Speed v. Speed
| Decision Date | 07 June 1993 |
| Docket Number | No. S93A0339,S93A0339 |
| Citation | 430 S.E.2d 348,263 Ga. 166 |
| Parties | SPEED v. SPEED. |
| Court | Georgia Supreme Court |
Leon A. Wilson, II, Waycross, for Teresa Johnson Speed.
John R. Thigpen, Sr., Blackshear, for Wallace Speed.
While they were married, the parties were involved in an automobile accident that left the husband, Wallace Speed (the appellee), a quadriplegic, and severely injured the wife, Teresa Speed. In settlement of their tort claims against the manufacturer of the vehicle they were driving, the driver of the other vehicle, and that driver's employer, the parties received a lump sum of cash, the husband received an annuity of $100,000 per year for life, and the wife received an annuity of $10,000 per year for life with 20 years guaranteed.
The husband transferred his portion of the settlement, including the annuity, into an irrevocable trust with himself as the sole beneficiary. The trust instrument instructs the trustees to distribute the trust principal and interest as necessary, in the trustees' discretion, for the husband's maintenance and support, and to pay the remainder to the husband's estate upon his death, to be administered in accordance with the husband's will. Additionally, the trust contains a spendthrift clause prohibiting the involuntary alienation of trust property for the satisfaction of debts or obligations incurred by the husband.
In the parties' subsequent divorce action, the trial court held without explanation that the trust is valid, and that since the husband had irrevocably transferred the trust property to the trustees, the trust property was no longer the property of the husband, and thus not subject to the wife's claims for alimony and equitable distribution of property. Therefore, concluded the trial court, the parties were barred from making any reference to the trust instrument, the settlement agreement, or the proceeds of the settlement agreement during the trial. We granted the wife's application for interlocutory review.
1. The wife argues that the spendthrift provision of the trust prohibiting involuntary transfer of trust property is not enforceable because the husband is both the settlor and the sole beneficiary of the trust. 1 We agree.
Except as otherwise provided in this subsection, a spendthrift provision prohibiting involuntary transfers is valid and enforceable. A spendthrift provision prohibiting involuntary transfers is not valid if the beneficiary is the settlor. A spendthrift provision prohibiting involuntary transfers is not valid as to [claims for alimony] against a distribution to a beneficiary, other than a beneficiary who has a medically determined physical or mental disability that substantially impairs the beneficiary's ability to provide for the beneficiary's care or custody and constitutes a substantial handicap....
OCGA § 53-12-28(c) (emphasis supplied).
The husband argues that because his physical disability removes him from the exception for alimony, the spendthrift clause protects the trust property from the wife's claims. The husband declines to address the previous sentence, however, which states unconditionally that no spendthrift provision is valid when the settlor is the sole beneficiary, which is undisputed in this case. However, for this Court to simply ignore that provision in determining the effect of the particular statutory language would be "contrary to the generally accepted principles for construing statutes." Porter v. Food Giant, 198 Ga.App. 736, 402 S.E.2d 766 (1991), see also City of Roswell v. City of Atlanta, 261 Ga. 657, 410 S.E.2d 28 (1991). Furthermore, even before the passage of the Act in Georgia, a person's own property could not be "conveyed to a trustee for the purpose of protecting it against his creditors." Sargeant v. Burdett, 96 Ga. 111, 117, 22 S.E. 667 (1895); see also Woodruff v. Trust Co. of Ga., 233 Ga. 135, 141, 210 S.E.2d 321 (1974). The invalidity of self-settled spendthrift trusts stems from the idea that no settlor, disabled or otherwise, should be permitted to put his own assets in a trust, of which he is the sole beneficiary, and shield those assets with a spendthrift clause, because to do so is "merely shift[ing] the settlor's assets from one pocket to another, [in an attempt to...
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Gordon v. Harman (In re Harman)
...names contingent beneficiaries to take the trust corpus if the settlor fails to exercise his power of appointment); Speed v. Speed, 263 Ga. 166, 167, 430 S.E.2d 348 (1993); Smith v. Francis, 221 Ga. 260, 266, 144 S.E.2d 439 (1965) (declaring valid a trust with multiple trustees and discreti......
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Gibson v. Gibson, S17F0593
...property in a trust of which he is the sole beneficiary, that property may be subject to equitable division. See Speed v. Speed , 263 Ga. 166, 430 S.E.2d 348 (1993). But if a spouse is not the sole beneficiary of a trust, the corpus of the trust is not subject to the other spouse's claim of......
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Calhoun v. Rawlins
...do so is ‘merely shift[ing] the settlor's assets from one pocket to another, [in an attempt to avoid creditors].’ " Speed v. Speed, 263 Ga. 166, 168, 430 S.E.2d 348 (1993), quoting from 76 Am. Jur. 2d, Trusts, § 129. In the absence of public policy or other argument to the contrary, we agre......
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In re Brown
...1982) (applying Ohio law and holding creditors could reach settlor-beneficiary's interest in spendthrift trust); Speed v. Speed, 263 Ga. 166, 430 S.E.2d 348, 349 (Ga.1993) (applying Georgia law, and holding spendthrift provision in trust created by quadriplegic husband from his insurance be......
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Domestic Relations - Barry B. Mcgough and Elinor H. Hitt
...of the trust, and the spendthrift provision was not enforceable.187 The question posed was answered in the affirmative.188 181. Id. 182. 263 Ga. 166, 430 S.E.2d 348 (1993). 183. Phillips, 286 Ga. at 620, 690 S.E.2d at 622. 184. Id. at 620, 690 S.E.2d at 621 (quoting Speed, 263 Ga. at 167, 4......
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Wills, Trusts, and Administration of Estates - James C. Rehberg
...90. Id. at 846, 432 S.E.2d at 228. 91. Id. at 846-47, 432 S.E.2d at 228. 92. Id. at 847, 432 S.E.2d at 229. 93. Id. 94. Id. 95. Id. 96. 263 Ga. 166, 430 S.E.2d 348 (1993). 97. 1991 Ga. Laws 810 (codified at O.C.G.A. Sec. 53-12-18 (Supp. 1994)). 98. 263 Ga. at 167, 430 S.E.2d at 348-49. 99. ......
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Chapter 2 - § 2.8 • SELF-SETTLED TRUSTS
...App. 1989) (Ruland, J., dissenting) (quoting Amato v. Amato, 434 A.2d 639, 643 (N.J. Super. Ct. App. Div. 1981)).[268] Speed v. Speed, 430 S.E.2d 348 (Ga. 1993).[269] The trust instrument instructed the trustees to "distribute the trust principal and interest as necessary, in the trustees' ......