Does Georgia have it Right when it comes to Tort Victims and Spendthrift Trusts?

This guest post is by Nick Johnson, Regent Law 3L, and current Wills, Trusts & Estates student:

There is a general idea that permeates throughout the country . . . when someone is wronged and we can show causation and injury, the wrongdoer should compensate the victim. A fairly basic concept. But when it comes to spendthrift trusts and tort victims, only one state, Georgia, is clear on allowing a tort victim to recover from a perpetrator’s spendthrift trust. See Ga. Code Ann. § 53-12-80(d)(3) (2016).

Starting with the basics, a spendthrift trust allows a settlor (person creating the trust) to protect the beneficiary (person who’s receiving from the trust) by limiting the amount of money that beneficiary is spending and able to take out by parceling out the trust proceeds over time. See UTC § 502. Second, outside claims to a spendthrift trust only have a few exceptions found in Section 503 of the U.T.C. These exceptions are “child support or spousal maintenance, claims from a creditor who provided services to protect the beneficiary’s interest in the trust, and governmental claims authorized by the state or federal law.” UTC § 503. At this moment, thirty-five states have adopted the UTC. What’s a notable exclusion to this exceptions list? You guessed it, tort victims! While most states, if not all 49 other states, don’t protect tort victims, Georgia does. Georgia is the one state with a clear exception for tort victims. See Ga. Code Ann. § 53-12-80(d)(3) (2016).

Why does this matter? Well let’s look at a real-life example of tort victims and trusts (while not perfectly in line with spendthrift trusts, but it’ll get the point across), let’s take a journey back to August of 2019. Who was arguably the most notorious sex trafficker in America at the time? Jeffrey Epstein. We don’t need to get down in the weeds of his entire case or his (disputed) suicide death. But what happened right before his passing? Epstein placed his estate in a trust with the probable intention of keeping the $577 million worth of assets away from his victims. Say Epstein’s trust was a spendthrift trust for his remaining family members. The only state where his victims would have a clear path to recovery would be Georgia. That just doesn’t sit right…that doesn’t sound like justice could be served for his victims in this scenario, unless they can sue in Georgia.

There is a quote attributed to former Supreme Court Justice Potter Stewart that most Americans would agree with, “Fairness is what justice really is.” A rather simple statement, but one that, truth be told, should sink in with everyone. As a fan of states’ rights, I wouldn’t ask for the federal government to somehow create an exception for tort victims with spendthrift trusts by a poorly drafted code from Congress. But other states should take notice of Georgia’s law and consider following in its footsteps. Not only would it bring about justice, but it could make a big difference for a family that’s been victimized by a trust beneficiary.