[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?

[Randal French]

Has the case been filed yet?  If so, I would wait until the discharge is entered and see whether the case closes at that time.  

I would not think that the trustee could or would keep the estate open for that.  By definition, the spend thrift trust assets that exist now are excluded from the estate and beyond the reach of any creditor of the debtor.  At age 50, The funds must be distributed to the debtor.  Any creditors that exist as of that time could try to garnish any accounts into which the funds were deposited, but could not force the trust to pay the funds to said creditor.  By the time that happens, the debts included in the bk would have been discharged and those creditors would be enjoined from taking any action to collect, due to the discharge injunction.  

If the trustee appears to be holding the case open for just this trust, you might file a motion to abandon the spend thrift trust or get a ruling that it is not part of the estate.  

Good luck.

Randy French
www.bauerandfrench.com


Bauer & French
Attorneys at Law
1501 Tyrell Lane 1P.O. Box 2730 PBoise, ID 83701-2730
(208) 383-0090 ( Fax: (208) 383-0412
IMPORTANT NOTICE: This communication, including any attachments, may contain information that may be confidential or privileged and is intended solely for the entity or individual to whom it is addressed. If you are NOT the intended recipient, you must delete this message and attachments and are hereby notified that any disclosure, copying, or distribution of this message is strictly prohibited. Nothing in this email, including any attachment, is to be a legally binding signature.



-----Original Message-----
From: CLBS [mailto:clbs-bounces at admws.idaho.gov] On Behalf Of Jon Wilson
Sent: Wednesday, March 20, 2013 1:42 PM
To: clbs at admws.idaho.gov
Subject: [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?


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

 

CONFIDENTIALITY NOTICE:  The preceding message (including any attachment, if
any) is coverby the Electronic Communication Privacy Act, 18 U.S.C. sections 2510-2521, is CONFIDENTIAL, and may also be protected by the ATTORNEY/CLIENT OR  OTHER PRIVILEGE.  If you believe that this message has been sent to you in error, do not read any further portion of the message other than the remainder of this notice, please reply to the sender that you have received the message in error, and delete the message.  If you are not the intended recipient,you are hereby notified that any retention, dissemination, distribution, or copying of this communication is strictly prohibited.  We do not waive any attorney/client or work privilege by the transmission of this message.  Thank you.

 

 

 

_______________________________________________
CLBS mailing list
CLBS at admws.idaho.gov
http://admws.idaho.gov/mailman/listinfo/clbs

!SIG:514a1132207757339811836!