Shelley v. Shelley Case Brief

Summary of Shelley v. Shelley, 354 P.2d 282, 223 Or. 328 (1960)

Facts: Trustee, Bank, and the trust was created by Hugh Shelley. The trust provided that all the residue of his estate was to held in trust for his third wife, but if she predeceased, then his surviving son, provided that when he reached 30 distribute all or any of the remainder if such are approved by either of settlor’s brothers in law. If his son dies and leaves issue, then trust shall continue grandchildren until the youngest reaches 21, then the trust terminates and is distributed equally. Each beneficiary is restrained from alienating or assigning any interest and cannot subject his liabilities, obligations, or judgments or claims by creditors. Beneficiary Grant was married twice and had two children with each. His 1st wife had an order of alimony. The second had a order for alimony and support. After his marriage to present wife he disappeared. The trustee bank invested the trust.

Issue: Whether a spendthrift provision in trust can be given an effective bar to claims of beneficiary’s children for support and divorced wife’s alimony?

Holding: Beneficiary’s interest in income of trust, under spendthrift provisions, is subject to claims of his divorced wife for alimony and support for his children to the extent deemed reasonable under the circumstances.

Procedure: Circuit Ct rendered judgment enjoining the trustee from disbursing assets and a garnishment was brought. Df creditors obtained judgment against settlor ; Supreme Ct affirmed decree and remanded case for modification.

Rule: A spendthrift provision of a trust is not effective against the claims of the beneficiary’s former wife for alimony and child support.

Rationale: The testator’s privilege to dispose of property at his pleasure is not without limitation or restriction. A court may impose on the privilege such restrictions as are consistent with its view of sound public policy UNLESS the legislature has expressed a contrary view. There is no Oregon statute which would bar the claim before the court. A spendthrift provision is subject to claims for alimony and support. Once the validity of spendthrift trust has been est. then the validity of the restraint against the claims for support and alimony is more easily reached.

Public policy requires that the trust be subject to claims for support b/c parents have an obligation to pay for their children. If the parent fails, society pays for their support. Likewise, the duty to support a former wife should override the restriction called for by a spendthrift provision. The duty of a married man to support and protect his wife and children is inherent in human nature. It is not ordinary indebtedness, it is a responsibility far superior to paying one’s debts. NO part of a man’s property or income should be exempt from meeting this liability.

However, G.Shelley is not a beneficiary of the income of the trust, and his right to receive any portion of the corpus is at the discretion of the trustee. If he fails to support the children out of assets other than income of the trust, his children have no claim against the trust. Until the trustee exercises his discretion, G.S has not realized interest and Pl cannot reach the corpus.

Copyright © 2001-2012 All rights reserved. Privacy Policy HotChalk Partner