The state’s highest court has ruled that the scion of a wealthy family does not have to pay his ex-wife $1.4 million from a trust set up by his father for family members.
The Supreme Judicial Court decision, handed down Thursday, said the trust could not be considered part of the ex-husband’s marital estate because he had no control over the fund and could receive the money only at the discretion of the trustees.
“It’s quite significant both in divorce and in estate planning,” said Harry S. Margolis, a Boston attorney.
The case involved Curt and Dianne Pfannenstiehl, who were married in 2000 and divorced in 2012.
Curt Pfannenstiehl is the son of Fred Pfannenstiehl, president of Educor Inc., which owns Bay State College and other for-profit educational institutions in Massachusetts and Indiana.
Though Curt is an assistant bookstore manager at an Educor subsidiary, he earns $170,000 a year, and is one of 11 beneficiaries of a $24 million trust set up by his father.
Dianne served as an Army reservist for about 18 years until the Pfannenstiehl family encouraged her to retire in 2004, two years before qualifying for her pension, so she could care for the couple’s daughter, who has Down syndrome, the SJC ruling said.
More recently, she earned $22,672 as a part-time ultrasound technician.
Between 2008 and 2010, Curt’s brother and a family attorney, who oversee the trust, paid Curt $800,000 from the fund, allowing both Curt and Dianne to live an “upper-middle-class lifestyle,” the court said, with a $700,000 home, several vacations a year, and a country-club membership.
After the divorce, the state Appeals Court ruled Dianne should continue to receive money from the trust because it was “woven into the fabric of the marriage” and “integral to the family unit.” The court awarded her what it said was 60 percent of his share of the trust money, plus interest, or about $1.4 million.
But the SJC disagreed, ruling the trust had been set up so that it was not under Curt’s control and he was not necessarily guaranteed any future payments.
“We conclude that Curt’s interest in the 2004 trust is so speculative . . . that it is ‘not assignable to the marital estate,’” Justice Fernande Duffly wrote.
Curt’s lawyer, Robert J. O’Regan, said the ruling ensures trusts will be honored as intended. “Fred did not intend
. . . for an ex-spouse to get part of his estate, and that’s what the court is upholding,” he said.