I have an irrevocable trust set up for my children's benefit.  What I
need is any case law that involves the grounds for invading the
children's trust.

Specifically, I'm involved in a divorce case in which the judge has
for all practical purposes ordered that I invade the children's trust
to pay their school tuition when both parents, who agreed to enroll
the children in a private school, have substantial assets that could
be used to pay the tuition.  In effect, the judge is requiring that
the children are paying for their own tuition instead of requiring the
parents to pay the tuition.

What I would like to know is if there is case law precedent
(specifically in Pennsylvania) that found that a parent Trustee
improperly used Trust money to pay for a child's needs when in fact
the parent had the means to pay for the child without invading the
trust.  For example, a parent might have used the children's trust
assets to pay for food/clothing etc. when the parent could have been
using his or her own money instead.

Since my case is in Pennsylvania, it would be better if the case law
was from Pennsylvania.  However, if you can't find any PA cases, cases
from other states might also help.

Thanks!

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Request for Question Clarification by pafalafa-ga on 11 Jun 2005 18:32 PDT

Hello again, benfranklin-ga,

I must say, you do come up with some interesting questions.

As to this current one, I'd appreciate a bit of clarification.

You start off your question quite generically:

"What I need is any case law that involves the grounds for invading the
children's trust..."



but later on, you narrow it down very specifically...



"What I would like to know is if there is case law precedent
(specifically in Pennsylvania) that found that a parent Trustee
improperly used Trust money to pay for a child's needs when in fact
the parent had the means to pay for the child without invading the
trust...."


I do see one case, in particular, that's relevant to the general
question:  a case involving a divorced dad who wants to dip into the
kids' trust fund in order to pay his alimony obligations to his ex,
but the trustee won't let him (I'm wildly paraphrasing here, but I
think I got the gist of it).


But I don't see much more PA case law on this topic (though there are
precedents pertaining to invasion of other types of trusts) and
certainly nothing as specific as you indicated in the latter part of
your question.


Can you offer any advice as to the best way to proceed at this point...?


Thanks,

pafalafa-ga

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Clarification of Question by benfranklin-ga on 11 Jun 2005 20:06 PDT

The general principle involves case law precedent in which a trustee
was either found liable for improperly invading a trust, or
conversely, found justified for invading a trust with just cause.

I would suggest to proceed by searching for cases in any state first. 
I think it would probably be important that the cases involve parents
and trusts for children.

In my specific situation it would be most helpful to find out if there
are any cases out there in which it was found that the trustee
improperly invaded the trust based on the fact that the parent(s) had
sufficient means to pay normal expenses for the children, but opted to
use the children's trust money instead of paying out of their own
pockets.

Maybe there are cases involving child actors whose parents were
accused of misusing the child's money.  Maybe a precedent might be
found that doesn't specifically involve a trust per se, but involves
the parent's responsibly handling the children's money.

Let me know if this helps!

Thanks!

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Request for Question Clarification by richard-ga on 13 Jun 2005 17:13 PDT

As mentioned below, the exact language of the trust is probably the
most important element in finding the answer to your question.

Can you type out, as a question clarification, the exact language of
the trust (names excluded) that talks about
(i) the operative language, something like "the trustee shall, in the
exercise of his absolute discretion, pay trust income and principal to
or for the benefit of one or more of [the children] for their health,
support, maintenance in reasonable comfort, etc. etc. etc.
(ii) anything that the trust has to say about 'support.'  Possibly it
says that the trustee cannot make any payment that would constitute
the parents' legal obligation of support.
(iii) if it does have that parental support restriction, then I'd need
to know more about the age of the children, what level private school
you're talking about, is it boarding school, etc. etc. etc.

Thanks!

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Clarification of Question by benfranklin-ga on 13 Jun 2005 23:49 PDT

The trust language is very broad, giving the Trustee the right to use
the trust for a variety of things for the children.  The trust does
not require the trustee to do anything until the children are 25.

Regardless, the trust language in my particular case isn't important
for what I'm looking for.  I'm looking for case law precedents that
involve a court ruling that it was improper for parents to invade a
child's trust because the parents were financially able to provide for
the children without the invasion of the trust.

I once handled the appeal of a case where a parent had invaded her
children's trust funds, and explained after-the-fact that her expenses
were for such things as the furniture in their bedrooms, the food they
ate, her car payment (ostensibly because she purchased a bigger car
for the children), part of her mortgage (ostensibly because she
purchased a bigger home to provide room for the children), and even
the children's birthday and Christmas presents. The mother had
significant assets of her own. Despite reasonably clear case law which
restricted the (mis)use of the children's trust funds in this manner
based upon the actual language of the trusts, the trial court
permitted the expenditures on the basis that the grantors of the trust
(the maternal grandparents) had testified that they had no objection
to this use of the trust, and thus that the use was consistent with
the grantors' intention. The Court of Appeals issued something of a
"split the baby" decision which was somewhat at odds with the law, and
I think was driven in no small part by a desire to minimize the harm
the family was doing to itself through the protracted litigation.

In any event, the language of the trust can be very important to the
resolution of this sort of conflict.

Since the judge's "decision" seems rather improbable, I wonder if it
has been correctly interpreted  ("... has for all practical purposes
...").  I could understand that he might (!) insist on using the trust
funds as a fall back source of support, should the parent(s) no longer
meet the children's needs  - or no longer be able to.
Could this be the situation?

The judge was asked to rule that the parents pay the children's
tuition.  Instead, the judge ruled that if the parents can't agree on
how to pay the tuition, the Trustee may invade the trust to pay
tuition.  Since the kids' mother doesn't want to pay the tuition at
all, this means that "for all practical purposes" the parents aren't
going to agree, and the kids are going to have to pay the tuition from
their trust.

You mentioned case law about misuse of a trust.  Any examples?  I
really need some example that shows that parents were found to be
misusing a trust because they had ample assets and didn't need to
invade the trust.

Thanks!

Thanks Benfranklin.  This might not be your understanding of what the
judge said, but one could interpret it this way:  If the kids' mother
refuses to pay her share, an "agreement" could be the father's
acquiescing and "agreeing" to pay everything.

NO, I personally don't like that and think the judge should have
included sharing child support more strongly in his judgement, but  -
of course -  I don't know the case.
Myoarin