(a) Whether or not the terms of a trust contain a spendthrift provision, the following rules apply: (1) During the lifetime of the settlor, the property of a revocable trust is subject to claims of the settlor's creditors. (2) With respect to an irrevocable trust, whether created on, before, or after January 1, 2025: (A) except as otherwise provided in this section, a creditor or assignee of the settlor may reach the maximum amount that can be distributed to or for the settlor's benefit. If a trust has more than one settlor, the amount the creditor or assignee of a particular settlor may reach may not exceed the settlor's interest in the portion of the trust attributable to that settlor's contribution; and (B) notwithstanding subitem (A), the trustee's discretionary authority to pay directly to the taxing authorities or to reimburse the settlor for any tax on trust income or trust principal that is payable by the settlor under the law imposing the tax may not be considered to be an amount that can be distributed to or for the settlor's benefit. (3) After the death of a settlor, and subject to the settlor's right to direct the source from which liabilities will be paid, and except to the extent state or federal law exempts any property of the trust from claims, costs, expenses, or allowances, the property held in a revocable trust at the time of the settlor's death is subject to claims of the settlor's creditors, costs of administration of the settlor's estate, the expenses of the settlor's funeral and disposal of remains, and statutory allowances to a surviving spouse and children to the extent the settlor's probate estate is inadequate to satisfy those claims, costs, expenses, and allowances, unless barred by Section 62-3-801, et seq. (b) For purposes of this section: (1) a beneficiary who is a trustee of a trust, but who is not the settlor of the trust, cannot be treated in the same manner as the settlor of a revocable trust if the beneficiary-trustee's power to make distributions to the beneficiary-trustee is limited by an ascertainable standard related to the beneficiary-trustee's health, education, maintenance, and support; (2) the assets in a trust that are attributable to a contribution to an inter vivos marital deduction trust described in either Section 2523(e) or (f) of the Internal Revenue Code of 1986, after the death of the spouse of the settlor of the inter vivos marital deduction trust are deemed to have been contributed by the settlor's spouse and not by the settlor; (3) that portion of a trust, whether created on, before, or after January 1, 2025, that can be distributed to or for the settlor's benefit solely because the settlor's interest in the trust was created by the settlor's spouse or by any third party, whether through the exercise of a power of appointment or otherwise is considered to have been contributed to the trust by the person exercising the power of appointment or otherwise creating the interest and not by the settlor. Effect of Amendment The 2010 amendment in subsections (a)(3) and (b) made nonsubstantive changes. The 2013 amendment, in subsection (a)(3), substituted "the property held in a revocable trust at the time of the settlor's death" for "the property of a trust that was revocable at the settlor's death", added subsection identifier (1) to subsection (b), and added subsection (b)(2), relating to Section 2523 of the Internal Revenue Code of 1986. 2025 Act No. 25, SECTION 4, in (a), rewrote (2); in (b), added (3); and made nonsubstantive changes.
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