House Bill 207 Alabama 2026 Session

Summary

Primary Sponsor

Tim WadsworthRepresentative

Republican

Session

2026 Regular Session

Title

Alabama Uniform Trust Code; amended to conform with Alabama Qualified Dispositions in Trust Act, limit property subject to creditors' claims

Summary

HB207 would align Alabama's Uniform Trust Code with the Alabama Qualified Dispositions in Trust Act by limiting creditor claims, clarifying when a beneficiary or withdrawal-power holder is treated as the trust's creator, and allowing reimbursement of the trust’s creator’s income taxes by the trustee.

What This Bill Does

It would limit creditor claims on trust assets to the same limits used in the Alabama Qualified Dispositions in Trust Act. It would set rules for when a trust beneficiary or a holder of a withdrawal power is considered the settlor (trust creator). It would authorize the trustee to reimburse the trust’s creator for income taxes paid or payable from the trust without those payments being subject to the creator’s creditors. It would also make nonsubstantive technical revisions to update the code language.

Who It Affects

• Settlors and beneficiaries of trusts (including those with withdrawal powers) who could be affected by creditor claim limits and the new definitions of when someone is considered the trust's creator.
• Trustees and creditors, as trustees gain authority to reimburse a settlor's income taxes paid or payable from trust assets without those amounts being claimable by creditors, and the law's language is updated for consistency.

Key Provisions

• Creditor claims on trust assets are limited to the same caps and rules as in the Alabama Qualified Dispositions in Trust Act, and clear limits are set on when a withdrawal-power holder or beneficiary is treated as the settlor.
• Trustees may reimburse the trust’s creator for income taxes paid or payable from the trust without those payments being subject to the creditors of the settlor, along with nonsubstantive, technical revisions to current code language.

AI-generated summary using openai/gpt-5-nano on Feb 11, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Property & Estates