– Donor transferred certain property to the trustee for the “use and benefit of herself and
of her children.”
– She then amended the trust such that: The trustee shall pay to the Settlor for her
uncontrolled use and benefit, all the net income of the trust during her lifetime.
Whenever the trustee determines that the income of the Settlor from all sources known to
the trustee is not sufficient for her reasonable support, comfort, and health and for the
reasonable support and education of Settlor’s descendants, the trustee may in hits
discretion pay to, or use for the benefit of, Settlor or one or more of Settlor’s descendants
so much of the principal as the trustee determines to be required for those purposes.
– Article 11(b) provides that upon the death of the settler the trustee shall distribute or
hold the then remaining principal and undistributed income as the settler may have
appointed by will. If the settler has not exercised her power to appoint by will, then upon
her death any property remaining in the trust shall be apportioned into separate, equal
trust, “one for each then living child of Settlor and one for the then living issue
collectively, of each deceased child of Settlor.
Issue: Can the income and or the corpus of an irrevocable spendthrift trust, created by
the settler for the settler and her children’s benefit, be reached by garnishment for the
debt of the settler?
Holding: Affirmed in part; Reversed in part. Mrs. Fewell’s interest in the trust is such that
the corpus may be reached by her creditors.
– Texas courts recognize the validity of spendthrift trusts created by a settlor for
others, and no part of the spendthrift trust estate can be taken on execution or
garnishment by creditors of the beneficiary. The rule is otherwise in cases where
the settlor creates a spendthrift trust and makes himself the beneficiary thereof.
And where a settlor creates a trust for his own benefit, and inserts a spendthrift
clause, it is void as far as the then existing or future creditors are concerned, and
they can reach his interest under the trust by garnishment
– Here, Fewell is not the sole beneficiary. The trust provides that the trustee may
exercise its discretion to invade principal under certain circumstances “for the
benefit of Settlor” or “one or more of “Settlor’s descendants.”
– Restatement 156c states: “Reservation of general power to appoint principal. If
the settlor reserves for his own benefit not only a life interest, but also a general
power to appoint the remainder by deed or will, his creditors can reach the
principle of the trust as well as the income.” “Trust for the settlor’s support.
Where the settlor creates a trust for his own support…it can be reached by his
creditors. They can compel the trustee to pay to them the maximum amount
which he could pay for the settlor-beneficiary or apply for his benefit.”