§ 59-13-05 — (505) Creditor's claim against settlor

North Dakota § 59-13-05

• Jurisdiction: North Dakota
• Title 59: Trusts, Uses, and Powers
• Ch. 59-13: Creditor's Claims - Spendthrift and Discretionary Trusts

Text

1. The following rules apply whether or not the terms of a trust contain a spendthrift
provision. During the lifetime of the settlor, the property of a revocable trust is subject
to claims of the settlor's creditors to the extent that the property would be subject to
creditors' claims if the property had not been placed in the trust. With respect to an
irrevocable trust, other than a special needs trust, a creditor or assignee of the settlor
may reach the maximum amount that can be distributed to or for the settlor's benefit. If
a trust has more than one settlor, the amount the creditor or assignee of a particular
settlor may reach may not exceed the settlor's interest in the portion of the trust
attributable to that settlor's contribution. After the death of a settlor, and subject to the
settlor's right to direct the source from which liabilities will be paid, the property of a
trust that was revocable immediately before the settlor's death is subject to claims of
the settlor's creditors, costs of administration of the settlor's estate, the expenses of
the settlor's funeral and disposal of remains, and statutory allowances to a surviving
spouse and children to the extent the settlor's probate estate is inadequate to satisfy
those claims, costs, expenses, and allowances. For purposes of this section, "statutory
allowances" includes any homestead exception under chapter 47-18 and the
allowances included in title 30.1.
2. For purposes of this section during the period the power may be exercised, the holder
of a power of withdrawal is treated in the same manner as the settlor of a revocable
trust to the extent of the property subject to the power and, upon the lapse, release, or
waiver of the power, the holder is treated as the settlor of the trust only to the extent
the value of the property affected by the lapse, release, or waiver exceeds the greater
of the amount specified in section 2041(b)(2) or 2514(e) of the Internal Revenue Code
of 1986, or section 2503(b) of the Internal Revenue Code of 1986, or corresponding
future provisions of federal tax law.