Bacardi v. White
463 So.2d 218 (1985)

  • The Bacardis got a divorce. As part of the divorce agreement, Luis was to pay Adriana $2k a month until one of them died or she got remarried.
    • Luis failed to make the alimony payments.
  • Adriana went to court and got a judgment for the unpaid alimony. Then she went to White, who was the trustee of a spendthrift trust that Luis was the beneficiary of and tried to get the money from him.
    • A spendthrift trust is a trust that is created for the benefit of a person (often because he or she is unable to control spending) that gives an independent trustee full authority to make decisions as to how the trust funds may be spent for the benefit of the beneficiary.
    • The spendthrift trust contained a provision that said the trust was not subject to any debts that Luis might incur, or be used to pay any judgment against Luis.
  • The Trial Court issued an order garnishing the $2k per month out of Luis’ trust. Luis and White appealed.
  • The Appellate Court reversed. Adriana appealed.
    • The Appellate Court found that Florida common law had long recognized the validity of spendthrift provisions.
  • The Florida Supreme Court reversed the Appellate Court and agreed that the Adriana could get money out of the spendthrift trust.
    • The Florida Supreme Court recognized that there were two long-standing public policy issues, the policy of recognizing spendthrift trust, and the policy of holding ex-husbands responsible for paying alimony.
      • The money in the trust is still legally the settlor’s, and not Luis’ (at least until the trustee makes a disbursement (aka a payment). Therefore, is it right to take the settlor’s money to pay Luis’ debts? That goes against the settlor’s intent.
    • The Florida Supreme Court found that the provisions of a spendthrift trust do not create an absolute bar against recovery by creditors.
      • It would be unjust an not equitable to allow a debtor to enjoy the benefits of wealth without being subject to the responsibility to support those whom he has a legal obligation to support.
      • However, the Court notes that garnishing spendthrift trusts should only be done as a last resort.
    • However, the Florida Supreme Court found that the money can’t be touched until the trustee makes a disbursement. If the trust is completely discretionary, the trustee can always withhold all payments out of the trust and then nobody gets any money.