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Pfannenstiehl v. Pfannenstiehl: Husband's Interest From Trust Part of Martial Property

Pfannenstiehl v. Pfannenstiehl: Husband's Interest From Trust Part of Martial Property

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’ children. Id.

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 family lawyer. 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. Id.

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.

If you are going through a divorce in Framingham, contact Barach Law Group LLC for experienced and compassionate legal representation. Free consultation offered.

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