Delaware Trust Act 2026 and the Delaware Family Trust Company Act

Two important pieces of legislation were signed into law by Governor Meyer in July of 2026. House Bill 297, also known as Delaware Trust Act 2026, was signed into law and became effective on July 23, instituting key updates to Delaware’s trust laws. In addition, Senate Bill 327, also known as the Delaware Family Trust Company Act, was signed into law and became effective on July 13, introducing legislation that authorizes the creation of private trust companies designed to serve a single high-net-worth family and providing a statutory framework for the governance of those companies. 

Delaware Trust Act 2026

Delaware Trust Act 2026 (“Trust Act 2026”) is the annual update to Delaware’s trust laws through the combined efforts of both the legislative drafting committee of the Estates and Trust Section of the Delaware State Bar Association and the Delaware legislature. The following is a summary of the key statutory changes resulting from Trust Act 2026.

Authority and Actions of Co-Fiduciaries (and Non-Fiduciaries)

Section 3323 of Title 12 addresses the default statutory authority of co-fiduciaries (and non-fiduciaries) when a trust instrument appoints more than one party in a powerholder role, such as a trustee, direction adviser or designated representative. Prior to the enactment of Trust Act 2026, this statute addressed when three or more such parties were serving in a powerholder role. Unless the trust instrument provides otherwise, any power vested in those powerholders is exercised by majority vote.

Trust Act 2026 makes it clear that, when there are exactly two parties serving in a powerholder role, they must act unanimously. In either case, one fiduciary can still be designated to perform ministerial or non-ministerial functions on behalf of all the fiduciaries/non-fiduciaries. 

This 2026 revision removes uncertainty regarding the authority of co-fiduciaries when a trust instrument names two parties to serve in a single powerholder role. A trust’s governing instrument may expressly permit either party to exercise such powers independently, but absent that authority being granted in the trust instrument, it is now clear they must act unanimously.

Appointment of “Officeholders” and Expanded Definition

Section 3326 of Title 12 includes a definition of the term “officeholder” and provides a mechanism for the resignation of officeholders if the trust instrument is silent on the matter. “Officeholder” was previously defined as a trustee, an adviser or a designated representative. Trust Act 2025 expanded this definition to include the enforcer of a purpose trust. Trust Act 2026 further expands the definition to include parties who hold the power to remove or appoint other trust powerholders.

This definition also applies to Section 3327 (Removal of an Officeholder) and the new Section 3327A (Appointment of an Officeholder), which is redesignated from, and expands upon, the former Section 3336, which applied only to trustees. Section 3327A applies to all officeholders and provides a statutory mechanism for the appointment of a successor officeholder for a trust that is not terminating if the trust instrument is silent on the matter. In such a case, the current permissible and presumptive remainder beneficiaries, acting by unanimous consent (directly or through virtual representation under Section 3547 of Title 12), may name a successor officeholder without the approval of the Court of Chancery.

Notably, the statute applies if (1) the party who has the power to appoint a successor officeholder under the trust instrument declines to do so, or (2) the trust instrument requires an officeholder to be appointed or a trust has no trustee serving and the party who has the power to appoint a successor officeholder or trustee fails to do so within sixty days of being notified of the vacancy.

Merger Statute

Contained within Section 3325 of Title 12 (Specific powers of trustee) is subsection (29), which authorizes a trustee to merge two trusts if the merger would not result in a material change in the beneficial interests of the beneficiaries of such trusts. This power includes the power to declare a new trust for the purpose of merging all or a portion of an existing trust into the newly declared trust. The effects of a merger are outlined in Section 3341. The property subject to the merger is considered property of the transferee trust as of the merger, along with all rights, privileges and obligations attached to such property. If the merger is a full merger of the trusts and all their property, the transferor trust will cease to exist.

Under Trust Act 2026, Section 3325(29) was amended to allow for additional flexibility and ease of administration when merging trusts. Under the revised merger statute, a trustee can now select which trust instrument shall govern the trust after the merger. A trustee can declare a new trust with updated administrative terms, merge the new trust into an existing trust, and retain the original trust as the surviving trust to be administered under the terms of the newly declared trust instrument. 

Allowing the original trust to be the surviving trust eliminates the administrative burden of transferring assets to a new trust, obtaining an Employer Identification Number, filing a final tax return for the original trust, and closing existing accounts and records.

When evaluating alternatives for modernizing an outdated trust instrument, trustees must consider not only the legal effect of a particular strategy but also its administrative impact. As discussed in our previous article, Modernizing Outdated Delaware Trusts, Delaware trustees have several tools available to update trust provisions. The Delaware trustee toolbox also includes decantings and self-decantings under Section 3528 of Title 12. 

Trust mergers have likewise served as an effective mechanism for implementing changes to a trust’s administrative terms. Despite their utility, mergers have historically been accompanied by administrative complexities that often made them a less desirable option. For example, where a trust held multiple brokerage accounts, a merger into a newly created trust generally required the trustee to open replacement accounts, transfer the assets, and close the original accounts. These steps could take considerable time and often created unnecessary operational burdens and additional administrative costs.

By reducing many of these administrative obstacles, the amendments to Delaware’s merger statute make trust mergers a more efficient and appealing method for trustees seeking to update and modernize existing trusts.

Beneficiary Well-Being Statute

Delaware introduced the beneficiary well-being trust in 2024. A primer on the structure can be found in our previous article titled An Introduction to Beneficiary Well-Being Trusts. Trust Act 2026 clears up certain provisions of Section 3345 of Title 12 with respect to beneficiary well-being trusts that have a direction adviser responsible for directing the trust regarding beneficiary well-being matters. These revisions refine the directed trust provisions, clarify that payments relating to beneficiary well-being programs to a trustee, affiliate, or adviser require express authorization in the governing instrument, and confirm that such payments may be made without prior notice or disclosure to trust beneficiaries.

You can access Delaware’s Trust Act 2026 here.

Delaware Family Trust Company Act

This year, Delaware also enacted legislation under Title 5 of the Delaware Code authorizing the formation of a new type of regulated Delaware trust company designed to serve a single family. The Family Trust Company Act (the “Act”) was specifically designed to create a regulatory framework with requirements tailored to the risk profile of family trust companies and generally lower operational burdens than traditional trust companies that serve a broader public rather than a single family.

The Act requires the family trust company to have one “designated relative,” who may be a living or deceased person, or that person and their living or deceased spouse, as designated in the company’s application for certification. The Act’s definition of “family member” relates to the person’s familial connection to the “designated relative.” The term is defined broadly and is intended to allow family trust companies to serve multiple generations of a family and its related trusts, entities, and charities. 

Under the Act, family trust companies must (1) maintain their principal place of business in the state of Delaware, (2) conduct certain core administrative functions at that principal place of business, and (3) maintain at least one trust officer who is an employee of the family trust company and such other additional employees as the Bank Commissioner deems necessary to perform the core administrative functions.

Notably, a family trust company can enter an arrangement with either (1) an existing regulated bank or trust company that maintains its principal place of business in the state of Delaware or (2) an outside service provider satisfactory to the Bank Commissioner to perform the functions noted above. This creates opportunities for partnerships between families who wish to establish a family trust company and existing Delaware banks and trust companies who already have the expertise and structure in place to provide the requisite administrative services to those families.

The enactment of the Delaware Family Trust Company Act further strengthens Delaware’s position as a leading jurisdiction for sophisticated trust planning and administration. By creating a regulatory framework specifically tailored to the needs of a single family and its related trusts, entities, and charitable interests, the Act provides high-net-worth families with an additional option for centralized fiduciary oversight while maintaining the benefits of Delaware’s well-established trust laws and trust services infrastructure. The Act also creates opportunities for collaboration between family trust companies and existing Delaware trust institutions, reinforcing Delaware’s continued commitment to innovation and flexibility in the trust and wealth management industry.

Here is a link to access Delaware’s Family Trust Company Act.

Commonwealth Trust Company is pleased to provide this article as a guide. Commonwealth Trust Company is not engaged in the practice of law and is not providing legal advice by the provision of these materials. Commonwealth Trust Company recommends that clients seek the opinion of their attorney regarding the specific legal and tax issues addressed in this article.