Trust Case Law
A trust can be used to determine how a person’s money should be managed and distributed while that person is alive or after death. A trust helps an estate avoid taxes and probate. It can protect assets from creditors and dictate the terms of inheritance for beneficiaries.
Basic Trust Case Law Information
Burns v. Miller, Hiersche, Martens & Hayward, P.C. 948 S.W.2d 317 (Tex. App—Dallas 1997 writ denied) The Trial Court ordered beneficiary to turn over property to a receiver for use in paying a creditor. The Trial Court included all disbursements from Spendthrift Trusts within the scope of the turnover order.
The most famous of all Medicaid Trusts is the Miller Trust. The Miller Trust is a written trust agreement that makes it possible for people to obtain Medicaid nursing home coverage even though they actually make too much money to qualify for Medicaid. Importantly, they are not actually called Miller Trusts anymore. Instead, we now call them Qualified Income Trusts. However, we do not create these types of trusts anymore for our clients, as we believe this type of trust has disadvantages and limitations that far outweigh the benefits of setting them up. There are much better options today than the Medicaid Miller Trust.
Conclusion: Distributions from Spendthrift Trusts are protected from turnover orders even though the property is in the possession of a beneficiary. In re: BancorpSouth Bank 2014 Tex. App. LEXIS 4052The Trial Court entered into a withholding order attempting to circumvent the spendthrift provisions of the trust. The Appellate Court concluded that that the Trial Court abused its discretion and granted writ of mandamus. The Appellate Court stated that: Although beneficial interests in trusts are generally assignable, attempts to assign such interests are invalid when they are subject to a spendthrift provision in the trust. Neither the corpus, the accrued income which has not been paid to the beneficiary or the future income to be paid to a beneficiary of a spendthrift trust are subject to the claims of the creditors of the beneficiary while those amounts are in the hands of the trustee.
Orders under Tex. Fam. Code Ann. §§ 154.007 and 8.101 are creatures of specific statutes that create an exception to the general limitation on garnishment of current wages. There is no similar statute permitting a trial court to redirect payments from a spendthrift trust to a spouse or former spouse. Conclusion: A court cannot order the trustee of a spendthrift trust to make distributions for the purpose of spousal support.
The right thing to do before you make financial decisions is to know your options.