PBCBA BAR BULLETINS pbcba_bulletin_Sept. 2019 | Page 21

PROBATE CORNER
Post Bacardi - The Hangover Continues
DAVID M. GARTEN
Are all discretionary spendthrift trusts,
including special needs trusts, subject to
the beneficiary’s legal obligation of support
and a continuing writ of garnishment on
disbursements that are due to be made or
which are actually made from the trust?
In Bacardi v. White , 463 So. 2d 218 (Fla.
1985), the parties entered into a marital
settlement agreement in which the former
husband (“H”) agreed to pay the former wife
(“W”) $2000 per month in alimony. Soon
after entry of the final judgment, H stopped
paying alimony. W obtained two judgments
for unpaid alimony and a judgment
for attorney's fees and served a writ of
garnishment on the trustee of a spendthrift
trust created by H's father for his benefit.
Additionally, W obtained a continuing writ
of garnishment against the trust income for
future alimony payments as they became
due. The trustee and the former husband
appealed the garnishment order, asserting
that the trust could not be garnished for the
collection of alimony because it contained a
spendthrift provision.
The issue on appeal was whether
disbursements from spendthrift trusts
can be garnished to satisfy court ordered
alimony and attorney's fee payments before
such disbursements reach the debtor-
beneficiary. The court held that: (a) the
continuing aspect of garnishment orders
may be sustained in lieu of ne exeat as
necessary to secure payment of alimony;
(b) a continuing garnishment against a
spendthrift trust in lieu of ne exeat is also
a "last resort" remedy that is available only
when the traditional methods of enforcing
alimony arrearages are not effective; (c)
the right of garnishment is limited to
disbursements that are due to be made or
which are actually made from the trust;
(d) if disbursements are wholly within the
trustee's discretion, the court may not order
the trustee to make such disbursements.
However, if the trustee exercises its
discretion and makes a disbursement, that
disbursement may be subject to the writ
of garnishment; (e) where a continuing
garnishment is appropriate, the trustee, if
it wishes to make payments to the debtor-
beneficiary in excess of alimony then
due, should seek court approval before it
makes such payments. The court may then
authorize such payments if sufficient assets
remain in the trust or if other provisions
are made to secure the payment of alimony
to the person who should receive it; and
(f) an order awarding attorney's fees or a
judgment for such fees which result from
the divorce or enforcement proceedings is
collectible in the same manner as alimony.
Such awards represent an integral part of
the dissolution process and are subject to
the same equitable consideration because
“if the ex-spouse must pay attorney's fees
out of the support awards, it only reduces
the amount of support available to the
needy party.”
In Berlinger v. Casselberry , 133 So. 3d 961 (Fla.
2nd DCA 2013), the parties were divorced
after thirty years of marriage. Pursuant to
a marital settlement agreement, the former
husband (“H”) agreed to pay the former wife
(“W”) $16,000 a month in permanent alimony.
H and his new wife enjoyed a substantial
lifestyle sustained through payments made
to H from multiple discretionary spendthrift
trusts. H was provided a Visa card from the
co-trustee of the discretionary trusts to use
for paying expenses not directly paid by
the trusts, including expenses for travel,
entertainment, clothing, medical expenses,
grooming, gifts, and the new wife’s credit
card bills. H stopped paying alimony and
W filed a motion for writ of garnishment
against the trustee of the trusts seeking to
attach the present and future distributions
made to or for the benefit of H from the
trusts. W alleged that traditional methods
of enforcing alimony were insufficient.
H asserted that the trusts could not be
garnished for the collection of alimony
because they contained a spendthrift
provision. The trial court entered orders
granting W’s motion for continuing writs
of garnishment against the trusts which
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provided, in part, that all distributions made
directly or indirectly to, on behalf of, or for
the benefit of H by the trustees of all of the
trusts would be made payable to W unless,
at the time of any future distributions,
there was no alimony or alimony arrears
owed. The appellate court affirmed. The
court held that: (a) in accordance with
Bacardi , the order granting W’s motion for
continuing writs of garnishment against
the discretionary spendthrift trusts was
proper; (b) §§736.0503 and 736.0504 codify
the Florida Supreme Court's holding in
Bacardi and that neither section protects
a discretionary trust from garnishment
by a former spouse with a valid order of
support; and (c) Florida's strong public
policy favoring enforcement of alimony and
support orders overcomes Florida’s public
policy favoring spendthrift provisions in
trusts and protecting a beneficiary's trust
income.
In Alexander v. Harris , 2019 Fla. App. LEXIS
7659 (Fla. 2nd DCA 5/17/19), the former
husband (“H”) is the sole beneficiary of
a special needs trust with funds from
the settlement of a product liability
action brought on H's behalf after he was
catastrophically injured in a car accident
as a minor. The special needs trust is a
spendthrift trust that provides him with
supplemental income while maintaining
his eligibility for public assistance. H does
not exercise any control over the trust, does
not have the ability to compel the trustee
to disburse any trust funds, and does not
personally receive any disbursements from
the trust because they are made directly to
third parties for the sole benefit of H. The
income from the trust exceeds H’s monthly
average expenses. The former wife (“W”)
sought enforcement of an order awarding
her child support for the parties' minor
child and a continuing writ of garnishment
directed to disbursements to H from the
special needs trust. In response, H argued
that using the trust's funds to satisfy his
support obligations would jeopardize his
eligibility for public assistance under
federal law. The appellate court rejected
H’s argument and held that the special
needs trust does not protect H from his
legal obligation to support his child and
that a continuing writ of garnishment was
appropriate, citing Bacardi .