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IN THIS ISSUE:
UTC Legislative Update 2005
The Uniform Trust Code (UTC) gained five more enactments in the 2005 state legislative sessions of Arkansas, North Carolina, Oregon, South Carolina and Virginia. These enactments bring the total number to 15 since 2002. Pennsylvania has its version of the UTC currently introduced. The Ohio State Bar Association and the Ohio Bankers League expect to have a bill introduced later this year with potential enactment in 2006. More UTC introductions - some new and some re-introductions - are expected in the following states in 2006: Alabama, Colorado, Connecticut, Florida, Oklahoma, Massachusetts, and South Dakota. Other states such as Georgia, Michigan, New Jersey, North Dakota, Vermont and Wisconsin are studying the UTC for future legislative consideration.
Alabama Connecticut Florida Iowa Kansas Nebraska The Nebraska Uniform Trust Code was cited as authority in two February 2005 decisions in cases pending on appeal in the Nebraska Supreme Court on January 1, 2005. In re Trust of Inman, 269 Neb. 376, 693 N.W.2d 514 (Feb. 25, 2006) (UTC §§ 802, 1106 and provisions of the prudent investor statutes carried into the NUTC); In re Trust of Rosenberg, 269 Neb. 310, 693 N.W.2d 500 (Feb. 18, 2005) (UTC §§ 706, 1106 and subject matter jurisdiction provisions). The 2005 Nebraska Legislature responded to the August 2004 NCCUSL changes in the official text. LB 533 (2005) §§ 36 to 46 became effective when signed by the Governor on March 22, 2005. The mandatory notice requirements of UTC § 105(b)(8) were deleted and the resulting default provisions in UTC § 813(b)(2) and (3) were made applicable to trustees accepting a trusteeship or trusts which become irrevocable on or after January 1, 2006. The 2005 legislation adopted the “ascertainable standards” revisions in the August 2004 NCCUSL amendments. Nebraska revised UTC § 603 by deleting the now bracketed language making the trust for an incapacitated settlor more like that of the property an incapacitated testator. The 2005 Nebraska amendments also track changes in UTC §§ 110, 411 and 802. The 2005 Legislature was not able to consider the further early 2005 NCCUSL changes. But the Nebraska Uniform Trust Code will continue to be the subject of interim legislative studies and these amendments will come on for consideration along with whatever additional fine tuning is needed to keep Nebraska current with national developments. North
Carolina Ohio Oklahoma Oregon Pennsylvania South
Carolina Tennessee Texas Vermont Virginia
2004 and 2005 [Following is a brief description of the substantive amendments made to the Uniform Trust Code by NCCUSL in August 2004 and January 2005 to address several issues raised by the probate and trust bar. No further amendments to the Uniform Trust Code are contemplated at this time. For a complete copy of the amendments to the UTC with relevant comments, please go to http://www.utcproject.org/ .] 2004 AMENDMENTS The 2004 amendments, unlike the 2001 and 2003 UTC amendments, are more significant and are primarily substantive, not technical. The amendments can be divided into the following categories: Notice. Section 105(b)(8)-(9), which addresses the extent to which a settlor may waive otherwise required notices to beneficiaries, is made optional by being placed in brackets. Many state bar and banker associations raised strong objections to the mandatory requirement involving the trustee’s duty to inform the qualified beneficiaries age 25 and over of certain matters relating to the administration of an irrevocable trust and to respond to the request of any beneficiary for information. The changes to Section 105(b)(8)-(9) acknowledge that a number of the enacting jurisdictions have either deleted or made substantial modifications to these provisions, usually but not always by allowing a settlor greater leeway to waive an otherwise required notice. Though now bracketed, the official comments reiterate the drafting committee’s continued belief that providing notice to beneficiaries should not be totally waiveable. Additionally, the bracketed provisions suggest an alternative to deleting Section 105(b)(9). Rather than deleting the provision, states are encouraged to retain a requirement that a trustee respond to a request for information by “qualified” beneficiaries. Keeping a trust totally secret prevents discovery of trustee mismanagement and opens the possibility that the trust might be deemed illusory by the courts. Selected portions of Section 813, which specifies the notice requirements for trusts which have not already addressed the issue in the trust instrument, are also made prospective only. Several states have deleted both Sections 105(b)(8) and (b)(9) in their entirety, allowing a settlor to waive all reporting to the beneficiaries, even if a beneficiary makes a request. Other states make more modest changes such as allowing a settlor to waive notice to remaindermen. In addition, Section 603 is amended to allow an enacting jurisdiction, if so inclined, to permit a revocable trust to be kept totally secret from the remainder beneficiaries even if the settlor becomes incapacitated. Concluding that there is a lack of consensus on the appropriate rule for beneficiary rights upon the settlor’s loss of capacity, the 2004 amendments bracket the language in 603(a) “and the settlor has capacity to revoke the trust,” thereby giving enacting jurisdictions the option to provide that a settlor’s exclusive control does not end upon loss of capacity. Estate Tax Concern. Section 411(a) codifies the common law rule that a settlor and beneficiaries may jointly terminate an irrevocable trust. The ACTEC Committee on Estate and Gift Taxation became concerned that any modification of the state’s previous common law might raise a possible estate tax issue. Although nearly all states provide that a settlor and beneficiaries may jointly terminate an irrevocable trust, either by statute or case law, they differ on lesser details, such as whether court approval is required. Section 411(a) is amended to allow an enacting jurisdiction to add a court approval requirement. Alternatively, the state may elect to make Section 411(a) prospective only. A final option is to simply delete Section 411(a), in which event the state’s previous law on trust termination and modification would presumably control. In addition, subsection (d) is added to Section 301 to provide that a settlor may not represent a beneficiary with respect to an action to terminate or modify a trust under Section 411(a). The objective is to eliminate concerns that the provisions of Sections 301 and 411 might conceivably trigger inclusion of an irrevocable trust in the settlor’s gross estate. The ACTEC Committee recommends that enacting jurisdictions enact Section 411(a) in a way so as to preserve the jurisdiction’s prior common law. Material Purpose. Section 411(c), which by the 2004 amendment was placed in brackets and therefore made optional, provides that a spendthrift provision is not presumed to constitute a material purpose of the trust. Several states that have enacted the Code have not agreed with the provision and have either deleted it or have reversed the presumption. Given these developments, the drafting committee concluded that uniformity could not be achieved. Role of Attorney General. Because the role of Attorneys General with respect to enforcement of charitable trusts varies greatly around the country, the language in Section 110(c) [now Section 110(d)] granting the attorney general the rights of a qualified beneficiary has been placed in brackets and made optional. States deleting or amending Section 110(c) may also need to amend Section 704(d), dealing with appointment of successor trustees of charitable trusts. Trustee/Beneficiary Creditor Issue. Although not specifically addressed in the UTC, concern has arisen that a trustee/beneficiary’s ability to make distributions for the trustee/beneficiary’s own benefit could result in a creditor of the beneficiary being able to reach the trustee/beneficiary’s interest. The UTC is amended to create a safe harbor from such creditor claims as long as the trustee’s discretion is limited by an ascertainable standard. The sections amended are Sections 103, 504, and 814. Although not specifically addressed in the UTC, concern has arisen that a trustee/beneficiary’s ability to make distributions for the trustee/beneficiary’s own benefit could result in a creditor being able to reach the trustee/beneficiary’s interest. The concern was triggered by a statement in Restatement (Third) of Trusts §60, comment g, that discretionary interests of a trustee/beneficiary are subject to claims of the trustee/beneficiary’s creditors no matter how limited the discretion. Concluding that the Restatement position, if valid, could disrupt much conventional estate planning, the 2004 amendments revise Sections 103, 504, and 814 to create a safe harbor from creditor claims if the discretionary power is subject to an ascertainable standard. 2005 AMENDMENTS Discussions held in connection with the 2004 amendments led to the identification of other issues in the area of creditor rights. Several amendments were approved in January 2005 by the Uniform Law Commissioners’ Executive Committee. Section 501 was revised to clarify that it applies only to the rare trust that does not contain a spendthrift provision. Section 503, which lists exception creditors, was revised to clarify that the court may use its equitable powers to limit relief and that attachment is the only remedy available to exception creditors under the Code. Finally, Section 506 was revised to add a definition of “mandatory distribution,” to avoid any argument that “mandatory distribution” as used in the section might include a distribution subject to the trustee’s discretion.
1st UTC National
Conference
Pictured from
left: Stanley Kent, Alan Newman, Richard Davis, David English, Scot
Boulton, The 1st Annual Uniform Trust Code National Conference was held in downtown Chicago on Sunday, June 26, 2005 at the Union League Club of Chicago. Participants from approximately 20 states attended the conference which lasted from 1:00 pm until 4:00 pm and began with a brunch at the Park Grill in Chicago’s new Millennium Park. The agenda for the UTC Conference included as follows: • Five Year Status Report from
UTC - David English The UTC National Conference was sponsored by a grant from the ACTEC Foundation. The grant also funded eight UTC Regional Conferences over the past two years. For more information about future UTC conferences, contact Michelle Clayton at mclayton@nccusl.org.
Editor’s Note: The National Conference of Commissioners on Uniform State Laws lost a long-time stalwart on probate and trust law in June. Below is the memorial his fellow Uniform Law Commissioner and colleague, Paul Kurtz, read at the NCCUSL Annual Meeting in July. I share it here because many lawyers are not particularly familiar with the uniform law process or its people. Many of our efforts with the Uniform Trust Code are modeled after Dick’s work on the Uniform Probate Code. Dick epitomized the best of NCCUSL. His constant efforts helped provide probate and trust law that is more clear, efficient and fair for every person – rich, poor or in between. He is greatly missed and will be long remembered. Memorial Remarks for
Commissioner Richard V. Wellman My friend and colleague Commissioner Richard V. Wellman of Georgia was taken from us on June 3, less than two months ago, after a short illness. He is survived by his widow, Natalie, his four daughters and two sons and four step-children, 16 grandchildren and a great granddaughter. Born in September, 1922 in Worthington, Ohio, Commissioner Wellman filled many roles during his almost 83 years—son, father, husband, brother, attorney and professor. In each of these roles he was extremely successful, but in none of them did he have any more impact on more people than in his position as a Commissioner on Uniform Laws, a role he filled in an exemplary fashion for 35 years. As is often the case with great people, the objective, historical facts concerning their lives are relatively easily stated. Dick earned undergraduate and law degrees from the University of Michigan, practiced law and then joined the Michigan Law faculty in 1954 where, for 20 years, he taught real property and probate law. In 1974, he migrated south to the University of Georgia as one of the first chaired professors on that faculty. Interestingly, one of the matters negotiated between Dick and the Georgia dean as part of his “package” was assurance that he would be appointed to represent Georgia in this Conference as he had been doing for Michigan since 1970. As he so often was, Dick was successful in that negotiation and served as a Georgia Commissioner from 1974 until his death. He was active in the American Law Institute, participated in a number of civic organizations, was an avid fisherman and almost-golfer and for a long time drove his precious Morris Minor automobile around the streets of Athens…as a former student put it recently, “it takes a good man to love an old car.” Dick retired from the Georgia faculty in 1994 as the Robert Cotten Alston Professor and the last 11 years of his professional life were devoted to work on Conference activities. During his 35 years of work for the Conference, he chaired four drafting committees, and served on numerous drafting committees. Oh yes, I suppose I should also mention that which all of you likely know…..he was the Chief Reporter for the Uniform Probate Code, one of the two or three most important Acts this Conference has ever promulgated and followed that with tireless service as Educational Director and then the Executive Director of the Joint Editorial Board of the UPC. Those are the objective, proveable facts. But no we come to the point at which the task of a memorialist becomes more difficult. Trying to capture in mere spoken or written words the enormity of a great person’s impact often is daunting. But that is my job and I will attempt it: To put it as simply and accurately as possible, Dick Wellman was a pioneer in the field of probate law. His original thinking, his keen intellect, his drive and his organizational skills combined to lead this Conference to the towering achievement known as the Uniform Probate Code … an act which has been adopted in about half the states and whose impact has been felt in every state. Imagine that….to be the guiding force behind the creation of a process which literally changed the law in every state, in every legislature and in every county probate court in the country. Dick drafted, revised, lobbied and testified on behalf of the UPC and his efforts resulted in a probate law that is now simpler, cheaper and easier to negotiate for those going through it (which is merely all of us). As Professor John Langbein, himself one of American law’s original thinkers who was a student and colleague of Dick’s in the probate area, put it in his memorial remarks, “The [Uniform Probate] Code is the benchmark of good practice in American law. Whenever a state…undertakes to improve any aspect of its probate procedures, the Code is always the starting point…. Dick Wellman quietly transformed American law. [His work] touched and will continue to touch the lives of millions, who will never know what he did for them.” I was honored to know Dick for almost exactly 30 years. He was a relatively new member of the Georgia faculty that I joined in 1975. He and his first wife, Louise, quickly became mentors to Carol and me and helped us make our way in academia. He gave me much excellent advice about the teaching profession, he helped cheer me up when that was needed and (through his Michigan connection with Bill Pierce) got me involved in the work of the Conference, first as a Reporter on two separate Conference projects and then, when a vacancy arose in the Georgia delegation, as a Commissioner. Always wanting to share his friends with others, Dick was careful to introduce me to all of his compadres in the Conference when we were at Annual meetings or at Drafting Committee weekends. That’s one of the many lessons he taught me…..be inclusive, put people together. I know many of you were the beneficiaries of this hobby of Dick Wellman’s. He orchestrated many good evenings with people from around the country at Annual Meetings, as we told stories and ate good food. Back at home, he also arranged to include me in the Georgia faculty poker game. I am convinced he invited me to join the game only to have somebody to share the losing with. Candor requires that I report that Dick was not our best player, but he did have the most fun. Another mark of the man is that through 30 years of interactions …cocktail party, office conversation, faculty meeting or dinner…. Dick was always upbeat, optimistic, warm, quick with a joke and a story, never harsh with his assessment of others, never a repeater of gossip. He was a bubbler, if there is such a thing. Only once in 30 years did I ever see another side of Dick. It was when I realized he had been born in Ohio and I naively asked him if he had any conflicting emotions when Ohio State played Michigan. He didn’t respond…just stared with a mixture of disbelief and wonderment, as if to say, “You must be kidding.” Only then did I realize Dick had only one team and it wore Maize and Blue. Dick was also a lucky guy. He was fortunate enough to have had two deep and abiding loves during his life….his first wife, Louise, who was cruelly taken from him by death in the early 1980’s and his second wife, Natalie, who blessed him with 21 years of a wonderful marriage which continued until his death. Many of you have spent happy hours with her as she has become an integral part of the Conference family and shared with him the happy avocation of being the glue of many friendship circles. I am glad she has been able to be here with us today and during the Annual Meeting. Since his passing, a deluge of emails from his former students has overwhelmed me…they recall a classroom dynamo who walked (and sometimes dragged) hundreds of students through the sometimes arcane fields of Property and Trusts and Estates. I wish time permitted me to read them to you, but suffice it to say they all described a brilliant, kind, accessible, practical scholar who cared about his students and nurtured them into thinking about problems and situations from a variety of perspectives. One noted that “after 23 years of practice, I still rely on Professor Wellman’s language when I need to explain basic property concepts.” Another wrote “when a Probate judge before whom I am appearing learns I am a UGA graduate, he or she often says ‘if you were taught by Professor Wellman you know more than me.’ ” A third reports, “his accessibility and his hospitality…made us feel respected and valued and … gave us hope that we would one day become the lawyers he wanted us to be.” All in all, Dick Wellman, not a bad run at all, Let’s see, you changed the face of an important area of American law so as to make it fairer, quicker and cheaper….you are remembered as a brilliant, demanding yet caring teacher, enthusiastic, warm and influential in the lives of your students and your friends. .good father, good husband, good friend…..not a bad run at all. While your loss pains us all deeply, I for one are comforted that you and Bill Pierce undoubtedly are up there plotting a campaign for a set of Uniform Laws in Heaven. You undoubtedly are the Enactment Plan Coordinator and the good news is there is only one jurisdiction to deal with, not fifty. Rest in peace, my dear friend, rest in peace. Robert M. Brucken
Presented Robert M. Brucken, a former student of Professor Wellman’s at University of Michigan School of Law, was awarded the Richard V. Wellman Award at the Uniform Trust Code National Conference held on June 26th in Chicago. The award, which will honor those who have greatly contributed to the uniform trust and estate law movement, was presented by Malcolm Moore, Chair of the Joint Editorial Board for Uniform Trust and Estate Acts. Mr. Brucken is the founding Editor-in-Chief of Probate Law Journal of Ohio, the only commercial journal for Ohio probate practitioners, upon whose Editorial Board Professor Wellman sat. He has also served as Chairman of the Estate Planning, Trust and Probate Law Section of the Ohio State Bar Association. During his three-year term of office, the Ohio estate tax was substantially reformed through the efforts of a joint lawyer-banker committee which he chaired, and many improvements in Ohio probate law were enacted. He currently is the lawyer Co-Chairman of the Joint Committee of the Estate Planning, Trust and Probate Law Section of the Ohio State Bar Association and the Ohio Bankers League that is preparing the Uniform Trust code for adoption in Ohio.
Recent and Upcoming UTC Articles On Beneficiary
Notice On Creditor
Rights On Special Needs
Trusts What is the Status of Creditors Under the Uniform Trust Code? To help estate planners know as
much as possible about the new Uniform Trust Code, This article, which first appeared in the February 2005 issue of WG&L's Estate Planning, 32 Est. Plan. 29 (Feb. 2005) is published by RIA, 117 E. Stevens Ave., Valhalla, NY 10595. Preview this and other WG&L Journals at: http://ria.thomson.com/journals/. SUZANNE BROWN WALSH, RICHARD E. DAVIS, STANLEY C. KENT, AND ALAN NEWMAN, ATTORNEYS Some practitioners have been critical of the asset protection aspects of the Uniform Trust Code (“UTC”).1 We believe that their position is based on misreadings of the UTC, case law, and both Restatements of Trust (Second) and (Third), and that they make a number of fallacious arguments. The following points respond to claims made by critics of the UTC and are discussed in detail in this article: 1. Spendthrift rule. The UTC codifies the traditional American rule under which a beneficiary’s interest in a spendthrift trust may not be either voluntarily alienated (assigned) or involuntarily alienated (attached). 2. Spendthrift exceptions. Similarly, the UTC codifies some, but not all, of the traditional exceptions to the spendthrift rule. In so doing, the UTC reaches a balance between the important public policy considerations underpinning the spendthrift exceptions and the interests of the beneficiary that are reflected in statutes or case law in most jurisdictions. 3. Elimination of the support/discretionary distinction. In accordance with the modern view, the formal distinction between support trusts and discretionary trusts is eliminated in the context of creditors’ rights. However, the UTC does not eliminate this distinction with respect to the rights and duties of beneficiaries and trustees concerning distributions. The extent of discretion granted the trustee, and the standards, if any, provided for the exercise of the trustee’s discretion, will continue their important roles in determining those rights and duties. 4. Good faith standard for trustee’s exercise of discretion. Consistent with the common law, the UTC requires the trustee to exercise its discretion in good faith, regardless of the use of such terms as “absolute” or “uncontrolled” in describing the trustee’s discretion. The good faith requirement will not increase the beneficiary’s ability to compel distributions and will not adversely affect asset protection planning with respect to the beneficiary’s interest. 5. Supplemental needs trusts. The UTC will not negatively affect either third-party settled or self-settled supplemental needs trusts (“SNTs”). By adopting the rule that prohibits creditors from forcing trustees to exercise discretion, whether or not expressed in the form of a standard, the UTC will actually clarify and improve the creditor protection afforded by properly drafted third-party SNTs. 6. Domestic relations and the UTC. Because the UTC has little or no effect on a beneficiary’s right to compel a discretionary distribution, it does not change how or if such trust interests are considered for spousal and child support purposes. The UTC does not address the division of property in divorce proceedings, nor should it change existing law as to the characterization of trust interests for this purpose. OVERVIEW The UTC, which was approved by the National Conference of Commissioners on Uniform State Laws (“NCCUSL”) in August 2000 and by the American Bar Association in February 2001, provides states with a codification of the law of trusts that is a rationally organized and comprehensive set of rules and a research resource for lawyers, trustees, settlors, and beneficiaries. It supplies statutory law for the many states that have sparse statutory and case law on trusts, and it substitutes uniformity for the current and, at times, significant variations among the states. The promulgation of the UTC has prompted a healthy and ongoing national discussion about what American trust law is and should be. This debate will ultimately benefit the millions who are now using, counseling about, administering, or enjoying beneficial interests in trusts. Most state bar associations that have studied the UTC have embraced it for enactment in their states. Nevertheless, some practitioners have attacked the UTC, claiming that the UTC substantially reduces the protection of third-party (i.e., non-self-settled) trusts from the claims of beneficiaries’ creditors. This article responds to and rebuts these claims. The UTC will actually do the opposite of what the critics assert; it will increase the creditor protection of most trusts in most states. The National UTC Committee, a group of UTC supporters working on the enactment of the UTC in over 25 states, provided assistance to the authors in the preparation of this article. UTC legislative success. The UTC is making good progress by uniform law standards. Many uniform laws in the field of estates and trusts have taken ten or more years to achieve wide enactment. By contrast, in only four years, the UTC is in force in ten states, and many more enactments are expected in the next two years. Even in Arizona, which enacted and then repealed the UTC, the Arizona Bar is continuing to work on the UTC for re-introduction in the next year or two. States have undertaken detailed studies of the UTC, making appropriate conforming changes. Uniform laws and Restatements: Distinctly different. NCCUSL drafts, promulgates, and urges the enactment of proposed uniform laws. The UTC is the first comprehensive uniform trust statute, but not the first uniform act on trusts. Notably, in the area of trusts, the Uniform Prudent Investor Act and the Uniform Principal and Income Act are very influential and have been enacted in nearly all states. NCCUSL members are appointed by states to provide nonpartisan, balanced legislation to increase the harmony of law across state lines. The process of drafting uniform acts is open; drafts are available online; and observers are encouraged to participate. Each drafting committee studies state statutory and case law, in addition to relevant treatises and commentaries. Important among the commentaries is likely to be any American Law Institute (“ALI”) Restatement of the Law (“Restatement”) relating to the subject. A Restatement is defined as a “series of volumes… that tell what the law in a general area is, how it is changing, and what direction the authors (who are leading legal scholars in each field covered) think this change should take.”2 It does not necessarily duplicate the law of every state, but it sets forth from existing law what is perceived as “the better rule.” Consequently, Restatements can be very persuasive in court proceedings in jurisdictions with no rule on a certain point. On the other hand, once a state enacts a uniform law, its judges must follow it, and any Restatement dealing with that subject, if different, is not relevant. The in-progress Restatement (Third) of Trusts is the third produced in approximately 70 years. Some critics, however, treat the UTC and the Restatement Third as if they were one unified whole, whether or not the positions of the two are the same on a particular issue. The two--although each is important in its own right--do not serve the same purpose, and not only are not identical, but are quite divergent on a number of important points.3 Both products, though often similar, work very differently to improve trust law as it continues to evolve. RESPONDING TO THE CRITICS’ 'COMMON LAW' INTERPRETATIONS This article’s purpose is to respond to criticisms of the UTC’s impact on the protection of third-party created trusts from claims of the beneficiaries’ creditors. Many of the criticisms are based upon misinterpretations of the UTC, a disregard of pertinent UTC provisions, or a misunderstanding of existing law. The issue of creditor protection deals with only five sections of the total 94 sections in the UTC. The subject of creditors’ rights varies greatly from state to state and, therefore, before enacting the UTC, many states make changes to conform the UTC to their current law. Moreover, because non-spendthrift trusts are used infrequently, many of the situations the critics address are rare. Some critics have, mischaracterized existing law by lumping “non-UTC” states together. For example, the assertion that no creditor can reach a discretionary trust is not the rule in every state, and numerous cases allow exception creditors (most commonly estranged spouses or children with valid support orders) to attach a beneficiary’s interest, particularly if the trustee’s discretion is subject to a support standard. The statement that discretionary trusts are immune to creditors’ claims is generally true only with respect to pure discretionary trusts, but even in that case, there are exceptions. Missouri, for example, allows spouses and children to reach the trust income even absent an abuse of discretion. Other states allow exception creditors to “stand at the door” and force satisfaction of a support order before the trustee makes a distribution to or for the benefit of the beneficiary/debtor.4 Moreover, under section 155(2) of the Restatement (Second) of Trusts, a trustee who makes a discretionary distribution to a beneficiary--after receiving notice of a claim of the beneficiary’s creditor--is liable to the creditor for the amount distributed. The thrust of the critics’ arguments is that the UTC gives beneficiaries of discretionary trusts enforceable rights to compel distributions, and that those enforceable rights will adversely affect the asset protection benefits discretionary trusts have traditionally provided. For several reasons, we respectfully disagree with these assertions. First, almost all trusts include spendthrift provisions. Under UTC section 502(c), creditors (other than the very short list of exception creditors that is already recognized in many states) cannot reach the interest of a beneficiary of a spendthrift trust, or the trust’s assets prior to their receipt by the beneficiary, even if the trustee is obligated to make distributions to the beneficiary that the beneficiary can compel. Second, UTC section 504(b) prohibits all creditors (other than a child, spouse, or former spouse with a judgment or court order for support or maintenance if there has been an abuse of discretion or a failure to comply with a standard for distributions) from compelling discretionary distributions, even if the beneficiary may do so. Third, and perhaps most fundamentally, the argument that UTC section 814(a) gives discretionary trust beneficiaries new, enforceable rights to compel distributions, is incorrect. This argument, which is based on the requirement in section 814(a) that a trustee exercise discretion in good faith, is clearly wrong. This argument is based on the claim that, under the common law, trustees who are granted extended discretion (by the use of such language as “sole and absolute”) are not required to act in good faith. Rather, the critics assert that a court will interfere with such a trustee’s exercise of discretion only if the trustee (1) acts dishonestly, (2) acts with an improper motive, or (3) fails to use his or her judgment. They cite in support a Colorado case, In Re Marriage of Jones,5 and the Scott and Bogert treatises on trusts.6 In another Colorado case decided a year after Jones, however, a trustee who was granted the sole and absolute discretion over distributions was found to be “in breach of his fiduciary responsibilities to act with the utmost good faith and fairness toward the beneficiary.”7 The critics’ contention that the common law does not require good faith of a trustee, no matter how broad the discretion the settlor grants the trustee, is simply wrong. Indeed, it is difficult, if not impossible, to imagine a court stating that a trustee need not act in good faith with respect to the beneficiary. As stated by the court in a recent Florida case, even if the trustee “has absolute discretion to pay out income and principal to the beneficiaries, he still must exercise good faith and be judicious in the administration of the trust.”8 Yet, the critics seize on language like that used in Jones to argue, without citation to authority, that trustees with extended discretion are held only to an absence of bad faith standard, which they argue is different from a good faith standard. Because bad faith is essentially the absence of good faith, courts use interchangeably the Jones language and language requiring that the trustee act in good faith. That is made plain in a California case in which the court stated that if:
Similarly, section 187.2 of Scott on Trusts describes the limits on the discretion of a trustee (who is relieved by the settlor of the otherwise applicable requirement to exercise its discretion reasonably) first by providing that the trustee may act “beyond the bounds of a reasonable judgment, if he acts in good faith and does not act capriciously” (emphasis added). The same section 187.2 later provides that if “by the terms of the trust [the trustee] is not required to act reasonably, the court will interfere where he acts dishonestly or in bad faith, or where he acts from an improper motive” [footnotes omitted; emphasis added]. There is no mention of these standards being substantively different. RESPONSE TO THE CRITICS’ SIX MAJOR CLAIMS Does the UTC weaken spendthrift trusts? The UTC recognizes the spendthrift trust and provides fewer exception creditors than under common law or the Restatements.10 Accordingly, most creditors of a beneficiary of a spendthrift trust may not reach the beneficiary’s interest, the trust assets, or a distribution to or for the benefit of the beneficiary (unless and until the beneficiary receives it, at which point the creditor is able to reach it in the beneficiary’s hands). Because most trust instruments include spendthrift provisions, and there are few exception creditors under the UTC, the common law distinctions among discretionary, support, and hybrid trusts are irrelevant with respect to creditors’ rights in almost all circumstances. The critics miss this fundamental point. Regarding exceptions to spendthrift protection, even the critics concede that the UTC supports asset protection when it eliminates from the list of exception creditors persons who provide necessities to beneficiaries of spendthrift trusts. The criticism, though, points to UTC provisions defining spouses, former spouses, and children as exception creditors. In fact, treating spouses and children as exception creditors is the majority rule in the United States. States that do not recognize them as exception creditors are free to modify the UTC to reflect their current law, as some have already done. We believe that the critics make two incorrect arguments with respect to the basic spendthrift protection the UTC provides.11 First, they argue that under the UTC, trustees of spendthrift trusts, the beneficiaries of which have creditor problems, will not be able to make protected distributions for the benefit of such beneficiaries (instead of outright distributions to the beneficiary, which creditors could then reach). This argument is based on language in UTC section 501 which allows creditors to attach distributions for the benefit of the beneficiary, as well as to the beneficiary. Section 501, however, applies only “[t]o the extent a beneficiary’s interest is not protected by a spendthrift provision.” Second, the critics argue that spendthrift protection applies only to assets held in trust, and that any creditor (not just an exception creditor) can attach an interest in a spendthrift trust and merely wait until the trustee decides to make a distribution that would have to be paid to the creditor. Article 5 of the UTC shows that this claim is incorrect. Section 501 states that creditors can attach distributions only if spendthrift protection is not available.12 Section 502(c) provides that creditors cannot reach a distribution from a spendthrift trust before the beneficiary receives it. Will the UTC cause an expansion of exception creditors? The critics warn “it may be only a matter of time before the state or federal government is able to convince the state legislators to add them as an exception creditor.”13 The critics’ concern ignores the fact that the federal government already has the power to preempt the states to reach the interest of beneficiaries of spendthrift trusts to satisfy claims to the United States, as it already has done with respect to income tax obligations.14 The federal government need not convince any state legislature, much less all 50. And, regardless of the UTC, a state can always adopt new law on the enforceability of spendthrift provisions. At least with the UTC, the exceptions will be codified, making them more certain than under current common law. With the ten state enactments of the UTC thus far, there has been no move by state legislatures to expand the exception creditor provisions of the UTC. In fact, the reverse is true, as some UTC states have deleted some or all of the exception creditors.15 Another erroneous criticism is that the UTC does not limit courts from adding judicially created spendthrift exception creditors.16 To the contrary, section 502(c) expressly prohibits creditors from reaching spendthrift trust interests “except as otherwise provided in this [article].” Accordingly, the UTC list of exception creditors is exclusive. This is just one of many instances in which the UTC deviates from the Restatement (Third) in the area of creditors’ remedies,17 and in this regard the UTC is more asset protection friendly than either the common law or the Restatements. Does the UTC’s elimination of the distinction between discretionary and support trusts weaken asset protection? Under UTC section 504, most creditors of a beneficiary--even those who have the right to attach distributions--may not compel discretionary distributions. This is true even if the trust is for the beneficiary’s support and the creditor’s claim is based on having provided support to the beneficiary. This treatment by the UTC of support trusts as discretionary trusts with a support standard enhances asset protection planning.18 The UTC’s elimination of the distinction between discretionary trusts and support trusts for purposes of Article 5 recognizes that a great many trusts give the trustee the discretion to provide for the beneficiary’s support. Under the UTC, trusts that direct the trustee to support the beneficiary, without an express grant of trustee discretion, will be treated as if the trust had expressly granted that discretion to the trustee. The critics discuss judicial efforts to distinguish among discretionary trusts, support trusts, discretionary support trusts, and hybrid trusts, but the arguments painfully illustrates the benefit of abolishing the arbitrary and artificial distinctions among them. In addition, the UTC’s elimination of the distinction between discretionary and support trusts will not expand creditors’ rights. This is not only because of section 504, discussed above, but also because most trusts include a spendthrift provision. The protection a spendthrift provision provides is in no way affected by whether the trust would have been a discretionary trust or a support trust under the traditional rules. Except for the very few exceptions specifically listed in Article 5, the protection afforded by spendthrift provisions is ironclad for all types of trusts. Furthermore, eliminating the distinction between discretionary trusts and support trusts for creditors’ rights purposes under Article 5 does not change the duties of the trustee and the rights of the beneficiary with respect to distributions. Rather, those duties and rights will continue to be determined in accordance with virtually universal doctrine, including the extent of discretion the settlor grants the trustee and the types of distribution standards, if any, that are contained in the trust.19 The critics state that “claims of the U.S…, including the IRS, have never been enforced against a discretionary trust,” and that the UTC would permit this.20 However, the federal government has successfully attached distributions made from purely discretionary trusts.21 Furthermore, a careful reading of section 503(c) shows that the UTC is silent on the remedies available to governmental exception creditors. Because UTC section 501 applies only to trusts that lack a spendthrift provision, that section does not grant any new powers to federal or state governments as against spendthrift trusts. Only if a trust lacks a spendthrift provision does UTC section 501 allow the United States, in enforcing a claim for unpaid income taxes, to attach distributions the trustee of a discretionary trust decides to make in the exercise of its discretion--a right that it already had.22 Does the UTC harm special or supplemental needs trusts? The critics believe that the UTC will: (1) curtail and eventually eliminate SNT planning, and (2) enable the federal and state governments to attach beneficial interests in SNTs.23 No authority is cited to support this assertion, and the plain language of UTC section 504 is ignored. SNTs are either third-party settled (e.g., a parent making a gift in trust for a disabled child) or self-settled (e.g., a disabled person funding a trust with her or his property in strict accordance with federal and state statutes). SNTs are not "asset protection" trusts. They are established to assure qualification for government welfare benefits such as Medicaid and Supplemental Security Income (“SSI”). A third-party SNT is effective because it is not funded with the beneficiary's property and either (preferably both): (1) its terms prohibit the trustee from making distributions for support otherwise provided by government welfare benefit programs; or (2) the trustee's distribution authority is discretionary.24 Inclusion of discretionary support standards in the terms of such SNTs has resulted in considerable litigation in states that determine a trust beneficiary’s eligibility to receive certain need-based government benefits depending on whether the trust is a “support” trust or “discretionary” trust.25 UTC section 504 prescribes an absolute rule prohibiting all creditors from compelling trustees' exercise of discretion.26 This rule applies whether or not a spendthrift provision is included. Including a spendthrift provision, however, will surely enhance creditor protection. A self-settled SNT is effective for purposes of qualifying for government welfare benefits only if it is drafted in strict accordance with OBRA ‘93 and applicable state statutes. Self-settled SNTs were never intended to be asset protection devices,27 nor do they need to be to achieve their intended purpose. The point easily overlooked is that neither the federal government, with respect to SSI and Medicaid, nor the states, with respect to Medicaid, are a "creditor" of the SNT beneficiary. Only after the death of the beneficiary does the state (and not the federal government) become a creditor with respect to Medicaid benefits paid prior to death under federally mandated estate recovery. Because a properly drafted self-settled SNT must distribute to the state upon termination (to the extent of benefits paid to or on behalf of the Medicaid recipient), a state's creditor status is never an issue. We believe the critics are wrong in attempting to attribute federal and state creditor attachment powers to the UTC. Federal preemption assures that congressional legislation can pierce spendthrift provisions despite state law such as the UTC. Moreover, there is no rule that prevents the states from enacting spendthrift avoiding legislation.28 The UTC does not create these possibilities; they are a reality whether or not the UTC is law. Two additional points to keep in mind are: (1) there is no necessities provider exception to spendthrift protection under the UTC; and (2) the state is not an exception creditor for spendthrift purposes under section 503(c), except to the extent that a state statute so provides (and federal law prohibits states from becoming creditors with respect to Medicaid benefits until after the death of the recipient). Does the UTC enhance spousal rights in divorce litigation? The critics contend that the UTC will give former spouses far greater rights against trusts for purposes of awards of alimony and child support than such spouses currently enjoy.29 Specifically, the critics rely on the Massachusetts case of Dwight v. Dwight.30 They expand the holding with greater leaps than a reasonable reading of the case can support, asserting that the appellate court relied on the Restatement (Third) section 59 as authority to dismiss the husband’s claim that the court should not have considered a discretionary spendthrift trust for his benefit. In actuality, the court mentioned the Restatement (Third) only once, in a footnote reference to an issue the court stated it did not need to reach. In fact, Dwight does not stand for the premise that a fully discretionary trust may be considered as imputed income in spousal support claims. The trial court considered the husband’s potential income rather than the limitation imposed by his own voluntary action (he had asked the trustee not to make payments to him, although payments were authorized for his support, comfort, and maintenance). This complicated, fact-driven, and narrowly tailored decision avoids the issue of spendthrift trusts altogether. Rather, it deals only with the separation agreement, which authorized the wife to file a complaint for alimony if the husband received a substantial inheritance. The appellate court merely upheld the trial court’s ruling that “the transfer to the trust in 1994 was a substantial inheritance within the meaning of the separation agreement,” without which the ability of the spouse to bring the case would not have existed. This was a factual determination consistent with prior Massachusetts law. Thus, the appellate court upheld it as “not clearly erroneous.” The critics cite an “excellent” analysis of Dwight in the Massachusetts Lawyers Weekly31 in support of their interpretation of the case. However, that analysis not only fails to support the critics’ interpretation, it specifically concludes that “a thorough reading and consideration of Dwight reveals that in fact the decision as written had nothing to do with the spendthrift trust rule or creditors’ (including creditor spouses’) rights to reach the income or the assets in such a trust.” In addition, the critics contend that in a state enacting the UTC, a beneficiary’s separate property interest in a discretionary trust would be more likely to be considered in determining how to divide marital property in a divorce. (Some, but not all, states consider spouses’ separate property, including beneficial interests in discretionary trusts, as a factor in deciding how to divide their marital property in a divorce.32) The basis for this argument is the unsupported contention that the UTC grants the beneficiary an enforceable right to compel discretionary distributions (that may constitute an interest in property), which did not exist at common law. A trustee’s exercise of even the broadest discretion is subject to judicial control under a minimum good faith standard of conduct. The UTC’s formulation--“in good faith and in accordance with the terms and purposes of the trust and the interests of the beneficiaries”--is not a change in the standard. Rather, the UTC standard simply states the common law, as the fiduciary nature of the trust relationship necessarily means that a trustee must act in good faith. Finally, the critics argue that because the UTC eliminates the distinction between discretionary trusts and support trusts, it enhances a beneficiary’s ability to compel distributions. From this faulty premise, they argue that there will be an increased likelihood that the beneficiary’s interest will be considered in dividing marital property. As discussed above, the UTC has eliminated the distinction between discretionary and support trusts in Article 5 only for purposes of determining the rights of a beneficiary’s creditors. This is made even more clear in other parts of the UTC. Accordingly, the comments to section 814, which deals with minimum standards of conduct in the exercise of discretion, state: “A grant of discretion establishes a range within which the trustee may act. The greater the grant of discretion, the broader the range.” Further, section 106 provides that the UTC is supplemented by the common law of trusts, under which great deference is given to the trustee’s exercise of discretion, particularly when the terms of the trust do not include a standard (such as support) for its exercise, and when the settlor uses such extended discretion language as “absolute and uncontrolled.”33 Consequently, the UTC’s treatment of support trusts as a form of discretionary trust for creditors’ rights purposes likely will have little or no effect on the issue of the extent to which (if at all) a beneficiary may compel discretionary distributions in a given situation. Therefore, the UTC should not make beneficiary interests in trusts any more vulnerable to property division than they are under existing law. Will the UTC cause malpractice lawsuits? The critics argue that a state’s enactment of the UTC may subject lawyers to a host of malpractice issues.34 The crux of this argument revolves around an attorney’s failure to disclose the “potential decrease in asset protection available to beneficiaries” in states that have adopted the UTC. As this article has demonstrated, the UTC has not caused a decrease in asset protection availability, nor does it significantly expand creditors’ rights, as erroneously claimed. Estate planning in a UTC state is not malpractice. CONCLUSION: THE UTC
IMPROVES AMERICAN TRUST LAW Basic default rules. The UTC is primarily a default law that settlors can draft around. If a trust instrument is silent, though, the UTC often provides answers to difficult questions. Virtual representation. Certain unrepresented beneficiaries may be bound by a decision of persons with a substantially identical interest with respect to a particular question or dispute, so long as there is no conflict of interest and the interest is sufficiently protected. Modification and termination provisions. The UTC liberalizes the ability to modify or terminate a trust without disregarding the key principle of honoring the settlor’s intent. These improvements are important because long-term trusts are becoming much more popular. Spendthrift provision. A spendthrift provision, which provides asset protection for beneficiaries, may be created by general reference to “spendthrift trust” in the trust instrument. Charitable trusts. The UTC provides a statutory structure for charitable trusts, codifying trust purpose and the common law doctrine of cy pres. Revocable trusts. The UTC recognizes revocable trusts and devotes an Article to the subject. Revocable trusts are generally viewed as a will substitute and are the most popular, modern trust form for estate planning. Removal of trustee. Upon request to the court by the settlor, co-trustee, beneficiary, or on the court’s own initiative, a trustee may be removed for appropriate grounds such as breach of trust or a lack of cooperation among co-trustees that substantially impairs the administration of the trust. Trustee’s duties and powers. The UTC specifies a trustee’s powers and duties, in detail, and provides numerous procedural rules concerning a trust’s administration. Protection of beneficiaries. The UTC provides protection to beneficiaries through disclosure requirements and fiduciary principles. Remedies. The UTC identifies the remedies for breach of trust, describes how money damages are to be determined, and specifies potential defenses. The use of trusts continues to grow. The UTC will allow lawyers from state to state to speak a common language. In view of modern mobility, both in terms of residence and property, the certainty of the UTC will provide economic efficiency. The UTC will make trust law readily accessible to both the legal community and the public. In specific areas where a state reaches a different conclusion for its own policy reasons, the UTC can be amended. Most enacting states have made changes, whether small or large; one state enacted a somewhat surprising version that ultimately satisfied two widely divergent groups.35 Such disagreements are not major issues when compared to the benefits that general uniformity among the states affords. The UTC has strong support from the estate planning bar, and we believe that the UTC will be a great overall improvement in American trust law. SUZANNE BROWN WALSH is a Principal of the law firm of Cummings & Lockwood LLC, resident in the West Hartford office. She is also a Fellow of the American College of Trust and Estate Counsel and a former Chair of the Connecticut Bar Association’s Elder Law Section. RICHARD E. DAVIS is a principal of the Canton, Ohio, law firm of Krugliak, Wilkins, Griffiths & Dougherty Co., L.P.A. where he chairs the Estate Planning and Elder Law Practice Groups. He is also a Fellow of the American College of Trust and Estate Counsel, and is a Certified Elder Law Attorney by the National Elder Law Foundation and a Certified Specialist in Estate Planning, Trust and Probate Law (by the Ohio State Bar Association). STANLEY C. KENT practices law in Colorado Springs. He is a Fellow of the American College of Trust and Estate Counsel and a former Chair of the Colorado Bar Association’s Trust & Estate Law Section. ALAN NEWMAN is Associate Professor at the University of Akron School of Law. He is also an Academic Fellow of the American College of Trust and Estate Counsel, a CPA, and a past Chair of the Taxation Section and the Estate Planning and Probate Law Section of the Oklahoma Bar Association. Mr. Newman is the Reporter for the Ohio Uniform Trust Code Joint Committee of the Ohio Bankers League Legal, Legislative and Regulatory Committee and the Ohio State Bar Association Estate Planning, Trust, and Probate Law Section. 1 See, e.g., Merric and Oshins, “Effect of the UTC on Asset Protection of Spendthrift Trusts,” 31 ETPL 375 (Aug. 2004); Merric and Oshins, “UTC May Reduce the Asset Protection of Non-Self-Settled Trusts,” 31 ETPL 411 (Sept. 2004); Merric and Oshins, “How Will Asset Protection of Spendthrift Trusts Be Affected by the UTC?,” 31 ETPL 478 (Oct. 2004). 2 Black’s Law Dictionary, p. 1313 (6th ed. 1990). 3 In the area of creditors’ rights, for example, the UTC and the new Restatement (Third) differ in several important respects. For example, (1) UTC §504(b) rejects the position of the Restatement in comment e to §60 that allows any creditor of a beneficiary to seek to compel discretionary distributions; (2) UTC §§502 and 503 reject the Restatement’s position (see comment a to §59) that tort claimant and other public policy exceptions may be made to spendthrift protection; and (3) UTC §503 excludes claims of necessities providers as exception creditors, which are recognized as exception creditors by the Restatement in §59. 4 See Restatement (Third) §60, Reporter’s Notes to comments b and c. 5 812 P.2d 1152 (Colo., 1991). 6 See generally Scott on Trusts (4th ed. 1989), and Bogert, The Law of Trusts and Trustees (2nd ed. 1980). 7 Matter of Estate of McCart, 847 P.2d 184 (Colo. App., 1992). 8 Friedman v. Friedman, 844 So.2d 789 (Fl. App., 2003). Accord, Matter of Estate of Mayer, 672 N.Y.S.2d 998 (1998); Funk, 185 F.2d 127, 39 AFTR 1249 (CA-3, 1950); Alexander v. Alexander, 561 S.W. 59 (Ark., 1978). See also Restatement (Second) §187, comment j, which requires the trustee to act “in a state of mind in which it was contemplated by the settlor that he would act.” 9 In re Ferrall’s Estate, 258 P.2d 1009 (Cal., 1953). 10 Under the Restatements, necessities providers are spendthrift exception creditors. Restatement (Second) §157(b); Restatement (Third) §59(2). They are not under UTC §503. Unlike the law in some states (see, e.g., N.Y. Est. Powers & Trusts Law §7-3.4), the UTC does not limit protected distributions that may be made to or for the benefit of a beneficiary of a spendthrift trust to, for example, amounts needed for the beneficiary’s support. 11 Merric and Oshins, “How Will Asset Protection of Spendthrift Trusts Be Affected by the UTC?,” 31 ETPL 478 (Oct. 2004). 12 Because the language of UTC §501, which is derived from the Restatement (Second) §155 and Scott on Trusts §155.1, may not be sufficiently clear, NCCUSL will consider an amendment to §501 in January 2005 to clarify that §501 applies only if the trust does not contain a spendthrift provision. 13 Merric, supra note 11, at 484. 14 See, e.g., Cohn, 855 F. Supp. 572, 73 AFTR2d 94-2180 (DC Conn., 1994). 15 See, e.g., W.S. 4-10-503, under which Wyoming recognizes as exception creditors child support claimants, but not spouses or former spouses. 16 Merric, supra note 11. 17 The Restatement (Third) provides that public policy may justify the creation of additional spendthrift exceptions. See Restatement (Third) §59, comment a(2). 18 Compare Estate of Dodge, 281 N.W.2d 447 (Iowa, 1979); Sisters of Mercy Health Corp. v. First Bank of Whiting, 624 N.E.2d 520 (Ind. App., 1993); In re Mayer's Will, 59 N.Y.S.2d 561 (N.Y. Sur., 1945). See also cases collected in Scott on Trusts, §157.2 (dealing both with the necessities provider’s spendthrift exception the UTC rejected and with the ability of support creditors to compel distributions from trusts for the support of beneficiary/debtors). 19 The Restatement (Third), which also eliminates the distinction between discretionary and support trusts, includes in §50 a lengthy discussion of the various factors that affect the exercise of discretionary distribution powers. 20 Merric, supra note 11, at 482. 21 Cohn, supra note 14. See also O’Shaughnessy, 517 N.W.2d 574 (Minn., 1994) (holding that a beneficiary’s interest in a purely discretionary trust is not “property” or “any right to property,” within the meaning of the federal tax lien statute, before the trustee has exercised its discretionary power of distribution under the trust agreement). 22 Id. 23 Merric, supra note 11, at 486. (pt.3), 24 Kruse, Jr. Third-Party and Self-Created Trusts, pp. 61-78 (3rd ed. ABA 2002). 25 Bureau of Support v. Kreitzer, 243 N. E. 2d 83 (Ohio, 1968). 26 UTC § 504 (c) provides that a beneficiary’s child, spouse, or former spouse with a judgment or order for support against the trust beneficiary may nonetheless obtain a court order directing the trustee to pay an equitable amount if the trustee has abused discretion. 27 Except in a limited number of jurisdictions including Alaska, Delaware, Rhode Island, Nevada and Utah, a settlor's creditors are not barred from reaching the assets held in a trust of which the settlor is a beneficiary. While an OBRA ‘93 self-settled trust technically has the beneficiary's parent, grandparent, guardian or conservator as the nominal settlor, such a trust is required to be funded with the beneficiary's assets, thereby exposing the trust assets to the claims of the beneficiary's creditors under common law, the Restatements, and the UTC. 28 Restatement (Second) §157(d); Restatement (Third) §59, comment a. 29 Merric, supra note 11, at 487. 30 756 N.E.2d 17 (Mass. Ct. of App., 2001). 31 See Bove, Jr. and Langa, “Another Look at ‘Dwight’ and Spendthrift Trusts,” Massachusetts Lawyers Weekly (12/10/01). See also www.bovelaw.com. 32 See, e.g., In re Marriage of Jones, 812 P.2d 1152 (Colo., 1991). 33 Restatement (Third) §50, comment c; Restatement (Second) §187, comment j. 34 See Merric, Gillen, and Freeman, “Malpractice Issues and the Uniform Trust Code,” 31 ETPL 586 (Dec. 2004). 35 In 2003, Utah authorized self-settled spendthrift trusts similar to those in Alaska. In 2004, the Legislature found it both beneficial and relatively easy to enact most of the rest of the UTC. Utah Code Ann. §75-7-101. Other states have considered the Alaska option and rejected it because of the concerns raised about such trusts’ validity. See Boxx, “Gray’s Ghost: A Conversation About the Onshore Trust,” 85 Iowa L. Rev. 1195 (May 2000).
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