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House approves trust law changes to attract trust business and jobs
Summary
The Utah House passed first-substitute House Bill 299, which extends trust lifespans, enhances asset-protection rules and creates favorable state tax treatment for trust income to attract trust-company business and associated jobs; the bill passed 70–2 and goes to the Senate.
The Utah House on Feb. 27 approved first-substitute House Bill 299, a package of trust law amendments intended to make the state more competitive for trust companies and the associated financial-services jobs.
Representative Paul Clark, sponsor of the measure, told colleagues the bill “extends the life of a trust, provides a mechanism for protection of trust assets and … income that remains in the trust will have a favorable state tax status until it is distributed.” He said the changes are aimed at attracting new trust business to Utah and keeping assets that otherwise migrate to states with more favorable trust laws.
Supporters said the bill is an economic-development tool. “We are able to export our statute so that we can attract the types of businesses that would want to come here to support the trust industry,” Representative Fairey said in floor remarks urging passage. Clark and supporters said states with favorable trust laws have captured large pools of assets and related employment, and that similar benefits could accrue to Utah.
Opponents warned about tax exemptions and the cumulative fiscal effect of targeted breaks. Representative Daniels said he was concerned that the bill exempts income for the highest-income segment of the population and urged caution about adding exemptions one at a time.
Lawmakers questioned the fiscal note and whether existing irrevocable trusts would move into the state. Clark cited examples of assets migrating to other states and noted that many new trusts are already being organized outside Utah. He also described community-reinvestment benefits if large fiduciary institutions grow locally; Clark said such firms have reinvested funds through the Utah Community Reinvestment Corporation and related programs.
After limited amendments were adopted on the floor, Representative Clark waived summation and the body voted to pass the first substitute, 70 yes, 2 no. The bill will be transmitted to the Senate for further consideration.
The House debate focused on the trade-off between short-term tax revenue and potential long-term economic development; several members said they wanted careful monitoring of the fiscal consequences as trust business develops.
