Obtaining Discovery of Trusts, Their Assets, & Income to Prove Cash Flow Available for Child and Spousal Support: The Black Letter Law & Practical Considerations
Alphonse F. Provinziano, CFLS
Wealthy families often set up trust funds for children in order to benefit from tax savings, private transfers of wealth, and to allow parents to control the funds going to their children. Such trusts are intended to protect the beneficiary from scrutiny and can be a shield for publicly holding assets that are much more available to the public eye.1 Trusts are often thought of as somewhat untouchable in family law cases, and that if someone has assets in a trust or is a beneficiary of trust, that they do not have to disclose the assets held in a trust and do not have to provide the information, often asserting confidentiality and privacy provisions for beneficiaries of a trust. Nevertheless, there often is a significant community property interest in trusts, as well as income bearing assets hidden inside of trusts that could be available as cash flow for support. The purpose of this article is to demystify the claims that trusts are somehow impervious to discovery, when, in fact, trusts are subject to discovery, both the assets in the trust and the information regarding the trust. If there are legitimate concerns regarding confidentiality and privacy, the court can impose appropriate protective orders and engage in an in camera review process.
What is a Trust?
In California, trusts are governed by the Probate Code Division 9 (sections 15000 et seq.). Chapter 1 begins at sections 15200 and addresses the Creation and Validity of Trusts. Chapter 2, beginning at sections 15300, addresses Restrictions on Voluntary and Involuntary Transfers, which is relevant to the use of trusts in family law cases. Probate Code section 15300 states: