Trusts and Estates

In re the Marriage of Elizabeth Anne Wendt and William Nicholas Pullen

Cite as C084083
Filed April 28, 2021
California Court of Appeal, Third District

By Golnaz Yazdchi
Sheppard Mullin Richter & Hampton LLP
https://www.sheppardmullin.com

Headnote:  Spendthrift Trusts — Attorney’s Fees and Support Orders

Summary: Assets of a spendthrift trust may be reached for payment of attorney’s fees and costs in marital dissolution proceedings where the trustee is joined as a party, and separately for child support orders.

Father created an irrevocable spendthrift trust for his daughter, Elizabeth Wendt, and named Bremer as the trustee.  The trust designated Illinois law as to matters of interpretation, and law of the principal place of administration—Indiana—for all other matters.  Wendt did not have the right to compel distributions, which were within the trustee’s discretion.  In connection with marital dissolution proceedings from her husband, William Pullen, Wendt requested distributions from the trust.  Bremer denied the request.  Pullen then succeeded in joining the trust and the trustee, Bremer, to the dissolution action and compelling Bremer to disburse funds to Wendt for spousal or child support orders and for attorney’s fees.  Pullen also filed a request for attorney’s fees and costs from Bremer for expenses in connection with the successful motion to join the trust and trustee under Family Code section 2030, which provides that a wealthier party to the proceeding may be compelled to pay another party’s attorney’s fees.  The family court denied the request finding that there was no bad faith by the trustee, Bremer.

The Appellate Court reversed.  The trustee’s liability for attorney’s fees was a matter of trust administration, hence Indiana law applied.  However, because California and Indiana follow the modern interpretation regarding the liability of trusts and trustees to third parties, the distinction was immaterial.  Parties to a dissolution proceeding other than spouses can be required to pay attorney’s fees and costs under section 2030 of the Family Code, as California has a strong public policy in favor of ensuring a level playing field between the parties in a dissolution action.  Such a right to attorney’s fees is not conditioned on bad faith conduct.  A spendthrift provision like the one at issue may not apply to claims for child support because the statute specifically precludes a beneficiary’s efforts to avoid support obligations.

https://www.courts.ca.gov/opinions/documents/C084083.PDF

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