There is some uncertainty as to whether and under what circumstances a revocable trust created by a decedent prior to death would be subject to the claims of the decedent’s creditors after the decedent settlor’s death. Now the Sixth District Court of Appeals of Ohio has weighed in on this issue in Watterson v. Burnard, 986 N.E. 2d 604 (Ct. App. Ohio, February 1, 2013).
In this case, Brad Watterson was injured in an auto accident caused by Barthel Burnard. Brad then filed suit against Barthel, but while the personal injury case was pending, Barthel died. Prior to her death and actually prior to the accident, Barthel had created and funded a revocable trust. After Barthel’s death, Brad sought declaratory and injunctive relief that Barthel’s trust would be available to satisfy any judgment he might obtain in his personal injury case. Barthel’s Trustee argued that Brad’s right to access Barthel’s revocable trust to collect on a judgment ceased when Barthel died. The trial court agreed, stating that as a matter of law the assets in a revocable trust would cease to be available to a creditor unless the creditor’s claim was reduced to a judgment prior to the settlor’s death. (more…)