Session of 1998
By Committee on Education
            9             AN ACT concerning trusts; relating to the removal of trustees and ap-
10             pointment of successors; amending K.S.A. 58-2412 and repealing the
11             existing section.
13       Be it enacted by the Legislature of the State of Kansas:
14           Section 1. K.S.A. 58-2412 is hereby amended to read as follows:
15       58-2412.   Trustees having violated or attempted to violate any express
16       trust, or becoming insolvent, or of whose solvency or that of their sureties
17       there is reasonable doubt, or for other cause, in the discretion of the court
18       having jurisdiction, may, on petition of any person interested, after hear-
19       ing, be removed by such court; and all vacancies in express trusteeships
20       may be filled by such court. (a) The provisions of this section shall be
21       liberally construed to promote its underlying purposes and policies.
22           (b) The underlying purposes and policies of this section are to protect
23       beneficiaries of trusts governed by Kansas law from:
24           (1) Insolvent or incompetent trustees; and
25           (2) the unforeseen consequences of having an originally named cor-
26       porate trustee being acquired by an out-of-state financial institution or
27       holding company.
28           The appointment of successor trustees should be encouraged so as to
29       permit beneficiaries to continue to receive the same level of services and
30       attention they had been receiving prior to the transfer of ownership of
31       their trustee to an out-of-state financial institution or holding company.
32           (c) When a trustee is or becomes an incapacitated person, becomes
33       insolvent or there is reasonable doubt as to the solvency of the trustee or
34       the trustee's surety, or is otherwise incapable of performing the duties of
35       the trustee, the trustee may be removed.
36           (d) When a trustee has violated or attempted to violate any express
37       trust or fails or refuses to perform any of the duties imposed upon the
38       trustee by law, by the provisions of the trust instrument or by any lawful
39       order of the court, the trustee may be removed.
40           (e) Upon a petition requesting the appointment of a specific successor
41       trustee by any beneficiary currently receiving or entitled to receive a dis-
42       tribution of principal or income from a trust, the court having jurisdiction
43       over such trust, after due notice to all persons, or the representative of

HB 2848


  1       persons having an interest in the trust, may appoint a specifically re-
  2       quested trust company, bank, national banking association, savings and
  3       loan association or savings bank which has trust powers and its principal
  4       place of business in this state as successor trustee, regardless of the absence
  5       of any provision in the trust instrument for removal of trustee or appoint-
  6       ment of successor trustee or the existence of any limitation in the trust
  7       instrument regarding the identity or qualification of a successor trustee,
  8       if the court finds:
  9           (1) The administration of the trust or the trustee's relationship with
10       the beneficiaries has been adversely affected by a transfer of ownership
11       of trustee to an out-of-state financial institution or holding company;
12           (2) appointment of such requested successor trustee or trustees would
13       not jeopardize the purpose of the trust; and
14           (3) appointment of such requested successor trustee would be in the
15       best interest of the petitioner and all other parties concerned.
16           The court shall also fashion such other relief as it deems appropriate
17       in the circumstances, including the awarding of reasonable attorney fees.
18       If the current trustee is ordered to be removed, such trustee shall not
19       charge any fees against the trust for defending the petition to remove such
20       trustee. The removed trustee may charge a reasonable fee to cover its
21       expenses for transferring trust assets to the successor trustee. The removed
22       trustee shall not be absolved or discharged from any duty to account
23       required by K.S.A. 59-1709, and amendments thereto, or any other ap-
24       plicable statute, rule of law, rules and regulations or court order, nor shall
25       the removed trustee be absolved from any breach of fiduciary duty or
26       obligation occurring prior to the effective date of its removal as trustee,
27       which, for purposes of this section, is the date the removed trustee's final
28       accounting is approved by the court.
29           (f) The right to file a petition under this section shall be in addition
30       to any other statute, rule of law, rules and regulations, court order or by
31       the writing creating the trust.
32           (g) For purposes of this section, the term ``out-of-state financial in-
33       stitution or holding company'' means any trust company, bank, national
34       banking association, savings and loan association or savings bank which
35       has trust powers and either:
36           (1) Its charter is granted by a state other than Kansas;
37           (2) its principal place of business is located in a state other than Kan-
38       sas; or
39           (3) it is owned by a holding company whose principal place of busi-
40       ness is located in a state other than Kansas.
41           Sec. 2. K.S.A. 58-2412 is hereby repealed.

HB 2848


  1           Sec. 3. This act shall take effect and be in force from and after its
  2       publication in the statute book.