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9081 / If the Delaware law requirements limiting the ability of creditors to reach trust assets have been satisfied and a creditor makes a claim against those assets, what are the results if the beneficiary has already received a trust distribution?

If a beneficiary of a Delaware trust has not acted in bad faith, the beneficiary may retain any distributions from the trust that are made before a creditor brings a claim against the trust assets.1 Under Delaware law, it is presumed that the beneficiary (including a beneficiary who is also the transferor) did not act in bad faith, and the creditor has the burden of proving the existence of bad faith.2

1.Del. Code. Ann. Tit. 12, § 3574(b)(2).

2.Del. Code. Ann. Tit. 12, § 3574(c).

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