Uniform Laws Promulgated by
the National Conference of
Commissioners on Uniform
State Laws:
A Report and Recommendations
to the Legislature
The
Commission is charged by statute with several duties, among which is the duty
to receive and consider proposed changes in law recommended by the National
Conference of Commissioners on Uniform State Laws (NCCUSL). In carrying out this statutory charge, in 2003
the Commission undertook a review of the following uniform laws promulgated by
the NCCUSL:
$ Uniform Athlete Agents Act
$ Uniform Interstate Family Support Act
$ Uniform Interstate Enforcement of Domestic Violence
Protection Orders Act
$ Uniform Foreign Money Claims Act
$ Uniform Principal and Income Act
$ Uniform Custodial Trust Act
$ Uniform Arbitration Act
$ Uniform Computer Information Transactions Act
$ Uniform Parentage Act
$ Uniform Trust Code
$ Uniform Partnership Act
$ Uniform Anatomical Gift Act
$ Uniform Limited Partnership Act
$ Uniform Apportionment of Tort Responsibility Act
$ Uniform Child Witness Testimony by Alternative
Methods Act
$ Uniform Disclaimer of Property Interests Act
$ Uniform Nonjudicial Foreclosure Act
$ Uniform Securities Act
The
Commission recommends adoption of the Uniform Athlete Agents Act, the Uniform
Interstate Family Support Act, the Uniform Foreign Money Claims Act, the
Uniform Custodial Trust Act, and the Uniform Anatomical Gift Act (the
Commission recommended adoption of this last Act in 1993 and renews that
recommendation here).
The
NCCUSL summary of these proposed laws follows. The text and commentary of these
proposed laws are available on-line at http://www.law.upenn.edu/bll/ulc/ulc_frame.htm.
UNIFORM ATHLETE AGENTS ACT
PURPOSE: This act provides for the uniform registration,
certification, and background check of sports agents seeking to represent
student athletes who are or may be eligible to participate in intercollegiate
sports. The act also imposes specified contract terms on these agreements to
the benefit of student athletes, and provides educations institutions with a
right to notice along with a civil cause of action for damages resulting from a
breach of specified duties.
ORIGIN: Completed by the Uniform Law Commissioners in 2000.
APPROVED BY: American
Bar Association
SUPPORTED BY: National Collegiate Athletic Association
STATE ADOPTIONS:
Alabama
Arizona
Arkansas
Delaware
District of Columbia
Florida
Idaho
Indiana
Minnesota
Mississippi
Nevada
Tennessee
Utah
U.S. Virgin Islands
Washington
West Virginia
2002 INTRODUCTIONS:
California
Georgia
Hawaii
Illinois
Iowa
Maryland
Michigan
Missouri
Nebraska
New Jersey
New York
Pennsylvania
South Carolina
Wisconsin
UNIFORM ATHLETE AGENTS ACT -- SUMMARY
With
the proliferation of professional sport franchises in the United States, and
the immense sums now paid to athletes for commercial endorsement contracts, it
is no surprise that the commercial marketplace in which athlete agents operate
has become very competitive. And while
maximizing the income of one's clients is certainly the "American
way" (as well as good business practice), the recruitment of a
student-athlete while he or she is still enrolled in an educational institution
may cause substantial eligibility or other problems for both the student and
the school, especially where the athlete is not aware of the implications of
signing the agency agreement or where agency is established without notice to the
athletic director of the school. The
problem becomes even more acute where an unscrupulous agent misleads a student.
While several states have enacted
legislation to address these issues, agent registration and disclosure
requirements vary greatly from state to state, causing confusion among student
athletes, athletic departments, educational institutions, and the agents
themselves.
The
Uniform Athlete Agents Act provides for the uniform registration,
certification, and background check of sports agents seeking to represent
student athletes who are or may be eligible to participate in intercollegiate
sports, imposes specified contract terms on these agreements to the benefit of
student athletes, and provides educational institutions with a right to notice
along with a civil cause of action for damages resulting from a breach of
specified duties.
The act
requires agents to disclose their training, experience, and education, whether
they or an associate have been convicted of a felony or crime of moral turpitude,
have been administratively or judicially determined to have made false or
deceptive representations, have had their agent's license denied, suspended, or
revoked in any state, or have been the subject or cause of any sanction,
suspension, or declaration of ineligibility. Agents are required to maintain
executed contracts and other specified records for a period of five years,
including information about represented individuals and recruitment
expenditures, which would be open to inspection by the state.
While
the act imposes significant disclosure, registration, and record-keeping
requirements on athlete agents, those who are issued a valid certificate of
registration or licensure in one state would be able to cross-file that
application (or a renewal thereof) in all other states that have adopted the
act. This aspect of the act at once
simplifies regulatory compliance for agents, while at the same time facilitates
the ability of all jurisdictions to obtain dependable, uniform information on
an agent's professional conduct in other states.
Because
the potential loss of intercollegiate eligibility is a serious, and often
unexpected, effect of entering an athlete-agent contract, the act provides
student-athletes with a statutory right to cancel an agency contract within 14
days after the contract is signed without penalty. In addition, athlete-agent contracts subject
to the act are required to disclose the amount and method of calculating the
agent's compensation, the name of any unregistered person receiving
compensation because the athlete signed the agreement, a description of
reimbursable expenses and services to be provided, as well as warnings
disclosing the cancellation and notice requirements imposed under the act.
The
potential loss of a student-athlete's eligibility is also a serious concern for
athletic programs at educational institutions - accordingly, the act requires
both the agent and the student-athlete to give notice of the contract to the
athletic director of the affected educational institution within 72 hours of
signing the agreement, or before the athlete's next scheduled athletic event,
whichever occurs first. Where
applicable, the agent must also provide this notice to a school where he or she
has reasonable grounds to believe the athlete intends to enroll. The act would also provide educational
institutions with a statutory right of action against an athlete agent or
former student athlete (several, but not joint, liability) for damages,
including losses and expenses incurred as a result of the educational
institution being penalized, disqualified, or suspended from participation by
an athletics association or conference, or as a result of reasonable
self-imposed disciplinary actions taken to mitigate sanctions, as well as
associated party costs and reasonable attorney's fees.
Finally,
the act prohibits athlete agents from providing materially false or misleading
information or making a materially false promise or representation with the
intent of inducing a student athlete to enter into an agency contract, or from
furnishing anything of value to a student athlete or another person before that
athlete enters into an agency contract. The
act provides that an athlete agent may not intentionally initiate contact with
a student athlete unless registered under this act, and may not refuse or
willfully fail to retain or permit inspection of required records, fail to
register where required, provide materially false or misleading information in
an application for registration or renewal thereof, predate or postdate an
agency contract, or fail to notify a student athlete (prior to signing) that
signing an agency contract may make the student athlete ineligible to
participate as a student athlete in that sport. The act would impose criminal penalties for
violations of these prohibitions.
The
Uniform Athlete Agents Act provides important protections for student-athletes
and the educational institutions where they compete, creates a uniform body of
agent registration information for use by
state agencies, and simplifies the regulatory environment faced by legitimate
sports agents.
Introduction in
Michigan Legislature
Legislation was
introduced in early 2002 to adopt the Uniform Athlete Agents Act in Michigan
(HB 4857). HB 4857 passed the House in
November 2002 and was referred to the Senate on November 14, 2002.
The House Legislative
analysis summarizes the arguments for and against the Uniform Act as follows:
Among the beneficial features of the model act are:
$ a requirement that athlete agents must be
registered with the state (with the assumption that the information regarding
their experience, education, and background that an applicant files will be
open for public inspection) and reciprocity arrangements that allow an agent
registered or licensed in one state to cross-file applications with other
states that have adopted the act;
$ mandatory notification by agents and
student-athletes to the educational institution when an agency contract has
been entered into (so that the institution can avoid using an ineligible
player);
$ the ability of student-athletes to cancel
a contract without penalty within 14 days after signing (due to the supposed
disparity in the sophistication of the parties to the contract) and the
automatic voiding of contracts that fail to contain certain specified features
(with the student under no obligation to return any consideration received as
an inducement to sign);
$ mandatory notification in the contracts
themselves to the student-athlete that signing the contract could result in
losing eligibility and that the student must notify his or her school of the
existence of the contract;
$ limitations on agent conduct, including
prohibitions on certain kinds of inducements, with misdemeanor penalties, as
well as civil penalties and administrative fines, for violations;
$ the granting of subpoena power to the
state so it can obtain materials needed to administer the model act;
$ the creation of a cause of action to
educational institutions for damages caused by an athlete agent or a former
student-athlete due to a violation of the act.
Against:
In the past, legislation of this kind has encountered several
objections. The bill requires the
registration of agents but imposes no competency requirements. The public, however, and student-athletes
searching for an agent might assume that a person who is a
"registered" agent has been approved by the state as competent and
qualified. Moreover, generally speaking,
the state has resisted efforts in recent years to register any additional
occupations, partly because to do so will invite a flood of such requests. There have also been concerns that this kind
of legislation ignores the possibility that part of the problem lies with the
rules of the governing athletic associations, the nature of big-time college
sports, and the special status of the student-athlete.
UNIFORM INTERSTATE FAMILY SUPPORT ACT
PURPOSE: Limits
child and family support orders to a single state, eliminating interstate
jurisdictional disputes. Amendments were
added in 2001 to clarify many of the provisions of the Act, increasing its
usefulness.
ORIGIN: Completed by the Uniform
Law Commissioners in 2001. The 1996
UIFSA has been adopted in every state and the District of Columbia.
APPROVED BY: American Bar Association
STATE ADOPTIONS:
California
Washington
West Virginia
2002 INTRODUCTIONS:
Delaware
Illinois
Mississippi
Nebraska
Virginia
AMENDMENTS TO
THE UNIFORM INTERSTATE FAMILY SUPPORT ACT (2001) -- SUMMARY
In 1992, the National Conference of
Commissioners on Uniform State Laws (NCCUSL) promulgated the Uniform Interstate
Family Support Act (UIFSA), which replaced the Uniform Reciprocal Enforcement
of Support Act (URESA). URESA, was
originally promulgated in 1950, and was adopted by every state. UIFSA has now replaced URESA in every American
jurisdiction.
UIFSA provides
universal and uniform rules for the enforcement of family support orders, by
setting basic jurisdictional standards for state courts, by determining the
basis for a state to exercise continuing exclusive jurisdiction over a child
support proceeding, by establishing rules for determining which state issues
the controlling order in the event proceedings are initiated in multiple
jurisdictions, and by providing rules for modifying or refusing to modify
another state's child support order.
The adoption of UIFSA
in all American jurisdictions in some respects tracked the development of
welfare reform efforts in the mid-1990s. Certain provisions of UIFSA were amended in
1996 following a review and analysis requested by state child support
enforcement community representative. A
month after these adoptions were promulgated by NCCUSL, Congress enacted the
Personal Responsibility and Work Opportunity Reconciliation Act, the last major
expression of child support enforcement reform from the Congress. As a result, federal grants to a state for
child support enforcement became partially dependent upon the enactment of
UIFSA.
The 2001 Amendments to
UIFSA again follow a review and analysis requested by representatives of the
state child support enforcement community. While some of these changes are procedural,
and others substantive, none make a fundamental change in UIFSA policies and procedures.
UIFSA continues to serve the basic
principle of one order from one state that will be enforced in other states. The amendments are meant to enhance that basic
objective.
The 2001 Amendments
One of the most
important accomplishments of UIFSA was the establishment of bedrock
jurisdictional rules under which a tribunal in one state only would issue or
modify one support order only. That
order would be the order any other state would enforce and would not modify. Further, if more than one state tribunal
issues an order pertaining to the same beneficiary, one of those would become
the enforceable, controlling order. The
2001 amendments clarify jurisdictional rules limiting the ability of parties to
seek modifications of orders in states other than the issuing state (in
particular, that all parties and the child must have left the issuing state and
the petitioner in such a situation must be a nonresident of the state where the
modification is sought), but allow for situations where parties might
voluntarily seek to have an order issued or modified in a state in which they
do not reside. The amendments also spell
out in greater specificity how a controlling order is to be determined and
reconciled in the event multiple orders are issued, and clarify the procedures
to be followed by state support enforcement agencies in these circumstances,
including submission to a tribunal where appropriate.
The amendments give
notice that UIFSA is not the exclusive method of establishing or enforcing a
support order within a given state B for example, a nonresident may
voluntarily submit to the jurisdiction of a state for purposes of a divorce
proceeding or child support determination, and seek the issuance of an original
support order at that tribunal. The amendments
also clarify, however, that the jurisdictional basis for the issuance of
support orders and child custody jurisdiction are separate, and a party
submitting to a court's jurisdiction for purposes of a support determination
does automatically submit to the jurisdiction of the responding state with
regard to child custody or visitation.
The amendments also
provide clearer guidance to state support agencies with regard to the
redirection of support payments to an obligee's current state of residence,
clarifies that the local law of a responding state applies with regard to
enforcement procedures and remedies, and fixes the duration of a child support
order to that required under the law of the state originally issuing the order
(i.e., a second state cannot modify an order to extend to age 21 if the issuing
state limits support to age 18).
The amendments
incorporate certain technical updates in response to changes in the law in the
intervening years since 1996 B specifically, the use of electronic communications
in legal and other contexts (i.e. E-Sign and the Uniform Electronic
Transactions Act) and the evolution of federal and state agency practice
(including specifically the usage of certain forms and the sealing of records
in connection with certain child custody action information), and make other
nonsubstantive changes to grammar and organization in an effort to clarify
certain provisions.
Finally, the
amendments expand UIFSA to include coverage of support orders from foreign
country jurisdictions pursuant to reciprocity and comity principles. While a determination by the U.S. State
Department that a foreign nation is a reciprocating country is binding on all
states, recognition of additional foreign support orders through comity is not
forbidden by federal law. UIFSA clearly
provides that a foreign country order may be enforced as a matter of comity. In
the event a party can establish that a foreign jurisdiction will not or may not
exercise jurisdiction to modify its own order, a state tribunal is also
authorized to do so.
UNIFORM INTERSTATE FAMILY SUPPORT ACT B WHY STATES SHOULD ADOPT IT
Currently,
one in four children in the U.S. -- more than 10 million children -- grows up
in a single-parent household, and millions of these children fail to receive
the financial support that they are owed. This support is crucial to sustaining family
life, and often to averting outright poverty. Children whose parents live in different
states suffer the most, since a conflict between jurisdictions can often stand
as a serious impediment to the enforcement of a support order.
In recent years, Congress has made
substantial changes to federal child support enforcement laws. Perhaps most significantly, it has mandated
that the states adopt child support guidelines and establish enforcement
devises such as tax intercepts and credit reporting.
To eliminate
interstate jurisdictional disputes and enable the new federal legislation to be
effective, the Uniform Law Commissioners (ULC) have drafted the Uniform
Interstate Family Support Act (UIFSA), which provides for one-state control of
a case and for a clear, efficient method of interstate case processing. This new act simplifies the muddle of
conflicting child and spousal support laws that develop when parents live in
different states. It represents a major
overhaul of national child support rules and should be adopted in every state.
UIFSA UPDATES AND IMPROVES URESA
The
Uniform Reciprocal Enforcement of Support Act (URESA), drafted by the ULC in
1950, amended in 1958 and 1968, and adopted in every state, has been one of the
ULC's most successful acts. Yet URESA
recognizes the coexistence of multiple support orders from different states,
often making it difficult to enforce an order for collection of child and
spousal support.
It is
the overriding principle of UIFSA that, to the maximum extent possible, only
one valid support order will be in existence at any one time. This act makes the child's "home
state" dominant in establishing priority of competing courts.
UIFSA
also provides for a "long arm" provision which allows one court to
retain exclusive jurisdiction over both parties in the support dispute, even
though one - or both - may be living outside the boundaries of the court's
jurisdiction.
A
number of other improvements are made to URESA to streamline interstate
proceedings: support proceedings may be initiated by or referred to
administrative agencies rather than to courts in states that use those agencies
to establish support orders; vital information and documents may be transmitted
through electronics and other modern means of communication for quicker
facilitation; courts are required to cooperate in the discovery process for use
in a court in another state; a registered support order is immediately
enforceable, unless the respondent files a written objection within twenty days
and sustains that objection.
UIFSA MAKES SUPPORT ORDER ENFORCEMENT
EASIER
If a
court finds that support is owed, it issues a support order requiring that
support or reimbursement be paid. To
enforce its support orders, a court may: order the person owing support to make
payments; order that income be withheld; enforce orders by claiming civil or
criminal contempt; set aside property for payment of support; or order the
person owing support to seek appropriate employment. Except under narrowly defined circumstances,
the only court or tribunal that can modify a support order is the one having
continuing, exclusive jurisdiction over the order. If two or more states claim jurisdiction to
establish or modify an order, UIFSA has a priority scheme that favors the
child's home state.
Also,
UIFSA provides two direct enforcement procedures that do not require assistance
from a court. First, the support order
may be mailed directly to an obligor's employer in another state, which
triggers wage withholding by that employer without the necessity of a hearing,
unless the employee objects. Second, the
act provides for direct administrative enforcement by the support enforcement
agency of the obligor's state.
UNIFORMITY
The
problems this act addresses have long cried out for uniformity, and it may well
be the answer to long-standing interstate jurisdictional conflicts that have often
been a refuge for those hoping to avoid paying child support.
If
adopted everywhere, the bottom line effect of this act would be to eliminate
multiple litigation across state lines and also to counter inefficiencies
within the URESA bureaucracy, both of which form major barriers to child
support enforcement.
The
UIFSA holds the promise of exerting a positive effect on the lives of untold
numbers of American children, one quarter of whom now live in single parent
households. The ULC envisions that the
new law's influence will be extremely broad, and some form of it should be
adopted in every state.
UNIFORM FOREIGN MONEY CLAIMS ACT -- SUMMARY
The necessary
engagement of Americans in international trade has increased the amount of
business conducted by Americans in foreign currency. Also, more travel to foreign countries by
Americans, and more travel to the United States by citizens of other countries,
increases the number of tort claims that can be expressed in foreign currency,
or in both foreign currency and dollars. When a business deal goes bad, the losses are
appropriately taken in the currency that is the foundation of the deal. Injuries suffered may, also, be most
appropriately compensated in a foreign currency, depending upon where the
losses were suffered and where damages accrued. Yet the general rule in the United States
requires judgments on all claims to be stated and paid in dollars. A number
of states fix the payment of judgments in
dollars by statute.
Requiring
that judgments be always in dollars does not accord with the international
character of much litigation, and is contrary to the rules that pertain in most
countries, which do recognize judgments in foreign currency--including dollars.
So it is appropriate for the United States to join the rest of the world with
respect to the payment of judgments. However,
to do so, the law must also select appropriate rules for converting a judgment
in a foreign currency to dollar value. The Uniform Foreign-Money Claims Act (UFMCA)
reverses the rule that all money judgments must be valued in dollars, and
provides the rules for fair conversions of foreign money judgments into dollar
amounts.
UFMCA
allows any claimant to assert a claim in foreign money. It also allows any opposing party to contest
such a claim, and to assert and prove that a different money should be the
basis for the claim. How does a court
determine the money to be used? UFMCA establishes some basic alternative
standards. If a specific money is
regularly used between the parties as a matter of usage or course of dealing,
it can be asserted as the currency to be used in assessing damages in an
action. If a specific currency is used
for valuing or settling transactions in a particular commodity or service by trade
usage or common practice, it can be the currency used in the litigation. Lastly, if a loss is ultimately felt or
incurred by a party in a specific currency, that money can be used to establish
the price of a claim. By hearing
evidence as to any of these basic standards, the court determines what money
shall be used to value a claim.
The
parties themselves can establish the money that is appropriate. UFMCA permits parties to agree to the money
that will govern the transaction between them. They can also agree to settle a claim in any
currency that they choose. If there is a
contract specifying payment in a certain currency, that currency is the proper
money for payment of any claim under that contract. But conversion between dollars and a foreign
currency remains a problem. American
litigants will ordinarily have dollars with which to satisfy judgments against
them. Foreign defendants may prefer to
pay in dollars, as well. Since the
dollar is actively traded in international money markets, it is not rare for
dollars to be available to foreign entities.
If
currencies remained at fixed values with respect to each other, there would be
no problem. However, currencies
fluctuate against each other in an international market. We hear that the dollar goes up or down
against the pound, the euro and the yen, as a part of the normal business news
every day. Anybody who travels out of
the United States is aware of these fluctuations as he or she exchanges dollars
for the foreign currency of choice. If judgments
are to be converted from another currency to dollars, what is the fair time to
value the exchange?
With
respect to judgments, there are three possibilities, the day a person suffers a
loss (breach day), the day the judgment is rendered by a court (judgment day),
or the day the judgment is actually paid (payment day). If the breach day or the judgment day are
chosen as the date of conversion, then currency fluctuations between the chosen
date and the date of payment are at the risk of the claimant. After a conversion date that is either the
breach day or the judgment day, if the dollar drops against the currency in
which the judgment is stated, the claimant gets less value on payment day. Conversely, if the dollar rises against that
currency, the claimant gets more value on payment day.
Rather
than subject the claimant to that risk of currency fluctuation, UFMCA
establishes payment day as the proper date for making the conversion. We assume that the claimant is being paid in
the currency that is appropriate. He or
she should get the value that is inherent in a judgment stated in that
currency. Conversion to dollars on
payment day conforms most closely to that principle. Payment day is, also, the day of conversion in
the law of the major participating countries in international trade.
Whether
to pay in dollars or in the foreign currency is, in fact, at the option of the
judgment debtor under UFMCA. If dollars
are chosen, the rate of exchange is the bank-offered spot rate on the
conversion date, which is the basically the free market rate of exchange on the
day preceding the day of payment.
Judgments
in a law suit are not the only money awards that UFMCA will govern. Arbitration
awards are, also, subject to this Act. Another
kind of proceeding that may require conversion from a foreign currency to
dollars is a "distribution proceeding." This is defined as "a judicial or
nonjudicial proceeding for an accounting, an assignment for the benefit of
creditors, a foreclosure, for the liquidation or rehabilitation of a
corporation or other entity, for the distribution of an estate, trust, or other
fund in or against which a foreign-money claim is asserted."
To
convert foreign money to dollars in a "distribution proceeding," the
selected date is the day the proceeding is initiated. The kinds of actions that are
"distribution proceedings" involve distributing money from an
established fund to those persons entitled to it. There are no losses that may fluctuate in
value. Therefore, value established at
the time the distribution is asked for is the fair value.
UFMCA
serves the goals of permitting claims in foreign currency and of establishing a
fair conversion to dollars. These are
its principal purposes. However, there
are some other issues that must be covered, and UFMCA covers them. The right to pre-judgment interest and the
rate of interest are treated as substantive law regarding the right to recovery
under the conflict of laws rules that pertain in a state. A court might choose the law of the foreign
jurisdiction, therefore, in deciding the right to pre-judgment interest and the
rate to be applied if there is a right to pre-judgment interest. However, the interest on a judgment is at the
same rate as any other judgment under the law of the state rendering the
judgment.
A
judgment of a court in another jurisdiction that is expressed in terms of a
foreign currency is enforceable, and may be converted into dollars under UFMCA
at the judgment debtor's option, even though the jurisdiction in which the
judgment is rendered does not provide for such a conversion. Such a judgment is to be enforced as any other
foreign judgment is enforced.
UFMCA
provides for temporary valuations of foreign money claims in dollars for the
purposes of taking certain provisional steps in an action, such as seizing or
restraining assets pursuant to a writ of attachment, assessing costs of
litigation, or determining the amount of a surety bond. The time for making a temporary valuation is
the banking day next preceding the filing of the application for the specific
process of the court, and the rate is the bank-offered spot rate of exchange
prevailing on that day.
Sometimes
a foreign country will revalorize its currency, such as Brazil did in recent
history. If a foreign money claim is
stated in the old currency, then a rate of exchange must be stated for
conversion into the new currency. The
rate under UFMCA is the rate of conversion officially established by the
issuing country.
These
are the basic issues addressed in UFMCA. The United States is preparing itself
for a greater and more competitive role in international trade. UFMCA is a measure that states can adopt as
part of the general preparation for assuming that improved role. Uniformity is
essential for that role to be fully assumed in the administration of civil
justice in the states.
UNIFORM FOREIGN
MONEY CLAIMS ACT B WHY STATES SHOULD ADOPT IT
The
Uniform Law Commissioners promulgated the Uniform Foreign Money Claims Act
(UFMCA) to allow courts in the United States to accept or render judgments
valued in a foreign currency. There are many reasons why the Uniform Foreign
Money Claims Act should be adopted in every state.
Increased Need Due to International
Claims. Foreign money claims are greatly increasing as more Americans
participate in the global economy. Additionally, increased international travel
also increases the number of personal claims in foreign money.
United States Role in Foreign Trade.
Most of the United States' major trading partners allow judgments in dollars.
The UFMCA will bring the United States in line with the international practice
by allowing judgments in foreign money.
A Settled Payment Date. UFMCA
endorses the payment day rule, which is used by most other countries for
converting foreign money judgments into dollars.
A Fair Payment Date. The payment
day rule meets the reasonable expectations of the parties involved and places
the aggrieved party in the position it would have been in financially but for
the wrong that gave rise to the claim.
A Fair Conversion to Dollars. The
UFMCA establishes a fair conversion to dollars by using the bank spot rate as
of the day of payment.
Allocation of Risk of Exchange Rate
Fluctuation. UFMCA recognizes the rights of parties to agree upon the money
that governs their relationship. In the absence of an agreement, the Act adopts
the rule of giving the aggrieved party the amount to which it is entitled in
its own money or the money in which the loss occurred.
Non-Adjudicated Claims. UFMCA also
covers arbitration awards.
Uniformity. A lack of uniformity in
the states in resolving foreign money claims stimulates forum shopping and
creates a lack of certainty in the law. The rapid adoption of UFMCA will help
to encourage and sustain the United States' leading role in international trade
in the coming decades.
UNIFORM CUSTODIAL TRUST ACT
PURPOSE: To
enable lawyers to make the benefits of trusts available at low cost to people
without extensive financial assets.
ORIGIN: Completed by the Uniform
Law Commissioners in 1987.
ENDORSED BY: American Bar
Association
American Association of Retired Persons
STATE ADOPTIONS:
Alaska
Arizona
Arkansas
Colorado
District of Columbia
Hawaii
Idaho
Louisiana
Massachusetts
Minnesota
Missouri
Nebraska
New Mexico
North Carolina
Rhode Island
Virginia
Wisconsin
UNIFORM CUSTODIAL
TRUST ACT -- SUMMARY
We are
perfectly free to be irresponsible with the property that we accumulate. We can
dissipate it, abandon it, or ignore it. Most of us choose to be more
responsible, however. We tend to accumulate property for the economic security
it provides ourselves and our families. It comes as a great shock, therefore,
when we find that controlling and protecting it at key moments in our lives is
much harder than we imagined. What happens if we become incapacitated?
Guardianships and conservatorships are expensive last resorts that mean total
loss of control. What happens when we die? Wills and the probate process offer
some solace, but probate becomes more onerous and expensive than helpful.
Extensive estate planning with its panoply of generation-skipping devices, such
as trusts, is expensive and beyond the resources of most people. The search for
a better way continues.
The
Uniform Law Commissioners' Uniform Custodial Trust Act, promulgated in 1987,
offers some needed help. Inter vivos and testamentary, discretionary trusts are
too complicated to meet certain needs. But the trust form of ownership,
simplified and carefully prescribed in a statute, can meet them, thus the
Uniform Custodial Trust Act (UCTA).
A trust
is, simply, a legal structure for organizing the ownership and management of
property for its preservation on behalf of specified individuals. A trust
involves three fundamental participants: a donor who puts property in a trust;
a trustee who owns and manages the trust; and beneficiaries who receive the
financial benefit of the trust and for whom the property is preserved. A trust
arises in a trust agreement or instrument (a document) in which the donor names
the trustee and beneficiaries. The donor also establishes the trustee's powers
over the property and the beneficiaries' rights to principal and income in the
trust instrument. The donor then transfers property to the trustee, who owns it
for the benefit of the beneficiaries. The trustee is also a fiduciary, meaning
that he or she is subject to special rules and standards of care when managing
the trust's assets. All trusts have these characteristics, and a custodial
trust is but one of a number of kinds of trusts.
The
UCTA allows any person to create a custodial trust by executing a simple
statement (it may be a separate document or merely a notation on an existing
title document) that the property is being placed in trust under the Act. The
trustee's
obligations arise upon acceptance of the
property. That is all that is necessary to create the trust.
The
UCTA permits a kind of springing trust too-a trust that arises upon the
happening of a future event. Any person can create such a trust with respect to
specific property by executing a simple statement, indicating that the trust
will be established upon the happening of the event.
The
UCTA also allows anybody obligated to an incapacitated person, without a
conservator (a conservator is a court-appointed manager of an incapacitated
person's property), to establish a custodial trust into which property
satisfying the obligation is placed for the incapacitated person as
beneficiary. If the value of the property so placed exceeds $20,000, however, a
transfer into such a trust must be approved by a court.
What
distinguishes a custodial trust from other kinds of trusts? To begin with, the
UCTA governs all aspects of the trust relationship, including a trustee's
powers and obligations. Therefore, elaborate trust documents are not needed.
Second, a custodial trust exists at the will of its beneficiaries. Any
beneficiary can terminate his or her share of the trust. Third, trust
beneficiaries can direct the trustee's payment of income to themselves. Fourth,
the beneficiaries can direct the trustee's investment and management of the trust
property. Fifth, at a beneficiary's incapacity, the trust continues as a
discretionary trust, with the trustee as a full fiduciary. Therefore, no
conservator needs to be appointed for the purposes of managing the trust
property. Sixth, a beneficiary may direct the trustee by a simple writing to
distribute the trust property in any fashion the beneficiary desires at the
beneficiary's death. The writing is not a will unless the beneficiary makes it
one, and the distribution is a nonprobate transfer of the property.
These
powers of beneficiaries distinguish a custodial trust from all other trusts.
Trustees under the common law are not subject to the direction of
beneficiaries. The powers of the beneficiaries in the UCTA suggest why such a
trust is called "custodial" and suggest the values of a custodial
trust, as well as its limitations.
A trust
is custodial because the trustee's powers are limited by the beneficiaries -
the trustee is a custodian for the beneficiaries' interests. The trustee is a
custodian until such time as a beneficiary becomes incapacitated. The custodial
trust is an ideal form of ownership for anyone who wants to make sure property
is properly managed before incapacity and protected afterwards. A person with
property merely conveys the property to a trustee, naming himself or herself as
beneficiary. While there are no questions of capacity, the beneficiary retains
significant powers over the property. At incapacity, his or her appointed
trustee continues to manage the property and use it for the beneficiary. If
incapacity is temporary, the beneficiary reasserts his or her powers when
capacity returns. If at any time a beneficiary with capacity desires to
terminate the custodial trust, he or she simply terminates it.
Who
will use the trust? Older people who want to make sure they control who manages
their property when they are incapacitated, are the most likely users of the
UCTA. People who go on long trips and who want to assure proper management
while they are gone or who want protection if they become incapacitated while
traveling can use a custodial trust rather than a power of attorney if it suits
their needs. These are examples of people and situations for which the UCTA was
created.
At the
same time, people who need discretionary trusts for estate planning and tax
purposes will continue to turn to traditional trust law. The control provided
to beneficiaries in the UCTA and the ability to terminate a custodial trust do
not make it suitable for these purposes.
The
UCTA fills very particular needs of ordinary people. It should be considered
strongly by any state or jurisdiction conscious of the difficulties an ordinary
person has in preparing for personal incapacity and death.
UNIFORM CUSTODIAL
TRUST ACT B WHY STATES SHOULD ADOPT IT
The
Uniform Custodial Trust Act (UCTA), promulgated by the National Conference of
Commissioners on Uniform State Laws in 1987, offers everyone a chance to
establish a kind of trust that guarantees control of property at a time when a
person becomes incapacitated, and that may also be used to pass on property at
death without probate. The act is designed to offer a new, very simplified
custodial trust, making the benefits of trusts available to people without
extensive financial assets.
The
UCTA was inspired by the Uniform Transfers to Minors Act, and the highly useful
concept of a custodian for property of a minor under the terms of that act. But
why should minors be the only beneficiaries of a good idea?
There
are many reasons why every state should consider and adopt the Uniform
Custodial Trust Act.
INEXPENSIVE
A
custodial trust is inexpensive to create. Fees for consultation and drafting
will be minimum - and non-existent in many cases. In addition, the UCTA
provides an alternative to a costly court-supervised conservator or guardian.
It can be used to avoid the costs and delays of probate proceedings at death.
Economies can accrue broadly with the use of custodial trusts.
SIMPLE
A
custodial trust can be set up by simple language referencing the statute. No
elaborate trust document is necessary. Rights and obligation are derived
directly from the statute.
CONTROL
Any
person who creates a custodial trust retains complete control over it until
incapacity or death. The named trustee manages the property in the case of
incapacity, but until then, control remains with the beneficiary - the creator
of the trust. The beneficiary directs the management of the property, receives
income and principal, and can cancel the trust at any time.
COMPREHENSIVE
Any
kind of property, real or personal, tangible or intangible, can be put in a
custodial trust. Anybody can be made a beneficiary. Any legally competent
person or entity can be appointed as trustee.
The
Uniform Custodial Trust Act is simple, inexpensive, comprehensive, and
complete. The most frequent users of this trust will most likely be senior
citizens who want to provide for the management of assets in the event of
future incapacity. It is also available for a parent to establish a custodial
trust for an adult child who may be incapacitated. Those leaving the country
temporarily can also place their property with another for management without
relinquishing permanent control of their property.
The
Uniform Custodial Trust Act should be adopted in every state. Although it
meshes with the Uniform Probate Code (UPC), it is appropriate in states which
have not adopted the UPC.