7 | 13 | | 6 |
---|
8 | 14 | | 7LONG TITLE |
---|
9 | 15 | | 8General Description: |
---|
10 | 16 | | 9 This bill addresses probate provisions. |
---|
11 | 17 | | 10Highlighted Provisions: |
---|
12 | 18 | | 11 This bill: |
---|
13 | 19 | | 12 <addresses when certain nonvested property interests or powers of appointment are |
---|
14 | 20 | | 13created; |
---|
15 | 21 | | 14 <permits a court in an action related to the administration of an estate to award costs |
---|
16 | 22 | | 15and expenses, including reasonable attorney fees, to any party to be paid by another |
---|
17 | 23 | | 16party or from the estate that is the subject of the controversy; |
---|
18 | 24 | | 17 <addresses when a creditor of a settlor may not satisfy the creditor's claim from an |
---|
19 | 25 | | 18irrevocable trust; and |
---|
20 | 26 | | 19 <make technical and conforming changes. |
---|
21 | 27 | | 20Money Appropriated in this Bill: |
---|
22 | 28 | | 21 None |
---|
23 | 29 | | 22Other Special Clauses: |
---|
24 | 30 | | 23 None |
---|
25 | 31 | | 24Utah Code Sections Affected: |
---|
26 | 32 | | 25AMENDS: |
---|
32 | 39 | | 30Be it enacted by the Legislature of the state of Utah: |
---|
33 | 40 | | 31 Section 1. Section 75-2-1204 is amended to read: |
---|
34 | 41 | | 32 75-2-1204. When nonvested property interest or power of appointment created. |
---|
35 | 42 | | 33 (1) Except as [provided in Subsections (2) and (3) and in] otherwise provided in this |
---|
36 | 43 | | 34section or Section 75-2-1207, the time of creation of a nonvested property interest or a power |
---|
37 | 44 | | 35of appointment is determined under general principles of property law. |
---|
38 | 45 | | 36 (2) For purposes of this part, if there is a person who alone can exercise a power |
---|
39 | 46 | | 37created by a governing instrument to become the unqualified beneficial owner of: |
---|
40 | 47 | | 38 (a) a nonvested property interest; or |
---|
41 | 48 | | 39 (b) a property interest subject to a power of appointment described in Section |
---|
42 | 49 | | 4075-2-1203, the nonvested property interest or power of appointment is created when the power |
---|
43 | 50 | | 41to become the unqualified beneficial owner terminates. |
---|
44 | 51 | | 42 (3) For purposes of this title, a nonvested property interest or a power of appointment |
---|
45 | 52 | | 43arising from a transfer of property to a previously funded trust or other existing property |
---|
46 | 53 | | 44arrangement is created when the nonvested property interest or power of appointment in the |
---|
47 | 54 | | 45original contribution was created. |
---|
48 | 55 | | 46 (4) A person who exercises an initial power of appointment may provide in the |
---|
49 | 56 | | 47exercise of that power of appointment: |
---|
50 | 57 | | 48 (a) for a nonvested property interest that is considered: |
---|
51 | 58 | | 49 (i) created when the initial power is irrevocably exercised or when a revocable exercise |
---|
52 | 59 | | 50becomes irrevocable; and |
---|
53 | 60 | | 51 (ii) not created at the time of the creation of the initial power of appointment that is |
---|
54 | 61 | | 52exercised; and |
---|
55 | 62 | | 53 (b) for a further power of appointment created by the exercise of the initial power of |
---|
56 | 63 | | 54appointment that is considered: |
---|
57 | 64 | | 55 (i) created when the initial power is irrevocably exercised or when a revocable exercise |
---|
61 | 68 | | 58exercised. |
---|
62 | 69 | | 59 Section 2. Section 75-3-719 is amended to read: |
---|
63 | 70 | | 60 75-3-719. Costs and expenses in estate litigation. |
---|
64 | 71 | | 61 (1) (a) In a judicial proceeding involving the administration of an estate, the court may, |
---|
65 | 72 | | 62as justice and equity may require, award costs and expenses, including reasonable attorney fees, |
---|
66 | 73 | | 63to any party to be paid by another party or from the estate that is the subject of the controversy. |
---|
67 | 74 | | 64 (b) This Subsection (1) does not apply to the Office of the Attorney General when the |
---|
68 | 75 | | 65Office of the Attorney General is a party to a judicial proceeding involving the administration |
---|
69 | 76 | | 66of an estate to protect a public or charitable interest. |
---|
70 | 77 | | 67 (2) If any personal representative or person nominated as personal representative |
---|
71 | 78 | | 68defends or prosecutes any proceeding in good faith, whether successful or not, the personal |
---|
72 | 79 | | 69representative is entitled to receive from the estate [all] the necessary expenses and |
---|
73 | 80 | | 70disbursements, including reasonable attorney fees incurred. This [provision] Subsection (2) |
---|
74 | 81 | | 71expressly applies in a will contest to any person nominated as a personal representative in a |
---|
75 | 82 | | 72testamentary instrument submitted in good faith. |
---|
76 | 83 | | 73 Section 3. Section 75-7-505 is amended to read: |
---|
77 | 84 | | 74 75-7-505. Creditor's claim against settlor. |
---|
78 | 85 | | 75 [Whether or not] Regardless of whether the terms of a trust contain a spendthrift |
---|
79 | 86 | | 76provision, the following rules apply: |
---|
80 | 87 | | 77 (1) During the lifetime of the settlor, the property of a revocable trust is subject to the |
---|
81 | 88 | | 78claims of the settlor's creditors. If a revocable trust has more than one settlor, the amount the |
---|
82 | 89 | | 79creditor or assignee of a particular settlor may reach may not exceed the settlor's interest in the |
---|
83 | 90 | | 80portion of the trust attributable to that settlor's contribution. |
---|
84 | 91 | | 81 (2) (a) With respect to an irrevocable trust other than an irrevocable trust that meets the |
---|
85 | 92 | | 82requirements of Section 25-6-502, a creditor or assignee of the settlor may reach the maximum |
---|
86 | 93 | | 83amount that can be distributed to or for the settlor's benefit. |
---|
87 | 94 | | 84 (b) [If the trust has] With respect to an irrevocable trust that has more than one settlor, |
---|
92 | 99 | | 88 (c) Notwithstanding Subsections (2)(a) and (b), a creditor of a settlor may not satisfy |
---|
93 | 100 | | 89the creditor's claim from an irrevocable trust solely because the trustee may make a |
---|
94 | 101 | | 90discretionary distribution reimbursing the settlor for income tax liability of the settlor |
---|
95 | 102 | | 91attributable to the income of the irrevocable trust, when the distribution is: |
---|
96 | 103 | | 92 (i) subject to the discretion of a trustee who is not the settlor; |
---|
97 | 104 | | 93 (ii) subject to the consent of an advisor who is not the settlor; or |
---|
98 | 105 | | 94 (iii) at the direction of an advisor who is not the settlor. |
---|
99 | 106 | | 95 (3) After the death of a settlor, and subject to the settlor's right to direct the source from |
---|
100 | 107 | | 96which liabilities will be paid, the property of a trust that was revocable at the settlor's death, but |
---|
101 | 108 | | 97not property received by the trust as a result of the death of the settlor which is otherwise |
---|
102 | 109 | | 98exempt from the claims of the settlor's creditors, is subject to claims of the settlor's creditors, |
---|
103 | 110 | | 99costs of administration of the settlor's estate, the expenses of the settlor's funeral and disposal |
---|
104 | 111 | | 100of remains, and statutory allowances to a surviving spouse and children to the extent the |
---|
105 | 112 | | 101settlor's probate estate is inadequate to satisfy those claims, costs, expenses, and allowances. |
---|