Stricken language would be deleted from and underlined language would be added to present law.
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State of Arkansas 1
94th General Assembly A Bill 2
Regular Session, 2023 HOUSE BILL 1019 3
4
By: Representative Maddox 5
6
For An Act To Be Entitled 7
AN ACT TO AMEND THE LAW CONCERNING THE C REATION OF A 8
SPENDTHRIFT TRUST; T O CREATE THE ARKANSA S SPENDTHRIFT 9
TRUST ACT; TO AMEND THE UNIFORM STATUTOR Y RULE 10
AGAINST PERPETUITIES ; AND FOR OTHER PURP OSES. 11
12
13
Subtitle 14
TO AMEND THE LAW CONCERNING THE CREATION 15
OF A SPENDTHRIFT TRUST; TO CREATE THE 16
ARKANSAS SPENDTHRIFT TRUST ACT; AND TO 17
AMEND THE UNIFORM STATUTORY RULE AGAINST 18
PERPETUITIES. 19
20
21
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 22
23
SECTION 1. Arkansas Code Title 18, Chapter 3 is amended to read as 24
follows: 25
18-3-101. Statutory rule against perpetuities. 26
(a) A nonvested property interest is invalid unless: 27
(1) when the interest is created, it is certain to vest or 28
terminate no later than 21 years after the death of an individ ual then alive; 29
or 30
(2) the interest either vests or terminates within 90 years 31
after its creation. 32
(b) A general power of appointment not presently exercisable because 33
of a condition precedent is invalid unless: 34
(1) when the power is created, the c ondition precedent is 35
certain to be satisfied or becomes impossible to satisfy no later than 21 36 HB1019
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years after the death of an individual then alive; or 1
(2) the condition precedent either is satisfied or becomes 2
impossible to satisfy within 90 years after its creation. 3
(c) A nongeneral power of appointment or a general testamentary power 4
of appointment is invalid unless: 5
(1) when the power is created, it is certain to be irrevocably 6
exercised or otherwise to terminate no later than 21 years after the d eath of 7
an individual then alive; or 8
(2) the power is irrevocably exercised or otherwise terminates 9
within 90 years after its creation. 10
(d) In determining whether a nonvested property interest or a power of 11
appointment is valid under subdivision (a)(1 ), (b)(1), or (c)(1) of this 12
section, the possibility that a child will be born to an individual after the 13
individual's death is disregarded. 14
(e) If, in measuring a period from the creation of a trust or other 15
property arrangement, language in a governin g instrument (i) seeks to 16
disallow the vesting or termination of any interest or trust beyond, (ii) 17
seeks to postpone the vesting or termination of any interest or trust until, 18
or (iii) seeks to operate in effect in any similar fashion upon, the later of 19
(A) the expiration of a period of time not exceeding 21 years after the death 20
of the survivor of specified lives in being at the creation of the trust or 21
other property arrangement or (B) the expiration of a period of time that 22
exceeds or might exceed 21 ye ars after the death of the survivor of lives in 23
being at the creation of the trust or other property arrangement, that 24
language is inoperative to the extent it produces a period of time that 25
exceeds 21 years after the death of the survivor of the specified lives 26
The common law rule against perpetuities is not in force in this state . 27
28
18-3-102. When nonvested property interest or power of appointment 29
created Limitation on suspension of absolute power of alienation . 30
(a) Except as provided in subsections (b) and (c) of this section and 31
in § 18-3-105(a), the time of creation of a nonvested property interest or a 32
power of appointment is determined under general principles of property law. 33
(b) For purposes of this chapter, if there is a person who alone can 34
exercise a power created by a governing instrument to become the unqualified 35
beneficial owner of (i) a nonvested property interest or (ii) a property 36 HB1019
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interest subject to a power of appointment described in § 18 -3-101(b) or § 1
18-3-101(c), the nonvested pro perty interest or power of appointment is 2
created when the power to become the unqualified beneficial owner terminates. 3
(c) For purposes of this chapter, a nonvested property interest or a 4
power of appointment arising from a transfer of property to a pre viously 5
funded trust or other existing property arrangement is created when the 6
nonvested property interest or power of appointment in the original 7
contribution was created. 8
(d) For purposes of this chapter, if a nongeneral power of appointment 9
or a general testamentary power of appointment is used to create another 10
nongeneral power of appointment or general testamentary power of appointment, 11
the nonvested property interest or power of appointment created through the 12
exercise of the other nongeneral power of appointment or general testamentary 13
power of appointment is considered to have been created at the same time the 14
first nongeneral power of appointment or general testamentary power of 15
appointment was created 16
The absolute power of alienation may not b e suspended by any limitation 17
or condition for a longer period than during the continuance of the lives of 18
persons in being plus a period of thirty (30) years at the creation of the 19
limitation or condition . 20
21
18-3-103. Reformation Permitted suspension of a bsolute power of 22
alienation. 23
Upon the petition of an interested person, a court shall reform a 24
disposition in the manner that most closely approximates the transferor's 25
manifested plan of distribution and is within the 90 years allowed by § 18 -3-26
101(a)(2), § 18-3-101(b)(2), or § 18-3-101(c)(2) if: 27
(1) a nonvested property interest or a power of appointment 28
becomes invalid under § 18 -3-101; 29
(2) a class gift is not but might become invalid under § 18 -3-30
101 and the time has arrived when the share of any class member is to take 31
effect in possession or enjoyment; or 32
(3) a nonvested property interest that is not validated by § 18 -33
3-101(a)(1) can vest but not within 90 years after its creation 34
(a) Every future interest is void which suspends the absolute power of 35
alienation for a longer period than prescribed in § 18 -3-103. 36 HB1019
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(b) A power of alienation is suspended when there are no persons in 1
being to whom an absolute interest in possession can be conveyed . 2
3
18-3-104. Exclusions from statutory rule against perpetuities 4
Suspension of term of years ownership . 5
Section 18-3-101 does not apply to: 6
(1) a nonvested property interest or a power of appointment 7
arising out of a nondonative transfer, except a nonvested property interest 8
or a power of appointment arising out of (i) a premarital or postmarital 9
agreement, (ii) a separation or divorce settlement, (iii) a spouse's 10
election, (iv) a similar arrangement arising out of a prospective, existing, 11
or previous marital relationship between the parties , (v) a contract to make 12
or not to revoke a will or trust, (vi) a contract to exercise or not to 13
exercise a power of appointment, (vii) a transfer in satisfaction of a duty 14
of support, or (viii) a reciprocal transfer; 15
(2) a fiduciary's power relating to the administration or 16
management of assets, including the power of a fiduciary to sell, lease, or 17
mortgage property, and the power of a fiduciary to determine principal and 18
income; 19
(3) a power to appoint a fiduciary; 20
(4) a discretionary power of a t rustee to distribute principal 21
before termination of a trust to a beneficiary having an indefeasibly vested 22
interest in the income and principal; 23
(5) a nonvested property interest held by a charity, government, 24
or governmental agency or subdivision, if the nonvested property interest is 25
preceded by an interest held by another charity, government, or governmental 26
agency or subdivision; 27
(6) a nonvested property interest in or a power of appointment 28
with respect to a trust or other property arrangement f orming part of a 29
pension, profit-sharing, stock bonus, health, disability, death benefit, 30
income deferral, or other current or deferred benefit plan for one or more 31
employees, independent contractors, or their beneficiaries or spouses, to 32
which contributions are made for the purpose of distributing to or for the 33
benefit of the participants or their beneficiaries or spouses the property, 34
income, or principal in the trust or other property arrangement, except a 35
nonvested property interest or a power of appoin tment that is created by an 36 HB1019
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election of a participant or a beneficiary or spouse; 1
(7) a property interest, power of appointment, or arrangement 2
that was not subject to the common -law rule against perpetuities or is 3
excluded by another statute of this St ate; or 4
(8)(A) a nonvested property interest or power of appointment 5
provided in a trust created or administered in this state so long as the 6
trust: 7
(i) has one (1) or more trustees who are able to convey an 8
absolute fee in possession of land, or fu ll ownership of personal property; 9
(ii) has one (1) or more trustees with express or implied 10
power to sell the trust assets; or 11
(iii) vests in one (1) or more persons in being the 12
unlimited power to terminate the trust. 13
(B) if the power of alien ation is suspended during the life of 14
the trust, the rule against perpetuities under § 18 -3-101 will begin to run 15
from the date of suspension. 16
(C) the exception created in this subdivision (8) applies to a 17
trust created in Arkansas on or after August 1, 2017 and to any other trust 18
whose principal place of administration is transferred to Arkansas on or 19
after August 1, 2017, regardless of when the trust was created 20
The absolute ownership of a term of years cannot be suspended for a 21
longer period than the absolute power of alienation can be suspended in 22
respect to a fee. 23
24
18-3-105. Prospective application Suspension of power to alienate 25
subject of trust. 26
(a) Except as extended by subsection (b) of this section, this chapter 27
applies to a nonvested proper ty interest or a power of appointment that is 28
created on or after March 9, 2007. For purposes of this section, a nonvested 29
property interest or a power of appointment created by the exercise of a 30
power of appointment is created when the power is irrevocabl y exercised or 31
when a revocable exercise becomes irrevocable. 32
(b) If a nonvested property interest or a power of appointment was 33
created before March 9, 2007, and is determined in a judicial proceeding, 34
commenced on or after March 9, 2007, to violate thi s State's rule against 35
perpetuities as that rule existed before March 9, 2007, a court upon the 36 HB1019
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petition of an interested person may reform the disposition in the manner 1
that most closely approximates the transferor's manifested plan of 2
distribution and is within the limits of the rule against perpetuities 3
applicable when the nonvested property interest or power of appointment was 4
created 5
The suspension of all power to alienate the subject of a trust is a 6
suspension of the power of alienation. 7
(b) However, there is no suspension of the power of alienation by a 8
trust or by equitable interests under a trust if the trustee has the power to 9
sell, either expressed or implied, or if there is an unlimited power to 10
terminate in one (1) or more persons in being . 11
12
18-3-106. Short title Computation of period for interest or trust 13
created under power of appointment . 14
This chapter may be cited as the Uniform Statutory Rule Against 15
Perpetuities If a future interest or trust is created by the exercise of a 16
power of appointment, the permissible period is computed from the time the 17
power is: 18
(1) Exercised, if the power is a general power including without 19
limitation a testamentary general power; or 20
(2) Created if the power is not a general power . 21
22
18-3-107. Uniformity of application and construction Final 23
distribution of trust assets . 24
This chapter shall be applied and construed to effectuate its general 25
purpose to make uniform the law with respect to the subject of this chapter 26
among states enacting it 27
If at the expiration of the period in which an instrument or a 28
provision of the instrument created by a trust or other legal relationship is 29
not to be rendered invalid by this chapter, measured by actual events rather 30
than possible events, any of the assets w hich have not by the terms of the 31
instrument become distributable or vested shall then be distributed as the 32
court having jurisdiction directs, giving effect to the general intent of the 33
creator of the trust or other instrument . 34
35
18-3-109. Supercession of common law Transfers exempt from chapter . 36 HB1019
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This chapter supersedes the rule of the common law known as the rule 1
against perpetuities 2
This chapter does not limit any of the following: 3
(1) Transfers, outright or in trust, for charitable purposes; 4
(2) Transfers to charitable corporations; 5
(3) Transfers to a cemetery corporation, society or association; 6
or 7
(4) Employees' trusts created as part of a pension, retirement, 8
insurance, savings, stock bonus, profit sharing, or similar plan established 9
by an employer for the benefit of employees eligible to participate . 10
11
18-3-110. Instruments 12
If an action or proceeding has not been instituted by July 1, 2024, to 13
declare void an instrument which existed before July 1, 2023, then the 14
instrument shall be interpreted under this chapter. 15
16
SECTION 2. Arkansas Code Title 28, Chapter 72, is amended to add an 17
additional subchapter to read as follows: 18
Subchapter 7 — Arkansas Spendthrift Trust Act 19
20
28-72-701. Title. 21
This subchapter shall be known and may be c ited as the "Arkansas 22
Spendthrift Trust Act". 23
24
28-72-702. Applicability. 25
(a) Unless the writing expressly states to the contrary, this 26
subchapter governs the construction, operation and enforcement of a 27
spendthrift trust in this state whether the spend thrift trust is created 28
inside or outside this state if: 29
(1) All or part of the land, rents, issues, or profits affected 30
are in this state; 31
(2) All or part of the personal property and other produce of 32
the personal property are in this state; 33
(3) The declared domicile of the creator of a spendthrift trust 34
affecting personal property is in this state; or 35
(4) At least one (1) trustee qualified under subsection (b) of 36 HB1019
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this section has powers that include without limitation: 1
(A) Maintaining trust records; 2
(B) Preparing income tax returns for the trust; and 3
(B) Administering all or part of the trust in this state. 4
(b) If the settlor is a beneficiary of the trust, at least one (1) 5
trustee of a spendthrift trust shall be a: 6
(1) Natural person who resides and has his or her domicile in 7
this state; 8
(2) Trust company that: 9
(A) Is organized under federal law or under the laws of 10
this state or another state; and 11
(B) Maintains an office in this state for the transaction 12
of business; or 13
(3) Bank that: 14
(A) Is organized under federal law or under the laws of 15
this state or another state; 16
(B) Maintains an office in this state for the transaction 17
of business; and 18
(C) Possesses and exercises trust powers. 19
(c) As used in this section, "trust company" does not include a 20
foreign independent trust company authorized to engage only in the 21
solicitation of trust company business in this state. 22
23
28-72-703. Definitions. 24
As used in this subchapter: 25
(1) "Adviser" means a person, including without limitation an 26
accountant, attorney, or investment adviser, who gives advice concerning or 27
who was involved in the creation of, transfer of property to, or 28
administration of the spendthrift trust or who parti cipated in the 29
preparation of accountings, tax returns, or other reports related to the 30
spendthrift trust; 31
(2) "Creditor" means a person or entity who has a claim; 32
(3) "Remainder beneficiary" means a person entitled to receive 33
trust principal when trust income interest ends; 34
(4) "Settlor" means: 35
(A) The person who creates a spendthrift trust as 36 HB1019
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described in the trust instrument; or 1
(B) A person who contributes assets to the spendthrift 2
trust as to the assets he or she contributed to the spendthrift trust except 3
to the extent of consideration received for the assets contributed by that 4
person; 5
(5) "Spendthrift trust" means trust in which by the terms of the 6
trust a valid restraint on the voluntary and involuntary transfer of the 7
interest of the beneficiary is imposed; 8
(6) "Writing" as used in this subchapter, unless the context 9
otherwise requires, when the term is used in reference to a will, trust, or 10
instrument. 11
12
28-72-704. Creation. 13
(a) A person competent by law to execute a will or deed may by an 14
executed writing create a spendthrift trust in real, personal, or mixed 15
property for the benefit of: 16
(1) A person other than the settlor; 17
(2) The settlor if the writing is irrevocable and does not: 18
(A) Require that any par t of the income or principal of 19
the trust be distributed to the settlor; and 20
(B) Hinder, delay, or defraud known creditors; or 21
(3) Both the settlor and another person if the writing meets the 22
requirements of subdivision (a)(2) of this section. 23
(b) A writing meets the requirements of subdivision (a)(2) of this 24
section even if under the terms of the writing the settlor: 25
(1) May prevent a distribution from the trust; 26
(2) Holds a special lifetime or testamentary power of 27
appointment that cannot be exercised in favor of the settlor, the settlor's 28
estate, a creditor of the settlor, or a creditor of the settlor's estate; 29
(3) Is a beneficiary of a trust that qualifies as a charitable 30
remainder trust under 26 U.S.C § 664 even if the settlor has the right to 31
release the settlor's retained interest in the charitable remainder trust, in 32
whole or in part, in favor of one (1) or more of the remainder beneficiaries 33
of the charitable remainder trust; 34
(4) May receive a percentage of the value of the trus t each year 35
as specified in the trust instrument of the initial value of the trust assets 36 HB1019
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or the value of the trust assets determined from time to time under the trust 1
instrument, but not exceeding: 2
(A) The amount that may be defined as income under 26 3
U.S.C. § 643(b); or 4
(B) With respect to benefits from any qualified retirement 5
plan or eligible deferred compensation plan, the minimum required 6
distribution as defined in 26 U.S.C. § 4974(b); 7
(5) May receive income or principal from a grantor ret ained 8
annuity trust paying out a qualified annuity interest within the meaning of 9
26 C.F.R. § 25.2702-3(b) or a grantor retained unitrust paying out a 10
qualified unitrust interest within the meaning of 26 C.F.R. § 25.2702 -3(c); 11
(6) May use real property held under a qualified personal 12
residence trust as described in 26 C.F.R. § 25.2702 -5(c), or the settlor may 13
possess a qualified annuity interest within the meaning of the term as 14
described in 26 C.F.R. § 25.2702 -3(b); 15
(7) May receive income or princip al from the trust but only 16
subject to the discretion of another person; or 17
(8) May use real or personal property owned by the trust. 18
(c) Except for the power of the settlor to make distributions to 19
himself or herself without the consent of another p erson, this section does 20
not prohibit the settlor of a spendthrift trust from holding other powers 21
under the spendthrift trust, whether or not the settlor is a cotrustee, 22
including without limitation the power to: 23
(1) Remove and replace a trustee; 24
(2) Direct trust investments; and 25
(3) Execute other trust management powers. 26
(d)(1) The creation of a spendthrift trust does not require specific 27
language. 28
(2) A spendthrift trust is created if by the terms of the 29
writing the settlor manifests an intention to create a spendthrift trust. 30
31
28-72-705. Settlor - powers. 32
(a) The settlor of a spendthrift has the powers and rights conferred 33
to the settlor by the trust instrument. 34
(b) An agreement or understanding express or implied between the 35
settlor and the trustee that attempts to grant or permit the retention of 36 HB1019
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greater rights or authority than is stated in the trust instrument is void. 1
2
28-72-706. Beneficiaries. 3
(a) The beneficiary of a spendthrift trust shall be named or clearly 4
referred to in the writing. 5
(b) A spouse, former spouse, child, or dependent of the settlor shall 6
not be a beneficiary of the spendthrift trust unless named or clearly 7
referred to as a beneficiary in the writing. 8
(c) The provision for the beneficiary in a spendthrift trust shall: 9
(1) Be for the support, education, maintenance and benefit of 10
the beneficiary and without reference to or limitation by the beneficiary's 11
needs, station in life, or mode of life, or the needs of any other person, 12
whether depended upon the beneficiary or not; and 13
(2) Extend to all of the income from the trust estate devoted 14
for that purpose by the creator of the spendthrift trust, without exception 15
or deduction other than for: 16
(A) Costs or fees regularly earned paid or incurred by the 17
trustee for administration of or protection of the trust estate; 18
(B) Taxes on the costs or fees regularly earned paid or 19
incurred by the trustee for administration of or protection of the trust 20
estate; or 21
(C) Taxes on the interest of the beneficiary. 22
(d) The existence of a spendthrift trust does not depend on the 23
beneficiary's: 24
(1) Character; 25
(2) Capacity; or 26
(3) Competency; 27
28
28-72-707. Discretion of trustee. 29
(a) The trustee's discretionary power is absolute whether a valid 30
provision for the accumulation of trust income is made or not and whether the 31
provision relates to the trust income from real or personal property in all 32
cases where the creator of a spendthrift trust: 33
(1) Indicates the sum to be applied for or paid to the 34
beneficiary or makes the application or payment of sums or further sums for 35
or to the beneficiary discretionary with the trustee; 36 HB1019
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(2) Makes the amount of trus t income to be applied for or paid 1
to the beneficiary discretionary with the trustee; or 2
(3) Gives the trustee discretion to pay all or any part of the 3
trust income to any one (1) or more of the beneficiaries. 4
(b) The discretion of a trustee under su bsection (a) of this section 5
shall not be interfered with for any consideration of the needs, station in 6
life, or mode of life of the beneficiary, or for uncertainty, or any pretext. 7
(c) A spendthrift trust is not invalidated by giving a trustee the 8
discretion granted under subsection (a) of this section. 9
(d) The trustee of a spendthrift trust is required to disregard and 10
defeat every assignment or other act, voluntary or involuntary, that is 11
attempted contrary to the provisions of this subchapter. 12
13
28-72-708. Restraints on alienation. 14
(a)(1) A spendthrift trust restrains and prohibits the assignment, 15
alienation, acceleration, or anticipation of any interest of the beneficiary 16
under the spendthrift trust by the voluntary or involuntary act of the 17
beneficiary, by operation of law, or any other circumstance. 18
(2) The trust estate, corpus, or capital of a spendthrift trust 19
shall not be assigned, aliened, diminished, or impaired by any alienation, 20
transfer, or seizure so as to cut off or diminish the payments, rents, 21
profits, earnings, or income of the trust estate that would otherwise be 22
currently available for the benefit of the beneficiary. 23
(b) A mandatory or discretionary payment by the trustee to the 24
beneficiary shall be made only to or for the benefit of the beneficiary and 25
not: 26
(1) By acceleration or anticipation; 27
(2) To an assignee of the beneficiary; or 28
(3) Upon an order, written or oral, given by the beneficiary 29
whether the assignment or order is a voluntary contractual act of the 30
beneficiary or is through any legal process, including without limitation: 31
(A) Judgment: 32
(B) Execution; 33
(C) Attachment; 34
(D) Garnishment; 35
(E) Bankruptcy; or 36 HB1019
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(F) Contract, tort, or duty. 1
(c)(1) The beneficiary shall not have the p ower or capacity to make 2
any disposition of the trust income: 3
(A) By his or her order, voluntary or involuntary; or 4
(B) Upon the order or direction of any court or courts, 5
whether of bankruptcy or otherwise. 6
(2) The interest of the beneficiary s hall not be: 7
(A) Subject to any process of attachment issued against 8
the beneficiary; or 9
(B) Taken in execution under any form of legal process 10
directed against the beneficiary or against the trustee, or trust estate, or 11
any part of the income of t he trust estate. 12
13
28-72-709. Legal estate of beneficiary in corpus. 14
(a) A beneficiary of a spendthrift trust shall not have a legal estate 15
in the capital, principal, or corpus of the trust estate unless under the 16
terms of the spendthrift trust the b eneficiary or a person deriving title 17
from the beneficiary is entitled to have the title conveyed or transferred to 18
him or her immediately or after a term of years of after a life in being. 19
(b) The income of the corpus of the trust estate shall not be pa id to 20
the beneficiary or any other beneficiary in the meantime. 21
22
28-72-710. Perpetuities. 23
(a) A spendthrift trust may not continue for a period longer than that 24
allowed under § 18-3-101 et seq. 25
(b)(1) The free alienation of the legal estate by the t rustee may not 26
be suspended for a period exceeding the limit prescribed in any 27
constitutional or statutory prohibition against perpetuities existing in this 28
state or in the state where the lands affected by the trust are situate. 29
(2) However, a conting ent remainder in fee may be created on a 30
prior remainder in fee to take effect if the persons to whom the first 31
remainder is limited die under the age of twenty -one (21) years, or upon any 32
other contingency by which the estate of those persons may be deter mined 33
before they attain that age. 34
35
28-72-711. Accumulation of income. 36 HB1019
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(a) An accumulation of the income of trust property may be directed in 1
the will or other writing creating a spendthrift trust for the benefit of one 2
(1) or more beneficiaries, to c ommence within the time permitted for the 3
vesting of future interests, not to extend beyond the period limiting the 4
time within which the absolute power of alienation of property may be 5
suspended. 6
(b) If the direction is for a longer term than is permitt ed by law, it 7
is void only as to the excess time, whether the direction is separable from 8
the other clauses in the spendthrift trust or not, and in such cases or 9
invalidity the trust income may be paid and distributed to the next 10
succeeding beneficiary in interest. 11
12
28-72-712. Settlor may make different provisions. 13
The principles stated in §§ 28 -72-701 - 28-72-711 shall not prevent the 14
settlor of a spendthrift trust, by will or other writing, from making other 15
or different provisions, provided he or she uses express, specific language 16
to that end. 17
18
28-72-713. Transfer of property to trust. 19
(a) A claimant may not bring an action with respect to a transfer of 20
property to a spendthrift trust if the person: 21
(1) Is a creditor when the transfer of property is made unless 22
the action is commenced within: 23
(A) Two (2) years after the transfer of property is made; 24
or 25
(B) Six (6) months after the person discovers or 26
reasonably should have discovered the transfer or property, whichever is 27
later; or 28
(2) Becomes a creditor after the transfer of property is made, 29
unless the action is commenced within two (2) years after the transfer of 30
property is made. 31
(b) A claimant discovers a transfer of property under subsection (a) 32
of this section at the t ime a public record is made of the transfer of 33
property, including without limitation at the time: 34
(1) The conveyance of real property is recorded in the office of 35
the county recorder of the county in which the property is located; or 36 HB1019
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(2) A financing statement is filed under the Uniform Commercial 1
Code, § 4-1-101 et seq. 2
(c)(1) A creditor may not bring an action with respect to a transfer 3
of property to a spendthrift trust unless a creditor can prove by clear and 4
convincing evidence that the transf er of property: 5
(A) Was a fraudulent transfer under the Uniform Voidable 6
Transactions Act, § 4 -59-201 et seq.; or 7
(B) Violates a legal obligation owed to the creditor under 8
a contract or a valid court order that is legally enforceable by that 9
creditor. 10
(2) In the absence of clear and convincing evidence, the 11
property transferred is not subject to the claims of the creditor. 12
(3) Clear and convincing evidence by one (1) creditor that a 13
transfer of property was fraudulent or wrongful does not constitute clear and 14
convincing evidence as to any other creditor and clear and convincing 15
evidence of a fraudulent or wrongful transfer of property as to one (1) 16
creditor shall not invalidate any other transfer of property. 17
(d)(1) If property transferr ed to a spendthrift trust is conveyed to 18
the settlor or to a beneficiary for the purpose of obtaining a loan secured 19
by a mortgage or deed of trust on the property and then reconveyed to the 20
spendthrift trust for the purpose of bringing an action under sub section (a) 21
of this section, the transfer is disregarded and the reconveyance relates 22
back to the date the property was originally transferred to the spendthrift 23
trust. 24
(2) The mortgage or deed of trust on the property shall be 25
enforceable against the spendthrift trust. 26
(e) A person may not bring a claim against an adviser to the settlor 27
or trustee of a spendthrift trust unless the person can show by clear and 28
convincing evidence that the adviser acted in violation of the laws of this 29
state, knowingly and in bad faith, and the adviser's actions directly caused 30
the damages suffered by the person. 31
(f)(1) A person other than a beneficiary or settlor may not bring a 32
claim against a trustee of a spendthrift trust unless the person can show by 33
clear and convincing evidence that the trustee acted in violation of the laws 34
of this state, knowingly and in bad faith, and the trustee's actions directly 35
caused the damages suffered by the person. 36 HB1019
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(2) As used in this subsection, "trustee" includes a cotrustee, 1
if any, and a predecessor trustee. 2
(g) If more than one (1) transfer of property is made to a spendthrift 3
trust: 4
(1) The subsequent transfer of property to the spendthrift trust 5
shall be disregarded for the purpose of determining whether a person may 6
bring an action under subsection (a) of this section with respect to a prior 7
transfer of property to the spendthrift trust; and 8
(2) Any distribution to a beneficiary from the spendthrift trust 9
is considered to have been made from the most recent transfer of property 10
made to the spendthrift trust. 11
(h) Notwithstanding any other provision of law, no action of any kind, 12
including without limitation an action to enforce a judgment entered by a 13
court or other body having adjudicative authority, may be brought at law or 14
in equity against the trustee of a spendthrift trust if, as of the date the 15
action is brought, an action by a creditor with respect to a transfer of 16
property to the spendthrift trust would be prohibited under this section. 17
(i) For purposes of this section, if a trustee exercises his or her 18
discretion or authority to distribute income or principal from the 19
spendthrift trust to or for a beneficiary of the spendthrift trust, by 20
appointing the property of the original spendthrift trust in favor of a 21
second spendthrift trust for the benefit of one (1) or more of the 22
beneficiaries under the Trustee Division of Trusts Act, § 28 -69-701, the time 23
of the transfer shall have occurred on the date the settlor of the original 24
spendthrift trust transferred ass ets into the original spendthrift thrust, 25
regardless of the fact that the property of the original spendthrift trust 26
may have been transferred to a second spendthrift trust. 27
28
28-72-714. Trust administered under laws of another state or foreign 29
jurisdiction. 30
(a) A trust administered under the laws of another state or under the 31
laws of a foreign jurisdiction is a spendthrift trust under this subchapter 32
if: 33
(1) The trustee of the trust complies with any requirements set 34
forth in the trust inst rument and any requirements of the laws of the state 35
or jurisdiction from which the trust is being transferred; 36 HB1019
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(2) The trustee or other person having the power to transfer the 1
domicile of the trust declares the intent to transfer domicile of the trust 2
in writing; 3
(3) The writing declaring the intent to transfer the domicile of 4
the trust is delivered to the trustee, if it is executed by a person other 5
than the trustee; and 6
(4) All requirements of this chapter are satisfied 7
simultaneously with or i mmediately after the change of domicile. 8
(b) For purposes of § 28 -72-713, if the domicile of an existing trust 9
is transferred from another state or from a foreign jurisdiction to this 10
state and the laws of the other state or jurisdiction are similar to t he 11
provisions of this subchapter, the transfer of the trust has occurred: 12
(1) On the date on which the settlor of the trust transferred 13
assets into the trust if the applicable law of the trust has at all times 14
been substantially similar to the provision s of this subchapter; or 15
(2) On the earliest date on which the applicable laws of the 16
trust were substantially similar to the provisions of this subchapter. 17
18
SECTION 3. Arkansas Code Title 28, Chapter 73, Subchapter 5, is 19
repealed. 20
28-73-501. Rights of beneficiary's creditor or assignee. 21
To the extent a beneficiary's interest is not protected by a 22
spendthrift provision, a court may authorize a creditor or assignee of the 23
beneficiary to reach the beneficiary's interest by attachment of present or 24
future distributions to or for the benefit of the beneficiary or other means. 25
The court may limit the award to such relief as is appropriate under the 26
circumstances. 27
28
28-73-502. Spendthrift provision. 29
(a) A spendthrift provision is valid only if it restra ins both 30
voluntary and involuntary transfer of a beneficiary's interest. 31
(b) A term of a trust providing that the interest of a beneficiary is 32
held subject to a “spendthrift trust”, or words of similar import, is 33
sufficient to restrain both voluntary and involuntary transfer of the 34
beneficiary's interest. 35
(c) A beneficiary may not transfer an interest in a trust in violation 36 HB1019
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of a valid spendthrift provision and, except as otherwise provided in this 1
subchapter, a creditor or assignee of the beneficiary may not reach the 2
interest or a distribution by the trustee before its receipt by the 3
beneficiary. 4
5
28-73-504. Discretionary trusts — Effect of standard. 6
(a) Whether or not a trust contains a spendthrift provision, a 7
creditor of a beneficiary may not co mpel a distribution that is subject to 8
the trustee's discretion, even if: 9
(1) the discretion is expressed in the form of a standard of 10
distribution; or 11
(2) the trustee has abused the discretion. 12
(b) This section does not limit the right of a benefi ciary to maintain 13
a judicial proceeding against a trustee for an abuse of discretion or failure 14
to comply with a standard for distribution. Under § 28 -73-814(a), a trustee 15
must always exercise a discretionary power in good faith and with regard to 16
the purposes of the trust and the interests of the beneficiaries. 17
(c) A creditor may not reach the interest of a beneficiary who is also 18
a trustee or cotrustee, or otherwise compel a distribution, if the trustee's 19
discretion to make distributions for the trustee 's own benefit is limited by 20
an ascertainable standard. 21
22
28-73-505. Creditor's claim against settlor. 23
(a) Whether or not the terms of a trust contain a spendthrift 24
provision, the following rules apply: 25
(1) During the lifetime of the settlor, the property of a 26
revocable trust is subject to claims of the settlor's creditors. If a trust 27
has more than one (1) settlor, the amount the creditor or assignee of a 28
particular settlor may reach may not exceed the settlor's interest in the 29
portion of the trust attributable to that settlor's contribution. 30
(2) With respect to an irrevocable trust, a creditor or assignee 31
of the settlor may reach the maximum amount that can be distributed to or for 32
the settlor's benefit. If a trust has more than one (1) settlor, the amount 33
the creditor or assignee of a particular settlor may reach may not exceed the 34
settlor's interest in the portion of the trust attributable to that settlor's 35
contribution. 36 HB1019
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(b) For purposes of this section: 1
(1) During the period the power may be exercised, the holder of 2
a power of withdrawal is treated in the same manner as the settlor of a 3
revocable trust to the extent of the property subject to the power. 4
(2) On the lapse, release, or waiver of a power of withdrawal, 5
the holder of a power of withdrawal is not, by reason of any such power of 6
withdrawal, treated as the settlor of the trust. 7
(c)(1) Subject to § 4 -59-204, for the purposes of this section, 8
property contributed to the following trusts is not deemed to have been 9
contributed by the settlor, and a person who would otherwise be treated as a 10
settlor or a deemed settlor of the following trusts shall not be treated as a 11
settlor: 12
(A) an irrevocable trust that is treated as qualified 13
terminable interest property under section 2523(f ) of the Internal Revenue 14
Code of 1986 as in effect on January 1, 2015, if the settlor is a beneficiary 15
of the trust after the death of the settlor's spouse; 16
(B) an irrevocable trust that is treated as a general 17
power of appointment trust under section 2523(e) of the Internal Revenue Code 18
of 1986 as in effect on January 1, 2015, if the settlor is a beneficiary of 19
the trust after the death of the settlor's spouse; 20
(C) an irrevocable trust for the benefit of a person to 21
the extent that the property of the trust was subject to a limited power of 22
appointment or a general power of appointment in another person. 23
(2) For purposes of this subsection (c), a person is a 24
beneficiary whether named under the initial trust instrument or through the 25
exercise of a limited or general power of appointment by that person's spouse 26
or by another person. 27
(3) For purposes of subdivision (c)(1)(C) of this section, a 28
general power of appointment means a power of appointment exercisable in 29
favor of the holder of the powe r, the estate of the holder of the power, a 30
creditor of the holder of the power, or a creditor of the estate of the 31
holder of the power. 32
(4) As used in subdivision (c)(1)(C) of this section, "limited 33
power of appointment" means a power of appointment th at is not a general 34
power of appointment. 35
36 HB1019
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28-73-506. Overdue distribution. 1
Whether or not a trust contains a spendthrift provision, a creditor or 2
assignee of a beneficiary may reach a mandatory distribution of income or 3
principal, including a distribut ion upon termination of the trust, if the 4
trustee has not made the distribution to the beneficiary within a reasonable 5
time after the designated distribution date. 6
7
28-73-507. Personal obligations of trustee. 8
Trust property is not subject to personal ob ligations of the trustee, 9
even if the trustee becomes insolvent or bankrupt. 10
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