Gunster Blog
Battle Over Creditor Access to John Goodman’s Spendthrift Trust Records
by Bill Stetson - Posted In: Private Wealth Services, Probate, Trust & Guardianship Litigation
There is an interesting battle being waged over a potential creditor’s access to financial records of a spendthrift trust. John Goodman is being sued in a wrongful death action by the parents of Scott Patrick Wilson, who was killed when Goodman’s car allegedly struck Wilson’s car last February. Although the case hasn’t gone to trial yet, Wilson’s parents are seeking access to financial records of a trust created by Goodman’s father as reported in this Sun-Sentinel story. The trust is apparently a spendthrift trust, and Goodman is a beneficiary of the trust.
Generally, a beneficiary’s creditors are not able to reach the property of a spendthrift trust to satisfy their claims against the beneficiary. A spendthrift trust only trust protects property as long as it is held in the trust. Once the trustee makes a distribution of property to a beneficiary, the distributed property is no longer protected from the beneficiary’s creditors.
The law regarding a creditor’s rights to the financial records of a spendthrift trust is not well developed. If Goodman’s trust is a valid spendthrift trust, the Wilson family will not be able to satisfy any judgment that they may receive against Goodman from trust property. And if the Wilson family is prohibited from satisfying any judgment against trust property, they may face an uphill battle in convincing the Court that they are entitled to the trust’s financial records.
The Goodman case also highlights an issue for trustees of spendthrift trusts who wish to keep the financial records of the trust confidential. Trustees are generally required to provide annual accountings of the trust under Fla. Stat. §736.0813. Once a beneficiary receives an accounting that beneficiary’s creditors may obtain that accounting through discovery. If trustees desire to keep financial information that may appear on a trust accounting confidential, they may request the beneficiary to waive the annual accounting requirement pursuant to Fla. Stat. §736.0813(1)(d) since a beneficiary can’t produce accountings that he doesn’t have.
