State Street Bank and Trust Co. v. Reiser

State Street Bank and Trust Co. v. Reiser case brief summary
389 N.E.2d 768 (1979)

CASE SYNOPSIS

Plaintiff bank commenced an action in the Probate Court for the County of Suffolk (Massachusetts) seeking payment from defendants, trustee and others, of monies owed the bank by decedent inter vivos trust settlor.

CASE FACTS
The settlor transferred the majority of assets to an inter vivos trust prior to obtaining a personal loan from the bank. The probate court found that such was done without fraudulent intent. The settlor died before repaying the loan, and the settlor's estate was insufficient to repay the balance owed. In creating the trust, the settlor retained the power to amend or revoke and the right to direct the disposition of principal and income.

DISCUSSION

• The court held that because the settlor had retained such authority during life that the bank could reach the trust assets to pay the settlor's debts after death to the extent that the settlor's estate was insufficient to satisfy such debts. 
• The bank's access to trust assets was limited to those assets over which the settlor had retained control during the settlor's lifetime.

CONCLUSION

The judgment was reversed, and a new judgment was to be entered declaring that the assets owned by the trust up to the time of the settlor's death could be reached and applied in satisfaction of a judgment entered in favor of the bank against the estate of said settlor, to the extent assets of the estate were insufficient to satisfy such a judgment.

Suggested Study Aids For Wills, Trusts & Estate Law