§ 60-1303 — Trust instrument defined.

A. For the purposes of the Oklahoma Qualified Dispositions into Trust Act, a trust instrument is an instrument appointing a qualified person or qualified persons for the property that is the subject of a disposition, which instrument: 1. Expressly incorporates the law of this state to govern the validity, construction, and administration of the trust; 2. Is irrevocable, but a trust instrument may not be deemed revocable on account of its inclusion of one or more of the following: a. a transferor's power to veto a distribution from the trust, b. an inter vivos power of appointment, other than an inter vivos power exercisable solely by the transferor in favor of the transferor, the transferor's creditors, the transferor's estate, or the creditors of the transferor's estate, c. a testamentary power of appointment, d. the transferor's potential or actual receipt of income, including rights to such income retained in the trust instrument, e. the transferor's potential or actual receipt of income or principal from a charitable remainder unitrust or charitable remainder annuity trust as such terms are defined in Section 664 of the Internal Revenue Code of 1986, 26 U.S.C., Section 664, as of January 1, 2009, f. the transferor's receipt each year of a percentage of the value as determined from time to time pursuant to the trust instrument, but not exceeding the amount that may be defined as income under Section 643(b) of the Internal Revenue Code of 1986, 26 U.S.C., Section 643(b), as of January 1, 2009, g. the transferor's receipt each year of a percentage of the value as determined from time to time pursuant to the trust instrument, but not exceeding the amount that may be defined as income under Section 664 of the Internal Revenue Code of 1986, 26 U.S.C., Section 643(b), as of January 1, 2009, h. the transferor's potential or actual receipt or use of principal if the potential or actual receipt or use of principal would be the result of a qualified person, including a qualified person acting at the direction of a trust advisor described in this act, acting either in the qualified person's sole discretion or pursuant to an ascertainable standard contained in the trust instrument, i. the transferor's right to remove a trustee, protector, or trust advisor and to appoint a new trustee, protector, or trust advisor, other than a trustee who is a related or subordinate party with respect to the transferor within the meaning of Section 672(c) of the Internal Revenue Code of 1986, 26 U.S.C., Section 672(c), as of January 1, 2009, j. the transferor's potential or actual use of real property held under a qualified personal residence trust within the meaning of such term as described in the regulations promulgated under Section 2702(c) of the Internal Revenue Code of 1986, 26 U.S.C., Section 2702(c), as of January 1, 2009, k. a pour-back provision that pours back to the transferor's will or revocable trust all or part of the trust assets, l. the transferor's potential or actual receipt of income or principal to pay, in whole or in part, income taxes due on income of the trust if the potential or actual receipt of income or principal is pursuant to a provision in the trust instrument that expressly provides for the payment of the taxes and if the potential or actual receipt of income or principal would be the result of a qualified person's acting in the qualified person's discretion or pursuant to a mandatory direction in the trust instrument or acting at the direction of a trust advisor described in Section 24 of this act, m. the ability, whether pursuant to discretion, direction, or the grantor's exercise of a testamentary power of appointment, of a qualified person to pay, after the death of the transferor, all or any part of the debts of the transferor outstanding at the time of the transferor's death, the expenses of administering the transferor's estate, or any estate or inheritance tax imposed on or with respect to the transferor's estate, n. a transferor's service as a noncontrolling member of a distribution committee that functions as a distribution trust advisor, which is a fiduciary given authority by the instrument to exercise all or any portions of the powers and discretions over any discretionary distributions of income or principal, or o. a transferor's enjoyment of a power to reacquire the trust corpus by substituting other property of an equivalent value within the meaning of Section 675(4)(C) of the Internal Revenue Code of 1986, 26 U.S.C., Section 675(4)(C), as of January 1, 2021, and 3. Provides that the interest of the transferor or other beneficiary in the trust property or the income from the trust property may not be transferred, assigned, pledged, or mortgaged, whether voluntarily or involuntarily, before the qualified person distributes the property or income from the property to the beneficiary, and such provision of the trust instrument constitutes a restriction on the transfer of the transferor's beneficial interest in the trust that is enforceable under applicable nonbankruptcy law within the meaning of Section 541(c)(2) of the Bankruptcy Code, 11 U.S.C., Section 541(c)(2), as of January 1, 2009. B. A disposition by a trustee that is not a qualified person to a trustee that is a qualified person may not be treated as other than a qualified disposition solely because the trust instrument fails to meet the requirements of paragraph 1 of subsection A of this section.

Legislative History

Added by Laws 2024, c. 369, § 21, eff. Nov. 1, 2024.