Articles & News
Enforcement of Child Support, Spousal Support and Attorneys Fee Order from Spendthrift Trusts
Los Angeles County Bar Association
Family Law: News & Review
Vol. XVII, No. 4
Ira M. Friedman and Abby B. Friedman are partners in the law firm of Friedman & Friedman with offices in Beverly Hills, California
You have just obtained an order for child support, spousal support and attorneys fees only to find out eh only available asset or source of income to obtain enforcement is the debtor's rights in a Trust. The bad news comes when you find out that the Trust has a spendthrift provision. Of course, once the beneficiary's interest reach the beneficiary then it may be subject to the full panoply of creditors' remedies against assets of the debtor.
A lot of practitioners would throw up their hands because of the old law school teachings that a spendthrift trust could or would not be invaded for debts. However, there is a way that the incomes from a spendthrift trust can be invaded to pay back child support, spousal support or an attorney fee order. This is the case even if the Judgment Debtor owed money to the Internal Revenue Service or the Franchise Tax Board.
The creditor begins by filing a Petition to Enforce Money Judgment in the Probate Court, pursuant to Code of Civil Procedure Sec. 709.010. While you could ask the Probate Court to take judicial notice of the Court Order in the dissolution of marriage action you are trying to enforce, you would be better advised to attach a conformed copy to the moving Petition so the Court has the document in from of it when it is considering your Petition.
After the Petition if filed with the Court, the Court will set a hearing date for the hearing and if you request, a Citation pursuant to Probate Code Sec. 1206 will be issued for the Cite who is the beneficiary of the Trust.
Code of Civil Procedure Sec. 709.010(b) provides that a Judgment Debtor's beneficial interest in a Trust is subject to enforcement of a money judgment and that the Court has jurisdiction to apply the Debtor's beneficial interest to the satisfaction of a money judgment by such means as the Court deems proper, including collection of the trust income of liquidation of trust property. This means that the Probate Court, in effect, is sitting as a Court of equity, which will allow it to make Orders over the Trust, affecting the beneficiary is entitled under the Trust instrument or that the Trustee, in the exercise of the Trustee's discretion, has determined or determines in the future to pay to the beneficiary.
There is a restriction on the amount of the Trust income that can be paid out to a creditor, which is somewhat similar to the restrict pertaining to earnings withholding orders or wage garnishments pursuant to Code of Civil Procedure Sec. 704.0709. This restriction is that the trustee may not be required to pay an amount exceeding 20% of the payment that otherwise would be made to, or for the benefit of, the beneficiary. See Probate Code Sec. 15306.5(b).
The "station in life rule" was set forth in Canfield vs. Security-Frist National Bank (1939) 13 Cal. 2d 1, 23; 87 P2d 830, 840. The "station in life" test requires consideration of a beneficiary's rearing, lifestyle, housing and similar costs. The amount necessary for the beneficiary's support is not to be measured by his ability to spend, but by his reasonable needs, which do not include extravagances or luxuries.
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