[CLBS] Inheritance income held in trust

[Bart Green]

Holly,
I may be wrong, but I think that whether or not the income to the debtor/trust beneficiary from the trust can be shielded depends on the language of the trust.  Request a copy of the actual trust agreement and review it. Does it contain a spendthrift provision that gives the trustee absolute discretion to withhold payments in the event the trustee deems a person to be a spendthrift?  Does it contain a provision that prohibits a beneficiary from pledging, assigning, selling or transferring his or her interest?  If it contains a spendthrift provision does it state that creditors cannot reach a beneficiary's interest?  Lastly, has your client/trust beneficiary's interest vested so that she has an absolute right to receive those payments?  If her interest has vested, then I think you need to take a hard look at who is the trustee, e.g., a professional trustee versus a family member, and how strong is the spendthrift provision.  Whether or not you can protect it will likely turn on that.
Sincerely, Bart Green  

----- Original Message -----
From: holly at bankruptcylawid.com
To: CLBS at admws.idaho.gov
Sent: Wednesday, June 12, 2019 2:21:56 PM
Subject: [CLBS] Inheritance income held in trust

Individual receives quarterly payments from an inheritance held in trust. She will receive payments until death. Can I protect them in a Chapter 7?
 
Holly Sutherland
Attorney and Counselor at Law
3090 E. Gentry Way, Ste. 150
Meridian, ID 83642
(208) 884-1928
holly at bankruptcylawid.com
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