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Grandson’s Creditors Can Not Reach Spendthrift Trust Assets

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Kyle Krueger


When Kyle Krueger’s grandmother established a trust for him in 1985, she may or may not have known how the 19-year-old would turn out. For whatever reason, she locked up his trust benefits until his fiftieth birthday. As it turned out, her decision was good for Mr. Krueger—but not so good for the victims of his later acts.

In 1998 Mr. Krueger (by then 32 years old) was sued by the mother of a young boy. She alleged that he not only had sex with her two-year-old son, but that he also videotaped the act and made it available over the internet. She got a court judgment against Mr. Krueger for $551,286.25.

Criminal charges were also filed against Mr. Krueger for his actions. He faced a lengthy prison sentence and little likelihood of release back into the community any time soon.

The child’s mother sought to collect her judgment from the proceeds of the trust Mr. Krueger’s grandmother had set up. She faced one major obstacle, however: the trust included what is usually called “spendthrift” language. That meant that the trustee was prohibited from paying anything directly to Mr. Krueger’s creditors, regardless of the circumstances.

Spendthrift provisions are common in trusts for the benefit of someone other than the person who establishes the trust. Though it may be difficult or impossible to restrict the availability of one’s own assets when placed in a trust, the general rule is that money set aside for the benefit of another person can be subjected to such a restriction. In fact, that is one of the primary reasons for many trusts—to protect beneficiaries from their own inability to handle funds in the future.

The victim’s mother argued that this case should be treated differently, however. She insisted that the rules should not permit the retention of funds to benefit an individual after such a heinous criminal act. In fact, she argued, the original purpose of the trust (to help care for Mr. Krueger) could no longer be met—precisely because he would likely be in prison past his fiftieth birthday.

State law in New Hampshire (like the law in most states, including Arizona) permits establishment of a spendthrift trust for another person. Even though Mr. Krueger’s later behavior was inexcusable, his grandmother’s money was set aside for his benefit and should not be reachable by his creditors, said the state Supreme Court.

A long prison sentence would not prevent the trust money from benefiting him, the court noted. Neither did it make any difference that the trust allowed Mr. Krueger to decide who would receive the balance if he died before fifty. The analysis makes it clear: the money in his grandmother’s trust did not belong to Mr. Krueger, and he did not have the power to lose it by even the most reprehensible actions. Scheffel v. Krueger, July 26, 2001.


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Robert B. Fleming


Robert Fleming is a Fellow of both the American College of Trust and Estate Counsel and the National Academy of Elder Law Attorneys. He has been certified as a Specialist in Estate and Trust Law by the State Bar of Arizona‘s Board of Legal Specialization, and he is also a Certified Elder Law Attorney by the National Elder Law Foundation. Robert has a long history of involvement in local, state and national organizations. He is most proud of his instrumental involvement in the Special Needs Alliance, the premier national organization for lawyers dealing with special needs trusts and planning.

Robert has two adult children, two young grandchildren and a wife of over fifty years. He is devoted to all of them. He is also very fond of Rosalind Franklin (his office companion corgi), and his homebound cat Muninn. He just likes people, their pets and their stories.

Elizabeth N.R. Friman


Elizabeth Noble Rollings Friman is a principal and licensed fiduciary at Fleming & Curti, PLC. Elizabeth enjoys estate planning and helping families navigate trust and probate administrations. She is passionate about the fiduciary work that she performs as a trustee, personal representative, guardian, and conservator. Elizabeth works with CPAs, financial professionals, case managers, and medical providers to tailor solutions to complex family challenges. Elizabeth is often called upon to serve as a neutral party so that families can avoid protracted legal conflict. Elizabeth relies on the expertise of her team at Fleming & Curti, and as the Firm approaches its third decade, she is proud of the culture of care and consideration that the Firm embodies. Finding workable solutions to sensitive and complex family challenges is something that Elizabeth and the Fleming & Curti team do well.

Amy F. Matheson


Amy Farrell Matheson has worked as an attorney at Fleming & Curti since 2006. A member of the Southern Arizona Estate Planning Council, she is primarily responsible for estate planning and probate matters.

Amy graduated from Wellesley College with a double major in political science and English. She is an honors graduate of Suffolk University Law School and has been admitted to practice in Arizona, Massachusetts, New York, and the District of Columbia.

Prior to joining Fleming & Curti, Amy worked for American Public Television in Boston, and with the international trade group at White & Case, LLP, in Washington, D.C.

Amy’s husband, Tom, is an astronomer at NOIRLab and the Head of Time Domain Services, whose main project is ANTARES. Sadly, this does not involve actual time travel. Amy’s twin daughters are high school students; Finn, her Irish Red and White Setter, remains a puppy at heart.

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Matthew M. Mansour


Matthew is a law clerk who recently earned his law degree from the University of Arizona James E. Rogers College of Law. His undergraduate degree is in psychology from the University of California, Santa Barbara. Matthew has had a passion for advocacy in the Tucson community since his time as a law student representative in the Workers’ Rights Clinic. He also has worked in both the Pima County Attorney’s Office and the Pima County Public Defender’s Office. He enjoys playing basketball, caring for his cat, and listening to audiobooks narrated by the authors.