## Facts

- Jeannette G. Brewer created a testamentary trust naming Bank One Trust Company, N.A. as trustee for the benefit of her son, John McCombe, seeking to protect the gift from McCombe’s creditors.
- The trust directed an outright distribution to McCombe at Brewer’s death unless McCombe was insolvent, had filed bankruptcy, or would not “personally enjoy” the trust property.
- If any condition existed, the trust continued as a discretionary trust for McCombe and his three children, with distributions subject to the trustee’s discretion.
- When Brewer died in 1984, McCombe was heavily indebted; the trustee determined the conditions for outright distribution were not met and administered the trust as discretionary.
- McCombe filed for Chapter 7 bankruptcy in 1986.
- The bankruptcy trustee (Thomas C. Scott) claimed the trust was an invalid restraint on alienation/spendthrift arrangement under Ohio law and sought turnover of trust assets to the bankruptcy estate.
- The federal district court, reviewing the bankruptcy court’s ruling, certified questions of Ohio law to the Supreme Court of Ohio under Ohio Supreme Court Rule XVI.

## Issues

1. Whether Ohio Supreme Court Rule XVI (permitting answers to questions of Ohio law certified by federal courts) is constitutional under Article IV of the Ohio Constitution.
2. Whether spendthrift trusts are valid and enforceable under Ohio law, including whether the trust’s provisions restricting creditor access are enforceable.

## Decision

- The court answered the first certified question “yes,” holding Rule XVI is constitutional.
- The court answered the second certified question “yes,” holding spendthrift trusts are valid and enforceable under Ohio law and the trust provisions at issue are enforceable.
- The court reasoned that answering a certified question does not constitute exercising jurisdiction over a “cause” because the federal court retains the power to adjudicate and enter judgment.
- The court concluded the settlor could condition a gift to a beneficiary in a manner that limits the beneficiary’s ability to transfer the interest and limits creditor reach, where the settlor is not attempting to shield the beneficiary’s own property from creditors.

## Legal Principles

- A state supreme court’s response to a certified question of law is not an exercise of jurisdiction over the underlying case; the federal court retains jurisdiction to decide the cause and enter judgment.
- A certification rule authorizing discretionary answers to federal certified questions is consistent with constitutional limits on the court’s jurisdiction when it does not transfer adjudicatory power over the case itself.
- Spendthrift trusts are valid and enforceable under Ohio law when created by a settlor to control disposition of the settlor’s property and to restrict voluntary or involuntary alienation of a beneficiary’s interest.
- Ohio law distinguishes between a settlor’s permissible control of the settlor’s property to limit creditor access and a debtor’s impermissible attempt to place the debtor’s own property beyond creditors’ reach.
- Where a trust converts from an outright distribution to a discretionary trust upon the beneficiary’s insolvency or bankruptcy, the beneficiary’s creditors generally cannot compel turnover of the trust corpus or force distributions.

## Conclusion

The Supreme Court of Ohio upheld the constitutionality of Ohio’s federal certification procedure and confirmed that spendthrift trust protections are enforceable under Ohio law, validating a testamentary trust structure that shifted to discretionary administration upon the beneficiary’s insolvency or bankruptcy.


Scott v. Bank One Tr. Co., N.A., 62 Ohio St. 3d 39, 577 N.E.2d 1077 (Ohio 1991)