Tax Facts

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).

Tax Facts Premium Tools
Calculators
100+ calculators specifically designed to help you easily assist clients with specific planning situations and calculations.
Practice Guidance
Designed to help you discover new ways for which to build and maintain client relationships.
Concepts Illustrated
Specifically designed to help you easily assist clients with specific planning situations and calculations.
Tax Facts Archives
Access to the entire library of Tax Facts dating back to 2012 allowing you to look up the exact tax figures from prior years.