Delaware Trust Act 2023 Legislative Update By Todd A. Flubacher, J. Zachary Haupt and Anne Grae Martin1 Delaware made numerous significant changes to the Delaware to its trust law in 2023. The legislation amended the spendthrift statute to include certain former spouses, and also updated it asset protection trust statute. Lawyers from Morris Nichols Arsht & Tunnell LLP summarize the changes. On August 31, 2023, Delaware Governor John C. Carney signed House Bill 132, as amended (“Trust Act 2023”), into law. The legislation includes the following highlights: • Amendment of Delaware’s spendthrift statute, 12 Del. C. 3536, to expressly include beneficiaries’ former spouses within the definition of “creditor” to clarify that the protections afforded under the statute apply to claims by beneficiaries’ former spouses. • Amendment to a provision of Delaware’s Qualified Dispositions in Trust Act (the “APT Act”), 12 Del. C. 3573 (i.e. Delaware’s asset protection trust statute), to provide
that the provisions of the statute that ordinarily except a transferor’s spouse to whom the transferor was married at the time of the transfer from the limitations on bringing claims against trust assets are inapplicable when such spouse has been provided with certain disclosures regarding the transfer and consents in writing to the transfer. • Amendment of a Delaware domestic relations statute relating to the disposition of marital property, 13 Del. C. 1513, to clarify that a spouse’s beneficial interest in a trust that was created by another person is not included within the term “marital property” in a proceeding for divorce or annulment involving the beneficiary-spouse. • Amendment of Delaware’s statute regarding governing law and change of situs, 12 Del. C. 3332, to cross-reference Delaware’s statute relating to place of administration, 12 Del. C. § 3340. • Amendment of Delaware’s statute relating to place of administration, 12 Del. C. 3340, to clarify that meeting one of the criteria listed therein is not the exclusive way to establish that a trust is administered in Delaware. • Amendment of Delaware’s designated representative statute, 12 Del. C. 3339, to clarify that a designated representative may be appointed under the statute when an otherwise appointed designated representative fails to serve and that, in certain instances, a trustor is included among the class of persons who may not be appointed to serve as a designated representative.
Published in eReport, Fall 2023 / Winter 2024 © 2023-2024 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
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