ATTORNEYSMichael A. Bosco , JrMark S. Bosco Lance R. Broberg Paul D. Cardon David L. Case Darren T. Case J. James Christian David W. Cowles Matthew D. Dayton Tina M. Ezzell James A. Fassold William H. Finnegan William M. Fischbach Richard C. Gramlich Alisa J. Gray Brett M Hager Beth A. Heath Richard G. Himelrick Hamid Jabbar Nora L. Jones Christopher R. Kaup Pamela L. Kingsley Timothy A. La Sota William E. Lally Christopher A. LaVoy Todd T. Lenczycki Stephen P. Linzer Aaron T. Lloyd May Lu Leonard J. Mark J. Lawrence McCormley Leonard J. McDonald Kevin P. Nelson James P. O'Sullivan Richard E. Oney Dow Glenn Ostlund Alexander Poulos Michael J. Rogers Robert A. Royal Matthew K. Schriever Kevin S. Soderstrom Natalya Ter-Grigoryan Michael E. Tiffany Gregory L. Wilde
LAND PLANNERSKurt A. Jones , AICPJacob E. Zonn
The New Arizona Trust Code
By: Darren T. Case| David L. Case
Last year our legislature unanimously passed the new Arizona Trust Code (the "ATC"), which for the most part became effective January 1, 2009.Supplemental legislation, effective September 30, 2009, has made technical corrections to and clarified the ATC, and made other additions not in the original bill.David L. Case, one of the authors of this short summary of the ATC, worked on State Bar committees the last few years finalizing and securing passage of this massive legislation.
The process of enacting the ATC has spanned nearly a decade.For practical reasons, the Model Uniform Trust Code (the "UTC"), sponsored by the National Conference of Commissioners on Uniform State Laws, has been the basic framework for the ATC.Although Arizona had previously repealed its earlier version of the UTC, almost all of the objections that had led to its repeal have been addressed by the ATC.
The new ATC greatly clarifies many areas of Arizona trust law and related laws, provides entirely new planning techniques, and adds new avenues to construe and amend irrevocable trusts.These changes will help clients, their attorneys, and the courts to find reasonable and practical solutions for many situations.
Creditor protection avenues have been expanded.Clients now have additional ways to protect their family and other trust beneficiaries under traditional "spendthrift" clauses.New provisions allow better protection of proceeds and cash value of life insurance policies.A single beneficiary (including a surviving spouse) of a trust established by another party can now act as sole trustee without losing creditor protection.There is a new rule that protects against invasion of an irrevocable trust for alimony obligations of the beneficiary.
Tax planning has been made easier. In several respects, the new provisions are unique to Arizona.These provide estate planning attorneys and their clients with the previously non-existent means to accomplish wealth transfer tax planning goals.
The rule against perpetuities (limiting the length of time for which trusts can exist) has been expanded to 500 years.This allows clients to protect assets in trust for their beneficiaries for much longer periods, against creditor attacks and wealth transfer tax application.
Despite all of its benefits, there may be times that a trust draftsman would choose to avoid ATC provisions.Although the ATC, in general, applies to all trusts and judicial actions from January 1, 2009 forward, there are several exceptions to retroactive application.Many issues related to retroactive application involve when notices must be given to beneficiaries of a trust and what information must be included in a notice.This new legislation has improved Arizona's trust law by providing guidance and structure for practitioners and the judiciary.Not only is trust law in Arizona clarified in many areas, but previous gaps in the law have now been filled.In addition, new federal law changes loom on the horizon for gift, estate, and generation-skipping transfer tax.The obvious result is that, in the very near future, most estate planning clients should review and update their Will and Trust documents with their attorney to ascertain how they can take advantage of the new law and keep abreast of the changes.The estate planning attorneys at Tiffany & Bosco have the depth of experience to assist with that process.