Are distributions from a Delaware statutory trust to beneficial owners subject to garnishment by a creditor? In Protech Minerals v. Dugout Team, No. 288, 2021, 2022 WL 4004606 (Del. Sept. 2, 2022), the Delaware Supreme Court affirmed that trust distributions are personal property subject to garnishment. The court declined to consider whether the result would be different if the trust were a spendthrift trust.

A Delaware statutory trust is a legal entity created to hold title to income producing properties. It is sometimes referred to as an unincorporated business trust. A Delaware statutory trust is created by a written instrument—whether referred to as a trust agreement, declaration of trust or otherwise—under which either property (real, tangible and intangible) is held, managed, administered, invested and/or operated; or business or professional activities for profit are carried on by one or more trustees for the benefit of the trustor who holds a beneficial interest in the trust property.

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