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Levitan v. Rosen

Appeals Court of Massachusetts, Norfolk

May 6, 2019

AMY LEVITAN
v.
DANIEL J. ROSEN (and a consolidated case).

          Heard: February 8, 2019. [1]

          Complaint for divorce filed in the Norfolk Division of the Probate and Family Court Department on November 4, 2013. Civil action commenced in the Norfolk Division of the Probate and Family Court Department on November 6, 2014. The cases were heard by George F. Phelan, J., and judgment was entered by him.

          L. Richard LeClair, III, for the wife.

          Dana Alan Curhan for the husband.

          Present: Green, C.J., Agnes, & Desmond, JJ.

          GREEN, C.J.

         The former wife (wife) is a beneficiary of a discretionary family trust (trust) settled by her father, which contains a spendthrift provision. Following a six-day trial, a judge of the Probate and Family Court issued a judgment of divorce nisi that, among other things, (1) treated the wife's "right" to annually withdraw five percent of her share of the trust principal as a marital asset subject to equitable distribution under G. L. c. 208, § 34, (2) excluded from the marital estate the remainder of the wife's trust interest on the basis that it is governed by the trust's spendthrift provision, and (3) included the wife's annual five percent trust principal withdrawals as income for purposes of child support.[2] The wife appeals. We conclude that the wife's entire interest in the trust, including her annual right to withdraw trust principal, is governed by the trust's spendthrift provision. We further conclude that the wife's entire interest in the trust is part of the marital estate for purposes of § 34, and must be assigned to the wife exclusively in light of the spendthrift provision, and that bonuses earned by the former husband (husband) must be considered in the calculation of child support. Accordingly, we vacate the portions of the judgment relating to property division and child support, and remand for further proceedings consistent with this opinion.[3]

         Background.

         1. The trust.

         The trust was established by the wife's father in 1984 and expressly provides that it is governed by Florida law. Pursuant to the terms of the trust, upon the death of the wife's father in 2007, the trust property was divided into three shares, which were set apart for the wife and each of her two siblings. The wife's share will continue to be held in trust for her lifetime, with the remainder distributed to her issue after her death.[4] The wife's share is managed by two trustees: the wife and Joblin Younger, an independent, nonbeneficiary trustee (independent trustee). Though the trust grants the independent trustee "sole discretion" to distribute "as much of the income and principal" to the wife as he "deems advisable," the trust expressly provides the wife with "the right" to annually withdraw five percent of the principal of her share (right of withdrawal). The trust provides that, once the wife has notified the independent trustee of her desire to exercise her right of withdrawal, the independent trustee "shall make such distribution to [the wife]." The wife exercised her right of withdrawal in 2014 (receiving $96, 588), 2015 (receiving $90, 104) and 2016 (receiving $84, 279).[5] The trust also grants the wife a limited power of appointment, giving her the power to direct principal and income from her share for the benefit of the grantor's issue (which includes the wife's children). The wife's right of withdrawal and limited power of appointment are both set forth in Article VII of the trust.

         Article XV of the trust is a spendthrift provision prohibiting the distribution of the wife's share to creditors and other third parties (including a spouse). To that end, the trust authorizes the independent trustee "to withhold any payment or distribution of income or principal (even though such payment or distribution is otherwise required hereunder) if the [independent trustee] in [his] sole discretion deems that such payment or distribution would not be subject to full enjoyment by the [wife]."

         2. The divorce proceedings.

         The wife filed a complaint for divorce in 2013, after sixteen years of marriage. During the marriage, the husband worked full time, while the wife worked sporadically, as she was principally responsible for homemaking and raising the parties' five children. Both parties were employed at the time of the divorce trial. At that time, the husband was earning an annual base salary of $191, 984 and was eligible to receive bonuses of up to fifteen percent of his salary, [6] and the wife was earning an annual salary of $69, 004. At the time of the divorce, the parties' assets were the husband's 401(k) plan, worth $127, 637; the wife's trust share, which was worth over $1.67 million as of October, 2016; and bank accounts and other personalty of relatively modest value.[7]

         The central issue at trial was whether the wife's trust share was includable in the marital estate for purposes of equitable distribution under G. L. c. 208, § 34. The wife contended that her share was not includable because the spendthrift provision barred distributions to third parties, including the husband. The trial judge disagreed in part, ruling that the wife's annual right of withdrawal was not governed by the spendthrift provision and was therefore includable in the marital estate, while the remainder of her trust share "was not a marital asset subject to division." Pursuant to the divorce judgment, the wife received her annual right of withdrawal under the trust, the husband received his 401(k), and the husband was ordered to pay weekly child support of $107 to the wife. In calculating child support, the ...


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