House
File
2378
-
Introduced
HOUSE
FILE
2378
BY
COMMITTEE
ON
JUDICIARY
(SUCCESSOR
TO
HF
624)
(SUCCESSOR
TO
HSB
46)
A
BILL
FOR
An
Act
relating
to
limitations
on
creditors’
rights
in
1
spendthrift
trusts
and
discretionary
trusts.
2
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
3
TLSB
1902HZ
(2)
84
rh/nh
H.F.
2378
Section
1.
Section
633A.2302,
subsection
3,
Code
2011,
is
1
amended
by
striking
the
subsection.
2
Sec.
2.
Section
633A.2305,
Code
2011,
is
amended
to
read
as
3
follows:
4
633A.2305
Discretionary
trusts
——
effect
of
standard.
5
1.
Whether
or
not
a
trust
contains
a
spendthrift
provision,
6
a
creditor
or
assignee
of
a
beneficiary
shall
not
compel
a
7
distribution
that
is
subject
to
the
trustee’s
discretion,
even
8
if
any
of
the
following
occur:
9
a.
1.
The
discretion
is
expressed
in
the
form
of
a
standard
10
of
distribution.
11
b.
2.
The
trustee
has
abused
its
discretion.
12
2.
This
section
shall
not
apply
to
a
creditor
of
a
13
beneficiary
or
to
a
creditor
of
a
deceased
beneficiary
14
enforcing
an
interest
in
a
trust,
if
any,
given
to
a
15
beneficiary
by
the
trust
instrument.
16
Sec.
3.
Section
633A.2306,
Code
2011,
is
amended
to
read
as
17
follows:
18
633A.2306
Court
action
——
trustee’s
discretion.
19
1.
If
a
trustee
has
discretion
as
to
payments
to
a
20
beneficiary,
and
refuses
to
make
payments
or
exercise
its
21
discretion,
the
court
shall
neither
order
the
trustee
to
22
exercise
its
discretion
nor
order
payment
from
any
such
trust,
23
if
any
such
payment
would
inure,
directly
or
indirectly,
to
the
24
benefit
of
a
creditor
of
the
beneficiary.
25
2.
Notwithstanding
subsection
1
,
the
court
may
order
26
payment
to
a
creditor
of
a
beneficiary
or
to
a
creditor
of
a
27
deceased
beneficiary
if
the
beneficiary
has
or
had
an
interest
28
in
the
trust.
29
Sec.
4.
NEW
SECTION
.
633A.2306A
Medical
assistance
30
payments.
31
Notwithstanding
sections
633A.2302
and
633A.2305,
an
32
interest
of
a
beneficiary
may
be
reached
by
the
department
33
of
human
services
pursuant
to
section
249A.5
to
satisfy
an
34
enforceable
claim
for
necessaries
against
the
beneficiary’s
35
-1-
LSB
1902HZ
(2)
84
rh/nh
1/
2
H.F.
2378
estate.
1
EXPLANATION
2
This
bill
eliminates
provisions
in
Code
sections
633A.2302,
3
633A.2305,
and
633A.2306
allowing
a
creditor
to
reach
a
4
beneficiary’s
(including
a
deceased
beneficiary)
interest
in
5
a
spendthrift
trust
or
a
discretionary
trust
to
satisfy
an
6
enforceable
claim
against
the
beneficiary.
The
bill
provides
7
that,
notwithstanding
Code
sections
633A.2302
(spendthrift
8
trusts)
and
633A.2305
(discretionary
trusts),
a
beneficiary’s
9
interest
may
be
reached
by
the
department
of
human
services
to
10
satisfy
a
medical
assistance
debt
against
the
beneficiary’s
11
estate.
12
-2-
LSB
1902HZ
(2)
84
rh/nh
2/
2