Alienability of Trust

Question 1

What is general rule regarding alienability of beneficial interests in trusts?

Answer 1

Absent a restrictive provision to the contrary, a trust beneficairy may freely assign the equitable title or right to receive income or principal from a trust

Question 2

What is a support trust?

Answer 2

A trust that directs the trustee to provide only so much as is necessary for the beneficiary’s support, and no other purpose

Question 3

What is a discretionary trust?

Answer 3

The trustee pays as much income to the beneficiaries as the trustee believes desirable

Question 4

What level of deference is given to trustees regarding distributions under a discretionary trust?

Answer 4

A trustee’s actions pertaining to matters within their discretion are not subject to attack unless there has been an abuse of that discretion or a complete failure to exercise it

Question 5

What is a spendthrift trust?

Answer 5

A provision in a trust that says the beneficiary cannot voluntarily transfer their property, nor can a creditor attack it

Question 6

What are exceptions regarding the susceptibility of assets in a spendthrift trust to attack by creditors?

Answer 6

Spendthrift trusts cannot be used to defeat claims of:
1. alimony or child support owed by the beneficiary
2. the provision of necessities to the beneficiary
3. government claims against the beneficiary