Massachusetts General Laws ch. 203E sec. 505 – Creditor’s claim against settlor
Section 505. Creditor’s claim against settlor
Terms Used In Massachusetts General Laws ch. 203E sec. 505
- Irrevocable trust: A trust arrangement that cannot be revoked, rescinded, or repealed by the grantor.
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Probate: Proving a will
- Revocable trust: A trust agreement that can be canceled, rescinded, revoked, or repealed by the grantor (person who establishes the trust).
- Trustee: A person or institution holding and administering property in trust.
(a) Whether or not a trust contains a spendthrift provision, the following rules shall apply:
(1) During the lifetime of the settlor, the property of a revocable trust shall be subject to claims of the settlor’s creditors.
(2) With respect to an irrevocable trust, a creditor or assignee of the settlor may reach the maximum amount that can be distributed to or for the settlor’s benefit and, if a trust has more than 1 settlor, the amount the creditor or assignee of a particular settlor may reach may not exceed the settlor’s interest in the portion of the trust attributable to that settlor’s contribution. Trust property shall not be considered distributable to or for the settlor’s benefit solely because the trustee has the discretion under the terms of the trust to reimburse the settlor for any tax on trust income or capital gain that is payable by the settlor under the law imposing such tax; no creditor or assignee of the settlor of an irrevocable trust shall be entitled to reach any trust property based on the discretionary authority described in this sentence.
(3) After the death of a settlor, and subject to the settlor’s right to direct the source from which liabilities will be paid, the property of a trust that was revocable at the settlor’s death shall be subject to claims of the settlor’s creditors, the expenses of the settlor’s funeral and disposal of remains and statutory allowances to a surviving spouse and children to the extent the settlor’s probate estate is inadequate to satisfy those claims, expenses and allowances.
[There is no subsection (b).]