AL HB207

Amends the Alabama Uniform Trust Code to align creditor claims against irrevocable trusts with the limits established in the Alabama Qualified Dispositions in Trust Act (Chapter 3E)

Eliminates the rule treating withdrawal power holders as settlors upon lapse of their power, providing that beneficiaries holding withdrawal powers are not considered settlors when the power lapses

Authorizes trustees to reimburse settlors for income taxes paid on trust income without those reimbursements being considered assets reachable by the settlor's creditors

Clarifies that persons who become trust beneficiaries through someone else's exercise of a power of appointment are not treated as settlors of the trust

Effective date of October 1, 2026, applying to all trusts under Section 19-3B-1204