## Facts

- Frank Gentry created a revocable trust in 1985 that, upon his death, divided the residue into five shares, including one share held in trust for Isabell Gentry’s lifetime.
- The trustee had sole discretion to distribute income and principal “to her or on her behalf,” considering her other available funds.
- Upon Isabell’s death, any remaining balance and accumulated income would be distributed to other designated beneficiaries.
- The trust contained no spendthrift provision.
- Ron R. Wilcox and Nancy Jo Wilcox obtained a money judgment against Isabell Gentry for fraud.
- The Wilcoxes commenced garnishment proceedings against the trustee to reach trust distributions connected to Isabell’s beneficial interest.

## Issues

1. In a discretionary trust lacking a spendthrift provision, may a creditor garnish trustee distributions made to third parties “on behalf of” the beneficiary, as well as distributions paid directly to the beneficiary?
2. Did the intermediate appellate court have authority to reverse, on its own motion, a continuing garnishment order concerning direct payments when that matter was not within the issue presented on appeal?

## Decision

- The Kansas Supreme Court adopted Restatement (Second) of Trusts § 155(2) for this context.
- The Court held that the lower courts erred by distinguishing between distributions paid directly to the beneficiary and distributions paid on the beneficiary’s behalf, and by exempting the latter from garnishment.
- The Court held that the intermediate appellate court lacked jurisdiction to decide, sua sponte, an issue unrelated to the sole issue on appeal, including its reversal of the continuing garnishment order concerning direct payments.
- The Court reversed the rulings that limited garnishment to direct payments and rejected the intermediate court’s sua sponte action regarding the continuing garnishment order.

## Legal Principles

- For a discretionary trust without spendthrift protection, creditor rights to reach trust distributions are governed by Restatement (Second) of Trusts § 155(2) as adopted in Kansas.
- If a creditor may reach distributions made to a beneficiary, the creditor may also reach distributions the trustee makes for the beneficiary’s benefit (including payments to third parties on the beneficiary’s behalf).
- Courts should not permit a payee-based distinction that would allow a trustee to defeat garnishment by routing distributions through third parties.
- An appellate court exceeds its authority when it decides, on its own initiative, an issue not presented and unrelated to the issue on appeal.

## Conclusion

The Kansas Supreme Court held that, absent a spendthrift clause, creditors may garnish discretionary-trust distributions whether paid directly to the beneficiary or paid to others for the beneficiary’s benefit, and it limited appellate review to issues properly presented on appeal.


Wilcox v. Gentry, 254 Kan. 411, 867 P.2d 281 (Kan. 1994)