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Trust deemed to be a support trust rather than a discretionary trust, therefore is subject to collection actions by creditors

Holding that the trusts at issue are not discretionary trusts, and thus, they are reachable by the state, the court reversed the order of the probate court holding that the State Treasurer could not reach the trust assets under the SCFRA, and remanded. The beneficiary, Darrell II, was incarcerated when the petitions were filed. He had one child, who was a minor and lived with her mother. Appellee argued that because Darrell II "was under a disability and incapable of managing a trust distribution, his share could be split off into a separate trust to be held for the benefit of Darrell II and his daughter[.]" Appellant-Department of Treasury argued on appeal that the trusts are not discretionary trusts shielded from state creditors, "maintaining that although the trustee has discretion over the manner and timing of payments, he cannot refuse to apply trust funds for Darrell II's benefit." Further, appellant argued that "Darrell II's estate will receive the benefit of the trusts when he passes away," and his daughter may never become an actual beneficiary. The court held that "while the trusts give the trustee some discretion in carrying out the mandates of the trust, there is no discretion to withhold making any payments to a beneficiary because that beneficiary is deemed to be incapable of managing a trust disbursement." A trust "can be set for the adult beneficiary whose purpose is to support both him and any spouse and descendants." Thus, under the circumstances here, accepting that the trustee determined that "Darrell II is incapable of managing a trust disbursement, the resulting trust is for the support of Darrell II and his daughter. Being a support trust and not a discretionary trust, the state may invade it." The court noted that it was important to stress that in the resulting trust, "the trustee has no discretion to withhold payments based on the beneficiary's identity." Also, "an allocation of 'zero' for someone's support, under virtually all circumstances would be patently unreasonable," but the court was not faced with that question here.


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