Restrictions on Trust Transfers

Division 9, Part 2, Chapter 2 deals with restrictions on voluntary and involuntary transfers of trusts in California.

Section 15300 provides that, if the trust instrument provides that a beneficiary’s interest in income is not subject to voluntary or involuntary transfer, the beneficiary’s interest in income under the trust may not be transferred and is not subject to enforcement of a money judgment until paid to the beneficiary.

Section 15301 specifies that, if the trust instrument provides that a beneficiary’s interest in principal is not subject to voluntary or involuntary transfer, the beneficiary’s interest in principal may not be transferred and is not subject to enforcement of a money judgment until paid to the beneficiary.

Section 15302 states that, if the trust instrument provides that the trustee must pay income or principal or both for the education or support of a beneficiary, the beneficiary’s interest in income or principal or both under the trust.

Section 15303 provides that, if the trust instrument provides that the trustee is to pay to or for the benefit of a beneficiary so much of the income or principal or both as the trustee in the trustee’s discretion sees fit to pay, a transferee or creditor of the beneficiary may not compel the trustee to pay any amount that may be paid only in the exercise of the trustee’s discretion.

Section 15304 states that, if the settlor is a beneficiary of a trust created by the settlor and the settlor’s interest is subject to a provision restraining the voluntary or involuntary transfer of the settlor’s interest, the restraint is invalid against transferees or creditors of the settlor. The invalidity of the restraint on transfer does not affect the validity of the trust.

Section 15305 defines the term “support judgment.” If the beneficiary has the right under the trust to compel the trustee to pay income or principal or both to or for the benefit of the beneficiary, the court may, to the extent that the court determines it is equitable and reasonable under the circumstances of the particular case, order the trustee to satisfy all or part of the support judgment out of all or part of those payments as they become due and payable, presently or in the future.

Section 15305.5 defines the term “restitution judgment.” If the beneficiary has the right under the trust to compel the trustee to pay income or principal or both to or for the benefit of the beneficiary, the court may, to the extent that the court determines it is equitable and reasonable under the circumstances of the particular case, order the trustee to satisfy all or part of the restitution judgment out of all or part of those payments as they become due and payable, presently or in the future.

Section 15306 specifies that, if a statute of this state makes the beneficiary liable for reimbursement of this state or a local public entity in this state for public support furnished to the beneficiary or to the beneficiary’s spouse or minor child, upon petition to the court by the appropriate state or local public entity or public official, to the extent the court determines it is equitable and reasonable under the circumstances of the particular case, the court may do any of three specified actions.

Section 15306 allows the court to make an order directing the trustee to satisfy all or part of the judgment out of the payments to which the beneficiary is entitled under the trust instrument or that the trustee, in the exercise of the trustee’s discretion, has determined or determines in the future to pay to the beneficiary.

Section 15307 states that any amount to which the beneficiary is entitled under the trust instrument or that the trustee, in the exercise of the trustee’s discretion, has determined to pay to the beneficiary in excess of the amount that is or will be necessary for the education and support of the beneficiary may be applied to the satisfaction of a money judgment against the beneficiary.

Section 15308 provides that any order entered by a court under specified sections of law is subject to modification upon petition of an interested person filed in the court where the order was made.

Section 15309 states that a disclaimer or renunciation by a beneficiary of all or part of his or her interest under a trust is not to be considered a transfer.