Another complex issue that can arise in family law cases involves the characterization of trust distributions received by a spouse during the marriage. The San Antonio court of appeals recently considered a case regarding the characterization of trust distributions.  Husband receives monthly distributions from a family trust that was established before the beginning of the marriage. Wife demanded to receive one-half of the distributions based on the notion that such distributions were community property. The trial court held the distributions were husband’s separate property and denied wife’s claim to one-half of the money.  The court of appeals affirmed, relying on the case of Sharma v. Routh. Trust distributions to a married beneficiary are separate property if the beneficiary has no present, possessory right to the trust corpus. Here, the trust was irrevocable and the terms that allowed for its amendment did not in fact then make it revocable.  Further, husband had no present, possessory rights to the corpus because the terms of the trust entitled him only to income distributions.

Benavides v. Mathis , ___ S.W.3d ___ 2014 WL 547904, 04-13-00186-CV (Tex. App.—San Antonio 2014, no pet. h.) (02-12-14)