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White v. Sargent6/2/2005
spute this; indeed, Ms. White acknowledges in her brief that "reinstating the trust will leave a modest estate from which the surviving spouse can claim a share." She nonetheless asserts that, "given the totality of the circumstances, this factor should not be controlling." Specifically, she contends that the trial court should have explored whether this result was "neutralized" by the fact that, in the first divorce proceeding, Mrs. Sargent was denied permanent alimony, and the further fact that, at the time of the creation of the trust, the Sargents were "separated and seeking divorce."
These facts, however, are irrelevant to the Windsor analysis. The primary question is whether the trust was created in bad faith in order to circumvent Mrs. Sargent's marital rights, not whether Mrs. Sargent would have been entitled to alimony payments from Mr. Sargent had their divorce become final before he died. Given the evidence of record, it is irrefutable that, because almost all of Mr. Sargent's assets were in the trust, Mrs. Sargent would have been left with virtually nothing. The trial court did not err in so finding, particularly in light of the fact that Mrs. Sargent stayed home to care for the children at her husband's insistence and therefore accrued no assets of her own.
We hold, therefore, that the trial court correctly applied the factors set forth in the Windsor case. Its conclusion that Mr. Sargent did not act in good faith in establishing the trust is well supported by the evidence of record.
IV.
Finally, appellants maintain that the trial court erred in ruling that the corpus of the voided trust should become part of Mr. Sargent's estate. In particular, they contend, annuity contracts such as the ones involved here cannot be part of a decedent's estate. Rather, Ms. White asserts in her brief that if this court determines that the trust is indeed void, "proceeds paid under the annuity contracts should revert to the prior designated beneficiaries [Mary and Angelique]" and not to the probate estate.
There appears to be no case law in the District of Columbia directly on point, but other courts have ruled as follows:
here the effect of an inter vivos trust is to remove assets from the decedent's estate that would otherwise have been available for the surviving spouse's distributive share, and the decedent has reserved to himself the practical attributes of ownership of the trust property for his lifetime, the trust property may be subject to claims made by the surviving spouse under the laws regulating succession to decedents' estates.
Staples v. King, 433 A.2d 407, 410 (Me. 1981) (citing Newman v. Dore, 275 N.Y. 371, 9 N.E.2d 966 (1937)). In Staples a surviving widow, who was not a beneficiary of trusts established by her husband, sought to have the trusts declared void and the corpora of the trusts included in her husband's estate to be available for her distributive share. The trial court dismissed her complaint for failure to state a claim upon which relief could be granted, but the Supreme Court of Maine reversed the dismissal and remanded the case for further proceedings. The court held that "Mrs. Staples was entitled to have her husband's trusts declared invalid as against her upon proof that when he executed the trusts he did not intend to relinquish ownership of the trust property . . . ." Id. at 411. This is precisely the situation here. Mr. Sargent created a trust in which he retained the right to withdraw "as much of the income and principal" as he requested, as well as the power to amend the trust. Because nearly all of his assets were transferred to the trust, the practical effect was to leave his estate virtual
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