§ 4-10-506 — Creditor's claim against settlor

Wyoming § 4-10-506

• Jurisdiction: Wyoming
• Title 04: Fiduciaries
• Ch. 10: UNIFORM TRUST CODE
• Art. 5: CREDITOR'S CLAIMS; SPENDTHRIFT AND DISCRETIONARY

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(a) Whether or not the terms of a trust contain a
spendthrift provision, the following rules apply:
(i) During the lifetime of the settlor, the property
of a revocable trust contributed by the settlor, and all income
and appreciation thereon and proceeds thereof, is subject to
claims of the settlor's creditors;
(ii) Except for discretionary trusts created in
accordance with W.S. 4-10-504(f) or irrevocable trusts providing
that the trustee may only make discretionary distributions to
the settlor, a creditor or assignee of the settlor of an
irrevocable trust without a spendthrift provision, other than a
creditor bringing any claim for forced heirship or legitime, may
attach the maximum amount that can be distributed to or for the
settlor's benefit. If a trust has more than one (1) settlor, the
amount the creditor or assignee of a particular settlor may
attach shall not exceed the settlor's interest in the portion of
the trust attributable to that settlor's contribution.
(b) With respect to an irrevocable trust with a
spendthrift provision, a creditor or assignee of the right of a
settlor are limited by the provisions of W.S. 4-10-510 et seq.
(c) With respect to irrevocable trusts providing that the
trustee may only make discretionary distributions to the
settlor, a creditor or assignee of the right of a settlor,
including a creditor bringing any claim for forced heirship or
legitime, are limited by W.S. 4-10-504(b) if:
(i) The transfer of property to the trust by the
settlor was not in violation of the Uniform Fraudulent Transfers
Act by applying the same standard of proof as provided in W.S.
4-10-517;
(ii) At least one (1) trustee of the irrevocable
trust is a qualified trustee; and
(iii) The trustee with authority to make
distributions to the settlor is not a trust beneficiary, related
to the settlor or subordinate to the settlor under Internal
Revenue Code section 672(c).
(d) After the death of a settlor, and subject to the
settlor's right to direct the source from which liabilities will
be paid, the portion of a trust that was revocable at the
settlor's death, and the property subject thereto, 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 to the extent the settlor's probate estate
is inadequate to satisfy those claims, costs of administration
and expenses.
(e) For purposes of this section, the holder of an
unexercised power of withdrawal or power of appointment over
trust property shall not be treated as a settlor of the trust
regardless of whether the power remains exercisable or has
lapsed.
(f) For purposes of this section, a person who created a
trust for his or her spouse under section 2523(e) of the
Internal Revenue Code, or for which the election in section
2523(f) of the Internal Revenue Code was made, shall not be
treated as a settlor of the trust, as of and after the death of
his or her spouse.
(g) For purposes of this section, a person who created an
irrevocable trust for another person that was a completed gift
to the other person under section 2511 of the United States
Internal Revenue Code for which the tax under section 2501 of
the Internal Revenue Code would be applicable shall not be
treated as a settlor of the trust as of and after the death of
the person for whom the trust was created.