A Massachusetts appeals court has recently held that a husband’s beneficial interest in an irrevocable trust set up by his father is community property. In Pfannenstiehl v. Pfannenstiehl, the court stated that the husband’s interest is a “vested beneficial interest subject to inclusion in the marital estate.” Over $800,000 in distributions were made from the trust between 2008 and 2010. According to the court, the husband’s interest was “presently enforceable.” The court rejected the husband’s argument that a spendthrift clause made his interest incapable of distribution as marital property. Because the distributions themselves were “woven into the fabric of the marriage” and “integral to the family unit,” the court reasoned that it was settled state trust law for those distributions to be classified as part of the community estate.
See Jillian Hirsch, Leiha Macauley, and Darian Butcher, Interest in Irrevocable Trust is Marital Asset, Wealth Management, September 9, 2015.
Special thanks to Jim Hillhouse for bringing this article to my attention.
