Filed April 20, 2017, U.S. Court of Appeals, 9th Cir.
Cite as 16-10152
After being convicted of theft from an employee benefit plan, Michael Harris was sentenced to jail and ordered to pay $646,000 in restitution. Harris was the beneficiary of two irrevocable trusts. One of the trusts provided that the trustee shall pay income in the trustee’s absolute discretion for Harris’ support, and the other trust provided the trustee may distribute income and principal in the trustee’s absolute discretion for his support. The district court granted the government’s application for a writ of continuing garnishment for any property distributed from the trusts to Harris.
The Ninth Circuit affirmed. Present and future interests in trust distributions fall within the definition of property under federal law, and are subject to garnishment. Despite the trustee’s discretion with respect to both trusts, California law allows Harris to compel distributions from the trusts. Accordingly, a federal government lien may attach to Harris’ right to receive trust distributions. Further, disclaimers and spendthrift clauses do not prevent attachment of federal liens.
Disclaimer: This article is intended to provide a general summary of laws in the State of and should not be construed as a legal opinion nor a complete legal analysis of the subject matter. Noelle Minto is an attorney at NM Law, APC in Tustin, California, a law firm specializing in Trusts & Estates and Business Transactions.