53-12-82. Rules for trusts; consideration of assets of an inter vivos marital trust following death.

As used in this subsection, the term “creditor” means:#

1. (A)

   With respect to subparagraphs (A) and (B) of paragraph (2) of this subsection, those creditors of a donor whose claims against the property of the trust are governed by this article, including those creditors identified in subsection (d) of Code Section 53-12-80; and#

2. (B)

   With respect to subparagraph (C) of paragraph (2) of this subsection, those claimants whose claims against the property of a donor’s estate are governed by Article 4 of Chapter 7 of this title, including those claimants identified in Code Section 53-7-40.#

Regardless of whether the trust instrument contains a spendthrift provision, the following rules shall apply:#

1. (A)

   During the lifetime of the settlor, the settlor shall be treated as the donor of all property of a trust revocable by such settlor and such property shall be subject to claims of such donor’s creditors;#

2. (B)

   With respect to an irrevocable trust:#

   1. (i)

      Creditors or assignees of the donor may reach the maximum amount that can be distributed to or for the donor’s benefit during the donor’s life or that could have been distributed to or for the donor’s benefit immediately prior to the donor’s death; and#

   2. (ii)

      The portion of a trust that can be distributed to or for the donor’s benefit pursuant to the power of a trustee, whether arising under the trust instrument or any other law, to make a distribution to or for the benefit of a donor for the purpose of reimbursing the donor in an amount equal to any income taxes payable on any portion of the trust principal and income that is treated as the donor’s individual income under applicable law shall not be considered an amount that can be distributed to or for the donor’s benefit during the donor’s life or that could have been distributed to or for the donor’s benefit immediately prior to the donor’s death; and#

3. (C)

   After the death of a donor, and subject to the donor’s right to direct the source from which liabilities shall be paid:#

   1. (i)

      The settlor shall be treated as the donor of all property of a trust that was revocable by the settlor at the settlor’s death or had become irrevocable as a result of the settlor’s incapacity, and such property shall be subject to claims of the creditors of the donor’s estate to the extent the donor’s probate estate is inadequate; and#

   2. (ii)

      Payments that would not be subject to the claims of the creditors of the donor’s estate if made by way of beneficiary designation to persons other than the donor’s estate shall not be made subject to such claims by virtue of this Code section unless otherwise provided in the trust instrument.#

As used in this subsection, the term:#

1. (A)

   “Donor’s spouse” means the spouse of the donor at the time of the creation of an inter vivos marital trust, regardless of whether such spouse is married to the donor at the time of such spouse’s death.#

2. (B)

   “Inter vivos marital trust” means:#

   1. (i)

      A trust described in Section 2523(e) of the Internal Revenue Code of 1986;#

   2. (ii)

      A trust for which the election described in Section 2523(f) of the Internal Revenue Code of 1986 has been made; or#

   3. (iii)

      Another trust to the extent such trust’s property is attributable to a trust described in division (i) or (ii) of this subparagraph.#

Subject to Article 4 of Chapter 2 of Title 18, after the death of the donor’s spouse, the property of an inter vivos marital trust shall be deemed to have been contributed by the donor’s spouse and not by the donor so that the spouse becomes the donor of all such property; provided, however, that this Code section shall not apply to any property contributed to such trust after the death of the donor’s spouse.#