Chapter 2 - § 2.5 • RIGHTS IN MULTI-GENERATIONAL TRUSTS DIVISIBLE IN SOME STATES
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§ 2.5 • RIGHTS IN MULTI-GENERATIONAL TRUSTS DIVISIBLE IN SOME STATES
Some courts have determined that a beneficiary's bundle of rights in a trust, though discretionary or usufructuary in nature, can constitute a property interest subject to division.
In the Massachusetts case of Comins v. Comins,159 the marital estate included the wife's interest in a trust settled by her father. A bank, in its discretion as trustee, was to pay to the wife income and principal for the wife's "comfort, welfare, support, travel and happiness. . . ."160 The wife held a power to appoint the trust principal at her death, and if the power was not exercised, the remainder was to be distributed by representation to her heirs.161 The opinion does not state whether the power of appointment was a general or special power. The court determined that the wife had a present, enforceable, equitable right to use the trust property and included the trust in the marital estate.162
In D.L. v. G.L.,163 the same court stated that a judge is not necessarily precluded from including a discretionary trust in the marital estate; rather, "the trust instrument and other relevant evidence must be examined closely to determine whether that party's interest is too remote."164
The Appeals Court of Massachusetts affirmed a trial court's inclusion in the marital estate of an apparent multi-generational trust valued at approximately $5 million in Caruso v. Caruso.165 The trust was created by the husband's father and named the husband and his issue as beneficiaries. Other dispositive provisions of the trust are not disclosed. The husband and his family's long-time accountant were the trustees. Distributions could not be made to the husband without the accountant-co-trustee's consent. The trust held stock of a family business, which the husband managed. The trial court held that the husband's beneficial interest was not too remote because the accountant "was in reality little more than the husband's 'yes man,' who would go along with anything the husband wanted."166 The trial court found that the beneficial interest, "far from being remote or 'speculative,' was 'real and equitable.'"167 The beneficial interest was, according to the court, "in practical effect complete and immediate" and it was not error to include the trust in the marital estate.168 In dividing the marital estate, the trust was awarded to the husband.
Oregon law also permits a usufructuary-type interest in trust to be divided in a property division. In In re Marriage of Taylor,169 the husband was entitled to income and discretionary distributions from a trust, and apparently, no required distribution of trust principal was to be made to him during his life.170 The court held that the interests were subject to division.171
In the Missouri case of Moore v. Moore,172 the wife was a beneficiary and the sole trustee of two trusts referred to as the "Descendant's Trust" and the "Exempt Trust." All of the trust income was required to be distributed to the wife, and the wife was entitled to distributions of principal for her maintenance, support, health, or education.173 The dispositive provisions of the trust applicable upon the wife's death were not disclosed. Apparently, the trust interests were characterized by the court as the wife's non-marital property and, as a consequence, the income from the trusts was marital property under Missouri law.174 Compelling to the court was that the wife was both "the sole trustee and sole beneficiary of each trust" and thereby held "both equitable and legal title."175 The court equated the wife's rights in the trust to a right to withdraw all of the trust property and held that the distributions of trust income to the wife were thereby marital property.176
Arguably, Moore may be cited for the proposition that multi-generational trusts of which a spouse is the sole trustee and sole current beneficiary...
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