(a) The board of trustees shall establish and administer the AFT Corporation. The board of trustees shall execute all documents necessary to establish and administer the AFT Corporation including, but not limited to, documents to form a not-for-profit corporation and to qualify as an organization pursuant to Section 501(c)(3) of the United States Internal Revenue Code.
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Terms Used In Alabama Code 38-9B-5

  • 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
  • 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.
  • Entitlement: A Federal program or provision of law that requires payments to any person or unit of government that meets the eligibility criteria established by law. Entitlements constitute a binding obligation on the part of the Federal Government, and eligible recipients have legal recourse if the obligation is not fulfilled. Social Security and veterans' compensation and pensions are examples of entitlement programs.
  • Fair market value: The price at which an asset would change hands in a transaction between a willing, informed buyer and a willing, informed seller.
  • following: means next after. See Alabama Code 1-1-1
  • Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
  • person: includes a corporation as well as a natural person. 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
  • Trustee: A person or institution holding and administering property in trust.
  • United States: includes the territories thereof and the District of Columbia. See Alabama Code 1-1-1
  • writing: includes typewriting and printing on paper. See Alabama Code 1-1-1
(b) The AFT Corporation shall establish the AFT Trust and the AFT Charitable Trust, and the board of trustees shall administer the AFT Trust and the AFT Charitable Trust through the AFT Corporation. The board of trustees and the AFT Corporation shall take all steps necessary to satisfy all federal and state laws, and all regulations, rules, and policies established by the federal Social Security Administration to ensure that the AFT Trust and the AFT Charitable Trust are qualified to supplement the provision of government entitlement funding and, where necessary, are qualified as tax exempt entities under the United States Internal Revenue Code, including, but not limited to, amending any master or joinder trust agreements or other corporation documents to comply with all relevant federal and state laws, rules, regulations, and policies. Any such amendments shall apply to all existing and future trust agreements for the benefit of life beneficiaries.
(c) The documents establishing the AFT Trust shall include and be limited by the following:

(1) To be eligible to participate in the AFT Trust, a life beneficiary must suffer from an impairment as defined in this chapter.
(2) The AFT Trust may accept contributions from any source, so long as basic eligibility requirements are satisfied, to be held, administered, managed, invested, and distributed so that life beneficiaries remain eligible for means-tested government benefits. Contributions and earnings of the AFT Trust may be administered as one trust for purposes of investment and management of funds. Notwithstanding the foregoing, separate accounts shall be established for each designated life beneficiary. The net income earned shall be credited to the accounts of the life beneficiaries in proportion to the fair market value that each account has to the total fair market value of all accounts. Administrative fees and administrative expenses may be charged directly to an account of a life beneficiary, except that administrative fees shall not exceed the income allocated to that account.
(3) Every settlor shall designate a specific person as the life beneficiary of the contribution made by the contributor. In addition, each settlor shall name a co-trustee, including a successor or successors to the co-trustee, to act with the trustee on behalf of the designated life beneficiary. Notwithstanding the foregoing, neither a life beneficiary or his or her spouse shall be eligible to be a co-trustee or a successor co-trustee.
(4) If a settlor designates a contributor or the contributor’s spouse as the life beneficiary, then the account of the life beneficiary shall, regardless of any other provision of this chapter, meet the following additional conditions:

(i) The AFT Trust shall be irrevocable.
(ii) The amounts remaining in the life beneficiary’s account upon the death of the life beneficiary shall be first dispersed to the AFT Corporation. The amounts remaining in the life beneficiary’s account upon the death of the life beneficiary shall be disbursed by the AFT Corporation as follows:

(1) payment of any taxes due from the trust to the state or any other state or the federal government because of the death of the beneficiary;
(2) payment of reasonable fees for administration of the trust such as an accounting of the trust to a court, completion and filing of documents, or other required actions associated with termination and wrapping up of the trust;
(3) retention of 10 percent to AFT Corporation for the AFT Charitable Trust;
(4) reimbursement to the State of Alabama, or to any other state, the District of Columbia or any other commonwealth, territory, or jurisdiction of the United States for medical assistance paid on behalf of the life beneficiary under the plan of the respective jurisdiction; and
(5) payment of the balance, if any, shall be dispersed in accordance with rules and regulations adopted by the AFT Corporation. The AFT Corporation shall determine the amount to be retained by the AFT Corporation for the AFT Charitable Trust from the amounts remaining in the life beneficiary’s account at death and the amount shall be outlined in the trust agreement established at the time of the creation of the life beneficiary’s account with the AFT Corporation.
(iii) Neither a contributor nor the contributor’s spouse shall serve as co-trustee.
(5) During his or her lifetime, any contributor or contributor’s spouse who has not been designated as the life beneficiary, may revoke his or her contribution made to the AFT Trust. Notwithstanding the foregoing, any contributor may, at any time, voluntarily waive the right to revoke by written notice. If the life beneficiary has not received any benefits provided by the use of the AFT Trust income or principal at the time the contributor revokes the contribution to the AFT Trust, then, subject to the payment of any administrative fees and expenses as established by the AFT Corporation, an amount equal to the current fair market value of the balance of the life beneficiary’s account in the AFT Trust as determined on the date of distribution shall be returned to the contributor. If at the time a contributor revokes the contribution to the AFT Trust the life beneficiary has received any benefits provided by the use of the AFT Trust income or principal, then, subject to the payment of any administrative fees and expenses as established by the AFT Corporation, an amount equal to 95 percent of the current fair market value of the principal balance of the life beneficiary account in the AFT Trust as determined on the date of distribution shall be returned to the contributor. The remaining balance of the life beneficiary account shall be distributed to the AFT Charitable Trust.
(6) The co-trustee, with the consent of the trustee, shall agree on the amount of income or principal, or both, to be used to provide non-cash benefits in the best interest of the life beneficiary. Any net income which is not used shall be added annually to the principal.
(7) In the event that the trustee and the co-trustee shall be unable to agree either on the amount of income or principal, or income and principal, to be used or the benefits to be provided, then either the trustee or the co-trustee may request that the matter be resolved by arbitration. The requesting party shall send a written request for arbitration to the responding party and shall in the request set forth the name, address, and telephone number of the requesting party’s arbitrator. The responding party shall, within 10 days, after receipt of the request for arbitration, set forth in writing to the requesting party the name, address, and telephone number of the responding party’s arbitrator. Copies of the request for arbitration and response shall be sent to the commissioner of the department. If the two designated arbitrators are unable to agree upon a third arbitrator within 10 days after the responding party has identified the responding party’s arbitrator, then the commissioner shall designate the third arbitrator by written notice to the requesting and responding parties’ arbitrators. The three arbitrators shall meet and render a decision within 30 calendar days after the appointment of the third arbitrator. A decision of a majority of the arbitrators shall be binding upon the requesting and responding parties. Each party shall pay the fees and expenses of the party’s arbitrator and the fees and expenses of the third arbitrator shall be borne equally by the parties.
(8) If a settlor designates a contributor or the contributor’s spouse as the life beneficiary and the trustee terminates the individual trust agreement for any lawful reason other than the death of the life beneficiary, the amounts remaining in the life beneficiary’s account upon the termination shall be dispersed as follows:

a. Payment of reasonable fees for administration of the trust such as an accounting of the trust to a court, completion and filing of documents, or other required actions associated with termination and wrapping up of the trust;
b. Reimbursement to the State of Alabama, or to any other state, the District of Columbia, or any other commonwealth, territory, or jurisdiction of the United States, for medical assistance paid on behalf of the life beneficiary under the plan of the respective jurisdiction; and
c. Payment of the balance, if any, to the life beneficiary.
(d) The documents establishing the AFT Charitable Trust shall include and be limited to the following:

(1) The AFT Charitable Trust shall be a charitable trust under the United States Internal Revenue Code and shall be administered as part of the AFT Trust, but as a separate account. The income attributable to the AFT Charitable Trust shall be used for the benefit of beneficiaries of AFT individual trusts who have needs that cannot be met from funds available to such life beneficiaries from their AFT individual trusts. The board of trustees shall determine annually the amount of AFT Charitable Trust income to be used to provide benefits and the nature and type of benefits to be provided for each AFT life beneficiary while taking into account the individual’s eligibility for government benefits. Any income of the AFT Charitable Trust not used shall be added annually to the principal.
(2) The board of trustees shall accept contributions to the AFT Charitable Trust from any source and shall comply with all rules and regulations under the United States Internal Revenue Code that govern the acceptance of charitable contributions.
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