Spendthrift Trusts, Limited Protection for Deadbeat Beneficiaries. - California law has long recognized a settlor’s right to restrict a beneficiary’s use of trust assets. Restraints on alienation, spendthrift clauses, shutdown clauses and wholly discretionary trusts are a few of the tools settlors may use when creating a trust for the benefit of someone likely to have creditor problems.

Many trustees employ counsel to provide advice on dealing with and responding to inquiries from beneficiaries. Trustees may believe that their communications with and advice from counsel are confidential and cannot be disclosed to the beneficiaries without their consent. The recent court decision in Fiduciary Trust International of California v. Klein (2017) 9 Cal. App. 5th 1184 is a cautionary tale that warns trustees against assuming that all communications with an attorney are confidential.

California law has long recognized a settlor’s right to restrict a beneficiary’s use of trust assets. Restraints on alienation, spendthrift clauses, shutdown clauses and wholly discretionary trusts are a few of the tools settlors may use when creating a trust for the benefit of someone likely to have creditor problems.

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Determine how to produce the summary of account and each supporting schedule. Recognize California's Uniform Principal and Income Act. Recognize when the fiduciary's records reveal a breach of trust. Determine how to get the records you need to do the job you were hired to do.