On April 5, 2016, the collective eyes of Massachusetts divorce attorneys and estate planners were fixed on the Supreme Judicial Court, where the highly-anticipated oral arguments on “further appellate review” of Pfannenstiehl v. Pfannenstiehl took place.
The 2015 Appeals Court decision received national attention for its potential detrimental impact on the estate planning goals of families who desire to shield trust assets from divorce claims. In Pfannenstiehl, both the Trial Court and the Appeals Court went to great lengths to ensure that the wife would benefit, at least indirectly, from an irrevocable trust established by her soon-to-be-ex-husband’s father even though the husband had no control over the trust and could receive distributions only at the discretion of the trustees. The husband had no present, guaranteed, enforceable interest to receive or use assets or income from the trust. The trustees’ discretion was limited to making distributions under an “ascertainable standard” for a beneficiary’s health, education, maintenance and support. The Trial Court and Appeals Court decisions failed to account for the fact that the trustees did not make distributions to the husband for most of the marriage, and that the husband received distributions only during the final two years of … Keep reading