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This entry was published on 2014-09-22
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SECTION 7-1.5
When trust interest inalienable; exception
Estates, Powers & Trusts (EPT) CHAPTER 17-B, ARTICLE 7, PART 1
§ 7-1.5 When trust interest inalienable; exception

(a) The interest of the beneficiary of any trust may be assigned or
otherwise transferred, except that:

(1) The right of a beneficiary of an express trust to receive the
income from property and apply it to the use of or pay it to any person
may not be transferred by assignment or otherwise unless a power to
transfer such right, or any part thereof, is conferred upon such
beneficiary by the instrument creating or declaring the trust.

(2) The proceeds of a life insurance policy which, under a trust or
other agreement, are upon the death of the insured left with the
insurance company may not be (A) transferred, (B) subject to commutation
or encumbrance or (C) subject to legal process except in an action for
necessaries, if provisions to such effect were incorporated in such
trust or other agreement.

(b) Notwithstanding subparagraph (a) (1):

(1) The beneficiary of an express trust to receive income from
property and apply it to the use of or pay it to any person may, unless
otherwise provided in the instrument creating or declaring such trust,
transfer any amount in excess of ten thousand dollars of the annual
income to which the beneficiary is entitled from such trust to the
spouse, issue, ancestors, brothers, sisters, uncles, aunts, nephews or
nieces of the beneficiary, or to a trustee, committee, conservator,
curator, custodian, guardian of the property of a minor, or the donee of
a power during minority for the benefit only of any such person bearing
such relationship to the beneficiary, provided that such transfer is
evidenced by a written instrument signed and acknowledged by the
beneficiary and delivered to the trustee of the trust, together with an
affidavit by the beneficiary that such transfer and any like transfer
concurrently in effect are for all or part of the excess over ten
thousand dollars of the annual income from such trust to which such
beneficiary is entitled, and that he has not received and is not to
receive any consideration in money or money's worth for the transfer.

(2) Any such transfer shall be effective in any year only as to income
from such trust in excess of ten thousand dollars, and for this purpose
all previous like transfers applicable to a given year shall be taken
into account. In the event that two or more transfers are made in or for
any year in a total amount exceeding the income from such trust properly
transferable hereunder, transferees shall be preferred in the order in
which the instruments of transfer were delivered to the trustee.

(3) A trustee shall be exonerated and fully discharged for any payment
made to a transferee in reliance on the affidavit of a beneficiary
described in subparagraph (1).

(4) The provisions of this paragraph do not apply to subparagraph (a)
(2):

(c) A transferee of income may, if he has not received or is not to
receive any consideration in money or money's worth therefor, make a
further transfer of such income only to one or more of the permissible
transferees referred to in subparagraph (b) (1), other than a prior
transferor; provided, however, that upon the death of a transferee any
income not so transferred by him shall be an asset of his estate,
subject to his testamentary disposition or passing to his distributees
under the statutes of descent and distribution.

(d) The beneficiary of an express trust to receive the income from
property and apply it to the use of or pay it to any person is not
precluded by anything contained in this section from transferring or
assigning any part or all of such income to or for the benefit of
persons whom the beneficiary is legally obligated to support.