This is a good question posed to me by a judgment creditor. “Is a trust attachable in judgment enforcement?” My friend, Mike, wanted to know. He won a money judgment in civil court. He had become aware that his judgment debtor had a significant amount of money being held in a trust. Mike wanted to know if he could legally access the funds in the trust so that he could receive payment of his judgment.
The answer to Mike’s question is likely of interest to many other judgment creditors. To tell you the truth, I suspect that most people have no idea whether or not a trust can be tapped to pay off a money award. The correct answer is maybe.
There are several factors which determine the answer as it relates to any particular trust. The factors can vary by state and jurisdiction. The first thing is to realise that the laws, and rules of procedure that apply to a trust and judgment execution are not the same from state to state. Make it a point to thoroughly investigate the applicable rules and statutes.
You can access the statutes of all 50 states at this link.
Another basic item to consider is that there are many types of trusts. Some may be attached and others not. Generally for a trust to be seized for payment of a judgment, it must be a revocable trust in which the judgment debtor has a beneficial interest. By the same token, an irrevocable trust probably cannot be seized.
If a judgment debtor’s assets are moved into a trust under circumstances that can be ruled a fraudulent transfer, then the court may allow those assets to be seized no matter what kind of trust is involved.
Sometimes it can be difficult to determine for sure whether your judgment debtor is truly a beneficiary of a particular trust. Public records of some trusts will only list the person who is the trustee while keeping the beneficiary anonymous. It may be possible in those cases to get a court order or subpoena in order to have the actual beneficiary unmasked. If the trustee and beneficiary want to fight it out in court then they may make it legally more difficult to discover the beneficiary. However that certainly does not mean they will ultimately succeed in hiding the identify of the person having a beneficial interest.
Of the various reasons to create a trust, one of them would be to make it more difficult for anyone to reach the assets of the trust.
Can trust assets be reached by execution of a money judgment? It does happen. Sometimes, it is simple to accomplish. Other times it can be difficult or impossible.
One would be wise to invest a little time and money with a well qualified attorney who has previously succeeded in attaching trust assets to help wade through the complexities of the subject.
I would encourage my friend Mike or anyone with a judgment to consider the possibilities of seizing judgment debtor assets held in a trust. It might be the best source of debtor money which could pay the judgment debt.
In your post judgment asset investigation don’t fail to uncover any trusts. Good luck.