State senators moved Tuesday night to fix a mess they may have created earlier this year in amending the law on irrevocable trusts.
Without dissent, the Senate Finance Committee voted to delay for two years a key change in laws governing these trusts.
Specifically, SB1010 would delay until 2006 a requirement that trust beneficiaries be notified about the provisions within a trust.
The vote came after several attorneys told lawmakers that unless they repeal it now, clients will not only move their money out of Arizona but may move out of state themselves.
"I have the executives of two Fortune 500 companies saying they’re ready to move,’’ said Susan Smith, a tax lawyer. And Senate Majority Whip Marilyn Jarrett, R-Mesa, said some people who are considering retirement here might choose to go somewhere where the laws are different.
Statelaw adopted earlier this year says that, beginning in January, beneficiaries must be told they have that right to know the terms of a trust.
"It has a very chilling effect,’’ said attorney Max Boyer. He said there may be reasons those who set up a trust don’t want that information given to their children and others.
But attorney Quinn DeAngelis, who is chairman of the Probate and Trust section of the State Bar of Arizona, rejected the contention that the change will result in trusts being moved out of state. He said the section’s ninemember executive council backs the new law, saying it is a good way for beneficiaries to protect their interests.
Sen. Dean Martin, R-Phoenix, chairman of the finance committee, said no one told lawmakers earlier this year when they were considering the change there might be problems. Martin said a two-year delay will give senators a chance to study what they did.
Martin said there is another hurdle to making the change: Gov. Janet Napolitano will not permit lawmakers to deal with the issue in the current special session unless the Legislature first approves more money for Child Protective Services.