LouisSteinmetz is the beneficiary of a spendthrift trust worth millions. Wells Fargois the trustee of the trust. If the trust distribution would be accessible to creditors, Steinmetz will not be able to receive distributions. Steinmetz secured a loanof $350,000 for an LLC. He was the personal guaranty on the loan. However, Stienmetz wasunable to pay the loan and defaulted. As a result, Wells Fargo made nodistribution to Steinmetz. The loan lender is suing Wells Fargo claiming thatFlorida state law violates the state constitution. Specifically, that the statelaw gets rid of the “common law” right to secure a judgmentagainst any interest that the debtor has and provides no alternative.
InRobert Zlatkiss and Linda Zlatkiss v. All America Team Concepts, LLC. (5th Dist., Case No. 5D12-3324, May 31, 2013),the court held that the Florida state law did not get rid of the common lawright. The court reasoned that spendthrift trusts were around long before thestatute was enacted. Therefore, the court dismissed the suit.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.
