A spendthrift trust is supposed to be a wall. Someone sets up a trust for a family member, adds language saying creditors cannot touch it, and the money stays out of reach even if the beneficiary gets sued and loses. That is the whole point. But a wall is only as good as the words that build it, and creditors have gotten very good at looking for cracks.
Here is the crack most creditors aim at. Spendthrift protection rests on the idea that the trustee decides whether and when to pay. If a trust instead orders the trustee to pay a fixed amount on a fixed schedule, the beneficiary has something close to a vested right to that money, and many trust statutes let a creditor reach it. So the fight becomes a fight over a single word: is this distribution mandatory or discretionary? And what happens when the trust document itself has a section titled “Mandated Distribution of Income”?
The Dallas Court of Appeals answered that question in Lopez-Garcia v. deLemos, No. 05-25-00092-CV (Tex. App.—Dallas May 12, 2026) (mem. op.). A judgment creditor holding a $1.3 million judgment went after a trust that had grown past $2.2 million, pointing straight at that section title. The court had to decide whether a heading that says “Mandated” actually mandates anything, and whether the creditor could get past the trust’s spendthrift clause.
Facts & Procedural History
On October 11, 2013, Roger and Lourdes Vales won a judgment in Maryland against Dorita deLemos Down for $1,324,875.09. Less than a month later — on November 5, 2013 — Dorita’s husband, Harry Down, Jr., created the Harry W. Down, Jr. Trust. Harry was the trustee. Dorita was the beneficiary. The timing tells you everything you need to know about why the trust was created, and nobody in the case pretended otherwise.
Harry named his stepson, Pedro Andre Rodriguez deLemos, as successor trustee. Harry died, and Pedro took over as trustee on January 17, 2017. The trust held “a little over $1 million” at that point. By an Edward Jones statement dated October 27, 2023, it was worth $2,264,371.24.
Dorita moved to Texas in 2020. The Valeses domesticated their Maryland judgment in Dallas County, in Cause No. CC-19-05078-E in Dallas County Court at Law No. 5. Then, on December 3, 2021, Nestor J. Lopez-Garcia — appointed as receiver for the Valeses — filed an Application for Writ of Garnishment After Judgment against Pedro in his capacity as trustee. A garnishment is how a judgment creditor reaches money a third party is holding for the debtor. The receiver’s theory was that the trust was holding money that belonged to Dorita.
Pedro pushed back. On August 19, 2022, he filed a petition for declaratory judgment asking the court to construe the trust as a discretionary spendthrift trust. If he was right, the creditors were done.
The receiver amended his application on November 15, 2023 and sharpened the argument. He claimed the trust required mandatory quarterly distributions of net income to Dorita, and that Pedro had simply stopped making them in September 2019. He pointed to section 14.5-506 of the Maryland Estates and Trusts Code, which lets a creditor reach a mandatory distribution the trustee has failed to make on time — spendthrift clause or not. Everyone agreed Maryland trust law governed the instrument.
The case was tried to the bench in Dallas County Probate Court No. 2, Cause No. PR-22-02702-2. Pedro testified that when an attorney drafted the trust for Harry, he knew about the Maryland judgment and encouraged Harry to include a spendthrift provision. Pedro said he administered the trust as a spendthrift trust and paid Dorita monthly distributions between $1,000 and $3,000. He denied that he stopped the quarterly payments just to keep the Valeses from collecting.
On October 25, 2024, the trial court signed an order denying the garnishment application, along with thirteen findings of fact and conclusions of law. The key ones: the trustee held no property belonging to Dorita and nothing she could demand on request; distributions to her were “limited to those necessary for her health, education, maintenance, recreation, or support”; those distributions were “subject to the Trustee’s discretion”; the trust carried spendthrift protections; Harry created the trust “with the intent to protect assets from the creditors of Dorita Down”; and assets held subject to a spendthrift provision “are not available to a beneficiary’s creditors.”
The receiver appealed. He challenged the legal sufficiency of findings 9, 10, and 13 — the discretion and spendthrift conclusions. He did not challenge finding 12, the one about Harry’s intent. That decision came back to hurt him.
How a Spendthrift Trust Blocks Creditors, and Where the Exception Lives
To understand why the receiver lost, you first have to understand what a spendthrift trust actually does and where the law leaves a creditor an opening.
A spendthrift trust restricts the beneficiary’s ability to transfer their interest in the trust, whether voluntarily or involuntarily. Involuntarily is the part creditors care about — a creditor grabbing the interest through a garnishment or a lien is an involuntary transfer, and a spendthrift clause blocks it. The beneficiary gets the benefit of the money when the trustee hands it over, but has no interest a creditor can attach before that.
Texas recognizes the same device, though the rule lives in the Property Code, not the Estates Code. Texas Property Code § 112.035(a) says a settlor may provide in the terms of the trust “that the interest of a beneficiary in the income or in the principal or in both may not be voluntarily or involuntarily transferred before payment or delivery of the interest to the beneficiary by the trustee.” Subsection (b) adds that simply declaring the interest is held subject to a “spendthrift trust” is enough to restrain alienation “to the maximum extent permitted by this subtitle.” Texas also draws a hard line most people miss: under § 112.035(d), if the settlor is also a beneficiary, a spendthrift clause will not stop the settlor’s own creditors. You cannot build a wall around your own money and then stand behind it.
Maryland’s version, which controlled here, is in the Maryland Trust Act. The General Assembly passed the Act in 2014 and it took effect January 1, 2015, adding Title 14.5 to the Estates and Trusts Code. It applies to all trusts created before, on, or after that date, but not to judicial proceedings commenced before January 1, 2015 or to acts done before then. This garnishment started in December 2021 and the receiver alleged no pre-2015 acts, so the Act applied in full.
Two Maryland provisions did the heavy lifting. Section 14.5-504(a) states that a “spendthrift provision is valid and enforceable.” Section 14.5-504(c) states that “[a] beneficial interest that is subject to a spendthrift provision may not be judicially foreclosed or attached by a creditor.” That is the wall.
Section 14.5-506(b) is the crack. It provides that “a creditor or an assignee of a beneficiary may reach a mandatory distribution of a trust if the trustee has not made the distribution to the beneficiary within a reasonable time after the designated distribution date, whether or not the trust contains a spendthrift provision or a support provision.” Read that carefully, because the structure is everything. The exception only opens if the distribution is mandatory. If the trustee has discretion, there is no mandatory distribution, there is no missed distribution date, and the exception never gets off the ground. The receiver’s entire case had to clear that one threshold.
Why the Court Read “Mandated Distribution of Income” as Discretionary
The court reviewed the trial court’s conclusions of law de novo. It also noted something worth remembering: the trial court had listed all thirteen items as “findings of fact and conclusions of law” without separating them, and the labels do not bind the appellate court. What matters is what the item actually is. The court treated items 10 and 13 as conclusions of law. It refused to reach item 9 at all, because the receiver cited no legal authority supporting a challenge to it — an inadequately briefed issue is a waived issue under Texas Rule of Appellate Procedure 38.1(i).
On the merits, Maryland courts read a trust to find the settlor’s intent, and that focus makes trust interpretation different from contract interpretation, where courts chase the mutual intent of two bargaining parties. As Vito v. Grueff, 160 A.3d 592 (2017), puts it, “[o]ne of the fundamental rules of construction is that the intention of the [settlor] must govern if consistent with the rules of law, and this intention must be gathered from the entire instrument.” The method is sequential: read the clause in question, then read the whole instrument if the clause alone will not resolve it, then — only if ambiguity survives — look outside the document.
So the court started with the clause. Section 4.a. of the trust, titled “Mandated Distribution of Income,” reads:
The Trustee shall pay the entire net income from the “Family Trust” to, or for the benefit of, the Settlor or spouse in quarter-annual or more frequent installments during the Settlor’s spouse’s lifetime unless the Trustee is permitted to otherwise exercise his discretion without affecting the tax benefits of the “Family Trust.”
The receiver read the first half of that sentence and stopped. “Shall pay.” “Entire net income.” “Quarter-annual.” Add the section heading and you have what looks like a mandatory quarterly payment obligation.
The court rejected that reading on two grounds. First, the title is not the provision. Quoting Matter of Albert G. Aaron Living Tr., 181 A.3d 703, 710 (2018), the court noted that “[w]here possible, and in accord with the objects and purposes of the trust, all of the language in a trust agreement should be given effect.” A heading is one piece of language among many, and it does not get to override the operative text underneath it.
Second — and this was the decisive point — the receiver ignored the rest of the sentence. The clause ends “unless the Trustee is permitted to otherwise exercise his discretion without affecting the tax benefits of the ‘Family Trust.'” That qualifier puts trustee discretion directly into the middle of a provision labeled as mandatory. The mandatory duty is real, but it is conditioned. And a duty a trustee can decline to perform is not a mandatory distribution within the meaning of § 14.5-506(b).
The receiver had a backup argument that also failed. He said section 4.a. could not be a “discretionary distribution provision” as Maryland defines that term, because § 14.5-103(g)(1) describes a provision giving the trustee discretion over whether to distribute or over the amount, and section 4.a. did neither. The court called that an overly narrow reading, and it was — the receiver stopped reading one subsection too early. Section 14.5-103(g)(2)(ii) says a discretionary distribution provision “includes a provision in a trust instrument that contains a spendthrift provision.” Harry’s trust had one. It stated that “[n]o such income or principle, in whole or in part, shall in any way be payable to [the] claim of any creditor, by any kind of legal or equitable process (including bankruptcy proceedings), in satisfaction of any debt or liability no matter when incurred in regard to any such beneficiary.” Under Maryland’s own definition, the presence of that clause brought the trust inside the discretionary category.
Then the unchallenged finding closed the door. Finding 12 said Harry created the trust intending to protect the assets from Dorita’s creditors. The receiver never attacked it. An unchallenged finding of fact is binding on appeal and carries “the same position and [is] entitled to the same weight as the verdict of a jury.” Borgelt v. Austin Firefighters Ass’n, IAFF Local 975, 692 S.W.3d 288, 298 n.8 (Tex. 2024) (quoting McGalliard v. Kuhlmann, 722 S.W.2d 694, 696 (Tex. 1986)). So the appellate court was required to accept, as established fact, the exact proposition the receiver needed to disprove. Both parties agreed section 4.a. was unambiguous, so extrinsic evidence was not needed — but the court observed that finding 12 pointed the same direction anyway.
The conclusion followed cleanly. Distributions were discretionary. Discretionary distributions subject to a spendthrift provision are not available to a beneficiary’s creditors under § 14.5-504(c). And because the distributions were never mandatory, § 14.5-506(b) had nothing to operate on. The court overruled the receiver’s first issue, did not reach the second, and affirmed the denial of the writ of garnishment.
The Takeaway
A trust is read as a whole sentence, not as a headline. Lopez-Garcia is a $2.2 million example of what happens when a creditor builds a case on a section title and the first half of a clause. The word “unless” at the midpoint of section 4.a. was worth more than everything before it.
If you are a beneficiary or a family member relying on a trust for protection, the lesson is that discretionary language plus a spendthrift clause is a durable combination, even against a creditor who knows the trust was set up specifically to frustrate him. Pedro admitted on the stand that the drafting attorney knew about the Maryland judgment and recommended the spendthrift provision anyway. That did not sink the trust. The court’s job was to find Harry’s intent, and Harry’s intent — to keep the money away from Dorita’s creditors — was exactly what the instrument accomplished.
If you are the creditor, understand how narrow the path is. You need a genuinely mandatory distribution, a missed distribution date, and an unreasonable delay. A conditional “shall” will not get you there. And be careful about which findings you leave alone on appeal — the receiver’s decision not to challenge the finding on Harry’s intent handed the other side a binding fact on the central question.
For anyone drafting, the practical point is to stop relying on section headings to carry meaning. If distributions are meant to be mandatory, say so in the operative text and do not bury a discretion carve-out at the end of the sentence. If they are meant to be discretionary, say that too, and pair it with a spendthrift clause. The trust in this case survived a determined, well-funded attack — but it survived on a qualifier that reads like an afterthought, and that is a thin margin to plan around.
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