In re: ROBERT DUANE RENS
- Summarized by Lars Fuller , BakerHostetler
- 3 years 2 months ago
- Case Type:
- Business
- Case Status:
- Reversed
- Citation:
- BAP No. SC-20-1131-LGH (9th Circuit, Oct 29,2021) Published
- Tag(s):
-
- Ruling:
- BAP for 9th Cir. reversed declaratory judgment of bankruptcy court (SD Cal.) ordering inter vivos trustee to turnover to chapter 7 trustee a portion of all future distributions to debtor, including after debtor's death. While estate’s rights in future distributions from trust were fixed as of petition date, estate’s ability to realize on those rights was subject to same contingencies that would have applied to debtor’s right to receive distributions. Trust implicitly terminated debtor’s interest upon his death.
- Procedural context:
- Bankruptcy court (SD Cal.) entered declaratory judgment ordering inter vivos trustee to turnover to chapter 7 trustee a portion of all future distributions to debtor, including after debtor's death. Inter vivos trustee appealed to BAP for 9th Cir.
- Facts:
- Debtor was beneficiary of irrevocable, spendthrift inter vivos trust as of the petition date. Debtor was in his early 80s and had four living children (the “Intervenors”). Remaining Trust assets consist of: (1) the right to future rental income from a ground lease for real property located in San Diego (the “Miramar Park Property”); and (2) Trust principal, which includes a 50% interest in the Miramar Park Property. The ground lease generates around $14,000 in monthly rental income, which is to be distributed equally each month to the Intended Beneficiaries, or to the living issue of a deceased Intended Beneficiary “by right of representation.” The Trust terminates upon expiration of the ground lease on July 31, 2035 (the “Trust Termination Date”), at which point the Trust principal is to be distributed equally to the Intended Beneficiaries or to the living issue of a deceased Intended Beneficiary “by right of representation.” Debtor’s brother and sister are now deceased, trustee was making distributions under the Trust to their living issue. Chapter 7 trustee sought declaration that the bankruptcy estate was entitled to 25% of debtor's interest in trust, including future distributions that might continue after debtor's death.
- Judge(s):
- Lafferty, Gan, Heston
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