Now Accepting New Clients!

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

FAMILY LAW 83: A trial court can terminate a parent’s rights and permit a stepparent to adopt a child.

A trial court has discretion to terminate a parent’s rights and permit a stepparent to adopt a child when the conditions of MCL 710.51(6) are met. MCL 710.51(6)(b) requires the petitioner to establish that the other parent had the ability to visit, contact, or communicate with the children, and substantially failed or neglected to do so for a period of two years.

PROBATE 53: The trust agreement included an Incontestability Provision.

A settlor’s intent is to be carried out as nearly as possible. Generally, in terrorem clauses are valid and enforceable. However, a provision in a trust that purports to penalize an interested person for contesting the trust or instituting another proceeding relating to the trust shall not be given effect if probable cause exists for instituting a proceeding contesting the trust or another proceeding relating to the trust.

FAMILY LAW 82: Court stated it would terminate the personal protection order (PPO) after the parties present documentation of the initiation of the divorce proceedings.

However, the trial court concluded that these matters should, in fact, be in the province and the jurisdiction of the Family Division and in that respect, having issued a personal protection order, the Court stated it would terminate the personal protection order after the parties present documentation of the initiation of the divorce proceedings.

What to Do When Homeowners Insurance Denies Your Claim

Since 1955, homeowners insurance has helped owners protect their property and belongings against damages and theft. According to the Insurance Information Institute, over 93% of homeowners in the US have homeowners insurance coverage, paying around...

What to Look for in a Criminal Defense Attorney

Originally posted on 10/20/2017 If you are charged with a crime, you could face severe penalties that could include financial fines, public service, or even jail time. For those in the Michigan area, hiring an attorney experienced in...

PROBATE 51: Trust filed a petition to determine title to credit union account.

The probate court explained that the owners of the account are S and J. When S passes, J becomes the owner of the account. J is the one who had the authority to make the designation. Nowhere in any documents is there a designation by J that SJ be the owner -- or the beneficiary of the account. The designation made by his father was no longer binding because he was no longer the owner at the time J passed away.

Invoking Your Right to Remain Silent

Originally posted on 07/19/2017 While the “right to remain silent” represents one of your most inalienable rights, many people have a few misconceptions about how it works. Many people receive their understanding of this...

Arrests made by tracking cell phones may be illegal

Originally posted on 02/10/2017 Law enforcement agencies are always looking for an edge in fighting crime. As cell phones have become an indispensable part of life for many people, authorities have taken to using these devices to track...

Could I lose my job over a drunk driving arrest?

Originally posted on 01/20/2017 When potential clients ask us questions about criminal defense representation (particularly for drunk driving offenses) one of the most common is whether they will lose their job.  Naturally, this...

FAMILY LAW 77: Court awarded plaintiff sole legal custody; defendant was unwilling to work with plaintiff.

For joint custody to work, parents must be able to agree with each other on basic issues in child rearing including health care, religion, education, day to day decision making and discipline and they must be willing to cooperate with each other in joint decision making. If two equally capable parents are unable to cooperate and to agree generally concerning important decisions affecting the welfare of their children, the court has no alternative but to determine which parent shall have sole custody of the children.

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
and secure reliable and trustworthy representation today!
Get the Help You Need From a Team You Can Truly Count On: (734) 404-3000