Enrolled Copy H.B. 432
1 PROBATE MODIFICATIONS
2 2023 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: Brady Brammer
5 Senate Sponsor: Daniel McCay
6
7LONG TITLE
8General Description:
9 This bill addresses probate provisions.
10Highlighted Provisions:
11 This bill:
12 <addresses when certain nonvested property interests or powers of appointment are
13created;
14 <permits a court in an action related to the administration of an estate to award costs
15and expenses, including reasonable attorney fees, to any party to be paid by another
16party or from the estate that is the subject of the controversy;
17 <addresses when a creditor of a settlor may not satisfy the creditor's claim from an
18irrevocable trust; and
19 <make technical and conforming changes.
20Money Appropriated in this Bill:
21 None
22Other Special Clauses:
23 None
24Utah Code Sections Affected:
25AMENDS:
26 75-2-1204, as last amended by Laws of Utah 2013, Chapter 364
27 75-3-719, as last amended by Laws of Utah 2012, Chapter 274
28 75-7-505, as last amended by Laws of Utah 2017, Chapters 125, 204
29 H.B. 432 Enrolled Copy
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30Be it enacted by the Legislature of the state of Utah:
31 Section 1. Section 75-2-1204 is amended to read:
32 75-2-1204. When nonvested property interest or power of appointment created.
33 (1) Except as [provided in Subsections (2) and (3) and in] otherwise provided in this
34section or Section 75-2-1207, the time of creation of a nonvested property interest or a power
35of appointment is determined under general principles of property law.
36 (2) For purposes of this part, if there is a person who alone can exercise a power
37created by a governing instrument to become the unqualified beneficial owner of:
38 (a) a nonvested property interest; or
39 (b) a property interest subject to a power of appointment described in Section
4075-2-1203, the nonvested property interest or power of appointment is created when the power
41to become the unqualified beneficial owner terminates.
42 (3) For purposes of this title, a nonvested property interest or a power of appointment
43arising from a transfer of property to a previously funded trust or other existing property
44arrangement is created when the nonvested property interest or power of appointment in the
45original contribution was created.
46 (4) A person who exercises an initial power of appointment may provide in the
47exercise of that power of appointment:
48 (a) for a nonvested property interest that is considered:
49 (i) created when the initial power is irrevocably exercised or when a revocable exercise
50becomes irrevocable; and
51 (ii) not created at the time of the creation of the initial power of appointment that is
52exercised; and
53 (b) for a further power of appointment created by the exercise of the initial power of
54appointment that is considered:
55 (i) created when the initial power is irrevocably exercised or when a revocable exercise
56becomes irrevocable; and
57 (ii) not created at the time of the creation of the initial power of appointment that is Enrolled Copy H.B. 432
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58exercised.
59 Section 2. Section 75-3-719 is amended to read:
60 75-3-719. Costs and expenses in estate litigation.
61 (1) (a) In a judicial proceeding involving the administration of an estate, the court may,
62as justice and equity may require, award costs and expenses, including reasonable attorney fees,
63to any party to be paid by another party or from the estate that is the subject of the controversy.
64 (b) This Subsection (1) does not apply to the Office of the Attorney General when the
65Office of the Attorney General is a party to a judicial proceeding involving the administration
66of an estate to protect a public or charitable interest.
67 (2) If any personal representative or person nominated as personal representative
68defends or prosecutes any proceeding in good faith, whether successful or not, the personal
69representative is entitled to receive from the estate [all] the necessary expenses and
70disbursements, including reasonable attorney fees incurred. This [provision] Subsection (2)
71expressly applies in a will contest to any person nominated as a personal representative in a
72testamentary instrument submitted in good faith.
73 Section 3. Section 75-7-505 is amended to read:
74 75-7-505. Creditor's claim against settlor.
75 [Whether or not] Regardless of whether the terms of a trust contain a spendthrift
76provision, the following rules apply:
77 (1) During the lifetime of the settlor, the property of a revocable trust is subject to the
78claims of the settlor's creditors. If a revocable trust has more than one settlor, the amount the
79creditor or assignee of a particular settlor may reach may not exceed the settlor's interest in the
80portion of the trust attributable to that settlor's contribution.
81 (2) (a) With respect to an irrevocable trust other than an irrevocable trust that meets the
82requirements of Section 25-6-502, a creditor or assignee of the settlor may reach the maximum
83amount that can be distributed to or for the settlor's benefit.
84 (b) [If the trust has] With respect to an irrevocable trust that has more than one settlor,
85other than an irrevocable trust that meets the requirements of Section 25-6-502, the amount H.B. 432 Enrolled Copy
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86[the] a creditor or assignee of a particular settlor may reach may not exceed the settlor's interest
87in the portion of the trust attributable to that settlor's contribution.
88 (c) Notwithstanding Subsections (2)(a) and (b), a creditor of a settlor may not satisfy
89the creditor's claim from an irrevocable trust solely because the trustee may make a
90discretionary distribution reimbursing the settlor for income tax liability of the settlor
91attributable to the income of the irrevocable trust, when the distribution is:
92 (i) subject to the discretion of a trustee who is not the settlor;
93 (ii) subject to the consent of an advisor who is not the settlor; or
94 (iii) at the direction of an advisor who is not the settlor.
95 (3) After the death of a settlor, and subject to the settlor's right to direct the source from
96which liabilities will be paid, the property of a trust that was revocable at the settlor's death, but
97not property received by the trust as a result of the death of the settlor which is otherwise
98exempt from the claims of the settlor's creditors, is subject to claims of the settlor's creditors,
99costs of administration of the settlor's estate, the expenses of the settlor's funeral and disposal
100of remains, and statutory allowances to a surviving spouse and children to the extent the
101settlor's probate estate is inadequate to satisfy those claims, costs, expenses, and allowances.