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Are you entitled to any benefit from the trust while your mother and disabled brother or alive or do you not receive any benefit of any nature until both their deaths? Does the trust contain a spendthrift clause?
The spendthrift clause will say something to the effect of the following: "No beneficiary may voluntarily or involuntarily alienate any benefit under this trust...."
I don't have any benefit from the trust income until the deaths of both my mother and my brother. I am not sure about the spendthrift clause. My mother (who has the checkbook from the account) has lent my sister money from the account. I don't think she has paid it back, but not sure of that either.
Okay, well I'll break it down both ways. If you have no benefit currently, then there is nothing to attach. Once both your mother and brother are deceased and you have a benefit, there would be a benefit that a creditor could attach if they obtain a judgment against you. However, if the trust has a spendthrift clause (and all do if drafted correctly -- I've never seen one without it), then the creditor still cannot reach your interest in the trust until trust monies are actually distributed to you (and the trustee can withhold distributions from you directly and just use the funds for your benefit to keep the creditor from getting anything). Even if you had a current interest, then the spendthrift clause would still protect you (assuming the clause is included in the terms of the trust, which as noted is the norm).
Thus, with a trust (because a spendthrift clause should be there - but you should check to know for certain) the beneficiary's interest is generally protected from the beneficiary's creditors.
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So if there is a spendthrift clause, I need do nothing about that account?
Correct, if there is a spendthrift clause, then the trust account is fine as it is regardless of whether you are a trustee that has access to the account.
And with my other account named to my business name, if they are after me personally and not my business, can they attach that account?
No, not if it's a corporation or LLC. They can only attach your ownership interest. If it is a sole proprietor or partnership interest, then yes they could get to the company assets as well.
And they can't go after my husband as he is not named or on the credit accounts I personally have right?
In CA, debts of either spouse are generally considered community debts, so in CA creditors of either can go after either.
I had a bankruptcy 13 years ago and at that time the debt was all in my name and we owned no property etc. and they did not go after my husband or even take him into consideration and it was more that $60,000. At this time I am not on the title to the home we live in, which is purchased with his inheritance and I have no assets (ie. car, stocks, etc.). If they get a judgement against me on this one debt ($1,835. + 7% int. per year) will other debtors follow suit. What would your advice be?
If it is inheritance, it is separate property and cannot be attached. I cannot give you advice, but if the only thing is his separate, inherited assets, and you have a trust interest with a spendthrift clause, you don't need to do anything at this point.
He bought the property with a partial inheritance amount.
Then that part of the property purchased with inheritance is separate. To the extent marital/community funds were used or increase in value is due to marital efforts, then it is also community property
Does that qualify as an inheritance? When he signed the paper's for the sale I had to sign something to the effect that it was not mine.
No, the purchased property is not inheritance but it maintains separate property status since it was purchased with separate property
Great! Thank you so much for your help!
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