Section 15-7-502 - SPENDTHRIFT TRUSTS(1) A settlor may provide in the terms of the trust that the interest of a beneficiary in the income or in the principal or in both may not be voluntarily or involuntarily transferred before payment or delivery of the interest to the beneficiary by the trustee.(2) A declaration in a trust instrument that the interest of a beneficiary shall be held subject to a "spendthrift trust" is sufficient to restrain voluntary or involuntary alienation of the interest by a beneficiary to the maximum extent permitted under this section.(3) Validity of a restraint on transfer in a trust document shall not require specific reference to or identical verbiage set forth in subsection (1) or (2) of this section.(4) If a person is both a settlor and beneficiary of the same trust, a provision restraining the voluntary or involuntary transfer of the settlor's beneficial interest in such trust does not prevent the settlor's creditors from satisfying claims from the settlor's interest in the trust estate that relates to the portion of the trust that was contributed by the settlor. For the purposes of this subsection, however, a settlor shall not be considered to be a beneficiary of an irrevocable trust created by the settlor and taxed for federal income tax purposes pursuant to the grantor trust rules of the Internal Revenue Code, sections 671 through 679, inclusive, if the settlor's only beneficial interest in such trust consists of the right to receive a distribution from such trust in an amount equal to or less than the amount of the federal and state income tax liability incurred by the settlor as a result of such trust being characterized as a grantor trust pursuant to the aforementioned grantor trust rules.(5) A beneficiary of a trust shall not be considered a settlor of a trust merely because of a lapse, waiver or release of:(a) A power described in subsection (6) of this section; or(b) The beneficiary's right to withdraw a part of the trust property to the extent that the value of the property affected by the lapse, waiver or release in any calendar year does not exceed the greater of the amount specified in:(i) Section 2041(b)(2) or 2514(e) of the Internal Revenue Code of 1986, as amended; or(ii) Section 2503(b) of the Internal Revenue Code of 1986, as amended.(6) A beneficiary of a trust shall not be considered a settlor, to have made a voluntary or involuntary transfer of the beneficiary's interest in a trust, or to have the power to make a voluntary or involuntary transfer of the beneficiary's interest in the trust, merely because the beneficiary, in any capacity including, but not limited to, as a trustee, holds or exercises:(a) A presently exercisable power to:(i) Consume, invade, appropriate or distribute property to or for the benefit of the beneficiary, if the power is either exercisable only on consent of another person holding an interest adverse to the beneficiary's interest or limited by an ascertainable standard including, but not limited to, health, education, support or maintenance of the beneficiary; or(ii) Exercise a limited power of appointment, as defined in the Internal Revenue Code of 1986, as amended, including, but not limited to, the power to appoint any property of the trust to or for the benefit of a person other than the beneficiary, a creditor of the beneficiary, the beneficiary's estate, or a creditor of the beneficiary's estate;(b) A testamentary power of appointment; or(c) A presently exercisable right described in subsection (5)(b) of this section.[15-7-502, added 2007 , ch. 68, sec. 4, p. 181; am. 2015 , ch. 77, sec. 1 , p. 199.]Amended by 2015 Session Laws, ch. 77, sec. 1, eff. 7/1/2015.