Levitan v. Rosen
| Decision Date | 06 May 2019 |
| Docket Number | No. 18-P-847,18-P-847 |
| Citation | 95 Mass.App.Ct. 248,124 N.E.3d 148 |
| Parties | Amy LEVITAN v. Daniel J. ROSEN (and a consolidated case). |
| Court | Appeals Court of Massachusetts |
L. Richard LeClair, III, Waltham, for the wife.
Dana Alan Curhan, Boston, for the husband.
Present: Green, C.J., Agnes, & Desmond, JJ.
The former wife (wife) is a beneficiary of a discretionary family trust (trust) settled by her father, which contains a spendthrift provision. Following a six-day trial, a judge of the Probate and Family Court issued a judgment of divorce nisi that, among other things, (1) treated the wife's "right" to annually withdraw five percent of her share of the trust principal as a marital asset subject to equitable distribution under G. L. c. 208, § 34, (2) excluded from the marital estate the remainder of the wife's trust interest on the basis that it is governed by the trust's spendthrift provision, and (3) included the wife's annual five percent trust principal withdrawals as income for purposes of child support.2 The wife appeals. We conclude that the wife's entire interest in the trust, including her annual right to withdraw trust principal, is governed by the trust's spendthrift provision. We further conclude that the wife's entire interest in the trust is part of the marital estate for purposes of § 34, and must be assigned to the wife exclusively in light of the spendthrift provision, and that bonuses earned by the former husband (husband) must be considered in the calculation of child support. Accordingly, we vacate the portions of the judgment relating to property division and child support, and remand for further proceedings consistent with this opinion.3
Background. 1. The trust. The trust was established by the wife's father in 1984 and expressly provides that it is governed by Florida law. Pursuant to the terms of the trust, upon the death of the wife's father in 2007, the trust property was divided into three shares, which were set apart for the wife and each of her two siblings. The wife's share will continue to be held in trust for her lifetime, with the remainder distributed to her issue after her death.4 The wife's share is managed by two trustees: the wife and Joblin Younger, an independent, nonbeneficiary trustee (independent trustee). Though the trust grants the independent trustee "sole discretion" to distribute "as much of the income and principal" to the wife as he "deems advisable," the trust expressly provides the wife with "the right" to annually withdraw five percent of the principal of her share (right of withdrawal). The trust provides that, once the wife has notified the independent trustee of her desire to exercise her right of withdrawal, the independent trustee "shall make such distribution to [the wife]." The wife exercised her right of withdrawal in 2014 (receiving $ 96,588), 2015 (receiving $ 90,104) and 2016 (receiving $ 84,279).5 The trust also grants the wife a limited power of appointment, giving her the power to direct principal and income from her share for the benefit of the grantor's issue (which includes the wife's children). The wife's right of withdrawal and limited power of appointment are both set forth in Article VII of the trust.
Article XV of the trust is a spendthrift provision prohibiting the distribution of the wife's share to creditors and other third parties (including a spouse). To that end, the trust authorizes the independent trustee "to withhold any payment or distribution of income or principal (even though such payment or distribution is otherwise required hereunder) if the [independent trustee] in [his] sole discretion deems that such payment or distribution would not be subject to full enjoyment by the [wife]."
2. The divorce proceedings. The wife filed a complaint for divorce in 2013, after sixteen years of marriage. During the marriage, the husband worked full time, while the wife worked sporadically, as she was principally responsible for homemaking and raising the parties' five children. Both parties were employed at the time of the divorce trial. At that time, the husband was earning an annual base salary of $ 191,984 and was eligible to receive bonuses of up to fifteen percent of his salary,6 and the wife was earning an annual salary of $ 69,004. At the time of the divorce, the parties' assets were the husband's 401(k) plan, worth $ 127,637; the wife's trust share, which was worth over $ 1.67 million as of October, 2016; and bank accounts and other personalty of relatively modest value.7
The central issue at trial was whether the wife's trust share was includable in the marital estate for purposes of equitable distribution under G. L. c. 208, § 34. The wife contended that her share was not includable because the spendthrift provision barred distributions to third parties, including the husband. The trial judge disagreed in part, ruling that the wife's annual right of withdrawal was not governed by the spendthrift provision and was therefore includable in the marital estate, while the remainder of her trust share "was not a marital asset subject to division." Pursuant to the divorce judgment, the wife received her annual right of withdrawal under the trust, the husband received his 401(k), and the husband was ordered to pay weekly child support of $ 107 to the wife. In calculating child support, the judge included the wife's right of withdrawal as income to her, and excluded the husband's annual bonuses on the ground that they fluctuated and were not guaranteed. The present appeal by the wife followed.
Discussion. 1. Spendthrift provision. To determine the scope of the spendthrift provision of the trust, we look to Florida law. When interpreting the provisions of a trust, the guiding principle is "to determine the intention of the settlor and give effect to his wishes." Gilbert v. Gilbert, 447 So. 2d 299, 301 (Fla. Dist. Ct. App. 1984). "If the trust language is unambiguous, the settlors' intent as expressed in the trust controls and the court cannot resort to extrinsic evidence." Roberts v. Sarros, 920 So. 2d 193, 195 (Fla. Dist. Ct. App. 2006). "This intention should not be determined by isolated words and phrases but rather the instrument as a whole should be considered and the testator's general plan ascertained." First Nat'l Bank of Fla. v. Moffett, 479 So. 2d 312, 313 (Fla. Dist. Ct. App. 1985). "[W]here there is ambiguity or uncertainty arising from the language used, construction of the instrument is necessary." Id. "In construing the instrument, words should be given their ordinary and usual meaning." Id. "Florida has a public policy favoring spendthrift provisions in trusts and protecting a beneficiary's trust income ...." Berlinger v. Casselberry, 133 So. 3d 961, 966 (Fla. Dist. Ct. App. 2013).8
Here, any uncertainty in the meaning or operation of the spendthrift provision can be attributed to the facial conflict between the wife's right of withdrawal and the independent trustee's discretion under the spendthrift provision to withhold "any payment or distribution of income or principal (even though such payment or distribution is otherwise required hereunder)." The judge concluded that the spendthrift provision does not apply to the wife's right of withdrawal because the spendthrift provision encompasses only a "payment or distribution," and makes no mention of a "withdrawal." However, though termed a "withdrawal," the sentence of Article VII detailing the procedure required to request such a withdrawal reads in full as follows: "Such right of withdrawal shall be exercised in each case by the [wife] notifying the Trustee in writing to that effect, specifying the cash or assets at current market value which [she] desires to withdraw; and promptly thereafter the Trustee shall make such distribution to [her]" (emphasis added). This language makes it clear that any funds withdrawn pursuant to the right of withdrawal are "distributions," and accordingly are not excluded from the application of the spendthrift provision. Furthermore, this interpretation is consistent with the settlor's express intent: "It is the primary intent of this Article ... that the [wife] shall be primarily provided for and that the Trustee shall distribute no amounts to any person other than the [wife] unless the Trustee determines that [her] welfare will not be unreasonably jeopardized, taking into account all other resources available to [her]."9
The judge's reliance on In re Brown, 303 F.3d 1261, 1263-1264, 1266-1268 (11th Cir. 2002), and Miller v. Kresser, 34 So. 3d 172, 175 (Fla. Dist. Ct. App. 2010), is misplaced. In Brown, supra at 1266, the United States Court of Appeals for the Eleventh Circuit stated that "Florida law will not protect assets contained within a spendthrift trust to the extent the settlor creates the trust for her own benefit, rather than the benefit of another." As such, the case stands simply for the proposition that a trust created for the sole benefit of the settlor will not be effective to shield assets held by the trust from creditors of the settlor. It is inapposite to the circumstances of the present case, as the trust was established by the wife's father and not by the wife herself. In Miller, supra, the District Court of Appeal stated that "[c]ourts have invalidated spendthrift provisions where a trust provides a beneficiary with express control to demand distributions from the trust or terminate the trust and acquire trust assets." As we have discussed above, the language of the trust expressly gives the independent trustee the discretion to withhold the funds otherwise subject to the wife's right of withdrawal, and indeed instructs the independent trustee to do so in circumstances where a distribution would be exposed to creditors of the beneficiary. The judge's conclusion that the wife's right of withdrawal was not subject to the spendthrift provision was erroneous.
2. Equitable distribution...
To continue reading
Request your trial
- Bos. Globe Media Partners, LLC v. Dep't of Pub. Health
-
Calvin C. v. Amelia A.
...of the specific attributes of that trust, the beneficial interest is a "fixed and enforceable" property right. Levitan v. Rosen, 95 Mass. App. Ct. 248, 253, 124 N.E.3d 148 (2019). "[A] nominee trust is ‘an entity created for the purpose of holding legal title to property with the trustees h......
-
Saxena v. Sewak
...was to be determined in the judge's discretion, consistent with the child's best interest. See Guidelines § II-C; Levitan v. Rosen, 95 Mass. App. Ct. 248, 256 n.12 (2019) ("The judge may, in his discretion, decline to award child support on any additional income above the first $250,000 of ......