Trusts as Security or Source for Support

Courts have allowed or ordered trusts to be established under IMDMA §503(g) when the circumstances of a case warranted it, as discussed above in §4.26.
Other trust issues arise as well in the child support context. For example, in In re Marriage of Chapman, 297 Ill.App.3d 611, 697 N.E.2d 365, 231 Ill.Dec. 811 (1st Dist. 1998), the husband was the beneficiary of five separate trusts, two of which gave the husband the right of appointment to direct his trustee to pay money from the trust to assist his descendants. Both trusts included limited powers of appointment whereby, upon written direction by the beneficiary husband, the trustee would distribute from the trust estate such amount or amounts as the beneficiary might appoint for the descendants of the beneficiary husband. Thus, the trust in this case was distinguishable from that in In re Support of Matt, 105 Ill.2d 330, 473 N.E.2d 1310, 85 Ill.Dec. 505 (1985), insofar as the trust in Matt clearly stated that it was not the subject of pledge, transfer, or encumbrance by the beneficiary.

Chapman further stated that the obligor spouse could seek enforcement by order of the trial court directing the beneficiary of the trust to direct the trustees to make the child support payment or, alternatively, simply garnish the trust itself, as well as its assets.

In addition, with regard to whether a court can order the payment of future child support from a trust, the court clearly stated that Illinois law limits the garnishment of spendthrift trusts solely to “unpaid child support obligations” (§2-1403 of the Illinois Code of Civil Procedure, 735 ILCS 5/1-101, et seq.). Nonetheless, one of the five trusts at issue was a self-settled trust, which could be used for payment of either child support arrearages or future child support payment within the meaning of IMDMA §503(g) in order to promote the best interests of the dependents. In re Marriage of Steffen, 253 Ill.App.3d 966, 625, N.E.2d 864, 192 Ill.Dec. 709 (4th Dist. 1993).

Courts can also impose a constructive trust over funds that have been erroneously directed to the wrong party. Perkins v. Stuemke, 223 Ill.App.3d 839, 585 N.E.2d 1125 Ill.App.3d 839, 585 N.E.2d 1125, 166 Ill.Dec. 103 (4th Dist. 1992), for example, imposed a constructive trust on proceeds from an insurance policy paid out on the death of the payor father to the child of his second marriage rather than the child of his first marriage. Pursuant to the judgment, the decedent father had owed an obligation to maintain the mother as a beneficiary of his life insurance; in violation of that order, he had changed both policies and beneficiaries. Over objection, the court limited the trust, however, to the amount called for by the order, allowing the second daughter, who was named as the actual beneficiary, to retain the remainder of the insurance proceeds.

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