## Facts

- A testator created a testamentary trust naming a bank as trustee, paying all trust income to the testator’s wife for life, then paying all income to the testator’s son (Grant) for life.
- The will required periodic income payments to Grant and included a spendthrift clause restricting transfer and creditor reach as to both income and principal.
- After Grant reached age 30, the trustee had discretion to distribute all or part of the principal to Grant, conditioned on an additional written approval by a designated third party.
- Grant had children from two marriages; divorce decrees required him to pay child support, and one decree also required alimony.
- Grant failed to pay support, disappeared, and his former spouses and children sought to satisfy their judgments from his beneficial interest in the trust.
- The trustee filed an interpleader action to determine whether the claimants could reach (1) mandatory income payable to Grant and (2) potential discretionary distributions of principal.
- The trial court broadly subjected both income and principal to the support claims and certain creditor claims; the trustee appealed.

## Issues

1. Whether a spendthrift clause bars claims for unpaid alimony and child support against a beneficiary’s mandatory income interest in a testamentary trust.
2. Whether a spendthrift clause bars such support claims against discretionary distributions of trust principal where the beneficiary cannot compel distribution.

## Decision

- The Oregon Supreme Court affirmed as modified.
- The court held that the spendthrift clause did not prevent the former spouse and children from reaching trust income that the trustee was required to pay to Grant.
- The court held that the support claimants could not compel, and could not reach, discretionary distributions of principal because Grant had no enforceable right to demand corpus distributions.

## Legal Principles

- Spendthrift provisions generally restrain alienation and creditor reach, but they may yield to public policy protecting enforcement of alimony and child-support obligations.
- A beneficiary’s mandatory right to trust income is a presently enforceable interest that may be reached to satisfy support judgments despite spendthrift language.
- A beneficiary’s interest in discretionary principal distributions is not a presently enforceable right; where the beneficiary cannot compel payment, creditors (including support claimants) cannot compel payment.
- Courts may distinguish between mandatory payments (attachable) and discretionary benefits (not attachable) when evaluating creditor access to trust interests.

## Conclusion

The court permitted enforcement of child-support and alimony judgments against a spendthrift trust’s mandatory income payments to the beneficiary, while preserving spendthrift protection for discretionary principal by refusing to allow creditors to force distributions the beneficiary himself could not compel.


Shelley v. Shelley, 223 Or. 328, 354 P.2d 282 (Or. 1960)