Alienation of trusts

Question 1

Can you sell off your trust rights?

Answer 1

YES, it is property, can sell your property voluntarily or involuntarily if creditor attaches

Question 2

Spendthrift Trust

Answer 2

Beneficiary can’t transfer his rights of future payment, creditors can’t attach the beneficiary’s right to future payment of income/principal
TERMS OF TRUST MUST EXPLICITLY STATE DEFINITION

Question 3

Spendthrift Trust voluntary alienation and involuntary

Surplus JX

Answer 3

Cannot sell as general rule.
Creditors can’t attach unless PREFERRED CREDITOR (government IRS, necessities of life to beneficiary, child for child support, alimony, spousal support)
Surplus jx: creditors can attach to the surplus of a trust (any excess $ that they don’t need to live)

Question 4

Spendthrift trust created for yourself for involuntary/voluntary alienation

Answer 4

Most jx the spendthrift provision does not apply to insulate against creditors for involuntary alienation (violation of PP) minority allow it
Voluntary alienation: majority allow alienation

Question 5

Support Trusts DEFINITION:

Answer 5

The trustee is required to use only so much of the income or principal as is necessary for the beneficiary’s health, support, maintenance or education

Question 6

Support trust alienation:

Answer 6

Voluntary: Can’t assign (defeats the purpose)
Involuntary:Creditors can’t attach unless PREFERRED CREDITOR (government IRS, necessities of life to beneficiary, child for child support, alimony, spousal support)

Question 7

Can settlor create Support Trust for himself to insulate from involuntary alienation?

Answer 7

Most jx say no, some say yes

Question 8

Discretionary trust definition:

Answer 8

The trustee is given sole and absolute discretion in determining how much to pay the beneficiary if ANYTHING and when to pay the beneficiary if EVER

Question 9

Discretionary Trust Voluntary alienation. Can beneficiary ever transfer his interest, his right to future payments, notwithstanding the discretionary trust provisions (and involuntary alienation)

Answer 9

On the one hand, no: Beneficiary cannot voluntarily
transfer his right to future payments because, the question may be asked, what exactly is the beneficiary assigning? The beneficiary may not get anything. BUT if there is assignment of something you can assign and trustee must pay assignee. (Vice versa with involuntary)