55-1-36. Satisfaction of claims of settlor's creditors from trust estate if settlor is beneficiary.

If a settlor is also a beneficiary of the trust, and the transfer is a qualified transfer pursuant to chapter 55-16, the provisions of §§ 55-1-24 to 55-1-43, inclusive, also apply. Conversely, if the settlor is a beneficiary of the trust and the transfer is not a qualified transfer pursuant to chapter 55-16, a provision restraining the voluntary or involuntary transfer of the settlor's beneficial interest does not prevent the settlor's creditors from satisfying claims from the settlor's interest in the trust estate. However, a settlor's creditors may not satisfy their respective claims from an irrevocable trust if:

(1)    The settlor has retained a beneficial interest that is contingent upon surviving the settlor's spouse such as an interest in an inter vivos marital deduction trust in which the interest of the settlor's spouse is treated as qualified terminable interest property under § 2523(f) of the Internal Revenue Code of 1986 (26 U.S.C. § 2523(f)), as amended, an interest in an inter vivos marital deduction trust that is treated as a general power of appointment trust for which a marital deduction would be allowed under § 2523(a) and (e) of the Internal Revenue Code of 1986 (26 U.S.C. § 2523(a) and (e)), as amended, and an interest in an inter vivos trust commonly known as a credit shelter trust that used all or a portion of the settlor's unified credit under § 2505 of the Internal Revenue Code (26 U.S.C. § 2505), as amended;

(2)    The settlor may be named, by someone other than the settlor, as an additional beneficiary or from a class of persons that includes the settlor; or

(3)    The settlor is a permissible object of the exercise of a power of appointment over trust property held by someone other than the settlor.

Source: SL 2007, ch 280, § 13; SL 2011, ch 212, § 35; SL 2015, ch 240, § 12; SL 2020, ch 206, § 4.