Parsing the Uniform Trust Code in Isolation Without Regard to the Uniform Probate Code and the Uniform Powers of Appointment Act is Not Advised

Intro. The Uniform Trust Code (UTC) is a mere aggregation of tweaks to the corner of equity jurisprudence that long ago gave birth to and currently stewards the trust relationship, hereinafter “the background trust law.” That being the case, I have cautioned in prior posts against parsing the UTC in isolation without regard to the background trust law. Here is one such past post: https://www.jdsupra.com/legalnews/equity-s-maxims-have-many-2669774/.

Today’s posting cautions against parsing the UTC in isolation without regard to the myriad other aggregations of statutory tweaks to the background trust law, such as the Uniform Probate Code (UPC) and the Uniform Powers of Appointment Act (UPAA). Below are two examples of how parsing the UTC in isolation without regard to the UPC and UPAA could lead to a misdiagnosis of the rights, duties and obligations of the parties to a particular trust relationship, and/or of the rights of third parties to the entrusted property.

Extending antilapse to trust dispositive provisions. A controversial innovation is the expansion of antilapse to distributions of entrusted property. Before, antilapse applied only to distributions via will. The rules governing antilapse in the context of trusts are impossibly arcane. That they lurk not in the UTC but in the UPC, specifically §2-707, is a trap for the unwary trust practitioner whose search for the law governing the rights, duties, and obligations of the parties to a particular trust relationship misguidedly is limited to the UTC. See generally §8.15.5 of Loring and Rounds: A Trustee’s Handbook (2025), the relevant portions of which section are reproduced in the appendix below.

Creditors of non-settlor holders of presently exercisable general inter vivos powers of appointment. Is property subject to a presently exercisable general inter vivos power of appointment, such as a power of revocation, accessible to the non-settlor power-holder’s creditors? Yes, as per the model UTC, although textual authority is misleadingly oblique. UTC §505(a) (1) provides that while its settlor is alive, the property of a revocable trust is subject to the claims of the settlor’s creditors. Section 505(b)(1) provides that a non-settlor holder of a power of revocation is deemed the trust’s settlor for creditor-accessibility purposes. The model UPAA is generally in accord. See UPAA §502(a)(1).

But wait. Four enacting jurisdictions have an upside-down version of model UPAA’s §502, namely that property subject to a general inter vivos power in someone other than the settlor is reachable by the powerholder’s creditors only to the extent the power is actually exercised. Four other enacting jurisdictions have a version of §502 that perversely goes so far as to exempt property subject to such a power from the claims of the non-settlor powerholder’s creditors even when the power is actually exercised, provided the exercise is in favor of someone other than the powerholder. “This latter result would have been hard to imagine as a matter of decisional law.” See Thomas P. Gallanis, The Dark Side of Codifying U.S. Trust Law, 49 ACTEC L.J. 283, 296 (2024).

Conclusion. Parsing the UTC in isolation without regard to the myriad other partial trust-law codifications is asking for misdiagnosis. So is parsing the model codifications rather than the versions actually in force and effect in the jurisdiction that has legal authority over the matter.