In re Reynolds (Frealy v. Reynolds)

A debtor’s bankruptcy estate is entitled to the full amount of debtor’s spendthrift trust distributions due to be paid as of the petition date, except for the portion the beneficiary needs for his support or education if the trust instrument specifies the funds are to be used for that purpose.  After the California Supreme Court answered certified questions, the Ninth Circuit remands this case to the bankruptcy court instructing that the bankruptcy estate is entitled to the full amount of spendthrift trust distributions due to be paid as of the petition date, except for the portion the beneficiary needs for his support or education if the trust instrument specifies the funds are to be used for that purpose.  Also, the bankruptcy estate is entitled 25% of expected future payments from the spendthrift trust, reduced by the amount the beneficiary needs to support himself and his dependents.

Ninth Circuit Court of Appeals (per curiam); August 15, 2017; 2017 WL 3482263

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