In re Marriage of Epperson: Facts

The couple executed parallel irrevocable trusts in 1999. The purpose of the irrevocable trusts was to minimize the estate and gift taxes on their assets to be passed to the children. Both spouses were named as trustees of the trust. The assets put into the trusts included the marital home, the land upon which it was built, and all personal property owned by the parties, including the tools used in the husband’s business. The beneficiaries of the two trusts were the seven children. “Both trusts contained a ‘purpose’ provision which stated: ‘The grantors established this trust for their family, consisting of the persons identified below, because they have contributed substantially and materially to the process of acquiring the property and are, therefore, the equitable owners thereof.'” 2005 WL 419605, at *1, 10.

In 2002, the wife filed for divorce. Due to the fact that her relationship with her children was positive and her relationship with her husband was negative, she argued that the property held in the two irrevocable trusts were not divisible upon divorce, and that the parties accordingly had a very limited marital estate to split. The husband’s argument was that the court should terminate the trusts. The trial court agreed with the husband because the husband and wife were trustee’s of each trust and thus they maintained control of the trust assets and therefore they could be forced by the court to adhere to the courts direction, thus terminating the trusts, and dividing the trust assets. If an independent trustee was in place with the proper spendthrift provisions, this would not have occurred. The wife appealed to the Montana Supreme Court. Continue reading re Marriage of Epperson: Holding: Irrevocable Trust Assets: Montana Rules re. Property & Asset Ownership

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