AS Title 13, Chapter 36: Trust Administration

Article 1. Trust Registration; Foreign Trustee Qualification. Chapter 36. Trust Administration. Sec. 13.36.005. Duty to register trusts. (a) The trustee of a trust having its principal place of administration in this state shall register the trust in the court of this state at the principal place of administration. Unless otherwise designated in the trust instrument, the principal place of administration of a trust is the trustee's usual place of business where the records pertaining to the trust are kept, or at the trustee's residence if the trustee has no such place of business. In the case of co-trustees, the principal place of administration, if not otherwise designated in the trust instrument, is (1) the usual place of business of the corporate trustee if there is but one corporate co-trustee; or (2) the usual place of business or residence of the individual trustee who is a professional fiduciary if there is but one such person and no corporate co-trustee; and otherwise (3) the usual place of business or residence of any of the co-trustees as agreed upon by them. (b) The duty to register under AS 13.36.005 — 13.36.025 does not apply to the trustee of a trust if registration would be inconsistent with the retained jurisdiction of a foreign court from which the trustee cannot obtain release. Sec. 13.36.010. Registration procedures. Registration shall be accomplished by filing a statement indicating the name and address of the trustee in which it acknowledges the trusteeship. The statement shall indicate whether the trust has been registered elsewhere. The statement shall identify the trust: (1) in the case of a testamentary trust, by the name of the testator and the date and place of domiciliary probate; (2) in the case of a written inter vivos trust, by the name of each settlor and the original trustee and the date of the trust instrument; or (3) in the case of an oral trust, by information identifying the settlor or other source of funds and describing the time and manner of the trust's creation and the terms of the trust, including the subject matter, beneficiaries and time of performance. If a trust has been registered elsewhere, registration in this state is ineffective until either the earlier registration is released by order of the court where prior registration occurred or an instrument executed by the trustee and all beneficiaries is filed with the registration in this state. Sec. 13.36.015. Effect of registration. (a) By registering a trust, or accepting the trusteeship of a registered trust, the trustee submits personally to the jurisdiction of the court in any proceeding under AS 13.36.035 relating to the trust that may be initiated by any interested person while the trust remains registered. Notice of any proceeding shall be delivered to the trustee, or mailed by ordinary first-class mail to the trustee's address as listed in the registration or as thereafter reported to the court and to the trustee's address as then known to the petitioner. (b) To the extent of their interests in the trust, all beneficiaries of a trust properly registered in this state are subject to the jurisdiction of the court of registration for the purposes of proceedings under AS 13.36.035 , if notice is given under AS 13.06.110 . Sec. 13.36.020. Effect of failure to register. A trustee who fails to register a trust in a proper place as required by AS 13.36.005 — 13.36.025, for purposes of any proceedings initiated by a beneficiary of the trust before registration, is subject to the personal jurisdiction of any court in which the trust could have been registered. In addition, any trustee who, within 30 days after receipt of a written demand by a settlor or beneficiary of the trust, fails to register a trust as required by AS 13.36.005 — 13.36.025 is subject to removal under AS 13.36.076 and denial of compensation or to surcharge as the court may direct. A provision in the terms of the trust purporting to excuse the trustee from the duty to register, or directing that the trust or trustee is not subject to the jurisdiction of the court, is ineffective. Sec. 13.36.025. Qualification of foreign trustee. (a) A foreign corporate trustee is required to qualify as a foreign corporation doing business in this state if it maintains the principal place of administration of any trust within the state. A foreign co-trustee is not required to qualify in this state solely because its co-trustee maintains the principal place of administration in this state. Unless otherwise doing business in this state, local qualification by a foreign trustee, corporate or individual, is not required in order for the trustee to receive distribution from a local estate or to hold, invest in, manage, or acquire property located in this state, or maintain litigation. Nothing in this section affects a determination of what other acts require qualification as doing business in this state. (b) The provisions of (a) of this section are not intended to override any provision of AS 06.26 , and AS 06.26 governs to the extent of any conflict. Article 2. Jurisdiction of Court Concerning Trusts; Choice of Law; Venue; Situs. Sec. 13.36.035. Court jurisdiction; choice of law. (a) The court has exclusive jurisdiction of proceedings initiated by interested parties concerning the internal affairs of trusts, including trusts covered by (c) of this section. Except as provided in (c) and (d) of this section, proceedings that may be maintained under this section are those concerning the administration and distribution of trusts, the declaration of rights, and the determination of other matters involving trustees and beneficiaries of trusts. These include proceedings to (1) appoint or remove a trustee under AS 13.36.076 ; (2) review trustees' fees and to review and settle interim or final accounts; (3) ascertain beneficiaries, determine any question arising in the administration or distribution of any trust including questions of construction of trust instruments, instruct trustees, and determine the existence or nonexistence of any immunity, power, privilege, duty, or right; and (4) release registration of a trust. (b) Neither registration of a trust nor a proceeding under this section results in continuing supervisory proceedings. The management and distribution of a trust estate, submission of accounts and reports to beneficiaries, payment of trustee's fees and other obligations of a trust, acceptance and change of trusteeship, and other aspects of the administration of a trust shall proceed expeditiously consistently with the terms of the trust, free of judicial intervention and without order, approval, or other action of any court, subject to the jurisdiction of the court as invoked by interested parties or as otherwise exercised as provided by law. (c) A provision that the laws of this state govern the validity, construction, and administration of the trust and that the trust is subject to the jurisdiction of this state is valid, effective, and conclusive for the trust if (1) some or all of the trust assets are deposited in this state and are being administered by a qualified person; in this paragraph, “deposited in this state” includes being held in a checking account, time deposit, certificate of deposit, brokerage account, trust company fiduciary account, or other similar account or deposit that is located in this state; (2) a trustee is a qualified person who is designated as a trustee under the governing instrument or by a court having jurisdiction over the trust; (3) the powers of the trustee identified under (2) of this subsection include or are limited to (A) maintaining records for the trust on an exclusive basis or a nonexclusive basis; and (B) preparing or arranging for the preparation of, on an exclusive basis or a nonexclusive basis, an income tax return that must be filed by the trust; and (4) part or all of the administration occurs in this state, including physically maintaining trust records in this state. (d) The validity, construction, and administration of a trust with a state jurisdiction provision are determined by the laws of this state, including the (1) capacity of the settlor; (2) powers, obligations, liabilities, and rights of the trustees and the appointment and removal of the trustees under AS 13.36.076 ; and (3) existence and extent of powers, conferred or retained, including a trustee's discretionary powers, the powers retained by a beneficiary of the trust, and the validity of the exercise of a power. (e) [Repealed, § 22 ch 105 SLA 1998.] (f) Unless the laws of this state govern the validity, construction, and administration of the trust under (c) of this section, the laws of this state govern the administration of a trust and the courts of this state have exclusive jurisdiction over the trust and its trustees while the trust is administered in this state unless the governing instrument of the trust (1) specifies that the law of a jurisdiction other than this state governs the administration of the trust; (2) expressly prohibits a change in the choice of law for the administration of the trust; and (3) expressly states that a change in the choice of law for the administration of the trust may not occur, even if a trustee from another jurisdiction becomes a trustee of the trust. (g) In (f) of this section, a trust is considered to be administered in this state if (1) the governing instrument of the trust specifies that the trust is to be administered in this state; (2) the principal office of the trustee having custody of the trust's principal assets and records is located in this state, unless the trustee elects to maintain the administration of the trust in the state whose law is specified in the governing instrument to govern; (3) the only trustee who is acting to administer the trust is a qualified person, unless the trustee elects to maintain the administration of the trust in the state whose law is specified in the governing instrument to govern; (4) a majority of all trustees acting to administer the trust consists of qualified persons, unless a majority of the trustees elects to maintain the administration of the trust in the state whose law is specified in the governing instrument to govern; or (5) a majority of the trustees are not qualified persons and a majority of the trustees, including at least one trustee who is a qualified person, executes an acknowledged instrument that this state shall be the primary place of administration for the trust. (h) The trustee shall make the election in (g)(2) — (4) of this section by an instrument that is acknowledged and filed in a court of the state whose law is specified in the governing instrument to govern. Sec. 13.36.040. Trust proceedings; venue. Venue for proceedings under AS 13.36.035 involving registered trusts is in the place of registration. Venue for proceedings under AS 13.36.035 involving trusts not registered in this state is in any place where the trust properly could have been registered, and otherwise by the rules of civil procedure. Sec. 13.36.043. Change of situs to Alaska. (a) The situs of a foreign trust is moved to this state when the trust satisfies the conditions listed in AS 13.36.035 (c)(1) — (4) and a qualified person serving as trustee registers the trust under AS 13.36.010 . (b) If the situs of a foreign trust is moved to this state as provided in this section, a provision in the trust that restricts the transfer of trust assets in a manner similar to AS 34.40.110 , that allows the trust to be perpetual, or that is not expressly prohibited by the law of this state is effective and enforceable under the laws of this state. (c) A foreign trust that moves its situs to this state is valid whether or not the trust complied with the laws of this state at the time of its creation or after its creation. (d) In this section, “foreign trust” means a trust that is created in another state or country and that is valid in that state or country. Sec. 13.36.045. Trust proceedings; matters relating to foreign trusts. (a) The court will not, over the objection of a party, entertain proceedings under AS 13.36.035 involving a trust registered or having its principal place of administration in another state, unless (1) all appropriate parties could not be bound by litigation in the courts of the state where the trust is registered or has its principal place of administration; (2) the interests of justice otherwise would seriously be impaired; or (3) the trust satisfies AS 13.36.035 (c). (b) The court may condition a stay or dismissal of a proceeding under this section on any party's consent to jurisdiction of the state in which the trust is registered or has its principal place of business, or the court may grant a continuance or enter any other appropriate order. Sec. 13.36.050. Concurrent jurisdiction; venue. The court of the place in which the trust is registered has concurrent jurisdiction with other courts of this state of actions and proceedings to determine the existence or nonexistence of trusts created other than by will, of actions by or against creditors or debtors of trusts, and of other actions and proceedings involving trustees and third parties. Venue is determined by the rules generally applicable to civil actions. Sec. 13.36.055. Proceedings for review of employment of agents and review of compensation of trustee and employees of trust. (a) On petition of an interested person, after notice to all interested persons, the court may review the propriety of employment of any person by a trustee including any attorney, auditor, investment advisor or other specialized agent or assistant, and the reasonableness of the compensation of any person so employed, and the reasonableness of the compensation determined by the trustee for the trustee's services. Any person who has received excessive compensation from a trust may be ordered to make appropriate refunds. (b) If the terms of a trust do not specify the compensation or method for determining the compensation of the trustee, the trustee is entitled to compensation that is reasonable under the circumstances. If the terms of a trust do not specify the compensation or method for determining the compensation of a person employed by the trustee, the person employed by the trustee is entitled to compensation that is reasonable under the circumstances. If the terms of a trust specify the compensation or method for determining the compensation of a trustee and if the trustee is compensated according to these terms, the compensation paid to the trustee is presumed to be reasonable. If the terms of a trust specify the compensation or method for determining the compensation of a person employed by the trustee and if the person employed by the trustee is compensated according to these terms, the compensation paid to the person employed by the trustee is presumed to be reasonable. If a trust specifies the compensation or method for determining the compensation paid to the trustee or person employed by the trustee and if the trustee or person employed by the trustee is compensated accordingly, an interested person who seeks review of the compensation has the burden of proving by a preponderance of the evidence that the compensation paid to the trustee or the person employed by the trustee is not reasonable. Sec. 13.36.060. Trust proceedings; initiation by notice; necessary parties. Proceedings under AS 13.36.035 are initiated by filing a petition in the court and giving notice under AS 13.06.110 to interested parties. The court may order notification of additional persons. A decree is valid as to all who are given notice of the proceeding though fewer than all interested parties are notified. Article 3. Trustees. Sec. 13.36.070. General duty not limited. Except as specifically provided, the general duty of the trustee to administer a trust expeditiously for the benefit of the beneficiaries is not altered by AS 13.06 — AS 13.36 . Sec. 13.36.071. Accepting or rejecting trusteeship. (a) Except as otherwise provided in (c) or (d) of this section, a person designated as a trustee accepts the trusteeship (1) by substantially complying with a method of acceptance provided by the terms of the trust; or (2) if the terms of the trust do not provide a method, or the method provided in the terms of the trust is not expressly made exclusive, and except as otherwise provided by the trust instrument, by accepting delivery of the trust property, exercising powers as a trustee, performing duties as a trustee, or otherwise indicating acceptance of the trusteeship. (b) A person designated as a trustee who has not yet accepted the trusteeship may reject the trusteeship. A person designated as a trustee who does not accept the trusteeship within a reasonable time after knowing of the designation is considered to have rejected the trusteeship. (c) A person designated as a trustee, without accepting the trusteeship, may act to preserve the trust property if, within a reasonable time after acting, the person sends a rejection of the trusteeship to the settlor or, if the settlor is dead or lacks capacity, to a qualified beneficiary. (d) A person designated as a trustee, without accepting the trusteeship, may inspect or investigate trust property to determine potential liability under environmental or other law or for another purpose. Sec. 13.36.072. Co-trustees. (a) Except as otherwise provided in the trust instrument, (1) co-trustees who are unable to reach a unanimous decision may decide to act by majority decision; (2) if a vacancy occurs in a co-trusteeship, the remaining co-trustee or co-trustees may continue to act for the trust with full authority; (3) a co-trustee shall participate in the performance of the co-trustee's function unless (A) the co-trustee is unavailable to perform the function because of absence, illness, disqualification under other law, or temporary incapacity; or (B) the co-trustee has properly delegated the performance of the function to another co-trustee; (4) if a co-trustee is unavailable to perform duties because of absence, illness, disqualification under other law, or temporary incapacity, and prompt action is necessary to achieve the purposes of the trust or to avoid injury to the trust property, the remaining co-trustee or a majority of the remaining co-trustees may act with full authority for the trust. (b) Except as prohibited by the terms of the trust, a co-trustee may, by a signed, written instrument, delegate to a co-trustee the performance of a function. Unless a delegation is irrevocable, a co-trustee may revoke a delegation. (c) Notwithstanding the other provisions of this section, if the terms of a trust instrument provide for the appointment of more than one trustee but confer on one or more of the trustees, to the exclusion of other trustees, the power to direct or prevent specified actions of other trustees, the excluded trustees shall act in accordance with the exercise of the power. An excluded trustee under this subsection is not liable, individually or as a fiduciary, for a consequence that results from complying with the exercise of the power, regardless of the information available to the excluded trustee. An excluded trustee does not have an obligation to review, inquire, investigate, or make recommendations or evaluations with respect to the exercise of the power. A trustee having the power is liable to the beneficiaries as a fiduciary with respect to the exercise of the power as if the excluded trustees were not in office and has the exclusive obligation to account to and to defend an action brought by the beneficiaries with respect to the exercise of the power. In this subsection, “power” means the power to direct or prevent specified actions by other trustees. Sec. 13.36.073. Vacancy in trusteeship; appointment of successor. (a) Except as otherwise provided in the trust instrument, a vacancy in a trusteeship occurs if (1) a person designated as a trustee rejects the trusteeship or is considered to have rejected the trusteeship under AS 13.36.071 ; (2) a person designated as a trustee cannot be identified or does not exist; (3) a trustee resigns; (4) a trustee is disqualified or removed under AS 13.36.076 ; (5) a trustee dies; (6) a guardian or conservator is appointed for an individual serving as a trustee. (b) Except as otherwise provided in the trust instrument, if one or more co-trustees remain in office, it is not necessary to fill a vacancy in a trusteeship, but a vacancy in a trusteeship shall be filled if the trust does not have a remaining trustee. (c) A vacancy in a trusteeship of a noncharitable trust that is required to be filled shall be filled in the following order of priority: (1) under the terms of the trust; (2) by a person, other than a beneficiary, appointed by unanimous agreement of the qualified beneficiaries; or (3) by a person appointed by the court. (d) A vacancy in a trusteeship of an exclusively charitable trust that is required to be filled shall be filled in the following order of priority: (1) under the terms of the trust; (2) by a person selected by the unanimous consent of the charitable organizations expressly designated to receive distributions under the terms of the trust; or (3) by a person appointed by the court. (e) Except as otherwise provided in the trust instrument, a qualified beneficiary who may be represented and bound by another person under AS 13.06.120 may have the qualified beneficiary's consent to the appointment of a trustee as specified in this section given by the person who may represent the qualified beneficiary under AS 13.06.120 . Sec. 13.36.074. Resignation of trustee. (a) Except as otherwise provided in the trust instrument, a trustee may resign (1) not less than 30 days after providing written notice of the intent to resign to the qualified beneficiaries and all co-trustees; or (2) with the approval of the court. (b) In approving the resignation of a trustee, the court may issue orders and impose conditions on the resigning trustee that are reasonably necessary for the protection of the trust property. (c) Except as otherwise provided in the trust instrument, a liability of a resigning trustee for acts or omissions of the trustee is not discharged or affected by the trustee's resignation. Sec. 13.36.075. Trustee's standard of care and performance. [Repealed, § 4 ch 43 SLA 1998.] Sec. 13.36.076. Removal of trustee. (a) A trustee may be removed from office (1) by the decision of a trust protector under AS 13.36.370 (b)(1); (2) by the decision of another person specified in the trust instrument; (3) under a procedure specified in the trust instrument; (4) by a court on petition by the settlor, a co-trustee, a qualified beneficiary, or the court on its own initiative, if (A) the court finds there is a basis for removal under (b) of this section, there is not a trust protector or another specified person who is currently acting and who may be contacted by the settlor, trustee, or qualified beneficiary in person, by mail, electronically, or by another means, and there is not a procedure for removal specified in the trust instrument; or (B) notwithstanding the appointment of a trust protector under AS 13.36.370 or the existence of a procedure for trustee removal specified in the trust instrument, there has been a serious breach of trust as specified under (b)(1) of this section. (b) A trustee may be removed from office under (a)(4) of this section if the court finds that removal would be in the best interests of all the beneficiaries and, (1) for (a)(4)(A) or (B) of this section, the trustee has committed a serious breach of trust under the terms of the trust and AS 13.36.070 — 13.36.290; or (2) for (a)(4)(A) of this section, (A) lack of cooperation among co-trustees substantially impairs the administration of the trust; (B) a trustee is unfit, is unwilling, or persistently fails to administer the trust effectively; or (C) there has been a substantial change of circumstances not anticipated by the settlor, removal is requested by all of the qualified beneficiaries, the court finds that removal of the trustee best serves the interests of all of the beneficiaries and is not inconsistent with a material purpose of the trust, and a suitable co-trustee or successor trustee is available. (c) When appointing a successor trustee, the court shall first consider the successor trustees named in the trust or, if the trust is a testamentary trust, in the testator's will, or, if a successor is not named, another procedure contained in the instrument for the appointment of a successor. When selecting a successor trustee, the court shall also consider the tax, creditor liability, and similar consequences of selecting a certain individual or institution. (d) Pending a final decision on a petition to remove a trustee, or instead of or in addition to removing a trustee, the court may order relief that is appropriate and necessary to protect the trust property or the interest of the beneficiaries. (e) A qualified beneficiary who may be represented and bound by another person under AS 13.06.120 may have the qualified beneficiary's consent to the removal of a trustee as specified in this section given by the person who may represent the qualified beneficiary under AS 13.06.120 . Sec. 13.36.077. Delivery of property by former trustee. Except as otherwise provided in the trust instrument, (1) unless a co-trustee remains or the court otherwise orders, and until the trust property is delivered to a successor trustee or another person entitled to the trust property, a trustee who has resigned or been removed has the duties of a trustee and the powers necessary to protect the trust property; (2) a trustee who has resigned or been removed shall proceed expeditiously to deliver the trust property in the trustee's possession to a co-trustee, a successor trustee, or another person entitled to the trust property. Sec. 13.36.078. Reimbursement of expenses. Except as otherwise provided in the trust instrument, (1) a trustee is entitled to be reimbursed out of the trust property, with interest as appropriate, for (A) expenses that were properly incurred in the administration of the trust; and (B) expenses that were not properly incurred in the administration of the trust to the extent necessary to prevent unjust enrichment of the trust; (2) if the trustee advances money for the protection of the trust, the trustee has a lien against trust property to secure reimbursement of the money and payment of reasonable interest on the money. Sec. 13.36.079. Certification of trust; penalty. (a) Except as otherwise provided in the trust instrument, instead of furnishing a copy of the trust instrument to a person other than a beneficiary, the trustee may furnish to the person a certification of trust containing the following information: (1) that the trust exists and the date the trust instrument was executed; (2) the identity of the settlor; (3) the identity and address of the currently acting trustee; (4) the powers of the trustee; (5) the revocability or irrevocability of the trust and the identity of any person holding a power to revoke the trust; (6) the authority of co-trustees to sign or otherwise authenticate documents related to the trust and whether all or fewer than all co-trustees are required to exercise the trustee powers; (7) the trust's taxpayer identification number, if the trust has a taxpayer identification number; and (8) the manner of taking title to the property of the trust. (b) A certification of trust may be signed or otherwise authenticated by any trustee. (c) A certification of trust must state that the trust has not been revoked, modified, or amended in a manner that would cause the representations contained in the certification of trust to be incorrect. (d) A certification of trust is not required to contain the dispositive terms of a trust. (e) A recipient of a certification of trust may require the trustee to furnish copies of the excerpts from the original trust instrument, including amendments to the trust that designate the trustee and confer on the trustee the power to act in the pending transaction for which the certification of trust is being furnished. (f) A person who acts in reasonable reliance on a certification of trust without knowledge that the representations contained in the certification of trust are incorrect is not liable to another person for acting in reasonable reliance on the certification of trust and may assume without inquiry the existence of the facts contained in the certification. Knowledge of the terms of the trust may not be inferred solely because the person relying on the certification is holding a copy of part of the trust instrument. (g) A person who in good faith enters into a transaction in reasonable reliance on a certification of trust may enforce the transaction against the trust property as if the representations contained in the certification were correct. (h) A person making a demand for the trust instrument in addition to a certification of trust or excerpts from the trust instrument is liable to the state for a civil penalty not to exceed $1,000, plus the actual damages associated with the demand for the trust instrument, if a court determines that the person did not act in good faith in demanding the trust instrument. (i) A person who is found liable for a civil penalty under (h) of this section shall also be liable for actual court costs and attorney fees associated with a demand made under (h) of this section. (j) This section does not limit the right of a person to obtain a copy of the trust instrument in a judicial proceeding concerning the trust. Sec. 13.36.080. Duty to inform and account to beneficiaries. (a) The trustee shall keep the beneficiaries of the trust reasonably informed of the trust and its administration. In addition, (1) within 30 days after acceptance of the trust, the trustee shall inform in writing the current beneficiaries and, if possible, one or more persons who under AS 13.06.120 may represent beneficiaries with future interests, of the court in which the trust is registered and of the trustee's name and address; (2) upon reasonable request, the trustee shall provide the beneficiary with a copy of the terms of the trust that describe or affect the beneficiary's interest and with relevant information about the assets of the trust and the particulars relating to the administration; (3) upon reasonable request, a beneficiary is entitled to a statement of the accounts of the trust annually and on termination of the trust or change of the trustee. (b) The settlor of a trust may exempt a trustee from the duties under (a) of this section to provide notification or information regarding the trust to a beneficiary who is not entitled to a mandatory distribution of income or principal from the trust on an annual or more frequent basis. The settlor may provide the exemption by provision in the instrument creating the trust if the trust is created by a writing, by an amendment of the trust if the settlor reserved the power to amend the trust, or by a written document after the trust is created. The exemption may not exceed in duration the shorter of the settlor's lifetime or a judicial determination of the settlor's incapacity. (c) If a settlor provides for an exemption under (b) of this section and a beneficiary with a future interest (1) who is not a beneficiary entitled to a mandatory distribution of income or principal from the trust on an annual or more frequent basis receives a distribution, the trustee shall provide notification or information limited to the accounting period during which the distribution was made; (2) becomes a beneficiary entitled to a mandatory distribution of income or principal from the trust on an annual or more frequent basis, the trustee shall provide notification and information as required under AS 13.16 and (a) of this section. Sec. 13.36.085. Bonding. A trustee need not provide bond to secure performance of the trustee's duties unless required by the terms of the trust, reasonably requested by a beneficiary, or found by the court to be necessary to protect the interests of the beneficiaries who are not able to protect themselves and whose interests otherwise are not adequately represented. On petition of the trustee or other interested person, the court may excuse a requirement of bond, reduce the amount of the bond, release the surety, or permit the substitution of another bond with the same or different sureties. If bond is required, it shall be filed in the court of registration or other appropriate court in amounts and with sureties and liabilities as provided in AS 13.16.260 and 13.16.270 relating to bonds of personal representatives. Sec. 13.36.090. Trustee's duty; appropriate place of administration; deviation. A trustee is under a continuing duty to administer the trust at a place appropriate to the purposes of the trust and to its sound, efficient management. If the principal place of administration becomes inappropriate for any reason, the court may enter any order furthering efficient administration and the interests of beneficiaries, including, if appropriate, release of registration, removal of the trustee under AS 13.36.076 , and appointment of a trustee in another state. Trust provisions relating to the place of administration and to changes in the place of administration or of trustee control unless compliance would be contrary to efficient administration or the purposes of the trust. Sec. 13.36.095. Personal liability of trustee to third parties. (a) [Repealed, § 22 ch 105 SLA 1998.] (b) Subject to AS 13.36.105 — 13.36.220, a trustee is personally liable for obligations arising from ownership or control of property of the trust estate or for torts committed in the course of administration of the trust estate only if personally at fault. (c) Claims based on contracts entered into by a trustee in a fiduciary capacity, on obligations arising from ownership or control of the trust estate, or on torts committed in the course of trust administration may be asserted against the trust estate by proceeding against the trustee in the trustee's fiduciary capacity, whether or not the trustee is personally liable for them. (d) The question of liability as between the trust estate and the trustee individually may be determined in a proceeding for accounting surcharge or indemnification or other appropriate proceeding. Sec. 13.36.100. Limitations on proceedings against trustees. (a) Unless resolved or barred under (b) or (c) of this section, and notwithstanding the lack of adequate disclosure, all claims against a trustee who has issued a report received by the beneficiary and who has informed the beneficiary of the location and availability of records for examination by the beneficiary are barred unless a proceeding to assert the claims is commenced within three years after the beneficiary's receipt of the report. (b) If a trustee petitions a court for an order approving a report that adequately discloses the existence of a potential claim, serves the report on all beneficiaries to be bound by the report, gives the beneficiaries at least 60 days' notice of the court proceeding, and notifies the beneficiary that a claim must be begun within 45 days after the beneficiary is served with notice of the court proceeding, all potential claims of the beneficiaries against the trustee are barred unless the claims are served on the trustee and filed with the court within 45 days after the beneficiaries are served with notice of the court proceeding. (c) If a trustee serves a report on a beneficiary that adequately discloses the existence of a potential claim against the trustee, the trustee informs the beneficiary that a proceeding to assert any claim against the trustee must be commenced by the beneficiary within six months after receipt of the report, and the beneficiary fails to assert a claim against the trustee, all claims of the beneficiary are barred. (d) A beneficiary is considered to have received a report if, being an adult, the report is received by the beneficiary personally, or, if the beneficiary is a person who may be represented and bound by another person under AS 13.06.120 , the report is received by the person who may represent the person under AS 13.06.120 . (e) A report adequately discloses the existence of a potential claim against a trustee if it provides sufficient information for the beneficiary to know of the potential claim or to be expected to reasonably inquire into the existence of a claim with respect to the matter. (f) This section does not apply to claims brought by a beneficiary against a trustee for fraud committed by the trustee. (g) The report of a trustee under this section is considered to provide adequate notice to the beneficiary that there is a time limitation for filing a claim against the trustee if the cover page or top of the first page of the report contains the following language in at least 14 point bold type: “BY RECEIPT OF THIS REPORT, ANY ACTION YOU MAY HAVE AS A BENEFICIARY AGAINST THE TRUSTEE FOR BREACH OF TRUST BASED ON ANY MATTER ADEQUATELY DISCLOSED IN THIS REPORT MAY BE BARRED UNLESS THE ACTION IS BEGUN WITHIN SIX MONTHS AFTER YOU RECEIVE THIS REPORT. IF YOU HAVE ANY QUESTIONS, YOU MAY WISH TO OBTAIN PROFESSIONAL ADVICE REGARDING THIS REPORT.” (h) In this section, “report” means a final report or an interim report for a certain period, and includes an accounting. Sec. 13.36.105. Powers attached to the office of trustee. Unless otherwise provided by the trust instrument, an amendment of the trust instrument, or a court order, the powers of a trustee are attached to the office and are not personal. Sec. 13.36.107. General powers. (a) Without authorization by a court, a trustee may exercise the powers conferred by the terms of the trust and, except as limited by the terms of the trust, the powers conferred by this chapter. (b) This chapter does not affect the power of a court to (1) relieve a trustee from provisions contained in the terms of the trust that restrict the exercise of powers; (2) confer on a trustee additional powers, whether or not the powers are authorized by the terms of the trust; or (3) restrict the exercise of a power otherwise given to the trustee by the terms of the trust or this chapter. (c) The grant of a power to a trustee, whether under the terms of the trust, this chapter, or a court, does not alone govern the exercise of the power. Sec. 13.36.109. Specific powers of trustees. Except as otherwise provided by this chapter, in addition to the powers conferred by the terms of the trust, a trustee may perform all actions necessary to accomplish the proper management, investment, and distribution of the trust property, including the power (1) to collect, hold, and retain trust property received from a settlor or another person; the property may be retained even if it includes property in which the trustee is personally interested; (2) to accept additions to the property of the trust from a settlor or another person; (3) to continue or to participate in the operation of a business or other enterprise that is part of the trust property and to effect an incorporation, dissolution, or other change in the form of the organization of the business or enterprise; (4) to acquire or dispose of property, for cash or on credit, at public or private sale or by exchange; (5) to manage, control, divide, develop, improve, exchange, partition, change the character of, or abandon trust property; (6) to encumber, mortgage, or pledge trust property for a term within or extending beyond the term of the trust in connection with the exercise of a power vested in the trustee; (7) to make ordinary or extraordinary repairs, alterations, or improvements in buildings or other trust property; to demolish improvements; and to raze existing or erect new party walls or buildings; (8) to subdivide or develop land; to dedicate land to public use; to make or obtain the vacation of plats and to adjust boundaries; to adjust differences in valuation on exchange or partition by giving or receiving consideration; and to dedicate easements to public use without consideration; (9) to enter into a lease for any purpose as lessor or lessee with or without the option to purchase or renew and for a term within or extending beyond the term of the trust; (10) to enter into a lease or arrangement for exploration and removal of gas, oil, or other minerals or geothermal energy; and to enter into a community oil lease, a pooling agreement, or a unitization agreement; (11) to grant an option involving disposition of trust property or to take an option for the acquisition of property, including an option that is exercisable beyond the duration of the trust; (12) with respect to shares of stock of a domestic or foreign corporation, a membership in a nonprofit corporation, or other property, to (A) vote in person and to give proxies to exercise any voting rights with respect to the shares, memberships, or property; (B) waive notice of a meeting or to give consent to the holding of a meeting; and (C) authorize, ratify, approve, or confirm an action that could be taken by shareholders, members, or property owners; (13) to pay calls, assessments, and other sums chargeable to or accruing against or on a securities account; (14) to sell or exercise stock subscription or conversion rights; (15) to consent, directly or through a committee or other agent, to the reorganization, consolidation, merger, dissolution, or liquidation of a corporation or other business enterprise; to participate in voting trusts, pooling arrangements, and foreclosures; and, in connection with a reorganization, consolidation, merger, dissolution, liquidation, voting trust, pooling arrangement, or foreclosure, to deposit securities with, transfer title, and delegate discretion to a protective or other committee as the trustee considers advisable; (16) to deposit securities in a securities depository; (17) to insure the property of the trust against damage or loss and to insure the trustee against liability with respect to third persons; (18) to borrow money for a trust purpose to be repaid from trust property; (19) to pay or contest a claim, to settle a claim by or against the trust by compromise, arbitration, or otherwise, and to release, in whole or in part, a claim belonging to the trust; (20) to pay taxes, assessments, reasonable compensation of the trustee, employees, and agents of the trust, and other expenses incurred in the collection, care, administration, and protection of the trust; (21) to make loans out of trust property to an eligible beneficiary or an eligible third-party entity on terms and conditions the trustee considers to be fair and reasonable under the circumstances and to guarantee loans to the eligible beneficiary or eligible third-party entity by encumbrances on trust property; in this paragraph, (A) “eligible beneficiary” means a beneficiary of the trust who is currently eligible for or entitled to a distribution of income or principal of the trust; (B) “eligible third-party entity” means a third-party entity if more than 50 percent of the equity of the entity is owned by the trust or by one or more beneficiaries of the trust; (22) to pay an amount distributable to a beneficiary, whether or not the beneficiary is under a legal disability, by paying the amount to the beneficiary or by paying the amount to another person for the use or benefit of the beneficiary; (23) to make a distribution of property and money in divided or undivided interests, pro rata or otherwise, and to adjust resulting differences in valuation; (24) to employ accountants, attorneys, investment advisers, appraisers, or other persons, even if they are associated or affiliated with the trustee, to advise or assist the trustee in the performance of administrative duties; (25) to inspect or investigate property that the trustee has been asked to hold or property owned or operated by an entity in which the trustee holds or has been asked to hold an interest for the purpose of determining the application of environmental law to the property and to take action to prevent, abate, or otherwise remedy an actual or potential violation of an environmental law affecting property held directly or indirectly by the trustee; (26) to establish for an asset a reserve for depreciation, depletion, or obsolescence, and to decide, under law, how and in what proportions a receipt or disbursement is to be credited, charged, or apportioned between principal and income; (27) to execute and deliver instruments that are useful to accomplish or facilitate the exercise of the trustee's powers; (28) to prosecute or defend an action, claim, or proceeding in order to protect trust property and the trustee in the performance of the trustee's duties; and (29) to consider discretionary distributions to a beneficiary as being made from capital gains realized during the year. Sec. 13.36.110. Liability of trustee relating to exercise of power. A dissenting trustee who has joined another trustee in exercising a power is not liable to the beneficiaries or to others for the consequences of the exercise of the power if the dissenting trustee joins because of a requirement for unanimous trustee consent to the exercise of the power. The dissenting trustee's dissent must be presented in writing to a co-trustee and a legally competent beneficiary or, if the beneficiary is a minor or an incompetent person, the representative of the beneficiary. A trustee who is not authorized to exercise a power is not liable to the beneficiaries or to others for (1) the exercise by a co-trustee of the power; or (2) the failure to exercise that power. Sec. 13.36.120. Voting of corporate stock owned by trustee. A trustee of a trust owning corporate stock is liable for a loss resulting to the beneficiaries from a failure to use reasonable care in deciding how to vote the stock and in voting the stock only if personally at fault. Sec. 13.36.125. Creation of trust bank account to pay special debts. Whenever a bank account is, by entries made on the books of the depositor and the bank at the time of the deposit, created exclusively for the purpose of paying dividends, interest, interest coupons, salaries, wages, or pensions or other employee benefits, and the depositor at the time of opening the account does not expressly declare otherwise, the depositor is considered a trustee of the account for the creditors to be paid from the account, subject to any power of revocation that the depositor may have reserved by agreement with the bank. Sec. 13.36.130. Failure of beneficiary to present claim for payment. If a beneficiary for whom a trust bank account is created under AS 13.36.125 does not present the beneficiary's claim to the bank for payment within one year after the claim is due, the depositor who created the trust may revoke the trust as to the beneficiary. Sec. 13.36.135. Holding stock in name of nominee. (a) A trustee of a trust owning stocks, bonds, notes, debentures, or other written obligations of a public or private corporation may hold the obligations in the name of a nominee, without mention of the trust in the records of the corporation or in the stock certificate or stock registration book of the corporation, if (1) the trust records and all reports or accounts rendered by the trustee clearly show the ownership of the stocks, bonds, notes, debentures, or other written obligations of the public or private corporation by the trustee and the facts regarding the holding by the trustee;

and (2) the nominee deposits with the trustee a signed statement showing the trust ownership, endorses the stock certificate or other title instruments for the obligations in blank, and does not have possession of or access to the stock certificate or other title instruments for the obligations except under the immediate supervision of the trustee. (b) A trustee holding obligations under (a) of this section is personally liable for a loss to the trust resulting from an act of the nominee in connection with the stocks, bonds, notes, debentures, or other written obligations held under (a) of this section. Sec. 13.36.140. Loan of trust funds. Except as provided in AS 13.36.145 , a corporate trustee may not lend trust funds to itself or an affiliate, or to a director, an officer, or an employee of itself or an affiliate, and a noncorporate trustee may not lend trust funds to itself or to a relative, an employer, an employee, or a partner or other business associate. Sec. 13.36.145. Corporate trustee depositing trust funds with itself. (a) A corporate trustee that is subject to regulation and supervision by state or federal authorities may deposit with itself trust funds that are being held out of necessity pending investment, distribution, or payment of debts if the corporate trustee (1) pays into the trust for the deposit the interest the corporate trustee is required by state or federal law to pay on uninvested trust funds or, if there is not a state or federal law requiring the payment of interest, at the same rate of interest the corporate trustee pays on similar nontrust deposits; and (2) maintains in its trust department as security for the deposit a separate fund consisting of securities that are legal for trust investments and that are at all times equal in total market value to the amount of the deposit, except that the security is not required to the extent that the deposit is insured or given a preference by state or federal law. (b) The separate fund of securities required by (a)(2) of this section shall be marked as a separate fund for (a)(2) of this section. Withdrawals from or additions to the separate fund may be made from time to time, as long as the required value is maintained. The income of the securities in the separate fund belongs to the corporate trustee. In the statements of its financial condition published or delivered to the Department of Commerce, Community, and Economic Development, the corporate trustee shall show as separate items the amount of trust funds that it has deposited with itself and the amount of securities that it holds as security for the payment of the deposits. Sec. 13.36.150. Trustee leasing, buying, or selling to or from itself or a related person. A trustee, unless expressly authorized by the trust instrument, may not directly or indirectly lease, buy, or sell property for the trust from or to (1) itself or an affiliate; (2) a director, an officer, or an employee of the trustee or an affiliate; or (3) a relative, an employer, or a partner or other business associate. Sec. 13.36.153. Restrictions on exercising certain trustee powers. (a) Notwithstanding AS 13.36.107 , a trustee who is not an independent trustee may not exercise a power to make or cause to be made a discretionary distribution of either principal or income (1) to or for the direct or indirect benefit of the trustee individually or to any person holding a power to remove and replace the trustee, except to the extent that the power is exercised in accordance with an ascertainable standard that relates to the health, education, maintenance, or support of the trustee or person; (2) to satisfy a legal obligation that is owed by the trustee individually or by any person holding a power to remove and replace this trustee; or (3) if the distribution would constitute a taxable gift from the trustee individually or from a person holding a power to remove and replace the trustee. (b) The prohibitions of (a) of this section apply to a trustee even if the governing instrument states that the trustee may make distributions in the trustee's uncontrolled, absolute, or total discretion, or that distributions are not subject to review by a court, or the governing instrument otherwise indicates that distributions by the trustee are not subject to reasonableness when the trustee exercises discretion. (c) If a trustee is prohibited by (a) of this section from exercising a power and if one or more other trustees are not prohibited by (a) of this section from exercising the power, the other trustees may exercise the power. If there is not a trustee who can exercise a power prohibited under (a) of this section, a party in interest may apply to the superior court to appoint an independent trustee to exercise the power. (d) The provisions of (a) of this section do not prohibit a trustee from making payments, including reimbursement of and compensation of an independent trustee appointed under (c) of this section, for the protection of the trust or the assets of the trust, or for the expenses, losses, or liabilities incurred in the collection, care, administration, or protection of the trust or the assets of the trust. (e) Except as provided in (f) of this section, this section applies to (1) a trust that is created on or after August 9, 2000; or (2) the decisions and actions of a trust that is in existence on August 9, 2000, if the decisions are made, or the actions occur, on or after August 9, 2000. (f) The application provisions of (e) of this section do not apply if (1) the terms of the trust, including the terms as amended, expressly provide that this section does not apply and either specifically refer to this section or otherwise clearly demonstrate the intent that this section does not apply; or (2) the trust is irrevocable and all parties in interest elect under (g) of this section not to be subject to the application of this section; an election under this paragraph must be made on or before January 1, 2003, or three years after the date on which the trust becomes irrevocable, whichever date is later; however, notwithstanding AS 13.36.080 , the trustee does not have a duty to inform the parties in interest of this election. (g) The election allowed under (f) of this section shall be made by a written declaration that is delivered to the trustee. (h) The prohibitions of (a) of this section do not apply to a trustee with respect to trust property, including income from the trust property, if the trust property would, upon the death of the trustee, be included, for any reason other than the exercise of a power prohibited by (a) of this section, in the gross estate of the trustee for federal estate tax purposes. (i) This section does not create a new cause of action, or impair a cause of action existing before August 9, 2000, if the new or existing cause of action relates to the exercise of a power prohibited by (a) of this section that was exercised before August 9, 2000. (j) In this section, “independent trustee” means a trustee that is not related or subordinate, as defined in 26 U.S.C. 672(c), to the person having the power to remove the trustee or to any beneficiary. Sec. 13.36.155. Permitted sales between trusts held by same corporate trustee. If the transaction is fair to both trusts and if the transaction is not prohibited by the instruments creating the trustee relationship, a corporate trustee may sell to itself as trustee of a trust the following held by the corporate trustee as trustee for another trust: (1) stocks, bonds, and other securities listed on a securities exchange supervised by the United States Securities and Exchange Commission; and (2) obligations of the United States treasury and obligations of United States government agencies. Sec. 13.36.157. Exercise of power of appointment. (a) An authorized trustee with unlimited discretion to invade trust principal may appoint part or all of that principal to a trustee of an appointed trust for, and only for the benefit of, one or more current beneficiaries of the invaded trust to the exclusion of other current beneficiaries. A permissible appointee of a power of appointment held by a beneficiary of the appointed trust is not considered a beneficiary of the appointed trust, regardless of whether the permissible appointee is a current beneficiary or a successor and remainder beneficiary. (b) An authorized trustee exercising the power under (a) of this section may grant a discretionary power of appointment, including a presently exercisable power of appointment, in the appointed trust to one or more of the current beneficiaries of the invaded trust, to the extent that the beneficiary who is granted the power to appoint is authorized to receive the principal outright under the terms of the invaded trust. A permissible appointee is not limited to the beneficiaries of the invaded trust. (c) Under (a) and (b) of this section, if the beneficiaries of the invaded trust are described by a class, the beneficiaries of the appointed trust may include present or future members of that class. (d) An authorized trustee with the power to invade trust principal but without unlimited discretion may appoint part or all of the principal of the trust to a trustee of an appointed trust if the current beneficiaries of the appointed trust are the same as the current beneficiaries of the invaded trust and the successor and remainder beneficiaries of the appointed trust are the same as the successor and remainder beneficiaries of the invaded trust. The shares of the current beneficiaries of the appointed trust must be the same as the shares of the current beneficiaries of the invaded trust, and the shares of the successor and remainder beneficiaries of the appointed trust must be the same as the shares of the successor and remainder beneficiaries of the invaded trust. (e) If the authorized trustee exercises the power under (d) of this section, the appointed trust must include the same standard authorizing the trustee to distribute the income or invade the principal of the appointed trust as the standard in the invaded trust. However, the standard authorizing the trustee to distribute the income or invade the principal of the appointed trust may be changed if the trustee appoints to an appointed trust that is a special needs trust, a pooled trust, or a third-party trust. (f) If an authorized trustee exercises the power under (d) and (e) of this section to extend the duration of the appointed trust beyond the duration of the invaded trust for any period after the invaded trust would have otherwise terminated under the provisions of the invaded trust, the appointed trust, in addition to the language required to be included in the appointed trust under (e) of this section, may also provide an additional trustee with unlimited discretion to invade the principal of the appointed trust during the extended duration. The trustee with unlimited discretion continues to be subject to the restrictions in (d) — (h) of this section. (g) Under (d) — (f) of this section, if the beneficiaries of the invaded trust are described by a class, the beneficiaries of the appointed trust include present or future members of that class. (h) If the authorized trustee exercises the power under (d) — (g) of this section and if the invaded trust grants a power of appointment to a beneficiary of the trust, the appointed trust must grant this power of appointment in the appointed trust, and the class of permissible appointees shall be the same as in the invaded trust. Sec. 13.36.158. Additional provisions relating to exercise of a power of appointment. (a) An exercise of the power to invade trust principal under AS 13.36.157 is the exercise of a special power of appointment. (b) The appointed trust to which an authorized trustee appoints the assets of the invaded trust under AS 13.36.157 may have a duration that is longer than the duration set out in the invaded trust. (c) If an authorized trustee has unlimited discretion to invade the principal of a trust and if the same trustee or another trustee has a power, not dependent on unlimited discretion, to invade principal under the trust instrument, the authorized trustee having unlimited discretion may exercise the power of appointment under AS 13.36.157 (a) — (c). (d) An authorized trustee may exercise the power to appoint in favor of an appointed trust under AS 13.36.157 whether or not there is a current need to invade principal under the terms of the invaded trust. (e) An authorized trustee exercising the power under AS 13.36.157 — 13.36.159 has a fiduciary duty to exercise the power in the best interests of one or more proper objects of the exercise of the power and as a prudent person would exercise the power under the prevailing circumstances. The authorized trustee may not exercise the power under AS 13.36.157 — 13.36.159 if there is substantial evidence of a contrary intent of the settlor and it cannot be established that the settlor would be likely to have changed this intention under the circumstances existing at the time the trustee exercises the power. The provisions of the invaded trust may not be viewed alone as substantial evidence of a contrary intent of the settlor unless the invaded trust expressly prohibits the exercise of the power in the manner intended by the authorized trustee. (f) The provisions of AS 13.36.157 — 13.36.159 may not be construed to abridge the right of a trustee to appoint property further in trust under the terms of the governing instrument of a trust, another provision of law, or common law, or as directed by a court having jurisdiction over the trust. (g) Nothing in AS 13.36.157 — 13.36.159 creates or implies a duty to exercise a power to invade principal. An inference of impropriety may not be made, and liability is not incurred, as a result of an authorized trustee not exercising the power conferred under AS 13.36.157 . (h) A power authorized by AS 13.36.157 may be exercised, subject to the provisions of AS 13.36.159 (a), unless expressly prohibited by the terms of the governing instrument. A general prohibition against amending or revoking the invaded trust and a provision that constitutes a spendthrift clause do not preclude the exercise of a power under AS 13.36.157 . (i) An authorized trustee may not exercise a power authorized by AS 13.36.157 to (1) reduce, limit, or modify a beneficiary's current right to a mandatory distribution of income or principal, a mandatory annuity or unitrust interest, a right to withdraw a percentage of the value of the trust, or a right to withdraw a specified dollar amount, if the mandatory right has come into effect with respect to the beneficiary, but the mandatory right may be reduced, limited, or modified during any extended duration of the trust; however, notwithstanding the other provisions in this paragraph, but subject to the other limitations in AS 13.36.157 — 13.36.159, an authorized trustee may exercise a power authorized by AS 13.36.157 to appoint to an appointed trust that is a special needs trust, a pooled trust, or a third-party trust; (2) decrease or indemnify against a trustee's liability or exonerate a trustee from liability for failure to exercise reasonable care, diligence, and prudence unless the court having jurisdiction over the trust specifies otherwise; (3) eliminate a provision granting another person the right to remove or replace the authorized trustee exercising the power under AS 13.36.157 unless a court having jurisdiction over the trust specifies otherwise; (4) fix as binding and conclusive the value of an asset for purposes of distribution, allocation, or otherwise; or (5) jeopardize (A) the deduction or exclusion originally claimed with respect to a contribution to the invaded trust that qualified for the annual exclusion under 26 U.S.C. 2503(b), the marital deduction under 26 U.S.C. 2056(a) or 26 U.S.C. 2523(a), or the charitable deduction under 26 U.S.C. 170(a), 26 U.S.C. 642(c), 26 U.S.C. 2055(a), or 26 U.S.C. 2522(a) (Internal Revenue Code); (B) the qualification of a transfer as a direct skip under 26 U.S.C. 2642(c) (Internal Revenue Code); (C) the election to treat a corporation as a subchapter S corporation under 26 U.S.C. 1362 (Internal Revenue Code); or (D) another specific tax benefit for which a contribution originally qualified for income, gift, estate, or generation-skipping transfer tax purposes under 26 U.S.C. (Internal Revenue Code). (j) Before exercising the power under AS 13.36.157 , an authorized trustee shall consider the tax implications of the exercise of the power. (k) An authorized trustee may not exercise a power described in AS 13.36.157 — 13.36.159 in violation of the limitations on validity in AS 34.27.051 or 34.27.100, or the restrictions on exercising certain powers in AS 13.36.153 by trustees who are not independent. A violation voids the entire exercise of the power unless the exercise is modified to correct the violation. (l) Unless a court having jurisdiction over the trust directs otherwise, an authorized trustee may not exercise a power authorized by AS 13.36.157 to change the provisions regarding the determination of the compensation of a trustee. The commissions or other compensation payable to the trustees of the invaded trust may continue to be paid to the trustees of the appointed trust during the term of the appointed trust and shall be determined in the same manner as for the invaded trust. (m) A trustee may not receive a payment, a commission, or other compensation for appointing property from the invaded trust to an appointed trust under AS 13.36.157 . However, a trustee may be compensated at a reasonable rate for the time spent considering and implementing the exercise of a power to appoint. (n) Unless the invaded trust expressly provides otherwise, the provisions in AS 13.36.157 — 13.36.159 apply to (1) a trust, whether testamentary or inter vivos, governed by the laws of this state, including a trust whose governing law has been changed to the laws of this state; and (2) a trust that has a trustee who is an individual domiciled in this state, or a trustee that is an entity having an office in this state, if a majority of the trustees select this state as the location for the primary administration of the trust and the selection is made by an instrument in writing that is signed and acknowledged by a majority of the trustees; the instrument exercising this selection shall be kept with the records of the invaded trust. (o) In this section, “Internal Revenue Code” means the Internal Revenue Code of the United States (26 U.S.C.) as it exists on September 9, 2013 and as it is amended from time to time. Sec. 13.36.159. Implementation of power of appointment. (a) Unless the authorized trustee provides otherwise, the appointment of (1) all of the assets making up the principal of the invaded trust to an appointed trust includes subsequently discovered assets of the invaded trust and undistributed principal of the invaded trust acquired after the appointment to the appointed trust; (2) a part but not all of the assets making up the principal of the invaded trust to an appointed trust may not include subsequently discovered assets belonging to the invaded trust or principal paid to or acquired by the invaded trust after the appointment to the appointed trust; those subsequently discovered assets remain the assets of the invaded trust. (b) The exercise of the power to appoint to an appointed trust under AS 13.36.157 shall be evidenced by an instrument in writing that is signed, dated, and acknowledged by the authorized trustee. The exercise of the power is effective 30 days after the date of service of the instrument as specified in (d) of this section, unless the persons entitled to notice consent in writing to a sooner effective date. (c) An authorized trustee may exercise the power authorized by AS 13.36.157 without the consent of the settlor or a person interested in the invaded trust and without court approval. However, an authorized trustee may seek court approval for the exercise. When seeking court approval, notice shall be sent to all qualified beneficiaries. (d) A copy of the invaded trust, the appointed trust, and the instrument exercising the power shall be delivered to (1) the settlor, if living, of the invaded trust; (2) a person having the right, under the terms of the invaded trust, to remove or replace the authorized trustee exercising the power under AS 13.36.157 ; and (3) a qualified beneficiary or a person who may represent and bind a qualified beneficiary under AS 13.06.120 . (e) Notice under (d) of this section to a qualified beneficiary is not required if the settlor has exempted the authorized trustee from providing notification or information to beneficiaries under AS 13.36.080 (b). Notice under (d) of this section shall be provided under AS 13.06.110 . (f) The instrument exercising the power must state whether the appointment is of all or part of the assets making up the principal of the invaded trust and, if a part, the approximate percentage of the value of the principal of the invaded trust that is the subject of the appointment. A failure to state whether the appointment is of all or part of the assets creates a presumption that only part of the assets is to be appointed. (g) A person entitled to notice under (d) of this section may object to the trustee's exercise of the power under AS 13.36.157 — 13.36.159 by serving a written notice of objection on the trustee before the effective date of the exercise of the power. The failure to object does not constitute consent. (h) The receipt of a copy of the instrument exercising the power does not, before the expiration of the limitation period in AS 13.36.100 with respect to a report disclosing the exercise, affect the right of a qualified beneficiary to object to the exercise of the power under AS 13.36.157 and to request the court to modify or to reverse the exercise. (i) A copy of the instrument exercising the power shall be kept with the records of the invaded trust. Sec. 13.36.160. Corporate trustee buying its own or an affiliate's securities. A corporate trustee may not purchase for a trust shares of its own stock, or its bonds, or other securities, or the stock, bonds, or other securities of an affiliate. Sec. 13.36.165. Withdrawals from mingled trust funds. If a person who is a trustee of two or more trusts mingles the funds of two or more trusts in the same aggregate of cash or in the same bank or brokerage account or other investment, and if a withdrawal is made from the cash aggregate, account, or investment by the trustee for the trustee's own benefit, for the benefit of a third person who is not a beneficiary or creditor of one or more of the trusts, or for an unknown purpose, the withdrawal must be charged first to the amount of the personal cash, credit, or other property, if any, of the trustee in the mingled fund, and, after the exhaustion of the trustee's cash, credit, or other property, then to the several trusts in proportion to their several interests in the cash, credit, or other property in the cash aggregate, account, or investment at the time of the withdrawal. Nothing in this section is intended to authorize the mingling of trust funds. Sec. 13.36.169. Elections to qualify property for marital deduction and generation-skipping transfer tax allocations. (a) Unless a governing instrument specifically refers to this section and provides otherwise, a trustee who makes an election under 26 U.S.C. 2056, 2056A, or 2523 (Internal Revenue Code), or who makes an allocation under 26 U.S.C. 2632 (Internal Revenue Code), may benefit personally from the election or allocation and is not required to reimburse another person interested in the election or allocation, to make an equitable adjustment, or to treat interested persons impartially with respect to the election or allocation. (b) Unless a governing instrument specifically refers to this section and provides otherwise, if an election is made under 26 U.S.C. 2056, 2056A, or 2523 (Internal Revenue Code), if an allocation is made under 26 U.S.C. 2632 (Internal Revenue Code), or if division of a trust benefits the persons interested in the trust, the trustee may divide the trust into two or more separate trusts of equal or unequal value if the terms of the separate resulting trusts are substantially identical to the terms of the trust before the division. The allocation of assets must be based on the fair market value of the assets at the time of the division. (c) Except as provided in (d) of this section, this section applies to (1) a trust that is created on or after August 9, 2000; or (2) the decisions and actions of a trust that is in existence on August 9, 2000 if the decisions are made or actions occur on or after August 9, 2000. (d) The application provisions of (c) of this section do not apply if (1) the terms of the trust, including the terms as amended, expressly provide that this section does not apply and either specifically refer to this section or otherwise clearly demonstrate the intent that this section does not apply; or (2) the trust is irrevocable and all parties in interest elect not to be subject to the application of this section; an election under this paragraph must be made on or before January 1, 2003, or three years after the date on which the trust becomes irrevocable, whichever date is later; however, notwithstanding AS 13.36.080 , the trustee does not have a duty to inform the parties in interest of this election; the election allowed under this paragraph must be made by a written declaration delivered to the trustee. Sec. 13.36.170. Unenforceable oral trust created by deed. (a) When an interest in real property is conveyed by deed to a person in a trust that is unenforceable under AS 09.25.010 — 09.25.020 and the intended trustee or the trustee's successor in interest holds title but refuses to carry out the trust because of AS 09.25.010 — 09.25.020, the intended trustee or the trustee's successor in interest, except to the extent that the successor in interest is a bona fide purchaser of a legal interest in the real property, shall convey the interest in real property to the settlor or the settlor's successor in interest. A court having jurisdiction may prescribe the conditions for conveying the interest to the settlor or the settlor's successor in interest. (b) If the intended trustee of an unenforceable trust under (a) of this section transfers part or all of the trustee's interest and the interest is transferred to a bona fide purchaser, the intended trustee is liable to the settlor or the settlor's successor in interest for the value, at the time of the transfer, of the interest transferred, less any offsets that a court determines to be equitable. Sec. 13.36.175. Action on contract against trustee in representative capacity. (a) When a trustee makes a contract that is within the trustee's powers as trustee or when a predecessor trustee has made a contract within the predecessor trustee's powers as trustee and a cause of action arises on the contract, the party in whose favor the cause of action has accrued may collect the judgment by execution on the trust property. (b) In an action under this section, the plaintiff is not required to prove that the trustee could have been reimbursed from the trust fund if the trustee had paid the plaintiff's claim. (c) A beneficiary or, in the case of a charitable trust, the attorney general and a corporation that is a beneficiary or agent in the performance of the charitable trust, may intervene in an action under this section and contest the right of the plaintiff to recover. (d) A judgment may not be rendered in favor of the plaintiff in an action under this section unless the plaintiff proves that, within 30 days after the beginning of the action or within another period set by the court and more than 30 days before obtaining the judgment, the plaintiff has notified each of the beneficiaries who is known to the trustee and who then has a present interest in the existence and nature of the action, or, in the case of a charitable trust, the attorney general of this state and a corporation that is a beneficiary or agent in the performance of the charitable trust. The notice shall be given by mailing copies of the notice with postage prepaid to the beneficiaries at their last known addresses. The trustee shall furnish the plaintiff with a list of names and addresses of the beneficiaries within 10 days after the plaintiff makes a written demand for the list. Notification of the persons on the list constitutes compliance with the duty placed on the plaintiff by this section. (e) The plaintiff in an action under this section may also hold the trustee who made the contract personally liable on the contract if the contract does not exclude the trustee's personal liability. In a contract action under this section, the addition of the word “trustee” or the words “as trustee” after the signature of a trustee to a contract creates a presumption, which may only be rebutted by clear and convincing evidence otherwise, of an intent to exclude the trustee from personal liability, and, unless the presumption is rebutted, the trustee is not personally liable under the contract. Sec. 13.36.180. Exoneration or reimbursement for tort. (a) A trustee who has incurred personal liability for a tort committed in the administration of the trust is entitled to exoneration for the liability from the trust property if the trustee has not discharged the claim, or to reimbursement for the liability out of trust funds if the trustee has paid the claim, if the trustee or an officer or employee of the trustee was not guilty of personal fault in incurring the liability. (b) If a trustee has incurred personal liability for a tort committed in the administration of the trust and that tort increases the value of the trust property, the trustee is entitled to exoneration or reimbursement to the extent of the increase in value as a result of the tort even though the trustee would not otherwise be entitled to exoneration or reimbursement. (c) Nothing in this section shall be construed to change the existing law with regard to the liability of trustees of charitable trusts for torts of the trustees or their employees. Sec. 13.36.185. Tort liability of trust. (a) If a trustee or a predecessor of the trustee incurs personal liability for a tort committed in the course of the trustee's administration, the trustee in the trustee's representative capacity may be sued and collection made from the trust property if the court determines in the tort action that (1) the trustee or the trustee's predecessor, or an officer or employee of the trustee or the trustee's predecessor, was not guilty of personal fault in incurring the liability; or (2) although the tort does not fall under (1) of this subsection, the tort increased the value of the trust property. (b) If the tort is within (a)(1) of this section, the full amount of proven damages may be collected from the trust property. (c) If the tort is within (a)(2) of this section, collection may not be made from the trust property except to the extent of the increase in the value of the trust property. (d) A beneficiary may intervene in an action under this section and contest the right of the plaintiff to recover. (e) In an action against the trustee in the trustee's representative capacity under this section, the plaintiff is not required to prove that the trustee could have secured reimbursement from the trust fund if the trustee paid the plaintiff's claim. (f) A judgment may not be rendered in favor of the plaintiff in an action under this section unless the trustee proves that within 30 days after the beginning of the action, or within another period set by the court and more than 30 days before obtaining the judgment, the trustee notifies each of the beneficiaries who is known to the trustee who then has a present interest in the existence and nature of the action. The notice shall be given by mailing copies of the notice with postage prepaid to the beneficiaries at their last known addresses. The trustee shall furnish the plaintiff with a list of names and addresses of the beneficiaries within 10 days after the plaintiff makes a written demand for the list. Notification of the persons on the list constitutes compliance with the duty placed on the plaintiff by this subsection. (g) Nothing in this section may be construed to change the existing law with regard to the liability of trustees of charitable trusts for torts of the trustees or their employees. Sec. 13.36.190. Personal liability for tort committed by trustee. A trustee may be held personally liable for a tort committed by the trustee, or by the trustee's agents or employees in the course of their agency or employment, subject to the rights of exoneration or reimbursement under AS 13.36.180 . Sec. 13.36.192. Power of settlor of trust. (a) The settlor of a trust affected by AS 13.36.105 — 13.36.220 may, by provision in the instrument creating the trust if the trust is created by a writing, by oral statement to the trustee at the time of the creation of the trust if the trust is created orally, or by an amendment of the trust if the settlor reserved the power to amend the trust, (1) relieve the trustee from any or all of the duties, restrictions, and liabilities that would otherwise be imposed on the trustee by AS 13.36.105 — 13.36.220; (2) alter or deny to the trustee any or all of the privileges and powers conferred on the trustee by AS 13.36.105 — 13.36.220; or (3) add duties, restrictions, liabilities, privileges, or powers, to those imposed or granted by AS 13.36.105 — 13.36.220. (b) Notwithstanding (a) of this section, an act of the settlor may not relieve a trustee from the duties, restrictions, and liabilities imposed on the trustee by AS 13.36.140 , 13.36.145, or 13.36.150. Sec. 13.36.194. Power of beneficiary of trust. A beneficiary of a trust affected by AS 13.36.105 — 13.36.220 may, if the beneficiary has full legal capacity and acts on full information, by written instrument delivered to the trustee, relieve the trustee, as regards the beneficiary, from any or all of the duties, restrictions, and liabilities that would otherwise be imposed on the trustee by AS 13.36.105 — 13.36.220, except for the duties, restrictions, and liabilities imposed by AS 13.36.140 — 13.36.150. The beneficiary may release the trustee from liability to the beneficiary for past violations of AS 13.36.105 — 13.36.220. Sec. 13.36.196. Relieving trustee of duties, restrictions, and liability; power of the court. A court of competent jurisdiction may, for cause shown and on notice to the beneficiaries, relieve a trustee from any or all of the duties and restrictions that would otherwise be placed on the trustee by AS 13.36.105 — 13.36.220 or wholly or partly excuse a trustee who has acted honestly and reasonably from liability for violations of AS 13.36.105 — 13.36.220. Sec. 13.36.198. Consequences of violations. If a trustee violates a provision of AS 13.36.105 — 13.36.220, the trustee may be removed as trustee under AS 13.36.076 and denied compensation in whole or in part, and a beneficiary, co-trustee, or successor trustee may treat the violation as a breach of trust. Sec. 13.36.215. Definitions. (a) In AS 13.36.105 — 13.36.220, unless the context or subject matter otherwise requires, (1) “affiliate” means a person directly or indirectly controlling or controlled by another person or a person under direct or indirect common control with another person, including a person with whom a trustee has an express or implied agreement regarding the purchase of trust investments by each from the other, directly or indirectly, except a broker or stock exchange; (2) “relative” means a spouse, ancestor, descendant, brother, or sister; (3) “trust” means an express trust only; (4) “trustee” includes a trustee that is a corporation or a natural person and a successor or substitute trustee. (b) In AS 13.36.157 — 13.36.159, (1) “appointed trust” means an irrevocable trust that receives principal from an invaded trust under AS 13.36.157 , including a new trust created by the settlor of the invaded trust or by the trustees, acting in that capacity, of the invaded trust; (2) “authorized trustee” means, with regard to an invaded trust, a trustee with the authority to pay trust principal to or for a current beneficiary; in this paragraph, “trustee” does not include a settlor or a beneficiary to whom income or principal must be paid, currently or in the future, or who is or will become eligible to receive a distribution of income or principal in the discretion of the trustee other than by the exercise of a power of appointment held in a nonfiduciary capacity; (3) “current beneficiary” means a person or, with regard to a class of persons, a person who is a member of the class, to whom a trustee may distribute principal when exercising a power under AS 13.36.157 ; (4) “invade” means pay directly to the beneficiary of a trust or apply to the benefit of a beneficiary; (5) “invaded trust” means an irrevocable inter vivos or testamentary trust the principal of which is appointed under AS 13.36.157 ; (6) “pooled trust” means a trust described in 42 U.S.C. 1396p(d)(4)(C) that meets the requirements for a pooled trust under the regulations of this state relating to the Medicaid treatment of trusts; (7) “principal” means the assets of a trust, including accrued and accumulated income, but excluding income that is currently required to be distributed; (8) “special needs trust” means a trust under 42 U.S.C. 1396p(d)(4)(A) that meets the requirements for a special needs trust under the regulations of this state relating to the Medicaid treatment of trusts; (9) “third-party trust” means a trust that is (A) established by a third party with the assets of the third party to provide for supplemental needs for a person eligible when the trust is created or at a future time for needs-based public assistance; and (B) exempt from the provisions of the regulations of this state relating to the Medicaid treatment of trusts; (10) “unlimited discretion” means the unlimited right to distribute principal if the right is not restricted by an ascertainable standard under 26 C.F.R. 25.2514-1. Sec. 13.36.220. Short title. AS 13.36.105 — 13.36.220 may be cited as the Alaska Trusts Act. Article 4. Alaska Uniform Prudent Investor Act. Sec. 13.36.225. Prudent investor rule. (a) Except as otherwise provided in (b) of this section and AS 13.36.273 , a trustee who invests and manages trust assets owes a duty to the beneficiaries of the trust to comply with the prudent investor rule set out in AS 13.36.230 — 13.36.290. (b) The prudent investor rule, a default rule, may be expanded, restricted, eliminated, or otherwise altered by the direction of the settlor to the provisions of a trust. A trustee is not liable to a beneficiary to the extent that the trustee acted in reasonable reliance on the provisions of the trust. Sec. 13.36.230. Standard of care; portfolio strategy; risk and return objectives. (a) A trustee shall invest and manage trust assets as a prudent investor would by considering the purposes, terms, distribution requirements, and other circumstances of the trust. In satisfying this standard, the trustee shall exercise reasonable care, skill, and caution. (b) A trustee's investment and management decisions respecting individual assets shall be evaluated not in isolation but in the context of the trust portfolio as a whole and as a part of an overall investment strategy having risk and return objectives reasonably suited to the trust. (c) Among circumstances that a trustee shall consider in investing and managing trust assets are those of the following that are relevant to the trust or its beneficiaries: (1) general economic conditions; (2) the possible effect of inflation or deflation; (3) the expected tax consequences of investment decisions or strategies; (4) the role that each investment or course of action plays within the overall trust portfolio, which may include financial assets, interests in closely held enterprises, tangible and intangible personal property, and real property; (5) the expected total return from income and the appreciation of capital; (6) other resources of the beneficiaries; (7) needs for liquidity, regularity of income, and preservation or appreciation of capital; and (8) an asset's special relationship or special value, if any, to the purposes of the trust or to one or more of the beneficiaries. (d) A trustee shall make a reasonable effort to verify facts relevant to the investment and management of trust assets. (e) A trustee may invest in any kind of property or type of investment consistent with the standards of AS 13.36.225 — 13.36.290. (f) A trustee who has special skills or expertise, or is named trustee in reliance on the trustee's representation that the trustee has special skills or expertise, has a duty to use those special skills or expertise. Sec. 13.36.235. Diversification. A trustee shall diversify the investments of the trust unless the trustee reasonably determines that, because of special circumstances, the purposes of the trust are better served without diversifying. Sec. 13.36.240. Duties at inception of trusteeship. Within a reasonable time after accepting a trusteeship or receiving trust assets, a trustee shall review the trust assets and make and implement decisions concerning the retention and disposition of assets in order to bring the trust portfolio into compliance with the purposes, terms, distribution requirements, and other circumstances of the trust and with the requirements of AS 13.36.225 — 13.36.290. Sec. 13.36.245. Loyalty. A trustee shall invest and manage the trust assets solely in the interest of the beneficiaries. Sec. 13.36.250. Impartiality. If a trust has two or more beneficiaries, the trustee shall act impartially in investing and managing the trust assets, taking into account any differing interests of the beneficiaries. Sec. 13.36.260. Investment costs. In investing and managing trust assets, a trustee may only incur costs that are appropriate and reasonable in relation to the assets, the purposes of the trust, and the skills of the trustee. Sec. 13.36.265. Reviewing compliance. Compliance with the prudent investor rule is determined in light of the facts and circumstances existing at the time of a trustee's decision or action and not by hindsight. Sec. 13.36.270. Delegation of investment and management functions. (a) A trustee may delegate investment and management functions that a prudent trustee of comparable skills could properly delegate under the circumstances. The trustee shall exercise reasonable care, skill, and caution in (1) selecting an agent; (2) establishing the scope and terms of the delegation, consistent with the purposes and terms of the trust; and (3) periodically reviewing the agent's actions in order to monitor the agent's performance and compliance with the terms of the delegation. (b) In performing a delegated function, an agent owes a duty to the trust to exercise reasonable care to comply with the terms of the delegation. (c) A trustee who complies with the requirements of (a) of this section is not liable to the beneficiaries or to the trust for the decisions or actions of the agent to whom the function was delegated. (d) By accepting the delegation of a trust function from the trustee of a trust that is subject to the law of this state, an agent submits to the jurisdiction of the courts of this state. Sec. 13.36.273. Trustee duties relating to insurance. (a) With respect to a contract for life insurance acquired or retained for a trust on the life of a qualified person, a trustee does not have a duty to determine whether the contract was procured or effected in accordance with AS 21.42.020 unless the trust instrument provides otherwise or unless the trustee applied for or accepted ownership of a contract of life insurance and had knowledge that (1) when the contract of life insurance was issued, the benefits were not payable to a person specified in AS 21.42.020 ; or (2) the contract was purchased with resources or guarantees directly or indirectly provided by a person who, when the contract was entered into, did not have an insurable interest in the insured, and, when the contract was entered into, there was a verbal or written arrangement, agreement, or plan with a third party to transfer ownership of the policy or the policy benefits in a manner that would violate the law of this state. (b) With respect to a contract for life insurance acquired or retained for a trust on the life of a qualified person, if this subsection applies under (c) of this section, a trustee does not have a duty to (1) determine whether a contract of life insurance is a proper investment; (2) investigate the financial strength of the person issuing the life insurance policy; (3) determine whether to exercise a policy option available under the contract; (4) diversify the contract or the assets of the trust with respect to the contract; or (5) inquire about or investigate the health or financial condition of an insured. (c) Unless the trust instrument provides otherwise, (b) of this section applies to a trustee if (1) the trust instrument refers to this section and makes this section applicable to contracts for life insurance held by the trust; or (2) the trustee notifies the qualified beneficiaries or a person who may represent and bind the qualified beneficiaries under AS 13.06.120 that the trustee is electing to have this section apply to a contract for life insurance held by the trust. (d) The notice provided under (c)(2) of this section must include a copy or restatement of (b) of this section and shall be provided (1) by mailing a copy of the notice by certified, registered, or ordinary first-class mail addressed to the person being notified at the post office address given in the person's demand for notice, if any, or at the person's office or place of residence, if known; (2) by delivering a copy of the notice personally to the person being notified; or (3) if the address or identity of the person is not known and cannot be ascertained with reasonable diligence, by publishing, at least once a week for three consecutive weeks, a copy of the notice in a newspaper having general circulation in the judicial district where one of the trustees is located. (e) If, within 30 days after a person receives notice under (d)(1) or (2) of this section or 30 days after the last date of publication of the notice under (d)(3) of this section, a person delivers to the trustee a written objection to the application of (b) of this section, (b) of this section does not apply until the objection is withdrawn. (f) Under (a) and (b) of this section, the trustee is not liable to the beneficiaries of the trust or to another person for a loss sustained with respect to a life insurance contract to which (a) and (b) of this section apply. (g) Notwithstanding the other provisions of this section, unless the duties have been delegated to another person under AS 13.36.270 , (a) and (b) of this section do not apply to a contract for life insurance purchased from an affiliate of a trustee or for which a trustee or an affiliate of the trustee receives a commission. In this subsection, “affiliate” means a person who controls, is controlled by, or is under common control with the trustee. (h) A trustee who performs fiduciary or advisory services related to a policy of life insurance to which (a)(1) or (2) of this section applies may not be compensated for performing the services to which (a)(1) or (2) of this section applies.

(i) In this section, “qualified person” means a person who (1) is an insured or a proposed insured under a policy of life insurance or the spouse of that person; and (2) provides (A) the actual funds used to acquire or pay the premiums for the policy; or (B) assets the income or principal of which is used to acquire or pay the premiums for the policy. Sec. 13.36.275. Language invoking standard of AS 13.36.225 — 13.36.290. The following terms or comparable language in the provisions of a trust, unless otherwise limited or modified, authorizes an investment or strategy permitted under AS 13.36.225 — 13.36.290: “investments permissible by law for investment of trust funds,” “legal investments,” “authorized investments,” “using the judgment and care under the circumstances then prevailing that persons of prudence, discretion, and intelligence exercise in the management of their own affairs, not in regard to speculation but in regard to the permanent disposition of their funds, considering the probable income as well as the probable safety of their capital,” “prudent man rule,” “prudent trustee rule,” “prudent person rule,” and “prudent investor rule.” Sec. 13.36.280. Application. (a) AS 13.36.225 — 13.36.290 apply to trusts existing on and created after May 23, 1998. As applied to trusts existing on May 23, 1998, AS 13.36.225 — 13.36.290 govern only decisions or actions occurring after May 23, 1998. (b) AS 13.36.225 — 13.36.290 govern only decisions or actions of personal representatives under AS 13.16.350 (a) or of conservators under AS 13.26.500 that occur on or after May 23, 1998. Sec. 13.36.285. Uniformity of application and construction. AS 13.36.225 — 13.36.290 shall be applied and construed to carry out their general purpose to make uniform the law with respect to the subject of those sections among the states that enact them. Sec. 13.36.290. Short title. AS 13.36.225 — 13.36.290 may be cited as the Alaska Uniform Prudent Investor Act. Article 5. Miscellaneous Provisions. Sec. 13.36.300. Administration of certain trusts with respect to federal law. (a) Except as specified in (b) of this section, in the administration of a trust that is a private foundation, as defined in 26 U.S.C. 509 (Internal Revenue Code of 1954), charitable trust, as described in 26 U.S.C. 4947(a)(1) (Internal Revenue Code of 1954), or split-interest trust, as described in 26 U.S.C. 4947(a)(2) (Internal Revenue Code of 1954), the trust instrument of the trust is considered to contain provisions prohibiting the trustee from (1) engaging in an act of self-dealing, as defined in 26 U.S.C. 4941(d) (Internal Revenue Code of 1954), that would give rise to liability for the tax imposed by 26 U.S.C. 4941(a) (Internal Revenue Code of 1954); (2) retaining excess business holdings, as defined in 26 U.S.C. 4943(c) (Internal Revenue Code of 1954), that would give rise to liability for the tax imposed by 26 U.S.C. 4943(a) (Internal Revenue Code of 1954); (3) making an investment that would jeopardize the carrying out of any of the exempt purposes of the trust, within the meaning of 26 U.S.C. 4944 (Internal Revenue Code of 1954), so as to give rise to liability for the tax imposed by 26 U.S.C. 4944(a) (Internal Revenue Code of 1954); and (4) making taxable expenditures, as defined in 26 U.S.C. 4945(d) (Internal Revenue Code of 1954), that would give rise to liability for the tax imposed by 26 U.S.C. 4945(a) (Internal Revenue Code of 1954). (b) The provisions of (a) of this section do not apply either to those split-interest trusts or to amounts of them that are not subject to the prohibitions applicable to private foundations by reason of the provisions of 26 U.S.C. 4947 (Internal Revenue Code of 1954). (c) The trust instrument of each trust specified in (a) of this section, except a split-interest trust, is considered to contain a provision requiring the trustee to distribute, for the purposes specified in the trust instrument, for each taxable year of the trust, amounts at least sufficient to avoid liability for the tax imposed by 26 U.S.C. 4942(a) (Internal Revenue Code of 1954). (d) Nothing in this section limits the power of a person who creates a trust after August 23, 1971, or the power of a person who has retained or has been granted the right to amend a trust created before August 23, 1971, to include a specific provision in the trust instrument or an amendment to it that provides that some or all of the provisions of (a) and (b) of this section do not apply to the trust. (e) In this section, references to provisions of the Internal Revenue Code of 1954 include future amendments to those provisions. Sec. 13.36.310. Challenges to trusts. (a) Except as provided in AS 34.40.110 (b), a trust that is covered by AS 13.36.035 (c) or that is otherwise governed by the laws of this state, or a property transfer to a trust that is covered by AS 13.36.035 (c) or that is otherwise governed by the laws of this state, is not void, voidable, liable to be set aside, defective in any fashion, or questionable as to the settlor's capacity, and the assets of the trust are not subject to the claim of a creditor of the settlor or a creditor of a beneficiary, on the grounds that the trust or transfer avoids or defeats a right, claim, or interest conferred by law on a person by reason of a personal or business relationship with the settlor or beneficiary or by way of a marital or similar right. (b) If a trust or a property transfer to a trust is voided or set aside under AS 34.40.110 (b), then the trust or property transfer shall be voided or set aside only to the extent necessary to satisfy the settlor's debt to the creditor or other person at whose instance the trust or property transfer is voided or set aside and the costs and attorney fees allowed under the rules of court. (c) If a trust or a property transfer to a trust is voided or set aside under (a) of this section, and if the court is satisfied that the trustee has not acted in bad faith in accepting or administering the property that is the subject of the trust, (1) the trustee has a first and paramount lien against the property that is the subject of the trust in an amount equal to the entire cost, including attorney fees, properly incurred by the trustee in a defense of the action or proceedings to void or set aside the trust or the property transfer; (2) the trust or property transfer that is voided or set aside is subject to the proper fees, costs, preexisting rights, claims, and interest of the trustee and any predecessor trustee that have not acted in bad faith; and (3) the beneficiary, including the settlor, may retain a distribution made by exercising a trust power or discretion vested in the trustee of the trust, if the power or discretion was properly exercised before the commencement of the action or proceeding to void or set aside the trust or property transfer. Sec. 13.36.320. Nonqualified persons serving as trustees. (a) If at least one qualified person serves as trustee of a trust whose state jurisdiction provision is valid, effective, and conclusive under AS 13.36.035 (c), then the following persons also may serve as trustees even though they are not qualified persons: (1) individuals who do not reside in the state; (2) trust companies that have their principal place of business outside the state and that are not organized under AS 06.26 ; and (3) banks that have their principal place of business outside the state or that are not organized under AS 06.05 . (b) Notwithstanding other provisions of law to the contrary, a trustee who is not a qualified person is not considered to be engaging in business in this state solely by reason of serving as trustee of a trust whose state jurisdiction provision is valid, effective, and conclusive under AS 13.36.035 (c). Sec. 13.36.330. Penalty clause. A provision in an inter vivos or testamentary trust purporting to penalize a beneficiary by charging the beneficiary's interest in the trust, or to penalize the beneficiary in another manner, for instituting a proceeding to challenge the acts of the trustee or other fiduciary of a trust, or for instituting other proceedings relating to the trust, is enforceable even if probable cause exists for instituting the proceedings. Sec. 13.36.335. Application of special distribution provisions. The asset distribution provisions of AS 13.16.540 — 13.16.545, 13.16.560, and the provisions of AS 13.38 apply to the administration of a revocable trust following the death of the settlor of the trust, unless the terms of the trust indicate a different intention. Sec. 13.36.338. Presumption of revocability. (a) Unless a trust is expressly made irrevocable, a trust executed on or after August 30, 2000 is revocable by the settlor. (b) Notwithstanding AS 13.36.035 — 13.36.050, this section applies only if the (1) settlor is domiciled in this state when the trust is created; (2) trust instrument is executed in this state; or (3) trust provides that the law of this state governs the trust. Sec. 13.36.340. Modification and revocation of revocable trusts. (a) A trust that is revocable by the settlor may be modified or revoked in whole or in part by (1) substantial compliance with a method of modification or revocation provided in the trust instrument; or (2) a writing, other than a will, signed by the settlor and delivered to the trustee during the lifetime of the settlor, except that, if the trust instrument expressly makes the method of revocation provided in the trust instrument the exclusive method of revocation, the trust may not be revoked under this paragraph. (b) Unless otherwise provided in the trust instrument, if a trust that is revocable by the settlor is created by or funded by more than one settlor, (1) the trust may be modified or revoked as provided in AS 34.77.100 to the extent the trust consists of community property under AS 34.77 (Alaska Community Property Act); (2) each settlor may modify or revoke the trust as to the portion of the trust property contributed by that settlor that is not community property under AS 34.77 . (c) A revocable trust may not be modified or revoked by an attorney-in-fact under a power of attorney unless the modification or revocation is expressly permitted by the trust instrument. Sec. 13.36.345. Modification or termination of irrevocable trusts because of unanticipated circumstances. (a) On petition by a trustee, settlor, or beneficiary, a court may modify the administrative or dispositive terms of an irrevocable trust or terminate an irrevocable trust if, because of circumstances not anticipated by the settlor, modification or termination would substantially further the settlor's purposes in creating the trust. (b) Upon termination of a trust under this section, the trust property shall be distributed in accordance with the settlor's probable intention. Sec. 13.36.350. Reformation to correct mistakes in irrevocable trusts. (a) On petition by a trustee, settlor, or beneficiary, a court may reform the terms of an irrevocable trust, even if the trust instrument is not ambiguous, to conform to the settlor's intention if the failure to conform was due to a mistake of fact or law, whether in expression in the trust or inducement to create the trust, and if the settlor's intent can be established by clear and convincing evidence. (b) A court may consider evidence, including direct evidence contradicting the plain meaning of the text, when determining the settlor's intent or for any other purpose under this section. Sec. 13.36.355. Construction or modification of trust to achieve settlor's tax objectives. (a) The terms of a trust shall be construed to achieve the settlor's tax objectives. (b) On petition by a trustee, settlor, or beneficiary, a court may modify the terms of an irrevocable trust to achieve the settlor's tax objectives in a manner that does not violate the settlor's probable intent. The court may order that the modification operate retroactively. Sec. 13.36.360. Modification or termination of irrevocable trust by consent. (a) Except as otherwise provided by this section, on petition by a trustee, settlor, or beneficiary, a court may modify or terminate an irrevocable trust if all of the beneficiaries consent and if continuation of the trust on the existing terms of the trust is not necessary to further a material purpose of the trust. However, the court, in its discretion, may determine that the reason for modifying or terminating the trust under the circumstances outweighs the interest in accomplishing the material purposes of the trust. The inclusion of a restriction on the voluntary or involuntary transfer of trust interests under AS 34.40.110 may constitute a material purpose of the trust under this subsection, but is not presumed to constitute a material purpose of the trust under this subsection. (b) Unless otherwise provided in the trust instrument, an irrevocable trust may not be modified or terminated under this section while a settlor is also a discretionary beneficiary of the trust. (c) If a beneficiary other than a qualified beneficiary does not consent to a modification or termination of an irrevocable trust that is proposed by the trustee, settlor, or other beneficiaries, a court may approve the proposed modification or termination if the court determines (1) if all the beneficiaries had consented, the trust could have been modified or terminated under this section; and (2) the rights of a beneficiary who does not consent will be adequately protected or not significantly impaired. (d) [Repealed, § 15 ch 7 SLA 2008.] Sec. 13.36.365. Uneconomical irrevocable trust. (a) Notwithstanding the other provisions of AS 13.36.338 — 13.36.365, if the value of the property of an irrevocable trust is less than $50,000, the trustee may terminate the trust unless the trust instrument provides otherwise. (b) Notwithstanding the other provisions of AS 13.36.338 — 13.36.365 and the terms of the trust, on petition to the superior court by a trustee, settlor, or beneficiary, the court may modify or terminate an irrevocable noncharitable trust, or remove the trustee and appoint a different trustee, if the court determines that the value of the trust property is insufficient to justify the cost of administration. (c) Upon termination of a trust under this section, the trustee shall distribute the trust property in accordance with the settlor's probable intent. Sec. 13.36.368. Claims against revocable trusts. (a) Whether or not the terms of the trust contain a spendthrift restriction, (1) during the lifetime of the settlor of a revocable trust, the property of the trust is subject to claims of the settlor's creditors; and (2) except as otherwise provided in (b) of this section, after the death of the settlor of a trust that was revocable at the settlor's death, and subject to the settlor's right to direct the source from which claims may be paid, the property of the trust is subject to claims to the extent the settlor's estate is not adequate to satisfy the claims. (b) With respect to claims in connection with the settlement after the death of the settlor of a trust that was revocable at the settlor's death, (1) a creditor's claim that would be allowed or barred against a decedent's estate under AS 13.16.450 — 13.16.525 shall be allowed or barred against the trustee of the trust, the trust property, and the creditors and beneficiaries of the trust; (2) if the personal representative of the decedent's estate follows the procedures provided by AS 13.16.450 — 13.16.525, then claims that are allowed or barred against the decedent's estate shall also be allowed or barred against the assets of the trust; (3) if the personal representative of the decedent's estate fails to follow the procedures stated by AS 13.16.450 — 13.16.525, the trustee of the trust may file a petition with the superior court for a determination of claims and follow the procedures established by AS 13.16.450 — 13.16.525, and claims against the trust and against the decedent's estate shall be allowed or barred under those procedures. (c) In (a)(2) and (b) of this section, “claim” means a claim (1) of a creditor of the settlor; (2) for the expenses of the administration of the settlor's estate; (3) for the expenses of the settlor's funeral; and (4) for the expenses of the disposal of the settlor's remains. Sec. 13.36.370. Trust protector. (a) A trust instrument may provide for the appointment of a trust protector. (b) A trust protector appointed under (a) of this section has the powers, delegations, and functions conferred on the protector by the trust instrument, which may include the power to (1) remove and appoint a trustee; (2) modify or amend the trust instrument to achieve favorable tax status or to respond to changes in 26 U.S.C. (Internal Revenue Code) or state law, or the rulings and regulations under those laws; (3) increase or decrease the interests of any beneficiary to the trust; and (4) modify the terms of a power of appointment granted by the trust. (c) A modification authorized under (b) of this section may not (1) grant a beneficial interest to an individual or a class of individuals unless the individual or class of individuals is specifically provided for under the trust instrument; (2) modify the beneficial interest of a governmental unit in a trust created under AS 47.07.020 (f). (d) Subject to the terms of the trust instrument, a trust protector is not liable or accountable as a trustee or fiduciary because of an act or omission of the trust protector taken when performing the function of a trust protector under the trust instrument. Sec. 13.36.375. Trustee advisor. (a) A trust instrument may provide for the appointment of a person to act as an advisor to the trustee with regard to all or some of the matters relating to the property of the trust. (b) Unless the terms of the trust instrument provide otherwise, if an advisor is appointed under (a) of this section, the property and management of the trust and the exercise of all powers and discretionary acts exercisable by the trustee remain vested in the trustee as fully and effectively as if an advisor were not appointed, the trustee is not required to follow the advice of the advisor, and the advisor is not liable as or considered to be a trustee of the trust or a fiduciary when acting as an advisor to the trust. (c) Notwithstanding (b) of this section, if, by the terms of the trust instrument, a trustee is designated to follow the directions of an advisor who is not designated in the trust instrument as being a trustee, the trustee who, by the terms of the trust instrument, is required to follow the directions of the advisor is not liable, individually or as a fiduciary, to a beneficiary for a consequence of the trustee's compliance with the advisor's directions, regardless of the information available to the trustee, and the trustee does not have an obligation to review, inquire, investigate, or make recommendations or evaluations with respect to the exercise of a power of the trustee if the exercise of the power complies with the directions given to the trustee. An advisor under this subsection is liable to the beneficiaries as a fiduciary with respect to the exercise of the advisor's directions by a trustee as if the trustee were not in office, and the advisor has the exclusive obligation to account to the beneficiaries and to defend an action brought by the beneficiaries with respect to the exercise of the advisor's directions by the trustee. Sec. 13.36.390. Definitions. In this chapter, (1) “party in interest” means, if the trust is (A) revocable and if the settlor is incapacitated, the settlor's legal representative under applicable law or the settlor's agent under a durable power of attorney; or (B) irrevocable, (i) each trustee serving at the time; (ii) each beneficiary entitled to receive a mandatory distribution of income or principal from a trust or, if a beneficiary entitled to receive a mandatory distribution of income or principal from a trust is not 19 years of age or is incapacitated, the beneficiary's legal representative under applicable law or the beneficiary's agent under a durable power of attorney; and (iii) each vested remainder beneficiary in existence at the time or, if a vested remainder beneficiary is not 19 years of age or is incapacitated, the vested remainder beneficiary's legal representative under applicable law or the vested remainder beneficiary's agent under a durable power of attorney; (2) “qualified beneficiary” means a beneficiary who (A) on the date the beneficiary's qualification is determined, is entitled or eligible to receive a distribution of trust income or principal; or (B) would be entitled to receive a distribution of trust income or principal if the event causing the trust's termination occurs; (3) “qualified person” means (A) an individual who, except for brief intervals, military service, attendance at an educational or training institution, or for absences for good cause shown, resides in this state, whose true and permanent home is in this state, who does not have a present intention of moving from this state, and who has the intention of returning to this state when away; (B) a trust company that is organized under AS 06.26 and that has its principal place of business in this state; or (C) a bank that is organized under AS 06.05 , or a national banking association that is organized under 12 U.S.C. 21 — 216d, if the bank or national banking association possesses and exercises trust powers and has its principal place of business in this state; (4) “settlor” means a person who transfers property in trust and includes a person who furnishes the property transferred to a trust even if the trust is created by another person; (5) “state jurisdiction provision” means a provision that the laws of this state govern the validity, construction, and administration of a trust and that the trust is subject to the jurisdiction of this state.