§ 18-4-24. Termination of small trusts.
(a) Any corporate trustee authorized to serve as a trustee under chapter 3.1 of title 19, which is a trustee of any inter vivos or testamentary trust, may, in its sole discretion,
or, if there is a cotrustee or cotrustees, after having obtained the approval of any
cotrustee, terminate the trust in whole or in part, if the current market value of
the trust principal is less than two hundred thousand dollars ($200,000). The existence
of any spendthrift or similar protective provision shall not preclude termination
of that trust.
(b)(1) The trust principal and income on hand, less fees and expenses, shall be distributed
to one or more beneficiaries and remaindermen, or their legal representative, in the
proportions and amounts that the trustee in its discretion determines to be appropriate
under the circumstances, giving consideration to the terms of the trust and the interests
of the income beneficiaries and remaindermen. The recipient shall release the trustee
or trustees from liability upon distribution of the amounts held.
(2) The interest of a minor beneficiary, or any portion of the interest, may be converted
into qualifying property and distributed to a custodian pursuant to the Rhode Island
Uniform Transfers to Minors Act, chapter 7 of this title, or similar acts in other
states.
(3) Any trust qualifying for the marital deduction under appropriate provisions of the
Internal Revenue Code, 26 U.S.C. § 1 et seq., shall be distributed only to the surviving spouse of the decedent or settlor.
(4) Any trust qualifying for the charitable deduction under appropriate provisions of
the Internal Revenue Code, 26 U.S.C. § 1 et seq., shall be distributed only to the appropriate charity or charities or in
a manner to assure the continued qualification of the distribution for the charitable
deduction. The trustee shall not be required to look into the application by the charity
of the amount distributed.
(c)(1) The termination may occur only after written notice sent by certified mail to all
interested persons who then have an interest in the trust, or their legal or natural
guardians. The term "interested person� means any living person or existing organization
who is a current income beneficiary or who would be a vested remainderman of the trust
if the trust were to terminate at the time of the notification.
(2) The written notice required by this section shall:
(i) State that the trustee intends to terminate the trust in accordance with this section;
(ii) Include a schedule of current trust assets and describe the plan of distribution;
(iii) Set forth all rights of the interested person to object to the termination or plan
of distribution as set forth in subsection (d) of this section; and
(iv) State that the trustee may proceed to terminate the trust, notwithstanding any objection
to the termination or plan of distribution.
(d)(1) Any interested person shall have thirty (30) days after receiving written notice in
accordance with subsection (c) of this section to object to the termination of the
trust or the plan of distribution in writing to the trustee, stating the grounds for
the objection. If the trustee has received no written objection to the proposed termination
or plan of distribution within the thirty (30) day period, it may proceed to terminate
the trust, subject to the waiting period contained in subdivision (4) of this subsection.
(2) A trustee receiving a written objection to the proposed termination or plan of distribution
from an interested person within thirty (30) days of the person's receipt of written
notice may: (i) reformulate the proposed plan, or (ii) state its intention to proceed
with the original plan of distribution. The trustee shall then re-notify all interested
persons of its intentions in a writing sent by certified mail. The re-notification
shall begin again the thirty (30) day period referred to in subdivision (1) of this
subsection.
(3) A trustee receiving a written objection to the proposed reformulated plan of distribution
from an interested person within thirty (30) days of the person's receipt of written
notice of the reformulated plan may proceed to terminate the trust in accordance with
the plan, without court proceeding or approval, notwithstanding the objection, provided
that all interested persons have been further notified in writing sent by certified
mail of:
(i) The objection;
(ii) The trustee's intention to proceed to terminate the trust, notwithstanding the objection;
and
(iii) Their right to petition the superior court to prevent the termination of the trust
or to modify the plan of distribution.
(4) Any interested person, within three (3) months of the mailing of the initial or the
further notice of the trustee's intention to proceed with the termination, notwithstanding
an objection, may petition the superior court to prevent termination or modify the
plan of distribution or may send the trustee a written waiver of the right to petition.
The trustee shall not distribute the assets of the trust until three (3) months from
the date of the receipt by the last interested person to receive notice or the further
written notice as provided in subdivision (3) of this subsection.
(e) Superior court approval of a termination of a small trust shall be required whenever
there is no corporate trustee. An individual trustee may petition the superior court
after notice to all interested persons according to the notice provisions in subsection
(c) of this section. The court shall make an order of distribution of the trust property
which shall specify the appropriate share of each interested person who is to share
in the proceeds of the trust, taking into account the interests of income beneficiaries
or remaindermen so as to conform as nearly as possible the intention of the trust
or testator. The superior court, in addition, may make any other and further orders
that it deems proper or necessary to protect the interests of the beneficiaries and
of the trustee. All provisions of subsection (b) of this section shall apply to terminations
under this subsection.
(f) Notwithstanding any other provision contained in this section, any corporate trustee
of a trust may seek superior court approval of the termination, and after submission
of a principal accounting, be released, along with any cotrustee, from all liability
with respect to the trust.