HB618 Alabama 2011 Session

Summary

Primary Sponsor

Allen Farley

Republican

Session

Regular Session 2011

Title

Alabama Family Trust, definitions of contributor and settlor, the word donor replaced with contributor or settlor, Secs. 38-9B-2, 38-9B-3, 38-9B-5, 38-9B-6 am'd.

Summary

HB618 updates Alabama's Family Trust by replacing the term donor with contributor or settlor and adds settlor as a defined role within the trust framework.

What This Bill Does

It amends the Alabama Family Trust statutes to delete the donor definition and establish contributor and settlor definitions, clarifying who can contribute and who establishes a trust account. It creates an organized governance structure including the Alabama Family Trust Corporation, the AFT Trust, and the AFT Charitable Trust, with tax-exempt status and alignment to government entitlement funding. It sets up how contributions are held (as separate accounts per life beneficiary), how income and administrative fees are managed, and how benefits are meant to supplement public assistance without reducing eligibility. It establishes rules for revocation, withdrawal, distributions after death or termination, and a dispute-arbitration process overseen by the state department.

Who It Affects

• Life beneficiaries (and their families) – will receive benefits from the AFT Trust, with rules intended to supplement government entitlements and limit impact on eligibility for public assistance.
• Contributors and settlors (replacing the term 'donor' and including those who establish accounts) – may contribute assets, designate life beneficiaries, name co-trustees, and have specific revocation rights and refund provisions if benefits have not been received.

Key Provisions

• Terminology change: Donor definitions are replaced with Contributor and Settlor definitions; Settlor is defined as the person who establishes an AFT Trust account for a life beneficiary; Donor as a term is removed.
• Governance and tax status: Establishes the AFT Corporation to run the AFT Trust and AFT Charitable Trust, with goals to qualify as tax-exempt and to coordinate with government entitlement funding.
• Account and benefits administration: Requires separate life-beneficiary accounts, allows contributions from any source, credits net income to beneficiaries, caps administrative fees to the income allocated to each account, and ensures benefits supplement but do not replace public assistance.
• Revocation, withdrawal, and distributions: Details when contributors can revoke contributions, how refunds are calculated depending on benefits received, and how remaining assets are distributed on death or termination, including possible transfers to successor trusts or to designated persons and the AFT Charitable Trust.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Alabama Family Trust