(a) This section applies to a creditor’s claim with respect to a discretionary interest in an irrevocable trust, unless the trust instrument provides otherwise.
Terms Used In Alaska Statutes 34.40.113
action: includes any matter or proceeding in a court, civil or criminal. See Alaska Statutes 01.10.060
Attachment: A procedure by which a person's property is seized to pay judgments levied by the court.
Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
Entitlement: A Federal program or provision of law that requires payments to any person or unit of government that meets the eligibility criteria established by law. Entitlements constitute a binding obligation on the part of the Federal Government, and eligible recipients have legal recourse if the obligation is not fulfilled. Social Security and veterans' compensation and pensions are examples of entitlement programs.
Irrevocable trust: A trust arrangement that cannot be revoked, rescinded, or repealed by the grantor.
Trustee: A person or institution holding and administering property in trust.
(b) A discretionary interest in an irrevocable trust is not a property interest or an enforceable right. It is an expectancy that a creditor of a beneficiary may not attach or otherwise reach.(c) A creditor of a beneficiary may not force a distribution with regard to a discretionary interest in an irrevocable trust. A creditor may not compel a trustee to exercise the trustee’s discretion to make a distribution with regard to a discretionary interest in an irrevocable trust.(d) Even if a beneficiary has an outstanding creditor, in the case of a discretionary interest in an irrevocable trust, a trustee who has the authority to pay income or principal to a beneficiary may pay it to a third party if the payment is for the benefit of the beneficiary. A trustee is not liable to a creditor for paying income or principal on behalf of the beneficiary.(e) A creditor of a beneficiary may not maintain an action or a proceeding in court that interferes with the trustee’s discretion to apply income or principal on behalf of the beneficiary.(f) A creditor of a beneficiary may not obtain an order of attachment or similar relief that would prevent a trustee from making a discretionary payment to a third party on behalf of the beneficiary.(g) This section does not prevent a creditor from obtaining relief from a fraudulent transfer under AS 34.40.110.(h) In this section, a beneficiary’s entitlement to a distribution is within the discretion of a trustee, whether or not the trust instrument states the purposes for the distribution or uses “may,” “shall,” “sole and absolute,” “uncontrolled,” or similar words.(i) In this section, “discretionary interest” means a beneficiary’s interest in an irrevocable trust if the beneficiary’s entitlement to a distribution is within the discretion of the trustee.
