Legal Question in Business Law in California

Can assets in a trust be taken to satisfy a judgment?

If a defendant is sued and there is a trust listing that defendant as beneficiary, can a judgment creditor go after the assets of that trust to satisfy a judgment obtained against that defendant?

What if a bankruptcy is filed by that defendant as a result of the judgment, how does that effect any assets entrusted to that defendant in a trust? Can those assets be taken to satisfy the judgment even if a bankruptcy is filed?

Basically, can assets in trust to a defendant be taken to satisfy a judgment against that defendant, regardless of whether or not a bankruptcy is filed?


Asked on 9/27/08, 9:11 pm

2 Answers from Attorneys
R.C. Lim The Law Offices of R.C. Lim

Re: Can assets in a trust be taken to satisfy a judgment?

It depends on the terms of the trust, and if the trust has what's called a spendthrift provision.

Also to a lesser extent, it depends on whether the trust was what's called self-settled (personally funded) or received as a bequest or gift from another (much better).

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Answered on 9/28/08, 9:48 am
Michael Stone Law Offices of Michael B. Stone Toll Free 1-855-USE-MIKE

Re: Can assets in a trust be taken to satisfy a judgment?

Depending on the type of trust involved, and certainly if the trust is intended to defraud creditors, it may well be subject to being levied upon. It might also constitute bankruptcy fraud, a federal crime, if the debtor were to file for bankruptcy and failed to list the interest in the trust as an asset on his bankruptcy schedules which are signed under oath.

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Answered on 9/27/08, 9:15 pm


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