Assailant's Spendthrift Trust Accessible to Child of Murdered Parents
de Prins v. Michaeles, SJC-12865 (October 20, 2020)
In de Prins v. Michaeles, the Massachusetts Supreme Judicial Court (SJC) tackled a trust issue arising under unusual circumstances when it answered a question of state law certified by the U.S. Court of Appeals for the First Circuit.
The case arises out of a double murder committed in Arizona by a former Massachusetts resident who, just prior to the murder, established and funded an irrevocable spendthrift trust that permitted unlimited distributions to himself during his lifetime. The question certified to the SJC was whether the assets of the trust were protected from a reach and apply action by the deceased settlor's creditors (the surviving child of the couple murdered in Arizona). The SJC answered “no” and provided an analysis of applicable law in support of its decision.
At the outset of its review, the SJC determined that Massachusetts common law, rather than the Massachusetts Uniform Probate Code (“MUPC”), governed the case because the MUPC expressly provides that it does not replace applicable common law unless specifically modified by the MUPC, which the Court found did not address the situation at bar (i.e., the ability of a creditor to reach the assets of an irrevocable self-settled trust after the settlor’s death).
The defendant-trustee argued that the trust should not be reached because he had not made any distributions to the settlor prior to his suicide (the day after the double murder), and because the trust could not make payments to or for the settlor after his death. Citing a line of cases including Ware v. Gulda, 331, Mass. 68 (1954), the SJC ruled that it is well-established in Massachusetts that a settlor may not use a self-settled trust to protect his assets from creditors. The Court went on to hold that there is no difference in the application of this law after a settlor’s death, and ruled that the assets of the settlor in this matter were not protected from a reach and apply action by the settlor’s creditors. The Court noted that the trustee’s argument that he did not actually make distributions to the settlor missed the mark, stating that “the important point is what is within the trustee’s power to do, not what he actually does.” At the conclusion of its analysis, the SJC highlighted the equities of the case by pointing out that it would entirely contradict well-established policy of the Commonwealth to prevent the child of two murder victims from recovering assets that the murderer attempted to “shield … from the consequences of his violence.”
Takeaway: A self-settled spendthrift trust with discretion for distributions to the settlor will not protect assets from creditors before or after the death of the settlor.
Co-Signor for Convenience
Matter of Estate of Zanconato, No. 19-P-454, 2020 WL 4577121, at *1 (Mass. App. Ct. Aug. 10, 2020).
In the Matter of Estate of Zanconato, the Appeals Court upheld the ruling of the trial court and ordered the transfer of the contents of various joint bank accounts from a surviving co-signor on the accounts to the estate.
The Appeals Court began its discussion of the case by reciting the well-established rule that naming additional account holders on a bank typically “operate[s] as a present and complete gift in joint ownership if [the owner] clearly intended such a result,” and noting the similarly well-established exception to the rule applicable to joint accounts that are created for convenience only and not intended as a gift.
The Court noted that the nature of a joint account as either a gift or for convenience only is a question of fact that is determined by the donor’s intent, and that the burden of...
