Husband and Wife in divorce proceedings had a marital estate worth $21 million. They disputed whether the assets held in certain irrevocable trusts were also part of their marital estate.
In the mid-2000s, Husband retained counsel for the purpose of creating a comprehensive family estate plan. Over the years, the parties together established and funded numerous irrevocable trusts.
Although Wife signed documents relating to the trusts, she denied knowing any of the details of the estate plan. She denied being involved in the planning process. She said that her only involvement with the trusts was to blindly sign documents based on Husband’s “misrepresentations.”
It is a fact that their children and further descendants would later have substantial tax benefits
from this estate plan. The problem from Wife’s perspective was that Husband’s estate planning
techniques substantially reduced the size of the marital estate for purposes of these
divorce proceedings. Wife accused Husband of “divorce planning.”
The Trial Court ruled that assets in those trusts were not part of the marital estate. Wife appealed.
The Court explained why the trusts were good. The trusts were not illusory in form. They were all
created by written agreements. Wife’s failure to read documents before signing them was no
defense.
The trial court had stressed that Wife could still argue later at trial that, by creating these trusts, Husband nevertheless committed dissipation or fraud against her.
The trusts remained in place. But, that did not mean the legal arguments about them were over.
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