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Calhoun v. Rawlins

Appeals Court of Massachusetts, Plymouth

June 27, 2018

SHONNA CALHOUN & others[1]
JASON M. RAWLINS, special representative, [2] & others.[3]

          Heard: February 1, 2018.

         Civil action commenced in the Superior Court Department on November 7, 2014.

         The case was heard by Robert C. Cosgrove, J., on motions for summary judgment, and entry of separate and final judgment was ordered by him.

          Richard B. Reiling (Richard C. Woods, Jr., also present) for the plaintiffs.

          Stephen M. LaRose (Charles Dell'Anno & Edward M. Joyce, Jr., also present) for the defendants.

          Present: Trainor, Blake, & Lemire, JJ.

          BLAKE, J.

         At issue in this case is whether the assets of an irrevocable spendthrift trust, established in 2007 on behalf of a disabled husband upon divorce from his wife, are available to satisfy any damages awarded in a subsequent personal injury action against the former husband. Resolution of the issue requires us to consider whether the trust was self-settled. We conclude that successful plaintiffs in this action may recover damages from the trust.


         A. The Probate and Family Court proceedings.

         Before the motor vehicle accident at issue in this case, Brian K. McInerney was involved in a motor vehicle accident in 2001, in which he sustained a severe traumatic brain injury. In September of 2004, a judge of the Probate and Family Court appointed coguardians for him due to his inability to make medical and other important decisions.[4]'[5]

         Having married in 1987, McInerney and his former wife, Susan J. Stone, separated in January of 2004. McInerney filed a complaint for divorce on March 8, 2005, requesting an equitable division of the marital assets under G. L. c. 208, § 34.[6]Throughout the marriage, Stone held significant assets in her own name, including accounts at KeyBank National Association (KeyBank), at least some of which derived from a trust created for Stone's benefit by her grandfather. McInerney worked for only one year during the marriage; Stone worked as an artist and then as a mental health counselor, making a modest salary. During the marriage, the family was supported primarily, if not exclusively, by Stone's income from her employment and her assets.

         McInerney, by his guardian, and Stone executed a separation agreement, which was incorporated into the judgment of divorce nisi. The separation agreement was later amended by stipulation and approved by a judge of the Probate and Family Court. The amended separation agreement (ASA), dated January 26, 2007, settled McInerney's and Stone's rights and obligations to one another upon dissolution of their marriage.[7] In pertinent part, the ASA provided that Stone would transfer approximately thirty-five percent of the funds in her KeyBank accounts to a spendthrift trust to be created for McInerney.[8] In addition, the ASA contained provisions regarding the marital home, a vacation home in Maine, the purchase of a home in Plymouth for McInerney, and other assets, including assets inherited by Stone. The ASA provided that the division of assets would survive entry of the judgment of divorce nisi and would have independent legal significance. By approving the ASA and incorporating it into the judgment of divorce nisi, the Probate and Family Court judge found that the terms were fair and reasonable.

         B. Creation of the Brian K. McInerney Irrevocable Trust.

         The Brian K. McInerney Irrevocable Trust (trust) was created on March 23, 2007, and, though irrevocable, the trustees were given complete discretion to distribute as much of the income and principal of the assets in the trust as they felt were necessary to meet the reasonable needs of McInerney. The terms of the trust identified Stone as the settlor, McInerney as the beneficiary, and their children, Elise and Dru, as the remainder beneficiaries. The trustees at that time were McInerney's sister and guardian (Jean E. McInerney[9]), and Bank of America as the corporate trustee. The trust provides that the "interest of any beneficiary created herein, either as to income or principal, shall not be alienated, anticipated or in any other manner assigned by such beneficiary and shall not be subject to legal process, bankruptcy proceedings, or the interference or control of creditors."

         Pursuant to the ASA, on May 7, 2007, Stone transferred $3, 538, 402.34 of stocks and bonds to the trust. She also transferred the Plymouth home valued at $538, 400 into the trust. In addition, McInerney transferred assets standing in his own name, totaling more than $120, 000, into the trust.

         C. The motor vehicle ...

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