Oregon Statutes 130.315 – UTC 505. Creditors claim against settlor
(1) Whether or not the terms of a trust contain a spendthrift provision, except as provided in ORS § 130.518:
Terms Used In Oregon Statutes 130.315
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Donor: The person who makes a gift.
- Inter vivos: Transfer of property from one living person to another living person.
- Irrevocable trust: A trust arrangement that cannot be revoked, rescinded, or repealed by the grantor.
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Marital deduction: The deduction(s) that can be taken in the determination of gift and estate tax liabilities because of the existence of a marriage or marital relationship.
- Person: includes individuals, corporations, associations, firms, partnerships, limited liability companies and joint stock companies. See Oregon Statutes 174.100
- Revocable trust: A trust agreement that can be canceled, rescinded, revoked, or repealed by the grantor (person who establishes the trust).
- Trustee: A person or institution holding and administering property in trust.
(a) During the lifetime of the settlor, the property of a revocable trust is subject to claims of the settlor’s creditors.
(b) A creditor or assignee of the settlor of an irrevocable trust may reach the maximum amount that can be distributed to or for the settlor’s benefit. If an irrevocable 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.
(c) If a trust was revocable at the settlor’s death, the property of the trust becomes subject to creditors’ claims as provided in ORS § 130.350 to 130.450 when the settlor dies. The payment of claims is subject to the settlor’s right to direct the priority of the sources from which liabilities of the settlor are to be paid.
(d) Notwithstanding the provisions of paragraph (b) of this subsection, the assets of an irrevocable trust may not be subject to the claims of an existing or subsequent creditor or assignee of the settlor, in whole or in part, solely because of the existence of a discretionary power granted to the trustee by the terms of the trust or any other provision of law to pay the amount of tax owed directly to the taxing authorities or to reimburse the settlor for any tax on trust income or principal that is payable or has been paid by the settlor under the law imposing the tax.
(2) For the purpose of creditors’ claims, the holder of a power of withdrawal is treated in the same manner as the settlor of a revocable trust to the extent property of the trust is subject to the power. The provisions of this subsection apply to the holder of a power of withdrawal only during the period that the power may be exercised.
(3) Upon the lapse, release or waiver of a power of withdrawal, the property of the trust that is the subject of the lapse, release or waiver becomes subject to claims of creditors of the holder of the power only to the extent the value of the property exceeds the greatest of:
(a) The amount specified in section 2041(b)(2) or 2514(e) of the Internal Revenue Code, as in effect on December 31, 2012;
(b) The amount specified in section 2503(b) of the Internal Revenue Code, as in effect on December 31, 2012; or
(c) Twice the amount specified in section 2503(b) of the Internal Revenue Code, as in effect on December 31, 2012, if the donor was married at the time of the transfer to which the power of withdrawal applies.
(4) The assets of an irrevocable trust that are attributable to a contribution to an inter vivos marital deduction trust described in section 2523(e) or (f) of the Internal Revenue Code, as in effect on December 31, 2012, after the death of the spouse of the settlor of the inter vivos marital deduction trust shall be deemed to have been contributed by the settlor’s spouse and not by the settlor.
(5) The assets of an irrevocable trust for the benefit of a person, including the settlor, are not subject to claims of creditors of the settlor to the extent that the property of the trust is subject to a presently exercisable general power of appointment held by a person other than the settlor.
(6) Subsections (2) and (3) of this section do not apply to a person other than a settlor who is a beneficiary of a revocable or irrevocable trust and who is also a trustee of the trust, if the power to withdraw for the person’s own benefit is limited by an ascertainable standard. [2005 c.348 § 42; 2013 c.529 § 9; 2017 c.17 § 5; 2021 c.272 § 8]