In re Marriage of Epperson: Holding

Montana adheres to the overriding rule: assets owned by an irrevocable trust are property of the trust, while property owned by a revocable trust are property of the grantors or spouses. In re Marriage of Malquist, 227 Mont. 413, 739 P.2d 482 (1987). Since the Epperson’s irrevocable trusts at issue were, in fact, irrevocable trusts, the assets within the irrevocable trusts were not divisible property.

However, this conclusion would hold true only as long as the irrevocable trusts themselves stood intact. The second exception to the major rule against the division of third-party assets recognizes that the conveyance of the assets into the irrevocable trust itself can be attacked and rescinded annulled if consideration is not legitimate and at market value. If sufficient reason can be found under the law to terminate the third party’s ownership interest after the conveyance, the property may revert back to the parties. This is one reason an independent trustee with critical spendthrift clauses are necessary to withstand these challenges because the independent trustee is a fiduciary with sole responsibilities of the protecting the assets in the trust for the beneficiaries. If the trustee does anything against his fiduciary obligation, like disperse funds outside of his obligations, he can go to jail for breaching his duty. Continue reading: Dividing Irrevocable Trust Assets or Property

Rocco Beatrice, CPA, MST, MBA, Managing Director, Estate Street Partners, LLC.
Mr. Beatrice is an asset protection award winning trust and estate planning expert.