Discretionary Trusts, Support Trusts, Discretionary Support Trusts, Spendthrift Trusts, and Special Needs Trusts under the Nebraska Uniform Trust Code

The Uniform Trust Code ( UTC )1 includes a number of provisions dealing with the rights of creditors to reach the interests of trust beneficiaries. A few authors in a series of articles have raised concerns that adopting the UTC significantly undermines traditional equity rules and policies governing the protection of trust assets against claims of creditors. These articles have caused attorneys and other trust professionals to question the extent to which enactment of the UTC changes the rules in this important area of trust law. The arguments raised by these few authors provided the initial impetus for this article. To address the particular concerns of Nebraska attorneys, we extensively analyzed Nebraska law governing the protection of trust assets against claims of creditors prior to enactment of the Nebraska Uniform Trust Code ( Nebraska UTC )5 which became operative on January 1, 2005. The comprehensive legislative study prior to enactment concluded that the Nebraska UTC would change prior case law on these types of trusts very little and that the changes made by the Nebraska UTC were grounded in sound legislative policy. We then compared the Nebraska UTC provisions relating to this area with prior Nebraska law. Finally, we examined the arguments presented in the various articles. We concluded that, although the Nebraska UTC expanded the rights of certain specific creditors under limited circumstances, there was no basis for the prophesies of doom asserted by these authors. Similar conclusions have been reached nationally and in other states enacting the UTC