SB368 Alabama 2013 Session

Summary

Primary Sponsor

Cam Ward

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

The bill renames and defines roles in the Alabama Family Trust (replacing 'donor' with 'contributor' and adding 'settlor') and sets up how the trust, its charitable arm, and state reimbursement for public benefits work.

What This Bill Does

It removes the old donor definition and adds new terms like contributor and settlor, and defines related roles such as life beneficiary and co-trustee. It creates and governs the Alabama Family Trust (AFT), the AFT Corporation, and the AFT Charitable Trust, including how funds are held, invested, and distributed for individuals with impairments while aiming to preserve government benefits. It establishes per-beneficiary accounts, outlines how net income is allocated, and sets rules for contributions, revocation, arbitration, and reimbursement to the state for medical assistance upon the life beneficiary’s death. It also provides protections for beneficiaries against creditor claims and clarifies eligibility and use of funds for non-cash benefits to supplement, not replace, public assistance.

Who It Affects

• Life beneficiaries and their families: receive supplemental benefits funded through the AFT Trust, with non-cash benefits allowed, but without losing eligibility for government entitlement programs; they have no vested rights to the trust funds and may be affected by revocation and execution rules.
• Donors/contributors and settlors (and their spouses): they contribute to the AFT Trust and may revoke contributions under defined conditions; revocation amounts and procedures affect who ultimately receives funds and how remaining assets are distributed.

Key Provisions

• Definition changes: replaces 'donor' with 'contributor' and adds 'settlor'; defines related terms such as life beneficiary, successor life beneficiary, co-trustee, and trust structures (AFT Trust, AFT Corporation, AFT Charitable Trust).
• Trust structure and governance: establishes the AFT Corporation to manage the AFT Trust and AFT Charitable Trust and outlines roles of the Board of Trustees and the Department of Mental Health, including tax-exempt status requirements.
• Account and funding rules: allows contributions from any source to fund separate accounts for each life beneficiary, credits net income to life beneficiary accounts, and permits administrative fees up to the income allocated to each account.
• Eligibility and benefits: requires life beneficiaries to have impairments and to remain eligible for government entitlement funding; permits non-cash benefits to supplement life beneficiaries’ lives without displacing basic government benefits.
• Distribution and reimbursement: upon certain events (including death of a life beneficiary where there is no successor life beneficiary), remaining funds may be repartitioned with the balance first dispersed to the AFT Corporation to reimburse medical assistance paid by the state or other jurisdictions, with the remainder distributed by rules set by the AFT Corporation.
• Revocation and refunds: donors/contributors may revoke contributions; refund amounts depend on whether benefits have been provided; if benefits have not been provided, a higher return is possible, otherwise a portion may be redirected to the AFT Charitable Trust.
• Dispute resolution: permits arbitration when trustees disagree on benefits or distributions, with appointed arbitrators and a binding decision.
• Protections and limitations: beneficiaries have no vested rights and funds are generally protected from creditors; the act emphasizes continuing eligibility for public benefits and uses funds to supplement, not replace, government entitlements.
• Effective date: the act becomes effective on the first day of the third month after passage and governor approval.

AI-generated summary using openai/gpt-5-nano on Feb 25, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Alabama Family Trust