In 2011, estate and family lawyers eagerly awaited the New Jersey Supreme Court’s decision in Tannen v. Tannen. At issue was whether spouses have a right to make claims against trusts created by the other spouse’s family; specifically, whether such trusts are available and can be compelled to make distributions for the beneficiary spouse’s support. Estate planning lawyers expected guidance on drafting trusts to avoid or limit such claims. Family lawyers sought clarification, to assist clients in pursuing or defending claims against trusts established by the other spouse’s family.
On Dec. 8, 2011, the Supreme Court affirmed the Appellate Division’s decision in Tannen for substantially the reasons expressed in the Appellate Division’s 2010 opinion, 416 N. J. Super. 248 (App. Div. 2010), aff’d 208 N.J. 409 (2011). Considering the language of the discretionary trusts at issue and applying principles of both trust and divorce law, the Appellate Division found that (a) the trustees could not be compelled to make distributions to the beneficiary spouse, and (b) in the alimony determination, hypothetical trust income could not be imputed to the beneficiary spouse. The Supreme Court confirmed the Appellate Division’s guidance regarding several important issues. Tannen highlights the interaction of trust and divorce law in our courts and whether that works efficiently and equitably.
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