HB546 Alabama 2013 Session

Summary

Primary Sponsor

John Merrill

Republican

Session

Regular Session 2013

Title

Alabama Family Trust, definitions of contributor and settlor added, references to donor replaced with defined terms contributor or settlor, reimbursement upon death of life beneficiary to other jurisdictions for certain public benefits, Secs. 38-9B-2, 38-9B-3, 38-9B-5, 38-9B-6, 38-9B-7 am'd.

Summary

HB546 updates the Alabama Family Trust by redefining roles and adding a settlor concept, plus a reimbursement rule to the state after a life beneficiary’s death.

What This Bill Does

It replaces the donor term with contributor and settlor definitions and creates the Alabama Family Trust Corporation to administer the AFT Trust and AFT Charitable Trust. It requires separate accounts for each life beneficiary, sets eligibility and governance rules, and allows limited coaching of income or principal for non-cash benefits while preserving public assistance eligibility. It adds an irrevocable option and a state reimbursement mechanism at death for funds used for medical assistance, and it establishes dispute resolution, tax-exemption protections, and liability limits for trustees.

Who It Affects

• Contributors and settlors who fund AFT accounts (and who must designate a life beneficiary and a co-trustee; they may revoke contributions under certain conditions).
• Life beneficiaries and their families (they are the designated recipients, have restricted rights, must preserve eligibility for government benefits, and may receive enhanced non-cash benefits under the trust rules).

Key Provisions

• Defines and replaces terms: donor is replaced with contributor or settlor; adds definitions for AFT Charitable Trust, AFT Trust, AFT Corporation, Life Beneficiary, Settlor, Co-Trustee, and other related terms.
• Creates a governance and funding structure: the AFT Corporation administers the AFT Trust and AFT Charitable Trust; separate accounts exist for each life beneficiary with net income credited to those accounts and administrative fees limited to the income allocated to each account.
• Designations and irrevocability: every donor settlor must designate a life beneficiary and name a co-trustee; if the settlor designates themselves as life beneficiary, the AFT Trust becomes irrevocable.
• Death and reimbursement provision: when the life beneficiary dies (and funds are remaining), amounts first reimburse the state(s) or other jurisdictions for medical assistance paid, with the remainder distributed according to trust rules.
• Revocation and arbitration: contributors may revoke contributions under specified conditions; disputes over income/principal can be resolved by arbitration with a binding decision.
• Asset protection and trustee liability: assets are protected from creditors and not considered state funds; trustees are not liable for mistakes except in cases of fraud or willful misconduct.
• Post-death and successor provisions: rules govern how funds are distributed to successor life beneficiaries or to the AFT Charitable Trust, and how successor trusts operate to supplement government benefits.
• Effective date: the act becomes effective on the first day of the third month after passage and approval.

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