The Kuhn Law Firm

A creditor cannot garnish a spendthrift trust

Minneapolis, Minnesota creditor debtor attorney know that “A spendthrift trust is a trust in which the power of alienation is suspended.” Morrison v. Doyle, 582 N.W.2d 237, 240 (Minn.1998) (footnote omitted). Consequently, the income and principal of a spendthrift trust “may not be reached by creditors either at law or by equitable proceeding” until the beneficiary actually receives the proceeds. Erickson v. Erickson, 197 Minn. 71, 77-79, 266 N.W. 161, 163-64 (1936) (including creditors for alimony or child support); see also First Nat’l Bank of Canby v. Olufson, 181 Minn. 289, 294, 232 N.W. 337, 339 (1930) (stating that once trust proceeds come into the hands of the beneficiary, the proceeds are subject to the claims of the beneficiary’s creditors). But see In re Trust Created Under Agreement with McLaughlin, 361 N.W.2d 43, 46 (Minn.1985) (suggesting that evidence of unreasonable delay on the part of the trustee or evidence of a beneficiary’s intent to defraud his creditors “by leaving assets, which he has a right to demand, in a spendthrift trust” might support a finding that proceeds have been distributed in fact).

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