ALIENABILITY OF BENEFICARIES and CREDITORS RIGHTS

Question 1

Beneficiaries Interest in Trust

Answer 1

A trust beneficiary may freely assign (gratuitously or for consideration) his right to receive income or principal from trust, unless a restriction prohibits this

Question 2

Types of Interests

Answer 2

Support

Discretionary

Question 3

Support Interest

Answer 3

Based on the needs of the beneficiary

Question 4

Discretionary Interest

Answer 4

Trustee pays as much income as he believes is desirable

Question 5

Spendthrift Provision

Answer 5

Beneficary cannot voluntarily transfer his property and a creditor cannot attack it.

These cannot be used to defeat a claim of:

1. Alimony or child support
2. Someone who is providing necessities to beneficiaries
3. Government claims against beneficiary

Question 6

Settlor’s Interests

Answer 6

A settlor has no interest in trust unless he has reserved it in the trust or made himself a beneficiary

Settlor’s often reserve right to revoke the trust
- Creditor cannot force him to revoke trust but bankruptcy court can