Trust Protects Against Later Suit

Trust Protects Against Later Suit:

Florida resident Grantor established a Trust. On Grantor's death Trust divided amongst Grantor's children. Defendant is the lifetime beneficiary of Trust which provides:  ◙ The Trustee may, in the Trustee's sole and absolute discretion, distribute to or for the direct or indirect benefit of B so much of the net income and/or principal from B's Trust, up to the whole, during his lifetime, as Trustee deems advisable. ◙ Neither the beneficiary nor any other person or entity shall have any right to require or compel Trustee to make any distribution for any purpose whatsoever. ◙ No share or interest of any beneficiary shall vest in the beneficiary until actually paid or delivered to him or her by Trustee. ◙ Nor shall any share or interest of any beneficiary be liable for his or her debts, or be subject to the process or seizure of any court, or be an asset in bankruptcy of any beneficiary. ◙ No beneficiary shall have the power to anticipate, pledge, assign, sell, transfer, alienate or otherwise encumber his or her interest in any trust created hereunder in any way, or in the income. ◙  Nor shall any interest in any manner be liable for, of subject to, the debts, liabilities or obligations of any such beneficiary or claims of any sort against such beneficiary.


The court entered a judgment against defendant for failure to pay child support. The lower court held that the payment of child support is the paramount debt that any person could have. It is the most important obligation that a person has, is to support their children. However, on appeal the Court noted that the Trust was a non-self-settled trust established by a Florida resident, and comprised solely of the settlor's property. Neither trustee was a resident of New Jersey. Other than the trustees subjecting the Trust to the special voluntary appearance to contest jurisdiction, the Trust has had no other contact with New Jersey. Pursuant to its own terms, the Trust is governed by Florida law which recognizes spendthrift trusts. The right of a third party to garnish assets of a beneficiary of a spendthrift trust is limited to disbursements from the trust and if disbursements are wholly within the trustee's discretion, the court may not order the trustee to make such disbursements. The validity of spendthrift trusts is also recognized by New Jersey. In re Estate of Bonardi, 376 N.J. Super. 508, 516 (App. Div. 2005); Constanza v. Verona, 48 N.J. Super. 355, 359 (Ch. Div. 1958). Accordingly, even if the trial court had jurisdiction over the Trust, the court could not have ordered the trustees to disperse funds from the trust to pay an obligation of defendant. Lerman, v. Lerman, Sup Ct NJ, App Div Dock. No. A-1953-07T31953-07T3.

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