Legislative Proposals for 2021 Legislative Session

Click here to view a report on the current status of Bar-initiated legislative proposals in the legislative process.  

Alternative Dispute Resolution (Legislative Proposal 2021-01)

Proposed by Alternative Dispute Resolution Committee

Approved by the Board of Governors on November 20, 2020

 

HB 953Rep. Louis Riggs  (R – Hannibal)

SB 591 - Sen. Steven Roberts  (D – St. Louis)

 

The Missouri statutes on mediation were last updated in 1986, and Supreme Court Rule changes were adopted in 1995. Over the last three decades, the practice of mediation has grown and modernized and become an essential ingredient in settling cases in litigation. These updates reflect a consensus of mediators, users, litigators and judges to meet participant expectations in the areas of definitions, confidentiality and due process, and provide clarity without needing court interpretation.

A new definition section (§ 435.300, RSMo):

  • Replaces the problematic language of "settlement negotiations" with the more modern phrase "ADR communication”;
  • Defines "writing" consistent with other statutes and case law; and
  • Defines what constitutes a "written agreement," so the parties will know what a valid agreement is.

The courts would be vested with broad discretion to order cases to mediation or other non-binding ADR processes (in line with Supreme Court Rule 17). Parties could modify the choice and/or opt out as provided by the statute, consistent with the best practice management concerns of Missouri courts.  Conflicts of interest by the neutral are identified and procedures to deal with conflicts of interest also are outlined in this section (§ 435.303, RSMo).

Specific issues concerning what should and should not remain confidential are addressed for the first time.  Four specific exceptions to confidentiality, one of the most fundamental underpinnings of mediation, are listed.  The procedures a court should use to address these exceptions are identified (§ 300.306, RSMo).

The ADR would be nonbinding on the parties unless there is a signed written agreement.  This harmonizes the statute with the best practices identified in Supreme Court Rule 17 (§ 300.309, RSMo).

The statute is expanded to provide for pre-suit and post-judgment disputes, when the parties agree (§ 300.312, RSMo).  Pre-suit mediation is a growing and important trend that will help avoid many lawsuits from being filed.

Finally, nothing in the proposed statute: (1) will undermine the right to jury trial; (2) require the parties to settle; or (3) require a pro se party to bring an attorney to the mediation (§ 300.312).

Assignments for the Benefit of Creditors (Legislative Proposal 2021-02)

Proposed by Bankruptcy Creditor-Debtor Rights Committee

Approved by the Board of Governors on November 20, 2020

HB 1020 –  Rep. Louis Riggs  (R – Hannibal)            

SB 524Sen. Bill White  (R – Joplin)

This legislative proposal would revise and update Chapter 426 of the Revised Statutes of Missouri (Assignment for Benefit of Creditors). An ABC involves the voluntary assignment of all of an individual’s or company’s assets to a neutral third-party assignee. The assignee, who holds legal and equitable title to the company’s assets in trust by virtue of the assignment, is empowered to sell the assets and distribute the proceeds to the company’s creditors pursuant to priorities established by state law.  An up-to-date ABC statute will enable individuals and small businesses to orderly liquidate their non-exempt assets to pay creditors without the stigma of bankruptcy.

The proposed legislation sets jurisdiction and venue in the circuit courts. It provides procedures for the recovery and distribution of assets to the assignor's creditors. The legislation would supplant common law assignments. The legislation would provide the required and prohibited provisions for a valid ABC. The legislation would define the rights, powers and duties of the assignor and assignee. The legislation would regulate the priority and processing of claims against the assignor for an orderly liquidation of the assignor's non-exempt assets.

The current ABC statutes were written in 1909 and have not been substantively revised since 1939. Chapter 426 of the Missouri statues is out of date and rarely used by practitioners.

Missouri Revised Decanting Statute

Proposed by the Probate and Trust Division (Estate Planning & Probate Administration Law Committee)

Approved by the Board of Governors on November 20, 2020

HB 929Rep. Louis Riggs   (R – Hannibal)              

HB 758Rep. Bill Hardwick  (R – Waynesville)

SB 338Sen. Tony Luetkemeyer  (R – Parkville)

In 2017, the Estate Planning, Trust and Probate Committee of the Missouri Bar formed a Decanting Subcommittee to study the Uniform Act and recommend whether Missouri should make any changes to the Missouri decanting statute or replace it with the Uniform Act. The Subcommittee recommended that the Missouri decanting statute be amended to adopt some, but not all, of the provisions of the Uniform Act. 

The Missouri decanting (a term used to describe discretionary distributions that are made from one trust (the "First Trust") to another trust (the "Second Trust") if certain conditions are met) statute was enacted in 2011. The Missouri decanting statute has been very useful to the citizens of Missouri because it allows greater flexibility to address circumstances that have changed since the First Trust was executed. One example involves the First Trust not including provisions that are desirable due to the dramatic increases in the federal estate tax exemption (which was only $600,000 prior to the year 2000 and is now $11,700,000) and the Second Trust does include those provisions. Another example involves the First Trust not including provisions for a beneficiary with special needs while the Second Trust does.

There are currently twenty-nine states with a decanting statute. In 2015, the Uniform Law Commissioners approved and recommended enactment of the Uniform Act. The Uniform Act has now been enacted in ten states.

The primary changes to the Missouri decanting statute are as follows:

  1. Subsection 2 eliminates the risk that the existence of the decanting power may cause the IRS to treat a “nongrantor trust” as a “grantor trust”, which would result in the settlor of the trust being deemed to be owner of the trust assets for income tax purposes.
  2. Subsection 3 provides more flexibility for the trustee of a trust to use decanting to create a special needs trust for a beneficiary with a disability.
  3. Subsection 4 adopts the tax provisions of the Uniform Act, which will prevent the exercise of the decanting power in a manner that has adverse tax consequences to a trust or the beneficiaries of a trust.
  4. Subsection 5 expands the notice requirements for the exercise of the decanting power.
  5. Subsection 8 provides that any rule against perpetuities that applies to the First Trust will apply to the Second Trust (unless a beneficiary has a general power of appointment over the First Trust or Second Trust that causes the rule to no longer apply) – although this is not a change to the current law, inclusion of this language in the statute eliminates any question as to whether the rule against perpetuities still applies to the Second Trust.
  6. Subsection 9 sets forth a “savings” provision that protects the trust and the beneficiaries from the attempted exercise of the decanting power in a manner that violates the statute.

The legislation introduced by Representative Hardwick and Senator Luetkemeyer also includes an additional provision pertaining to familial relationships, in particular regarding unknown heirs. This provision was approved by Executive Committee of The Missouri Bar Board of Governors for inclusion with the Bar-initiated Legislative Proposal 2021-03.