The alimony statute, N.J.S.A. 2A:34-23, in determining an alimony award considers “the income available to either party through investment of any assets held by that party.” The question that arose in Tannen v. Tannen, a New Jersey Appellate Division case, is whether income from a discretionary trust falls under the category of “income available”.
In Tannen, the wife’s parents settled an irrevocable, discretionary trust, with the wife as sole beneficiary, and the wife and her parents as co-trustees during her marriage. The trial court determined that the trust benefits to the wife must be considered before computing alimony, and therefore imputed income to the wife from the trust. The Appellate Division, upon examining the language of the trust, noted that although it provided that “The trustees shall pay… any or all of the principal thereof as the trustees shall determine to be in the beneficiary’s best interests, after taking into account the other financial resources available to the beneficiary”, it also stated “the beneficiary shall not be permitted, under any circumstances, to compel distributions of income and/or principal prior to the time of final distribution.” Moreover, in reviewing the testimony of the wife’s father, the Appellate Division discovered that his intention in settling the trust was so that the wife would not be able to compel distributions. Also, on some occasions, when the wife asked for funds from the trust for vacations, the distribution was not allowed.
Based on the explicit language of the trust, as well as the circumstances surrounding its execution, the Appellate Division overturned the trial court’s decision to include the income as it was not “available” to the beneficiary as per the statute requirement.