Bill > HB207

This bill amends Alabama's Uniform Trust Code to align with the Alabama Qualified Dispositions in Trust Act and to limit the property that can be claimed by creditors. Specifically, it clarifies that while property in a revocable trust remains subject to the settlor's creditors' claims, irrevocable trusts are protected from such claims except as provided by Chapter 3E, which likely refers to the Qualified Dispositions in Trust Act. The bill also modifies rules regarding claims against a deceased settlor's revocable trust, including notice periods for creditors and the priority of payments, and clarifies that a beneficiary holding a power of withdrawal in an irrevocable trust does not become a settlor upon the lapse of that power. Additionally, it expands the powers of a trustee, allowing them to make distributions to or for the benefit of a settlor to cover income taxes on trust assets, and clarifies that a trustee is not responsible for ensuring the proper application of payments made to a beneficiary under a legal disability if the trustee acted prudently in selecting the recipient. The bill also makes technical amendments to existing language and specifies an effective date of October 1, 2026.

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