Irrevocable Trusts Under Attack: The Domestic Relations Angle

ALI-ABA Estate Planning Course Materials Journal | 3

Irrevocable Trusts Under Attack: The Domestic Relations Angle

Daniel S. Rubin

A. The Institution Of Marriage (And Divorce)

1. Question: What percent of the U.S. population gets married?

a. According to the U.S. Bureau of the Census, 85 percent of the population of the United States will marry at least once. U.S. Bureau of the Census, 2006.

i. For the twelve months ending with September 2007, there were approximately 2,169,000 marriages in the United States. Sutton PD, “Births, marriages, divorces, and deaths: Provisional Data for September 2007,” National Vital Statistics Reports Vol. 56 No. 18 (National Center for Health Statistics, Hyattsville, MD 2008).

2. Question: What percent of the U.S. population gets divorced?

a. The American divorce rate is between 40 and 50 percent. www.nwamarriages.com/about/marriage_facts.php

b. In 2005, there were 1.2 million divorces. Id.

c. About 9.9 percent of the U.S. population (almost 20 million people) are currently divorced. Id.

d. Statistically,40percentof firstmarriages,60percentof secondmarriages,and73percentof thirdmarriages end in divorce. Id.

Daniel S. Rubin is a partner in the New York City law firm of Moses & Singer LLP. Mr. Rubin, a member of the board of directors

of the Estate Planning Council of New York City, Inc. , is a frequent speaker and writer on estate planning and asset protection

topics.

4 | ALI-ABA Estate Planning Course Materials Journal April 2009

i. Theprobabilityof afirstmarriageending in separationordivorcewithinfiveyears is20

percent. Bramlett MD and Mosher WD, “Cohabitation, Marriage, Divorce, and Remarriage in

the United States,” Vital Health Stat23(22)(NationalCenterforHealthStatistics2002).

(1) After10years,theprobabilityof afirstmarriageendinginseparationordivorceis33

percent. Id.

ii. Theprobabilityof asecondmarriageendinginseparationordivorcewithinfiveyearsis23

percent. Id.

(1) After10years,theprobabilityof asecondmarriageendinginseparationordivorceis39

percent. Id.

3. Question: What percent of the U.S. population gets married more than once?

a. In 2004, 52.2 percent of men previously divorced were remarried. www.census.gov/population/www/

socdemo/marr-div/2004detailed_tables.html

b. In2004,43.5percentof womenpreviouslydivorcedwereremarried.Id.

B. The Prevalence Of Trusts

1. Question: How many trusts are created each year?

a. There is no way to determine the number of new trusts created each year because the Internal

RevenueServicedoesnotprovidespecificinformationregardingthenumberof trustscreatedeach

year.However,in2006,3.7millionestatesandtrustsfiledincometaxreturns.Table2.Number

of Returns Filed, by Type of Return, Fiscal Years 2005 and 2006, available at www.irs.gov/taxstats/

compliancestats/article/0,,id=97168,00.html

2. Question: How much property is held in trust, approximately?

a. Again, there is no way to determine the value of property held in trust. However, one might

extrapolatethesignificanceof trust-ownedpropertyfromthefactthat,in2003,estatesandtrusts

reported aggregate gross income worth $85.2 billion, of which approximately 71 percent, or $60.6

billion,wastrustincome.LisaSchreiber,FiduciaryIncomeTaxReturns,FilingYears2003and

2004, available at www.irs.gov/taxstats/indtaxstats/article/0,,id=96425,00.html

C. Why Should We Care About These Statistics?

1. Attheriskof statingtheobvious,theconfluenceof multiplemarriages,andmultipledivorces,with

hundredsof billionsortrillionsof dollarsof propertyheldintrustforthebenefitof oneortheother

of the spouses breeds contention over the issue of when trust property should be available to meet the

obligationsof abeneficiarytopayalimony(hereinaftergenerallyreferredtoas“spousalsupport”or

simply “support”).

www.census.gov/population/www/socdemo/marr-div/2004detailed_tables.html

www.census.gov/population/www/socdemo/marr-div/2004detailed_tables.html

www.irs.gov/taxstats/compliancestats/article/0,,id=97168,00.html

www.irs.gov/taxstats/compliancestats/article/0,,id=97168,00.html

Irrevocable Trusts Under Attack | 5

D. What Is This Outline/Presentation About?

1. In the Summer 2002 edition of the Asset Protection Journal, Vol. 4, No. 2, the author presented an article entitled “When Your Child’s Marriage Goes Bad, So Might Your Child’s Trust: Spousal and Child Support Exceptions to Spendthrift Trust Protections.” This outline will serve to examine, in further and updated detail, the issue of spendthrift (and other types of trust) protections against attacks by a spouse or former spouse for support.

a. For a quick reference on this issue, please refer to the state by state chart (with the District of Columbia included as well) at the end of this outline.

E. Types Of Trusts

1. As a preliminary matter, it is important to note the various types of trusts that may bear on the issue under discussion. Notably, trusts may contain features pertaining to one or more of the various types of trusts under discussion.

2. Spendthrift Trusts

a. “The term ‘spendthrift trust’ refers to a trust that restrains voluntary and involuntary alienation of alloranyof thebeneficiaries’interests.”Restatement (Third) of Trusts §58, General Comment (ALI 2003).

b. “Trustsinwhichtheinterestof abeneficiarycannotbeassignedbyhimorreachedbyhiscreditorshave come to be known as ‘spendthrift trusts.’” 2A Austin W. Scott & William F. Fratcher, The Law of Trusts§151,at83(4thed.1987).

3. Discretionary Trusts

a. A“discretionary”trustisatrustinwhichdistributionstothebeneficiaryareleftwhollywithinthediscretion of the trustee, generally without regard to any ascertainable standard.

b. A discretionary trust is a trust “where the trustee or another party has the right to accumulate (rather than pay out) the income for each year. Depending on the terms of the trust instrument, suchincomemaybeaccumulatedforfuturedistributionstotheincomebeneficiariesoraddedtocorpusforthebenefitof theremaindermen.”Black’s Law Dictionary 467 (6th ed. 1990).

4. Support Trusts

a. A“supporttrust”is“[a]trustinwhichthetrusteehasthepowertopaythebeneficiaryonlysomuchof thetrustincomeasisnecessaryforthebeneficiary’ssupport,educationandmaintenance.”Black’s Law Dictionary1513(6thed.1990).See also, Restatement (Second) of Trusts §154, cmt. d (1959) (A “support trust” is one in which “by the terms of the trust the amount to be paid to or applied forthebeneficiaryislimitedtosomuchof theincomeorprincipalasisinfactnecessaryforhiseducation or support.”)

c. In essence, support trusts are a subset of discretionary trusts in which the trustee’s discretion to makeadistributiontothebeneficiaryislimitedtoreasonsof thebeneficiary’ssupport.


i. The legal distinction between “discretionary” trusts and “support” trusts is, however, dis-appearing.

(1) “[T]his Restatement Third does not attempt to draw a bright line between ‘discretionary’ interests...and‘support’interests....Theso-called‘supporttrust,’forexample,isviewedhereas a discretionary trust with a support standard. This in turn requires asking and examining all of the questions that follow from that view, such as how a particular standard, in context, istobeinterpretedandwhetherabeneficiary’sotherresourcesaretobetakenintoaccountinmakingafiduciaryjudgmentaboutappropriatedistributionstothebeneficiary.”Restatement (Third) of Trusts §60, Comment a.

(2) The Uniform Trust Code similarly provides but a single rule and a single section for all discretionary trusts, includingones inwhich the trustee’sdiscretion is subject toa supportstandard.

5. Trusts With Forfeiture Provisions

a. Atrustmightcontainaprovisionthatwouldeffectaforfeitureof abeneficiary’strustinterestuponanattemptbythebeneficiarytotransferitoranattemptbythebeneficiary’screditorstoreachit.

i. An example provided by the Restatement (Second) of Trusts illustrates:

(1) “A transfers property to B in trust to pay the income to C for life and to pay the principal, on C’s death, to D. By the terms of the trust, if C conveys his interest or if his creditors should attempt to reach it, or if he should become bankrupt, his interest under the trust should cease and the income should be paid to C’s wife during the remainder of C’s life. C becomes bankrupt. His interest under the trust terminates.” Restatement (Second) of Trusts §150, illust. 1 (1959).

F. The Nature Of The Protection

1. Each of the various types of trusts provides some protection against spousal support claims, but the basis behind the protection differs depending on the type of trust. It is, obviously, important to understand why a trust may or may not be protective.

2. Spendthrift Trusts

a. Spendthrift trusts are free from creditors’ claims because the settlor has explicitly provided, through the incorporation of a spendthrift provision in the governing instrument, that the trust fund shall beexemptfromtheclaimsof thebeneficiary’screditors.Thespendthrifttrustcarriesoutastatedintent of the settlor.

3. Themaxim“cujusestdare,ejusestdisponere,”or“[w]hoseitistogive,hisitistodispose”isfrequentlycited in connection with references to the validity of spendthrift trust restrictions.

a. “The validity of a spendthrift provision in a trust is predicated upon the [public policy] consideration that a person is free to make any desired disposition of his property.” Estate of Johnson, 252 Cal.App.2d923,925(1967).


b. According to the United States Supreme Court in Nichols v. Eaton, 91 U.S. 716 at 725 (1875):

We concede that there are limitations which public policy or general statutes impose upon all dispositions of property, such asthosedesignedtopreventperpetuitiesandaccumulationsof realestate....Wealsoadmitthatthereisajustandsoundpolicy . . . to protect creditors against frauds upon their rights . . . . But the doctrine, that the owner of property . . . cannot sodisposeof it,butthattheobjectof hisbounty...mustholditsubjecttothedebtsduehiscreditors...isonewhichweare not prepared to announce as the doctrine of this court.

4. Itisoftensaidthattheuseof aspendthrifttrusttakesnothingfromthebeneficiary’screditorthatthecreditor had previously.

The doctrine that property may be made inalienable by such declaration of a [spendthrift] trust rests upon the theory that adonorhastherighttogivehispropertytoanotheruponanyconditionswhichheseesfittoimpose,andthat,inasmuchassuchagifttakesnothingfromthepriororsubsequentcreditorsof thebeneficiarytowhichtheypreviouslyhadtheright to look for payment, they cannot complain that the donor has provided that the property or income shall go or be paidpersonallytothebeneficiaryandshallnotbesubjecttotheclaimsof creditors.Parscal v. Parscal,148Cal.App.3dat1102–1103.

5. Discretionary Trusts

a. Theeffectof adiscretionarytrustistolimittheextentof thebeneficiary’sinterestinthetrustsoastomakeitsufficientlytenuoussothatitdoesnotqualifyasapropertyrightthatissubjecttoattachmentbycreditors.Ineffect,thebeneficiary’sinterestwillonlycomeintoexistencewhenandto the extent that the trustee decides to make a distribution.

b. “[I]f bythetermsof atrustitisprovidedthatthetrusteeshallpaytoorapplyforabeneficiaryonlyso much of the income and principal or either as the trustee in his uncontrolled discretion shall see fittopayorapply,atransfereeorcreditorof thebeneficiarycannotcompelthetrusteetopayanypart of the income or principal.” Restatement (Second) of Trusts §155(1) (ALI 1959).

i. “Inadiscretionarytrustitisthenatureof thebeneficiary’sinterestratherthanaprovisionforbiddingalienationwhichpreventsthetransferof thebeneficiary’sinterest.Therule...isnotdependent upon a prohibition of alienation by the settlor; but the transferee or creditor cannot compelthetrusteetopayanythingtohimbecausethebeneficiarycouldnotcompelpaymenttohimself orapplicationforhisownbenefit.”Restatement (Second) of Trusts §155 cmt. b (ALI 1959).

ii. “Atransfereeorcreditorof atrustbeneficiarycannotcompelthetrusteetomakediscretionarydistributionsif thebeneficiarypersonallycouldnotdoso.”Restatement (Third) of Trusts §60, cmt. e (ALI2003).

iii. Similarly:

Wherebythetermsof thetrustabeneficiaryisentitledonlytosomuchof theincomeorprincipalasthetrusteeinhisuncontrolleddiscretionshallseefittogivehim,hecannotcompelthetrusteetopaytohimortoapplyforhisuseanypartof thetrustproperty.Insuchacase,anassigneeof theinterestof thebeneficiarycannotcompelthetrusteetopayanypartof thetrustproperty,norcancreditorsof thebeneficiaryreachanypartof thetrustproperty....If thebeneficiaryhimself cannotcompelthetrusteetopayoveranypartof thetrustfund,hisassigneeandhiscreditorsare in no better position. Scott & Fratcher, supra,§155,at152-54.

c. Thecourtswillgenerallynotsubstitutetheirjudgmentforthejudgmentof atrusteeaslongasthetrusteeexercisesthetrustee’sjudgmentingoodfaithandwithinreasonablebounds.

d. In general, a court will only interfere with a trustee’s exercise of or failure to exercise a discretionary distribution power when an abuse of discretion has been shown to have occurred.


i. “At the heart of this issue, then, is the critical inquiry whether any court can substitute its discretion for that which a settlor has vested exclusively in the trustee, and thereby force the premature distribution of trust property by distributing same not to the beneficiary but to hisseizing creditors. We are persuaded that question must be answered in the negative.” Read v. U.S. ex rel. Department of Treasury,169F.3d243,254(5thCir.1999).

6. Support Trusts

a. Like a discretionary trust (and unlike a spendthrift trust), a support trust is protective of the beneficiary’s interestbecauseof thenatureof thebeneficiary’s trust interest: thebeneficiary isonlyentitledtodistributionsthatare,withinthetrustee’sdiscretion,requiredforthebeneficiary’ssupport.

b. “[I]f by the terms of a trust it is provided that the trustee shall pay or apply only so much of the incomeandprincipaloreitherasisnecessaryfortheeducationorsupportof thebeneficiary,thebeneficiarycannot transferhis interestandhiscreditorscannot reach it.”Restatement (Second) of Trusts §154 (ALI 1959).

i. “Ina trust for support it is thenatureof thebeneficiary’s interest rather thanaprovisionforbiddingalienationwhichpreventsthetransferof thebeneficiary’sinterest.Therulestatedinthis Section is not dependent upon a prohibition of alienation by the settlor; but the transferee orcreditorcannotcompelthetrusteetopayanythingtohim,becausethebeneficiarycouldnotcompel payment or compel application in any way except for the restricted purpose set out in the terms of the trust.” Restatement (Second) of Trusts §154 cmt. b (ALI 1959).

7. Trusts With Forfeiture Provisions

a. Asnoted,aspendthrifttrustisprotectiveof thebeneficiary’sinterestbecauseof ademonstrationof thesettlor’sintentthatthetrustbeheldforthebenefitof thebeneficiary,andnotthebeneficiary’screditors,andthebeneficiary’screditorshavenorealbasistocomplainsincetheyhavelostnothingthat they had previously. And, again as noted, a discretionary trust or a support trust is protective of abeneficiary’sinterestbecausethetenuousnatureof thebeneficiary’sinterestdoesnotrisetothelevelof apropertyinterestsubjecttoattachment.Atrustwithaforfeitureprovisioncombineseach of these elements:

i. Theforfeitureprovisionisanexpressionof thesettlor’sintentthatthebeneficiary’screditorsnothaveaccesstothetrustfund,andthebeneficiary’screditorshavenobasisforcomplaintsincethey have lost nothing that they had previously.

ii. Theforfeitureclausemightalsobethoughttobetheepitomeof atenuousbeneficialinterest.

G. Why Would Spousal Support Claims Be An Exception To Trust Protections?

1. Spouses with support claims are sometimes called “exception creditors” because their claims are “excepted” from trust protections under certain circumstances. For purposes of comparison, other exception creditors sometimes include:

a. Creditorswithclaimsfornecessariesprovidedtothebeneficiary;


b. Creditorswithclaimsforservicestoprotectthebeneficiary’sinterestinthetrust;

c. Claims by a governmental entity;

d. Children with child support claims; and

e. (Very rarely) involuntary tort creditors.

2. The exception for spousal support claims and the claims of dependent children is recognized in both theRestatementof theLawof Trustsand,toasignificantlylesserextent,theUniformTrustCode.

a. Section 59(a) of the Restatement (Third) of Trusts (ALI 2003), provides that “[t]he interest of abeneficiaryinavalidspendthrifttrustcanbereachedinsatisfactionof anenforceableclaimagainstthebeneficiaryforsupportof achild,spouse,orformerspouse.”

b. This section is carried forward from section 157 of the Restatement (Second) of Trusts (ALI 1959), which provided that “[a]lthough a trust is a spendthrift trust or a trust for support, the interest of thebeneficiarycanbereachedinsatisfactionof anenforceableclaimagainstthebeneficiarybythewifeorchildof thebeneficiaryforsupport,orbythewifeforalimony.”

c. UniformTrustCode§503(b)and(c)providethat:

[a]spendthriftprovisionisunenforceableagainstabenficiary’schild,spouse,orformerspousewhohasajudgmentorcourtorderagainstthebeneficiaryforsupportormaintenance....Aclaimantagainstwhichaspendthriftprovisioncannotbeenforcedmayobtainfromacourtanorderattachingpresentorfuturedistributionstoorforthebenefitof thebeneficiary.

d. The comment to this section of the Uniform Trust Code notes that the quoted subsection “does not authorize the spousal or child claimant to compel a distribution from the trust.” Instead, Uniform Trust Code §504(c) provides that:

To the extent a trustee has not complied with a standard of distribution or has abused a discretion: (1) a distribution maybeorderedbythecourttosatisfyajudgmentorcourtorderagainstthebeneficiaryforsupportormaintenanceof thebeneficiary’schild,spouse,orformerspouse;and(2)thecourtshalldirectthetrusteetopaytothechild,spouse,orformer spouse such amount as is equitable under the circumstances but not more than the amount the trustee would havebeenrequiredtodistributetoorforthebenefitof thebeneficiaryhadthetrusteecompliedwiththestandardornot abused the discretion.

e. Per the comment to section 504 of the Uniform Trust Code:

Beforefixingthisamount,thecourthavingjurisdictionoverthetrustshouldconsiderthat insettingtherespectivesupport award, the family court has already considered the respective needs and assets of the family.

3. Thereareseveraltheoreticalbasesunderwhichspousesholdingsupportclaimsareheldtobeentitledto special access against an otherwise protected trust.

4. The Settlor’s Intent

a. Thecourtmayfindthatthesettlordidnotactuallyintendforthetrust’sspendthriftprotectionstoapplyagainstthebeneficiary’sspouseorminordependents.Similarly,thecourtmayfindthebeneficiary’sspouseorminordependenttobeanadditional,if implied,beneficiaryof thetrust.

i. Considertheabsurdityof believingthatthesettloractuallyintendedtonamethefutureex-son-in-laworex-daughter-in-lawasabeneficiaryof the settlor’s largess.Perhaps themost thatmight be said here of the settlor’s “intent” is that the settlor never actually considered the matter.


b. “Wherethetrustiscreatedforthesupportof thebeneficiary...thefactthathehasdependentsisto be taken into consideration . . . The result is much the same as though the trust were created, not solelyforthebenefitof thebeneficiary,butforthebenefitof himself andhisdependents.”Scott&Fratcher, The Law of Trusts §157.1, at 190–191.

c. In Schwager v. Schwager, 109 F.2d 754 (7th Cir. 1940), the Seventh Circuit Court of Appeals noted that:

no decision, other than predicated upon a statutory provision, has permitted a wife or child to reach a spendthrift trust createdbyathirdpartyforthebenefitof thehusbandwithoutrelyinginwholeorinpartuponanintentionexpressorimplied, that the trust fund be thus employed . . .

d. The Schwager court further noted, however, that:

courts have extended themselves at great length to ascertain a favorable intent on the part of the settlor and, in fact, in some of the cases have indulged in a reasoning indicative of the desire sought to be achieved. In such cases, the intent hasbeenfoundbecauseof afailuretoexpressanon-intent.Id. at 757.

5. Definition Of “Creditor” And “Debt”

a. Not necessarily distinct from the question of the settlor’s intent, the court may find that thebeneficiary’sspouse,ex-spouse,anddependentchildrenarenottrue“creditors”of thebeneficiary.Similarly,thecourtmayfindthatthebeneficiary’slegalobligationof supportisnota“debt.”Oneither of these bases, a spendthrift provision, at least, would not apply to prevent access to the trust fundbyaspouse,ex-spouse,ordependentchildforsupport.

i. “The will under which the trust in the instant case is created contains a spendthrift clause, prohibiting payment to creditors of the cestui, and it is urged that this provision bars the application. The obligation of a parent for the support of his child does not arise from a creditor-debtorrelationship. It is not a debt within the contemplation of the testatrix or the interpretation of the clause.” Marsh v. Scott,63A.2d275,279(N.J.Super.Ct.Ch.Div.1949).

ii. “In this State alimony is not a debt. It is a social obligation as well as a pecuniary liability; it is founded on public policy and is for the good of society.” England v. England,223Ill.App.549(Ill.App.3Dist.1922),citing Deen v. Bloomer, 191 Ill. 416 (Ill. 1901).

iii. “The question thus presented is whether or not a wife, seeking support from her husband, is a creditor within the meaning of the word as it is used in §3536andinITEMIIof thewill.If thewife is a creditor, then seizure of any of the trust assets on her behalf is prohibited by the terms of §3536andof ITEMIIof thewill.TheChancellorconcludedthatthewifewasnotacreditorinthat meaning of the word, and we agree with that conclusion . . . A wife, under such circumstances, canhardlybeacreditorwhoisdefinedas‘onetowhomadebtisowingbyanotherpersonwhois the debtor’, Black’s Law Dictionary, Rev. 4th ed.” Garretson v. Garretson,306A.2d737,740–741(Del.1973).

b. The suggestion, however, that the beneficiary’s spouse, ex-spouse, and dependent children arenottrue“creditors”of thebeneficiary,orthatthebeneficiary’slegalobligationof supportisnota“debt,” is far from universally conceded.


i. See, for example, Spencer v. Spencer,802A.2d215,223(Conn.App.Ct.2002)(“Becausetheplaintiff obtainedajudgmentagainstthedefendantforalimonyandchildsupport,herstatusisthat of a creditor”).

c. Moreover,considerthedifficultythataformerspousemakingaclaimpursuanttoamaritalcontractmight have avoiding being branded a “creditor” seeking to enforce a “debt.” Also, consider whether the spouse entitled to support would be considered a “creditor” for fraudulent transfer purposes if the moneyed spouse had fraudulently transferred all of his or her assets to a new spouse.

6. Public Policy Considerations

a. Atrustbeneficiaryshouldnotbeallowedtobenefitfromatrustwhileatthesametimeneglectingsocialandlegalobligationstothebeneficiary’schild,spouse,orformerspouse.

b. “[F]reedom of disposition in this country allows a property owner to impose conditions and limitationsonbeneficialinterestsheorshecreatesinatrust,butonlytotheextenttheyarenotillegal or contrary to public policy.” Reporter’s Notes on §59 of the Restatement (Third) of Trusts, Comments a–a(2).

c. “Althoughatrust isaspendthrifttrustoratrustforsupport,theinterestof thebeneficiarycanbe reached in satisfaction of an enforceable claim against him [or her] for support by his [or her spouse]orchildren....[becausethe]beneficiaryshouldnotbepermittedtohavetheenjoymentof his [or her] interest under the trust while neglecting to support his [or her] dependents.” Restatement (Second) of Trusts §157, cmt. b.

d. Paragraph (b) of the General Comment to section 59 of the Restatement (Third) of Trusts provides that “[o]npublic-policygrounds, thebeneficiary shouldnotbepermitted to enjoyabeneficialinterest in a trust while neglecting the support of dependents.”

e. Stated more emphatically, “[i]t would be shocking indeed to permit a husband to receive and enjoy thewholeof the income froma large trust fundandtomakenoprovision forhisneedydependents.” Scott & Fratcher, supra, §157.1, at 192.

i. In addition, it has been said that the state has an interest in ensuring that those who suffer as a result of nonpayment of support and alimony do not become wards of the state.

ii. Arguably,spendthrifttrustsaresanctionedinthefirstinstancetoensurethatthebeneficiaryhasnecessarylivingexpenses,andthatpartof abeneficiary’snecessarylivingexpensesisthecostof supportingthebeneficiary’sspouseandchildren.See, e.g., Zinke v. Hipkins,135N.E.899(1922).

f. Albeit with regard to child support, not spousal support, the holding of Shelley v. Shelley,354P.2d282,286(Ore.1960),notesthat:

Wehavenohesitationindeclaringthatpublicpolicyrequiresthattheinterestof thebeneficiaryof atrustshouldbesubjecttotheclaimsforsupportof hischildren....Certainly,thedefendantwillacceptthesocietalpostulatethatparents have the obligation to support their children. If we give effect to the spendthrift provision to bar the claims for support,wehavethespectacleof amanenjoyingthebenefitsof atrustimmunefromclaimswhicharejustlydue,whilethe community pays for the support of his children . . . . We do not believe that it is sound policy to use the welfare fundsof thisstateinsupportof thebeneficiary’schildren,whilehestandsbehindtheshieldof immunitycreatedbyaspendthrift trust provision. To endorse such a policy and to permit the spectacle which we have described above would betoinvitedisrespectfortheadministrationof justice.


g. “Althoughaspendthriftclausecanoftenbeconstruedasnotintendedtoexcludethebeneficiary’sdependents, that is neither the rationale nor the limit of this exception to the general effect . . . of spendthriftprotection.Onpublic-policygrounds,thebeneficiaryshouldnotbepermittedtoenjoyabeneficialinterestinatrustwhileneglectingthesupportof dependents.”CommentsonClause(a), Paragraph b, Section 59 of the Restatement (Third) of Trusts(ALI2003).

h. According to the Reporter’s Notes on section 59, Comments a–a(2), of the Restatement (Third) of Trusts:

Significantpolicysupportfortheruleof thisSection(andthemannerof itsimplementationunderthisComment)isalsofoundinfederalBankruptcyCode§523(a)(5),makingnondischargeablethedebtor’sobligationsforalimony,maintenance, or support of a spouse, former spouse, or child.

i. 11U.S.C.§523(a)(5)provides:“Adischargeunder...thistitledoesnotdischargeanindividualdebtor from any debt . . . for a domestic support obligation.”

ii. Seealso11U.S.C.§523(a)(15),whichprovides:

A discharge under . . . this title does not discharge an individual debtor from any debt . . . to a spouse, former spouse, or child of the debtor and not of the kind described in paragraph (5) that is incurred by the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order of a court of record, or a determination made in accordance with State or territorial law by a governmental unit.

i. In a similar vein, the Employee Retirement Income Security Act of 1974 requires that each plan prohibit theassignmentoralienationof benefits,butprovides thatbenefitsmaybereachedbyaqualified domestic relations order for child support, alimony, andmarital property rights.See 29 U.S.C.§1056(d)(1);I.R.C.§§401(a)(13)(B),414(p).

i. Butisreferencetosection523(a)(5)(orsection523(a)(15)forthatmatter)of theBankruptcyCodedisingenuous? Although, without a doubt, the existence of an exception to discharge for obligations for alimony, maintenance, or support of a spouse, former spouse, or child does demonstrate a public policy,itcanhardlybesaidtoprovidesignificantpolicysupportforanexceptiontotheprotectionaffordedbyatrustsetupbyathirdpartywithoutanyindependentobligationtothebeneficiary’sspouse, former spouse, or child.

ii. In this regard, consider section 541(c)(2) of the Bankruptcy Code, which excludes from thebankruptcy estate all property subject to a restrictionon transfer that is enforceableunder“applicable nonbankruptcy law” and contains no reference to any exception creditors independent of those that might exist under applicable nonbankruptcy law, thus demonstrating some circularity of reasoning in the comment to the Restatement.

j. Notallauthorityon thepublicpolicyquestionpoints toanexception for spouseswith supportclaims.Inanumberof jurisdictionsthedominantpublicpolicyconsiderationistheimportanceof effectuatingthesettlor’sintent.Akeypointinthisregardisthat,absentaself-settledspendthrifttrust,theundeniablyimportantdutyof supportisadutyimposedonthebeneficiary,andisnotaduty imposed on the settlor.

i. “When a trust of this kind has been created, the law holds that the donor has an individual right of property in the execution of the trust; and to deprive him of it would be a fraud on his generosity....Itisalwaystoberememberedthatconsiderationforthebeneficiarydoesnoteven


in the remotest way enter into the policy of the law; it has regard solely to the rights of the donor. Spendthrifttrustscanhavenootherjustificationthanistobefoundinconsiderationsaffectingthedonor alone. They allow the donor to so control his bounty, through the creation of the trust, that it may be exempt from liability for the donee’s debts, not because the law is concerned to keep the donee from wasting it, but because it is concerned to protect the donor’s right to property.” In re Morgan’s Estate, 72A, 498, 499 (1909).

ii. “It would serve no good purpose for us to enter into a castigation of the husband for his plain and apparently willful disregard of an obligation imposed upon him by the law of Wisconsin and, infact,bythelawsof allcivilizedjurisdictions.Nodoubtthereisathoroughlyestablishedpublicpolicy which imposes such obligation upon a husband. We are convinced, however, that there is nothing in such policy which requires or, in fact, permits the destruction of a spendthrift trust underthecircumstancespresented.Inthefirstplace,thepolicythatapersonmaydisposeof hisproperty according to his own wishes is equally well established. In the instant case, for instance, the testatrix was under no obligation to her son’s wife and children. She was under no obligation to bequeath her property to her son in trust or otherwise. She was at perfect liberty to give it all toastrangerhadshesodesired.Beingthusempowered,itisdifficulttoascertainbyanyordinaryprocess of reasoning, how or why she should be precluded from disposing of it as she did. The wife and children were not damaged—they were no worse off than before. They were deprived of no means afforded by the law to enforce the duty imposed upon the husband for alimony and support. Itseemstousthatthispublicpolicywhichplaintiffsseektoinvoke,andwhichfindssomesupportin the authorities referred to, has been inaptly applied. It is directed solely at the husband, and may be invoked only against him.” Schwager v. Schwager,109F.2d754,759-60(7thCir.1940).

H. Planning For The Possibility Of A Domestic Relations Attack

1. Use A Discretionary Trust

a. Becausetheinterestof abeneficiaryof adiscretionarytrustdoesnot,inthefirstinstance,qualifyas a property right, even preferred creditors are often precluded from accessing a discretionary trustinsatisfactionof theirclaimsagainstthebeneficiary.See, e.g., First Northwestern Trust Co. of South Dakota v. Internal Revenue Service,622F.2d387(8thCir.1980).

b. “Courts appear more willing to allow claims against spendthrift trusts and trusts for support than against discretionary trusts . . . .In a trust that contains a spendthrift clause as the only protective device, thebeneficiaryhasanabsoluterighttodistributionsof income,principal,orboth.Thespendthrift clause protects the assets as long as they remain in the trustee’s hands. Because there is noquestionthatthebeneficiarywillultimatelyreceivethedistributions,theonlyrealquestionforthe decision maker is whether the public policy favoring payment of support or alimony obligations outweighs the settlor’s intent that the assets be protected . . . .A trust that provides that the trustee istomakedistributionsforthesupportof thebeneficiaryisconceptuallysimilartoaspendthrifttrust.Theamounttowhichthebeneficiaryisentitledisbasedonhissupportneeds.Thetrusteehasnopoweroverdistributions....Whenadiscretionarytrustisinvolved,however,thebeneficiarydoes not have a right to distribution until the trustee exercises discretion.” Dessin, Carolyn L.,


Feed a Trust and Starve a Child: The Effectiveness of Trust Protective Techniques Against Claims for Support and Alimony,10Ga.St.U.L.Rev.691,at707-08.

c. Some states distinguish between the protection afforded by discretionary trusts and mere spendthrift trustsbystatute.Forexample,section5805.02(B)of theOhioRevisedCodeprovidesthat:

Aspendthriftprovisionisunenforceableagainst...[t]hebeneficiary’schildorspousewhohasajudgmentorcourtorderagainstthebeneficiaryforsupport,butonlyif distributionscanbemadeforthebeneficiary’ssupportorthebeneficiaryis entitled to receive mandatory distributions under the terms of the trust.

i. Conversely,§5805.03of theOhioRevisedCodeprovidesthat:

Notwithstanding anything to the contrary in division (B) of section 5805.02 of the Revised Code, no creditor or assignee of abeneficiaryof awhollydiscretionarytrustmayreachthebeneficiary’sinterestinthetrust,oradistributionbythetrusteebeforeitsreceiptbythebeneficiary,whetherbyattachmentof presentorfuturedistributionstoorforthebenefitof thebeneficiary,byjudicialsale,byobtaininganordercompellingthetrusteetomakedistributionsfromthetrust, or by any other means, regardless of whether the terms of the trust include a spendthrift provision.

2. Clearly State The Settlor’s Intent

a. Inthosejurisdictionsthatdonotspecificallycitethataspousewithasupportclaimisanexceptioncreditor, either under governing caselaw or pursuant to statutory authority, the issue is governed by the settlor’s intent.

i. “The donee’s obligation to pay alimony or support money, paramount though it may be, should not, in our opinion, transcend the right of the donor to do as he pleases with his own property andtochoosetheobjectof hisbounty....If alimonyorsupportmoneyistobeanexceptiontotheprotectionofferedbyspendthriftprovisions,itmustbebysomejustifiableinterpretationof thedonor’s language by which such implied exception may be fairly construed into the instrument of trust. It cannot logically arise out of the character of the obligation.” Erickson v. Erickson, 266 N.W.2d161,164(Minn.1943).

ii. “It is the donor’s intent, not the character of the donee’s obligation, that controls the availability and disposition of the trust. . . . The donee’s obligation to pay maintenance does not transcend the right of the donor to do as she pleases with her own property.” In Re the Marriage of Vallie B. Kritz v. James J. Kritz, Jr., 1996 WL 291616, at *1, (Minn. Ct. App. June 4, 1996).

I. Some Final Thoughts

1. Regarding the public policy in favor of providing for the support of dependents:

a. Isitthejobof thejudiciarytodeterminepublicpolicywhenthelegislaturehasnotyetspoken?When spendthrift trust protections are set forth by statute, the absence of statutory exception creditors would seem to indicate a legislative determination that the strong public policy in favor of enforcing the settlor’s intent trumps any public policy in favor of providing for the support of dependents out of trust assets.

b. If “public policy” should compel the attachment of assets held within an otherwise protective trust, why does it not impinge on an individual’s freedom of disposition more broadly? Does public policy not also require the imposition of some sort of forced heirship, at least in favor of one’s dependent children?


c. Is it not an important public policy to provide for the enforcement of the legitimate claims of

creditors of all stripes? For example, are involuntary tort creditors less worthy of collecting on their

claims than a sophisticated business person who chose to marry knowing that his or her potential

future claims for spousal supportmight not be subject to recovery from the future ex-spouse’s

beneficialtrustinterest?Thecreationof evenalimitedclassof exceptioncreditorsisaslippery

slope that “opens the door” to arguments by other classes of creditors.

d. Thecreationof aclassof exceptioncreditorshasthepotentialtoharmothertrustbeneficiaries

whoareinnocentof whateverissuesformtheclaimagainstthedebtorbeneficiary.

2. Onemustdistinguishbetweenincludingthebeneficiary’sminorchildrenasexceptioncreditorsand

including the spouse as an exception creditor:

a. Notdistinguishingbetweenthebeneficiary’sminorchildrenandthebeneficiary’sspousefailsto

recognize the substantial equalization of the sexes that has occurred in American society over the

course of the past century.

b. Contrarytothesuggestionof mostauthorities,intheauthor’sopinionthebeneficiary’sspouseis

significantlymorelikeacontractcreditorwhoproceededtoextendcreditcognizantof thepotential

futuredifficultyof collectionthantheinvoluntarytortcreditorwhocouldnotprotecthisorher

owninterests inthecreditor’s interactionwiththebeneficiary.Afterall,allstatesrecognizeand

enforce prenuptial agreements, which are becoming more and more common, including among

individuals of more modest means.

c. Consider theconflict inherent in includingbotha spouseanddependentchildrenasexception

creditors.Considerfurthertheconflictinherentinincludingspousesanddependentsof multiple

marriages as exception creditors.

3. Considerthatprovisionunderthelawforexceptioncreditorsismerelyatrapfortheunwary,bethat

the settlor or the settlor’s attorney. Alternatively, consider that for those who are aware of the issue, the

effect of exception creditors is to cause the settlor to alter the settlor’s dispositive plan and to leave his

orherbountytosomeoneotherthanthebeneficiarythatthesettlortrulywantedtoinherit.

a. Consider the absurdity of the following situation, which is a real client matter with which the

author is currently involved:

i. W-2ismarriedtoH.Beforegettingmarried,W-2andHenteredintoaprenuptialagreement

that included mutual waivers of estate rights, including any applicable right of election.

ii. HwaspreviouslymarriedtoW-1.HhasasubstantialongoingsupportobligationtoW-1,

which he is unable to meet and which he has also been unable to modify, either by consent or

throughthecourts.Hiscurrentlyindefaultof hissupportobligationtoW-1.


iii. Although,asnoted,theprenuptialagreementbetweenW-2andHincludedmutualwaiversof estaterights,includingtherightof election,W-2wantsHtocontinuetoenjoythelifestyletowhichhehasbecomeaccustomedwhilemarriedtoW-2,shouldhesurviveW-2.

iv. If W-2andH live ina jurisdiction that includes spouseswith supportclaimsasexceptioncreditors,W-2hasonlythefollowingtwooptions:

(1) Disinherit H.

(2) ProvideforH,andbyimplicationW-1,eventhoughW-2mightleaveHhisinheritancein trust.

4. An interesting approach is taken by Professor Adam Hirsch in Spendthrift Trusts and Public Policy: Economic and Cognitive Perspectives,73WashingtonU.L.Q.1,82-83(1995).ProfessorHirschwrites:

I would permit involuntary creditors in general to reach spendthrift trusts, but at the same time permit benefactors to name in the instrument of trust specific involuntary creditorswho are nonetheless barred from tapping into it.This“exception to the exception” would apply where the benefactor is aware of an existing claim or anticipates a claim by an individualcreditorwhomshespecificallydesiresnot to satisfy—hence,wherearulepermittingsatisfactionby thatcreditorismostlikelytoinducethebenefactortotakepreemptivemeasures.Ihastentoaddthatnotasinglejurisdictionfollows this approach today, but a pervasive analogy can be found in a close relative of the spendthrift trust, known as the “supplemental needs trust.”

5. To the extent that a spouse with a support claim is to be made an exception creditor, however, the author’s preferred approach is that of the Uniform Trust Code, which, of course, provides that a spouse or former spouse may obtain a court order attaching present or future distributions to or for the benefitof thebeneficiary,butcannotforceasaleof thebeneficiary’sinterest.Thisapproachnegatesthepossibilityof thebeneficiaryenjoyingalargetrustfundwhilethebeneficiary’sneedydependents“starve” or are required to seek support from the state and, to the greatest extent possible, respects the settlor’s freedom of disposition.

Irrevocable Trusts Under Attack 17

STA

TE

STA

TU

TE

A

ND

/O

R

RE

LE

VA

NT

CA

SEL

AW

GE

NE

RA

L R

UL

E

Ala

bam

aA

la. C

ode

§§19

-3B

-503

(b)(1

), (c

)A

spe

ndth

rift

prov

isio

n is

une

nfor

ceab

le a

gain

st a

ben

efici

ary’

s ch

ild,

spou

se,

or f

orm

er s

pous

e w

ho h

as a

ju

dgm

ent o

r co

urt o

rder

aga

inst

the

bene

ficia

ry fo

r su

ppor

t or

mai

nten

ance

. The

cla

iman

t may

obt

ain

a co

urt

orde

r at

tach

ing

pres

ent

or fu

ture

dis

trib

utio

ns t

o or

for

the

bene

fit o

f th

e be

nefic

iary

. The

cou

rt m

ay li

mit

the

awar

d to

suc

h re

lief

as is

app

ropr

iate

und

er th

e ci

rcum

stan

ces.

Ala

ska

Ala

ska

Stat

. §§3

4.40

.110

(a),

(b)(4

)A

per

son

who

in w

ritin

g tr

ansf

ers

prop

erty

in t

rust

may

pro

vide

tha

t th

e in

tere

st o

f a

bene

ficia

ry o

f th

e tr

ust,

incl

udin

g a

bene

ficia

ry w

ho is

the

sett

lor

of th

e tr

ust,

may

not

be

eith

er v

olun

tari

ly o

r in

volu

ntar

ily tr

ansf

erre

d be

fore

pay

men

t or

deliv

ery

of th

e in

tere

st to

the

bene

ficia

ry b

y th

e tr

uste

e. T

here

is n

o st

ated

stat

utor

y ex

cept

ion

for

alim

ony

cred

itors

. How

ever

, it s

houl

d be

not

ed th

at a

cre

dito

r of

the

sett

lor

hold

ing

a ch

ild su

ppor

t jud

gmen

t or

ord

er m

ay s

atis

fy th

at c

laim

out

of

the

trus

t if

at th

e tim

e of

the

tran

sfer

to th

e tr

ust t

he s

ettlo

r w

as in

def

ault

by th

irty

or

mor

e da

ys o

f m

akin

g a

paym

ent d

ue u

nder

a c

hild

sup

port

judg

men

t or

orde

r.

Ari

zona

Ari

z. R

ev. S

tat.

Ann

. §14

-105

01 e

t seq

.A

cou

rt o

f co

mpe

tent

juri

sdic

tion

may

, in

its d

iscr

etio

n, a

llow

the

bene

ficia

ry’s

spou

se to

rea

ch th

e be

nefic

iary

’s in

tere

st in

sat

isfa

ctio

n of

an

enfo

rcea

ble

alim

ony

clai

m a

gain

st th

e be

nefic

iary

.

Ark

ansa

sA

rk.

Cod

e A

nn.

§28-

73-5

02;

Cou

ncil

v. O

wen

s, 77

0 S.

W.2

d 19

3 (A

rk.

Ct.

App

. 19

89)

No

stat

utor

y ex

cept

ion

for

alim

ony

exis

ts u

nder

the

spen

dthr

ift p

rovi

sion

of

the

Ark

ansa

s Tru

st C

ode.

How

ever

, a

judi

cial

exc

eptio

n fo

r al

imon

y cr

edito

rs p

reda

tes

the

enac

tmen

t of

the

curr

ent i

tera

tion

of th

e A

rkan

sas

Tru

st

Cod

e.

Cal

iforn

iaC

al. P

rob.

Cod

e §§

1530

5(c)

, (d)

Not

with

stan

ding

any

pro

visi

on in

the

tru

st in

stru

men

t, an

d w

heth

er o

r no

t th

e be

nefic

iary

has

the

rig

ht u

nder

th

e tr

ust

to c

ompe

l the

tru

stee

to

pay

inco

me

or p

rinc

ipal

or

both

to

or f

or t

he b

enefi

t of

the

ben

efici

ary,

the

cour

t may

, to

the

exte

nt th

at th

e co

urt d

eter

min

es it

is e

quita

ble

and

reas

onab

le u

nder

the

circ

umst

ance

s of

the

part

icul

ar c

ase,

ord

er th

e tr

uste

e to

sat

isfy

all

or p

art o

f a

judg

men

t for

sup

port

of

the

trus

t ben

efici

ary’

s sp

ouse

or

form

er s

pous

e ou

t of

all o

r pa

rt o

f fu

ture

pay

men

ts th

at th

e tr

uste

e, p

ursu

ant t

o th

e ex

erci

se o

f th

e tr

uste

e’s

disc

retio

n, d

eter

min

es to

mak

e to

or

for

the

bene

fit o

f th

e be

nefic

iary

.

Col

orad

oSn

yder

v. O

’Con

ner,

102

Col

o. 5

67 (1

938)

; In

re

Mar

riage

of

Bal

anso

n, 2

5 P.

3d 2

8 (C

olo.

200

1)

As a

mat

ter

of c

asel

aw, s

pend

thri

ft tr

usts

are

val

id. T

here

is n

o ca

sela

w th

at in

dica

tes a

n ex

cept

ion

to sp

endt

hrift

tr

ust p

rote

ctio

ns fo

r spo

usal

supp

ort c

laim

s. T

here

is, h

owev

er, c

asel

aw to

the

effe

ct th

at a

ben

efici

ary’

s rem

aind

er

inte

rest

in a

trus

t fro

m w

hich

a tr

uste

e m

ay, i

n th

e tr

uste

e’s d

iscr

etio

n, d

istr

ibut

e in

com

e an

d pr

inci

pal,

cons

titut

es

“pro

pert

y” fo

r pu

rpos

es o

f pr

oper

ty d

ivis

ion

in a

mar

ital d

isso

lutio

n ca

se.

Con

nect

icut

Con

n. G

en. S

tat.

Ann

. §52

-321

; Spe

ncer

v.

Spen

cer,

802

A.2

d 21

5 (A

pp. C

t. 20

02)

Cas

elaw

has

hel

d th

at th

e ex

erci

se o

f di

scre

tion

by th

e tr

uste

e of

a sp

endt

hrift

trus

t is s

ubje

ct to

the

cour

t’s c

ontr

ol

only

to th

e ex

tent

that

an

abus

e ha

s oc

curr

ed a

nd b

ars

cred

itors

, inc

ludi

ng a

limon

y an

d ch

ild s

uppo

rt c

redi

tors

, fr

om r

each

ing

a di

stri

butio

n un

less

, and

unt

il, it

is in

the

hand

s of

the

bene

ficia

ry.

Del

awar

eD

el. C

ode

Ann

. tit.

12

§353

6(a)

; Gar

retso

n v.

Gar

retso

n, 3

06 A

.2d

737

(Del

. 197

3)A

cre

dito

r of

a t

rust

ben

efici

ary

shal

l hav

e on

ly s

uch

righ

ts a

gain

st t

he b

enefi

ciar

y’s

inte

rest

in t

he t

rust

or

the

prop

erty

of

the

trus

t as

sha

ll be

exp

ress

ly g

rant

ed t

o th

e cr

edito

r by

the

ter

ms

of t

he i

nstr

umen

t th

at c

reat

es

or d

efine

s th

e tr

ust

or b

y th

e la

ws

of D

elaw

are.

Thi

s ru

le a

pplie

s re

gard

less

of

the

natu

re o

r ex

tent

of

the

bene

ficia

ry’s

inte

rest

or

of a

ny a

ctio

n ta

ken

or t

hat

mig

ht b

e ta

ken

by t

he b

enefi

ciar

y. N

otw

ithst

andi

ng t

he

fore

goin

g, h

owev

er, c

asel

aw h

as d

eter

min

ed t

hat

a sp

ouse

, see

king

sup

port

from

oth

er s

pous

e, is

not

a c

redi

tor

with

in th

e m

eani

ng o

f th

e w

ord

as it

is u

sed

in th

e st

atut

e.


STA

TE

STA

TU

TE

A

ND

/O

R

RE

LE

VA

NT

CA

SEL

AW

GE

NE

RA

L R

UL

E

Dis

tric

t of

Col

umbi

aD

C C

ode

§19-

1305

.02

A b

enefi

ciar

y m

ay n

ot t

rans

fer

an in

tere

st in

a t

rust

in v

iola

tion

of a

val

id s

pend

thri

ft pr

ovis

ion

and

a cr

edito

r or

ass

igne

e of

the

ben

efici

ary

may

not

rea

ch t

he i

nter

est

or a

dis

trib

utio

n by

the

tru

stee

bef

ore

its r

ecei

pt b

y th

e be

nefic

iary

. The

re is

no

stat

ed s

tatu

tory

exc

eptio

n fo

r al

imon

y cr

edito

rs, a

lthou

gh n

otab

ly t

here

is a

sta

ted

stat

utor

y ex

cept

ion

unde

r D

C C

ode

§19-

1305

.03

allo

win

g a

bene

ficia

ry’s

child

who

has

a j

udgm

ent

or c

ourt

or

der

agai

nst t

he b

enefi

ciar

y fo

r su

ppor

t or

mai

nten

ance

to a

ttac

h pr

esen

t or

futu

re d

istr

ibut

ions

whe

n pa

yabl

e un

der

the

term

s of

the

trus

t to

or fo

r th

e be

nefit

of

the

bene

ficia

ry.

Flo

rida

Fla

. Sta

t. A

nn. §

§736

.050

3(2)

(a),

(3)

A sp

endt

hrift

pro

visi

on is

une

nfor

ceab

le a

gain

st a

ben

efici

ary’

s chi

ld, s

pous

e, o

r for

mer

spou

se w

ho h

as a

judg

men

t or

cou

rt o

rder

aga

inst

the

ben

efici

ary

for

supp

ort

or m

aint

enan

ce. T

he c

laim

ant

may

obt

ain

from

a c

ourt

, or

purs

uant

to

the

Uni

form

Int

erst

ate

Fam

ily S

uppo

rt A

ct,

an o

rder

att

achi

ng p

rese

nt o

r fu

ture

dis

trib

utio

ns t

o or

for

the

bene

fit o

f th

e be

nefic

iary

. The

cou

rt m

ay li

mit

the

awar

d to

suc

h re

lief

as is

app

ropr

iate

und

er t

he

circ

umst

ance

s. T

he re

med

y pr

ovid

ed a

pplie

s onl

y as

a la

st re

sort

upo

n an

initi

al sh

owin

g th

at tr

aditi

onal

met

hods

of

enf

orci

ng th

e cl

aim

are

insu

ffici

ent.

Geo

rgia

Ga.

Cod

e A

nn. §

53-1

2-28

(c)(4

)A

spen

dthr

ift p

rovi

sion

pro

hibi

ting

invo

lunt

ary

tran

sfer

s is n

ot v

alid

as t

o th

e al

imon

y cl

aim

s aga

inst

a d

istr

ibut

ion

to a

ben

efici

ary,

othe

r th

an a

ben

efici

ary

who

has

a m

edic

ally

det

erm

ined

phy

sica

l or

men

tal

disa

bilit

y th

at

subs

tant

ially

impa

irs

the

bene

ficia

ry’s

abili

ty t

o pr

ovid

e fo

r th

e be

nefic

iary

’s ca

re o

r cu

stod

y an

d co

nstit

utes

a

subs

tant

ial h

andi

cap.

Haw

aii

Rich

ard

D. W

elsh

v. Al

ice K

amok

ila C

ampb

ell,

et al

., 41

Haw

. 106

(Haw

. 195

5)

As a

mat

ter

of c

asel

aw, s

pend

thri

ft tr

usts

are

val

id. T

here

is n

o ca

sela

w th

at in

dica

tes a

n ex

cept

ion

to sp

endt

hrift

tr

ust p

rote

ctio

ns fo

r sp

ousa

l sup

port

cla

ims.

Idah

oId

aho

Cod

e A

nn. §

15-7

-502

(1)

A se

ttlo

r m

ay p

rovi

de in

the

term

s of

the

trus

t tha

t the

ben

efici

ary’

s int

eres

t in

the

inco

me,

the

prin

cipa

l, or

bot

h m

ay n

ot b

e vo

lunt

arily

or

invo

lunt

arily

tran

sfer

red

befo

re th

e tr

uste

e’s

paym

ent o

r de

liver

y of

the

inte

rest

to th

e be

nefic

iary

. The

re is

no

stat

ed s

tatu

tory

exc

eptio

n fo

r al

imon

y cr

edito

rs.

Illin

ois

735

ILC

S 5/

2-14

03; M

iller

v. M

iller

, 643

N

.E.2

d 28

8 (I

ll. C

t. A

pp.

1994

), ap

peal

de

nied

, 647

N.E

.2d

1011

(199

5)

No

cour

t sha

ll or

der

the

satis

fact

ion

of a

judg

men

t oth

er th

an fo

r un

paid

chi

ld s

uppo

rt o

blig

atio

ns o

wed

by

the

bene

ficia

ry o

ut o

f an

y pr

oper

ty h

eld

in tr

ust f

or th

e ju

dgm

ent d

ebto

r if

the

trus

t has

, in

good

faith

, bee

n cr

eate

d by

, or

the

fund

so h

eld

in tr

ust h

as p

roce

eded

from

, a p

erso

n ot

her

than

the

judg

men

t deb

tor.

The

legi

slatu

re h

as

show

n its

inte

nt th

at g

arni

shm

ent o

f sp

endt

hrift

trus

ts b

e re

stri

cted

to c

olle

ctio

n of

unp

aid

child

sup

port

by

the

limita

tion

in th

e la

ngua

ge o

f th

is se

ctio

n to

“ch

ild su

ppor

t,” r

athe

r th

an to

“m

aint

enan

ce a

nd c

hild

supp

ort,”

or

sim

ply

“sup

port

.”

Indi

ana

Ind.

Cod

e §3

0-4-

3-2(

a);

Cla

y v.

Ham

ilton

, 11

6 In

d. A

pp. 2

14, 2

24 (1

945)

The

set

tlor

may

pro

vide

in th

e te

rms

of th

e tr

ust t

hat t

he in

tere

st o

f a

bene

ficia

ry m

ay n

ot b

e ei

ther

vol

unta

rily

or

invo

lunt

arily

tran

sfer

red

befo

re p

aym

ent o

r de

liver

y of

the

inte

rest

to th

e be

nefic

iary

by

the

trus

tee.

Alth

ough

th

ere

is n

o st

ated

sta

tuto

ry e

xcep

tion

for

alim

ony

cred

itors

, “[i

]t is

wel

l set

tled

in I

ndia

na t

hat

a ju

dgm

ent

for

alim

ony

is n

ot a

“de

bt g

row

ing

out o

f, or

foun

ded

upon

a c

ontr

act,

expr

ess o

r im

plie

d” a

nd th

at a

deb

tor

cann

ot

clai

m e

xem

ptio

n of

any

pro

pert

y fr

om e

xecu

tion

upon

such

a ju

dgm

ent .

. . .

The

refo

re, w

e co

nclu

de th

at th

e ne

t in

com

e of

said

farm

in th

e ha

nds o

f th

e tr

uste

e, o

r th

e be

nefic

iary

afte

r th

e sa

me

has b

een

paid

by

the

trus

tee,

is

subj

ect t

o se

izur

e in

sat

isfa

ctio

n of

app

elle

e’s

judg

men

t for

alim

ony.

”


STA

TE

STA

TU

TE

A

ND

/O

R

RE

LE

VA

NT

CA

SEL

AW

GE

NE

RA

L R

UL

E

Iow

aIo

wa

Cod

e §6

33A

.230

1; R

oord

a v.

Roo

rda,

et

al.,

300

N.W

. 294

(Iow

a 19

41)

A te

rm o

f a

trus

t pro

vidi

ng th

at th

e in

tere

st o

f a

bene

ficia

ry is

hel

d su

bjec

t to

a “s

pend

thri

ft tr

ust,”

or

wor

ds o

f si

mila

r im

port

, is s

uffic

ient

to re

stra

in b

oth

volu

ntar

y an

d in

volu

ntar

y tr

ansf

ers o

f th

e be

nefic

iary

’s in

tere

st. T

here

is

no

stat

ed s

tatu

tory

exc

eptio

n fo

r al

imon

y cr

edito

rs, a

nd c

asel

aw h

as a

lso d

eclin

ed to

pro

vide

an

exce

ptio

n fo

r al

imon

y cr

edito

rs.

Kan

sas

K.S

.A. §

58a-

502

Kan

sas a

dopt

ed a

form

of

the

Uni

form

Tru

st C

ode;

its s

tatu

te p

rovi

des t

hat a

spen

dthr

ift p

rovi

sion

is v

alid

and

a

bene

ficia

ry m

ay n

ot tr

ansf

er a

n in

tere

st in

a tr

ust i

n vi

olat

ion

of th

e pr

ovis

ion,

nor

may

a c

redi

tor

or a

ssig

nee

of

the

bene

ficia

ry r

each

the

inte

rest

or

a di

stri

butio

n by

the

trus

tee

befo

re it

s re

ceip

t by

the

bene

ficia

ry.

Ken

tuck

yK

y. R

ev. S

tat.

Ann

. §38

1.18

0(6)

(a)

Alth

ough

a t

rust

is a

spe

ndth

rift

trus

t, th

e be

nefic

iary

’s in

tere

st is

sub

ject

to

the

satis

fact

ion

of a

n en

forc

eabl

e cl

aim

aga

inst

the

bene

ficia

ry b

y th

e sp

ouse

of

the

bene

ficia

ry fo

r su

ppor

t or

mai

nten

ance

.

Lou

isia

naL

a. R

ev. S

tat.

Ann

. §9:

2005

(1)

Not

with

stan

ding

any

stip

ulat

ion

in th

e tr

ust i

nstr

umen

t to

the

cont

rary

, the

pro

per c

ourt

, in

sum

mar

y pr

ocee

ding

s to

whi

ch t

he t

rust

ee, t

he b

enefi

ciar

y, an

d th

e be

nefic

iary

’s cr

edito

r sh

all b

e pa

rtie

s, m

ay p

erm

it se

izur

e of

any

po

rtio

n of

the

bene

ficia

ry’s

inte

rest

in tr

ust i

ncom

e an

d pr

inci

pal i

n its

dis

cret

ion

and

as m

ay b

e ju

st u

nder

the

circ

umst

ance

s if

the

clai

m is

bas

ed o

n a

judg

men

t for

alim

ony

or m

aint

enan

ce o

f a

pers

on w

hom

the

bene

ficia

ry

is o

blig

ated

to s

uppo

rt.

Mai

neM

e.§

Rev

. St

at.

Ann

. tit

. 18

-B,

§§50

2(3)

, 50

3A

ben

efici

ary

may

not

tran

sfer

an

inte

rest

in a

trus

t in

viol

atio

n of

a v

alid

spe

ndth

rift

prov

isio

n, a

nd a

cre

dito

r or

ass

igne

e of

the

bene

ficia

ry m

ay n

ot r

each

the

inte

rest

or

a di

stri

butio

n by

the

trus

tee

befo

re it

s re

ceip

t by

the

bene

ficia

ry. A

spe

cific

sta

tuto

ry p

rovi

sion

pro

vide

s th

at t

here

are

no

exce

ptio

ns t

o th

is r

ule,

exc

ept

as s

et fo

rth

in s

ectio

ns 5

04, 5

05, a

nd 5

06 o

f T

itle

18-B

of

the

Mai

ne R

evis

ed S

tatu

tes,

none

of

whi

ch r

elat

e to

cla

ims

for

alim

ony.

Mar

ylan

dM

d. C

ode

Ann

. Est

. & T

rust

s §1

4-40

2(a)

(3);

Safe

Dep

osit

& T

rust

Co.

of B

altim

ore

v. R

ober

tson,

65

A.2

d 29

2 (M

d. 1

949)

By

stat

ute,

the

bene

ficia

ry m

ay n

ot h

ave

any

inte

rest

in tr

ust p

rope

rty

that

can

be

assi

gned

or

atta

ched

. How

ever

, ca

sela

w h

as h

eld

that

as

a m

atte

r of

pub

lic p

olic

y fu

nds

in a

spe

ndth

rift

trus

t ca

n be

rea

ched

to

satis

fy a

n en

forc

eabl

e cl

aim

aga

inst

a b

enefi

ciar

y by

an

ex-s

pous

e fo

r al

imon

y.

Mas

sach

uset

tsLa

urice

lla v

. La

urice

lla,

565

N.E

.2d

436

(Mas

s. 19

91)

Cas

elaw

has

det

erm

ined

that

a s

pous

e’s

pres

ent,

enfo

rcea

ble,

equ

itabl

e ri

ght t

o us

e tr

ust p

rope

rty

for

his

or h

er

bene

fit is

a m

arita

l ass

et s

ubje

ct to

pro

pert

y di

stri

butio

n as

a p

art o

f th

e di

vorc

e pr

ocee

ding

s.

Mic

higa

nC

onve

rston

v.

Kell

ogg,

35

7 N

.W.2

d 70

5 (M

ich.

Ct.

of A

pp. 1

984)

The

inco

me

of a

spen

dthr

ift tr

ust o

f w

hich

a fo

rmer

hus

band

is th

e cu

rren

t inc

ome

bene

ficia

ry m

ay b

e re

ache

d to

sat

isfy

his

form

er w

ife’s

clai

m fo

r al

imon

y or

sep

arat

e m

aint

enan

ce.

Min

neso

taE

ricks

on v

. Eric

kson

, 266

N.W

. 161

(Min

n.

1936

)M

inne

sota

mak

es n

o ex

cept

ion

to s

pend

thri

ft tr

ust p

rote

ctio

ns fo

r cl

aim

s fo

r al

imon

y.


STA

TE

STA

TU

TE

A

ND

/O

R

RE

LE

VA

NT

CA

SEL

AW

GE

NE

RA

L R

UL

E

Mis

siss

ippi

Mis

s. C

ode

Ann

. §91

-9-5

03E

xcep

t w

hen

the

sett

lor

is a

ben

efici

ary

of a

tru

st c

reat

ed b

y th

e se

ttlo

r, if

the

tru

st in

stru

men

t pr

ovid

es t

hat

a be

nefic

iary

’s in

tere

st in

trus

t inc

ome

or p

rinc

ipal

or

both

is n

ot s

ubje

ct to

vol

unta

ry o

r in

volu

ntar

y tr

ansf

er, t

he

bene

ficia

ry’s

inte

rest

in in

com

e or

pri

ncip

al o

r bo

th u

nder

the

trus

t may

not

be

tran

sfer

red

and

is n

ot s

ubje

ct to

th

e en

forc

emen

t of

a m

oney

judg

men

t un

til p

aid

to t

he b

enefi

ciar

y. T

here

is n

o st

ated

sta

tuto

ry e

xcep

tion

for

alim

ony

cred

itors

.

Mis

sour

iM

o. R

ev. S

tat.

§456

.5-5

03(2

)E

ven

if a

trus

t con

tain

s a sp

endt

hrift

pro

visi

on, a

ben

efici

ary’

s chi

ld, s

pous

e, o

r for

mer

spou

se w

ho h

as a

judg

men

t ag

ains

t th

e be

nefic

iary

for

supp

ort

or m

aint

enan

ce m

ay o

btai

n a

cour

t or

der

atta

chin

g pr

esen

t or

fut

ure

trus

t in

com

e. I

f th

ere

is m

ore

than

one

per

mis

sibl

e di

stri

bute

e, t

he c

ourt

may

gra

nt r

elie

f as

is e

quita

ble

unde

r th

e ci

rcum

stan

ces.

Mon

tana

MC

A §

§72-

33-3

01, 3

02If

the

tru

st in

stru

men

t pr

ovid

es t

hat

a be

nefic

iary

’s in

tere

st is

not

sub

ject

to

volu

ntar

y or

invo

lunt

ary

tran

sfer

, th

e be

nefic

iary

’s in

tere

st u

nder

the

tru

st m

ay n

ot b

e tr

ansf

erre

d an

d is

not

sub

ject

to

enfo

rcem

ent

of a

mon

ey

judg

men

t unt

il pa

id to

the

bene

ficia

ry. T

here

is n

o st

ated

sta

tuto

ry e

xcep

tion

for

alim

ony

cred

itors

.

Neb

rask

aN

eb. R

ev. S

tat.

Ann

. §§3

0-38

48(b

), (c

)A

spe

ndth

rift

prov

isio

n is

une

nfor

ceab

le a

gain

st a

ben

efici

ary’

s ch

ild,

spou

se,

or f

orm

er s

pous

e w

ho h

as a

ju

dgm

ent o

r co

urt o

rder

aga

inst

the

bene

ficia

ry fo

r su

ppor

t or

mai

nten

ance

. The

cla

iman

t may

obt

ain

a co

urt

orde

r at

tach

ing

pres

ent

or fu

ture

dis

trib

utio

ns t

o or

for

the

bene

fit o

f th

e be

nefic

iary

. The

cou

rt m

ay li

mit

the

awar

d to

suc

h re

lief

as is

app

ropr

iate

und

er th

e ci

rcum

stan

ces.

Nev

ada

Nev

. Rev

. Sta

t. §§

166.

080,

120

A s

pend

thri

ft tr

ust

rest

rain

s an

d pr

ohib

its g

ener

ally

the

ass

ignm

ent,

alie

natio

n, a

ccel

erat

ion,

and

ant

icip

atio

n of

any

inte

rest

of

the

bene

ficia

ry u

nder

the

tru

st b

y th

e vo

lunt

ary

or in

volu

ntar

y ac

t of

the

ben

efici

ary,

or b

y op

erat

ion

of la

w o

r an

y pr

oces

s or

at

all.

Paym

ents

by

the

trus

tee

to t

he b

enefi

ciar

y sh

all b

e m

ade

only

to

and

into

the

prop

er h

ands

of

the

bene

ficia

ry a

nd n

ot b

y w

ay o

f ac

cele

ratio

n or

ant

icip

atio

n, n

or to

any

ass

igne

e of

th

e be

nefic

iary

, nor

to o

r up

on a

ny o

rder

, wri

tten

or

oral

, giv

en b

y th

e be

nefic

iary

, whe

ther

suc

h as

sign

men

t or

orde

r be

the

volu

ntar

y co

ntra

ctua

l act

of

the

bene

ficia

ry o

r be

mad

e pu

rsua

nt to

or

by v

irtu

e of

any

lega

l pro

cess

in

judg

men

t, ex

ecut

ion,

att

achm

ent,

garn

ishm

ent,

bank

rupt

cy, o

r ot

herw

ise,

or

whe

ther

it b

e in

con

nect

ion

with

an

y co

ntra

ct, t

ort,

or d

uty.

The

ben

efici

ary

shal

l hav

e no

pow

er o

r ca

paci

ty t

o m

ake

any

disp

ositi

on w

hate

ver

of a

ny o

f th

e in

com

e by

the

bene

ficia

ry’s

orde

r, vo

lunt

ary

or in

volu

ntar

y, an

d w

heth

er m

ade

upon

the

orde

r or

di

rect

ion

of a

ny c

ourt

or

cour

ts, w

heth

er o

f ba

nkru

ptcy

or

othe

rwis

e; n

or s

hall

the

inte

rest

of

the

bene

ficia

ry

be s

ubje

ct t

o an

y pr

oces

s of

att

achm

ent

issu

ed a

gain

st t

he b

enefi

ciar

y, or

to

be t

aken

in e

xecu

tion

unde

r an

y fo

rm o

f le

gal p

roce

ss d

irec

ted

agai

nst t

he b

enefi

ciar

y or

aga

inst

the

trus

tee,

or

the

trus

t est

ate,

or

any

part

of

the

inco

me

ther

eof,

but t

he w

hole

of

the

trus

t est

ate

and

the

inco

me

of th

e tr

ust e

stat

e sh

all g

o to

and

be

appl

ied

by

the

trus

tee

sole

ly fo

r th

e be

nefit

of

the

bene

ficia

ry, f

ree,

cle

ar, a

nd d

isch

arge

d of

and

from

any

and

all

oblig

atio

ns

of th

e be

nefic

iary

wha

tsoe

ver

and

of a

ll re

spon

sibi

lity

ther

efor

. The

ben

efici

ary

or b

enefi

ciar

ies

of a

spe

ndth

rift

trus

t sha

ll be

nam

ed o

r cl

earl

y re

ferr

ed to

in th

e w

ritin

g. N

o sp

ouse

, for

mer

spo

use,

chi

ld, o

r de

pend

ent s

hall

be

a be

nefic

iary

unl

ess

nam

ed o

r cl

earl

y re

ferr

ed to

as

a be

nefic

iary

in th

e w

ritin

g.


STA

TE

STA

TU

TE

A

ND

/O

R

RE

LE

VA

NT

CA

SEL

AW

GE

NE

RA

L R

UL

E

New

Ham

pshi

reN

.H.

Rev

. St

at.

Ann

. §§

564-

B:5

-503

(b)

(2),

(c)

A s

pend

thri

ft pr

ovis

ion

is u

nenf

orce

able

aga

inst

a b

enefi

ciar

y’s

spou

se o

r fo

rmer

spo

use

who

has

a j

udgm

ent

or c

ourt

ord

er a

gain

st t

he b

enefi

ciar

y fo

r al

imon

y, bu

t on

ly f

or a

nd t

o th

e ex

tent

tha

t th

e ju

dgm

ent

or c

ourt

or

der

expr

essly

spe

cifie

s th

e al

imon

y am

ount

att

ribu

tabl

e to

the

mos

t ba

sic

food

, she

lter,

and

med

ical

nee

ds o

f th

e sp

ouse

or

form

er s

pous

e. T

he c

laim

ant

may

obt

ain

a co

urt

orde

r at

tach

ing

pres

ent

or f

utur

e di

stri

butio

ns

to o

r fo

r th

e be

nefit

of

the

bene

ficia

ry. T

he c

ourt

may

lim

it th

e aw

ard

to s

uch

relie

f as

is a

ppro

pria

te u

nder

the

circ

umst

ance

s.

New

Jers

eyM

arsh

v.

Scot

t, 63

A.2

d 27

5 (N

.J. S

uper

. C

t. C

h. D

iv. 1

949)

Cas

elaw

has

stat

ed th

at th

e ob

ligat

ion

of a

par

ent f

or th

e su

ppor

t of

a ch

ild d

oes n

ot a

rise

from

a c

redi

tor-

debt

or

rela

tions

hip

and

is n

ot a

deb

t with

in th

e in

terp

reta

tion

of th

e sp

endt

hrift

cla

use.

No

stat

ute

or c

asel

aw in

dica

tes

whe

ther

a si

mila

r exc

eptio

n m

ight

exi

st fo

r alim

ony

clai

ms,

or w

heth

er a

n ex

plic

it st

atem

ent o

f in

tent

wou

ld a

lter

the

stat

ed r

esul

t.

New

Mex

ico

N.M

. Sta

t. A

nn. §

46A

-5-5

03(B

)(1),

(C)

A s

pend

thri

ft pr

ovis

ion

is u

nenf

orce

able

aga

inst

a b

enefi

ciar

y’s

spou

se o

r fo

rmer

spo

use

who

has

a ju

dgm

ent o

r co

urt o

rder

aga

inst

the

bene

ficia

ry fo

r sup

port

or m

aint

enan

ce. T

he c

laim

ant m

ay o

btai

n a

cour

t ord

er a

ttac

hing

pr

esen

t or f

utur

e di

stri

butio

ns to

or f

or th

e be

nefit

of

the

bene

ficia

ry. T

he c

ourt

may

lim

it th

e aw

ard

to su

ch re

lief

as is

app

ropr

iate

und

er th

e ci

rcum

stan

ces.

The

ord

er a

ttac

hing

pre

sent

or f

utur

e di

stri

butio

ns to

or f

or th

e be

nefit

of

the

ben

efici

ary

shal

l be

the

excl

usiv

e re

med

y av

aila

ble

to a

cla

iman

t ag

ains

t w

hom

a s

pend

thri

ft pr

ovis

ion

cann

ot b

e en

forc

ed.

New

Yor

kN

.Y. C

.P.L

.R. §

5205

(c)

All

prop

erty

whi

le h

eld

in tr

ust f

or a

judg

men

t deb

tor,

whe

n th

e tr

ust h

as b

een

crea

ted

by, o

r th

e fu

nd s

o he

ld in

tr

ust h

as p

roce

eded

from

, a p

erso

n ot

her

than

the

judg

men

t deb

tor,

is e

xem

pt fr

om a

pplic

atio

n to

the

satis

fact

ion

of a

mon

ey ju

dgm

ent

exce

pt a

s re

gard

s a

qual

ified

dom

estic

rel

atio

ns o

rder

or

an o

rder

of

supp

ort,

alim

ony,

or m

aint

enan

ce o

f an

y co

urt o

f co

mpe

tent

juri

sdic

tion

to e

nfor

ce a

rrea

rs/p

ast d

ue s

uppo

rt, w

heth

er o

r no

t the

ar

rear

s/pa

st d

ue s

uppo

rt h

as b

een

redu

ced

to a

mon

ey ju

dgm

ent.

Nor

th C

arol

ina

N.C

. Gen

. Sta

t. §3

6C-5

-502

(c)

A b

enefi

ciar

y m

ay n

ot tr

ansf

er a

n in

tere

st in

a tr

ust i

n vi

olat

ion

of a

val

id s

pend

thri

ft pr

ovis

ion,

and

a c

redi

tor

or a

ssig

nee

of t

he b

enefi

ciar

y m

ay n

ot r

each

the

int

eres

t or

a d

istr

ibut

ion

by t

he t

rust

ee b

efor

e its

rec

eipt

by

the

bene

ficia

ry. T

here

is n

o st

ated

sta

tuto

ry e

xcep

tion

for

alim

ony

cred

itors

, alth

ough

not

ably

the

re is

a s

tate

d st

atut

ory

exce

ptio

n un

der

N.C

. Gen

. Sta

t. §

36C

-5-5

03(b

) for

a b

enefi

ciar

y’s

child

who

has

a ju

dgm

ent o

r co

urt

orde

r ag

ains

t the

ben

efici

ary

for

supp

ort o

r m

aint

enan

ce.

Nor

th D

akot

aN

.D. C

ent.

Cod

e §§

59-1

3-03

(2)(a

), (4

)A

spe

ndth

rift

prov

isio

n is

une

nfor

ceab

le a

gain

st a

ben

efici

ary’

s sp

ouse

or

form

er s

pous

e w

ho h

as a

judg

men

t or

cour

t ord

er a

gain

st th

e be

nefic

iary

for

supp

ort o

r m

aint

enan

ce. A

cla

iman

t may

obt

ain

a co

urt o

rder

att

achi

ng

pres

ent o

r fut

ure

dist

ribu

tions

to o

r for

the

bene

fit o

f th

e be

nefic

iary

. The

cou

rt m

ay li

mit

the

awar

d to

such

relie

f as

is a

ppro

pria

te u

nder

the

circ

umst

ance

s. If

ther

e is

mor

e th

an o

ne p

erm

issi

ble

dist

ribu

tee,

the

cour

t may

gra

nt

such

rel

ief

as is

equ

itabl

e.


STA

TE

STA

TU

TE

A

ND

/O

R

RE

LE

VA

NT

CA

SEL

AW

GE

NE

RA

L R

UL

E

Ohi

oO

hio

Rev

. C

ode

Ann

. §§

5805

.02(

B)(1

), (C

), (D

)A

spe

ndth

rift

prov

isio

n is

une

nfor

ceab

le a

gain

st t

he b

enefi

ciar

y’s

spou

se w

ho h

as a

jud

gmen

t or

cou

rt o

rder

ag

ains

t th

e be

nefic

iary

for

sup

port

, bu

t on

ly i

f di

stri

butio

ns c

an b

e m

ade

for

the

bene

ficia

ry’s

supp

ort

or t

he

bene

ficia

ry is

ent

itled

to

rece

ive

man

dato

ry d

istr

ibut

ions

und

er t

he t

erm

s of

the

tru

st. A

cla

iman

t m

ay o

btai

n fr

om t

he c

ourt

an

orde

r at

tach

ing

pres

ent

or f

utur

e di

stri

butio

ns t

o or

for

the

ben

efit

of t

he b

enefi

ciar

y. T

he

cour

t may

lim

it th

e aw

ard

to th

e re

lief

that

is a

ppro

pria

te u

nder

the

circ

umst

ance

s, co

nsid

erin

g am

ong

any

othe

r fa

ctor

s de

term

ined

app

ropr

iate

by

the

cour

t the

sup

port

nee

ds o

f th

e be

nefic

iary

, the

ben

efici

ary’

s sp

ouse

, and

th

e be

nefic

iary

’s de

pend

ent c

hild

ren

or, w

ith r

espe

ct to

a b

enefi

ciar

y w

ho is

the

reci

pien

t of

publ

ic b

enefi

ts, t

he

supp

lem

enta

l nee

ds o

f th

e be

nefic

iary

if th

e tr

ust w

as n

ot in

tend

ed to

pro

vide

for

the

bene

ficia

ry’s

basi

c su

ppor

t. A

spe

ndth

rift

prov

isio

n is,

how

ever

, enf

orce

able

aga

inst

the

bene

ficia

ry’s

form

er s

pous

e.

Okl

ahom

aO

kla.

Sta

t. A

nn ti

t. 60

, §17

5.25

(B)(1

)(a)

Not

with

stan

ding

a p

rovi

sion

in t

he t

erm

s of

a t

rust

res

trai

ning

the

alie

natio

n of

the

ben

efici

ary’

s in

tere

st, t

he

inte

rest

sha

ll be

ent

itled

to

be r

each

ed in

the

sat

isfa

ctio

n of

cla

ims

for

supp

ort

of a

spo

use

to t

he e

xten

t of

all

inco

me

due

or to

acc

rue

in th

e fu

ture

to th

e be

nefic

iary

.

Ore

gon

Or.

Rev

. Sta

t. §1

30.3

10(2

)E

ven

if a

tru

st c

onta

ins

a sp

endt

hrift

pro

visi

on, t

he h

olde

r of

a ju

dgm

ent,

cour

t or

der,

or a

dmin

istr

ativ

e or

der

agai

nst

a be

nefic

iary

for

sup

port

or

mai

nten

ance

of

the

bene

ficia

ry’s

spou

se o

r fo

rmer

spo

use

may

obt

ain

an

orde

r fro

m a

cou

rt o

f th

is st

ate

auth

oriz

ing

garn

ishm

ent o

r oth

er e

xecu

tion

agai

nst p

rese

nt o

r fut

ure

dist

ribu

tions

to

or

for

the

bene

fit o

f th

e be

nefic

iary

. The

cou

rt m

ay is

sue

an o

rder

aut

hori

zing

exe

cutio

n ag

ains

t suc

h am

ount

as

the

cou

rt d

eter

min

es t

o be

equ

itabl

e un

der

the

circ

umst

ance

s bu

t no

t m

ore

than

the

am

ount

the

tru

stee

w

ould

hav

e be

en r

equi

red

to d

istr

ibut

e to

or

for

the

bene

fit o

f th

e be

nefic

iary

. Dis

trib

utio

ns s

ubje

ct to

exe

cutio

n in

clud

e di

stri

butio

ns r

equi

red

by t

he e

xpre

ss t

erm

s of

the

tru

st, s

uch

as m

anda

tory

pay

men

ts o

f in

com

e, a

nd

dist

ribu

tions

the

trus

tee

has

othe

rwis

e de

cide

d to

mak

e, s

uch

as th

roug

h th

e ex

erci

se o

f di

scre

tion.

Penn

sylv

ania

20 P

a.C

.S. §

§774

2, 7

743

A t

rust

ins

trum

ent

prov

idin

g th

at a

ben

efici

ary’

s in

tere

st i

s he

ld s

ubje

ct t

o a

“spe

ndth

rift

trus

t,” o

r w

ords

of

sim

ilar

impo

rt, i

s su

ffici

ent t

o re

stra

in b

oth

volu

ntar

y an

d in

volu

ntar

y tr

ansf

er o

f th

e be

nefic

iary

’s in

tere

st, a

nd

a be

nefic

iary

may

not

tra

nsfe

r an

inte

rest

in a

tru

st in

vio

latio

n of

a v

alid

spe

ndth

rift

prov

isio

n. F

urth

erm

ore,

ex

cept

as o

ther

wis

e pr

ovid

ed in

the

subc

hapt

er, a

cre

dito

r or a

ssig

nee

of th

e be

nefic

iary

of

a sp

endt

hrift

trus

t may

no

t rea

ch th

e in

tere

st o

r a

dist

ribu

tion

by th

e tr

uste

e be

fore

its

rece

ipt b

y th

e be

nefic

iary

. The

re is

an

exce

ptio

n to

the

enf

orce

abili

ty o

f a

spen

dthr

ift t

rust

und

er 2

0 Pa

.C.S

. §77

43(b

)(2),(

c), h

owev

er, f

or a

ny p

erso

n w

ho h

as a

ju

dgm

ent

or c

ourt

ord

er a

gain

st t

he b

enefi

ciar

y fo

r su

ppor

t or

mai

nten

ance

, to

the

exte

nt o

f th

e be

nefic

iary

’s in

tere

st in

the

trus

t’s in

com

e, a

nd th

at p

erso

n m

ay o

btai

n a

cour

t ord

er a

ttac

hing

pre

sent

or

futu

re d

istr

ibut

ions

to

or

for

the

bene

fit o

f th

e be

nefic

iary

. The

cou

rt m

ay li

mit

the

awar

d to

suc

h re

lief

as is

app

ropr

iate

und

er th

e ci

rcum

stan

ces.

Rho

de I

sland

R.I

. Gen

. Law

s §1

8-9.

1-1

Any

per

son

crea

ting

an e

xpre

ss t

rust

for

the

ben

efit

of a

ny o

ther

per

son

or p

erso

ns m

ay, b

y th

e te

rms

of t

he

trus

t, es

tabl

ish

valid

res

trai

nts

on t

he v

olun

tary

and

/or

invo

lunt

ary

tran

sfer

of

inte

rest

s in

the

exp

ress

tru

st b

y its

ben

efici

arie

s, w

heth

er b

y w

ay o

f an

ticip

atio

n or

acc

eler

atio

n, a

ssig

nmen

t, hy

poth

ecat

ion,

or

by v

irtu

e of

le

gal p

roce

ss in

judg

men

t, ex

ecut

ion,

att

achm

ent,

garn

ishm

ent,

bank

rupt

cy, o

r ot

herw

ise.

The

re is

no

stat

utor

y ex

cept

ion

for

alim

ony

cred

itors

.

Sout

h C

arol

ina

S.C

. Cod

e A

nn. §

62-7

-502

A b

enefi

ciar

y m

ay n

ot tr

ansf

er a

n in

tere

st in

a tr

ust i

n vi

olat

ion

of a

val

id s

pend

thri

ft pr

ovis

ion,

and

a c

redi

tor

or a

ssig

nee

of t

he b

enefi

ciar

y m

ay n

ot r

each

the

int

eres

t or

a d

istr

ibut

ion

by t

he t

rust

ee b

efor

e its

rec

eipt

by

the

bene

ficia

ry. T

here

is n

o st

ated

sta

tuto

ry e

xcep

tion

for

alim

ony

cred

itors

, alth

ough

not

ably

the

re is

a s

tate

d st

atut

ory

exce

ptio

n un

der

S.C

. Cod

e A

nn. §

62-7

-503

for

a be

nefic

iary

’s ch

ild w

ho h

as a

judg

men

t or

cour

t ord

er

agai

nst t

he b

enefi

ciar

y fo

r su

ppor

t or

mai

nten

ance

.


STA

TE

STA

TU

TE

A

ND

/O

R

RE

LE

VA

NT

CA

SEL

AW

GE

NE

RA

L R

UL

E

Sout

h D

akot

aS.

D. C

odifi

ed L

aws

§§55

-1-2

5, 3

5, 4

1A

dec

lara

tion

in a

tru

st t

hat

the

inte

rest

of

a be

nefic

iary

sha

ll be

hel

d su

bjec

t to

a s

pend

thri

ft tr

ust

is s

uffic

ient

to

res

trai

n vo

lunt

ary

or in

volu

ntar

y al

iena

tion

of a

ben

efici

al in

tere

st b

y a

bene

ficia

ry t

o th

e m

axim

um e

xten

t pr

ovid

ed b

y la

w, a

nd i

f th

e tr

ust

cont

ains

a s

pend

thri

ft pr

ovis

ion,

no

cred

itor

may

att

ach

pres

ent

or f

utur

e m

anda

tory

dis

trib

utio

ns fr

om th

e tr

ust a

t the

trus

t lev

el. M

oreo

ver,

no c

ourt

may

ord

er a

trus

tee

to d

istr

ibut

e pa

st

due

man

dato

ry d

istr

ibut

ions

dir

ectly

to a

cre

dito

r. T

here

is n

o st

ated

stat

utor

y ex

cept

ion

for a

limon

y cr

edito

rs. I

n fa

ct, t

he st

atut

e pr

ovid

es th

at “

[i]n

the

area

of

cred

itor r

ight

s, th

e R

esta

tem

ent o

f T

rust

s (T

hird

) and

the

Uni

form

T

rust

Cod

e cr

eate

s man

y ne

w p

ositi

ons o

f la

w a

s wel

l as a

dopt

s man

y m

inor

ity p

ositi

ons o

f la

w. S

ectio

ns 5

5-1-

24

to 5

5-1-

43, i

nclu

sive

, affi

rmat

ivel

y re

ject

man

y of

thes

e po

sitio

ns. T

here

fore

, the

Leg

isla

ture

doe

s not

inte

nd th

e co

urts

to c

onsu

lt th

e R

esta

tem

ent (

Thi

rd) o

f th

e L

aw o

f T

rust

s Art

icle

s § 5

0, §

56,

§ 5

8, §

59,

or

§ 60

as a

ppro

ved

by th

e A

mer

ican

Law

Ins

titut

e of

Uni

form

Tru

st C

ode

Art

icle

5 .

. . w

ith r

espe

ct to

subj

ect m

atte

rs a

ddre

ssed

by

§§55

-1-2

4 to

55-

1-43

, inc

lusi

ve.”

Ten

ness

eeT

enn.

Cod

e A

nn. §

35-1

5-50

2A

ben

efici

ary

cann

ot t

rans

fer

an in

tere

st in

a t

rust

in v

iola

tion

of a

val

id s

pend

thri

ft pr

ovis

ion,

and

a c

redi

tor

or a

ssig

nee

of t

he b

enefi

ciar

y m

ay n

ot r

each

the

int

eres

t or

a d

istr

ibut

ion

by t

he t

rust

ee b

efor

e its

rec

eipt

by

the

bene

ficia

ry. T

here

is n

o st

ated

sta

tuto

ry e

xcep

tion

for

alim

ony

cred

itors

, alth

ough

not

ably

the

re is

a s

tate

d st

atut

ory

exce

ptio

n un

der

Ten

n. C

ode

Ann

. §3

5-15

-503

for

cla

ims

of t

he s

tate

of

Ten

ness

ee t

o th

e ex

tent

a

stat

ute

of T

enne

ssee

so

prov

ides

.

Tex

asT

ex. P

rop.

Cod

e A

nn. §

112.

035

A s

ettlo

r m

ay p

rovi

de in

the

term

s of

the

trus

t tha

t a b

enefi

ciar

y’s

inte

rest

in th

e in

com

e, th

e pr

inci

pal,

or b

oth

may

not

be

volu

ntar

ily o

r in

volu

ntar

ily tr

ansf

erre

d be

fore

pay

men

t or

deliv

ery

of th

e in

tere

st to

the

bene

ficia

ry

by t

he t

rust

ee. T

here

is n

o st

ated

sta

tuto

ry e

xcep

tion

for

alim

ony

cred

itors

, alth

ough

not

ably

the

re is

a s

tate

d st

atut

ory

exce

ptio

n un

der

Tex

. Fam

. Cod

e A

nn. §

154.

005

for

the

supp

ort o

f a

child

to th

e ex

tent

the

trus

tees

are

re

quir

ed to

mak

e pa

ymen

ts to

a b

enefi

ciar

y w

ho is

req

uire

d to

mak

e ch

ild su

ppor

t pay

men

ts, o

r if

dis

burs

emen

t of

the

asse

ts o

f th

e tr

ust i

s di

scre

tiona

ry, f

or th

e su

ppor

t of

a ch

ild fr

om tr

ust i

ncom

e bu

t not

pri

ncip

al.

Uta

hU

tah

Cod

e A

nn. §

§75-

7-50

2(1)

, (3)

A sp

endt

hrift

pro

visi

on fo

r a b

enefi

ciar

y ot

her t

han

the

sett

lor i

s val

id if

it re

stra

ins b

oth

volu

ntar

y an

d in

volu

ntar

y tr

ansf

er o

f a

bene

ficia

ry’s

inte

rest

. A b

enefi

ciar

y m

ay n

ot t

rans

fer

an in

tere

st in

a t

rust

in v

iola

tion

of a

val

id

spen

dthr

ift p

rovi

sion

, and

a c

redi

tor

or a

ssig

nee

of t

he b

enefi

ciar

y m

ay n

ot r

each

the

inte

rest

or

a di

stri

butio

n by

the

trus

tee

befo

re it

s re

ceip

t by

the

bene

ficia

ry. T

here

is n

o st

ated

sta

tuto

ry e

xcep

tion

for

alim

ony

cred

itors

, al

thou

gh n

otab

ly t

here

is

a st

ated

sta

tuto

ry e

xcep

tion

unde

r U

tah

Cod

e A

nn.

§75-

7-50

3(2)

for

a b

enefi

ciar

y’s

child

who

has

a ju

dgm

ent

or c

ourt

ord

er a

gain

st t

he b

enefi

ciar

y fo

r su

ppor

t or

mai

nten

ance

, and

a ju

dgm

ent

cred

itor

who

has

pro

vide

d se

rvic

es fo

r th

e pr

otec

tion

of a

ben

efici

ary’

s in

tere

st in

the

trus

t, an

d th

ere

is a

sta

ted

stat

utor

y ex

cept

ion

unde

r U

tah

Cod

e. A

nn. §

75-7

-503

(3) f

or c

laim

s of

Uta

h or

the

Uni

ted

Stat

es to

the

exte

nt a

st

atut

e of

Uta

h or

fede

ral l

aw s

o pr

ovid

es.

Ver

mon

tIn

re

Esta

te of

Man

ley,

24 A

.2d

357

(Vt.

1942

)A

s a m

atte

r of

cas

elaw

, spe

ndth

rift

trus

ts a

re v

alid

. The

re is

no

case

law

that

indi

cate

s an

exce

ptio

n to

spen

dthr

ift

trus

t pro

tect

ions

for

spou

sal s

uppo

rt c

laim

s.

STA

TE

STA

TU

TE

A

ND

/O

R

RE

LE

VA

NT

CA

SEL

AW

GE

NE

RA

L R

UL

E

Ohi

oO

hio

Rev

. C

ode

Ann

. §§

5805

.02(

B)(1

), (C

), (D

)A

spe

ndth

rift

prov

isio

n is

une

nfor

ceab

le a

gain

st t

he b

enefi

ciar

y’s

spou

se w

ho h

as a

jud

gmen

t or

cou

rt o

rder

ag

ains

t th

e be

nefic

iary

for

sup

port

, bu

t on

ly i

f di

stri

butio

ns c

an b

e m

ade

for

the

bene

ficia

ry’s

supp

ort

or t

he

bene

ficia

ry is

ent

itled

to

rece

ive

man

dato

ry d

istr

ibut

ions

und

er t

he t

erm

s of

the

tru

st. A

cla

iman

t m

ay o

btai

n fr

om t

he c

ourt

an

orde

r at

tach

ing

pres

ent

or f

utur

e di

stri

butio

ns t

o or

for

the

ben

efit

of t

he b

enefi

ciar

y. T

he

cour

t may

lim

it th

e aw

ard

to th

e re

lief

that

is a

ppro

pria

te u

nder

the

circ

umst

ance

s, co

nsid

erin

g am

ong

any

othe

r fa

ctor

s de

term

ined

app

ropr

iate

by

the

cour

t the

sup

port

nee

ds o

f th

e be

nefic

iary

, the

ben

efici

ary’

s sp

ouse

, and

th

e be

nefic

iary

’s de

pend

ent c

hild

ren

or, w

ith r

espe

ct to

a b

enefi

ciar

y w

ho is

the

reci

pien

t of

publ

ic b

enefi

ts, t

he

supp

lem

enta

l nee

ds o

f th

e be

nefic

iary

if th

e tr

ust w

as n

ot in

tend

ed to

pro

vide

for

the

bene

ficia

ry’s

basi

c su

ppor

t. A

spe

ndth

rift

prov

isio

n is,

how

ever

, enf

orce

able

aga

inst

the

bene

ficia

ry’s

form

er s

pous

e.

Okl

ahom

aO

kla.

Sta

t. A

nn ti

t. 60

, §17

5.25

(B)(1

)(a)

Not

with

stan

ding

a p

rovi

sion

in t

he t

erm

s of

a t

rust

res

trai

ning

the

alie

natio

n of

the

ben

efici

ary’

s in

tere

st, t

he

inte

rest

sha

ll be

ent

itled

to

be r

each

ed in

the

sat

isfa

ctio

n of

cla

ims

for

supp

ort

of a

spo

use

to t

he e

xten

t of

all

inco

me

due

or to

acc

rue

in th

e fu

ture

to th

e be

nefic

iary

.

Ore

gon

Or.

Rev

. Sta

t. §1

30.3

10(2

)E

ven

if a

tru

st c

onta

ins

a sp

endt

hrift

pro

visi

on, t

he h

olde

r of

a ju

dgm

ent,

cour

t or

der,

or a

dmin

istr

ativ

e or

der

agai

nst

a be

nefic

iary

for

sup

port

or

mai

nten

ance

of

the

bene

ficia

ry’s

spou

se o

r fo

rmer

spo

use

may

obt

ain

an

orde

r fro

m a

cou

rt o

f th

is st

ate

auth

oriz

ing

garn

ishm

ent o

r oth

er e

xecu

tion

agai

nst p

rese

nt o

r fut

ure

dist

ribu

tions

to

or

for

the

bene

fit o

f th

e be

nefic

iary

. The

cou

rt m

ay is

sue

an o

rder

aut

hori

zing

exe

cutio

n ag

ains

t suc

h am

ount

as

the

cou

rt d

eter

min

es t

o be

equ

itabl

e un

der

the

circ

umst

ance

s bu

t no

t m

ore

than

the

am

ount

the

tru

stee

w

ould

hav

e be

en r

equi

red

to d

istr

ibut

e to

or

for

the

bene

fit o

f th

e be

nefic

iary

. Dis

trib

utio

ns s

ubje

ct to

exe

cutio

n in

clud

e di

stri

butio

ns r

equi

red

by t

he e

xpre

ss t

erm

s of

the

tru

st, s

uch

as m

anda

tory

pay

men

ts o

f in

com

e, a

nd

dist

ribu

tions

the

trus

tee

has

othe

rwis

e de

cide

d to

mak

e, s

uch

as th

roug

h th

e ex

erci

se o

f di

scre

tion.

Penn

sylv

ania

20 P

a.C

.S. §

§774

2, 7

743

A t

rust

ins

trum

ent

prov

idin

g th

at a

ben

efici

ary’

s in

tere

st i

s he

ld s

ubje

ct t

o a

“spe

ndth

rift

trus

t,” o

r w

ords

of

sim

ilar

impo

rt, i

s su

ffici

ent t

o re

stra

in b

oth

volu

ntar

y an

d in

volu

ntar

y tr

ansf

er o

f th

e be

nefic

iary

’s in

tere

st, a

nd

a be

nefic

iary

may

not

tra

nsfe

r an

inte

rest

in a

tru

st in

vio

latio

n of

a v

alid

spe

ndth

rift

prov

isio

n. F

urth

erm

ore,

ex

cept

as o

ther

wis

e pr

ovid

ed in

the

subc

hapt

er, a

cre

dito

r or a

ssig

nee

of th

e be

nefic

iary

of

a sp

endt

hrift

trus

t may

no

t rea

ch th

e in

tere

st o

r a

dist

ribu

tion

by th

e tr

uste

e be

fore

its

rece

ipt b

y th

e be

nefic

iary

. The

re is

an

exce

ptio

n to

the

enf

orce

abili

ty o

f a

spen

dthr

ift t

rust

und

er 2

0 Pa

.C.S

. §77

43(b

)(2),(

c), h

owev

er, f

or a

ny p

erso

n w

ho h

as a

ju

dgm

ent

or c

ourt

ord

er a

gain

st t

he b

enefi

ciar

y fo

r su

ppor

t or

mai

nten

ance

, to

the

exte

nt o

f th

e be

nefic

iary

’s in

tere

st in

the

trus

t’s in

com

e, a

nd th

at p

erso

n m

ay o

btai

n a

cour

t ord

er a

ttac

hing

pre

sent

or

futu

re d

istr

ibut

ions

to

or

for

the

bene

fit o

f th

e be

nefic

iary

. The

cou

rt m

ay li

mit

the

awar

d to

suc

h re

lief

as is

app

ropr

iate

und

er th

e ci

rcum

stan

ces.

Rho

de I

sland

R.I

. Gen

. Law

s §1

8-9.

1-1

Any

per

son

crea

ting

an e

xpre

ss t

rust

for

the

ben

efit

of a

ny o

ther

per

son

or p

erso

ns m

ay, b

y th

e te

rms

of t

he

trus

t, es

tabl

ish

valid

res

trai

nts

on t

he v

olun

tary

and

/or

invo

lunt

ary

tran

sfer

of

inte

rest

s in

the

exp

ress

tru

st b

y its

ben

efici

arie

s, w

heth

er b

y w

ay o

f an

ticip

atio

n or

acc

eler

atio

n, a

ssig

nmen

t, hy

poth

ecat

ion,

or

by v

irtu

e of

le

gal p

roce

ss in

judg

men

t, ex

ecut

ion,

att

achm

ent,

garn

ishm

ent,

bank

rupt

cy, o

r ot

herw

ise.

The

re is

no

stat

utor

y ex

cept

ion

for

alim

ony

cred

itors

.

Sout

h C

arol

ina

S.C

. Cod

e A

nn. §

62-7

-502

A b

enefi

ciar

y m

ay n

ot tr

ansf

er a

n in

tere

st in

a tr

ust i

n vi

olat

ion

of a

val

id s

pend

thri

ft pr

ovis

ion,

and

a c

redi

tor

or a

ssig

nee

of t

he b

enefi

ciar

y m

ay n

ot r

each

the

int

eres

t or

a d

istr

ibut

ion

by t

he t

rust

ee b

efor

e its

rec

eipt

by

the

bene

ficia

ry. T

here

is n

o st

ated

sta

tuto

ry e

xcep

tion

for

alim

ony

cred

itors

, alth

ough

not

ably

the

re is

a s

tate

d st

atut

ory

exce

ptio

n un

der

S.C

. Cod

e A

nn. §

62-7

-503

for

a be

nefic

iary

’s ch

ild w

ho h

as a

judg

men

t or

cour

t ord

er

agai

nst t

he b

enefi

ciar

y fo

r su

ppor

t or

mai

nten

ance

.


STA

TE

STA

TU

TE

A

ND

/O

R

RE

LE

VA

NT

CA

SEL

AW

GE

NE

RA

L R

UL

E

Vir

gini

aV

a. C

ode

Ann

. §55

-545

.02

A b

enefi

ciar

y m

ay n

ot tr

ansf

er a

n in

tere

st in

a tr

ust i

n vi

olat

ion

of a

val

id s

pend

thri

ft pr

ovis

ion,

and

a c

redi

tor

or a

ssig

nee

of t

he b

enefi

ciar

y m

ay n

ot r

each

the

int

eres

t or

a d

istr

ibut

ion

by t

he t

rust

ee b

efor

e its

rec

eipt

by

the

bene

ficia

ry. T

here

is n

o st

ated

sta

tuto

ry e

xcep

tion

for

alim

ony

cred

itors

, alth

ough

not

ably

the

re is

a s

tate

d st

atut

ory

exce

ptio

n un

der V

a. C

ode.

Ann

. §55

-545

.03

for a

ben

efici

ary’

s chi

ld w

ho h

as a

judg

men

t or c

ourt

ord

er

agai

nst t

he b

enefi

ciar

y fo

r su

ppor

t or

mai

nten

ance

, or

for

a ju

dgm

ent c

redi

tor

who

has

pro

vide

d se

rvic

es fo

r th

e pr

otec

tion

of a

ben

efici

ary’

s in

tere

st in

the

trus

t.

Was

hing

ton

Was

h. R

ev. C

ode

§6.3

2.25

0(2)

Any

mon

ey, t

hing

in a

ctio

n, o

r ot

her

prop

erty

hel

d in

trus

t for

a ju

dgm

ent d

ebto

r is

exe

mpt

from

sei

zure

whe

n th

e tr

ust h

as b

een

crea

ted

by, o

r th

e fu

nd s

o he

ld in

trus

t has

pro

ceed

ed fr

om, a

per

son

othe

r th

an th

e ju

dgm

ent

debt

or. T

here

is n

o st

ated

sta

tuto

ry e

xcep

tion

for

alim

ony

cred

itors

.

Wes

t Vir

gini

aW

. Va.

Cod

e §3

6-1-

18(a

)E

stat

es h

eld

in tr

ust a

re su

bjec

t to

the

debt

s of

the

bene

ficia

ry o

f th

e tr

ust,

exce

pt w

hen

the

crea

tor

has e

xpre

ssly

pr

ovid

ed in

the

trus

t ins

trum

ent w

ords

sub

stan

tially

to th

e ef

fect

that

the

trus

t is

not s

ubje

ct to

the

liabi

lity

of o

r al

iena

tion

by th

e be

nefic

iary

or

bene

ficia

ries

. The

re is

no

stat

ed s

tatu

tory

exc

eptio

n fo

r al

imon

y cr

edito

rs.

Wis

cons

inW

is. S

tat.

Ann

. §70

1.06

A s

ettlo

r m

ay e

xpre

ssly

pro

vide

in

the

crea

ting

inst

rum

ent

that

the

int

eres

t of

a b

enefi

ciar

y is

not

sub

ject

to

volu

ntar

y or

Sch

wag

er v

. Sc

hwag

er,

109

F.2d

754

(7t

h C

ir. W

is. 1

940)

, in

volu

ntar

y al

iena

tion.

The

int

eres

t of

su

ch a

ben

efici

ary

cann

ot b

e as

sign

ed a

nd is

exe

mpt

from

cla

ims

agai

nst

the

bene

ficia

ry u

ntil

paid

ove

r to

the

be

nefic

iary

pur

suan

t to

the

ter

ms

of t

he t

rust

. T

here

is

no s

tate

d st

atut

ory

exce

ptio

n fo

r al

imon

y cr

edito

rs,

alth

ough

not

ably

the

re i

s a

stat

ed s

tatu

tory

exc

eptio

n un

der

Wis.

Sta

t. A

nn.

§701

.06(

4) t

hat

perm

its a

per

son

havi

ng a

val

id o

rder

dir

ectin

g a

bene

ficia

ry to

mak

e pa

ymen

t for

supp

ort o

f th

e be

nefic

iary

’s ch

ild to

app

ly to

the

cour

t for

an

orde

r di

rect

ing

the

trus

tee

to sa

tisfy

par

t or

all o

f th

e cl

aim

out

of

part

or

all o

f pa

ymen

ts o

f in

com

e or

pri

ncip

al a

s the

y ar

e du

e, to

the

bene

ficia

ry p

rese

ntly

or

in th

e fu

ture

, or

if th

e tr

ust i

s a d

iscr

etio

nary

trus

t, to

di

rect

the

trus

tee

to s

atis

fy p

art o

r al

l of

the

clai

m o

ut o

f pa

rt o

r al

l of

futu

re p

aym

ents

of

inco

me

or p

rinc

ipal

th

at a

re to

be

mad

e pu

rsua

nt to

the

exer

cise

of

the

trus

tee’

s di

scre

tion

in fa

vor

of s

uch

bene

ficia

ry. P

ursu

ant t

o ca

sela

w, w

hen

unre

stra

ined

by

stat

ute,

it is

the

don

or’s

inte

nt, n

ot t

he c

hara

cter

of

the

done

e’s

oblig

atio

n, t

hat

cont

rols

the

avai

labi

lity

and

disp

ositi

on o

f th

e gi

ft.

Wyo

min

gW

yo. S

tat.

Ann

. §4-

10-5

02A

ter

m o

f a

trus

t pr

ovid

ing

that

a b

enefi

ciar

y’s

inte

rest

is

held

sub

ject

to

a “s

pend

thri

ft tr

ust,”

or

wor

ds o

f si

mila

r im

port

, is

suffi

cien

t to

res

trai

n bo

th v

olun

tary

and

invo

lunt

ary

tran

sfer

s of

the

ben

efici

ary’

s in

tere

st. A

be

nefic

iary

may

not

tran

sfer

an

inte

rest

in a

trus

t in

viol

atio

n of

a sp

endt

hrift

pro

visi

on, a

nd a

cre

dito

r or a

ssig

nee

of th

e be

nefic

iary

may

not

rea

ch th

e in

tere

st o

r at

tach

a d

istr

ibut

ion

by th

e tr

uste

e un

less

and

unt

il it

is r

ecei

ved

by th

e be

nefic

iary

. The

re is

no

stat

ed st

atut

ory

exce

ptio

n fo

r al

imon

y cr

edito

rs, a

lthou

gh n

otab

ly th

ere

is a

stat

ed

stat

utor

y ex

cept

ion

unde

r W

yo. S

tat.

Ann

. §4-

10-5

03(b

) for

per

sons

who

hav

e a

judg

men

t or

cour

t ord

er a

gain

st

the

bene

ficia

ry f

or c

hild

sup

port

or

mai

nten

ance

, w

ho m

ay o

btai

n a

cour

t or

der

atta

chin

g pr

esen

t or

fut

ure

dist

ribu

tions

to, o

r fo

r th

e be

nefit

of,

the

bene

ficia

ry.

Irrevocable Trusts Under Attack: The Domestic Relations Angle

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Transcript of Irrevocable Trusts Under Attack: The Domestic Relations Angle