H.B. 162

             1     

ASSET PROTECTION TRUST AMENDMENTS

             2     
2014 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Earl D. Tanner

             5     
Senate Sponsor: ____________

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill enacts the Asset Protection Trust Act and adds new provisions relating to
             10      registration, limits on protected amounts, and child support, alimony, and domestic
             11      property.
             12      Highlighted Provisions:
             13          This bill:
             14          .    creates the Asset Protection Trust Act;
             15          .    defines terms;
             16          .    requires registration of the trust with the Department of Commerce;
             17          .    limits protected trust assets to $250,000;
             18          .    provides a special exemption for child support, alimony, and property division; and
             19          .    creates an exemption for Medicaid reimbursement.
             20      Money Appropriated in this Bill:
             21          None
             22      Other Special Clauses:
             23          None
             24      Utah Code Sections Affected:
             25      AMENDS:
             26           75-2-205 , as last amended by Laws of Utah 2003, Second Special Session, Chapter 3
             27           75-7-107 , as renumbered and amended by Laws of Utah 2004, Chapter 89


             28           75-7-301 , as repealed and reenacted by Laws of Utah 2004, Chapter 89
             29           75-7-501 , as repealed and reenacted by Laws of Utah 2004, Chapter 89
             30           75-7-505 , as enacted by Laws of Utah 2004, Chapter 89
             31           75-7-816 , as enacted by Laws of Utah 2004, Chapter 89
             32      ENACTS:
             33           25-6-201 , Utah Code Annotated 1953
             34           25-6-202 , Utah Code Annotated 1953
             35           25-6-203 , Utah Code Annotated 1953
             36           25-6-204 , Utah Code Annotated 1953
             37           25-6-205 , Utah Code Annotated 1953
             38           25-6-206 , Utah Code Annotated 1953
             39           25-6-207 , Utah Code Annotated 1953
             40      REPEALS:
             41           25-6-14 , as repealed and reenacted by Laws of Utah 2013, Chapter 284
             42     
             43      Be it enacted by the Legislature of the state of Utah:
             44          Section 1. Section 25-6-201 is enacted to read:
             45     
Part 2. Asset Protection Trust Act

             46          25-6-201. Title.
             47          This part is known as the "Asset Protection Trust Act."
             48          Section 2. Section 25-6-202 is enacted to read:
             49          25-6-202. Definitions.
             50          As used in this chapter:
             51          (1) "Creditor" means:
             52          (a) a creditor or other claimant of the settlor existing when the trust is created; or
             53          (b) a person who subsequently becomes a creditor, including, whether or not the claim
             54      is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
             55      disputed, undisputed, legal, equitable, secured, or unsecured:
             56          (i) who holds or seeks to enforce a judgment entered by a court or other body having
             57      adjudicative authority; or
             58          (ii) who has a right to payment.


             59          (2) "Insolvent" has the same meaning as in Section 25-6-3 .
             60          (3) "Paid and delivered" to the settlor, as beneficiary, does not include the settlor's use
             61      or occupancy of real property or tangible or intangible personal property owned by the trust if
             62      the use or occupancy is in accordance with the trustee's discretionary authority under the trust
             63      instrument.
             64          (4) "Property" means real property, tangible or intangible personal property, and
             65      interests in real property or tangible or intangible personal property.
             66          (5) "Settlor" means a natural person who transfers property in trust.
             67          (6) "Special creditor" means the holder of a judgment or court order against the settlor
             68      of a trust for child support, alimony, or domestic property division.
             69          (7) "Transfer" means any form of transfer of property, including gratuitous transfers,
             70      whether by deed, conveyance, or assignment.
             71          (8) "Trust" has the same meaning as in Section 75-1-201 .
             72          (9) "Trust protector" means a person who has the authority to:
             73          (a) appoint or remove trustees;
             74          (b) direct, approve, or disapprove distributions or withdrawals; or
             75          (c) amend, revoke, or terminate all or any portion of the trust.
             76          Section 3. Section 25-6-203 is enacted to read:
             77          25-6-203. Trust protections -- Creditor restrictions -- Special creditor exemption.
             78          (1) If the settlor of an irrevocable trust is also the sole beneficiary of the trust during
             79      the settlor's life, and if the requirements of Section 25-6-204 are satisfied, a creditor of the
             80      settlor may not:
             81          (a) satisfy a claim or liability of the settlor in either law or equity out of the settlor's
             82      transfer to the trust or the settlor's beneficial interest in the trust;
             83          (b) force or require the trustee to make a distribution to the settlor, as beneficiary; or
             84          (c) require the trustee to pay any distribution directly to the creditor, or otherwise
             85      attach the distribution before it has been paid or delivered by the trustee to the settlor, as
             86      beneficiary.
             87          (2) This section does not apply to:
             88          (a) a special creditor; or
             89          (b) a claim for reimbursement arising under the Medicaid Benefits Recovery Act in


             90      accordance with Subsection 25-6-5 (1)(b).
             91          (3) The provisions of this chapter do not apply to trust assets in excess of $250,000.
             92          (4) Notwithstanding Subsection (1), nothing in this section prohibits a creditor from
             93      satisfying a claim or liability from the distribution once it has been paid or delivered by the
             94      trustee to the settlor, as beneficiary.
             95          Section 4. Section 25-6-204 is enacted to read:
             96          25-6-204. Trust requirements.
             97          In order for Subsection 25-6-203 (1) to apply, the conditions in this section shall be
             98      satisfied. Where this section requires that a provision be included in the trust instrument, no
             99      particular language need be used in the trust instrument if the meaning of the trust provision
             100      otherwise complies with this section.
             101          (1) The trust instrument shall be in writing and provide that the trust is governed by
             102      Utah law and this chapter.
             103          (2) The trust instrument shall require that at all times the trust protector and at least one
             104      trustee shall be a Utah resident or Utah trust company, as the term "trust company" is defined
             105      in Section 7-5-1 .
             106          (3) The trust instrument shall provide that neither the interest of the settlor, as
             107      beneficiary, nor the income or principal of the trust may be voluntarily or involuntarily
             108      transferred by the settlor, as beneficiary. The provision shall be considered to be a restriction
             109      on the transfer of the settlor's beneficial interest in the trust that is enforceable under applicable
             110      nonbankruptcy law within the meaning of 11 U.S.C. Sec. 541(c)(2).
             111          (4) The settlor may not have the ability under the trust instrument to revoke, amend, or
             112      terminate all or any part of the trust, or to withdraw property from the trust.
             113          (5) The trust instrument may not provide for any mandatory distributions of either
             114      income or principal to the settlor, as beneficiary, except as provided in Subsection
             115      25-6-206 (2)(f).
             116          (6) The settlor may not benefit from, direct a distribution of, or use trust property
             117      except as stated in the trust instrument. An agreement or understanding, express or implied,
             118      between the settlor and the trustee that attempts to grant or permit the retention of greater rights
             119      or authority than is stated in the trust instrument is void.
             120          (7) The trust instrument shall require that, at least 30 days before paying or delivering


             121      any distribution to the settlor, as beneficiary, the trustee notify in writing every special creditor.
             122      The trust instrument shall require that the notice state the date the distribution will be made and
             123      the amount of the distribution.
             124          (8) The trust assets consist solely of cash, cash equivalents, publicly traded securities,
             125      and real property title in fee simple.
             126          (9) At the time that the settlor transfers any assets to the trust, the settlor may not be in
             127      default of making any payments due under any court order or judgment regarding child support,
             128      alimony, or domestic property division.
             129          (10) A transfer of assets to the trust may not render the settlor insolvent.
             130          (11) At the time the settlor transfers any assets to the trust, the settlor may not intend to
             131      hinder, delay, or defraud a known creditor by transferring the assets to the trust. A settlor's
             132      expressed intention to protect trust assets from the settlor's potential future creditors is not
             133      evidence of an intent to hinder, delay, or defraud a known creditor.
             134          (12) Assets transferred to the trust may not be derived from criminal activities.
             135          (13) At the time the settlor transfers any assets to the trust, the settlor shall sign a
             136      sworn affidavit stating that:
             137          (a) the settlor has full right, title, and authority to transfer the assets to the trust;
             138          (b) the transfer of the assets to the trust will not render the settlor insolvent;
             139          (c) the settlor does not intend to hinder, delay, or defraud a known creditor by
             140      transferring the assets to the trust;
             141          (d) there are no pending or threatened court actions against the settlor, except for those
             142      court actions identified by the settlor on an attachment to the affidavit;
             143          (e) the settlor is not involved in any administrative proceedings that would reasonably
             144      be expected to have a materially adverse financial effect on the settlor, except those
             145      administrative proceedings identified on an attachment to the affidavit;
             146          (f) at the time of the transfer of the assets to the trust, the settlor is not in default on an
             147      obligatory payment for child support, alimony, or division of property pursuant to a divorce or
             148      separation;
             149          (g) the settlor does not contemplate filing for relief under the provisions of 11 U.S.C.
             150      Sec. 101, et seq.; and
             151          (h) the assets being transferred to the trust were not derived from criminal activities.


             152          (14) The trust shall be registered with the Department of Commerce within 10 days of
             153      the trust's creation, with the following information available to the public through a search:
             154          (a) the name of the trust;
             155          (b) the name and address of the settlor;
             156          (c) the name and address of all trust protectors;
             157          (d) the name and address of all trustees; and
             158          (e) a designation that the trust is an asset protection trust.
             159          Section 5. Section 25-6-205 is enacted to read:
             160          25-6-205. Consequences.
             161          Failure to satisfy the requirements of Section 25-6-204 shall result in the consequences
             162      described in this section.
             163          (1) If any requirement of Subsections 25-6-204 (1) through (7) is not satisfied, none of
             164      the property held in the trust will at any time have the benefit of the protections described in
             165      Section 25-6-203 .
             166          (2) If the trustee does not send the notice required under Subsection 25-6-204 (7), the
             167      trustee shall be personally liable to the holder of the judgment or order to the extent of the
             168      distribution.
             169          (3) If any requirement set forth in Subsections 25-6-204 (9) through (13) is not
             170      satisfied, the property transferred to the trust that does not satisfy the requirement may not have
             171      the benefit of the protections described in Section 25-6-203 .
             172          (4) Failure to register as required in Subsection 25-6-204 (14) shall deprive the trust of
             173      the protections described in Section 25-6-203 .
             174          Section 6. Section 25-6-206 is enacted to read:
             175          25-6-206. Settlor limitations.
             176          (1) A settlor may not create more than one trust under the provisions of this part.
             177          (2) The following provisions will not disqualify a trust from the protections described
             178      in Section 25-6-203 if the requirements of this chapter are otherwise satisfied:
             179          (a) the settlor serves as a cotrustee or as an advisor to the trust protector or a trustee,
             180      provided that any determination as to whether a discretionary distribution will be made to the
             181      settlor is made by trustees other than the settlor;
             182          (b) the settlor has the authority under the terms of the trust instrument to appoint


             183      nonsubordinate trust protectors who can remove and appoint trustees and who can direct,
             184      consent to, or disapprove distributions;
             185          (c) the settlor has the power under the terms of the trust instrument to serve as an
             186      investment director or to appoint an investment director under Section 75-7-906 ;
             187          (d) the trust instrument gives the settlor the power to consent to or veto a distribution
             188      from the trust;
             189          (e) the trust instrument gives the settlor an inter vivos or testamentary nongeneral
             190      power of appointment or similar power;
             191          (f) the trust instrument gives the settlor the right to receive the following types of
             192      distributions:
             193          (i) income, principal, or both in the discretion of a person, including the trust protector
             194      or a trustee, other than the settlor;
             195          (ii) principal, subject to an ascertainable standard set forth in the trust;
             196          (iii) income or principal from a charitable remainder annuity trust or charitable
             197      remainder unitrust, as defined in 26 U.S.C. Sec. 664;
             198          (iv) a percentage of the value of the trust each year as determined under the trust
             199      instrument, but not exceeding the amount that may be defined as income under 26 U.S.C. Sec.
             200      643(b);
             201          (v) the transferor's potential or actual use of real property held under a qualified
             202      personal residence trust, or potential or actual possession of a qualified annuity interest, within
             203      the meaning of 26 U.S.C. Sec. 2702 and the accompanying regulations; and
             204          (vi) income or principal from a grantor retained annuity trust or grantor retained
             205      unitrust allowed under 26 U.S.C. Sec. 2702;
             206          (g) the trust instrument authorizes the settlor to use real or personal property owned by
             207      the trust;
             208          (h) (i) the settlor gives a personal guarantee with respect to any debt or obligation
             209      secured by property that is held in the trust and the settlor directly or indirectly pays or makes
             210      payments on the debt or obligation; or
             211          (ii) the settlor directly pays property taxes, casualty and liability insurance premiums,
             212      maintenance expenses, homeowners association dues, or other similar expenses with respect to
             213      property held in the trust; or


             214          (i) the settlor pays income tax with respect to items of income attributable to that
             215      portion of the trust of which the settlor is considered to be the owner under 26 U.S.C. Secs. 671
             216      through 678, which payments do not constitute additional transfers to the trust for purposes of
             217      this chapter.
             218          Section 7. Section 25-6-207 is enacted to read:
             219          25-6-207. Limitations on claims for relief.
             220          (1) If a trust instrument contains the provisions described in Subsections 25-6-204 (1)
             221      through (7), the transfer restrictions prevent a creditor or other person from asserting any cause
             222      of action or claim for relief against a trustee of the trust or against others involved in the
             223      counseling, drafting, preparation, execution, or funding of the trust for conspiracy to commit
             224      fraudulent conveyance, aiding and abetting a fraudulent conveyance, participation in the trust
             225      transaction, or similar cause of action or claim for relief.
             226          (2) The creditor and other person prevented from asserting a cause of action or claim
             227      for relief may assert a cause of action against, and are limited to recourse against, only:
             228          (a) the trust and the trust assets; and
             229          (b) the settlor, to the extent otherwise allowed in this chapter.
             230          (3) A cause of action or claim for relief regarding a fraudulent transfer of a settlor's
             231      assets under Subsection 25-6-204 (11) is extinguished unless the action under Subsection
             232      25-6-204 (11) is brought by a creditor of the settlor who was a creditor of the settlor before the
             233      assets referred to in Subsection 25-6-204 (11) were transferred to the trust and the action under
             234      Subsection 25-6-204 (11) is brought within the earlier of:
             235          (a) the later of:
             236          (i) two years after the transfer is made; or
             237          (ii) one year after the transfer is or reasonably could have been discovered by the
             238      creditor if the creditor:
             239          (A) can demonstrate, by clear and convincing evidence, that the creditor asserted a
             240      specific claim against the settlor before the transfer; or
             241          (B) files another action, other than an action alleging a fraudulent transfer, against the
             242      settlor that asserts a claim based on an act or omission of the settlor that occurred before the
             243      transfer, and the action described in this Subsection (3) is filed within two years after the
             244      transfer; or


             245          (b) with respect to a creditor known to the settlor, 120 days after the date on which
             246      notice of the transfer is mailed to the creditor, which notice shall state the name of the settlor,
             247      the address of the settlor or the settlor's representative, the name of the trustee, and the address
             248      of the trustee or the trustee's representative, and also describe the assets that were transferred,
             249      but does not need to state the value of those assets if the assets are other than cash, and which
             250      shall inform the creditor of the requirement to bring an action or claim for relief within 120
             251      days from the mailing of the notice or be forever barred.
             252          Section 8. Section 75-2-205 is amended to read:
             253           75-2-205. Decedent's nonprobate transfers to others.
             254          Unless excluded under Section 75-2-208 , the value of the augmented estate includes the
             255      value of the decedent's nonprobate transfers to others, not included under Section 75-2-204 , of
             256      any of the types described in this section, in the amount provided respectively for each type of
             257      transfer:
             258          (1) Property owned or owned in substance by the decedent immediately before death
             259      that passed outside probate at the decedent's death. Property included under this category
             260      consists of the property described in this Subsection (1).
             261          (a) (i) Property over which the decedent alone, immediately before death, held a
             262      presently exercisable general power of appointment.
             263          (ii) The amount included is the value of the property subject to the power, to the extent
             264      the property passed at the decedent's death, by exercise, release, lapse, in default, or otherwise,
             265      to or for the benefit of any person other than the decedent's estate or surviving spouse.
             266          (b) (i) The decedent's fractional interest in property held by the decedent in joint
             267      tenancy with the right of survivorship.
             268          (ii) The amount included is the value of the decedent's fractional interest, to the extent
             269      the fractional interest passed by right of survivorship at the decedent's death to a surviving joint
             270      tenant other than the decedent's surviving spouse.
             271          (c) (i) The decedent's ownership interest in property or accounts held in POD, TOD, or
             272      co-ownership registration with the right of survivorship.
             273          (ii) The amount included is the value of the decedent's ownership interest, to the extent
             274      the decedent's ownership interest passed at the decedent's death to or for the benefit of any
             275      person other than the decedent's estate or surviving spouse.


             276          (d) (i) Proceeds of insurance, including accidental death benefits, on the life of the
             277      decedent, if the decedent owned the insurance policy immediately before death or if and to the
             278      extent the decedent alone and immediately before death held a presently exercisable general
             279      power of appointment over the policy or its proceeds.
             280          (ii) The amount included:
             281          (A) is the value of the proceeds, to the extent they were payable at the decedent's death
             282      to or for the benefit of any person other than the decedent's estate or surviving spouse; and
             283          (B) may not exceed the greater of the cash surrender value of the policy immediately
             284      prior to the death of the decedent or the amount of premiums paid on the policy during the
             285      decedent's life.
             286          (2) Property transferred in any of the forms described in this Subsection (2) by the
             287      decedent during marriage:
             288          (a) (i) Any irrevocable transfer in which the decedent retained the right to the
             289      possession or enjoyment of, or to the income from, the property if and to the extent the
             290      decedent's right terminated at or continued beyond the decedent's death.
             291          (ii) An irrevocable transfer in trust which includes a restriction on transfer of the
             292      decedent's interest as settlor and beneficiary as described in [Section 25-6-14 ] Title 25, Chapter
             293      6, Part 2, Asset Protection Trust Act.
             294          (iii) The amount included is the value of the fraction of the property to which the right
             295      or restriction related, to the extent the fraction of the property passed outside probate to or for
             296      the benefit of any person other than the decedent's estate or surviving spouse.
             297          (b) (i) Any transfer in which the decedent created a power over income or property,
             298      exercisable by the decedent alone or in conjunction with any other person, or exercisable by a
             299      nonadverse party, to or for the benefit of the decedent, creditors of the decedent, the decedent's
             300      estate, or creditors of the decedent's estate.
             301          (ii) The amount included with respect to a power over property is the value of the
             302      property subject to the power, and the amount included with respect to a power over income is
             303      the value of the property that produces or produced the income, to the extent the power in
             304      either case was exercisable at the decedent's death to or for the benefit of any person other than
             305      the decedent's surviving spouse or to the extent the property passed at the decedent's death, by
             306      exercise, release, lapse, in default, or otherwise, to or for the benefit of any person other than


             307      the decedent's estate or surviving spouse.
             308          (iii) If the power is a power over both income and property and Subsection (2)(b)(ii)
             309      produces different amounts, the amount included is the greater amount.
             310          (3) Property that passed during marriage and during the two-year period next preceding
             311      the decedent's death as a result of a transfer by the decedent if the transfer was of any of the
             312      types described in this Subsection (3).
             313          (a) (i) Any property that passed as a result of the termination of a right or interest in, or
             314      power over, property that would have been included in the augmented estate under Subsection
             315      (1)(a), (b), or (c), or under Subsection (2), if the right, interest, or power had not terminated
             316      until the decedent's death.
             317          (ii) The amount included is the value of the property that would have been included
             318      under Subsection (1)(a), (b), (c), or Subsection (2) if the property were valued at the time the
             319      right, interest, or power terminated, and is included only to the extent the property passed upon
             320      termination to or for the benefit of any person other than the decedent or the decedent's estate,
             321      spouse, or surviving spouse.
             322          (iii) (A) As used in this Subsection (3)(a), "termination," with respect to a right or
             323      interest in property, occurs when the right or interest terminated by the terms of the governing
             324      instrument or the decedent transferred or relinquished the right or interest, and, with respect to
             325      a power over property, occurs when the power terminated by exercise, release, lapse, default, or
             326      otherwise.
             327          (B) With respect to a power described in Subsection (1)(a), "termination" occurs when
             328      the power terminated by exercise or release, but not otherwise.
             329          (b) (i) Any transfer of or relating to an insurance policy on the life of the decedent if
             330      the proceeds would have been included in the augmented estate under Subsection (1)(d) had
             331      the transfer not occurred.
             332          (ii) The amount included:
             333          (A) is the value of the insurance proceeds to the extent the proceeds were payable at
             334      the decedent's death to or for the benefit of any person other than the decedent's estate or
             335      surviving spouse; and
             336          (B) may not exceed the greater of the cash surrender value of the policy immediately
             337      prior to the death of the decedent or the amount of premiums paid on the policy during the


             338      decedent's life.
             339          (c) (i) Any transfer of property, to the extent not otherwise included in the augmented
             340      estate, made to or for the benefit of a person other than the decedent's surviving spouse.
             341          (ii) The amount included is the value of the transferred property to the extent the
             342      aggregate transfers to any one donee in either of the two years exceeded $10,000.
             343          Section 9. Section 75-7-107 is amended to read:
             344           75-7-107. Governing law.
             345          (1) For purposes of this section:
             346          (a) "Foreign trust" means a trust that is created in another state or country and valid in
             347      the state or country in which the trust is created.
             348          (b) "State law provision" means a provision that the laws of a named state govern the
             349      validity, construction, and administration of a trust.
             350          (2) If a trust has a state law provision specifying this state, the validity, construction,
             351      and administration of the trust are to be governed by the laws of this state if any administration
             352      of the trust is done in this state.
             353          (3) For all trusts created on or after December 31, 2003, if a trust does not have a state
             354      law provision, the validity, construction, and administration of the trust are to be governed by
             355      the laws of this state if the trust is administered in this state.
             356          (4) A trust shall be considered to be administered in this state if:
             357          (a) the trust states that this state is the place of administration, and any administration
             358      of the trust is done in this state; or
             359          (b) the place of business where the fiduciary transacts a major portion of its
             360      administration of the trust is in this state.
             361          (5) If a foreign trust is administered in this state as provided in this section, the
             362      following provisions are effective and enforceable under the laws of this state:
             363          (a) a provision in the trust that restricts the transfer of trust assets in a manner similar
             364      to [Section 25-6-14 ] Title 25, Chapter 6, Part 2, Asset Protection Trust Act;
             365          (b) a provision that allows the trust to be perpetual; or
             366          (c) a provision that is not expressly prohibited by the law of this state.
             367          (6) A foreign trust that moves its administration to this state is valid whether or not the
             368      trust complied with the laws of this state at the time of the trust's creation or after the trust's


             369      creation.
             370          (7) Unless otherwise designated in the trust instrument, a trust is administered in this
             371      state if it meets the requirements of Subsection (4).
             372          Section 10. Section 75-7-301 is amended to read:
             373           75-7-301. Basic effect.
             374          (1) Notice to a person who may represent and bind another person under this part has
             375      the same effect as if notice were given directly to the other person.
             376          (2) The consent of a person who may represent and bind another person under this part
             377      is binding on the person represented unless the person represented objects to the representation
             378      before the consent would otherwise have become effective.
             379          (3) Except as otherwise provided in [Sections] Section 75-7-411 and [ 25-6-14 ] Title
             380      25, Chapter 6, Part 2, Asset Protection Trust Act, a person who under this part may represent a
             381      settlor who lacks capacity may receive notice and give a binding consent on the settlor's behalf.
             382          Section 11. Section 75-7-501 is amended to read:
             383           75-7-501. Rights of beneficiary's creditor or assignee.
             384          To the extent a beneficiary's interest is not protected by a spendthrift provision or
             385      [Section 25-6-14 ] Title 25, Chapter 6, Part 2, Asset Protection Trust Act, the court may
             386      authorize a creditor or assignee of the beneficiary to reach the beneficiary's interest by
             387      attachment of present or future distributions to or for the benefit of the beneficiary or other
             388      means. The court may limit the award to relief as is appropriate under the circumstances.
             389          Section 12. Section 75-7-505 is amended to read:
             390           75-7-505. Creditor's claim against settlor.
             391          (1) Whether or not the terms of a trust contain a spendthrift provision, the following
             392      rules apply:
             393          (a) During the lifetime of the settlor, the property of a revocable trust is subject to the
             394      claims of the settlor's creditors. If a trust has more than one settlor, the amount the creditor or
             395      assignee of a particular settlor may reach may not exceed the settlor's interest in the portion of
             396      the trust attributable to that settlor's contribution.
             397          (b) With respect to an irrevocable trust other than an irrevocable trust that meets the
             398      requirements of [Section 25-6-14 ] Title 25, Chapter 6, Part 2, Asset Protection Trust Act, a
             399      creditor or assignee of the settlor may reach the maximum amount that can be distributed to or


             400      for the settlor's benefit. If the trust has more than one settlor, the amount the creditor or
             401      assignee of a particular settlor may reach may not exceed the settlor's interest in the portion of
             402      the trust attributable to that settlor's contribution.
             403          (c) After the death of a settlor, and subject to the settlor's right to direct the source from
             404      which liabilities will be paid, the property of a trust that was revocable at the settlor's death, but
             405      not property received by the trust as a result of the death of the settlor which is otherwise
             406      exempt from the claims of the settlor's creditors, is subject to claims of the settlor's creditors,
             407      costs of administration of the settlor's estate, the expenses of the settlor's funeral and disposal
             408      of remains, and statutory allowances to a surviving spouse and children to the extent the
             409      settlor's probate estate is inadequate to satisfy those claims, costs, expenses, and allowances.
             410          (2) For purposes of this section:
             411          (a) during the period the power may be exercised, the holder of a power of withdrawal
             412      is treated in the same manner as the settlor of a revocable trust to the extent of the property
             413      subject to the power; and
             414          (b) upon the lapse, release, or waiver of the power, the holder is treated as the settlor of
             415      the trust only to the extent the value of the property affected by the lapse, release, or waiver
             416      exceeds the greater of the amount specified in Subsection 2041(b)(2), 2514(e), or Section
             417      2503(b) of the Internal Revenue Code of 1986, in each case as in effect on May 1, 2004.
             418          Section 13. Section 75-7-816 is amended to read:
             419           75-7-816. Recitals when title to real property is in trust -- Failure.
             420          (1) When title to real property is granted to a person as trustee, the terms of the trust
             421      may be given either:
             422          (a) in the deed of transfer; or
             423          (b) in an instrument signed by the grantor and recorded in the same office as the grant
             424      to the trustee.
             425          (2) If the terms of the trust are not made public as required in Subsection (1), a
             426      conveyance from the trustee is absolute in favor of purchasers for value who take the property
             427      without notice of the terms of the trust.
             428          (3) The terms of the trust recited in the deed of transfer or the instrument recorded
             429      under Subsection (1)(b) shall include:
             430          (a) the name of the trustee;


             431          (b) the address of the trustee; and
             432          (c) the name and date of the trust.
             433          (4) Any real property titled in a trust which has a restriction on transfer described in
             434      [Section 25-6-14 ] Title 25, Chapter 6, Part 2, Asset Protection Trust Act, shall include in the
             435      title the words "asset protection trust."
             436          Section 14. Repealer.
             437          This bill repeals:
             438          Section 25-6-14 , Asset Protection Trust.




Legislative Review Note
    as of 2-24-14 8:31 AM


Office of Legislative Research and General Counsel


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