On August 27, 2015, the Appeals Court of Massachusetts issued a decision
affirming the lower court’s amended judgment, which included as
part of the
marital estate the husband’s interest as beneficiary of an irrevocable trust established
by the husband’s father for the benefit of his three children.
See Pfannenstiehl v. Pfannenstiehl, 88 Mass. App. Ct. 121, 124 (2015). The husband points to a spendthrift clause in the trust, but the Court
looked heavily to the history of distributions to conclude that the husband’s
interest in the trust should be included in the marital estate for division
pursuant to M.G.L. c. 208, § 34.
Id. at 122-3.
The parties were married in 2000 and had two children, both with special
needs. The husband worked as an assistant manager at a bookstore at a
college that was run by the husband’s family. His salary was $170,000
per year, which the Court noted was significantly higher than a salary
typical for that position and credited the increase to his familial relations.
Id. at 125. The wife was an officer in the United States Army Reserves and
was encouraged to retire two years shy of qualifying for a military pension
by the Husband and his family.
Id. At the time of this decision, the wife worked as an ultrasound technician
and worked only one day a week earning a gross income of $22,672.
Id. The wife was found to be the primary homemaker and caretaker of the parties’
The Court discusses the trust in great detail. There are two trustees –
one is the husband’s twin brother, and the other is a long-time
Id. at 128. The three beneficiaries, the husband and his two siblings, were
regularly receiving distributions identical to one another’s.
Id. at 129-130. The Court developed a chart that demonstrates an abrupt cutoff
of distributions to the Husband, but not his two siblings, the month prior
to that in which the husband filed for divorce.
Addressing the spendthrift provision, the Court relies on principles of
fairness, and asserts that “[t]he law does not require that an obligor
be allowed to enjoy an asset—such as a valuable home or the beneficial
interest in a spendthrift trust—while he neglects to provide for
those persons whom he is legally required to support.”
Id. at 132, quoting
Krokyn v. Krokyn, 378 Mass. 206, 213-214, 390 N.E.2d 733 (1979). The Court cites various
case law rendering a trust with a spendthrift clause includable when looking
at a marital estate for purposes of § 34.
Id. Further, the Court notes that this is not a wholly discretionary trust,
but the trustees are directed to make distributions “for the confortable
support, health, maintenance, welfare and education of each or all [beneficiaries].”
Id. at 132. Therefore, the trust meets the ascertainable standards.
Id. at 133.
The husband appealed the Appeals Court decision to include his interest
in the trust in the marital estate for division to the Massachusetts Supreme
Judicial Court. Arguments are set to be heard in April of 2016 and the
husband’s brief is due February 19, 2016. Stay tuned for now. But
keep in mind that any assets that becomes part of the fabric of a marriage
including those “protected” by a trust may end up as an asset
to be divided within the marital estate.