Child Support Order Beats a Trust’s “Shutdown Clause.”
A recent case shows that family law is powerful stuff. The needs of a child will trump some sophisticated estate planning. A mother is the beneficiary of a trust established by her grandparents. A clause in the trust prohibits the trustee from making certain distributions if they would subject the beneficiary’s distribution to the claims of creditors. Meanwhile, the father of the beneficiary’s children obtained a child support order, but the trustee refused to satisfy the child support order from the trust estate. Because of the “shutdown clause” in the trust, the trial court denied the petition to compel the trustee to satisfy the child support order from the trust estate. The Court of Appeal reversed, stating: “We hold that, notwithstanding the shutdown clause, Probate Code section 15305 gives the trial court discretion to order a trustee to make distributions of income and principal to satisfy the final child support orders.” The case is Pratt v. Ferguson (Cal. App. 4th Dist., Div. 3, Sept. 6, 2016) 3 Cal.App.5th 102.