Scheffel v. Krueger

146 N.H. 669, 782 A.2d 410 (2001)

 

RULE:

The provisions of a spendthrift trust shall not apply to a beneficiary's interest in a trust to the extent that the beneficiary is the settlor and the trust is not a special needs trust established for a person with disabilities, N.H. Rev. Stat. Ann. § 564:23(II). Thus, under the plain language of the statute, a spendthrift provision is enforceable unless the beneficiary is also the settlor or the assets were fraudulently transferred to the trust. 

FACTS:

A mother sued a perpetrator for sexually abusing her minor child. The court entered a default judgment against the perpetrator and ordered him to pay $ 551,286.25 in damages. To satisfy the judgment against the defendant, the mother sought an attachment of the defendant's beneficial interest in an irrevocable trust that was established by his grandmother. The trial court dismissed the trustee process action.

ISSUE:

Were the trust assets shielded from a tort creditor when the tortious act resulted in criminal charges?

ANSWER:

Yes.

CONCLUSION:

The court affirmed, holding that nothing in the trust statute language suggested that the legislature intended that a tort creditor should be exempted from a spendthrift provision. A beneficiary of a trust could transfer his or her right to future payments of income and principal, and a creditor of a beneficiary shall not be able to subject the beneficiary's interest to the payment of its claim.

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