Sunday, August 25, 2013
The beneficiary of a spendthrift trust personally guaranteed a loan of $350,000 to the business of which he was a principal, assuring the lenders that he was the beneficiary of a trust worth in excess of $6.8 million. The business defaulted and the trustee refused to pay on the guarantee because of the spendthrift limitation in the trust.
The lenders sued, alleging that the Florida statutes that recognize the enforceability of spendthrift provisions violate the guarantee of equal access to the courts contained in the Florida Constitution, claiming that the statutes abolished a common right to execute a monetary judgment against any beneficial interest held by the debtor. The trial court granted summary judgment to the trustee and the intermediate appellate court affirmed, holding that because the validity of spendthrift limitations was recognized long before the adoption of the statutes, they do not abolish a common right but rather recognize it. Zlatkiss v. All America Team Concepts, LLC, No. 5D12–3324, 2013 WL 2359108 (Fla. Dist. Ct. App. May 31, 2013).
Special thanks to William LaPiana (Professor of Law, New York Law School) for bringing this case to my attention.