(1) Whether or not the terms of a trust contain a spendthrift provision:
(a) During the lifetime of the settlor, the property of a revocable trust is subject to claims of the settlor’s creditors.
(b) A creditor or assignee of the settlor of an irrevocable trust may reach the maximum amount that can be distributed to or for the settlor’s benefit. If an irrevocable 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.
(c) If a trust was revocable at the settlor’s death, the property of the trust becomes subject to creditors’ claims as provided in ORS 130.350 to 130.450 when the settlor dies. The payment of claims is subject to the settlor’s right to direct the priority of the sources from which liabilities of the settlor are to be paid.
(2) For the purpose of creditors’ claims, the holder of a power of withdrawal is treated in the same manner as the settlor of a revocable trust to the extent property of the trust is subject to the power. The provisions of this subsection apply to the holder of a power of withdrawal only during the period that the power may be exercised.
(3) Upon the lapse, release or waiver of a power of withdrawal, the property of the trust that is the subject of the lapse, release or waiver becomes subject to claims of creditors of the holder of the power only to the extent the value of the property exceeds the greater of the amount specified in section 2041(b)(2) or 2514(e) of the Internal Revenue Code, as in effect on January 1, 2006, or section 2503(b) of the Internal Revenue Code, as in effect on January 1, 2006.
(4) Subsections (2) and (3) of this section do not apply to a person other than a settlor who is a beneficiary of a revocable or irrevocable trust and who is also a trustee of the trust, if the power to withdraw for the person’s own benefit is limited by an ascertainable standard. [2005 c.348 §42]
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