Wilson v. Rhodes, 258 S.W.3d 873 (Mo. App. S.D. 2008)

Factual Background:

Bill Rhodes Sr. and Jean Rhodes were married and had three children, Bill Rhodes Jr., Kathy Kinder and Amelia Winchester.  Winchester had a child named Abigail Winchester.  In 1992 both Bill Sr. and Jean established individual and identical trusts. Each trust contained a spendthrift provision which provided that any payments from the trust beneficiaries will not be subject to garnishment, levy, execution, anticipation, assignment or encumbrance, nor can they be sold or transferred in any manner, nor shall such interest, while in possession of the trustee, be liable for or subject to the debts, contracts, obligations, liabilities or torts of any beneficiary of the trust.  Bill Rhodes Senior died in 1993.  Jean Rhodes died in November of 2002.  Shortly thereafter, Amelia Winchester died in December of 2002, leaving Abigail Winchester as her sole heir.  The personal representative of Winchester’s estate demanded that trustees of the Jean Rhodes Trust distribute the trust assets that were due to Winchester to her estate pursuant to the Rhodes Trust Agreement.  The trustees refused claiming that the spendthrift clause of the trust precluded payment to Winchester’s estate.  After the trustees’ refusal, the Rhode’s Trust Trustees and Winchester’s Estate filed cross motions for summary judgment.  Circuit Court, Stoddard County, Sharp, J., held in favor of Winchester’s estate, and entered an order compelling release of all assets due to Winchester.

On Appeal:

The executor or administrator of a deceased beneficiary of a spendthrift trust is entitled to income or other distributions that have accrued but have not been paid at the time of the beneficiary’s death to the same extent as if the trust were not a spendthrift trust because income or principal received by the personal representative is distributed and no longer subject to the trust, these funds are subject to creditors’ claims and other obligations of the deceased beneficiary’s estate, and to disposition by the beneficiary’s will or by intestate succession.


Here, Jean Rhodes was survived, if only for a short period of time, by her daughter Winchester.  The trust in question did not explicitly require a beneficiary to survive until the date of distribution in order to receive trust assets.  As a result, Winchester had a vested right in her share of the trust assets at the time of Jean Rhode’s death.  A spendthrift provision prevents alienation of trust property that a beneficiary is entitled to receive in the future, but has no effect with regard to property actually received or with regard to property in which a beneficiary has a vested right to receive such property.  Here, because Winchester survived her mother, she had a vested right to receive the trust property at that moment, and the spendthrift provision became inapplicable.  To implicitly treat a personal representative’s demand for release of trust assets owed to a beneficiary as a creditor is improper.  In such a situation, the personal representative stands in the shoes of the deceased beneficiary, and cannot be characterized as a creditor making application of the spendthrift clause inapplicable.