References in periodicals archive ?
(11.) See, e.g., Michael Sjuggerud, Comment, Defeating the Self-Settled Spendthrift Trust in Bankruptcy, 28 FLA.
GRISWOLD, SPENDTHRIFT TRUSTS 88 331-76, at 387-462 (2d ed.
See Hirsch, supra note 24, at 91-95 (discussing the problematic effects of the spendthrift trust).
(52) Thus, where the beneficiary of a spendthrift trust is also the settlor of the trust, creditors are allowed to reach the interest of the settlor-beneficiary.
Bankruptcy Code section 541(c)(2) provides: "A restriction on the transfer of a beneficial interest of the debtor in a trust that is enforceable under applicable non-bankruptcy law is enforceable in a case under this title."(29) Subsection (c)(2) "preserves restrictions on transfer of a spendthrift trust to the extent that the restriction is enforceable under applicable non-bankruptcy law."(30) Thus, under subsection (c)(2), if applicable nonbankruptcy law provides that the assets of a trust are protected from the claims of a debtor-beneficiary's creditors, i.e., that the trust is a valid spendthrift or other protective trust, the assets of such trust may not be property of a bankruptcy estate and may be excepted from the reach of Code section 541 (a)(1).
designed to function in a manner 'analogous' to a spendthrift trust" could be excluded from the bankruptcy estate, holding instead "only an interest in a trust can be the subject of an enforceable transfer restriction within the meaning of 11 U.S.C.
How does the concept of a spendthrift trust protect underlying trust assets from the claims of a beneficiary's creditors?
Under this analysis, the courts in both cases held that the domestic jurisdiction had a greater interest in the matter at issue than did the foreign jurisdiction.(17) The blanket rule that may be distilled from these cases seems to be that, unlike with other spendthrift: trusts, public policy acts as an absolute bar to an individual's right to create an effective self-settled spendthrift trust unless the law of the forum state permits such trusts.
Jack inquired about the benefits of using a spendthrift trust and/or a discretionary trust.
Other strategies are available to shield installment payments payable to a client flora potential future creditors, such as having the client contribute the note to another structure, such as an offshore or Nevada spendthrift trust, (19) qualified terminable interest trust (20) or a Nevis LLC (21) with strong "charging order" protections (i.e., a creditor cannot access the LLC's assets, only LLC distributions (if any) to the debtor/member).
In fact, Colorado even has what many people don't know, a version of a self-settled spendthrift trust rule in their own laws for many years, which allows individuals to protect themselves from unforeseen future creditors.
(8) Use of this technique assures that the assets held in the inter vivos trust for the benefit of Judy are protected from her creditors during Judy's lifetime because the QTIP trust is a spendthrift trust.