A bankruptcy court in Michigan has held that a Trust’s spendthrift provision did not protect it from being included as part of a person’s bankruptcy estate. When Richard Lewiston filed for bankruptcy in 2012 he disclosed the Trust for notice reasons, but claimed that it should be excluded from his bankruptcy estate under Section 541 of the Federal Bankruptcy Code. The law lets people exclude Trust property if it is subject to certain transfer restrictions. The Court concluded that Lewiston had complete control over the Trust property, and it rejected his argument that he did not have control because he needed his wife’s consent to revoke the Trust. The decision of the District Court in the Eastern District of Michigan Southern division can be read here.
See Kathy Sherby and Stephanie Moll, What Do You Mean The Trust Is Not Asset Protected?, Bryan Cave, October 23, 2015.
