There are those who argue that both the reasonableness test of Restatement (Third) and the good faith test of the UTC radically change the equation for asset protection purposes: “Once the threshold for the judicial standard of review has been reduced to reasonableness or good faith, in almost all cases, the beneficiary should have an enforceable right to a distribution. This being the case, may a creditor stand in the beneficiary’s shoes under the UTC or the Restatement (Third)? Even if a creditor may not stand in the beneficiary’s shoes, similar to the Metzcase in Ohio [145 Ohio App. 3d 304, 762 N.E.2d 1032 (2001) (holding that a discretionary trust is an available resource)], may a governmental agency deny benefits by considering a discretionary trust as an available resource? Also, would the discretionary trust be considered an equitable factor in determining child support, alimony, and possibly an equitable division of marital property? Finally, should a beneficiary be imputed income from a trust for the purpose of computing child support and alimony?” Oshins, Asset Protection Other Than Self-Settled Trusts: Beneficiary Controlled Trusts, FLPs, LLCs, Retirement Plans and Other Creditor Protection Strategies, 2005 Heckerling Institute on Estate Planning, 3-45.
Defenders of the UTC argue that no change to the traditional law governing discretionary trusts was made by Section 814 and, indeed, that UTC simply defers to the case law of the governing jurisdiction. See, Newman, Spendthrift and Discretionary Trusts: Alive and Well Under the Uniform Trust Code, 40 Real Prop. Prob. & Tr. J., 567 (Fall 2005) (Section VII, 601). Interestingly, Newman cites Jacob v. Davis, — for support of the proposition that: “Cases from many jurisdictions explicitly acknowledge the requirement that trustees exercise discretion in good faith even if the trustee is granted extended discretion.” Newman at 605-6.