Bill Text: AZ HB2403 | 2011 | Fiftieth Legislature 1st Regular | Engrossed
Bill Title: Trusts and estates
Spectrum: Partisan Bill (Republican 2-0)
Status: (Passed) 2011-04-29 - Governor Signed [HB2403 Detail]
Download: Arizona-2011-HB2403-Engrossed.html
|
Senate Engrossed House Bill |
|
State of Arizona House of Representatives Fiftieth Legislature First Regular Session 2011
|
|
HOUSE BILL 2403 |
|
|
|
|
AN ACT
Amending sections 14-2712, 14-10202, 14-10504, 14-10505, 14-10819, 14-11014, 25-213, 28-2055 and 33-1126, Arizona Revised Statutes; relating to probate.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 14-2712, Arizona Revised Statutes, is amended to read:
14-2712. Burdens relating to validity of governing instruments
A. A proponent of a governing instrument has the burden of establishing prima facie proof of due execution in all cases.
B. It is a rebuttable presumption that a person who executes a governing instrument is presumed to have capacity to execute the governing instrument and to have done so free from undue influence and duress.
C. If the validity of a governing instrument is challenged on the grounds of revocation by a later governing instrument, the validity of the later governing instrument must be determined first.
D. Except as prescribed pursuant to subsections E and F of this section, a party that challenges the validity of a governing instrument has the burden of establishing the invalidity of that governing instrument by a preponderance of the evidence.
E. A governing instrument is presumed to be the product of undue influence and is invalid if either:
1. A person who had a confidential relationship to the creator of the governing instrument was active in procuring its creation and execution and is a principal beneficiary of the governing instrument.
2. The preparer of the governing instrument or the preparer's spouse or parents or the issue of the preparer's spouse or parents is a principal beneficiary of the governing instrument. This paragraph does not apply if the governing instrument was prepared for a person who is a grandparent of the preparer, the issue of a grandparent of the preparer or the respective spouses or former spouses of persons related to the preparer.
F. The beneficiary of the governing instrument may overcome a presumption of undue influence by a preponderance of the evidence.
G. For the purposes of this section, determining if a person is a principal beneficiary of a governing instrument or the preparer of a governing instrument is a question of fact to be determined by the totality of the circumstances.
H. This section does not apply to the following:
1. Proceedings to determine the validity of a durable power of attorney pursuant to section 14‑5506, subsection B.
2. Proceedings to determine ownership of multiple party accounts pursuant to section 14‑6211.
Sec. 2. Section 14-10202, Arizona Revised Statutes, is amended to read:
14-10202. Jurisdiction over trustee and beneficiary
A. By accepting the trusteeship of a trust having its principal place of administration in this state or by moving the principal place of administration to this state, or until otherwise declared by the trustee if a proceeding regarding a matter involving the trust is not pending in a court of this state, by declaring that the trust is subject to the jurisdiction of the courts of this state, the trustee submits personally to the jurisdiction of the courts of this state regarding any matter involving the trust.
B. With respect to their interests in the trust, the beneficiaries of a trust having its principal place of administration in this state are subject to the jurisdiction of the courts of this state regarding any matter involving the trust. By accepting a distribution from such a trust, the recipient submits personally to the jurisdiction of the courts of this state regarding any matter involving the trust.
C. This section does not preclude other methods of obtaining jurisdiction over a trustee, beneficiary or other person receiving property from the trust.
Sec. 3. Section 14-10504, Arizona Revised Statutes, is amended to read:
14-10504. Discretionary trusts; effect of standard; definition
A. Except as provided in subsection B of this section, whether or not a trust contains a spendthrift provision, a creditor of a beneficiary may not compel a distribution that is subject to the trustee's discretion, even if either:
1. The discretion is expressed in the form of a standard of distribution.
2. The trustee has not complied with the applicable standard of distribution or has abused the discretion regarding distributions.
B. To the extent a trustee has not complied with the applicable standard of distribution or has abused the discretion regarding distributions:
1. Except as provided in section 14‑10503, a distribution may be ordered by the court to satisfy a judgment or court order against the beneficiary for support or maintenance of the beneficiary's child.
2. The court shall direct the trustee to pay to the child an amount as is equitable under the circumstances but not more than the amount the trustee would have been required to distribute to or for the benefit of the beneficiary had the trustee complied with the standard or not abused the discretion.
C. This section does not limit the right of a beneficiary to maintain a judicial proceeding against a trustee for an abuse of discretion or failure to comply with a standard for distribution, provided that this right may not be exercised by a creditor of the beneficiary or to the extent that any creditor of the beneficiary takes through the name or rights of the beneficiary.
D. Whether or not a trust contains a spendthrift provision:
1. A creditor of a trust beneficiary may not compel a distribution from insurance proceeds payable to the trustee as beneficiary to the extent state law exempts such insurance proceeds from creditors' claims if it had been paid directly to the trust beneficiary.
2. To the extent that under Arizona law life insurance proceeds, policy cash surrender values or other distributions or payments are exempt from attachment or garnishment by, execution on or otherwise the reach of creditors, if the death benefit is payable to an individual beneficiary, the life insurance proceeds, policy cash surrender values or other distributions or payments are also exempt from attachment or garnishment by, execution on or otherwise the reach of creditors if payable to a trust of which a beneficiary is that individual.
E. A creditor of a beneficiary, whether or not the beneficiary is also a trustee or cotrustee, may not reach the beneficiary's beneficial interest or otherwise compel a distribution if either the trustee's discretion to make distributions for the trustee's own benefit is purely discretionary or is limited by an ascertainable standard, including a standard relating to the beneficiary's health, education, support or maintenance or similar language within the meaning of section 2041(b)(1)(a) of the internal revenue code.
F. For the purposes of this section, "child" includes any person for whom an order or judgment for child support has been entered in this or another state.
Sec. 4. Section 14-10505, Arizona Revised Statutes, is amended to read:
14-10505. Creditor's claim against settlor
A. Whether or not the terms of a trust contain a spendthrift provision, the following rules apply:
1. During the lifetime of the settlor, the property of a revocable trust is subject to claims of the settlor's creditors. If a trust has more than one settlor or contributor, the amount the creditor or assignee of a particular settlor may reach may not exceed the settlor's interest in the portion of the trust attributable to that settlor's contribution. This paragraph does not abrogate otherwise applicable laws relating to community property.
2. Subject to the requirements of this section, with respect to an irrevocable trust, a creditor or assignee of the settlor may reach the maximum amount that can be distributed to or for the settlor's benefit. If a trust has more than one settlor, the amount the creditor or assignee of a particular settlor may reach may not exceed the settlor's interest in the portion of the trust attributable to that settlor's contribution. This paragraph does not apply to any trust from which any distribution to the settlor can be made pursuant to the exercise of a power of appointment held by a third party or abrogate otherwise applicable laws relating to community property. A creditor of a settlor:
(a) Shall not reach any trust property based on a trustee's, trust protector's or third party's power, whether or not discretionary, to pay or reimburse the settlor for any income tax on trust income or trust principal that is payable by the settlor under the law imposing the tax or to pay the tax directly to any taxing authority.
(b) Is not entitled to any payment or reimbursement that is to be made directly to any taxing authority.
(c) Shall not reach or compel distributions to or for the benefit of the beneficiary of a special needs trust.
3. After the death of a settlor, and subject to the settlor's right to direct the source from which liabilities will be paid, the property of a trust that was revocable at the settlor's death is subject to claims of the settlor's creditors, costs of administration of the settlor's estate, the expenses of the settlor's funeral and disposal of remains and statutory allowances to a surviving spouse and children to the extent the settlor's probate estate is inadequate to satisfy those claims, costs, expenses and allowances, except to the extent that state or federal law exempts any property of the trust from these claims, costs, expenses or allowances. if a trust has more than one settlor or contributor, the amount the creditor or assignee of a particular settlor may reach may not exceed the settlor's interest in the portion of the trust attributable to that settlor's contribution. This paragraph does not abrogate otherwise applicable laws relating to community property.
B. For the purposes of this section:
1. During the period the power may be exercised, the holder of a power of withdrawal is treated in the same manner as the settlor of a revocable trust to the extent of the property subject to the power.
2. On the lapse, release or waiver of a power of withdrawal, the holder is treated as the settlor of the trust only to the extent the value of the property affected by the lapse, release or waiver exceeds the greater of the amount specified in section 2041(b)(2) or 2514(e) of the internal revenue code, or section 2503(b) of the internal revenue code. On the lapse, release or waiver of a power of withdrawal in the case of a trust created under section 2503(c) of the internal revenue code, the holder will not be treated as the settlor of the trust not, by reason of any such lapse, release or waiver, treated as the settlor of the trust.
C. For the purposes of this section, a trust settled or established by a corporation, professional corporation, partnership, limited liability company, governmental entity, trust, foundation or other entity is not deemed to be settled or established by its directors, officers, shareholders, partners, members, managers, employees, beneficiaries or agents.
D. For the purposes of this section, amounts contributed to a trust by a corporation, professional corporation, partnership, limited liability company, governmental entity, trust, foundation or other entity are not deemed to have been contributed by its directors, officers, shareholders, partners, employees, beneficiaries or agents. Powers, duties or responsibilities granted to or reserved by the settlor pursuant to the trust and any actions or omissions taken pursuant to the trust are deemed to be the powers, responsibilities, duties, actions or omissions of the settlor and not those of its directors, officers, shareholders, partners, members, managers, employees, beneficiaries or agents.
E. For the purposes of this section, amounts and property contributed to the following trusts are not deemed to have been contributed by the settlor, and a person who would otherwise be treated as a settlor or a deemed settlor of the following trusts shall not be treated as a settlor:
1. An irrevocable inter vivos marital trust that is treated as qualified terminable interest property under section 2523(f) of the internal revenue code if the settlor is a beneficiary of the trust after the death of the settlor's spouse.
2. An irrevocable inter vivos marital trust that is treated as a general power of appointment trust under section 2523(e) of the internal revenue code if the settlor is a beneficiary of the trust after the death of the settlor's spouse.
3. An irrevocable inter vivos trust for the settlor's spouse that does not qualify for the gift tax marital deduction if the settlor is a beneficiary of the trust after the death of the settlor's spouse.
4. An irrevocable inter vivos trust created by the settlor's spouse for the benefit of the settlor, regardless of whether or when the settlor also created an irrevocable inter vivos trust with respect to which such spouse is a beneficiary.
4. An irrevocable trust for the benefit of a person, the settlor of which is the person's spouse, regardless of whether or when the person was the settlor of an irrevocable trust for the benefit of that spouse.
5. An irrevocable trust for the benefit of a person to the extent that the property of the trust was subject to a general power of appointment in another person.
F. For the purposes of subsection E, a person is a beneficiary whether so named under the initial trust instrument or through the exercise by that person's spouse or by another person of a limited or general power of appointment.
G. Subsections C and D do not apply to:
1. A trust that has no valid business purpose and that has as its principal purpose the evasion of the claims of the creditors of the persons or entities listed in those subsections.
2. A trust that would be treated as a grantor trust pursuant to sections 671 through 679 of the internal revenue code. This paragraph does not apply to a qualified subchapter S trust that is treated as a grantor trust solely by application of section 1361(d) of the internal revenue code.
Sec. 5. Section 14-10819, Arizona Revised Statutes, is amended to read:
14-10819. Trustee's special power to appoint to other trust
A. Unless the terms of the instrument expressly provide otherwise, a trustee who has the discretion under the terms of a testamentary instrument or irrevocable inter vivos agreement to make distributions, regardless of whether a standard is provided in the instrument or agreement, for the benefit of a beneficiary of the trust may exercise without prior court approval the trustee's discretion by appointing part or all of the estate trust in favor of a trustee of a another trust under an instrument other than that under which the power to make distributions was created if the exercise of this discretion:
1. Does not reduce any fixed nondiscretionary income payment to a beneficiary.
2. Does not alter any nondiscretionary annuity or unitrust payment to a beneficiary.
3. Is in favor of the beneficiaries of the trust.
4. Results in any ascertainable standard applicable for distributions from the trust being the same or more restrictive standard applicable for distributions from the recipient trust when the trustee exercising the power described in this subsection is a possible beneficiary under the standard.
5. Does not adversely affect the tax treatment of the trust, the trustee, the settlor or the beneficiaries.
6. Does not violate the limitations on validity under sections 14-2901 and 14-2905.
B. This section applies to a trust governed by the laws of this state, including a trust whose governing jurisdiction is transferred to this state.
C. The exercise of the power to invade the principal of a trust under subsection A of this section is considered to be the exercise of a special power of appointment.
D. The trustee, in the trustee's sole discretion, prior to before or after the exercise of the trustee's discretion under this section, may request the court to approve the exercise.
E. The trustee may exercise the discretion to appoint all of the trust estate pursuant to this section by restating the trust. END_STATUTE
Sec. 6. Section 14-11014, Arizona Revised Statutes, is amended to read:
14-11014. Total return trusts; definitions
A. A trustee, other than an interested trustee, or if two or more persons are acting as trustee, a majority of the trustees who are not an interested trustee, in its sole discretion and without the approval of the probate court may:
1. Convert an income trust to a total return unitrust.
2. Reconvert a total return unitrust to an income trust.
3. Change the percentage used to calculate the unitrust amount or the method used to determine the fair market value of the trust, or both, if:
(a) The trustee adopts a written policy for the trust providing either:
(i) In the case of a trust being administered as an income trust, future distributions from the trust will be unitrust amounts rather than net income.
(ii) In the case of a trust being administered as a total return unitrust, future distributions from the trust will be net income rather than unitrust amounts.
(iii) That the percentage used to calculate the unitrust amount or the method used to determine the fair market value of the trust, or both, will be changed as stated in the policy.
(b) The trustee sends written notice of its intention to take this action, along with copies of the written policy and this section, to:
(i) The settlor of the trust, if living.
(ii) All living persons who are currently receiving or eligible to receive distributions of income qualified beneficiaries of the trust.
(iii) Without regard to the exercise of any power of appointment, all living persons who would receive principal of the trust if the trust were to terminate at the time of the giving of the notice and all living persons who would receive or be eligible to receive distributions of income or principal of the trust if the interests of all of the beneficiaries currently eligible to receive income under item (ii) of this subdivision were to terminate at the time of the giving of the notice.
(iv) (iii) All persons acting as adviser or trust protector of the trust.
(c) At least one person receiving notice under subdivision (b), item (ii) or (iii) of this subsection is legally competent.
(d) No person receiving notice objects to the proposed action of the trustee by submitting a written instrument delivered to the trustee within thirty days after receipt of the notice.
B. If there is no trustee of the trust other than an interested trustee, the interested trustee or, if two or more persons are acting as trustee and are interested trustees, a majority of interested trustees, in its sole discretion and without the approval of the probate court may:
1. Convert an income trust to a total return unitrust.
2. Reconvert a total return unitrust to an income trust.
3. Change the percentage used to calculate the unitrust amount or the method used to determine the fair market value of the trust, or both, if:
(a) The trustee adopts a written policy for the trust providing either:
(i) In the case of a trust being administered as an income trust, that future distributions from the trust will be unitrust amounts rather than net income.
(ii) In the case of a trust being administered as a total return unitrust, that future distributions from the trust will be net income rather than unitrust amounts.
(iii) That the percentage used to calculate the unitrust amount or the method used to determine the fair market value of the trust, or both, will be changed as stated in the policy.
(b) The trustee appoints a disinterested person who, in its sole discretion but acting in a fiduciary capacity, determines for the trustee:
(i) The percentage to be used to calculate the unitrust amount.
(ii) The method to be used in determining the fair market value of the trust.
(iii) Which assets, if any, are to be excluded in determining the unitrust amount.
(c) The trustee sends written notice of its intention to take such action, along with copies of the written policy and this section, and the determinations of the disinterested person to:
(i) The settlor of the trust, if living.
(ii) All living persons who are currently receiving or eligible to receive distributions of income qualified beneficiaries of the trust.
(iii) Without regard to the exercise of any power of appointment, all living persons who would receive principal of the trust if the trust were to terminate at the time of the giving of the notice and all living persons who would receive or be eligible to receive distributions of income or principal of the trust if the interests of all of the beneficiaries currently eligible to receive income under item (ii) of this subdivision were to terminate at the time of the giving of the notice.
(iv) (iii) All persons acting as adviser or protector of the trust.
(d) At least one person receiving notice under subdivision (c), item (ii) or (iii) of this subsection is legally competent.
(e) No person receiving notice objects to the proposed action or the determinations of the disinterested person by submitting a written instrument delivered to the trustee within thirty days after receipt of the notice.
C. If any trustee wishes to convert an income trust to a total return unitrust, reconvert a total return unitrust to an income trust or change the percentage used to calculate the unitrust amount or the method used to determine the fair market value of the trust, or both, but does not have the ability to or elects not to do it pursuant to subsection A or B of this section, the trustee may petition the probate court for an order as the trustee deems appropriate. If there is only one trustee of such a trust and that trustee is an interested trustee or if there are two or more trustees of such a trust and a majority of them are interested trustees, the court, in its discretion or on petition of the trustee or trustees or of any person interested in the trust, may appoint a disinterested person who, acting in a fiduciary capacity, shall present information to the court necessary to enable the court to make its determinations.
D. The fair market value of the trust shall be determined at least annually, using a valuation date or dates or averages of valuation dates as are deemed appropriate. Assets for which a fair market value cannot be readily ascertained shall be valued using valuation methods as are deemed reasonable and appropriate. Assets used by a trust beneficiary, such as a residence property or tangible personal property, may be excluded from fair market value for computing the unitrust amount.
E. The percentage to be used in determining the unitrust amount shall be a reasonable current return from the trust, but not less than three per cent or more than five per cent, taking into account the intentions of the settlor of the trust as expressed in the governing instrument, the needs of the beneficiaries, general economic conditions, projected current earnings and appreciation for the trust, and projected inflation and its impact on the trust.
F. A trustee may act pursuant to subsection A or B of this section with respect to a trust for which both income and principal have been permanently set aside for charitable purposes under the governing instrument and for which a federal estate or gift tax deduction has been taken, provided that:
1. Instead of sending written notice to the persons described in subsection A, paragraph 3, subdivision (b), items item (ii) and (iii) of this section or pursuant to subsection B, paragraph 3, subdivision (c), items item (ii) and (iii) of this section, as the case may be, the trustee shall send the written notice to the named charity or charities then entitled to receive income of the trust and, if no named charity or charities are entitled to receive all of that income, to the attorney general of this state.
2. Subsection A, paragraph 3, subdivision (c) of this section or subsection B, paragraph 3, subdivision (d) of this section, as the case may be, does not apply to that action.
3. In each taxable year, the trustee must distribute the greater of the unitrust amount and the amount required by section 4942 of the internal revenue code.
G. Following the conversion of an income trust to a total return unitrust, the trustee:
1. Shall consider the unitrust amount as paid from net accounting income determined as if the trust were not a unitrust.
2. Shall then consider the unitrust amount as paid from ordinary income not allocable to net accounting income.
3. After calculating the trust's capital gain net income described in section 1222(9) of the internal revenue code, may consider the unitrust amount as paid from net short-term capital gain described in section 1222(5) of the internal revenue code and then from net long-term capital gain described in section 1222(7) of the internal revenue code.
4. Shall then consider the unitrust amount as coming from the principal of the trust.
H. In administering a total return unitrust, the trustee, in its sole discretion but subject to the provisions of the governing instrument, may determine:
1. The effective date of the conversion.
2. The timing of distributions, including provisions for prorating a distribution for a short year in which a beneficiary's right to payments commences or ceases.
3. Whether distributions are to be made in cash or in kind or partly in cash and partly in kind.
4. If the trust is reconverted to an income trust, the effective date of the reconversion.
5. Any other administrative issues as may be necessary or appropriate to carry out the purposes of this section.
I. Conversion to a total return unitrust under this section does not affect any other provision of the governing instrument, if any, regarding distributions of principal.
J. Notwithstanding anything in this section to the contrary, in the case of a trust for which a marital deduction has been taken for federal tax purposes under section 2056 or 2523 of the internal revenue code, the spouse otherwise entitled to receive the net income of the trust has the right, by written instrument delivered to the trustee, to prohibit conversion to a total return unitrust and to compel the reconversion during that spouse's lifetime of the trust from a total return unitrust to an income trust.
K. This section pertains to the administration of a trust and is available to any trust that is administered in this state under Arizona law or to any trust, regardless of its place of administration, whose governing instrument provides that Arizona law governs matters of construction or administration unless:
1. The governing instrument reflects an intention that the current beneficiary or beneficiaries are to receive an amount other than a reasonable current return from the trust.
2. The trust is a pooled income fund described in section 642(c)(5) of the internal revenue code or a charitable remainder annuity trust described in section 664(d) of the internal revenue code.
3. The governing instrument expressly prohibits use of this section by specific reference to this section or expressly states the settlor's intent that net income not be calculated as a unitrust amount. A provision in the governing instrument that "the provisions of Arizona Revised Statutes, section 14-11014, as amended, or any corresponding provision of future law, shall not be used in the administration of this trust" or "my trustee shall not determine the distributions to the income beneficiary as a unitrust amount" or similar words reflecting such intent shall be sufficient to preclude the use of this section.
L. Any trustee or disinterested person who in good faith takes or fails to take any action under this section is not liable to any person affected by that action or inaction, regardless of whether the person received written notice as prescribed in this section and regardless of whether the person was under a legal disability at the time of the delivery of the notice. The person's exclusive remedy is to obtain a court order directing the trustee to convert an income trust to a total return unitrust, to reconvert from a total return unitrust to an income trust or to change the percentage used to calculate the unitrust amount.
M. This section is available to trusts in existence on October 1, 2008 or created after that date.
N. For the purposes of this section:
1. "Disinterested person" means a person who is not a related or subordinate party pursuant to section 672(c) of the internal revenue code with respect to the person then acting as trustee of the trust and excludes the settlor of the trust and any interested trustee.
2. "Income trust" means a trust that is created by either an inter vivos or a testamentary instrument and that directs or permits the trustee to distribute the net income of the trust to one or more persons, either in required amounts or proportions, or in amounts or proportions determined by the trustee and regardless of whether the trust directs or permits the trustee to distribute the principal of the trust to one or more of these persons.
3. "Interested distributee" means a person to whom distributions of income or principal can currently be made who has the power to remove the existing trustee and designate as successor a person who may be a related or subordinate party pursuant to section 672(c) of the internal revenue code with respect to that distributee.
4. "Interested trustee" means:
(a) An individual trustee to whom the net income or principal of the trust can currently be distributed or would be distributed if the trust were then to terminate and be distributed.
(b) Any trustee who may be removed and replaced by an interested distributee.
(c) An individual trustee whose legal obligation to support a beneficiary may be satisfied by distributions of income and principal of the trust.
5. "Total return unitrust" means an income trust that has been converted under and meets the requirements of this section.
6. "Trustee" means any person acting as trustee of the trust, unless expressly noted otherwise, whether acting in that person's discretion or on the direction of one or more persons acting in a fiduciary capacity.
7. "Unitrust amount" means an amount computed as a percentage of the fair market value of the trust.
Sec. 7. Section 25-213, Arizona Revised Statutes, is amended to read:
25-213. Separate property
A. A spouse's real and personal property that is owned by that spouse before marriage and that is acquired by that spouse during the marriage by gift, devise or descent, and the increase, rents, issues and profits of that property, is the separate property of that spouse.
B. Property that is acquired by a spouse after service of a petition for dissolution of marriage, legal separation or annulment is also the separate property of that spouse if the petition results in a decree of dissolution of marriage, legal separation or annulment.
C. Notwithstanding subsection B of this section and section 25‑214, subsection C, a mortgage or deed of trust executed by a spouse who acquires the real property encumbered by that mortgage or deed of trust after service of a petition for dissolution of marriage, legal separation or annulment shall be enforceable against the real property if the petition does not result in a decree of dissolution of marriage, legal separation or annulment.
D. A contribution to an irrevocable trust that has or will have as its principal asset life insurance on the person making the contribution is a contribution of the insured's separate property if the spouse of the insured is the primary beneficiary of the trust.
Sec. 8. Section 28-2055, Arizona Revised Statutes, is amended to read:
28-2055. Certificate of title; content requirements; transfer on death provision; delivery
A. The department or an authorized third party shall print the certificate of title, and it shall contain forms for assignment of title or interest and warranty by the owner, with space for notation of liens and encumbrances on the vehicle at the time of transfer. The certificate of title shall also contain the odometer mileage disclosure statement pursuant to section 28‑2058.
B. At the request of the owner and on payment of a fee prescribed by the department by rule, the certificate of title may contain, by attachment, a transfer on death provision where the owner may designate a beneficiary of the title. The attachment shall include a notice to the owner and any beneficiary that the monetary limitation on the transfer of personal property in a decedent's estate prescribed in section 14‑3971 may apply.
C. If a motor vehicle, trailer or semitrailer has been registered in any other state or country, the department shall retain in its records the name of the state or country in which the prior registration took place.
D. Except as provided in section 28‑2064, the department shall deliver or mail the original certificate of title to:
1. The applicant if there are not any liens or encumbrances on the certificate of title.
2. The holder of the lien or encumbrance first in time on the date of the application if there are liens or encumbrances on the certificate of title.
Sec. 9. Section 33-1126, Arizona Revised Statutes, is amended to read:
33-1126. Money benefits or proceeds; exception
A. The following property of a debtor shall be is exempt from execution, attachment or sale on any process issued from any court:
1. All money received by or payable to a surviving spouse or child upon on the life of a deceased spouse, parent or legal guardian, not exceeding twenty thousand dollars.
2. The earnings of the minor child of a debtor or the proceeds thereof of these earnings by reason of any liability of such the debtor not contracted for the special benefit of such the minor child.
3. All monies received by or payable to a person entitled to receive child support or spousal maintenance pursuant to a court order.
4. All money, proceeds or benefits of any kind to be paid in a lump sum or to be rendered on a periodic or installment basis to the insured or any beneficiary under any policy of health, accident or disability insurance or any similar plan or program of benefits in use by any employer, except for premiums payable on such policy or debt of the insured secured by a pledge, and except for collection of any debt or obligation for which the insured or beneficiary has been paid under the plan or policy and except for payment of amounts ordered for support of a person from proceeds and benefits furnished in lieu of earnings which that would have been subject to such that order and subject to any exemption applicable to earnings so replaced.
5. All money arising from any claim for the destruction of, or damage to, exempt property and all proceeds or benefits of any kind arising from fire or other insurance upon on any property exempt under this article.
6. The cash surrender value of life insurance policies where for a continuous unexpired period of two years such the policies have been owned by a debtor and have named as beneficiary the debtor's surviving spouse, child, parent, brother or sister, or any other dependent family member, in the proportion that the policy names any such beneficiary, except that, subject to the statute of limitations, the amount of any premium which that is recoverable or avoidable by a creditor pursuant to title 44, chapter 8, article 1, with interest thereon, shall is not be exempt. The exemption provided by this paragraph does not apply to a claim for the payment of a debt of the insured or beneficiary that is secured by a pledge or assignment of the cash value of the insurance policy or the proceeds of the policy. For the purposes of this paragraph, "dependent" means a family member who is dependent on the insured debtor for not less than half support.
7. An annuity contract where for a continuous unexpired period of two years such that contract has been owned by a debtor and has named as beneficiary the debtor, the debtor's surviving spouse, child, parent, brother or sister, or any other dependent family member, except that, subject to the statute of limitations, the amount of any premium, payment or deposit with respect to such that contract is recoverable or avoidable by a creditor pursuant to title 44, chapter 8, article 1 shall is not be exempt. The exemption provided by this paragraph does not apply to a claim for a payment of a debt of the annuitant or beneficiary that is secured by a pledge or assignment of the contract or its proceeds. For the purposes of this paragraph, "dependent" means a family member who is dependent on the debtor for not less than half support.
8. Any claim for damages recoverable by any person by reason of any levy upon on or sale under execution of his that person's exempt personal property or by reason of the wrongful taking or detention of such that property by any person, and the judgment recovered for such damages.
9. A total of one hundred fifty dollars held in a single account in any one financial institution as defined by section 6‑101. The property declared exempt by this paragraph is not exempt from normal service charges assessed against the account by the financial institution at which the account is carried.
B. Any money or other assets payable to a participant in or beneficiary of, or any interest of any participant or beneficiary in, a retirement plan under section 401(a), 403(a), 403(b), 408, 408A or 409 or a deferred compensation plan under section 457 of the United States internal revenue code of 1986, as amended, shall be whether the beneficiary's interest arises by inheritance, designation, appointment or otherwise, is exempt from any and all claims of creditors of the beneficiary or participant. This subsection shall does not apply to any of the following:
1. An alternate payee under a qualified domestic relations order, as defined in section 414(p) of the United States internal revenue code of 1986, as amended. The interest of any and all alternate payees is exempt from any and all claims of any creditor of the alternate payee.
2. Amounts contributed within one hundred twenty days before a debtor files for bankruptcy.
3. The assets of bankruptcy proceedings filed before July 1, 1987.
C. Any person the age of eighteen years of age or over, married or single, who resides within this state and who does not exercise the homestead exemption under article 1 of this chapter may claim as a personal property homestead exempt from all process prepaid rent, including security deposits as provided in section 33‑1321, subsection A, for the claimant's residence, not exceeding the lesser of one thousand dollars or one and one‑half months' rent.
D. Nothing in This section exempts does not exempt property from orders which that are the result of a judgment for arrearages of child support or for a child support debt.
