Can a creditor enforce a judgement against a trust beneficiary if the trust has a spendthrift provision that forbids it?
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Can a creditor enforce a judgement against a trust beneficiary if the trust has a spendthrift provision that forbids it?
The spend thrift provision in the trust that I am the beneficiary of specifically states that the money must be paid to me as the beneficiary and no creditor even with a judgment against me can petition to take it. But a creditor has ask the court to enforce a judgement through the trust that has a spendthrift provision. Am I correct in assuming that the creditor can not do this and must instead get the judgement from the beneficiary who owes it directly?
Asked on September 16, 2011 under Estate Planning, California
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
If you are a beneficiary under a trust and you have a judgment against you where the judgment creditor is attempting to collect upon it, the judgment creditor under most state statutes cannot levy upon a trust's assets especially where there is a "spend thrift provision" regarding a specific beneficiary for full or partial satisfaction of the judgment typically with success.
Rather the judgment creditor will need to wait until assets from the trust are paid directly to the beneficiary/judgment debtor before levying upon those assets depending where they are then deposited.
If the judgment creditor attempts to levy upon the trust assets concerning your interests in it as a beneficiary, you and the trustee will need to immediately file and serve a claim of exemption regarding this.
Good luck.
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