IBA Compliance Connection

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We received a non-wage garnishment order naming both John and Jane Doe as judgment debtors. Their only account at our bank is a revocable living trust account (titled “The John and Jane Doe Living Trust”), for which they are both named as trustees. They created the trust and are its only two beneficiaries. The garnishment is not for child support obligations. Is the trust account subject to the garnishment order?

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Yes, we believe the trust account is subject to the garnishment order.

Under Illinois law, a debtor’s interest in trust funds is subject to garnishment, provided that the trust was self-settled — that is, created by the debtor himself for his own benefit. In this case, you have indicated that the debtors established their trust account for their own benefit. Consequently, we believe the account is accessible by creditors.

For resources related to our guidance, please see:

  • 735 ILCS 5/2-1403 (“No court, except as otherwise provided in this Section, shall order the satisfaction of a judgment out of any property held in trust for the judgment debtor if such trust has, in good faith, been created by, or the fund so held in trust has proceeded from, a person other than the judgment debtor.”)
  • Illinois Supreme Court, Rush U. Med. Ctr. v. Sessions, 980 N.E.2d 45, 54 (Ill. 2012) (“That section [735 ILCS 5/2–1403] provides for a general exclusion from postjudgment execution on property held in trust for the judgment debtor, but it expressly limits that exclusion to trusts that are not self-settled . . . The clear corollary is that Illinois law allows execution by a creditor against assets held in a self-settled trust . . .”)