Chapter 2 - § 2.10 • POWER OF APPOINTMENT AS PROPERTY: COOLEY AND RUML

• Jurisdiction: Colorado

§ 2.10 • POWER OF APPOINTMENT AS PROPERTY: COOLEY AND RUML

§ 2.10.1—Cooley v. Cooley

A non-general power of appointment exercisable by the husband during his lifetime or by will in favor of the wife or the husband's brothers was held not to be a part of the marital estate and therefore not subject to the court's dispositional power in a divorce in Cooley v. Cooley.²⁸¹

The Connecticut Court of Appeals in Cooley ruled that "[t]he trial court properly refused to order the [husband] to exercise his [non-general] power of appointment. . . ."²⁸² The court distinguished a non-general power of appointment from a general power of appointment, noting that "'[w]here . . . a general power has been created, the donee is substantially in the position of an owner,'"²⁸³ but in a case of a non-general power, the power holder "has no interest, beneficial or otherwise. . . ."²⁸⁴

§ 2.10.2—Ruml v. Ruml

In a case involving egregious facts, the Appeals Court of Massachusetts in Ruml v. Ruml²⁸⁵ upheld a decision that awarded the wife all of the trust property of a trust created by the husband for the benefit of his "spouse and children" over which the husband held a non-general power of appointment exercisable in favor of a broad class of appointees, which included the spouse of the settlor.²⁸⁶ The third-party trustee was not a party to the divorce action. The husband was ordered "to assign to the wife all of the [trust property],"²⁸⁷ but apparently did not. The trial court simply awarded the trust property to the wife, and the appellate court affirmed that decision.

Generally, it is the "value" of a trust interest that is awarded by the divorce court. Even when egregious circumstances exist, there is no basis for a court to award the property of a trust without having jurisdiction over the trustee.²⁸⁸

Ruml stands for the questionable proposition that a court may order a spouse to exercise a non-general power of appointment over a trust in favor of the other spouse even though the husband held no beneficial interest in the trust.

The Appeals Court of Massachusetts affirmed the trial court's award of the trust property to the wife, even though the husband failed to exercise the power of appointment in compliance with the court's order and the absence of the trustee in the divorce proceedings. This aspect of the Ruml opinion is even more questionable. Ruml may be best explained by the axiom that bad facts make bad law.

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Notes:

^[281] Cooley v. Cooley, 628 A.2d 608 (Conn...