AR HB1394

Adds a new subchapter (28-72-701 et seq.) to Arkansas Code governing spendthrift trusts and domestic asset protection trusts, providing comprehensive definitions and operational requirements for both trust types.

Allows creation of domestic asset protection trusts (self-settled, irrevocable trusts) where the settlor can be a beneficiary, provided the trust does not require income/principal distribution to the settlor and is not intended to defraud creditors.

Requires at least one trustee of a domestic asset protection trust to be an Arkansas resident, an Arkansas-organized trust company or bank, or an out-of-state trust company/bank maintaining an Arkansas office.

Establishes creditor protections by limiting actions against trust transfers to two years after transfer or six months after discovery (whichever is later), and requiring creditors to prove fraud by clear and convincing evidence to challenge transfers.

Restricts actions against trust advisers and trustees to cases where they acted knowingly and in bad faith in violation of Arkansas law and directly caused damages, requiring clear and convincing evidence.