Now Accepting New Clients!
Blog

FAMILY LAW 30: Discretionary trust assets cannot be reached to satisfy claims for child support and alimony.

This action arises out of petitioner’s attempts to obtain compensation for child support and alimony arrearages owed to her by her ex-husband. Ex-husband is a beneficiary of the trust at issue herein. Petitioner sought to compel respondents, who are the trust’s successor co-trustees, to make income distribution payments to Ex-husband, out of which petitioner could then seek payment of Ex-husband’s child support and alimony arrearages.

Petitioner argues that the probate court erred by denying her petition for distribution based on a finding that the trust is a purely discretionary trust, and that she is not entitled to compensation for Ex-husband’s outstanding child support and alimony arrearages out of income distributions made to Ex-husband from the trust.

Petitioner and respondents disagree regarding the type of trust that is at issue herein. Petitioner argues that the trust is a support or spendthrift trust, and respondents argue that the trust is a discretionary trust.

Under a discretionary trust, the trustee may pay to the beneficiary as much of the income or principal as the trustee in his discretion determines to be appropriate. Conversely, under a support trust, the trustee shall pay so much of the income and such amounts of principal as the trustee deems proper for support, maintenance, and welfare. Trusts with spendthrift provisions provide that the beneficiary’s interest shall not be transferable or subject to the claims of creditors, unless the spendthrift provision allows ordinary creditors to reach trust assets.

The key difference between discretionary trusts, support trusts, and spendthrift trusts, for petitioner’s purposes, is that creditors, including petitioner, cannot compel the trustee of a discretionary trust to pay any part of the income or principal in order that the creditors may be paid. The opposite is true of spendthrift and support trusts, which allow trust assets to be reached to satisfy creditors, including creditors seeking to satisfy claims for child support and alimony.

Petitioner argues that the use of the word “shall” in the terms of the trust indicates that the trust is a support or spendthrift trust, whereas respondents argue that the use of the words “sole and absolute discretion” indicate that the trust is a discretionary trust.

A court must ascertain and give effect to the settlor’s intent when resolving a dispute concerning the meaning of a trust.

At several intervals, the trust document states that respondents, as trustees, are permitted to use their sole and absolute discretion in applying any part of the trust income or principal for Ex-husband’s benefit, indicating that it is a discretionary trust, and not a spendthrift or support trust.

The trust provisions at issue in this case give respondents discretion to determine whether to distribute the income and principal of the trust to its beneficiaries, including Ex-husband, as contemplated in MCL 700.7103(d). Thus, this Court must conclude that the trust is discretionary. Because the trust is discretionary, creditors, including petitioner, cannot reach the trust assets.

At Aldrich Legal Services, our attorneys and staff understand the stress that can come with family law disputes. Our firm is committed to helping you find resolutions.

From our law firm in Plymouth, MI, we serve clients throughout Wayne, Washtenaw and Oakland counties who are dealing with family law matters.

Contact Aldrich Legal Services

Are Juvenile Records Public or Can They be Expunged?

There is something in most people’s life they regret - if they could redo a moment, they would have done it better. Although there is no physical way to erase the past or redo past wrongs, there is a legal way to prevent some of the crimes...

FAMILY LAW 42: Motion to modify custody denied due to lack of supporting affidavits or documentation.

The lack of substantiation, again and again, could reasonably call into question plaintiff’s motives and credibility on all matters. The trial court appeared more than open to further considering a motion to modify custody if plaintiff would come forward with supporting documentary evidence, explaining why the court took the unusual step of denying the motion without prejudice.

WILLS/TRUSTS 21: Plaintiff alleged the University failed to use the funds consistent with the terms of the trust.

On April 23, 2018, plaintiff filed suit, alleging (1) breach of contract, namely the University’s failure to use the funds consistent with the terms of the Gift Agreement, and seeking damages or specific performance; (2) breach of fiduciary duty, on account of the University’s failure, as trustee of the charitable trust established by Professor’s gift, to comply with the terms and conditions of the resulting charitable trust; (3) violation of the Uniform Prudent Management of Institutional Funds Act, MCL 451.921 et seq.; and (4) the need for injunctive relief prohibiting the dissipation of funds during the pendency of the case.

What is Collaborative Divorce Family Law?

Coming to the end of a happy time is a challenge no one wants to deal with in life. The end of a marriage through a divorce can especially be a tough, emotional, and complicated period. Lawyers and judges deciding your future, remembering important...

FAMILY LAW 41: To minimize disruptive changes in children’s custody, moving party must establish cause or a change of circumstance.

To minimize unwarranted and disruptive changes in children’s custody, a trial court may only modify children’s custody if the moving party first establishes a proper cause or a change of circumstances. The purpose of this framework is to erect a barrier against removal of a child from an established custodial environment and to minimize unwarranted and disruptive changes of custody orders.

DIVORCE 35: Proceeds received by one spouse in a personal injury lawsuit are generally considered separate property.

Proceeds received by one spouse in a personal injury lawsuit meant to compensate for pain and suffering, as opposed to lost wages, are generally considered separate property. Moreover, separate assets may lose their character as separate property and transform into marital property if they are commingled with marital assets and treated by the parties as marital property.

4 Common Real Estate Disputes to Watch Out For

Creating a mutually beneficial real estate deal usually goes through smoothly with both sides presenting their interests then negotiating toward a middle ground they can both agree to uphold. Unfortunately, not all deals go through without an issue....

Is My Conviction Eligible for Expungement?

At one point or another, we have all made mistakes. For some people, those mistakes involved breaking the law. Convictions have a large impact on someone’s life. Beyond the sentencing ranging from community service to fines, to jail or prison...

REAL ESTATE 44: Rule of acquiescence in boundary disputes.

The doctrine of acquiescence provides that, where adjoining property owners acquiesce to a boundary line for a period of at least fifteen years, that line becomes the actual boundary line. The underlying reason for the rule of acquiescence is the promotion of peaceful resolution of boundary disputes.

FAMILY LAW 37: Referee recommended against changing legal custody or parenting time.

Plaintiff requested sole legal custody, arguing that she and defendant had difficulty co-parenting and that defendant would not agree to medical treatment for the diagnosis and treatment of ADHD, need for orthodontic work, and need for vision testing and glasses. Plaintiff also requested an alternating weekly or biweekly schedule during the summer, which would increase her overall parenting time.

Don't let a bad decision, unfair contract, or a messy divorce get in the way of a promising future!
Contact the experienced team at Aldrich Legal Services today to schedule your free initial
consultation
and secure reliable and trustworthy representation today!
Get the Help You Need From a Team You Can Truly Count On: (734) 404-3000
734-237-6482
734-366-4405