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Husband’s Use of Trusts to Hold Assets Fails to Prevent Wife From Collecting Alimony

pad-lock.jpgOne variety of estate planning technique used to shield assets from creditors is the use of discretionary trusts, such as so-called “spendthrift trusts.” In a recent ruling by the 2d District Court of Appeal, however, the trusts a former husband created failed to block his ex-wife from collecting the alimony he owed her. The court decided that, although Florida has a public policy favoring the recognition of spendthrift provisions in trusts, it has a stronger policy favoring the protection of spouses through the enforcement of spousal support orders.

When a couple divorced in 2007, after 30 years of marriage, they reached a marital settlement agreement resolving, among other items, alimony. The agreement, which the court ratified, required the husband to pay the wife $16,000 per month. Despite receiving a sizable regular income from a series of discretionary trusts, the husband fell behind on his alimony.

The wife filed motions seeking enforcement of the alimony order, including asking the court to order the garnishment of any distributions from the trusts to the husband. The trustee objected, claiming that the law protected trust assets from all creditors, including the wife. The trial court agreed with the wife and issued the order.

The husband appealed, arguing that, because the trusts were discretionary, the wife could not reach their assets. The 2d DCA disagreed and upheld the order. The court concluded that the case closely resembled the facts in a 1985 Supreme Court ruling, Bacardi v. White. In both cases, the husband agreed to pay an amount of alimony as part of the divorce, but stopped paying, despite receiving income from trusts. The court in Bacardi stated the protections afforded by spendthrift trusts “should not be an absolute bar to the enforcement of alimony orders,” noting that allowing the use of these trusts to frustrate a former spouse’s effort to collect alimony would be “unjust and inequitable” because it would permit the spouse with the alimony obligation “to enjoy the benefits of wealth without being subject to the responsibility to support those whom he has a legal obligation to support.”

Like the Supreme Court ruled in Bacardi, the 2d DCA limited the ex-wife’s right to collect. The ruling would not allow the wife to force a trustee to make a distribution. The garnishment extended only to distributions made by a trustee of a trust in that trustee’s discretion. Because the garnishment order did not mandate the issuance of distributions, the trusts’ status as discretionary trusts did not matter, contrary to the husband’s arguments before the court.

Divorces and their aftermath can, unfortunately, be contentious matters, especially when one spouse refuses to comply with court-ordered support obligations. In this case, the ex-wife refused to give up pursing her rights, even in the face of her ex-husband’s intricate strategy to deny her alimony. If your spouse is derelict in meeting his or her legal obligations to you regarding alimony, do not let him or her use trusts or other legal tools to block you from receiving what you are owed. Talk to the South Florida family law attorneys of Sandy T. Fox, P.A. They are committed to helping Fort Lauderdale and Miami-Dade people receive the support to which the law entitles them. Contact us online or by calling (800) 596-0579 to schedule your confidential consultation.

More Blog Posts:

Ex-Wife’s Cohabitation Arrangement Warrants Reduction in Alimony, Fort Lauderdale Divorce Lawyer Blog, Nov. 13, 2013
Can You Modify Alimony in Florida?, Fort Lauderdale Divorce Lawyer Blog, Aug. 28, 2013