Christopher J. Roman has published his article, Protecting Your Clients’ Assets from Their Future Ex-Sons and Daughters-in-Law: The Impact of Evolving Trust Laws on Alimony Awards, in the ACTEC Law Journal.  His article begins as follows:

Since the dawn of modern estate planning, parents have sought to keep wealth “in the family” and protected from the reach of their de- scendants’ creditors. To achieve this objective, estate planners have often implemented discretionary trusts to shield beneficiaries’ assets from their own misjudgments. For the modern parent, with nearly fifty percent of first marriages ending in divorce, the most threatening creditor has become a future ex-son or ex-daughter-in-law.

As we continue through this era with a high rate of divorce and an increasing number of children becoming beneficiaries of trusts from past generations, the confluence of these two factors has created a tension between trust law and matrimonial law that has become the subject of an increasing number of cases across the county. This tension has pushed trust law and matrimonial law to evolve in tandem as more and more divorce cases involve a trust for the benefit of one of the parties. A critical issue in these divorces becomes whether potential distributions to the beneficiary-spouse after the divorce should be included as a source of income for the purposes of calculating alimony. This issue gives rise to the following dilemma for the court: since the court cannot determine whether the future distributions will be made, can the court presume that distributions will be made or, alternatively, can the court compel the trustee of the trust to make distributions to the beneficiary to ensure that the alimony obligation is satisfied?

The evolution of the law with respect to these issues is highlighted in a recent Supreme Court of New Jersey decision, Tannen v. Tannen,2 which examines whether a court can compel future distributions from a discretionary trust and, thereby…

via American College of Trust and Estate Counsel | ACTEC Law Journal.

Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.