As used in this chapter, the following terms shall have the following meanings:

(1) ADVISOR. A person who is given authority by the terms of a trust instrument to remove or appoint, or both, one or more trustees or to direct, consent to, approve, or veto a trustee‘s actual or proposed investment or distribution decisions. A person is considered an advisor even if the person is denominated by another title, such as trust protector. Any person may serve as an advisor.
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Terms Used In Alabama Code 19-3E-2

  • Amendment: A proposal to alter the text of a pending bill or other measure by striking out some of it, by inserting new language, or both. Before an amendment becomes part of the measure, thelegislature must agree to it.
  • Annuity: A periodic (usually annual) payment of a fixed sum of money for either the life of the recipient or for a fixed number of years. A series of payments under a contract from an insurance company, a trust company, or an individual. Annuity payments are made at regular intervals over a period of more than one full year.
  • 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
  • Common law: The legal system that originated in England and is now in use in the United States. It is based on judicial decisions rather than legislative action.
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
  • Fiduciary: A trustee, executor, or administrator.
  • following: means next after. See Alabama Code 1-1-1
  • Lien: A claim against real or personal property in satisfaction of a debt.
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
  • person: includes a corporation as well as a natural person. See Alabama Code 1-1-1
  • property: includes both real and personal property. See Alabama Code 1-1-1
  • state: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Alabama Code 1-1-1
  • Testator: A male person who leaves a will at death.
  • Trustee: A person or institution holding and administering property in trust.
  • Veto: The procedure established under the Constitution by which the President/Governor refuses to approve a bill or joint resolution and thus prevents its enactment into law. A regular veto occurs when the President/Governor returns the legislation to the house in which it originated. The President/Governor usually returns a vetoed bill with a message indicating his reasons for rejecting the measure. In Congress, the veto can be overridden only by a two-thirds vote in both the Senate and the House.
  • year: means a calendar year; but, whenever the word "year" is used in reference to any appropriations for the payment of money out of the treasury, it shall mean fiscal year. See Alabama Code 1-1-1
(2) ASCERTAINABLE STANDARD. A standard relating to an individual’s health, education, support, or maintenance within the meaning of 26 U.S.C. § 2041(b)(1)(A), as amended, or 26 U.S.C. § 2514(c)(1), as amended, and any applicable regulations.
(3) CLAIM. A right to payment, whether or not the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.
(4) CREDITOR. With respect to a transferor, a person who has a claim, whether directly or indirectly.
(5) DEBT. Liability on a claim.
(6) DISCRETIONARY TRUST PROVISION. A provision in a trust, regardless of whether the terms of the trust provide a standard for the exercise of the trustee’s discretion and regardless of whether the trust contains a spendthrift provision, which provides that the trustee has discretion, or words of similar import, to determine one or more of the following:

a. Whether to distribute to or for the benefit of an individual or a class of beneficiaries the income or principal, or both, of the trust.
b. The amount, if any, of the income or principal, or both, of the trust to distribute to or for the benefit of an individual or a class of beneficiaries.
c. Who, if any, among a class of beneficiaries will receive income or principal, or both, of the trust.
d. Whether the distribution of trust property is from income or principal, or both, of the trust.
e. When to pay income or principal, except that a power to determine when to distribute income or principal within or with respect to a calendar or taxable year of the trust is not a discretionary trust provision if the distribution is required to be made.
(7) DISPOSITION. A transfer of property that either creates a new fiduciary relationship between at least one trustee and a trust beneficiary or subjects property to a preexisting fiduciary relationship between at least one trustee and a trust beneficiary. The term includes a transfer by conveyance or assignment; by exercise of a power of appointment, including a power to substitute a trustee for another or to add one or more new trustees; by exercise of a power of revocation or amendment; or, except as provided in this subdivision, by disclaimer, release, or relinquishment. The term does not include a disclaimer, release, or relinquishment of property that was previously the subject of a qualified disposition. For purposes of this subdivision, as between a given trustee and a given beneficiary, a new fiduciary relationship is created whenever the terms of the governing trust instrument are materially altered, including alteration by an irrevocable written election as described in subsection (f) of Section 19-3E-5 with respect to the trust beneficiary in question.
(8) DISTRIBUTION DECISION. A decision regarding the distribution of trust property to or for the benefit of a trust beneficiary. The term includes a decision whether to make or guarantee a loan to or for the benefit of a trust beneficiary.
(9) FIDUCIARY DISPOSITION. A disposition made by a trustee acting in a fiduciary capacity.
(10) FIDUCIARY QUALIFIED DISPOSITION. A qualified disposition made by a trustee acting in a fiduciary capacity.
(11) GENERAL POWER OF APPOINTMENT. A power to appoint trust property, the permissible appointees of which include the power holder, his or her estate, his or her creditors, or the creditors of his or her estate. The term includes a power that is not expressly restricted as to appointees. A power may be general as to some property and special as to other property. The term does not include a power exercisable in favor of the power holder, his or her estate, his or her creditors, or the creditors of his or her estate that is limited by an ascertainable standard.
(12) INVESTMENT DECISION. A decision regarding whether to purchase, sell, exchange, tender, or pledge any trust property. The term includes decisions regarding other transactions affecting the ownership of or rights in any trust property, other than distribution decisions. Unless otherwise provided in the trust instrument, the term also includes a decision regarding whether to make or guarantee a loan to or on behalf of an entity in which the trust owns an interest, directly or indirectly, in the entity’s debt or equity.
(13) LIEN. A charge against or an interest in property to secure payment of a debt or performance of an obligation. The term includes a security interest created by agreement, a judicial lien obtained by legal or equitable process or proceedings, a common law lien, or a statutory lien.
(14) ORGANIZATION. A person other than an individual.
(15) PERSON. An individual, estate, partnership, association, trust, business or nonprofit entity, public corporation, government or governmental subdivision, agency, or instrumentality, or other legal or commercial entity.
(16) PROPERTY. Anything that may be the subject of ownership, whether real or personal, legal or equitable, or any interest therein. The term includes choses in action, claims, and interests created by a beneficiary designation under policies of insurance, financial instruments, deferred compensation, and other retirement arrangements, whether revocable or irrevocable.
(17) QUALIFIED BENEFICIARY. A living trust beneficiary to whom any of the following apply on the date of the beneficiary’s qualification:

a. The beneficiary is a distributee or permissible distributee of trust income or principal.
b. The beneficiary would be a distributee or permissible distributee of trust income or principal if the interests of the distributees described in paragraph a. terminated on that date, but the termination of those interests would not cause the trust to terminate.
c. The beneficiary would be a distributee or permissible distributee of trust income or principal if the trust terminated on that date.
(18) QUALIFIED DISPOSITION. A disposition of property to one or more trustees, at least one of whom is a qualified trustee, which is governed by a trust instrument, including, but not limited to, a trust instrument as modified by an irrevocable written election described in subsection (f) of Section 19-3E-5, under which the transferor has no more rights, powers, or interests than those permitted by Section 19-3E-4. The term does not include a disposition to the extent that, at the time of the disposition, the transferor is in arrears on a child support obligation by more than 30 days.
(19) QUALIFIED TRUSTEE. A person, other than the transferor, who meets all of the following conditions:

a. Is an individual who is a resident of this state, or is an organization that is authorized by the law of this state to act as a trustee and whose activities are subject to supervision by the Alabama State Banking Department, the Federal Deposit Insurance Corporation, the Comptroller of the Currency, or the Office of Thrift Supervision.
b. Maintains or arranges for custody in this state of some or all of the property that is the subject of the qualified disposition and administers all or part of the trust in this state.
c. Whose usual place of business, where some of the records pertaining to the trust are kept, is located in this state or, if the person does not have such a place of business, who is a resident of this state. For a corporate trustee, the usual place of business is the business location of the primary trust officer.
(20) RETIREMENT BENEFIT. An interest in one of the following types of assets if payable to a trust as a beneficiary or owned by the trust:

a. A qualified or nonqualified annuity.
b. A benefit under a qualified or nonqualified plan of deferred compensation.
c. Any account in, or benefit payable under, any pension, profit-sharing, stock bonus, or other qualified retirement plan.
d. Any individual retirement account or trust.
e. Any benefit under a plan or arrangement established under 26 U.S.C §§ 401, 403, 408, 408A, or 457, or a similar provision of the Internal Revenue Code of 1986.
(21) SETTLOR. A person, including a testator or trustee, who creates a trust. If more than one person creates a trust, each person is a settlor of the portion of the trust property attributable to that person’s contribution. The lapse, release, or waiver of a power of appointment does not cause the holder of the power to be treated as a settlor of the trust.
(22) SPECIAL POWER OF APPOINTMENT. A power to appoint trust property, the permissible appointees of which do not include the power holder, his or her estate, his or her creditors, or the creditors of his or her estate.
(23) SPENDTHRIFT PROVISION. A term of a trust which restrains both voluntary and involuntary transfers of a beneficiary’s interest.
(24) SPOUSE or FORMER SPOUSE. An individual to whom the transferor was married at or before the time a qualified disposition is made.
(25) SUPPORT PROVISION. A provision in a trust that requires the trustee to distribute income or principal, or both, for the health, education, support, or maintenance of a trust beneficiary, or language of similar meaning. The term does not include a provision that provides that a trustee has discretion whether to distribute income or principal, or both, for these purposes or to select from among a class of beneficiaries to receive distributions under the trust provision.
(26) TRANSFEROR. Either of the following, as applicable:

a. A person or, for more than one owner of undivided interests, each of several persons who, as a beneficial owner of certain property or as the holder of a general power of appointment over certain property, directly or indirectly makes a disposition of the property or causes a disposition to be made.
b. For a fiduciary disposition, the person or persons who, as of the time of the fiduciary disposition, most recently fit the description in paragraph a. with respect to the property subject to the fiduciary disposition.
(27) TRUST BENEFICIARY. The same meaning as the term “beneficiary”, as that term is defined in Section 19-3B-103.
(28) TRUST INSTRUMENT. An instrument appointing a qualified trustee or qualified trustees for the property that is the subject of a disposition to which all of the following apply:

a. The instrument expressly incorporates the law of this state to govern the validity, construction, and administration of the trust.
b. The instrument is irrevocable.
c. The instrument provides that the interest of the transferor or other trust beneficiary in trust property may not be transferred, assigned, pledged, or mortgaged, whether voluntarily or involuntarily, before the qualified trustee or qualified trustees actually distribute trust property to the trust beneficiary. Such a provision in a trust instrument is considered 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 11 U.S.C. § 541(c)(2).
(29) VALID LIEN. A lien that is effective against the holder of a judicial lien subsequently obtained by legal or equitable process or proceedings.
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