Download Zipped Amended WordPerfect HB0490.ZIP
[Introduced][Status][Bill Documents][Fiscal Note][Bills Directory]

H.B. 490

This document includes House Floor Amendments incorporated into the bill on Thu, Mar 1, 2012 at 11:00 AM by jeyring. -->              1     

ASSET PROTECTION TRUSTS

             2     
2012 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Derek E. Brown

             5     
Senate Sponsor: John L. Valentine

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill removes the requirement that the trustee be a trust company.
             10      Highlighted Provisions:
             11          This bill:
             12          .    allows an individual to be a trustee.
             13      Money Appropriated in this Bill:
             14          None
             15      Other Special Clauses:
             16          None
             17      Utah Code Sections Affected:
             18      AMENDS:
             19          25-6-14, as last amended by Laws of Utah 2004, Chapter 89
             20     
             21      Be it enacted by the Legislature of the state of Utah:
             22          Section 1. Section 25-6-14 is amended to read:
             23           25-6-14. Restricting transfers of trust interests.
             24          (1) (a) For trusts created on or after December 31, 2003, a settlor who in writing
             25      irrevocably transfers property in trust to a trust [having as trustee a company defined in
             26      Subsection 7-5-1 (1)(d) who holds some or all of the trust assets in this state in a savings
             27      account described in Subsection 7-1-103 (29), a certificate of deposit, a brokerage account, a


             28      trust company fiduciary account, or account or deposit located in this state that is similar to
             29      such an account] may provide that the income or principal interest of the settlor as beneficiary
             30      of the trust may not be either voluntarily or involuntarily transferred before payment or delivery
             31      to the settlor as beneficiary by the trustee. The provision shall be considered to be a restriction
             32      on the transfer of the settlor's beneficial interest in the trust that is enforceable under applicable
             33      nonbankruptcy law within the meaning of Section 541(c)(2) of the Bankruptcy Code or
             34      successor provision.
             35          (b) This Subsection (1) applies to:
             36          (i) any form of transfer into trust including:
             37          (A) conveyance; or
             38          (B) assignment; and
             39          (ii) transfers of:
             40          (A) personal property;
             41          (B) interests in personal property;
             42          (C) real property; or
             43          (D) interests in real property.
             44          (2) (a) Except as provided in Subsection (2)(c), if a trust has a restriction as provided in
             45      Subsection (1)(a), a creditor or other claimant of the settlor may not satisfy a claim, or liability
             46      on it, in either law or equity, out of the settlor's transfer or settlor's beneficial interest in the
             47      trust.
             48          (b) For the purposes of Subsection (2)(a), a creditor includes one holding or seeking to
             49      enforce a judgment entered by a court or other body having adjudicative authority as well as
             50      one with a right to payment, whether or not reduced to judgment, liquidated, unliquidated,
             51      fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or
             52      unsecured.
             53          (c) A restriction provided under Subsection (1) does not prevent a creditor or person
             54      described in Subsection (2)(a) from satisfying a claim or liability out of the settlor's beneficial
             55      interest in or transfer into trust if:
             56          (i) the claim is a judgment, order, decree, or other legally enforceable decision or ruling
             57      resulting from a judicial, arbitration, mediation, or administrative proceeding commenced prior
             58      to or within three years after the trust is created;


             59          (ii) the settlor's transfer into trust is made with actual intent to hinder, delay, or defraud
             60      that creditor;
             61          (iii) the trust provides that the settlor may revoke or terminate all or part of the trust
             62      without the consent of a person who has a substantial beneficial interest in the trust and the
             63      interest would be adversely affected by the exercise of the settlor's power to revoke or
             64      terminate all or part of the trust;
             65          (iv) the trust requires that all or a part of the trust's income or principal, or both must be
             66      distributed to the settlor as beneficiary;
             67          (v) the claim is for a payment owed by a settlor under a child support judgment or
             68      order;
             69          (vi) the transfer is made when the settlor is insolvent or the transfer renders the settlor
             70      insolvent;
             71          (vii) the claim is for recovery of public assistance received by the settlor allowed under
             72      Title 26, Chapter 19, Medical Benefits Recovery Act;
             73          (viii) the claim is a tax or other amount owed by the settlor to any governmental entity;
             74          (ix) the claim is by a spouse or former spouse of the settlor on account of an agreement
             75      or order for the payment of support or alimony or for a division or distribution of property;
             76          (x) (A) the settlor transferred assets into the trust that:
             77          (I) were listed in a written representation of the settlor's assets given to a claimant to
             78      induce the claimant to enter into a transaction or agreement with the settlor; or
             79          (II) were transferred from the settlor's control in breach of any written agreement,
             80      covenant, or security interest between the settlor and the claimant; or
             81          (B) without limiting the claimant's right to pursue assets not held by the trust, a
             82      claimant described in Subsection (2)(c)(x)(A) may only foreclose or execute upon an asset in
             83      the trust listed in the written representation described in Subsection (2)(c)(x)(A)(I) or
             84      transferred in breach of a written agreement, covenant, or security interest as provided in
             85      Subsection (2)(c)(x)(A)(II) to the extent of the settlor's interest in that asset when it was
             86      transferred to the trust or the equivalent value of that asset at the time of foreclosure or
             87      execution if the original asset was sold or traded by the trust; or
             88          (xi) the claim is a judgment, award, order, sentence, fine, penalty, or other
             89      determination of liability of the settlor for conduct of the settlor constituting fraud, intentional


             90      infliction of harm, or a crime.
             91          (d) The statute of limitations for actions to satisfy a claim or liability out of the settlor's
             92      beneficial interest in or transfer into trust under Subsections (2)(c)(ii), (v), (vii), (viii), (ix), (x),
             93      and (xi) is the statute of limitations applicable to the underlying action.
             94          (e) For the purposes of Subsection (2)(c) "revoke or terminate" does not include:
             95          (i) a power to veto a distribution from the trust;
             96          (ii) a testamentary special power of appointment or similar power;
             97          (iii) the right to receive a distribution of income, principal, or both in the discretion of
             98      another, including a trustee other than the settlor, an interest in a charitable remainder unitrust
             99      or charitable remainder annuity trust as defined in Internal Revenue Code Section 664 or
             100      successor provision, or a right to receive principal subject to an ascertainable standard set forth
             101      in the trust; or
             102          (iv) the power to appoint nonsubordinate advisers or trust protectors who can remove
             103      and appoint trustees, who can direct, consent to or disapprove distributions, or is the power to
             104      serve as an investment director or appoint an investment director under Section 75-7-906 .
             105          (3) The satisfaction of a claim under Subsection (2)(c) is limited to that part of the trust
             106      or transfer to which it applies.
             107          (4) (a) If a trust has a restriction as provided under Subsection (1), the restriction
             108      prevents anyone, including a person listed in Subsection (2)(a), from asserting any cause of
             109      action or claim for relief against a trustee or anyone involved in the counseling, drafting,
             110      preparation, execution, or funding of the trust for:
             111          (i) conspiracy to commit a fraudulent conveyance;
             112          (ii) aiding and abetting a fraudulent conveyance; or
             113          (iii) participating in the trust transaction.
             114          (b) A person prevented from asserting a cause of action or claim for relief under this
             115      Subsection (4) may assert a cause of action only against:
             116          (i) the trust assets; or
             117          (ii) the settlor or beneficiary to the extent allowed under Subsection 25-6-5 (1)(a).
             118          (5) In any action brought under Subsection (2)(c), the burden to prove the matter by
             119      clear and convincing evidence shall be upon the creditor.
             120          (6) For purposes of this section, the transfer shall be considered to have been made on


             121      the date the property was originally transferred in trust.
             122          (7) The courts of this state shall have exclusive jurisdiction over any action brought
             123      under this section.
             124          (8) If a trust or a property transfer to a trust is voided or set aside under Subsection
             125      (2)(c), the trust or property transfer shall be voided or set aside only to the extent necessary to
             126      satisfy:
             127          (a) the settlor's debt to the creditor or other person at whose instance the trust or
             128      property transfer is voided or set aside; and
             129          (b) the costs and attorney fees allowed by the court.
             130          (9) If a trust or a property transfer to a trust is voided or set aside under Subsection
             131      (2)(c) and the court is satisfied that the trustee did not act in bad faith in accepting or
             132      administering the property that is the subject of the trust:
             133          (a) the trustee has a first and paramount lien against the property that is the subject of
             134      the trust in an amount equal to the entire cost properly incurred by the trustee in a defense of
             135      the action or proceedings to void or set aside the trust or the property transfer, including
             136      attorney fees;
             137          (b) the trust or property transfer that is voided or set aside is subject to the proper fees,
             138      costs, preexisting rights, claims, and interest of the trustee and any predecessor trustee if the
             139      trustee and predecessor trustee did not act in bad faith; and
             140          (c) any beneficiary, including the settlor, may retain a distribution made by exercising a
             141      trust power or discretion vested in the trustee of the trust, if the power or discretion was
             142      properly exercised before the commencement of the action or proceeding to void or set aside
             143      the trust or property transfer.
             144           H. [ (10) If at least one trustee is a trust company as defined in Subsection 7-5-1 (1)(d), then
             145      individuals may also serve as cotrustees.
] .H





Legislative Review Note
    as of 2-10-12 12:14 PM


Office of Legislative Research and General Counsel


[Bill Documents][Bills Directory]