Monday, December 12, 2016
BENEFICIAL TRUST INTEREST: A beneficiary’s interest in a discretionary trust is not property subject to division on divorce. The Massachusetts Supreme Judicial Court reversed the intermediate appellate court holding that a beneficiary’s interest in a discretionary trust created by the beneficiary’s parent is not sufficiently “fixed and enforceable” to allow the interest to be classified as martial property subject to division on divorce. Pfannenstiehl v. Pfannenstiehl, 55 N.E.3d 933 (Mass. 2016). The beneficiary is one of eleven current beneficiaries and more are likely to be born. The trustee’s duty to consider the needs of each beneficiary, including those yet unborn, means that any one beneficiary’s interest cannot be fixed and enforceable. Any interest in the trust remainder is too speculative to be classified as marital property because the occurrence of the events under the trust terms will terminate the trust is too uncertain.
Special thanks to William LaPiana (Professor of Law, New York Law School) for bringing this case to my attention.