Money a spouse holds in a trust counts in a Georgia alimony case, and sometimes it can be reached to pay the award.
A Trust You Set Up for Yourself
In Speed v. Speed, 263 Ga. 166 (1993), a husband put his share of a personal injury settlement into an irrevocable trust naming himself sole beneficiary, with a spendthrift clause barring creditors. The Georgia Supreme Court held that “because the husband is both the settlor and the sole beneficiary of the trust,” the spendthrift clause was unenforceable and “does not protect the trust property from claims for alimony or property division.”
A Trust With Other Beneficiaries
The result changes when the spouse is not the only beneficiary. In Avera v. Avera, 253 Ga. 16 (1984), the husband was settlor and trustee of a trust paying him the income for life and leaving the principal to his children. The court held the wife could reach his interest in the net income for alimony and child support, but not the principal.
It Still Counts as Part of the Estate
A trust out of reach is still not invisible. In McGinn v. McGinn, 273 Ga. 292 (2001), the husband was a beneficiary and co-trustee of a trust holding stock in his family’s company. The trust corpus was not subject to the wife’s claims, but the court held that “[t]he value and reasonable earnings potential of the stock … is discoverable because evidence thereof is admissible,” because his interest in the trust is part of the separate estate that OCGA 19-6-5(a) requires the court to consider.
A trust a spouse might someday inherit is different. In Cormier v. Cormier, 280 Ga. 693 (2006), the wife had “no current access to or present interest in the trust, which belongs to wife’s mother,” and the trial court properly attributed no trust income to her.
So the questions are who created the trust, who benefits, and whether the spouse has a present interest.
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This post is a quick overview of the law and is not intended as legal advice. Please feel free to contact our office for a consultation if you have questions about this or any other legal aspects regarding your case!