The Arizona Trust Code (based on the Uniform Trust Code), was unanimously passed by the legislature of the State of Arizona in 2008 and became effective on January 1, 2009. Impacting the areas of law concerning estate planning, trust administration, and trust litigation, and applying to all trusts, whether revocable or irrevocable, created before or after the effective date, the Arizona Trust Code is found in Title 14, Chapter 11 of the Arizona Revised Statutes.
In addition to making many significant changes in the law, such as providing for nonjudicial settlements using virtual representation or other representation provisions previously only available in formal proceedings, the Arizona Trust Code establishes new rules for spendthrift trusts and the rights of creditors, flexibility for the amendment and termination of trusts, the classification of beneficiaries as either “qualified” or “nonqualified”, a legal framework to determine the extent to which beneficiaries are entitled to information about the administration of the trust and financial reports, provision for removal of trustees, and the provision of a new set of trustees’ powers and other rules affecting the trustee. In addition, the Arizona Trust Code has clarified many areas of existing trust law.
There are a number of default and mandatory provisions that cannot be overridden by the terms of the trust, some of which include the following: requirements for creating a trust; the duty of the trustee to act in good faith and in accordance with the purposes of the trust; the requirement that a trust and its terms be for the benefit of its beneficiaries, and that the trust have a purpose that is lawful, not contrary to public policy, and possible to achieve; the power of the court to modify or terminate a trust; the effect of a spendthrift provision and the rights of certain creditors and assignees to reach a trust; the duty to respond to the request of a qualified beneficiary of an irrevocable trust for trustee’s reports and other information reasonably related to the administration of a trust; and the limitation on the power to relieve trustees of liabilities or duties.