Ten Things You Should Know about the Alabama Uniform Trust Code, 0518 ALBJ, 79 The Alabama Lawyer 200 (2018)

• Author: R. Mark Kirkpatrick
• Position: Vol. 79 3 Pg. 200

Ten Things You Should Know about the Alabama Uniform Trust Code

Vol. 79 No. 3 Pg. 200

Alabama Bar Lawyer

May, 2018

R. Mark Kirkpatrick

1. The Alabama Uniform Trust Code (UTC) contains both default and mandatory rules.

The UTC, Ala. Code §19-3B-101 et seq. (1975) contains default rales that apply when the trust instrument is silent. It also has 13 mandatory rules that will apply to all trusts regardless. See Ala. Code §19-3B-105.

2. The UTC does not authorize investment in stock of a private corporation.

There is a constitutional prohibition against investment in stock of a private corporation absent a specific authorization in the trust. Thus, you cannot rely on the UTC for such authorization. See Ala. Code §19-3-B-902(e).

3. Spendthrift provisions do not protect against a domestic relations order for support and maintenance.

A spendthrift provision is one that restrains the beneficiary's ability to voluntarily and involuntarily transfer his or her interest in the trust. If present, this protects the beneficiary's interest from creditors. The only requirement is to indicate an intent that it be a spendthrift trust. See Ala. Code §19-3B-502. The most notable exception to spendthrift protection is the one for domestic relations orders on behalf of the beneficiary's child or former spouse for support and maintenance. Ala. Code §19-3B-503.

4. Absent a waiver in the trust instrument, a trustee has a duty to inform all qualified beneficiaries of certain matters.

A qualified beneficiary is any beneficiary currently eligible to receive a distribution from the trust, any successive income beneficiary and presumptive remainder beneficiaries. Absent a waiver in the trust instrument, the trustee of any trust (created after January 1, 2007) has a duty to inform all qualified beneficiaries of the existence of the trust, the name of the settlor or creator, the right to request the trust instrument, the right to receive the trustee's most recent accounting and the right to receive the trustee's most recent report. Ala. Code §19-3B-813.

5. A trustee has a non-waivable duty to respond promptly to a qualified beneficiary's request for trustee's reports and other information reasonably related to the administration of a trust. Ala. Code §19-3B-105.

While the creator of the trust may waive the duty to inform discussed above, he or she may not waive the duty to promptly respond to a...