Trust Law “Back to Normal” in Pfannenstiehl Decision

The Supreme Judicial Court issued a long-awaited decision in Pfannenstiehl v. Pfannenstiehl yesterday. The decision reversed a prior decision of the Appeals Court that upheld the inclusion of assets of a discretionary spendthrift trust in the marital estate of a divorcing couple. The Appeals Court decision, if it had been allowed to stand, would have allowed the trust beneficiary’s spouse to obtain a share of the trust assets as part of the divorce. The decision of the Appeals Court was widely criticized and introduced considerable uncertainty in the drafting of spendthrift trusts, trusts designed to protect assets from a beneficiary’s creditors, including a divorcing spouse. The SJC decision made clear that the assets of such trusts are not normally available for division in divorce, though the Court did acknowledge that the right to distributions from such trusts may be considered in determining how to fairly divide marital property that is subject to division.