Monday, August 15, 2011
New Hampshire Supreme Court Rules that Discretionary Trust Interest is Expectancy, Not Subject to Equitable Distribution on Divorce
Thedore J. Goodlander and Elizabeth M. Tamposi married in January 1982. In 1992, Elizabeth’s father established two trusts with assets worth approximately seventy-two million. One of the trusts contained sub-trusts that were created for the benefit of Tamposi and her four siblings. The trust contained a spendthrift provision which allowed the trustee to make distributions for a beneficiary’s “education and maintenance and health and reasonable comfort.” When her father died 1995, Tamposi became one of the beneficiaries of the Elizabeth Tamposi sub-trusts (“EMT Trust”).
In 2007, Goodlander filed for divorce, and a divorce was granted in 2009. The trial found that it could not force Tamposi to make distributions from the EMT Trust to make alimony payments unless the payments were to provide for Goodlander’s food, shelter and medical needs. To get around the trust’s provisions, the court awarded Goodlander $50,000 per year in alimony to meet his “most basic needs,” stating that the alimony was to be paid from the EMT Trust directly.
In In re Goodlander, 20 A.3d 199 (N.H. 2011), the Supreme Court of New Hampshire held that the trial court erred in its ruling, finding that trustees’ power to make distributions in their discretion for a beneficiary’s “education and maintenance and heath and reasonable comfort” creates in the beneficiary an expectancy and is not subject to equitable distribution on divorce.
Special thanks to William LaPiana (Professor of Law, New York Law School) for bringing this case to my attention.