Powell-Ferri v. Ferri, 326 Conn. 457 (2017) (companion case, Ferri v. Powell-Ferri, 326 Conn. 438 (2017))

The Connecticut Supreme Court ruled, in a precedent-setting case, that the decanting of trust assets to protect them from a party’s reach in a divorce case was lawful.  The Connecticut Supreme Court also upheld the trial court’s decision making alternate property distribution and alimony orders in the divorce case.  The Husband, who was represented by Carole Topol Orland and Sarah E. Murray of Broder Orland Murray & DeMattie LLC in the divorce trial, was the beneficiary of a trust that had been established by his father prior to the parties’ marriage.  The Husband had the right to withdraw principal from the trust when he reached certain ages, though he had not exercised this right except under limited circumstances.  During the dissolution action, without the Husband’s prior knowledge, the Trustees decanted the trust assets into a new spendthrift trust of which the Husband was beneficiary and filed a declaratory judgment action seeking a ruling that they had validly exercised their authority.  The trial court found that the decanting was improper and ordered that 75% of the trust assets (the percentage which the Husband had a right to withdraw under the terms of the original trust at the time of the decanting) be returned to the original trust.

The Trustees appealed this Order, and the appeal remained pending during the dissolution trial.  The parties agreed that the trial court could issue “alternate” Orders because the validity of the decanting was at issue at the time of the dissolution trial.  The value of the trust assets was in dispute at trial, with the Wife claiming they were worth at least $98 million.  In her Proposed Orders at trial, the Wife requested an award in excess of $50 million.  In contrast, the trial court’s “alternate” Orders were as follows: if the decanting was found to be invalid, then the Husband was to pay $12 million in lump sum alimony to the Wife in light of the trust assets (and periodic alimony would cease), whereas, if the decanting was found to be valid, no lump sum alimony order would issue and the Husband would only have to pay periodic alimony of $25,000 per month.  The Wife was not successful in her appeal of this decision.  The Connecticut Supreme Court, after deciding in the companion civil case that the decanting had been lawful, affirmed the trial court’s dissolution orders.  The trial court’s alternate Order of periodic alimony only, with no lump sum alimony award, will be the effective Order in the dissolution action.