Body)
A corporation is a form of business ownership that helps prevent personal liability for business debts.
(an incorporated body) is a juristic person whose members ‘are not’ responsible for the financial acts of the association.
You stand to lose only the money that you’ve invested in the corporation. (Share Value)
Limited Personal Liability
Limited Personal Liability
One of the main advantages of incorporating is that the owners’ personal assets are protected from creditors of the corporation. For instance, if a court judgment is entered against your corporation saying that it owes a creditor $100,000, you can’t be forced to use personal assets, such as your house, to pay the debt. Because only corporate assets need be used to pay business debts, you stand to lose only the money that you’ve invested in the corporation.
Exceptions to Limited Liability
There are some circumstances in which limited liability will not protect an owner’s personal assets. An owner of a corporation can be held personally liable if he or she:
personally and directly injures someone
personally guarantees a bank loan or a business debt on which the corporation defaults
fails to deposit taxes withheld from employees’ wages
does something intentionally fraudulent or illegal that causes harm to the company or to someone else, or
treats the corporation as an extension of his or her personal affairs, rather than as a separate legal entity.
This last exception is the most important. In some circumstances, courts can rule that a corporation doesn’t really exist and that its owners should not be shielded from personal liability for their acts. This might happen if you fail to follow routine corporate formalities such as:
adequately investing money in (“capitalizing”) the corporation
formally issuing stock to the initial shareholders
regularly holding meetings of directors and shareholders, or
keeping business records and transactions separate from those of the owners.
Retaining Corporate Status
Corporations and their owners must observe certain formalities to retain the corporation’s status as a separate entity. Specifically, corporations must:
hold annual shareholders’ and directors’ meetings
keep minutes of shareholders’ and directors’ major decisions
make sure that corporate officers and directors sign documents in the name of the corporation
maintain separate bank accounts from their owners
keep detailed financial records, and
file a separate corporate income tax return.
Corporate Decisions
Who Makes Corporate Decisions?
To understand the corporate decision-making process, let’s look at the different legal roles people traditionally play in a corporation: shareholder, director, officer, and employee. As we consider these roles, keep in mind that you can set up a corporation in which one or two people play all of them.
Shareholders
Shareholders own stock (called shares or ownership interests) in the corporation. Shareholders have the exclusive right to:
elect and remove directors
amend the articles of incorporation and bylaws
approve the sale of all or substantially all of the corporate assets
approve mergers and reorganizations, and
dissolve the corporation.
State laws typically require the shareholders to hold an annual meeting. However, many states allow shareholders to do this through a “written consent” or “consent resolution” – a document signed by all of the shareholders – instead of a face-to-face meeting.
Directors
The board of directors sets policy for the corporation and makes major financial decisions. Among other things, the directors:
authorize the issuance of stock
elect the corporate officers
set officer and key employee salary amounts
decide whether to mortgage, sell, or lease real estate, and
approve loans to or from the corporation.
While many states require directors to hold regular meetings, it’s often simpler and just as effective for the directors to take actions by signing a consent resolution or written consent. Alternatively, most states allow directors’ meetings to be held by telephone.
While the organizational structure of corporations separates the rights and duties of shareholders and directors, this separation isn’t much of an issue for small corporations because most shareholders are also directors and officers. However, even if you are both a shareholder and director of your corporation, you must still observe the formalities required by law, which means wearing different hats at different times. For instance, sometimes you’ll have to sign a document in your capacity as director; at other times you’ll sign as a shareholder.
Officers
Officers are responsible for the day-to-day operation and management of the corporation. State laws usually require the corporation to have at least a president, a secretary, and a treasurer (sometimes called a chief financial officer). But in most states, the same person can hold all of the required offices.
The president is usually the chief operating officer (COO) of the corporation. The secretary is responsible for the corporate records. The treasurer, or chief financial officer (CFO), of course, is responsible for the corporate finances, although it’s common to delegate everyday fiscal duties to a bookkeeper.
Employees
In small corporations, the owners are usually also employees of the corporation. Owners of small corporations receive most of their financial benefits through the salary and other compensation they receive as corporate employees.
Documenting Corporate Decisions
While you don’t need to document routine business decisions, you should prepare written minutes or consent resolutions for events or decisions that require formal board of director or shareholder participation. These include:
the proceedings of annual meetings of directors and shareholders
the issuance of stock to new or existing shareholders
the purchase of real property
the approval of a long-term lease
the authorization of a substantial loan or line of credit
the adoption of a stock option or retirement plan, and
the making of important federal or state tax decisions.
If you document important corporate decisions, whether through formal written minutes or less formal consent resolutions, you’ll protect your limited liability status – and you’ll have solid documentation if key decisions are later questioned by creditors, the courts, or the IRS. In addition, keeping good corporate records allows you to note the reasons for making critical decisions; this can head off controversy and dissension in your ranks in the future.
Beneficial Owner
”Beneficial owner’’ means any owner of a beneficial interest in a statutory trust, the fact of ownership to be determined and evidenced (whether by means of registration (including on, by means of, or in the form of any information storage device, method, or 1 or more electronic networks or databases (including 1 or more distributed electronic networks or databases)), the issuance of certificates or otherwise) in conformity to the applicable provisions of the governing instrument of the statutory trust.
Delaware Title 12
Foreign statutory trust
“Foreign statutory trust’’ means a business trust or statutory trust formed under the laws of any state or under the laws of any foreign country or other foreign jurisdiction and denominated as such under the laws of such state or foreign country or other foreign jurisdiction.
Delaware Title 12
Governing instrument
“Governing instrument’’ means any written instrument (whether referred to as a trust agreement, declaration of trust or otherwise) which creates a statutory trust or provides for the governance of the affairs of the statutory trust and the conduct of its business. A governing instrument:
(1) May provide that a person shall become a beneficial owner or a trustee if such person (or, in the case of a beneficial owner, a representative authorized by such person orally, in writing or by other action such as payment for a beneficial interest) complies with the conditions for becoming a beneficial owner or a trustee set forth in the governing instrument or any other writing and, in the case of a beneficial owner, acquires a beneficial interest;
(2) May consist of 1 or more agreements, instruments or other writings and may include or incorporate bylaws containing provisions relating to the business of the statutory trust, the conduct of its affairs and its rights or powers or the rights or powers of its trustees, beneficial owners, agents or employees; and
(3) May contain any provision that is not inconsistent with law or with the information contained in the certificate of trust.
A statutory trust is not required to execute its governing instrument. A statutory trust is bound by its governing instrument whether or not the statutory trust executes the governing instrument. A beneficial owner or a trustee is bound by the governing instrument whether or not such beneficial owner or trustee executes the governing instrument. A governing instrument is not subject to any statute of frauds (including § 2714 of Title 6).
Delaware Title 12
Independent Trustee
“Independent trustee’’ means, any trustee who is not an “interested person’’ of the statutory trust; provided that the receipt of compensation for service as an independent trustee shall not affect the status of a trustee as an independent trustee under this chapter.
An independent trustee as defined hereunder shall be deemed to be independent and disinterested for all purposes.
Delaware Title 12
Person
“Person’’ means a natural person, partnership (whether general or limited), limited liability company, trust, (including a common law trust, business trust, statutory trust, voting trust or any other form of trust) estate, association (including any group, organization, co-tenancy, plan, board, council or committee), corporation, government (including a country, state, county or any other governmental subdivision, agency or instrumentality), custodian, nominee or any other individual or entity (or series thereof) in its own or any representative capacity, in each case, whether domestic or foreign, and a statutory trust or foreign statutory trust.
Delaware Title 12
United States Internal Revenue Code of 1986 [26 U.S.C. § 856 et seq.]
U.S. Code › Title 26 › Subtitle A › Chapter 1 › Subchapter M › Part II › § 856
26 U.S. Code § 856 - Definition of real estate investment trust
US Code
Notes
IRS Rulings
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(a) In generalFor purposes of this title, the term “real estate investment trust” means a corporation, trust, or association—
(1) which is managed by one or more trustees or directors;
(2) the beneficial ownership of which is evidenced by transferable shares, or by transferable certificates of beneficial interest;
(3) which (but for the provisions of this part) would be taxable as a domesticcorporation;
(4) which is neither (A) a financial institution referred to in section 582(c)(2), nor (B) an insurance company to which subchapter L applies;
(5) the beneficial ownership of which is held by 100 or more persons;
(6) subject to the provisions of subsection (k), which is not closely held (as determined under subsection (h)); and
(7) which meets the requirements of subsection (c).
(b) Determination of status
The conditions described in paragraphs (1) to (4), inclusive, of subsection (a) must be met during the entire taxable year, and the condition described in paragraph (5) must exist during at least 335 days of a taxable year of 12 months, or during a proportionate part of a taxable year of less than 12 months.
(c) LimitationsA corporation, trust, or association shall not be considered a real estate investment trust for any taxable year unless—
(1) it files with its return for the taxable year an election to be a real estate investment trust or has made such election for a previous taxable year, and such election has not been terminated or revoked under subsection (g);
(2) at least 95 percent (90 percent for taxable years beginning before January 1, 1980) of its gross income (excluding gross income from prohibited transactions) is derived from—
(A) dividends;
(B) interest;
(C) rents from real property;
(D) gain from the sale or other disposition of stock, securities, and real property (including interests in real property and interests in mortgages on real property) which is not property described in section 1221(a)(1);
(E) abatements and refunds of taxes on real property;
(F) income and gain derived from foreclosure property (as defined in subsection (e));
(G) amounts (other than amounts the determination of which depends in whole or in part on the income or profits of any person) received or accrued as consideration for entering into agreements (i) to make loans secured by mortgages on real property or on interests in real property or (ii) to purchase or lease real property (including interests in real property and interests in mortgages on real property);
(H) gain from the sale or other disposition of a real estate asset which is not a prohibited transaction solely by reason of section 857(b)(6); and
(I) mineral royalty income earned in the first taxable year beginning after the date of the enactment of this subparagraph from real property owned by a timber real estate investment trust and held, or once held, in connection with the trade or business of producing timber by such real estate investment trust;
(3) at least 75 percent of its gross income (excluding gross income from prohibited transactions) is derived from—
(A) rents from real property;
(B) interest on obligations secured by mortgages on real property or on interests in real property;
(C) gain from the sale or other disposition of real property (including interests in real property and interests in mortgages on real property) which is not property described in section 1221(a)(1);
(D) dividends or other distributions on, and gain (other than gain from prohibited transactions) from the sale or other disposition of, transferable shares (or transferable certificates of beneficial interest) in other real estate investment trusts which meet the requirements of this part;
(E) abatements and refunds of taxes on real property;
(F) income and gain derived from foreclosure property (as defined in subsection (e));
(G) amounts (other than amounts the determination of which depends in whole or in part on the income or profits of any person) received or accrued as consideration for entering into agreements (i) to make loans secured by mortgages on real property or on interests in real property or (ii) to purchase or lease real property (including interests in real property and interests in mortgages on real property);
(H) gain from the sale or other disposition of a real estate asset (other than a nonqualified publicly offered REIT debt instrument) which is not a prohibited transaction solely by reason of section 857(b)(6); and
(I) qualified temporary investment income; and
(4) at the close of each quarter of the taxable year—
(A) at least 75 percent of the value of its total assets is represented by real estate assets, cash and cash items (including receivables), and Government securities; and
(B)
(i) not more than 25 percent of the value of its total assets is represented by securities (other than those includible under subparagraph (A)),
(ii) not more than 20 percent of the value of its total assets is represented by securities of one or more taxable REIT subsidiaries,
(iii) not more than 25 percent of the value of its total assets is represented by nonqualified publicly offered REIT debt instruments, and
(iv) except with respect to a taxable REIT subsidiary and securities includible under subparagraph (A)—
(I) not more than 5 percent of the value of its total assets is represented by securities of any one issuer,
(II) the trust does not hold securities possessing more than 10 percent of the total voting power of the outstanding securities of any one issuer, and
(III) the trust does not hold securities having a value of more than 10 percent of the total value of the outstanding securities of any one issuer.
A real estate investment trust which meets the requirements of this paragraph at the close of any quarter shall not lose its status as a real estate investment trust because of a discrepancy during a subsequent quarter between the value of its various investments and such requirements (including a discrepancy caused solely by the change in the foreign currency exchange rate used to value a foreign asset) unless such discrepancy exists immediately after the acquisition of any security or other property and is wholly or partly the result of such acquisition. A real estate investment trust which does not meet such requirements at the close of any quarter by reason of a discrepancy existing immediately after the acquisition of any security or other property which is wholly or partly the result of such acquisition during such quarter shall not lose its status for such quarter as a real estate investment trust if such discrepancy is eliminated within 30 days after the close of such quarter and in such cases it shall be considered to have met such requirements at the close of such quarter for purposes of applying the preceding sentence.
(5) For purposes of this part—
(A) The term “value” means, with respect to securities for which market quotations are readily available, the market value of such securities; and with respect to other securities and assets, fair value as determined in good faith by the trustees, except that in the case of securities of real estate investment trusts such fair value shall not exceed market value or asset value, whichever is higher.
(B) The term “real estate assets” means real property (including interests in real property and interests in mortgages on real property or on interests in real property), shares (or transferable certificates of beneficial interest) in other real estate investment trusts which meet the requirements of this part, and debt instruments issued by publicly offered REITs. Such term also includes any property (not otherwise a real estate asset) attributable to the temporary investment of new capital, but only if such property is stock or a debt instrument, and only for the 1-year period beginning on the date the real estate trust receives such capital.
(C) The term “interests in real property” includes fee ownership and co-ownership of land or improvements thereon, leaseholds of land or improvements thereon, options to acquire land or improvements thereon, and options to acquire leaseholds of land or improvements thereon, but does not include mineral, oil, or gas royalty interests.
(D) Qualified temporary investment income.—
(i)In general.—The term “qualified temporary investment income” means any income which—
(I) is attributable to stock or a debt instrument (within the meaning of section 1275(a)(1)),
(II) is attributable to the temporary investment of new capital, and
(III) is received or accrued during the 1-year period beginning on the date on which the real estate investment trust receives such capital.
(ii)New capital.—The term “new capital” means any amount received by the real estate investment trust—
(I) in exchange for stock (or certificates of beneficial interests) in such trust (other than amounts received pursuant to a dividend reinvestment plan), or
(II) in a public offering of debt obligations of such trust which have maturities of at least 5 years.
(E) A regular or residual interest in a REMIC shall be treated as a real estate asset, and any amount includible in gross income with respect to such an interest shall be treated as interest on an obligation secured by a mortgage on real property; except that, if less than 95 percent of the assets of such REMIC are real estate assets (determined as if the real estate investment trust held such assets), such real estate investment trust shall be treated as holding directly (and as receiving directly) its proportionate share of the assets and income of the REMIC. For purposes of determining whether any interest in a REMIC qualifies under the preceding sentence, any interest held by such REMIC in another REMIC shall be treated as a real estate asset under principles similar to the principles of the preceding sentence, except that, if such REMIC’s are part of a tiered structure, they shall be treated as one REMIC for purposes of this subparagraph.
(F) All other terms shall have the same meaning as when used in the Investment Company Act of 1940, as amended (15 U.S.C. 80a–1 and following).
(G)Treatment of certain hedging instruments.—Except to the extent as determined by the Secretary—
(i) any income of a real estate investment trust from a hedging transaction (as defined in clause (ii) or (iii) of section 1221(b)(2)(A)), including gain from the sale or disposition of such a transaction, shall not constitute gross income under paragraphs (2) and (3) to the extent that the transaction hedges any indebtedness incurred or to be incurred by the trust to acquire or carry real estate assets,
(ii) any income of a real estate investment trust from a transaction entered into by the trust primarily to manage risk of currency fluctuations with respect to any item of income or gain described in paragraph (2) or (3) (or any property which generates such income or gain), including gain from the termination of such a transaction, shall not constitute gross income under paragraphs (2) and (3),
(iii) if—
(I) a real estate investment trust enters into one or more positions described in clause (i) with respect to indebtedness described in clause (i) or one or more positions described in clause (ii) with respect to property which generates income or gain described in paragraph (2) or (3),
(II) any portion of such indebtedness is extinguished or any portion of such property is disposed of, and
(III) in connection with such extinguishment or disposition, such trust enters into one or more transactions which would be hedging transactions described in clause (ii) or (iii) of section 1221(b)(2)(A) with respect to any position referred to in subclause (I) if such position were ordinary property,
any income of such trust from any position referred to in subclause (I) and from any transaction referred to in subclause (III) (including gain from the termination of any such position or transaction) shall not constitute gross income under paragraphs (2) and (3) to the extent that such transaction hedges such position, and
(iv) clauses (i), (ii), and (iii) shall not apply with respect to any transaction unless such transaction satisfies the identification requirement described in section 1221(a)(7) (determined after taking into account any curative provisions provided under the regulations referred to therein).
Statutory Trust
Delaware Title 12
(g) ”Statutory trust’’ means an unincorporated association which:
(1) Is created by a governing instrument under which (property is or will be held), managed, administered, controlled, invested, reinvested and/or operated,
- or business or professional (activities for profit are carried on) or will be carried on,
- (by a trustee) or trustees or as otherwise provided in the governing instrument
- for the benefit of such person or persons as are or may become beneficial owners or as otherwise provided in the governing instrument,
including but not limited to a trust of the type known at common law as a “business trust,’’ or “Massachusetts trust,’’ or a trust qualifying as a real estate investment trust under § 856 et seq. of the United States Internal Revenue Code of 1986 [26 U.S.C. § 856 et seq.], as amended, or under any successor provision, or a trust qualifying as a real estate mortgage investment conduit under § 860D of the United States Internal Revenue Code of 1986 [26 U.S.C. § 860D], as amended, or under any successor provision; and
(2) Files a certificate of trust pursuant to § 3810 of this title.
Any such association heretofore or hereafter organized shall be a statutory trust and, unless otherwise provided in its certificate of trust and in its governing instrument, a separate legal entity. The term “statutory trust’’ shall be deemed to include each trust formed under this chapter prior to September 1, 2002, as a “business trust’’ (as such term was then defined in this subsection). A statutory trust may be organized to carry on any lawful business or activity, whether or not conducted for profit, and/or for any of the purposes referred to in paragraph (g)(1) of this section (including, without limitation, for the purpose of holding or otherwise taking title to property, whether in an active or custodial capacity). Unless otherwise provided in a governing instrument, a statutory trust has the power and authority to grant, hold or exercise a power of attorney, including an irrevocable power of attorney. Neither use of the designation “business trust’’ nor a statement in a certificate of trust or governing instrument executed prior to September 1, 2002, to the effect that the trust formed thereby is or will qualify as a Delaware business trust within the meaning of or pursuant to this chapter, shall create a presumption or an inference that the trust so formed is a “business trust’’ for purposes of Title 11 of the United States Code.
Trustee
Delaware Title 12
“Trustee’’ means the person or persons appointed as a trustee in accordance with the governing instrument of a statutory trust, and may include the beneficial owners or any of them.
Contributions by Beneficial Owners
§ 3802 Contributions by beneficial owners.
(a) A contribution of a beneficial owner to the statutory trust may be in cash, property or services rendered, or a promissory note or other obligation to contribute cash or property or to perform services; provided however, that a person may become a beneficial owner of a statutory trust and may receive a beneficial interest in a statutory trust without making a contribution or being obligated to make a contribution to the statutory trust.
(b) Except as provided in the governing instrument, a beneficial owner is obligated to the statutory trust to perform any promise to contribute cash, property or to perform services, even if the beneficial owner is unable to perform because of death, disability or any other reason. If a beneficial owner does not make the required contribution of property or services the beneficial owner is obligated at the option of the statutory trust to contribute cash equal to that portion of the agreed value (as stated in the records of the statutory trust) of the contribution that has not been made. The foregoing option shall be in addition to, and not in lieu of, any other rights, including the right to specific performance, that the statutory trust may have against such beneficial owner under the governing instrument or applicable law.
(c) A governing instrument may provide that the interest of any beneficial owner who fails to make any contribution that the beneficial owner is obligated to make shall be subject to specific penalties for, or specified consequences of, such failure. Such penalty or consequence may take the form of reducing or eliminating the defaulting beneficial owner’s proportionate interest in the statutory trust, subordinating the beneficial interest to that of nondefaulting beneficial owners, a forced sale of the beneficial interest, forfeiture of the beneficial interest, the lending by other beneficial owners of the amount necessary to meet the beneficiary’s commitment, a fixing of the value of the defaulting beneficial owner’s beneficial interest by appraisal or by formula and redemption or sale of the beneficial interest at such value, or any other penalty or consequence.
Liability of Beneficial Owners and Trustees
§ 3803 Liability of beneficial owners and trustees.
(a) Except to the extent otherwise provided in the governing instrument of the statutory trust, the beneficial owners shall be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the general corporation law of the State.
(b) Except to the extent otherwise provided in the governing instrument of a statutory trust, a trustee, when acting in such capacity, shall not be personally liable to any person other than the statutory trust or a beneficial owner for any act, omission or obligation of the statutory trust or any trustee thereof.
(c) Except to the extent otherwise provided in the governing instrument of a statutory trust, an officer, employee, manager or other person acting pursuant to § 3806(b)(7) or (i) of this title, when acting in such capacity, shall not be personally liable to any person other than the statutory trust or a trustee or a beneficial owner for any act, omission or obligation of the statutory trust or any trustee thereof.
(d) No obligation of a beneficial owner or trustee of a statutory trust to the statutory trust, or to a beneficial owner or trustee of the statutory trust, arising under the governing instrument or a separate agreement in writing, and no note, instrument or other writing evidencing any such obligation of a beneficial owner or trustee, shall be subject to the defense of usury, and no beneficial owner or trustee shall interpose the defense of usury with respect to any such obligation in any action.
To Sue or Be Sued (legal process)
(a) A statutory trust may sue and be sued, and service of process upon 1 of the trustees shall be sufficient. In furtherance of the foregoing, a statutory trust may be sued for debts and other obligations or liabilities contracted or incurred by the trustees or other authorized persons, or by the duly authorized agents of such trustees or other authorized persons, in the performance of their respective duties under the governing instrument of the statutory trust. The property of a statutory trust shall be subject to attachment and execution as if it were a corporation, subject to § 3502 of Title 10. Notwithstanding the foregoing provisions of this section, in the event that the governing instrument of a statutory trust, including a statutory trust which is a registered investment company under the Investment Company Act of 1940, as amended (15 U.S.C. § 80a-1 et seq.), creates 1 or more series as provided in § 3806(b)(2) of this title, and to the extent separate and distinct records are maintained for any such series and the assets associated with any such series are held in such separate and distinct records (directly or indirectly, including through a nominee or otherwise) and accounted for in such separate and distinct records separately from the other assets of the statutory trust, or any other series thereof, and if the governing instrument so provides, and notice of the limitation on liabilities of a series as referenced in this sentence is set forth in the certificate of trust of the statutory trust, then the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to a particular series shall be enforceable against the assets of such series only, and not against the assets of the statutory trust generally or any other series thereof, and, unless otherwise provided in the governing instrument, none of the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to the statutory trust generally or any other series thereof shall be enforceable against the assets of such series. Neither the preceding sentence nor any provision pursuant thereto in a governing instrument or certificate of trust shall:
(1) Restrict a statutory trust on behalf of a series from agreeing in the governing instrument or otherwise that any or all of the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to the statutory trust generally or any other series thereof shall be enforceable against the assets of such series; or
(2) Restrict a statutory trust from agreeing in the governing instrument or otherwise that any or all of the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to a series shall be enforceable against the assets of the statutory trust generally.
As used in this chapter, a reference to assets of a series includes assets associated with a series and a reference to assets associated with a series includes assets of a series. Except to the extent otherwise provided in the governing instrument of a statutory trust, a statutory trust that has established series in accordance with this subsection (a) may contract, hold title to assets (including real, personal and intangible property), grant liens and security interests, and sue and be sued, in each case, in the name of a series.
Service of process ( trustee)
(b) A trustee of a statutory trust may be served with process in the manner prescribed in subsection (c) of this section in all civil actions or proceedings brought in the State involving or relating to the activities of the statutory trust or a violation by a trustee of a duty to the statutory trust, or any beneficial owner, whether or not the trustee is a trustee at the time suit is commenced. Every resident or nonresident of the State who accepts election or appointment or serves as a trustee of a statutory trust shall, by such acceptance or service, be deemed thereby to have consented to the appointment of the Delaware trustee or registered agent of such statutory trust required by § 3807 of this title (or, if there is none, the Secretary of State) as such person’s agent upon whom service of process may be made as provided in this section. Such acceptance or service shall signify the consent of such trustee that any process when so served shall be of the same legal force and validity as if served upon such trustee within the State and such appointment of such Delaware trustee or registered agent (or, if there is none, the Secretary of State) shall be irrevocable.
(c) Service of process shall be effected by serving the Delaware trustee or registered agent of such statutory trust required by § 3807 of this title (or, if there is none, the Secretary of State) with 1 copy of such process in the manner provided by law for service of writs of summons. In the event service is made under this subsection upon the Secretary of State, the plaintiff shall pay to the Secretary of State the sum of $50 for the use of the State, which sum shall be taxed as part of the costs of the proceeding if the plaintiff shall prevail therein. In addition, the Prothonotary or the Register in Chancery of the court in which the civil action or proceeding is pending shall, within 7 days of such service, deposit in the United States mails, by registered mail, postage prepaid, true and attested copies of the process, together with a statement that service is being made pursuant to this section, addressed to the defendant at the defendant’s address last known to and furnished by the party desiring to make such service.
(d) In any action in which any such trustee has been served with process as hereinafter provided, the time in which a defendant shall be required to appear and file a responsive pleading shall be computed from the date of mailing by the Prothonotary or the Register in Chancery as provided in subsection (c) of this section; provided however, the court in which such action has been commenced may order such continuance or continuances as may be necessary to afford such trustee reasonable opportunity to defend the action.
Jurisdiction in relation to service of process
(e) In the governing instrument of the statutory trust or other writing, a trustee or beneficial owner or other person may consent to be subject to the nonexclusive jurisdiction of the courts of, or arbitration in, a specified jurisdiction, or the exclusive jurisdiction of the courts of the State, or the exclusivity of arbitration in a specified jurisdiction or the State, and to be served with legal process in the manner prescribed in such governing instrument of the statutory trust or other writing. Except by agreeing to arbitrate any arbitrable matter in a specified jurisdiction or in the State, a beneficial owner who is not a trustee may not waive its right to maintain a legal action or proceeding in the courts of the State with respect to matters relating to the organization or internal affairs of a statutory trust.
Court of Chancery
relating to service of process
(f) Nothing herein contained limits or affects the right to serve process in any other manner now or hereafter provided by law. This section is an extension of and not a limitation upon the right otherwise existing of service of legal process upon nonresidents.
(g) The Court of Chancery and the Superior Court may make all necessary rules respecting the form of process, the manner of issuance and return thereof and such other rules which may be necessary to implement this section and are not inconsistent with this section. The Court of Chancery shall have jurisdiction over statutory trusts to the same extent as it has jurisdiction over common law trusts formed under the laws of the State.
Right to Trust Property
§ 3805 Rights of beneficial owners and trustees in trust property.
(a) Except to the extent otherwise provided in the governing instrument of the statutory trust,
a beneficial owner shall have an undivided beneficial interest in the property of the statutory trust and shall share in the profits and losses of the statutory trust in the proportion (expressed as a percentage) of the entire undivided beneficial interest in the statutory trust owned by such beneficial owner.
The governing instrument of a statutory trust may provide that the statutory trust or the trustees, acting for and on behalf of the statutory trust, shall be deemed to hold beneficial ownership of any income earned on securities of the statutory trust issued by any business entities formed, organized, or existing under the laws of any jurisdiction, including the laws of any foreign country.
Creditors barred from claims to trust property
(b) No creditor of the beneficial owner shall have any right to obtain possession of, or otherwise exercise legal or equitable remedies with respect to, the property of the statutory trust.
Personal property except…
(c) A beneficial owner’s beneficial interest in the statutory trust is personal property notwithstanding the nature of the property of the trust. Except to the extent otherwise provided in the governing instrument of a statutory trust, a beneficial owner has no interest in specific statutory trust property.
Transferability
(d) A beneficial owner’s beneficial interest in the statutory trust is freely transferable except to the extent otherwise provided in the governing instrument of the statutory trust.
Distributions
(e) Except to the extent otherwise provided in the governing instrument of a statutory trust, at the time a beneficial owner becomes entitled to receive a distribution, the beneficial owner has the status of, and is entitled to all remedies available to, a creditor of the statutory trust with respect to the distribution. A governing instrument may provide for the establishment of record dates with respect to allocations and distributions by a statutory trust.
Legal Title
(f) Except to the extent otherwise provided in the governing instrument of the statutory trust, legal title to the property of the statutory trust or any part thereof may be held in the name of any trustee of the statutory trust, in its capacity as such, with the same effect as if such property were held in the name of the statutory trust.
Possession of Trust Property
(g) No creditor of the trustee shall have any right to obtain possession of,
or otherwise exercise legal or equitable remedies with respect to,
the property of the statutory trust
with respect to any claim against, or obligation of, such trustee in its individual capacity and not related to the statutory trust.
Must Be Preferred Shares
(h) Except to the extent otherwise provided in the governing instrument of the statutory trust,
where the statutory trust is a registered investment company under the Investment Company Act of 1940, as amended (15 U.S.C. § 80a-1 et seq.),
any class, group or series of beneficial interests established by the governing instrument
with respect to such statutory trust
shall be... a class, group or series 'preferred' as to distribution of assets or payment of dividends 'over' all other classes, groups or series
in respect to (assets specifically allocated) to the class, group or series
as contemplated by § 18 (or any amendment or successor provision) of the Investment Company Act of 1940 [15 U.S.C. § 80a-18], as amended, and any regulations issued thereunder, provided that this section is not intended to affect in any respect the provisions of § 3804(a) of this title.
All Shares must be Allocated at formation
(i) Unless otherwise provided in the governing instrument of a statutory trust or another agreement,
a beneficial owner shall have no preemptive right to subscribe to any additional issue of beneficial interests or another interest in a statutory trust.
Management (separation of trustee powers)
(a) Except to the extent otherwise provided in the governing instrument of a statutory trust,
the business and affairs of a statutory trust shall be managed by or under the direction of its trustees.
To the extent provided in the governing instrument of a statutory trust,
any person (including a beneficial owner) shall be entitled to direct the trustees or other persons in the management of the statutory trust.
Except to the extent otherwise provided in the governing instrument of a statutory trust,
neither the power to give direction to a trustee or other persons nor the exercise thereof by any person (including a beneficial owner) (shall cause such person to be a trustee.)
To the extent provided in the governing instrument of a statutory trust,
neither the power to give direction to a trustee or other persons nor the exercise thereof by any person (including a beneficial owner) shall cause such person to have duties (including fiduciary duties) or liabilities relating thereto to the statutory trust or to a beneficial owner thereof.
Governing Instrument Provisions (clauses)
Nominate trustee
Nominate Beneficial Owners
Vote by proxy
Records in Chancery
Lend money, encumber assets
Delegate Trustees rights, powers and duties
Subjection to Penalties for beach of duty
Protected in reliance in good faith on trust Information.
Personal Accounts and Master Accounts,
Residual Estate
Higher claims against Residual Estate
Provisions may define and provide for…
Management of business or affairs Rights, Duties and Obligations Classes, groups or series of persons Classes, groups or series of interests Classes, groups or series of offices Classes, groups or series of hierarchies Rights with respect to property Taking of actions Voting rights To grant or restrict (withhold) Derivative trusts Meetings Hire officers, agents, contractors, employees. Define fiduciary duties and relations Amendments Convey rights to persons Subdivide trustee for purposes of voting decisions
(b) A governing instrument may contain any provision relating to the management of the business and affairs of the statutory trust, and the rights, duties and obligations of the trustees, beneficial owners and other persons, which is not contrary to any provision or requirement of this subchapter and, without limitation:
(1) May provide for classes, groups or series of trustees or beneficial owners, or classes, groups or series of beneficial interests, having such relative rights, powers and duties as the governing instrument may provide, and may make provision for the future creation in the manner provided in the governing instrument of additional classes, groups or series of trustees, beneficial owners or beneficial interests, having such relative rights, powers and duties as may from time to time be established, including rights, powers and duties senior or subordinate to existing classes, groups or series of trustees, beneficial owners or beneficial interests;
(2) May establish or provide for the establishment of designated series of trustees, beneficial owners, assets or beneficial interests having separate rights, powers or duties with respect to specified property or obligations of the statutory trust or profits and losses associated with specified property or obligations, and, to the extent provided in the governing instrument, any such series may have a separate business purpose or investment objective;
(3) May provide for the taking of any action, including the amendment of the governing instrument, the accomplishment of a merger, conversion or consolidation, the appointment of one or more trustees, the sale, lease, exchange, transfer, pledge or other disposition of all or any part of the assets of the statutory trust or the assets of any series, or the dissolution of the statutory trust, or may provide for the taking of any action to create under the provisions of the governing instrument a class, group or series of beneficial interests that was not previously outstanding, in any such case without the vote or approval of any particular trustee or beneficial owner, or class, group or series of trustees or beneficial owners;
(4) May grant to (or withhold from) all or certain trustees or beneficial owners, or a specified class, group or series of trustees or beneficial owners, the right to vote, separately or with any or all other classes, groups or series of the trustees or beneficial owners, on any matter, such voting being on a per capita, number, financial interest, class, group, series or any other basis;
(5) May, if and to the extent that voting rights are granted under the governing instrument, set forth provisions relating to notice of the time, place or purpose of any meeting at which any matter is to be voted on, waiver of any such notice, action by consent without a meeting, the establishment of record dates, quorum requirements, voting in person, by proxy or in any other manner, or any other matter with respect to the exercise of any such right to vote;
(6) May provide for the present or future creation of more than 1 statutory trust, including the creation of a future statutory trust to which all or any part of the assets, liabilities, profits or losses of any existing statutory trust will be transferred, and for the conversion of beneficial interests in an existing statutory trust, or series thereof, into beneficial interests in the separate statutory trust, or series thereof;
(7) May provide for the appointment, election or engagement, either as agents or independent contractors of the statutory trust or as delegates of the trustees, of officers, employees, managers or other persons who may manage the business and affairs of the statutory trust and may have such titles and such relative rights, powers and duties as the governing instrument shall provide.
(8) May provide rights to any person, including a person who is not a party to the governing instrument, to the extent set forth therein;
(9) May provide for the manner in which it may be amended, including by requiring the approval of a person who is not a party to the governing instrument or the satisfaction of conditions, and to the extent the governing instrument provides for the manner in which it may be amended such governing instrument may be amended only in that manner or as otherwise permitted by law, including as permitted by § 3815(f) of this title (provided that the approval of any person may be waived by such person and that any such conditions may be waived by all persons for whose benefit such conditions were intended). Unless otherwise provided in a governing instrument, a supermajority amendment provision shall only apply to provisions of the governing instrument that are expressly included in the governing instrument. As used in this section, “supermajority amendment provision’’ means any amendment provision set forth in a governing instrument requiring that an amendment to a provision of the governing instrument be adopted by no less than the vote or consent required to take action under such latter provision. If a governing instrument does not provide for the manner in which it may be amended, the governing instrument may be amended with the approval of all of the beneficial owners and trustees or as otherwise permitted by law, including as permitted by § 3815(f) of this title; or
(10) May provide for specific trustees, a certain number of trustees or a threshold percentage of trustees required to vote in favor of any action in order for such action to be considered approved by the trustees; except that, if the governing instrument is silent as to the specific trustees, number of trustees or threshold percentage of trustees so required, then unless otherwise provided in this chapter or in the governing instrument, the vote of a majority of the trustees (or, in the event that such action requires the approval of a particular class, group, or series of trustees, then a majority of such class, group, or series) shall be sufficient to approve such action.
(c) To the extent that, at law or in equity, a trustee or beneficial owner or other person has duties (including fiduciary duties) to a statutory trust or to another trustee or beneficial owner or to another person that is a party to or is otherwise bound by a governing instrument, the trustee’s or beneficial owner’s or other person’s duties may be expanded or restricted or eliminated by provisions in the governing instrument; provided, that the governing instrument may not eliminate the implied contractual covenant of good faith and fair dealing.
(d) Unless otherwise provided in a governing instrument, a trustee or beneficial owner or other person shall not be liable to a statutory trust or to another trustee or beneficial owner or to another person that is a party to or is otherwise bound by a governing instrument for breach of fiduciary duty for the trustee’s or beneficial owner’s or other person’s good faith reliance on the provisions of the governing instrument.
(e) A governing instrument may provide for the limitation or elimination of any and all liabilities for breach of contract and breach of duties (including fiduciary duties) of a trustee, beneficial owner or other person to a statutory trust or to another trustee or beneficial owner or to another person that is a party to or is otherwise bound by a governing instrument; provided, that a governing instrument may not limit or eliminate liability for any act or omission that constitutes a bad faith violation of the implied contractual covenant of good faith and fair dealing.
(f) Unless otherwise provided in the governing instrument of a statutory trust, meetings of beneficial owners may be held by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this subsection shall constitute presence in person at the meeting. Unless otherwise provided in the governing instrument of a statutory trust, on any matter that is to be voted on by the beneficial owners:
(1) The beneficial owners may take such action without a meeting, without a prior notice and without a vote if consented to, in writing, or by electronic transmission by beneficial owners having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all interests in the statutory trust entitled to vote thereon were present and voted; and
(2) The beneficial owners may vote in person or by proxy, and such proxy may be granted in writing, by means of electronic transmission; or as otherwise permitted by applicable law.
Unless otherwise provided in a governing instrument, a consent transmitted by electronic transmission by a beneficial owner or by a person or persons authorized to act for a beneficial owner shall be deemed to be written and signed for purposes of this subsection. For purposes of this subsection, the term “electronic transmission’’ means any form of communication, not directly involving the physical transmission of paper, including the use of or participation in 1 or more electronic networks or databases (including 1 or more distributed electronic networks or databases), that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process. Unless otherwise provided in a governing instrument, if a person (whether or not then a beneficial owner) consenting as a beneficial owner to any matter provides that such consent will be effective at a future time (including a time determined upon the happening of an event), then such person shall be deemed to have consented as a beneficial owner at such future time so long as such person is then a beneficial owner.
(g) Unless otherwise provided in the governing instrument of a statutory trust, meetings of trustees may be held by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this subsection shall constitute presence in person at the meeting. Unless otherwise provided in the governing instrument of a statutory trust, on any matter that is to be voted on by the trustees:
(1) The trustees may take such action without a meeting, without a prior notice and without a vote if consented to, in writing, or by electronic transmission, by trustees having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all trustees entitled to vote thereon were present and voted; and
(2) The trustee may vote in person or by proxy, and such proxy may be granted in writing, by means of electronic transmission, or as otherwise permitted by applicable law.
Unless otherwise provided in a governing instrument, a consent transmitted by electronic transmission by a trustee or by a person or persons authorized to act for a trustee shall be deemed to be written and signed for purposes of this subsection. For purposes of this subsection, the term “electronic transmission’’ means any form of communication, not directly involving the physical transmission of paper, including the use of or participation in 1 or more electronic networks or databases (including 1 or more distributed electronic networks or databases), that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process. Unless otherwise provided in a governing instrument, if a person (whether or not then a trustee) consenting as a trustee to any matter provides that such consent will be effective at a future time (including a time determined upon the happening of an event), then such person shall be deemed to have consented as a trustee at such future time so long as such person is then a trustee.
(h) Except to the extent otherwise provided in the governing instrument of a statutory trust, a beneficial owner, trustee, officer, employee or manager may lend money to, borrow money from, act as a surety, guarantor or endorser for, guarantee or assume 1 or more obligations of, provide collateral for, and transact other business with a statutory trust and, subject to other applicable law, has the same rights and obligations with respect to any such matter as a person who is not a beneficial owner, trustee, officer, employee or manager.
(i) Except to the extent otherwise provided in the governing instrument of a statutory trust, a trustee of a statutory trust has the power and authority to delegate to 1 or more other persons the trustee’s rights, powers or duties to manage and control the business and affairs of the statutory trust, including to delegate to agents, officers and employees of the trustee or the statutory trust, and to delegate by management agreement or other agreement with, or otherwise to, other persons. Unless otherwise provided in the governing instrument of a statutory trust, such delegation by a trustee of a statutory trust shall be irrevocable if it states that it is irrevocable. Except to the extent otherwise provided in the governing instrument of a statutory trust, such delegation by a trustee of a statutory trust shall not cause the trustee to cease to be a trustee of the statutory trust or cause the person to whom any such rights, powers or duties have been delegated to be a trustee of the statutory trust.
(j) The governing instrument of a statutory trust may provide that:
(1) A beneficial owner who fails to perform in accordance with, or to comply with the terms and conditions of, the governing instrument shall be subject to specified penalties or specified consequences;
(2) At the time or upon the happening of events specified in the governing instrument, a beneficial owner shall be subject to specified penalties or specified consequences; and
(3) The specified penalties or specified consequences under paragraphs (j)(1) and (j)(2) of this section may include and take the form of any penalty or consequence set forth in § 3802(c) of this title.
Trust protect beneficial Owner in reliance on trust information
(k) A trustee, beneficial owner or an officer, employee, manager or other person designated in accordance with paragraph (b)(7) or subsection (i) of this section shall be fully protected in relying in good faith upon the records of the statutory trust and upon information, opinions, reports or statements presented by another trustee, beneficial owner or officer, employee, manager or other person designated in accordance with paragraph (b)(7) or subsection (i) of this section, or by any other person as to matters the trustee, beneficial owner or officer, employee, manager or other person designated in accordance with paragraph (b)(7) or subsection (i) of this section reasonably believes are within such other person’s professional or expert competence, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits or losses of the statutory trust, or the value and amount of assets or reserves or contracts, agreements or other undertakings that would be sufficient to pay claims and obligations, or any other facts pertinent to the existence and amount of assets from which distributions to beneficial owners or creditors might properly be paid.
Trustee not liable for hiring choices
(m) Except to the extent otherwise provided in the governing instrument of a statutory trust, a trustee shall have no duties or liabilities with respect to the selection, supervision, removal, decisions or actions of, or to exercise or perform the rights, powers or duties of, an officer, employee, manager or other person acting pursuant to paragraph (b)(7) of this section or a delegate acting pursuant to subsection (i) of this section:
(1) To the extent such person is appointed, elected, engaged or made a delegate by an express provision of the governing instrument or another agreement contemplated thereby;
(2) To the extent the trustee is required to appoint, elect or engage, or delegate to, such person by an express provision of the governing instrument or another agreement contemplated thereby and not pursuant to the discretionary authority of the trustee;
(3) To the extent a trustee makes an irrevocable delegation pursuant to subsection (i) of this section and pursuant to the discretionary authority of the trustee, except to exercise the standard of care required of the trustee under the governing instrument or this subchapter in making such decisions when selecting such person and when establishing the scope and terms of the delegation; or
(4) In all other cases, except to exercise the standard of care required of the trustee under the governing instrument or this subchapter in making such decisions when selecting such person, when establishing the scope and terms of the delegation and when reviewing such person’s actions in order to monitor such person’s performance and compliance with the scope and terms of the delegation.
(n) Any officer, employee, manager or other person acting pursuant to paragraph (b)(7) of this section or any delegate acting pursuant to subsection (i) of this section shall comply with the scope and terms of the appointment, election, engagement or delegation and, except to the extent otherwise provided in the governing instrument of a statutory trust or the terms of such appointment, election, engagement or delegation, shall:
(1) Exercise the rights, powers and duties subject to the standard of care required of the trustee under the governing instrument or this subchapter; and
(2) Be liable for failure to do so.
66 Del. Laws, c. 279, § 1; 67 Del. Laws, c. 297, § 4; 68 Del. Laws, c. 404, § 9; 69 Del. Laws, c. 265, §§ 3-5; 71 Del. Laws, c. 335, § 5; 72 Del. Laws, c. 387, § 5; 73 Del. Laws, c. 328, §§ 9-12; 73 Del. Laws, c. 329, § 1; 74 Del. Laws, c. 353, §§ 2-4; 75 Del. Laws, c. 418, §§ 5-10; 77 Del. Laws, c. 403, §§ 3, 4; 78 Del. Laws, c. 280, §§ 4-6; 79 Del. Laws, c. 355, §§ 2-4; 80 Del. Laws, c. 304, §§ 3, 4; 81 Del. Laws, c. 352, §§ 5-10.;
Fiduciary Duty same as a for profit CORP.
(l ) Except to the extent otherwise provided in the governing instrument of a statutory trust, trustees of a statutory trust that is registered as an investment company under the Investment Company Act of 1940 [15 U.S.C. § 80a-1 et seq.] shall have the same fiduciary duties as directors of private corporations for profit organized under the general corporation law of the State.
Registered Agent
(a) Every statutory trust shall at all times have at least 1 trustee which, in the case of a natural person, shall be a person who is a resident of this State or which, in all other cases, has its principal place of business in this State.
(b) Notwithstanding the provisions of subsection (a) of this section, if a statutory trust is, becomes, or will become prior to or within 180 days following the first issuance of beneficial interests, a registered investment company under the Investment Company Act of 1940, as amended (15 U.S.C. § 80a-1 et seq.), such statutory trust shall not be required to have a trustee who is a resident of this State or who has a principal place of business in this State if notice that the statutory trust is or will become an investment company as referenced in this sentence is set forth in the certificate of trust of the statutory trust and if and for so long as such statutory trust shall have and maintain in this State:
(1) A registered office, which may but need not be a place of business in this State; and
(2) A registered agent for service of process on the statutory trust, which agent may be either an individual resident in this State whose business office is identical with such statutory trust’s registered office, or a domestic corporation, limited partnership, limited liability company or statutory trust, or a foreign corporation, limited partnership, limited liability company or statutory trust authorized to transact business in this State, having a business office identical with such registered office.
(c) Any statutory trust maintaining a registered office and registered agent in this State under subsection (b) of this section may change the location of its registered office in this State to any other place in this State, or may change the registered agent to any other person or corporation (meeting the requirements contained in subsection (b) of this section), by filing an amendment to its certificate of trust in accordance with the applicable provisions of this subchapter. If a statutory trust which is an investment company registered as aforesaid maintains a registered office and a registered agent in this State as herein provided, then the reference in § 3810(a)(1)b. of this title to the “name and address in this State of at least 1 of the trustees meeting the requirements of § 3807 of this title’’ shall be deemed a reference to the name and address in this State of the registered agent and registered office maintained under this section, and the certificate of trust filed under § 3810 of this title shall reflect such information in lieu of the information otherwise required by § 3810(a)(1)b. of this title.
(d) Service of process upon a registered agent maintained by a statutory trust pursuant to subsection (b) of this section shall be as effective as if served upon one of the trustees of the statutory trust pursuant to § 3804 of this title.
(e) A trustee or registered agent of a statutory trust whose address, as set forth in a certificate of trust pursuant to § 3810(a)(1)b. of this title, has changed may change such address in the certificates of trust of all statutory trusts for which such trustee or registered agent is appointed to another address in the State by paying a fee as set forth in § 3813(a)(5) of this title and filing with the Secretary of State a certificate, executed by such trustee or registered agent, setting forth the address of such trustee or registered agent before it was changed, and further certifying as to the new address of such trustee or registered agent for each of the statutory trusts for which it is trustee or registered agent. Upon the filing of such certificate, the Secretary of State shall furnish to the trustee or registered agent a certified copy of the same under the Secretary’s hand and seal of office, and thereafter, or until further change of address, as authorized by law, the address of such trustee or registered agent in the State for each of the statutory trusts for which it is trustee or registered agent shall be located at the new address of the trustee or registered agent thereof as given in the certificate. A trustee or registered agent of a statutory trust whose name, as set forth in a certificate of trust pursuant to § 3810(a)(1)b. of this title, has changed may change such name in the certificates of trust of all statutory trusts for which such trustee or registered agent is appointed to its new name by paying a fee as set forth in § 3813(a)(5) of this title and filing with the Secretary of State a certificate, executed by such trustee or registered agent, setting forth the name of such trustee or registered agent before it was changed and further certifying as to the new name of such trustee or registered agent for each of the statutory trusts for which it is a trustee or registered agent. Upon the filing of such certificate and payment of such fee, the Secretary of State shall furnish to the trustee or registered agent a certified copy of the certificate under the Secretary’s hand and seal of office. A change of name of any person acting as a trustee or registered agent of a statutory trust as a result of a merger or consolidation of the trustee or registered agent with another person who succeeds to its assets and liabilities by operation of law shall be deemed a change of name for purposes of this section. Filing a certificate under this section shall be deemed to be an amendment of the certificate of trust of each statutory trust affected thereby, and no further action with respect thereto to amend its certificate of trust under § 3810 of this title shall be required. Any trustee or registered agent filing a certificate under this section shall promptly, upon such filing, deliver a copy of any such certificate to each statutory trust affected thereby.
(f) The registered agent of 1 or more statutory trusts may resign and appoint a successor registered agent by paying a fee as set forth in § 3813(a)(5) of this title and filing a certificate with the Secretary of State stating that it resigns and providing the name and address of the successor registered agent. There shall be attached to such certificate a statement of each affected statutory trust ratifying and approving such change of registered agent. Upon such filing, or upon the future effective date or time of such certificate if it is not to be effective upon filing, the successor registered agent shall become the registered agent of such statutory trusts as have ratified and approved such succession, and the successor registered agent’s address, as stated in such certificate, shall become the address of each such statutory trust’s registered office in the State of Delaware. The Secretary of State shall then issue a certificate that the successor registered agent has become the registered agent of the statutory trusts so ratifying and approving such change and setting out the names of such statutory trusts. Filing of such certificate of resignation shall be deemed to be an amendment to the certificate of trust of each statutory trust affected thereby, and no further action with respect thereto to amend its certificate of trust under § 3810 of this title shall be required.
(g) The registered agent of 1 or more statutory trusts may resign without appointing a successor registered agent by paying a fee as set forth in § 3813(a)(5) of this title and filing a certificate of resignation with the Secretary of State, but such resignation shall not become effective until 30 days after the certificate is filed. The certificate shall contain a statement that written notice of resignation was given to each affected statutory trust at least 30 days prior to the filing of the certificate by mailing or delivering such notice to each statutory trust at its address last known to the registered agent and shall set forth the date of such notice. After receipt of the notice of the resignation of its registered agent, each statutory trust for which such registered agent was maintaining a registered office and registered agent in this State under subsection (b) of this section shall obtain and designate a new registered agent, to take the place of the registered agent so resigning, or shall appoint a trustee meeting the requirements of subsection (a) of this section. After the resignation of the registered agent shall have become effective as provided in this section and if no new registered agent shall have been obtained and designated in the time and manner aforesaid, service of legal process against each statutory trust for which the resigned registered agent had been acting shall thereafter be upon the Secretary of State in accordance with § 3804 of this title.
(h) As contained in any certificate of trust, application for registration as a foreign statutory trust, or other document filed in the office of the Secretary of State under this chapter, the address of a trustee and a registered agent or registered office shall include the street, number, city and postal code.
Existence and Dissolution
(a) Except to the extent otherwise provided in the governing instrument of the statutory trust, a statutory trust shall have perpetual existence, and a statutory trust may not be terminated or revoked by a beneficial owner or other person except in accordance with the terms of its governing instrument.
(b) Except to the extent otherwise provided in the governing instrument of a statutory trust, the death, incapacity, dissolution, termination or bankruptcy of a beneficial owner or a trustee shall not result in the termination or dissolution of a statutory trust.
(c) In the event that a statutory trust does not have perpetual existence, a statutory trust is dissolved and its affairs shall be wound up at the time or upon the happening of events specified in the governing instrument. If a governing instrument provides the manner in which a dissolution may be revoked, it may be revoked in that manner and, unless a governing instrument prohibits revocation of dissolution, then notwithstanding the happening of events specified in the governing instrument, the statutory trust shall not be dissolved and its affairs shall not be wound up if, prior to the filing of a certificate of cancellation as provided in § 3810 of this title, the statutory trust is continued, effective as of the happening of such event:
(1) In the case of dissolution effected by the approval of the beneficial owners or other persons, pursuant to such approval (and the approval of any beneficial owners or other persons whose approval is required under the governing instrument to revoke a dissolution contemplated by this clause); and
(2) In the case of dissolution at the time or upon the happening of events specified in a governing instrument (other than a dissolution effected by the approval of the beneficial owners or other persons), pursuant to such approval that, pursuant to the terms of the governing instrument, is required to amend the provision of the governing instrument effecting such dissolution (and the approval of any beneficial owners or other persons whose approval is required under the governing instrument to revoke a dissolution contemplated by this clause).
The provisions of this section shall not be construed to limit the accomplishment of a revocation of dissolution by other means permitted by law.
(d) Upon dissolution of a statutory trust and until the filing of a certificate of cancellation as provided in § 3810 of this title, the persons who, under the governing instrument of the statutory trust, are responsible for winding up the statutory trust’s affairs may, in the name of and for and on behalf of the statutory trust, prosecute and defend suits, whether civil, criminal or administrative, gradually settle and close the statutory trust business, dispose of and convey the statutory trust property, discharge or make reasonable provision for the statutory trust liabilities and distribute to the beneficial owners any remaining assets of the statutory trust.
(e) A statutory trust which has dissolved shall pay or make reasonable provision to pay all claims and obligations, including all contingent, conditional or unmatured claims and obligations, known to the statutory trust and all claims and obligations which are known to the statutory trust but for which the identity of the claimant is unknown and claims and obligations that have not been made known to the statutory trust or that have not arisen but that, based on the facts known to the statutory trust, are likely to arise or to become known to the statutory trust within 10 years after the date of dissolution. If there are sufficient assets, such claims and obligations shall be paid in full and any such provision for payment shall be made in full. If there are insufficient assets, such claims and obligations shall be paid or provided for according to their priority and, among claims and obligations of equal priority, ratably to the extent of assets available therefor. Unless otherwise provided in the governing instrument of a statutory trust, any remaining assets shall be distributed to the beneficial owners. Any person, including any trustee, who under the governing instrument of the statutory trust is responsible for winding up a statutory trust’s affairs who has complied with this subsection shall not be personally liable to the claimants of the dissolved statutory trust by reason of such person’s actions in winding up the statutory trust.
(f) Except to the extent otherwise provided in the governing instrument of the statutory trust, a series established in accordance with § 3804(a) of this title may be dissolved and its affairs wound up without causing the dissolution of the statutory trust or any other series thereof. Unless otherwise provided in the governing instrument of the statutory trust, the dissolution, winding up, liquidation or termination of the statutory trust or any series thereof shall not affect the limitation of liability with respect to a series established in accordance with § 3804(a) of this title. A series established in accordance with § 3804(a) of this title is dissolved and its affairs shall be wound up at the time or upon the happening of events specified in the governing instrument of the statutory trust. Except to the extent otherwise provided in the governing instrument of a statutory trust, the death, incapacity, dissolution, termination or bankruptcy of a beneficial owner or a trustee of such series shall not result in the termination or dissolution of such series and such series may not be terminated or revoked by a beneficial owner of such series or other person except in accordance with the terms of the governing instrument of the statutory trust.
(g) Upon dissolution of a series of a statutory trust established in accordance with § 3804(a) of this title, the persons who under the governing instrument of the statutory trust are responsible for winding up such series’ affairs may, in the name of the statutory trust and for and on behalf of the statutory trust and such series, take all actions with respect to the series as are permitted under subsection (d) of this section and shall provide for the claims and obligations of the series and distribute the assets of the series as provided under subsection (e) of this section. Any person, including any trustee, who under the governing instrument is responsible for winding up such series’ affairs who has complied with subsection (e) of this section shall not be personally liable to the claimants of the dissolved series by reason of such person’s actions in winding up the series.
Applicability of Trust Law
Except to the extent otherwise provided in the governing instrument of a statutory trust or in this subchapter, the laws of this State pertaining to trusts are hereby made applicable to statutory trusts; provided however, that for purposes of any tax imposed by this State or any instrumentality, agency or political subdivision of this State a statutory trust shall be classified as a corporation, an association, a partnership, a trust or otherwise, as shall be determined under the United States Internal Revenue Code of 1986 [26 U.S. Code § 1 et seq.], as amended, or under any successor provision.
Certificate of Trust
§ 3810 Certificate of trust; amendment; restatement; cancellation.
(a) (1) Every statutory trust shall file a certificate of trust in the office of the Secretary of State. The certificate of trust shall set forth:
a. The name of the statutory trust;
b. The name and address in this State of at least 1 of the trustees meeting the requirements of § 3807 of this title;
c. The future effective date or time (which shall be a date or time certain) of effectiveness of the certificate if it is not to be effective upon the filing of the certificate; and
d. Any other information the trustees determine to include therein.
(2) A statutory trust is formed at the time of the filing of the initial certificate of trust in the Office of the Secretary of State or at any later date or time specified in the certificate of trust if, in either case, there has been substantial compliance with the requirements of this section. A statutory trust formed under this chapter, unless otherwise provided in its certificate of trust and in its governing instrument, shall be a separate legal entity. A statutory trust as to which a certificate of trust has been filed and a governing instrument has been adopted, regardless of the sequence of such acts, shall be duly formed, and the existence of the statutory trust shall continue until cancellation of the statutory trust’s certificate of trust.
(3) The filing of a certificate of trust in the office of the Secretary of State shall make it unnecessary to file any other documents under Chapter 31 of Title 6.
(b) (1) A certificate of trust may be amended by filing a certificate of amendment thereto in the office of the Secretary of State. The certificate of amendment shall set forth:
a. The name of the statutory trust;
b. The amendment to the certificate; and
c. The future effective date or time (which shall be a date or time certain) of effectiveness of the certificate if it is not to be effective upon the filing of the certificate.
(2) Except to the extent otherwise provided in the certificate of trust or in the governing instrument of a statutory trust, a certificate of trust may be amended at any time for any purpose as the trustees may determine. A trustee who becomes aware that any statement in a certificate of trust was false when made or that any matter described has changed making the certificate false in any material respect shall promptly file a certificate of amendment.
(c) (1) A certificate of trust may be restated by integrating into a single instrument all of the provisions of the certificate of trust which are then in effect and operative as a result of there having been theretofore filed 1 or more certificates of amendment pursuant to subsection (b) of this section, and the certificate of trust may be amended or further amended by the filing of a restated certificate of trust. The restated certificate of trust shall be specifically designated as such in its heading and shall set forth:
a. The present name of the statutory trust, and if it has been changed, the name under which the statutory trust was originally formed;
b. The date of filing of the original certificate of trust with the Secretary of State;
c. The information required to be included pursuant to subsection (a) of this section; and
d. Any other information the trustees determine to include therein.
(2) A certificate of trust may be restated at any time for any purpose as the trustees may determine. A trustee who becomes aware that any statement in a restated certificate of trust was false when made or that any matter described has changed making the restated certificate false in any material respect shall promptly file a certificate of amendment or a restated certificate of trust.
(d) A certificate of trust shall be cancelled upon the dissolution and the completion of winding up of a statutory trust, or upon the filing of a certificate of merger or consolidation if the statutory trust is not the surviving or resulting person in a merger or consolidation, or upon the future effective date or time of a certificate of merger or consolidation if the trust is not the surviving or resulting person in a merger or consolidation, or upon the filing of a certificate of transfer, or upon the future effective date or time of a certificate of transfer, or upon the filing of a certificate of conversion to non-Delaware other business entity or upon the future effective date or time of a certificate of conversion to non-Delaware entity. A certificate of cancellation shall be filed in the office of the Secretary of State and set forth:
(1) The name of the statutory trust;
(2) The date of filing of its certificate of trust;
(3) The future effective date or time (which shall be a date or time certain) of cancellation if it is not to be effective upon the filing of the certificate; and
(4) Any other information the trustee determines to include therein.
A certificate of cancellation that is filed in the office of the Secretary of State prior to the dissolution or the completion of winding up of a statutory trust may be corrected as an erroneously executed certificate of cancellation by filing with the office of the Secretary of State a certificate of correction of such certificate of cancellation in accordance with subsection (e) of this section. The Secretary of State shall not issue a certificate of good standing with respect to a statutory trust if its certificate of trust is cancelled.
(e) Whenever any certificate authorized to be filed with the office of the Secretary of State under this subchapter has been so filed and is an inaccurate record of the action therein referred to or was defectively or erroneously executed, such certificate may be corrected by filing with the office of the Secretary of State a certificate of correction of such certificate. The certificate of correction shall specify the inaccuracy or defect to be corrected, shall set forth the portion of the certificate in corrected form and shall be executed and filed as required by this subchapter. The certificate of correction shall be effective as of the date the original certificate was filed, except as to those persons who are substantially and adversely affected by the correction, and as to those persons the certificate of correction shall be effective from the filing date. In lieu of filing a certificate of correction, the certificate may be corrected by filing with the office of the Secretary of State a corrected certificate which shall be executed and filed in accordance with this subchapter. The corrected certificate shall be specifically designated as such in its heading, shall specify the inaccuracy or defect to be corrected and shall set forth the entire certificate in corrected form. The corrected certificate shall be effective as of the date the original certificate was filed, except as to those persons who are substantially and adversely affected by the corrections, and as to those persons the corrected certificate shall be effective from the filing date.
(f) If any certificate filed in accordance with this subchapter provides for a future effective date or time and if the transaction is terminated or amended to change the future effective date or time prior to the future effective date or time, the certificate shall be terminated or amended by the filing, prior to the future effective date or time set forth in such original certificate, of a certificate of termination or amendment of the original certificate, executed and filed in accordance with this subchapter, which shall identify the original certificate which has been terminated or amended and shall state that the original certificate has been terminated or amended.
(g) When the certificate of trust of any statutory trust formed under this chapter shall be cancelled by the filing of a certificate of cancellation pursuant to this section, the Court of Chancery, on application of any creditor, beneficial owner or trustee of the statutory trust, or any other person who shows good cause therefor, at any time, may either appoint 1 or more persons to be trustees, or appoint 1 or more persons to be receivers, of and for the statutory trust, to take charge of the statutory trust’s property, and to collect the debts and property due and belonging to the statutory trust, with the power to prosecute and defend, in the name of the statutory trust, or otherwise, all such suits as may be necessary or proper for the purposes aforesaid, and to appoint an agent or agents under them, and to do all other acts which might be done by the statutory trust, if in being, that may be necessary for the final settlement of the unfinished business of the statutory trust. The powers of the trustees or receivers may be continued as long as the Court of Chancery shall think necessary for the purposes aforesaid.
Execution of Certificate
(a) Each certificate required by this subchapter to be filed in the office of the Secretary of State shall be executed in the following manner:
(1) A certificate of trust must be signed by all of the trustees;
(2) A certificate of amendment, a certificate of correction, a corrected certificate, a certificate of termination or amendment, and a restated certificate of trust must be signed by at least one of the trustees;
(3) A certificate of cancellation must be signed by all of the trustees or as otherwise provided in the governing instrument of the statutory trust; and
(4) If a statutory trust is filing a certificate of merger or consolidation, certificate of conversion, certificate of transfer, certificate of transfer and continuance, certificate of statutory trust domestication or certificate of termination or amendment to any such certificate, the certificate of merger or consolidation, certificate of conversion, certificate of transfer, certificate of transfer and continuance, certificate of statutory trust domestication or certificate of termination or amendment to any such certificate must be signed by all of the trustees or as otherwise provided in the governing instrument of the statutory trust, or if the certificate of merger or consolidation, certificate of conversion, certificate of statutory trust domestication or certificate of termination or amendment to any such certificate is being filed by an other business entity or non-United States entity (as such term is defined in § 3822 of this title thereof), the certificate of merger or consolidation, certificate of conversion, certificate of statutory trust domestication or certificate of termination or amendment to any such certificate must be signed by a person authorized to execute the certificate on behalf of the other business entity or non-United States entity (as such term is defined in § 3822 of this title hereof).
(b) Unless otherwise provided in the governing instrument, any person may sign any certificate or amendment thereof or enter into a governing instrument or amendment thereof by any agent, including any attorney-in-fact. An authorization, including a power of attorney, to sign any certificate or amendment thereof or to enter into a governing instrument or amendment thereof need not be in writing, need not be sworn to, verified or acknowledged and need not be filed in the office of the Secretary of State, but if in writing, must be retained by the statutory trust or a trustee or other person authorized to manage the business and affairs of the statutory trust.
(c) The execution of a certificate by a trustee, or other person authorized pursuant to subsection (a) of this section above, constitutes an oath or affirmation, under the penalties of perjury in the third degree, that, to the best of the trustee’s, or other person authorized pursuant to subsection (a) of this section above, knowledge and belief, the facts stated therein are true.
(d) For all purposes of the laws of the State of Delaware, unless otherwise provided in a governing instrument of a statutory trust, a power of attorney or proxy with respect to a statutory trust granted to any person shall be irrevocable if it states that it is irrevocable and it is coupled with an interest sufficient in law to support an irrevocable power of attorney or proxy. Such irrevocable power of attorney or proxy, unless otherwise provided therein or in a governing instrument of a statutory trust, shall not be affected by subsequent death, disability, incapacity, dissolution, termination of existence or bankruptcy of, or any other event concerning, the principal. A power of attorney or proxy with respect to matters relating to the organization, internal affairs or termination of a statutory trust or granted by a person as a beneficial owner or by a person seeking to become a beneficial owner and, in either case, granted to the statutory trust, a trustee or beneficial owner thereof, or any of their respective officers, directors, managers, members, partners, trustees, employees or agents shall be deemed coupled with an interest sufficient in law to support an irrevocable power of attorney or proxy. The provisions of this subsection shall not be construed to limit the enforceability of a power of attorney or proxy that is part of a governing instrument of a statutory trust.
