Civil Litigation,
California Supreme Court,
Bankruptcy,
9th U.S. Circuit Court of Appeals
Sep. 5, 2017
Spendthrift clauses get a new limitation
Ambiguities in the California Probate Code led to disagreements among courts. Under the current ruling, a bankruptcy estate is entitled to reach the total amount of spendthrift trust distributions “due to be paid.”
Megan Lisa Jones
Email: megan.jones@withersworldwide.com
Loyola Law School
Megan is a tax attorney who specializes in estate and business planning. She was previously an investment banker at firms including Lazard Freres & Company.
In recent opinion, the 9th U.S. Circuit Court of Appeals did as expected, reversing a decision of the Bankruptcy Appellate Panel following the California Supreme Court's opinion in response to a certified question. In Frealy v. Reynolds, 2017 DJDAR 7871 (Aug. 15, 2017), at issue has been when creditors can reach trust distributions and to what extent. The trust in question contained a spendthrift clause and only held undeveloped land, which...
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