Help with a question re: Sch. B #19
Posted: Fri Mar 04, 2005 3:22 pm
It is important to distinguish between dad's interest and daughter's
interest in the trust. Dad seems to have a lifetime income interest,
subject to a spendthrift provision. Daughter's interest is a remainder
interest which ripens when dad dies. It may or may not have a spendthrift
provision. You'll only know by reading the trust.
Pat
Patrick T. Green, Esq.
Fitzgerald & Green, Attorneys at Law
1010 E. Union Street Suite 206
Pasadena, CA 91106
Ph: (626) 449-8433
Fax: (626) 449-0565
pg23@earthlink.net
Sent: Thursday, March 03, 2005 6:48 PM
To: cdcbaa@yahoogroups.com
Subject: RE: [cdcbaa] Re: Help with a question re: Sch. B #19
Meg,
I looked up your question and agree with Michael Chekian, a spendthrift
trust is EXCLUDABLE from the bankruptcy estate under 541(c)(2). See also
Ehrenberg v. Southern CaL Permanente Med. Group, (In re Moses) 9th Cir 1999
167 F3d 470.
>Reply-To: cdcbaa@yahoogroups.com
>To:
>Subject: RE: [cdcbaa] Re: Help with a question re: Sch. B #19
>Date: Wed, 2 Mar 2005 14:13:21 -0800
>
>The grandfather set up the spendthrift trust for his son - the debtor's
>father. It seems as if there is no way that the debtor can reach this
>money
>until the father dies (the grandfather was an attorney and tried to make it
>impossible for his son to get his hands on the money all at once). The
>debtor tried to get some money to pay her creditors before filing and was
>unsuccessful. It seems as if the only thing now that will satisfy this
>creditor who is handling the trust is to provide something in writing and I
>don't know what I can provide at this point unless I try to reopen the
>case -- if the judge will allow me to. The creditor did bring it to the
>Chap 7 trustee's attention and she did not pursue it. If it is an asset
>that the trustee can reach to pay creditors, the debtor is willing to have
>that happen and I want to do whatever is necessary to accomplish that. A
>little more input on this would really be appreciated!
>Thanks for all the help so far.
>Margaret Hew
>
>-----Original Message-----
>Sent: Wednesday, March 02, 2005 11:02 AM
>To: cdcbaa@yahoogroups.com
>Subject: [cdcbaa] Re: Help with a question re: Sch. B #19
>
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>Is this the father's trust or is this a trust someone else
>established with the father as a beneficiary? Assuming it is the
>father's trust, and this secured creditor of the debtor's is acting
>as trustee of the father's trust, the question becomes is the trust
>revocable or not? If the father can make changes including to
>beneficiaries, then the trust is revocable and the bankruptcy estate
>has no interest in it unless of course father dies within 6 months of
>the petition being filed. On the other hand if the trust's terms are
>set in stone and the father or whomever estatblished the trust cannot
>make changes, it is an irrevocable trust. As such the debtor and
>thus the bankruptcy estate has an interest as a residual beneficiary,
>conditional upon the debtor surviving the father. That interest
>should be listed in Schedule B.
>
>If the trust is irrevocable and has a spendthrift clause relating to
>the debtor's right to receive a distribution at the father's death,
>then although an asset of the bankruptcy estate, theoretcally, the
>spendthrift clause may serve to prevent or minimize any distributions
>that would otherwise go to the bankruptcy estate.
>
>Mark Jessee
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