Bankruptcy’s Spendthrift Trust Exception: Mandatory or Permissive?

Estate planning attorneys work tirelessly for their clients, taking into account myriad complex issues. Despite these efforts, even the best-laid plans can be adversely affected when a beneficiary files for bankruptcy. As the debtors discovered in Scott v. King (In re Amerson), 839 F.3d 1290 (10th Cir. 2016), the existence of a valid spendthrift trust does not necessarily prevent the debtor’s beneficial interest from being included in his or her bankruptcy estate for the benefit of creditors.