00 SENATE BILL NO. 163 01 "An Act relating to trusts, including trust protectors, trustee advisors, transfers of 02 property in trust, and transfers of trust interests, and to creditors' claims against 03 property subject to a power of appointment." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05  * Section 1. AS 13.36 is amended by adding new sections to read: 06 Sec. 13.36.370. Trust protector. (a) A trust instrument may provide for the 07 appointment of a disinterested third party to act as a trust protector. 08 (b) A trust protector appointed under (a) of this section has the powers, 09 delegations, and functions conferred on the protector by the trust instrument, which 10 may include the power to 11 (1) remove and appoint a trustee; 12 (2) modify or amend the trust instrument to achieve favorable tax 13 status or to respond to changes in 26 U.S.C. (Internal Revenue Code) or state law, or 14 the rulings and regulations under those laws; 01 (3) increase or decrease the interests of any beneficiary to the trust; and 02 (4) modify the terms of a power of appointment granted by the trust. 03 (c) A modification authorized under (b) of this section may not 04 (1) grant a beneficial interest to an individual or a class of individuals 05 unless the individual or class of individuals is specifically provided for under the trust 06 instrument; 07 (2) modify the beneficial interest of a governmental unit in a trust 08 created under AS 47.07.020(f). 09 (d) Subject to the terms of the trust instrument, a trust protector is not liable or 10 accountable as a trustee or fiduciary because of an act or omission of the trust 11 protector taken when performing the function of a trust protector under the trust 12 instrument. 13 Sec. 13.36.375. Trustee advisor. (a) A trust instrument may provide for the 14 appointment of a person to act as an advisor to the trustee with regard to all or some of 15 the matters relating to the property of the trust. 16 (b) Unless the terms of the trust instrument provide otherwise, if an advisor is 17 appointed under (a) of this section, the property and management of the trust and the 18 exercise of all powers and discretionary acts exercisable by the trustee remain vested 19 in the trustee as fully and effectively as if an advisor were not appointed, the trustee is 20 not required to follow the advice of the advisor, and the advisor is not liable as or 21 considered to be a trustee of the trust or a fiduciary when acting as an advisor to the 22 trust. 23  * Sec. 2. AS 34.40.110(a) is amended to read: 24 (a) A person who in writing transfers property in trust may provide that the 25 interest of a beneficiary of the trust, including a beneficiary who is the settlor of the  26 trust, may not be either voluntarily or involuntarily transferred before payment or 27 delivery of the interest to the beneficiary by the trustee. Payment or delivery of the  28 interest to the beneficiary does not include a beneficiary's use or occupancy of  29 real property or tangible personal property owned by the trust if the use or  30 occupancy is in accordance with the trustee's discretionary authority under the  31 trust instrument. In this subsection, 01 (1) "property" includes real property, personal property, and interests 02 in real or personal property; 03 (2) "transfer" means any form of transfer, including deed, conveyance, 04 or assignment. 05  * Sec. 3. AS 34.40.110(b) is amended to read: 06 (b) If a trust contains a transfer restriction allowed under (a) of this section, 07 the transfer restriction prevents a creditor existing when the trust is created or [,] a 08 person who subsequently becomes a creditor[, OR ANOTHER PERSON] from 09 satisfying a claim out of the beneficiary's interest in the trust, unless the creditor is a  10 creditor of the settlor and 11 (1) the settlor's transfer of property in trust was made with the  12 primary intent [INTENDED IN WHOLE OR IN PART] to [HINDER, DELAY, OR] 13 defraud that creditor [CREDITORS OR OTHER PERSONS UNDER 14 AS 34.40.010]; 15 (2) the trust provides that the settlor may revoke or terminate all or 16 part of the trust without the consent of a person who has a substantial beneficial 17 interest in the trust and the interest would be adversely affected by the exercise of the 18 power held by the settlor to revoke or terminate all or part of the trust; in this 19 paragraph, "revoke or terminate" does not include a power to veto a distribution from 20 the trust, a testamentary nongeneral [SPECIAL] power of appointment or similar 21 power, or the right to receive a distribution of income, principal [CORPUS], or both 22 in the discretion of a person, including a trustee, other than the settlor, or a right to  23 receive a distribution of income or principal under (3)(A) or (B) of this  24 subsection; 25 (3) the trust requires that all or a part of the trust's income or principal, 26 or both, must be distributed to the settlor; however, this paragraph does not apply  27 to a settlor's right to receive 28 (A) income or principal from a charitable remainder  29 annuity trust or charitable remainder unitrust; in this subparagraph,  30 "charitable remainder annuity trust" and "charitable remainder  31 unitrust" have the meanings given in 26 U.S.C. 664 (Internal Revenue  01 Code) as that section reads on the effective date of this bill section and as  02 it may be amended;  03 (B) a percentage of the value of the trust each year as  04 determined from time to time under the trust instrument, but not  05 exceeding the amount that may be defined as income under AS 13.38 or  06 under 26 U.S.C. 643(b) (Internal Revenue Code) as that subsection reads  07 on the effective date of this bill section and as it may be amended; or 08 (4) at the time of the transfer, the settlor is in default by 30 or more 09 days of making a payment due under a child support judgment or order. 10  * Sec. 4. AS 34.40.110(c) is amended to read: 11 (c) The satisfaction of a claim under (b)(1) - (4) of this section is limited to 12 that part of the trust for [TO] which a transfer restriction is not allowed under 13 (b)(1) - (4) of this section, and an attachment or other order may not be made  14 against the trustee with respect to a beneficiary's interest in the trust or against  15 property that is subject to a transfer restriction, except to the extent that a  16 transfer restriction is determined not to be allowed under (b)(1) - (4) of this  17 section [APPLIES]. 18  * Sec. 5. AS 34.40.110(d) is amended to read: 19 (d) A cause of action or claim for relief with respect to a fraudulent transfer of  20 a settlor's assets under (b)(1) of this section [, OR UNDER OTHER LAW,] is 21 extinguished unless the action under (b)(1) of this section is brought by a creditor of  22 the settlor [AS TO A PERSON] who 23 (1) is a creditor of the settlor before the settlor's assets are  24 transferred to the trust, and the action under (b)(1) of this section is brought 25 [WHEN THE TRUST IS CREATED,] within the later of 26 (A) four years after the transfer is made; or 27 (B) one year after the transfer is or reasonably could have been 28 discovered by the creditor if the creditor 29 (i) can demonstrate, by a preponderance of the  30 evidence, that the creditor asserted a specific claim against the  31 settlor before the transfer; or  01 (ii) files another action, other than an action under  02 (b)(1) of this section, against the settlor that asserts a claim based  03 on an act or omission of the settlor that occurred before the  04 transfer, and the action described in this sub-subparagraph is filed  05 within four years after the transfer [PERSON]; or 06 (2) becomes a creditor subsequent to the transfer into trust, and the  07 action under (b)(1) of this section is brought within four years after the transfer is 08 made. 09  * Sec. 6. AS 34.40.110 is amended by adding new subsections to read: 10 (g) A transfer restriction allowed under (a) of this section and enforceable 11 under (b) of this section applies to a settlor who is also a beneficiary of the trust even 12 if the settlor serves as a co-trustee or as an advisor to the trustee under AS 13.36.375 if 13 the settlor does not have a trustee power over discretionary distributions. 14 (h) A transfer restriction allowed under (a) of this section and enforceable 15 under (b) of this section applies to a beneficiary who is not the settlor of the trust, 16 whether or not the beneficiary serves as a sole trustee, a co-trustee, or an advisor to the 17 trustee under AS 13.36.375. 18 (i) A transfer restriction is allowed under (a) of this section and is enforceable 19 under (b) of this section even if a settlor has the authority under the terms of the trust 20 instrument to appoint a trust protector under AS 13.36.370 or an advisor to the trustee 21 under AS 13.36.375. 22 (j) A settlor whose beneficial interest in a trust is subject to a transfer 23 restriction that is allowed under (a) of this section may not benefit from, direct a 24 distribution of, or use trust property except as may be stated in the trust instrument. 25 An agreement or understanding, express or implied, between the settlor and the trustee 26 that attempts to grant or permit the retention of greater rights or authority than is stated 27 in the trust instrument is void. 28  * Sec. 7. AS 34.40 is amended by adding a new section to read: 29 Sec. 34.40.115. Subjecting appointed property to claims of donee's  30 creditor. The property that a donee of a power of appointment is authorized to 31 appoint is not subject to the claims of the creditors of the donee except to the extent 01 that a donee of an inter vivos or testamentary power of appointment 02 (1) is permitted by the donor of the power to appoint the property to 03 the donee, the creditors of the donee, the donee's estate, or the creditors of the donee's 04 estate; and 05 (2) effectively exercises the power of appointment in favor of the 06 donee, the creditors of the donee, the donee's estate, or the creditors of the donee's 07 estate. 08  * Sec. 8. The uncodified law of the State of Alaska is amended by adding a new section to 09 read: 10 APPLICABILITY. This Act applies to a trust regardless of whether the trust was 11 created before, on, or after the effective date of the applicable section of this Act.