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Trusts and Estates

Blech v Blech

Cite as B288074
Filed August 15, 2019, Second District

By Daniel C. Kim
Weintraub Tobin Chediak Coleman Grodin Law Corporation
www.weintraub.com

Headnote: Trusts – Judgment Creditors’ Rights Against Future Distributions – Timing of Petition

Summary: Future Distributions of Trust Principal May be Subject to Judgment Creditors When Due and Payable, Regardless of When Petition To Enforce is Filed.

Richard Blech is the beneficiary of a spendthrift trust created by his father. Following his father’s death, the trust estate was divided into four unequal shares between Richard and his three siblings. The trust provides for mandatory quarterly distributions of income and annual distributions of principal. After their father passed away, the four siblings had several disputes that were ultimately settled with Richard agreeing to pay various sums of money to his three siblings. Richard then breached the deadline to make those payments and his siblings, in 2016, obtained a court order compelling the trustee to pay 25% of Richard’s future trust distributions to his sibling creditors in satisfaction of the monies owed. Following the Supreme Court’s decision in Carmack v. Reynolds in 2017, the creditors all filed petitions to enforce their money judgments against the unencumbered 75% of Richard’s future distributions. Richard opposed the petitions arguing, inter alia, that no amount was “due and payable” at the time of the hearing (3 days before the trust distribution was due), the court lacked authority to make an order regarding future distributions of principal, and the trust was a “support trust” requiring additional evidentiary hearings regarding necessary support. The Court took the matter under submission and issued an order 9 days later granting the petitions.

The appellate court affirmed. Richard’s argument that a creditor may not file a petition to enforce a money judgment until after a disbursement is due and payable was not supported by the language of the relevant statute. The statute allowed such an order regardless of when the petition itself is filed. The court did not abuse its discretion to order the trustee to delay the future trust distribution until it ruled on the petitions because the trial court had broad inherent powers to take the matter under submission and order the trustee to delay distribution, notwithstanding Richard’s request that it rule from the bench. Lastly, the trust was not a “support trust” because the distributions of income and principal were mandatory, whereas a “support trust” requires the trustee “to pay or apply no more than is necessary to educate or support the beneficiary.”

https://www.courts.ca.gov/opinions/documents/B288074.PDF

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