Chatard

INTRODUCTION

This appeal raises the issue whether the beneficiary of a spendthrift trust who also acts as trustee and commits a breach of trust causing financial harm to the trust can have her interest in the trust estate impounded to satisfy a claim arising from her misfeasance. Because the damage resulting from the trustee’s breach of her fiduciary duty will otherwise be sustained by the beneficiaries, we hold that the trustee’s interest can be reached to satisfy the claim notwithstanding the existence of the spendthrift provision. We therefore affirm the trial court’s order directing that its surcharge order upon former trustee appellant Joyce Chatard be satisfied from her distributive share of the trust estate.

FACTUAL AND PROCEDURAL BACKGROUND

In 1989, Frederic and Vera Chatard, husband and wife, created the Chatard Family Trust (the Trust), naming themselves as beneficiaries. The Trust provides for the distribution of income and principal to them during their joint lifetimes. Upon the death of the first of them, the Trust divides into two subparts, Trusts A and B. Income and principal from each subpart are distributed to the surviving spouse. Upon the death of…