Pub. 12 2015 Issue 3

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G N E W M E X I C O R E A L I Z E D R E A M S Fall • 2015 9 In the exam area, they would allow greater flexibility for regulators to tailor exam requirements to the operations of the bank and not simply to bank size. purpose of the deduction is to assist in the expansion of the trust and estate business in New Mexico. • Enact the Uniform Powers of Appointment Act. The act does not change the law, but rather codifies the scant case law addressing powers of appointment, providing need- ed guidance for practitioners, for clients, and for courts. Currently, the powers of appointment are commonly in- cluded in both wills and trusts, but there is very little stat- utory law governing their use. Instead, estate planners must rely on a patchwork of state court decisions, most of which are not binding outside the jurisdiction in which the case was decided. The act adds clarity and direction for parties using the Probate Code. This should result in easier, more efficient probating of estates in probate and district court. The Uniform Act governs the creation, amendment, and revocation of powers of appointment. It also: addresses the exercise of powers by the power-hold- er and the distribution of appointive property; provides rules for disclaimers and releases, and for contracts be- tween a power-holder and a permissible beneficiary; and it sets out the rights of a power-holder’s creditors to ac- cess appointive property under certain conditions. • Enact the Uniform Trust Decanting Act. Decanting is the term primarily used to describe the act of paying trust property from one trust to another under the trustee’s discretionary power to make distributions to or for the benefit of one or more beneficiaries. Often the power to distribute trust corpus is called the power to invade a trust. With decanting, instead of exercising an invasion power by making payment directly to or for a beneficiary, a trustee can now pay the assets over to a new trust for the beneficiary. This power enables a trustee to address a va- riety of potential issues including favorable tax planning, changes in trust management, or state law issues. Finally, the most valuable benefit of trust decanting is its ability to make corrections or adjustments in an irrevocable trust setting. Twenty-three states have decanting statutes that permit the trustee to modify irrevocable trusts either di- rectly or by distributing the trust assets to another trust. Decanting is distinct from judicial modification because decanting does not require court approval. Decanting is also distinct from modifications by non-judicial settle- ment agreements because beneficiary consent is not re- quired. Because decanting does not require beneficiary consent or court approval, adverse tax consequences may be avoided when making certain modifications. The purpose of the NMBA trust proposal is to make NewMex- ico competitive in attracting the management of trust assets. Currently, the states that rank highest in trust administration and management including South Dakota, Nevada, Alaska, Tennessee and Wyoming have in their laws the trust provisions we are proposing. Federal Matters July 2015 marked the fifth anniversary of the signing of Dodd- Frank. Signs are not encouraging after 5 years. Only 60 per- cent of the nearly 400 regulations by Dodd Frank have been finalized, and 21.5 percent of the rulemakings have not even been proposed. However, there have been over 600 regulato- ry releases consisting of 22,000 pages under the CFTC, SEC, FDIC, Fed, OCC, and CFPB related to Dodd Frank; upwards of 800,000 comment letters filed with the regulatory agencies; nearly 120 congressional hearings related to Dodd Frank; and 139 bills introduced in Congress to amend or repeal the act-only five of which were signed into law. Is there light at the end of the tunnel for regulatory reform? It appears dim. However, the House has pursued certain reform legislation including: • HR 1210, the Portfolio Lending and Mortgage Access Act; • HR 1233, the CLEARR Act; • HR 1941, the Financial Institution Examination Fairness and Reform Act; and • HR 2896, the TAILOR Act of 2015 These bills focus on reforming mortgage regulations, includ- ing the Qualified Mortgage rule to permit all portfolio loans to be treated as a QM. In the exam area, they would allow greater flexibility for regulators to tailor exam requirements to the op- erations of the bank and not simply to bank size. In the Senate, our best hope for reform rests with Senator Richard Shelby, Chairman of the Senate Banking Committee and his S.B. 1884, the Financial Regulatory Improvement Act of 2015. The proposed legislation would: • Provide a QM safe harbor for mortgages held in portfolio • Establish an office of independent examination review • Reduce unnecessary privacy notice paperwork • Help rural customers receive CFPB mortgage exemptions • Extend the exam cycle for more institutions • Require the regulators to provide short form call reports based upon the institution size and complexity • Exempt institutions with less than $10 billion in assets from the “Volcker Rule”, with some exceptions • Prohibit regulatory agencies from participating in Oper- ation Chokepoint • Raise the threshold for CFPB exams from $10 billion to $50 billion in assets The Shelby bill was approved by the Senate Banking Com- mittee in May. It appears that moving that bill without greater Democratic support to the floor for consideration is unlikely. However, Shelby has attached his complete bill to appropri- ations legislation that would fund the Treasury Department and other government agencies. Some political commentators have suggested that the Shelby package may be attached to a continuing resolution intended to fund the government should Congress not enact a General Appropriations Act. The 2016 election cycle will likely limit any financial reform in 2016. 