BY: Aaron Jack
Chief Development Officer, Argent Financial Group
Chief Executive Officer, Argent Trust Oklahoma
Originally published in Journal Record August 23 , 2024
Oklahoma is undergoing significant changes in its trust laws with the introduction of the Oklahoma Trust Reform Act of 2024. This legislation, passed on May 31, 2024, and set to take effect on November 1, 2024, brings about substantial reforms through the Oklahoma Uniform Directed Trust Act (OUDTA), the Oklahoma Qualified Disposition in Trust Act and other important updates. These changes are positioning Oklahoma as a leading trust jurisdiction in the United States.
The Oklahoma Uniform Directed Trust Act (OUDTA)
The OUDTA addresses the growing use of directed trusts, which allow for the division of trustee responsibilities among multiple parties. Previously, Oklahoma lacked a clear legal framework to support this approach.
Under the new law, a “trust director” can be appointed to manage specific aspects of the trust, such as investments or distributions. These directors carry out duties similar to those of a trustee but are only responsible for their designated areas. For instance, a trust director managing investments is obligated to act in the best interest of the beneficiaries.
This update enhances control and flexibility in trust management while ensuring that the interests of beneficiaries remain protected.
The Oklahoma Qualified Disposition in Trust Act
The Oklahoma Qualified Disposition in Trust Act is particularly relevant for individuals seeking to protect their assets from future creditors. With the new law, Oklahoma reforms and modernizes the parameters to establish Domestic Asset Protection Trusts (DAPTs).
These trusts enable individuals to shield assets from most future creditors, provided specific conditions are met. The trust must be governed by Oklahoma law, be irrevocable, include a spendthrift clause, and have a qualified Oklahoma trustee.
Despite these protections, the trust creator may still receive distributions and retain certain controls, such as the ability to veto distributions if necessary. Up to $10 million in assets can be protected, with some exceptions, such as obligations for child support. This makes DAPTs a powerful tool for asset protection.
Non-Judicial Settlement Agreements
Another significant update is the introduction of non-judicial settlement agreements. These provisions allow trustees and beneficiaries to resolve certain trust matters—such as modifying terms or reallocating responsibilities—without the need for court intervention. This change simplifies and expedites the process of addressing trust issues, while saving the time and expense that often accompanies the judicial process.
Task Force on Trust Administration and Review
In addition, Oklahoma has established a unique seven-member Task Force on Trust Administration and Review. This task force, that includes representatives from the Bankers Association, State Chamber, and the Oklahoma trust industry, is tasked with reviewing and recommending further changes to Oklahoma’s trust administration statutes to provide an efficient framework for the administration of trusts. The formation of this task force underscores Oklahoma’s commitment to maintaining its status as a leading trust jurisdiction.
Conclusion
The comprehensive changes in Oklahoma’s trust laws position the state as a premier destination for trust management in the United States. With these updates, individuals and businesses now have access to enhanced tools, greater flexibility, and stronger asset protection options. If you have questions about how these changes might impact you, consider reaching out for professional advice.
