Skip to main content

Trusting the Trust: the Pfannenstiehl Redux

Guest Post from Beth Aarons*

Massachusetts estate planners enjoyed a collective sigh of relief as the Supreme Judicial Court (SJC) agreed to further appellate review of the Pfannenstiehl’s plight to determine whether the husband’s interest in his family’s trust should be divisible as a marital asset during divorce.  The SJC issued an opinion that such a trust should not be divided as part of the marital property.  [SJC-12031]

When the Pfannenstiehls appeared in case law three years ago, the MA Appeals Court had upheld the Probate and Family Court’s determination that the husband’s one-eleventh fractional beneficial interest in his family’s trust balance (there were 11 living beneficiaries at the time) was a marital asset, with 60% of his one-eleventh share to be paid to the wife as part of the property division in their divorce.  The class of trust beneficiaries was open to include any future descendants of the donor, but the lower court used the existing number of beneficiaries to calculate the value as the husband’s present interest.

The estate planning community was roiling in confusion, since the Pfannenstiehl family trust had elements that estate planners regularly rely upon for the protection of their clients’ assets: completely discretionary distributions, a spendthrift clause, and co-trustees, including one disinterested trustee.  Estate planners were scratching their heads and regrouping at the drawing board.  Wasn’t the point of establishing this type of trust to prevent exactly the scenario that occurred?  Shouldn’t the trust protect the family’s assets from creditors and transfers outside of the family blood line during a beneficiary’s divorce?  If not, what’s the point of creating a trust at all?  The bullet-proof language had suddenly been pierced and in that moment all similar trusts were potentially at risk.

So imagine the relief brought by the SJC’s opinion, restoring established expectations to the world of trust provisions.  It should be noted that the specific facts in Pfannenstiehl relating to the trust distributions and the particular terms of the trust factored into the SJC’s decision.  The conclusion is not that trusts are globally excluded from consideration as marital property during a divorce, but that with the right facts and circumstances, they still can be.


*Beth Aarons is a Mediator and Collaborative Law attorney who runs her own practice in Newton and is of counsel to Skylark Law & Mediation, P.C. Beth's practice includes family law mediation, collaborative divorce representation, and estate planning, trusts and probate practice. Click here to learn more about Beth or here to schedule an appointment with Beth.

Comments

Popular posts from this blog

New Massachusetts Child Support Guidelines (2021): Big Changes, Little Changes, Typos & some Unexpected Results

UPDATE: The court has released a web calculating version of the 2021 MA Child Support Guidelines Worksheet .  It resolves some of the typos referred to below, but the unexpected calculations still apply. Every four years, per federal mandate, the Massachusetts Probate & Family Court revisits the Child Support Guidelines through the work of a Task Force appointed by the Chief Justice.  The 2021 Massachusetts Child Support Guidelines were recently posted.  They take effect on October 4, 2021.    If you are interested in a training on all of these changes to the new Child Support Guidelines: DMTA Presents the 2021 MA Child Support Guidelines Update  – Attend this event to learn the key updates you need to know for your mediation clients. Presented by Justin Kelsey of  Divorce Mediation Training Associates  and  Skylark Law & Mediation, PC . For a full comparison of all the  tracked changes between the 2018 and 2021 Massachusetts Child Support Guidelines you can download a pdf sho

What is the purpose of the Divorce Nisi waiting period?

In Massachusetts the statutory waiting period after a Judgment of Divorce and before the divorce becomes final (or absolute) is called the Nisi period. After a divorce case settles or goes to trial, a Judgment of Divorce Nisi will issue and it will become Absolute after a further ninety (90) days. This waiting period serves the purpose of allowing parties to change their mind before the divorce becomes final. If the Judgment of Divorce Nisi has issued but not become final yet, and you and your spouse decide you don't want to get divorced, then you can file a Motion to Dismiss and the Judgment will be undone. Although many of my clients who are getting divorced think the idea of getting back together with their ex sounds crazy, I have had cases where this happened. In addition to offering a grace period to change your mind, the Nisi period has three other legal effects: 1. The most obvious effect of the waiting period is that you cannot remarry during the Nisi period, be

Online Tool for Creating Parenting Plans

It is our hope that all families find a way to resolve conflict peacefully.  This is especially true when children are involved.  Divorced or separated parenting has many complications and the first is just deciding how to share time with a child from two separate households.  Developing a schedule can result in a lot of tension, especially if parents have trouble picturing how this new schedule will interact with their work schedules and the schedules of their children. To help make this easier, we've created an online tool for creating parenting plans that is simple and easy to use: We encourage parents, regardless of the process they are using to divorce, to use this form to assist in evaluating and settling custody disputes. The form allows you to choose between the Model Parenting Plan proposals or customize your parenting plan over a four week period by clicking directly on the form.  When you click on a section of the calendar it switches between Mom and Dad, an