## Facts

- A testator created a testamentary trust of $75,000 for his brother, Charles W. Adams.
- The trustees were directed to invest the fund and pay its net income to Adams semiannually during his life.
- The will required payment to Adams personally when convenient, otherwise upon his written order or receipt.
- The will stated that income payments were to be “free from the interference or control of his creditors,” and that the income was not to be anticipated by assignment.
- Broadway National Bank was a creditor of Adams and filed a bill in equity to reach and apply the trust income to satisfy Adams’s debt before the income was paid to him.
- The trial court dismissed the bill.

## Issues

1. Whether a settlor who owns property outright may create a trust for another and validly restrain the beneficiary from assigning future income and restrain the beneficiary’s creditors from reaching that income before payment.
2. Whether a creditor may, in equity, compel trustees to pay trust income to the creditor contrary to an express clause directing payment free from creditor interference.

## Decision

- The Supreme Judicial Court affirmed dismissal of the creditor’s bill.
- The court held that, under a valid will, trust income payable to a beneficiary cannot be reached by attachment or equitable process before it is actually paid to the beneficiary when the instrument bars anticipation and creditor interference.
- The court enforced the testator’s expressed intent and declined to order trustees to do what the will forbade unless the restraint was unlawful.

## Legal Principles

- An owner with full power of disposition may settle property in trust for another and provide that trust income is not alienable by the beneficiary in advance of payment and is not subject to creditor process before payment.
- Restrictions on alienation are invalid when repugnant to an absolute estate granted to the transferee, but a donor may instead define and limit the beneficiary’s equitable interest from the outset, including by making it non-assignable in advance and unreachable by creditors before payment.
- General policy favoring satisfaction of debts does not give a beneficiary’s creditors rights in property that belongs to the donor and is given only on stated conditions.
- The beneficiary takes only the interest the settlor created; if that interest is limited to periodic payments subject to anti-anticipation and anti-creditor provisions, creditors cannot compel diversion of unpaid income.
- The rule applies where the trust property originates with the donor/settlor, not where a debtor attempts to place the debtor’s own property beyond creditors by self-settlement.

## Conclusion

The court upheld the validity of a spendthrift-type restraint in a testamentary trust and ruled that a beneficiary’s creditor cannot reach trust income prior to its payment when the settlor, owning the property, expressly conditioned the gift on non-anticipation and freedom from creditor interference.


Broadway Nat'l Bank v. Adams, 133 Mass. 170 (1882)