Ohio Code 5816.03 – Spendthrift Provisions
(A) In addition to any other method allowed by law, the spendthrift provision of a legacy trust may be stated as provided in division (B) of section 5805.01 of the Revised Code.
Terms Used In Ohio Code 5816.03
- Another: when used to designate the owner of property which is the subject of an offense, includes not only natural persons but also every other owner of property. See Ohio Code 1.02
- Bankruptcy: Refers to statutes and judicial proceedings involving persons or businesses that cannot pay their debts and seek the assistance of the court in getting a fresh start. Under the protection of the bankruptcy court, debtors may discharge their debts, perhaps by paying a portion of each debt. Bankruptcy judges preside over these proceedings.
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Child: includes child by adoption. See Ohio Code 1.59
- Claim: means a right to payment, whether or not the right is reduced to judgment or is liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured. See Ohio Code 5816.02
- Debt: means a liability on a claim. See Ohio Code 5816.02
- Disposition: includes the exercise of a general power so as to cause a transfer of property to a trustee or trustees but does not include any of the following:
(1) The release or relinquishment of an interest in property that, until the release or relinquishment, was the subject of a qualified disposition;
(2) The exercise of a limited power so as to cause a transfer of property to a trustee or trustees;
(3) A disclaimer of an interest in a trust, bequest, devise, or inheritance. See Ohio Code 5816.02
- former spouse: means only the person to whom a transferor was married on or before a qualified disposition is made. See Ohio Code 5816.02
- Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
- Legacy: A gift of property made by will.
- Legacy trust: means a trust evidenced by a written trust instrument to which all of the following apply:
(a) The trust has, names, or appoints at least one qualified trustee for or in connection with the property that is the subject of a qualified disposition. See Ohio Code 5816.02
- Person: includes an individual, corporation, business trust, estate, trust, partnership, and association. See Ohio Code 1.59
- Property: means real and personal property. See Ohio Code 1.59
- Qualified disposition: means a disposition by or from a transferor to any trustee of a trust that is, was, or becomes a legacy trust. See Ohio Code 5816.02
- Rule: includes regulation. See Ohio Code 1.59
- state: means the state of Ohio. See Ohio Code 1.59
- Statute: A law passed by a legislature.
- Transferor: means a person who directly or indirectly makes a disposition. See Ohio Code 5816.02
(B) Except as otherwise provided in this section, the spendthrift provisions of a legacy trust shall restrain both voluntary and involuntary transfer of a transferor‘s interest in that trust. Any spendthrift provision in a legacy trust is enforceable under any applicable nonbankruptcy law within the meaning of section 541(c)(2) of the Bankruptcy Code regardless of whether or not the relevant legacy trust instrument makes any reference to that enforceability. In addition to the restraints required by this division, a legacy trust and its spendthrift provisions may provide for any other restraints on alienation that are permitted by any law of this state.
(C) Notwithstanding division (B) of this section or the terms of any spendthrift provision, but subject to divisions (D), (E), and (F) of this section, a transferor’s interest in property that is the subject of a qualified disposition may be attached or otherwise involuntarily alienated in connection with any debt that the transferor owes pursuant to an agreement or court order for either of the following:
(1) The payment of child or spousal support or alimony to or for the transferor’s spouse, former spouse, child, or children, or to any governmental agency that is designated by statute, rule, or regulation to be the payee of that child or spousal support or alimony;
(2) The division or distribution of property in favor of the transferor’s spouse or former spouse.
(D) A transferor’s interest in property that is transferred pursuant to a qualified disposition and the transferor’s beneficial interest in a legacy trust shall not be subject to any claim for forced heirship or legitime.
(E) A transferor’s interest in property that is transferred pursuant to a qualified disposition and the transferor’s beneficial interest in a legacy trust shall not be subject to a distributive award under section 3105.171 of the Revised Code or to any similar award under the law of another jurisdiction, to any person other than the transferor’s spouse or former spouse. A court shall liberally construe and apply this provision in finding that such similarity exists.
(F) Nothing in this section shall deprive any beneficiary of any exemption rights that the beneficiary may have under any applicable law after the trust property is received by that beneficiary.