The Spouse Is Not a Creditor.

The distinction was put back in front of the profession this summer. On 3 August 2026, Trusts & Estates convened a T&E Inner Circle session on asset protection trusts with Martin M. Shenkman, moderated by the journal’s editor in chief, Susan Lipp. The published description promised recent developments on divorce risk, self-settled trusts and fraudulent conveyances, and — the phrase that earns a second reading — “a novel idea for piercing (or protecting, if your client is on the other side) trust planning in divorce cases.” “The T&E Inner Circle | Asset Protection Trusts: New Developments,” Trusts & Estates / WealthManagement.com (published 1 July 2026; session dated 3 August 2026).

That parenthesis is the honest posture. In divorce, the same structure is attacked and defended by lawyers of equal skill, and which side you are on is an accident of the calendar. What follows is not a report of that session, which was not published in transcript and which cites no cases. It is a survey of the decided authority that makes the question hard, and of what that authority says about how structures should be built.

A creditor asks one question: can I reach this? A divorcing spouse, through counsel, asks three, and they are governed by different rules.

First: is the beneficial interest a divisible marital asset? This is a question of property characterisation under state domestic relations law, and it usually turns on whether the interest is presently enforceable or a mere expectancy.

Second: whose law applies? Trusts choose their own governing law. Divorce courts do not always let them.

Third — the one that is most often overlooked: even if the interest cannot be divided, can it be counted? A trust interest excluded from the marital estate may still be treated as a resource in setting alimony or support. And support obligees are, in most American jurisdictions, exception creditors who pierce spendthrift protection outright.

A structure can win the first two questions and lose on the third, which is why “the trust is protected” is rarely a complete answer.

Massachusetts supplied the modern anchor. In Pfannenstiehl v. Pfannenstiehl, 475 Mass. 105 (2016) (SJC-12031, decided 4 August 2016), a probate judge awarded the wife sixty per cent of the present value of the husband’s interest in a discretionary spendthrift trust as part of the divorce judgment. On 4 August 2016, the Supreme Judicial Court vacated that award.

The reasoning is the point. The husband’s interest was “so speculative as to constitute nothing more than an expectancy,” and therefore not assignable to the marital estate. Id. at 105–06. Interests in genuinely discretionary trusts are ordinarily treated as expectancies — too remote for inclusion — because the beneficiary has no present enforceable right, cannot compel a distribution, and must depend on the trustee’s exercise of discretion. Id.

Read that list backwards and it is a drafting specification. Present right to use principal defeats protection. Power to compel a distribution defeats protection. A support standard that hardens into an enforceable entitlement, an ascertainable-standard distribution right, a beneficiary-removable trustee who can be leaned on — each of these converts an expectancy into something a court can value and divide. What saved the Pfannenstiehl trust was that it gave the beneficiary nothing he could demand.

New Hampshire reached the parallel conclusion in In the Matter of Jonathan Merrill and Lea Merrill, 174 N.H. 195, 261 A.3d 300 (2021), discussed in a previous note in this series, holding that a spendthrift trust interest was not a marital asset subject to equitable division. The doctrine is not confined to Massachusetts, but neither is it uniform, and it is state law all the way down.

Here the authority genuinely splits, and the split is the most important practical fact in this area.

In Dahl v. Dahl, 2015 UT 23, 345 P.3d 566 (Utah 2015), the Utah Supreme Court confronted a trust that selected Nevada law. It declined to honour the choice-of-law provision, holding that Utah’s “strong public policy interest in the equitable division of marital assets” required the application of Utah law — and, on the instrument before it, that the trust was revocable, with the consequences that follow.

Two years later, in Klabacka v. Nelson, 133 Nev. 164, 394 P.3d 940 (2017), the Nevada Supreme Court held that the self-settled spendthrift trusts before it were “validly created self-settled spendthrift trusts,” and enforced them against the spousal claims asserted. Nevada’s self-settled spendthrift trust statute, Nev. Rev. Stat. ch. 166, unlike the domestic asset protection trust statutes of several other states, does not contain an express exception for alimony or child support claims — a legislative choice that did substantial work in the outcome. Compare Del. Code Ann. tit. 12, § 3573 (excepting certain support and alimony claims from Delaware’s qualified disposition protections). Statutory carve-outs vary by state and are amended from time to time; the position in any given jurisdiction should be confirmed against the current text.

Set the two side by side. The same category of instrument, the same governing-law clause, and two supreme courts reaching opposite results — because the deciding court’s own public policy, not the instrument’s nominated law, determined which law applied. This is the structural lesson: a governing-law clause binds the trustee; it does not bind a foreign judge. Where the settlor lives, where the marriage was, where the divorce is filed, and where the assets sit will frequently matter more than the words on the signature page. That is a reason to think hard about situs, connection and administration — real trustee, real records, real jurisdictional nexus — rather than to treat the clause as self-executing.

The most contested manoeuvre is decanting: a trustee distributes the assets of one irrevocable trust into a new one with different, usually more protective, terms. Done during a divorce, it looks to the other side exactly like a fraudulent conveyance in a dinner jacket.

The Connecticut and Massachusetts courts addressed it together in the Ferri litigation. The Connecticut Supreme Court held that decanting the trust assets, in the circumstances before it, was lawful notwithstanding that it placed them beyond the wife’s reach in the divorce. Powell-Ferri v. Ferri, 326 Conn. 457 (2017); see also Ferri v. Powell-Ferri, 326 Conn. 438, 165 A.3d 1137 (2017). On questions certified from Connecticut, the Supreme Judicial Court of Massachusetts held that property of a Massachusetts irrevocable trust may be decanted into a new trust “even if doing so would remove the trust assets from the beneficiary’s marital estate during his divorce.” Ferri v. Powell-Ferri, 476 Mass. 651, 72 N.E.3d 541 (2017).

Now the sentence practitioners skip. The SJC expressly left open whether a decanting undertaken solely to deprive the beneficiary’s spouse of marital assets would be invalid as contrary to public policy. Id. The door is open; nobody has yet walked through it in a reported decision, and the question is waiting for the right facts.

Which is to say: decanting is a real trustee power with real authority behind it, and it is also an invitation to litigate motive. A decanting executed years before any marital difficulty, for reasons documented at the time and unrelated to any spouse, is a different exhibit from one executed after the separation. The power is the same in both cases. The evidentiary posture is not remotely the same.

Suppose the structure survives characterisation and choice of law. Two exposures remain, and both are routinely underestimated.

Support and alimony obligees pierce the spendthrift clause. Under the Uniform Trust Code as adopted in most American states, a spendthrift provision is unenforceable against a claim by a child, spouse or former spouse who holds a judgment or court order for support or maintenance, and a court may order the trustee to satisfy such a claim out of present or future distributions. Unif. Trust Code §§ 503(b), 504(c); adoption and section numbering vary by state, and several enacting states have modified or omitted parts of these provisions. Most domestic asset protection trust statutes carry equivalent carve-outs. Nevada’s is a notable exception, which is exactly why Klabacka came out the way it did. The exception creditor’s existence means that “creditor-proof” and “spouse-proof” are simply different tests, and a structure evaluated only against the first has not been evaluated.

Excluded from the estate is not excluded from the calculation. A discretionary interest too speculative to divide can nonetheless bear on a support award, because a beneficiary with a history of regular distributions has a demonstrated standard of living and a demonstrated source. The asset is untouched and the cash flow it produces is fully visible.

Nothing in the above departs from the four principles this series returns to. It applies them to a different adversary.

Seasoning does more work in divorce than anywhere else. “In contemplation of divorce” is the fatal finding, and it is a finding about dates. A trust settled before the marriage, or years into a stable one, for reasons documented at the time, presents nothing to attack. A trust funded after the marriage began to fail presents its own motive.

Third-party trusts are materially stronger than self-settled ones. Pfannenstiehl and Merrill both involved trusts settled by someone other than the beneficiary. Parents and grandparents can build protection for a child that the child cannot build alone — and the child’s later divorce does not change who settled it.

Genuine discretion is the protective feature. Not a support standard the beneficiary can enforce. Not a right to income. A trustee with real, unfettered discretion and no compelled distribution.

Independent administration decides close cases. A trustee the beneficiary can remove and replace at will is a trustee the beneficiary controls, and control is what every one of these doctrines is ultimately looking for.

And situs must be earned, not merely recited. Dahl is the standing reminder that a jurisdiction clause is an argument, not a guarantee, when the forum has its own strongly held policy about dividing marital property.

The reason divorce is the hardest problem in this field is that the opposing party is not a stranger with a claim. She or he is a person with standing derived from the marriage itself, a court applying its own state’s family law, and a body of doctrine that was written to be difficult to evade — because society decided that it should be.

Structures built quietly, early, by somebody else, with real discretion and a real trustee, tend to hold. Structures assembled once the marriage was in trouble tend to become the other side’s exhibits. That is the same sentence this series writes about creditors, and it is not a coincidence: the badges of a transfer made to defeat a claim look identical whoever the claimant turns out to be.

The novel idea, when someone finally publishes it, will be a way of attacking the second category. It will not be a way of attacking the first.

This note is general commentary for informational purposes and is not legal advice for any specific matter. The treatment of trust interests in divorce is a matter of state law and varies substantially between jurisdictions; outcomes turn closely on the terms of the instrument, who settled it, when it was funded, the degree of discretion conferred on the trustee, and the forum in which the dissolution proceeds.