Cleopatra Cameron is the granddaughter of wealthy oilman Arthur A. Cameron. Cleopatra’s father, Arthur A. Cameron, Jr., created several spendthrift trusts for Cleopatra’s benefit which are collectively referred to in this post as “Cleopatra’s Trust.”
Cleopatra married Christopher Pallanck in 2005. In 2009, Christopher filed for divorce in Santa Barbara County, California. The California family law court granted the divorce in October 2010. In addition, the court granted legal and physical custody of the couple’s two minor children to Christopher and ordered that the trustee of Cleopatra’s Trust pay spousal support and child support directly to Christopher.
Although Cleopatra’s Trust is a spendthrift trust stating that Cleopatra’s beneficial interest in the trust may not be transferred, the court was permitted to order the trustee to distribute trust property in satisfaction of Cleopatra’s support obligation under California law. In July 2012, the situs of Cleopatra’s Trust was moved from California to South Dakota. The trustee continued to make the ordered support payments for some time, but, in January 2017, the trustee ceased making direct support payments to Christopher.
The matter eventually appeared before the Supreme Court of South Dakota to decide whether the spendthrift provision of Cleopatra’s Trust prohibited the trustee from making support payments directly to Christopher. The South Dakota court found that the trustee was, indeed prohibited from making such distributions.
In finding that trust distributions directly to Christopher were improper, the South Dakota court distinguished between a judgment and enforcement of a judgment. The South Dakota court acknowledged that the California court’s judgment was entitled to Full Faith and Credit under the United States Constitution. However, the South Dakota court determined that the portion of the California order directing the trustee of Cleopatra’s Trust to make payment was not a judgment. Rather, it was a means to enforce the California court’s order against Cleopatra, individually, to pay spousal support and child support.
South Dakota law does not provide an exception to a spendthrift clause for payment of spousal support or child support. Contrary to California’s law, South Dakota specifically states that there is no exception for payment of a beneficiary’s support obligations. Therefore, the South Dakota trustee was prohibited from directly paying Cleopatra’s support obligations to Christopher.
The South Dakota court made sure to clarify that Cleopatra’s support obligations were unaffected by the ruling. Ostensibly, any trust distributions received by Cleopatra could be attached along with Cleopatra’s income from other sources. But, until the trustee chooses to make a distribution, Cleopatra’s inheritance is safe in South Dakota.
In re Cleopatra Cameron Gift Trust, dated May 26, 1998, 931 N.W.2d 244 (S.D. 2019).