Divorce disputes involving a spouse's rights as a beneficiary of
a third-party trust are often complex and bitterly contested.
Typically, a beneficiary-spouse will argue that the settlor
(parent) had no intention of subjecting the trust assets to a
property division for the benefit of a former son-in-law or
daughter-in-law, and that the terms of the trust expressly prohibit
the court from invading the trust for this purpose. The
non-beneficiary-spouse will likely argue that he or she made a
substantial contribution to the marriage, and that the family
relied on the trust funds to live, such that a division of some
portion of the trust principal is both warranted and within the
court's authority to divide pursuant to M.G.L. c. 208, § 34. What
is a Probate Court to do?
The Most Recent Controversy
In Pfannenstiehl v. Pfannenstiehl, the Appeals Court
recently upheld a Probate Court decision awarding a non-beneficiary
wife a substantial portion of a marital estate, which included her
husband's interest in a multimillion-dollar irrevocable spendthrift
trust established by the husband's father.1 The Probate
Court valued the husband's beneficial interest in the trust at
approximately $2.3 million.2 Throughout the marriage,
the husband received distributions of income and principal, which
abruptly ceased upon the eve of his filing for divorce.3
The wife, who, at the urging of the husband and his family, gave up
a military career and devoted herself to the care of the parties'
two children, was told that the spendthrift provision of the trust
prohibited the trustees from continuing to issue distributions to
The Probate Court rejected the husband's interpretation of the
trust.5 Appalled by the way the husband's family
suddenly cut off all distributions and used the spendthrift
provision as a shield in the divorce action, the Probate Court
ordered the husband to pay to the wife 60 percent of his share of
the trust, plus a sizeable award of attorney's fees.6
The Appeals Court upheld the Probate Court's ruling that the
husband's interest in the trust was a marital asset for purposes of
calculating an equitable division of marital property pursuant to
M.G.L. c. 208, § 34, because the husband had a present, enforceable
right to distributions based upon an ascertainable
standard.7 The Appeals Court reaffirmed that a trust,
even one with a spendthrift provision, may be included in a marital
estate for purposes of equitable division under § 34.8 A
strong dissent in Pfannenstiehl questioned whether the
husband's interest was sufficiently definite, non-discretionary and
properly valued, as to be includible in the marital
The case is now on further appeal to the Supreme Judicial
Court.10 It has generated a great deal of debate within
the bar over the extent to which trust assets like these can be
protected from the claims of a non-beneficiary
When is a Beneficial Interest in a Trust a Marital
The threshold issue is usually whether a particular beneficial
interest is a marital asset, subject to division pursuant to M.G.L.
c. 208, § 34. For the most part, this is a relatively well-settled
question of law. Massachusetts appellate courts apply an
"expansive," rather than a restrictive, approach to what
constitutes marital property for purposes of § 34.12 A
Probate Court is not bound by traditional concepts of title or
property.13 "When the future acquisition of assets is
fairly certain, and current valuation possible, the assets may be
considered for assignment under § 34."14
There are many examples of cases involving beneficial interests
in trusts found to be marital assets,15 subject to
equitable division. In the oft-cited case of Lauricella v.
Lauricella, a husband's beneficial interest in a spendthrift
trust, which owned a two-family house that the husband had a vested
right to use and a contingent right to legal title provided he
survived his father by 21 years, was determined to be a marital
asset. The Supreme Judicial Court ruled that where the
husband's interest in the trust property was "present, enforceable
and valuable," his beneficial interest was includible in the
marital estate.16 Many subsequent cases have relied on
Lauricella in reaching the determination that a trust
interest is a marital asset.17 More recent appellate
decisions have excluded trust interests, but these have generally
occurred in circumstances involving contingent beneficial
interests, which are devoid of any history of the beneficiary
spouse's receiving payments of income or principal, or trusts that
are purely discretionary.18 On balance, beneficial
interests in trusts, which are likely to vest and possible to value
are considered marital assets, subject to equitable division in a
Only the Beginning
The issues that arise in determining an equitable division of
marital property in cases involving trust interests often only
begin once the Probate Court determines that a spouse's beneficial
interest is a marital asset. Other difficult issues then appear due
to the interplay of trust and divorce law. These issues reflect the
collision of interests between trust settlors and their
beneficiaries, and those of non-beneficiary spouses.
For example, a ruling that a particular beneficial interest in a
trust is a marital asset may be of little value to a
non-beneficiary spouse if the Probate Court does not have the power
to order the trustee to issue distributions of income or principal
to the non-beneficiary spouse as part of an equitable property
division. Must the non-beneficiary spouse wait until the trustee
issues distributions to the beneficiary spouse before receiving any
portion of the trust (that could be long wait)? Does a spendthrift
provision, which prohibits distributions to creditors, or the
discretionary nature of a beneficial interest in a trust, prevent
the Probate Court from ordering the trustee to issue distributions
to a non-beneficiary spouse, once the asset is included in the
In Pfannenstiehl, the Appeals Court did not hold that
the trustees of an irrevocable trust can be ordered to make
distributions directly to the non-beneficiary spouse.19
As a result, it is unclear how the wife will collect her portion of
the marital estate, and the husband has argued on appeal that the
court's ruling, in effect, impermissibly gives the wife a right to
compel distributions before they are issued to the
Other questions arise out of these disputes. What state law
applies to the interpretation of the trust instrument? Does the
non-beneficiary spouse have standing in a divorce action to
challenge a trustee, who interprets the trust as prohibiting such
distributions? Must the trustee and other beneficiaries be included
as necessary parties in an action to determine the
non-beneficiary's rights? What state law applies to determine the
equitable division, if the trust is interpreted under the law of a
state other than Massachusetts? These issues pit the power of the
Probate Court to order equitable divisions of marital property
against common law principles, which generally give effect to the
intentions of trust settlors and recognize the enforceability of
spendthrift provisions and other limitations on how monies placed
in a trust may be used.
The dispute in Pfannenstiehl addressed some of these
issues. The final decision will likely further develop the law in
determining whether a broad ascertainable standard, like the one
stated in the husband's trust, is too remote, indefinite or
discretionary as to remove the trust interest from the marital
estate. It may also provide guidance on complex valuation issues
due to the open-ended nature of the beneficiary classes. Still, the
case does not solve many of the problems that arise in equitably
dividing a marital estate, once a trust interest like the interest
in Pfannenstiehl is included, especially if there are no
The Protection of Vested Interests
Massachusetts law has long considered spendthrift protections to
be valid, whether a beneficiary's interest in the trust is in the
income or the principal.21 Most arguments against the
enforceability of spendthrift provisions in trusts subject to
Massachusetts law have been rejected in favor of the view that a
settlor ought to be able to dispose of his assets in trust as he
wishes.22 Indeed, the Massachusetts version of the
Uniform Trust Code provides that a creditor or assignee of the
beneficiary may not reach the interest or a distribution by the
trustee before its receipt by the beneficiary.23
Notably, the Legislature did not adopt those provisions of the
Uniform Trust Code, which would have created exceptions to the
enforceability of spendthrift provisions for certain preferred
creditors, including children, spouses, and former spouses, who
hold judgments or court orders against the beneficiary for
support.24 This was true despite a growing trend to
grant a spouse or minor child rights to trust
Massachusetts Takes the Minority View
In this regard, Massachusetts law is out of step with the
prevailing view. Principles articulated in the Restatement (Third)
of Trusts, federal bankruptcy law and the Uniform Trust Code all
support the view that a Probate Court has authority to order
distributions from trusts to non-beneficiary spouses under certain
circumstances. The Restatement (Third) of Trusts invalidates
spendthrift provisions where a beneficiary has a non-discretionary
right to withdraw or receive trust property, including exercisable,
but unexercised general powers of appointment.26 The
restatement provides that creditors may reach a beneficiary's right
to withdraw trust property or to demand distribution of a stated or
formula amount, including a power to periodically compel payments
of stated or percentage amounts.27 The restatement
treats a power to require periodic distributions as property of the
beneficiary, even if the power has not been exercised, irrespective
of the existence of a spendthrift restraint.28
Federal bankruptcy law has long been in accord.29 In
In re Behan, the U.S. Bankruptcy Court for the District of
Massachusetts applied the above principles to render a spendthrift
clause unenforceable.30 The Bankruptcy Court ruled that
a bankruptcy estate includes a debtor's interest in that portion of
a trust, spendthrift or otherwise, that the debtor has an absolute
right to receive.31
Finally, the Uniform Trust Code codifies the above
principles.32 The creditor's rights provisions of the
Code specifically render spendthrift provisions unenforceable and
allow creditors to reach trust property where a beneficiary has a
non-discretionary right to withdraw or receive trust
property.33 As mentioned above, the code also recognizes
exceptions for children, spouses and former spouses with judgments
or court orders against the beneficiary for child and spousal
support and maintenance.34
Applying these principles, the above sources of law support a
Probate Court's authority to compel trust distributions to achieve
an equitable division of marital assets for a non-beneficiary
spouse, to the extent that the beneficiary spouse has
non-discretionary rights to withdraw trust property or demand a
distribution of a specified amount, regardless of whether the trust
contains a spendthrift provision. At the same time, they balance
that authority with limitations, which recognize that to the extent
a beneficiaries' interest requires the exercise of a trustee's
discretion (apart from the discretion associated with enforcing a
spendthrift clause), the Probate Court may only divide those
distributions as part of an equitable division of marital property,
if, as and when the beneficiary spouse receives them.
Consequently, it is important that family law practitioners
understand the creditor's rights provisions of the state law which
govern their particular trust dispute. In Florida, for example, a
state which adopted the Uniform Trust Code's creditor's rights
provisions, a non-beneficiary spouse may reach trust assets to the
extent the beneficiary has a general power of withdrawal, or a
support or maintenance order, regardless of whether the trust
contains a spendthrift provision.35 If Florida law
governs the interpretation of the trust in a Massachusetts divorce,
a beneficiary spouse's rights to trust distributions over which he
or she may exercise control would not be shielded by a spendthrift
Divorce cases involving trust disputes are becoming more
prevalent. The Supreme Judicial Court's decision in the
Pfannenstiehl appeal will likely clarify the extent to
which a beneficial interest in a trust may be included as a marital
asset for purposes of calculating an equitable distribution. Beyond
Pfannenstiehl, however, family law practitioners should be
aware of the strong protections Massachusetts has enacted that can
and often are used to thwart the Probate Court's enforcement of
child and spousal support and maintenance orders and equitable
property divisions. Practitioners should also be aware that many
other states have enacted exceptions to the enforceability of
spendthrift provisions, which provide non-beneficiary spouses and
children greater rights to reach a beneficiary spouse's trust
funds. While this awareness may not resolve the
Pfannenstiehl family feud, it may shine light on
188 Mass. App. Ct. 121, 122-124 (2015).
2Id. at 126.
3Id. at 125.
4Id. at 125 and 131.
5Id. at 131-132.
6Id. at 126-127.
7Id. at 131-134 (the Appeals Court ruled
that where the trustees were obligated to and actually did
distribute the trust assets to the husband, for such things as
comfortable support, health, maintenance, welfare and education,
the husband's interest in the trust was vested in possession, with
a presently enforceable right to the trust distributions to support
his lifestyle during his lifetime).
8Id. at 132.
9Id. at 137-142 (the dissent pointed out
that the trustees made distributions in some years and not in
others, such that the husband's interest in the trust stands on
different footing from a party's interest in cases where interests
are more clearly fixed and certain).
10Supreme Judicial Court Docket No. 12031.
11Marc A. Chorney, Pfannenstiehl v. Pfannenstiehl:
Massachusetts Supreme Judicial Court Grants Petition for Certiorari
in Unusual Property Division Involving Trust Interests, ACTEC
Journal (2016); Lisa M. Rico and Judith A. Saxe, "The planning
implications of 'Pfannenstiehl'," Massachusetts Lawyer's Weekly
(December 17, 2015); William M. Levine, O Pfannenstiehl! Part 3: No
Wonder We're All Confused (Be Careful What You Wish For),"
(Oct. 28, 2015); Harry S. Margolis, "Does Pfannenstiehl Case
Undermine Asset Protection in Massachusetts,"
(Sept. 22, 2015).
12Davidson v. Davidson, 19 Mass. App. Ct.
364, 371 (1985).
13S.L. v. R.L., 55 Mass. App. Ct. 880,
14Williams v. Massa, 431 Mass. 619, 628
15Lauricella v. Lauricella, 409 Mass. 211,
16Id. at 216.
17See, e.g., S.L. v. R.L., 55 Mass. App. Ct.
880, 882-883, 884 (2002) (a wife's beneficial interest in numerous
spendthrift trusts established by her father, contingent upon her
surviving her 77-year old mother); Ruml v. Ruml, 50 Mass.
App. Ct. 500, 511-512 (2000) (a husband's interest in a spendthrift
trust established by the husband, in which the husband maintained a
non-general power of appointment to withdraw trust income and
principal); Comins v. Comins, 33 Mass. App. Ct. 28, 30
(1992) (a wife's beneficial interest in a discretionary trust
established by her father with stocks, bonds and other securities,
in which the wife had a testamentary power of appointment); see
also Davidson v. Davidson, 19 Mass. App. Ct. 364, 371-372
(1985)(a husband's contingent remainder interest in a testamentary
18See, e.g., D.L. v. G.L., 61 Mass. App. Ct.
488, 494-505 (2004); cf., Child v. Child, 58 Mass. App.
Ct. 76, 82-84, n. 4 (2003).
19In Pfannenstiehl, the Appeals Court set
aside a contempt judgment against the husband for failing to make
payments of over $200,000to the wife, illustrating the very issues
described above. See 88 Mass. App. Ct. at 136.
20See Brief of Appellant, Curt F. Pfannenstiehl, at
pp. 20-22 (Feb. 19, 2016), 2016 WL 943890.
21See Boston Safe Deposit & Trust Co. v.
Collier, 222 Mass. 390, 393-395 (1916); Broadway National Bank
v. Adams, 133 Mass. 170, 173 (1882).
22See 23 Patricia M. Annino, Estate Planning § 13.13,
n. 7 and 8 (2015 3d ed.) (and cases cited therein including
Pemberton v. Pemberton, 9 Mass.App.Ct. 9, 19-22 (1980) (in
which the Appeals Court refused to enforce an alimony and child
support order from a father's trust funds, even in the face of
strong public policy arguments favoring such a recovery).
23G.L. c. 203E, § 502(c).
2423 Patricia M. Annino, Estate Planning § 13.0.50
(2015 3d ed.).
2524 Patricia M. Annino Estate Planning § 28.13, n. 5
(2015 3d ed.) (and cases cited therein).
26Restatement (Third) of Trusts § 56 cmt. b;
Restatement of Trusts § 58 cmt b.
27Restatement (Third) of Trusts § 56 cmt. a
28Restatement (Third) of Trusts § 56 cmt. b
29See 11 U.S.C. § 541(a) and (b).
30In re Behan, 506 B.R. 8,15-17 (2014); see
also In re Dorsey, 497 B.R. 374, 386 (Bankr. N.D.Ga.
2013), citing Lunkes v. Gecker, 427 B.R. 425, 431 (N.D.
32See Uniform Trust Code §§ 500, et. seq.
33Uniform Trust Code § 505 (unlike the version of the
code adopted in Massachusetts, the Uniform Trust Code treats
non-settlors that have a power of withdrawal as the settlor of the
trust to the extent of the power).
34Uniform Trust Code § 503.
35F.L.A. § 736.0505; Miller v. Kresser, 34
So.3d 172, 175-177 (2010); Bacardi v. White, 463 So. 2d
218, 222 (Fla. 1985).