March 9, 2015

Ninth Circuit asks Supreme Court to answer spendthrift trust question [UPDATED]

Saying that resolution of the appeal before it “could transform the terrain of California trust law” and that the appeal “hinges on the interpretation of opaque sections of the Probate Code,” the Ninth Circuit today asked the Supreme Court to answer this question:  “Does section 15306.5 of the California Probate Code impose an absolute cap of 25 percent on a bankruptcy estate’s access to a beneficiary’s interest in a spendthrift trust that consists entirely of payments from principal, or may the bankruptcy estate reach more than 25 percent under other sections of the Probate Code?”  The case is Frealy v. Reynolds.

It’s been less than three weeks since the Ninth Circuit asked for the Supreme Court’s help on a question of California law.  Before that, it had been over a year.  We should know by the beginning of May — give or take — whether the Supreme Court will agree to decide the question.  The odds are that it will.

[March 11 update:  The Supreme Court has now docketed the Ninth Circuit’s request.]

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