Utah 2023 Regular Session

Utah House Bill HB0432 Compare Versions

OldNewDifferences
1-Enrolled Copy H.B. 432
1+1st Sub. H.B. 432
2+LEGISLATIVE GENERAL COUNSEL
3+6 Approved for Filing: P. Owen 6
4+6 02-15-23 1:57 PM 6
5+H.B. 432
6+1st Sub. (Buff)
7+Representative Brady Brammer proposes the following substitute bill:
28 1 PROBATE MODIFICATIONS
39 2 2023 GENERAL SESSION
410 3 STATE OF UTAH
511 4 Chief Sponsor: Brady Brammer
6-5 Senate Sponsor: Daniel McCay
12+5 Senate Sponsor: ____________
713 6
814 7LONG TITLE
915 8General Description:
1016 9 This bill addresses probate provisions.
1117 10Highlighted Provisions:
1218 11 This bill:
1319 12 <addresses when certain nonvested property interests or powers of appointment are
1420 13created;
1521 14 <permits a court in an action related to the administration of an estate to award costs
1622 15and expenses, including reasonable attorney fees, to any party to be paid by another
1723 16party or from the estate that is the subject of the controversy;
1824 17 <addresses when a creditor of a settlor may not satisfy the creditor's claim from an
1925 18irrevocable trust; and
2026 19 <make technical and conforming changes.
2127 20Money Appropriated in this Bill:
2228 21 None
2329 22Other Special Clauses:
2430 23 None
2531 24Utah Code Sections Affected:
2632 25AMENDS:
33+*HB0432S01* 1st Sub. (Buff) H.B. 432 02-15-23 1:57 PM
34+- 2 -
2735 26 75-2-1204, as last amended by Laws of Utah 2013, Chapter 364
2836 27 75-3-719, as last amended by Laws of Utah 2012, Chapter 274
2937 28 75-7-505, as last amended by Laws of Utah 2017, Chapters 125, 204
30-29 H.B. 432 Enrolled Copy
31-- 2 -
38+29
3239 30Be it enacted by the Legislature of the state of Utah:
3340 31 Section 1. Section 75-2-1204 is amended to read:
3441 32 75-2-1204. When nonvested property interest or power of appointment created.
3542 33 (1) Except as [provided in Subsections (2) and (3) and in] otherwise provided in this
3643 34section or Section 75-2-1207, the time of creation of a nonvested property interest or a power
3744 35of appointment is determined under general principles of property law.
3845 36 (2) For purposes of this part, if there is a person who alone can exercise a power
3946 37created by a governing instrument to become the unqualified beneficial owner of:
4047 38 (a) a nonvested property interest; or
4148 39 (b) a property interest subject to a power of appointment described in Section
4249 4075-2-1203, the nonvested property interest or power of appointment is created when the power
4350 41to become the unqualified beneficial owner terminates.
4451 42 (3) For purposes of this title, a nonvested property interest or a power of appointment
4552 43arising from a transfer of property to a previously funded trust or other existing property
4653 44arrangement is created when the nonvested property interest or power of appointment in the
4754 45original contribution was created.
4855 46 (4) A person who exercises an initial power of appointment may provide in the
4956 47exercise of that power of appointment:
5057 48 (a) for a nonvested property interest that is considered:
5158 49 (i) created when the initial power is irrevocably exercised or when a revocable exercise
5259 50becomes irrevocable; and
5360 51 (ii) not created at the time of the creation of the initial power of appointment that is
5461 52exercised; and
5562 53 (b) for a further power of appointment created by the exercise of the initial power of
5663 54appointment that is considered:
5764 55 (i) created when the initial power is irrevocably exercised or when a revocable exercise
58-56becomes irrevocable; and
59-57 (ii) not created at the time of the creation of the initial power of appointment that is Enrolled Copy H.B. 432
65+56becomes irrevocable; and 02-15-23 1:57 PM 1st Sub. (Buff) H.B. 432
6066 - 3 -
67+57 (ii) not created at the time of the creation of the initial power of appointment that is
6168 58exercised.
6269 59 Section 2. Section 75-3-719 is amended to read:
6370 60 75-3-719. Costs and expenses in estate litigation.
6471 61 (1) (a) In a judicial proceeding involving the administration of an estate, the court may,
6572 62as justice and equity may require, award costs and expenses, including reasonable attorney fees,
6673 63to any party to be paid by another party or from the estate that is the subject of the controversy.
6774 64 (b) This Subsection (1) does not apply to the Office of the Attorney General when the
6875 65Office of the Attorney General is a party to a judicial proceeding involving the administration
6976 66of an estate to protect a public or charitable interest.
7077 67 (2) If any personal representative or person nominated as personal representative
7178 68defends or prosecutes any proceeding in good faith, whether successful or not, the personal
7279 69representative is entitled to receive from the estate [all] the necessary expenses and
7380 70disbursements, including reasonable attorney fees incurred. This [provision] Subsection (2)
7481 71expressly applies in a will contest to any person nominated as a personal representative in a
7582 72testamentary instrument submitted in good faith.
7683 73 Section 3. Section 75-7-505 is amended to read:
7784 74 75-7-505. Creditor's claim against settlor.
7885 75 [Whether or not] Regardless of whether the terms of a trust contain a spendthrift
7986 76provision, the following rules apply:
8087 77 (1) During the lifetime of the settlor, the property of a revocable trust is subject to the
8188 78claims of the settlor's creditors. If a revocable trust has more than one settlor, the amount the
8289 79creditor or assignee of a particular settlor may reach may not exceed the settlor's interest in the
8390 80portion of the trust attributable to that settlor's contribution.
8491 81 (2) (a) With respect to an irrevocable trust other than an irrevocable trust that meets the
8592 82requirements of Section 25-6-502, a creditor or assignee of the settlor may reach the maximum
8693 83amount that can be distributed to or for the settlor's benefit.
8794 84 (b) [If the trust has] With respect to an irrevocable trust that has more than one settlor,
88-85other than an irrevocable trust that meets the requirements of Section 25-6-502, the amount H.B. 432 Enrolled Copy
95+85other than an irrevocable trust that meets the requirements of Section 25-6-502, the amount
96+86[the] a creditor or assignee of a particular settlor may reach may not exceed the settlor's interest
97+87in the portion of the trust attributable to that settlor's contribution. 1st Sub. (Buff) H.B. 432 02-15-23 1:57 PM
8998 - 4 -
90-86[the] a creditor or assignee of a particular settlor may reach may not exceed the settlor's interest
91-87in the portion of the trust attributable to that settlor's contribution.
9299 88 (c) Notwithstanding Subsections (2)(a) and (b), a creditor of a settlor may not satisfy
93100 89the creditor's claim from an irrevocable trust solely because the trustee may make a
94101 90discretionary distribution reimbursing the settlor for income tax liability of the settlor
95102 91attributable to the income of the irrevocable trust, when the distribution is:
96103 92 (i) subject to the discretion of a trustee who is not the settlor;
97104 93 (ii) subject to the consent of an advisor who is not the settlor; or
98105 94 (iii) at the direction of an advisor who is not the settlor.
99106 95 (3) After the death of a settlor, and subject to the settlor's right to direct the source from
100107 96which liabilities will be paid, the property of a trust that was revocable at the settlor's death, but
101108 97not property received by the trust as a result of the death of the settlor which is otherwise
102109 98exempt from the claims of the settlor's creditors, is subject to claims of the settlor's creditors,
103110 99costs of administration of the settlor's estate, the expenses of the settlor's funeral and disposal
104111 100of remains, and statutory allowances to a surviving spouse and children to the extent the
105112 101settlor's probate estate is inadequate to satisfy those claims, costs, expenses, and allowances.