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Feed a Trust and Starve a Child: The Effectiveness of Trust Protective Techniques Against Claims for Support and Alimony
Georgia State Law Review (1994)
  • Carolyn L. Dessin, University of Akron School of Law
Abstract

In its classic definition, a trust is an arrangement for dealing with property in which a settlor transfers property in trust to a trustee who is to hold the property for the benefit of one or more beneficiaries. In creating a trust, the settlor sets forth the trust's dispositive provisions, which determine the interests of the beneficiaries. Because of the wide variety of dispositive plans that can be accomplished by using a trust, trusts are useful devices for the management and disposition of assets. A settlor may create a trust for any number of reasons, including: (1) a wish to support one or more beneficiaries; (2) a desire for professional management of assets; and (3) an attempt to transfer property in a way that obtains the most favorable tax treatment.

There is often, however, a concern that creditors of a beneficiary will attack the assets of the trust seeking payment of claims. To address this concern, many drafters include one or more protective devices in the trusts they draft. Such techniques can be very effective in fending off creditors' attempts to reach assets held in trust.

In light of the current nonsupport crisis, an important question arises when the attacking creditor of a trust beneficiary is a child making a claim for support or a former spouse making a claim for support or alimony. Should such individuals be treated differently from other creditors of the beneficiary, and should trust assets be used to satisfy those claims?

Resolution of this issue must take into account a number of competing interests. The law of trusts is replete with statements that the intent of the settlor should be paramount in any question involving interpretation of the trust, so long as that intent is neither illegal nor against public policy. Often, the needs of the beneficiary are considered as well. In a situation involving a claim against trust assets for support or alimony, however, the settlor and the beneficiary against whom the claim is leveled (the debtor-beneficiary) are not the only entities whose interests are implicated. The spouse or child making a claim has an interest in enforcing a support or alimony obligation. The state has an interest in assuring that its judgments are enforced and that those who suffer as a result of nonpayment of support and alimony do not become wards of the state. Additionally, the interest of any other beneficiaries of the trust may be adversely affected by distributions of trust assets to satisfy claims against a debtor-beneficiary. Finally, the interests of other creditors of the debtor-beneficiary may be implicated.

How then should these competing interests be balanced when a claim for support or alimony is made? This Article will examine the various types of protective techniques that trust drafters use to shield trust assets, explore and critique various legislative enactments and court decisions addressing the effectiveness of protective devices against claims for support and alimony, and propose a model for resolution of the issue.

Disciplines
Publication Date
1994
Citation Information
Carolyn L. Dessin, Feed a Trust and Starve a Child: The Effectiveness of Trust Protective Techniques Against Claims for Support and Alimony, 10 Georgia State Law Review 691 (1994).