CSSB 369(RLS): "An Act relating to trusts, including trust protectors, trustee advisors, and transfers of trust interests, and to creditors' claims against property subject to a power of appointment; and providing for an effective date."
00 CS FOR SENATE BILL NO. 369(RLS) 01 "An Act relating to trusts, including trust protectors, trustee advisors, and transfers of 02 trust interests, and to creditors' claims against property subject to a power of 03 appointment; and providing for an effective date." 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) Except for a trust created under 07 AS 47.07.020(f), a trust instrument may provide for the appointment of a disinterested 08 third party to act as a trust protector. 09 (b) A trust protector appointed under (a) of this section has the powers, 10 delegations, and functions conferred on the protector by the trust instrument, which 11 may include the power to 12 (1) remove and appoint a trustee; 13 (2) modify or amend the trust instrument to achieve favorable tax 14 status or to respond to changes in 26 U.S.C. (Internal Revenue Code) or state law, or
01 the rulings and regulations under those laws; 02 (3) increase or decrease the interests of any beneficiary to the trust; and 03 (4) modify the terms of a power of appointment granted by the trust. 04 (c) A modification authorized under (b) of this section may not grant a 05 beneficial interest to an individual or a class of individuals unless the individual or 06 class of individuals is specifically provided for under the trust instrument. 07 (d) Subject to the terms of the trust instrument, a trust protector is not liable or 08 accountable as a trustee or fiduciary because of an act or omission of the trust 09 protector taken when performing the function of a trust protector under the trust 10 instrument. 11 Sec. 13.36.375. Trustee advisor. (a) A trust instrument may provide for the 12 appointment of a person to act as an advisor to the trustee with regard to all or some of 13 the matters relating to the property of the trust. 14 (b) If an advisor is appointed under (a) of this section, the property and 15 management of the trust and the exercise of all powers and discretionary acts 16 exercisable by the trustee remain vested in the trustee as fully and effectively as if an 17 advisor were not appointed, the trustee is not required to follow the advice of the 18 advisor, and the advisor is not liable as or considered to be a trustee of the trust when 19 acting as an advisor to the trust. 20 * Sec. 2. AS 34.40.110(a) is amended to read: 21 (a) A person who in writing transfers [PROPERTY] in trust real property, 22 personal property, or an interest in real or personal property may provide that the 23 interest of a beneficiary of the trust, including a beneficiary who is the settlor of the 24 trust, may not be either voluntarily or involuntarily transferred before payment or 25 delivery of the interest to the beneficiary by the trustee. Payment or delivery of the 26 interest to the beneficiary does not include a beneficiary's use or occupancy of 27 real property or tangible personal property owned by the trust if the use or 28 occupancy is in accordance with the trustee's discretionary authority under the 29 trust instrument. In this subsection, 30 [(1) "PROPERTY" INCLUDES REAL PROPERTY, PERSONAL 31 PROPERTY, AND INTERESTS IN REAL OR PERSONAL PROPERTY;
01 (2)] "transfer" means any form of transfer, including deed, 02 conveyance, or assignment. 03 * Sec. 3. AS 34.40.110(b) is amended to read: 04 (b) If a trust contains a transfer restriction allowed under (a) of this section, 05 the transfer restriction prevents a creditor existing when the trust is created, a person 06 who subsequently becomes a creditor, or another person from satisfying a claim out of 07 the beneficiary's interest in the trust, unless [THE] 08 (1) the transfer was intended primarily [IN WHOLE OR IN PART] to 09 hinder, delay, or defraud creditors or other persons under AS 34.40.010; 10 (2) the trust provides that the settlor may revoke or terminate all or 11 part of the trust without the consent of a person who has a substantial beneficial 12 interest in the trust and the interest would be adversely affected by the exercise of the 13 power held by the settlor to revoke or terminate all or part of the trust; in this 14 paragraph, "revoke or terminate" does not include a power to veto a distribution from 15 the trust, a testamentary special power of appointment or similar power, or the right to 16 receive a distribution of income, corpus, or both in the discretion of a person, 17 including a trustee, other than the settlor; 18 (3) the trust requires that all or a part of the trust's income or principal, 19 or both, must be distributed to the settlor; however, this paragraph does not apply 20 to a settlor's right to receive 21 (A) income or principal from a charitable remainder 22 annuity trust or charitable remainder unitrust; in this subparagraph, 23 "charitable remainder annuity trust" and "charitable remainder 24 unitrust" have the meanings given in 26 U.S.C. 664 (Internal Revenue 25 Code) as that section reads on the effective date of this bill section and as 26 it may be amended; 27 (B) a percentage of the value of the trust each year as 28 determined from time to time under the trust instrument, but not 29 exceeding the amount that may be defined as income under AS 13.38 or 30 under 31 (i) 26 U.S.C. 643(b) (Internal Revenue Code) as that
01 subsection reads on the effective date of this bill section and as it 02 may be amended; or 03 (ii) the permanent or temporary regulations adopted 04 under 26 U.S.C. 643(b); or 05 (4) at the time of the transfer, the settlor is in default by 30 or more 06 days of making a payment due under a child support judgment or order. 07 * Sec. 4. AS 34.40.110(c) is amended to read: 08 (c) The satisfaction of a claim under (b)(1) - (4) of this section is limited to 09 that part of the trust for [TO] which a transfer restriction is not allowed under 10 (b)(1) - (4) of this section, and an attachment or other order may not be made 11 against the trustee with respect to a beneficiary's interest in the trust or against 12 property that is subject to a transfer restriction, except to the extent that a 13 transfer restriction is determined not to be allowed under (b)(1) - (4) of this 14 section [APPLIES]. 15 * Sec. 5. AS 34.40.110(d) is amended to read: 16 (d) A cause of action or claim for relief with respect to a fraudulent transfer of 17 a settlor's assets under (b)(1) of this section [,] or under other law [,] is extinguished 18 unless the action under (b)(1) of this section is brought by a creditor [AS TO A 19 PERSON] who 20 (1) is a creditor before the settlor's assets are transferred to the 21 trust, and the action is brought [WHEN THE TRUST IS CREATED,] within the 22 later of 23 (A) four years after the transfer is made; or 24 (B) one year after the transfer is or reasonably could have been 25 discovered by the creditor [PERSON]; or 26 (2) becomes a creditor subsequent to the transfer into trust, and the 27 action is brought within four years after the transfer is made. 28 * Sec. 6. AS 34.40.110 is amended by adding new subsections to read: 29 (g) An action or claim under (d)(1) of this section is limited to a cause of 30 action or claim for relief where the creditor 31 (1) can demonstrate, by a preponderance of the evidence, that the
01 creditor asserted a specific claim against the settlor before the settlor transferred assets 02 to the trust; or 03 (2) files an action against the settlor within four years after the settlor 04 transferred assets to the trust, and the action asserts a specific cause of action based on 05 an act or omission of the settlor that occurred before the transfer. 06 (h) A transfer restriction allowed under (a) of this section applies to a settlor 07 who is also a beneficiary of the trust even if the settlor serves as a co-trustee or as an 08 advisor to the trustee under AS 13.36.375 if the settlor does not have a trustee power 09 over discretionary distributions. 10 (i) A transfer restriction allowed under (a) of this section applies to a 11 beneficiary who is not the settlor of the trust, whether or not the beneficiary serves as a 12 sole trustee, a co-trustee, or an advisor to the trustee under AS 13.36.375. 13 (j) A transfer restriction is allowed under (a) of this section even if a settlor 14 has the authority under the terms of the trust instrument to appoint a trust protector 15 under AS 13.36.370 or an advisor to the trustee under AS 13.36.375. 16 (k) A settlor whose beneficial interest in a trust is subject to a transfer 17 restriction that is allowed under (a) of this section may not benefit from, direct a 18 distribution of, or use trust property except as may be stated in the trust instrument. 19 An agreement or understanding, express or implied, between the settlor and the trustee 20 that attempts to grant or permit the retention of greater rights or authority than is stated 21 in the trust instrument is void. 22 * Sec. 7. AS 34.40 is amended by adding a new section to read: 23 Sec. 34.40.115. Powers as subjecting property to creditors. The property 24 that a donee of a power of appointment is authorized to appoint is not subject to the 25 claims of the creditors of the donee except to the extent that a donee of an inter vivos 26 or testamentary power of appointment 27 (1) is permitted by the donor of the power to appoint the property to 28 the donee's estate or to the creditors of the donee's estate; and 29 (2) effectively exercises the power of appointment in favor of the 30 donee's estate or the creditors of the donee's estate. 31 * Sec. 8. The uncodified law of the State of Alaska is amended by adding a new section to
01 read: 02 APPLICABILITY. This Act applies to a trust regardless of whether the trust was 03 created before, on, or after the effective date of the applicable section of this Act. 04 * Sec. 9. AS 34.40.110(b), as amended by sec. 3 of this Act, takes effect immediately under 05 AS 01.10.070(c).