How the Common Law Fills in the Gaps
No statute can cover every situation in trust management. Title 14 of the Arizona revised statutes handles the major topics.
When a question falls outside the written rules, courts turn to common law and equity. This means trust law has two layers: the statute comes first, and common law fills in the rest.
The common law of trusts and principles of equity supplement this chapter, except to the extent modified by this chapter or another statute of this state.
A.R.S. § 14-10106(A)These common law rules cover the duty of loyalty and fairness between beneficiaries. They also set standards for trustee decisions. Settlor intent guides how courts apply these rules.
Which Restatement Guides the Court
Legal scholars have published several restatements of trusts. Each one reflects changing views on trust law. The legislature chose a specific version to control.
The court shall look to the restatement (second) of trusts for interpretation of the common law and not to subsequent restatements of trusts to determine: 1. The rights and powers of creditors of beneficiaries. 2. The duties of trustees to distribute to those to whom a beneficiary owes any duties. 3. Whether public policy may affect enforceability and effectiveness of the terms of the trust. 4. And effectuate the settlor's intent.
A.R.S. § 14-10106(B)The later Restatement (Third) took different positions on creditor rights and public policy. By locking in the Second Restatement, the law provides more stable outcomes.
As a result, creditor access to trust assets and spendthrift protections follow the traditional framework. This framework is rooted in settlor intent.