[CLBS] The assets of a Spendthrift Trust are not property of the bankruptcy estate, but what if the Trust with the spendthrift provisions designates beneficary-debtor receives $s on 50th B-Day?

[Jon Wilson]

Hypothetical:  Trust assets in correctly established Trusts with a
spendthrift clause are not property of the bankruptcy estate [11 USC
541(c)(2)].  However, what if there is a provision in the spend thrift trust
which directs a set amount of funds ($50K) must be paid to the
beneficiary/debtor when he/she has their 50th birthday?  Does a bankruptcy
trustee have the authority to keep the bankruptcy open until debtor's 50th
birthday (years down the road) or be able to sell  that contingent interest
that matures in 12 years?  Would 541(c)(2) and Idaho Trust Law prevent it?
I have not found any  case law on this type of spendthrift trust provision.

 

Thanks everybody ahead of time for your input.

 

Jon R. Wilson

Attorney at Law

 

Wilson Law Offices, P.C.

4614 W. Emerald St.

Boise, ID 83706

Tel. (208)343-8400

Fax (208)424-5006

Email:   <mailto:jon at boiselaw.org> jon at boiselaw.org

 

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