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House Bill 1250 was one of 77 bills Gov. Eric Greitens signed during his last day in office.
SBJ photo by Wes Hamilton
House Bill 1250 was one of 77 bills Gov. Eric Greitens signed during his last day in office.

How a bill is built into law

New trust company rewrites law signed by governor on his last day in office

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When Jeremy Loftin, Tim Parrish and others were creating Missouri Trust and Investment Co., they wanted to do things differently.

“We were writing the policies and procedures and starting a company brand new last year … trying to determine the services we could offer and the clients we wanted to serve,” said Loftin, chief administrative officer.

The conversation turned to directed trusts, a trending option currently offered in nine states, but not in Missouri.

“What could we do to change this one area to better fit our business model?” asked Parrish, Missouri Trust’s president. “There wasn’t anybody to tell us we couldn’t do it.”

Missouri allows delegated trusts, Loftin said, which puts a trust company in charge of trust administration and all assets for a client.

A directed trust would allow for two parties to serve in that role, said Missouri Trust CEO Richard Russell, who joined the team in April. A broker, investment adviser or a beneficiary could manage investments, while a trust company would handle trust administration. Currently, he said, trust companies in Missouri oversee the investment adviser, but Missouri Trust wanted to separate that liability.

Parrish added, “It leaves the choice to the client,” on who they want to manage their money.

So instead of wishing the law were different, they set out to change it.


Great minds
About nine years ago at separate companies, Loftin and Russell first discussed, as friends in the industry, the need for directed trusts. Neighboring states Oklahoma and Tennessee offered directed trusts and were poaching business from Missouri. “I think it’s easy to say you want to have a law passed,” Russell said. “It’s hard once you actually get into it and figure out all the stuff it takes.”


Small beginnings
Loftin first spoke with Sen. Mike Cunningham. Cunningham, a Republican from Rogersville, suggested pre-filing the bill by Dec. 1, 2017, Loftin said. Cunningham sponsored the bill and made it a priority for the session. Senate Bill 569 reflected Missouri Trusts’ addition to Missouri code section 456. One sentence defined directed trust, and the second defined “the liability provision that basically prevents the trustee from being liable for the actions of that directed investment manager,” Russell said. Missouri Trust also solicited support from Rep. Lyndall Fraker, who presented a similar bill, HB 2351. Cunningham said by introducing similar legislation in both chambers, it increases a bill’s chance of being signed into law.


Green light

In mid-February, the Missouri Senate approved the bill. Cunningham said he wanted to sponsor the bill because it was bipartisan and good for Missourians and state businesses. “It will help trust companies be more competitive. There are particular states that have this particular clause,” Cunningham said. “It also affects our local banks because that money leaves Missouri.”

Hearing No. 1
The bill headed to committee in late January. Parrish testified at the Senate’s Insurance and Banking Committee, where Cunningham is the vice chairman. He was joined by Springfield attorney David Healy of Appleby Healy, Attorneys at Law PC, who is also a shareholder of Missouri Trust, and Craig Overfelt, senior vice president of the Missouri Bankers Association. “[I] had no idea the format or what I was supposed to say or not,” Parrish said. “I was pretty nervous.”


Hearing No. 2

“I wasn’t quite so nervous the second time around,” Parrish said of his subsequent committee testimony. At the Financial Institutions Committee hearing at the beginning of March, where Fraker is the chairman, the legislation passed with no contest.  Proponents at the hearing said the bill would make Missouri trust companies more competitive and keep jobs in the state, as Missouri is loosing jobs to other states where similar legislation has passed.

Muddy waters
The bill was referred to the House’s Legislative Oversight Committee and by mid-April was headed to the House for a vote. “That’s where things get cloudy for us,” Parrish said.  The House passed the bill, but with amendments, before sending it back to the Senate for review. The updates proposed by Rep. Robert Cornejo, a Republican from St. Peters, Loftin said, changed Missouri Trusts’ original language. “We didn’t think it did quite as good a job as ours did,” he said.

Call a conference
To reconcile the bill language with amendments, which were proposed by the Missouri Bar Association and presented by Cornejo in the House, the Senate called a joint conference. Cunningham said it’s not uncommon to tack amendments onto a bill. “I don’t like it, but it’s just the way it works,” he said. He said the amendment from the House was one “they had tried for several years to get done” related to a no-contest clause in trusts. By late April, the conference was approved with amendments.

Reconciling motions
Cunningham said he sought help from the Missouri Bar Association. “We were able to reconcile that with the language that (Missouri Trust) originally filed and come up with a product that satisfied our needs,” said Eric Jennings, government relations council with the Missouri Bar. Eric Wilson, also in the same role, said the bar’s probate and trust division had been working on trust-related provisions, including directed trusts, since 2015. “We all had the same goal,” he said.


Change in name

Russell said he met with representatives from the Missouri Bar on May 11, the week before the end of session, to share concerns with the verbiage and work together on new language. To reconcile Missouri Bar and Missouri Trusts’ directed trust clauses, as well as several other updates regarding trusts and estate planning, Jennings said several bills and provisions were joined together in conference under HB 1250. He said it’s “a matter of efficiency” to merge bills, as a typical session has 2,000-2,500 bills introduced with only 100-150 bills passed.

Eleventh hour
With just a day left in session, Missouri Trust called Senate and House leadership to ask for support of the bill. With all the back and forth, Russell said the company executives didn’t understand that their language had been moved to a different bill until about 30 minutes before it was voted on. They worried the session would end before the bill could be brought for a vote. “Then, the last day of session at 4:24 p.m., ours got passed,” he said. The vote on May 18 was 138-2. As a lawyer, Russell said he used to read bills and wonder why they seemed poorly written and confusing, and thought he could write it better. “Now, I appreciate that,” he said with a laugh.  “Here I am a week before this law is getting passed, trying to find two spots in this bill where I can shove my language. … As long as my language is in there, I don’t care where it is or how it reads.” The Missouri Trust crew watched the vote live from Parrish’s office. It was high-fives all around.


Final seals

At the end of May, House and Senate leadership sent HB 1250 off to Gov. Eric Greitens’ desk for approval or veto, at the same time as the governor was announcing his resignation. HB 1250 was one of 77 bills the governor signed on his last day in office. “To have our voices heard, that’s great,” Loftin said. Parrish added, “It’s neat to know that a good idea can be introduced to change laws to help people.”

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