This section limits what trust beneficiaries and related creditors can do with trust interests and distributions, and it sets rules for pledges and payment to pledgees.
§1341. Transfers by beneficiaries A. The trust's beneficiaries shall have no power over the trust or the trust property. A beneficiary shall not alienate or encumber its beneficial interest in a trust, except as solely permitted by Subsection B of this Section. B. If authorized in the pertinent financing order, a trust agreement shall permit the corporation to encumber the whole or any part of its interest as beneficiary in favor of the issuer of the related bonds as additional security for the corporation's repayment of the loan of the net proceeds of the related bonds made to the corporation by that issuer. The issuer also may pledge that collateral. In such instance, the trust agreement shall require the trustee to pay a pledgee all or a portion of a distribution owing to the corporation after the trustee receives a notification, authenticated by the corporation or the pledgee, that the amount due or to become due has been assigned and that payment is to be made to the pledgee, notwithstanding any provisions in R.S. 10:9-406. A trustee may request the pledgee to seasonably furnish reasonable proof that the assignment to the pledgee has been made, and unless the pledgee complies, the trustee may pay the corporation, even if the trustee has received a notification pursuant to this Subsection. As to trust property, the pledgee may seize only distributions of dividend income and redemption payments that have been authorized by the trustee and not yet paid to the corporation beneficiary as pledgor. C. A trust agreement shall provide that the interest of the related utility beneficiary shall not be subject to voluntary or involuntary alienation or encumbrance. Such a restraint upon voluntary alienation or encumbrance is valid. However, a restraint upon involuntary alienation, or encumbrance by a beneficiary, is subject to the limitations in Subsection D of this Section. D. A creditor of a related utility beneficiary may seize only distributions of dividend income and redemption proceeds that have been authorized by the trustee and have not yet been paid to such beneficiary. E. For purposes of R.S. 39:1430.1, the corporation's beneficial interest in a trust including, without limitation, the corporation's rights under a trust agreement, interests in income and principal, and income, receipts, and proceeds from distributions from a trust, whether dividend income, redemption payments, or otherwise, shall be considered to be income, revenues, monies, receipts, and contract rights pursuant to R.S. 39:1430.1, and shall be subject to the provisions of R.S. 39:1430.1. A pledge and security interest granted by the corporation in such rights, interests, income, receipts, and proceeds pursuant to this Subpart shall be effective as to the applicable trustee from the time a copy of the pledge or security agreement is received by the trustee, and shall be valid, perfected, and enforceable against the corporation and other third parties from the time when the pledge and grant is made without any notice or filing of any kind. Without limiting the foregoing, notwithstanding that the corporation's interest in a trust is a general intangible pursuant to the Uniform Commercial Code - Secured Transactions, R.S. 10:9-101 et seq., the filing of a financing statement is not required to perfect a pledgee's security interest in the corporation's movable property described in this Subsection. This pledge and security interest pursuant to this Subsection shall secure all obligations, then existing or thereafter arising, provided in the pledge or security agreement. A perfected pledge and security interest pursuant to this Subsection shall be a continuously perfected privilege and security interest in all movable property described in this Subsection whether or not the interests, income, receipts, proceeds, or distributions have accrued. Conflicting pledges, if allowed, shall rank according to priority in time of perfection. F. Insofar as the provisions of this Section are inconsistent with the provisions of R.S. 10:9-406 or 9-408, the provisions of this Section shall be controlling. Acts 2021, No. 293, §3, eff. June 14, 2021.