55-1-36.1. Effect on creditor claims of trustee discretionary powers to pay taxes or make reimbursements for taxes.
Regardless of whether a disposition is a qualified disposition pursuant to chapter 55-16, where a trustee is granted a discretionary power by the terms of the trust instrument, or any provision of law, to pay directly to any taxing authority, or to reimburse the person liable for, any tax imposed by a taxing authority on the person by reason of the person being treated as the owner of all or any portion of the trust property pursuant to §§671 to 678, inclusive, of the Internal Revenue Code of 1986, 26 U.S.C. §§671 to 678, inclusive, as of January 1, 2016, and the U.S. Treasury Regulations promulgated thereunder, as of January 1, 2016:
(1)A creditor of the person shall not satisfy a claim from the property of the trust solely because of the existence or exercise of the discretionary power; and
(2)The use of trust property to pay the tax shall not be deemed a distribution or transfer of trust property to the person for any purpose, and the amount paid from the trust to the taxing authority or to the person in reimbursement of the person's payment of the tax is not subject to the claims of a creditor of the person solely because of the existence or exercise of the discretionary power.
Source: SL 2015, ch 240, §13; SL 2016, ch 231, §13.