Beruflich Dokumente
Kultur Dokumente
No. 95-1631
Plaintiff,
v.
Defendant, Appellant,
and
UNITED STATES,
Defendant, Appellee.
____________________
Before
____________________
February 7, 1996
____________________
Fay
("Fay"), in
her capacity
as
Appellant
trustee of
Claire M.
three trusts,
the trusts.
Fay
because the
her own
contends that
property of the
under Massachusetts
the magistrate
law.
of
judge erred
be considered
federal
upon
the
trust property
statutory notice
trusts,
and
and
also
indispensable parties
because it
limitations
that
the
failed to
requirements
trust
lien
comply with
as
to
beneficiaries
the
were
of property without
was
no
statutory
or
constitutional
We
error
and
that
the
Home Trusts.
holding
I.
In
extensive
a published opinion,
-22
to provide context to
the issues
before us.
owning and
of
inter alia, of
_____ ____
Massachusetts.
Three
Nursing
Home
Trust --
are involved
in
Avenue
this appeal.
Fay
trustee
of each trust the nursing home for which the trust was named.
fourth
entity,
corporation"),
Regina
Nursing
was incorporated
in
Home,
1961.
Inc.
("the
Fay became
her
stock to
during the
her
1970s.
Nursing Home.
sister Theresa
The
Dzialo (Dzialo)
its
of
sometime
Chester Manor
property.
In
president
of the
corporation, sold
trusts owned
mortgages
by Louis
and
bankruptcy in
trusts and
other
1978.
the Parker
Almeida ("Almeida"), in
consideration.
By then,
the corporation
Hill, Green
Almeida
-33
exchange for
filed
for
owned by the
and Almeida
had
defaulted on them.
court
awarded the
On October 2,
trusts
and the
corporation, as
secured
On
October 10,
1990, the
IRS filed
a derivative
IRS's claim
In
1979, in
view
of
Almeida's
U.S.C.
The
bankruptcy,
the
IRS
had
failed to pay for the nursing homes' employees during the tax
filed a
notice
of
federal
tax
lien for
the
IRS sued
judgment
entered
against
Fay individually,
was
$200,213.45
against
and on
her
In 1984,
December
in
the
Fay
30, 1990,
amount
of
On
October
31, 1990,
the
IRS
delivered to
the
notice of
of Fay.
notices thereof
____________________
1.
Fay apparently
continued to be involved
in managing the
The efficacy of
-44
against
the trusts,
Fay as
trustee of
the trusts,
or the
the
nursing
homes,
Massachusetts Superior
("Markham"),
filed
an
interpleader
sale of
action
in
of the
rights
of
the
Markham named
of the
various
claimants to
the
interpled
attorneys seeking
payment for
fund.
and as trustee
and two
of the
On
March 14, 1991, the IRS removed the case to the United States
District
1993,
the court
denied
summary judgment
to
On May 5,
the IRS,
the
of the
including
opinion,
holding that
the IRS
Avenue Nursing
herself
such significant
884 F.
Homes because
powers
Supp. at 607,
entitled to
Highland
assets would
was
609.
in the
the entire
Pastures and
Fay had
trusts that
their
-55
reserved to
also held
that
to prove that
the trusts or
the corporation were Fay's alter egos, and found that the IRS
had not established that Fay used the trusts for a fraudulent
purpose
or
Judgment
for her
own individual
benefit.
Id.
__
at 604.
in
the
amount of
interest.2
Fay,
$23,107.04
in her
plus 45%
capacity as
of
the accumulated
trustee of
the three
Before we
issues, we clarify
the present status of the trusts and the proceeds of the sale
of
Since
any property
and have
not engaged
in any
transaction or
and
defending
the
bankruptcy
terminated by
business other
court's
award.
to exist.
the bankruptcy
the
Although
They were in
trustee's sale of
bankruptcy
court
no way
the nursing
homes.
Rather,
awarded
proceeds
refer to
as trust property,
the
sale
We
although not
____________________
2.
After
the attorneys
were paid
at the
accumulated interest
summary judgment
remained.
The
$23,107.04
Highland
Avenue Nursing
Hill
Nursing
Home
to
the
corporation;
Home Trust;
Trust;
and $440.10
$16,046.63
$11,246.12
to
Green
to
to Parker
Pastures
-66
yet
paid
to the
trusts, because
the proceeds
will become
-77
II.
Fay first
valid
contends that
lien against
comply with
the trust
statutory
requirements
as to
notice
the
not have
property because
it did
and
limitations
trusts.
statute
It
of
gave
no
notice
not
of
trusts,
Fay
as
trustee,
or
the
trust
beneficiaries
as
not
proceed
demand,
against
lien or levy.
IRS sought
in the
trust property
them
by
separate
suit,
assessment,
interpleader action to
collect from
the
parties
be joined in
no
opportunity to
appear
and defend
their
rights in
the
deprived
The IRS
property
to collect and
trusts
or
transferees,
action
the
directly
have
against
Fay's own
beneficiaries
it would
it is only
personally
had to
them
liable
institute a
within six
The
years
as
Fay's
collection
from
the
-88
6901.
that
the taxes
would
it sought
be
Notice and
to collect
considered
limitations
trusts therefore
Fay's
own
out of
under
requirements
property that
Massachusetts
with
respect
As to
to
law.
the
Fay's joinder
and
due
process
bankruptcy trustee
action,
she
has
arguments,
the
IRS
responds that
represented
the
the
in the interpleader
interests
of
the
sought to intervene.
Furthermore,
for wrongful
which
is now
time-barred because no
U.S.C.
such suit
7426(a),
was brought
required by 26
6532(c).
Although
resolve
to 26 U.S.C.
these
the
issues,3
magistrate judge
we
will
review
did
not precisely
them de
__
novo
____
as
986
____________________
3.
The
magistrate
judge stated
at
the
beginning of
his
were Fay's
were not
trusts
distinct
would
required to
theory that
went on to
treated
prevailed --
whether the
separately under
that the
the
trust property
Massachusetts law.
The
-99
the web of
in
this phase
assessment of
which
of
to "give notice to
U.S.C.
property,
person."
particular
arises
in
"upon
real
U.S.C.
piece
makes
it has sixty
a lien
whether
26
the IRS
or
6321.
of property
favor
all
of
personal,
days in
thereof."
and
belonging
Whether and
constitutes
26
and the
the United
property
an
unpaid,
automatically
Once
6303(a).
goes
appeal.
a taxpayer's liability,
tax
Fay's
implicated
States
rights
to
to
such
to what extent
property of
the
of state law.
(1960).
and
The
continues until
unenforceable
the liability
by lapse of time.
tax by levy or
assessment is made
is satisfied
26
509, 512
U.S.C.
or becomes
6322.
The IRS
by bringing a proceeding
in
6502
after
(1988).
the
assessment of
A lien
expiration
collection,
of
26 U.S.C.
6502(a)
time upon
the
but if
the tax."4
six-year
the
statute
of
limitations
for
government brings
suit within
six
____________________
4.
26 U.S.C.
6502(a) (1994).
-1010
receives a judgment in
its favor,
See Rodriguez
___ _________
v. Escambron Dev. Corp., 740 F.2d 92, 94 n.3 (1st Cir. 1984).
_______________________
There
against Fay
is no
individually in
1979, that
property,
lien
it gave
a tax
notice and
timely filed a
IRS assessed
of tax
the life
indefinitely.
That
of the lien
brings us
on Fay's
to the
property
IRS's collection
court in
October of
action below.
or
by a
proceeding in
court.
to the
interpleader
26 U.S.C.
6502(a).
The
briefs
are unhelpful
took.
The
IRS
(at best)
indicates
property,
but
the
IRS
notifying
the taxpayer in
such levy.
26 U.S.C.
levy
the
upon
constitute
inter
_____
alia,
____
different
the
it
which route
levied
collect
by
writing of its
levy
as
Fay's
on the
and
the
on
levy
the IRS
the
trust
only
after
intention to make
trusts
property.
that
may
corporation
notice of
as to
alter
The notice of
ego
trust property
corporation
did
not
because,
each
held
-1111
intention
to levy on the
has been no
levy.
Other
than
by levy,
the
IRS
can collect
by
26 U.S.C.
U.S. 677,
682 (1983).
creditor" to
that it
is.5
The
IRS is
therefore
exercising
the
usual rights
of
a judgment
creditor.
It
the
trust
property)
Procedure Act of
governs
the
that
the
1990 (FDCPA),
interpleader
contend otherwise.
Federal
28 U.S.C.
proceedings,
Fay's tax
Debt
Collection
3001, et
__
and
indebtedness is
Fay
does
a "debt"
defined in the
FDCPA because it is
United
on account
. .
U.S.C.
States
3002(3)(B).
of [an]
Except to
the
seq.,
___
as
to the
. assessment."
extent that
not
28
another
for a debt arising under such law, the FDCPA is the exclusive
____________________
5.
to
seek a
delinquent
forced sale
taxpayer has
U.S.
an
entire property
interest
even
the
at 697,
express terms
and
is
not
in
where
arises from
461
of the
which a
innocent
This special
of section
available to
7403,
the
government here.
-1212
debt.
28 U.S.C.
3001(a),
(b).
The tax
on a
judgment by levy,
in a federal
26 U.S.C.
6331, and by
district court to
filing an action
enforce a lien, 26
U.S.C.
a derivative
in a
resulting
interpleader action,
as the
IRS did
could
seek
notifying
language of
Fay
I f
to
here.
enforce
in
in 1979,
the
section 6303(a)
the
IRS
interpleader
action.
complied with
the
By
plain
demand on
statute
liable."
complied with
the
The
so
that
the IRS's
interpleader
action was
failed to establish
individually
homes,
was
effort to
and the
enforce
timely.
a nexus
Fay argues
proceeds of
the judgment
the sale
-1313
in the
that the
IRS
owed by
her
of the
nursing
judgment could be
of whether it belonged to
lien upon
that
Fay.
Fay's individual
it may
enforce out
of any
trust property
a valid
to property
that under
As
parties
an opportunity to
be heard in
their
own right,
we begin
that
remedy
Rodgers
_______
only
by rejecting the
only remedy is
7426(a).
when
by Fed. R. Civ.
(Federal Rules
That
wrongful
by
levy,
P. 19. See 28
___
U.S.C.
Procedure apply in
3003(f)
FDCPA actions).
service
of process
court of subject
party
of Civil
proceeds
695-96, which it
is governed
a suit for
the government
IRS's argument
and whose
in the action if
. . . the person
deprive the
be joined as
claims an interest
as a practical
-1414
to protect
that interest .
. .
."6
Courts applying
this
parties in actions
from
the trust
1495-96
corpus, see
___
(11th Cir.
or other debt
F.2d 1490,
F.
seeking
to terminate a trust.
(1875);
Cir.
Carey v. Brown, 92
_______________
1964).
An
exception
to the
general
the trustees
U.S. 171,
172
rule, however,
exists
when
the
interests fully
trustee
represents
the
3A
beneficiaries'
James W.
Moore,
duty
While, at least
____________________
6.
In
contrast, in an action
property
7403,
to payment of tax
"[a]ll
persons .
property
involved" are
U.S.C.
7403(b);
. .
to enforce a
lien or subject
brought pursuant to
claiming
required
to be
26 U.S.C.
any interest
made
in the
parties.
26
424 F.2d
7403(b) is
1142, 1146
-1515
on
the surface,
the
fact that
the
trustee in
this
case
beneficiaries,
zealously and
all
signs
are
without conflict.
that
Fay
Fay
represented
has not
them
asserted any
claim
to the
course
of
fund
in her
individual right
this litigation,
capacity as trustee.
but
Moreover,
throughout the
has appeared
as settlor and
only
in her
one of
the
did not
magistrate judge
own
right.
This
is not to
parties in their
to raise
of whether
party should have been joined does not result in waiver), but
it does
failure on Fay's
part to
represent their
interests at
the
time.
And
between her
on appeal,
Fay fails
to describe
any conflict
way in
they
had been
joined.
As
will be seen,
differently if
resolution of the
-1616
any of the
-- depended
factually
the
trust
judge
us.
may
better
have been
only on
Although
the
language of
in an abundance of
for the
beneficiaries
to have
been
joined, as
it turned
interests.
indispensable parties.
argument that
the
without
process
due
magistrate
judge
caution it
beneficiaries were
was
represented their
of
law.
right,
deprived of
Moreover,
the
property
assuming
beneficiaries
were
the
not
III.
LAW?
____
When
the
IRS assessed
taxes
owed
by Fay
all
property
and
rights
tax
code "creates
consequences,
state law."
no
to
property,
26 U.S.C.
property rights
federally defined,
to
as
arose "upon
whether
real
6321, 6322.
but merely
rights
The
attaches
created
or
under
(1958).
in the trusts
constitute property to
U.S. at 512.
tax
Aquilino, 363
________
-1717
We review de
__
instruments
property that
law.
gave Fay
such extensive
it was in
of whether the
powers over
trust
the trust
under Massachusetts
499 U.S.
225, 231
(1st
Cir. 1993).
In
doing so,
we will
382, 384
take care
not to
such
as trust law
that is quintessentially
the province of
state courts.
Fay,
Under the
common
among the
law of
beneficiaries
973
F.2d
(Second)
Scott
of a trust."
968,
971
of Trusts
on Trusts,
(1st
be included
Cir.
1992),
citing
Restatement
ed. 1987).
And a sole
trustee who
is also the
settlor may be
one of two
or more
100.
the
with
beneficiaries (including
herself), has
a duty
of the beneficiaries,
-1818
for all of
to deal
hold
to
use as she
legal
and
pleases.
equitable
There
is no partial
interests.
Restatement
Trusts
99
cmt. b; 2
Scott on Trusts
that
creditor
generally
trustee/beneficiary's
interest in
merger of the
99.3.
cannot
a trust,
(Second) of
It follows
reach
such as
these,
99 cmt. b.
When
a beneficiary is
also the
settlor, however,
placing it in
benefit.
See
___
1953);
settlor/beneficiary's
creditors
therefore
can
1923).
reach
"the
maximum amount which the trustee under the terms of the trust
could
pay to
(Second)
him or
156(2), quoted
______
interest
apply for
of
his benefit."
This, of course,
any other
beneficiary
settlor/beneficiary's creditors.
As
a matter
property or
of
federal law,
rights to
Restatement
N.E.2d 137,
may be
the
reached
by the
Scott on Trusts
114.
tax lien
property belonging to
extends
only to
the delinquent
taxpayer,
parties.
this
case
and not
to property
attaches to
the
belonging to
690.
innocent third
entire property
of
each trust
-1919
the power
A.
and
Parker Hill
trust
Nursing Home
declarations of
sole
Trusts under
trustee
and
of their assets.
conveyed
to
herself
Fay
as
named herself
trustee
the
as
each trust,
the beneficiaries
until
of
the
trust
property
and
all in
equal shares,
undistributed
income
were
to
The
entitled
magistrate
to
reach that
represents the
Nursing
judge
part
ruled
of
that
the interpled
Home Trusts,
based
the
on Fay's
IRS
fund
was
that
"copious" rights
and
the beneficiaries
of
settlor to alter,
reserved right as
____________________
7.
The
trusts
following:
declared;
appointment
property.
are
twenty
Fay's
to
terminate at
years
election
of a
Although
from
the
to
guardian of
the
date the
terminate;
her or
our point
her
-2020
were
death;
or
of her
Fay
trusts' continuing
of reference is
litigation began.
of the
trusts
a conservator
earliest
the date
this
amend or revoke
those powers or
benefit.
her exclusive
to
inter
property
powers
exercised
vivos
trusts,
regarding their
reserved to him or
assets
the settlor in
her, at least
full effect
as
trust
spite of broad
remain
unexercised.
N.E.2d 113,
1009,
See
___
(Mass.
holding
App.
Ct.
that a
1979),
and
income
remained
broke
with
settlor/beneficiary's creditors
amend or revoke
the court
389 N.E.2d
during
his
unexercised at
though
the remainder
vested
upon
his
could reach
the
time of
beneficiaries'
death
powers to
the disposition of
lifetime, even
because
though
his
there
principal
the
powers
death, and
rights
was
in
768
tradition,
and to direct
In
the
no
even
trust
further
71.
Id.
__
at 770-
the right
until his
death to
destroy all
Id. at 771.
__
-2121
other beneficial
Similarly,
in
Stockdale,
_________
relied
Reiser
______
on
settlor's creditor
where the
to
hold
(in
could reach
settlor was
the
alternative)
sole trustee,
his children
to amend
and
revoke
and a
specific
power
Id. at 417-18.
__
that
his death
were the
general power
to
substitute
As in Reiser,
______
his creditors could reach the trust assets even though he had
not
exercised
interests
his
powers
had vested.
See
___
and
the
other
beneficiaries'
property could
be
reached to
power
to
withdraw
satisfy
alimony judgment
alter, amend
5/6 of
and
revoke
where settlor
and absolute
principal; remainder
had
right
to
beneficiaries' rights
The touchstone
the
trust instrument
eliminate
the
as
of the analysis,
a whole
interests of
gives
all others
then, is
Fay the
in
whether
power
the trust.
to
As
alter, amend
and
the
same."
include
the
These
unrestricted and
right
to
substitute
or
unconditional
powers
strike
other
out
N.E.2d 238,
-2222
N.E.2d 5
Sevinor v. Stahler, 84
__________________
to completely revoke
the trust.
If
beneficiary,
the legal
title and
equitable interest
180
would
1064,
1066 (Mass.
1912).
As
Fay
points out,
the
trust
to
As
trustee, Fay
control
the trust
powers,
but
Broad
powers
effective
has
property.
we attribute
The IRS
them no
are typically
way to manage
broad powers
to manage
makes much
and
of these
significance whatsoever.
conferred
trust property.
on a
trustee
Trustees
as an
who are
also
to
'necessary or appropriate
of the trust.'"
powers
(Second) of Trusts
context,
186.
settlor/trustee's administrative
cannot be
to carry out
equated
with ownership.
-2323
estate tax
and management
See
___
Old Colony
__________
1970).
As trustee,
trust"
and
Fay is to
accumulate the principal and net income "for the use and
benefit
of said
beneficiaries."
The sentence
much
and discretion
or all
or
to pay
any part
of
immediately
power
homes "in
over to said
the trust
beneficiaries so
property,
whether
We think
whole, gives
Fay the
power to
pay income
and/or invade
We
recognize,
as
we
have
before,
that
under
even
by the
terms of
the trust
5, 9
1139
Dana v. Gring,
_____________
(Mass. 1971);
504,
506 (Mass.
1967).
In particular,
a trustee
N.E.2d
may not
-2424
exercise
broad discretionary
power
to
shift beneficial
interests in
a trust.
1965).
A Massachusetts
duties
at
623 N.E.2d
at
1139.
N.E.2d 200
evaluate a
552; Fine,
____
In Copp v. Worcester
__________________
(Mass. 1964),
the court
Id. at
__
202-03.
In
cases interpreting
trustee powers
for
directed
principal and/or
specific
purpose
expressed an
(such
intent
to
beneficiaries, or both.
income
as
to be
education
preserve
distributed for
and
principal
support),
for
or
remainder
States,
______
317 F.
Supp.
618, 622
(D.
Mass. 1970);Dana,
____
371
N.E.2d 838,
840 (Mass.
1971);
-2525
trust
discretion so as to
take the
that
terms
do
not
limit
her
discretion
beneficiaries' interests
or
in income
define
the
and principal.
other
They do
particular
their
receive
time
Under
it free of trust
interest could
to pay all of
these
to receive
it for
circumstances, we
terminates.
amount to nothing
trust
the right
sister's remainder
decided
or interval,
think
Fay's sons
and
the
benefit.
that
We
is
trust
the
if Fay
principal to herself.
whether
Fay's
instrument
contained
these purposes
ascertainable
that
the other
vested.
beneficiaries'
Although
that
we
interests in
apparently makes
rely on to
do not
think
the trust
no difference
are
in
-2626
present time.
Under
Massachusetts law,
substance,
the
constitute an
holder."
interest
interest or
sufficiently
right
which has
established
to
accrued to
its
only to total
1983).
That an interest
or partial defeat
or
is
Id.
__
Thus,
is "subject
by biological events"
does
a beneficiary's right
to
on his
property right.
908
(Mass. 1972);
N.E.
92 (Mass. 1905).
or non-exercise of powers
no
longer
(remainder
exercise them.
interests
of
See
___
Reiser,
______
powers can
389 N.E.2d
beneficiaries became
powers to amend
vested
at 770
upon
death
or revoke the
trust
where
he had
the
right
not vest
to
revoke
until settlor's
the
trust
or
death
change
beneficiaries).
part
of the
trust
property is
not
contingent on
mere
-2727
power to
on whether
what amounts
or not
Fay exercises
trusts, and on to
her
whom and in
trust continues.
Due to
the broad
nature of
Fay's powers
and the
her
sister.
We
and
a Massachusetts court
Pastures
and
her
creditors.
Wolfe,
_____
to
Like
the settlors in
direct disposition
of
principal and
income.
Although
beneficiary
meant
in this case it
and principal
right
as a
whatever
beneficiary to
amount
unrestricted
trusts.
she
as
trustee
deemed
principal in
proper,
and
the
Fay's creditors
not
able to exercise
-2828
We do not
trust
hold that
invalid --
to alter, amend
one of
the trusts'
beneficiaries
with a
right to
receive
invalid.
See
___
Roberts v. Roberts,
___________________
646
N.E.2d 1061,
1064
at
199-200.
And
although
it
may
be
only
technical
distinction,
to amend
or revoke
to
satisfy the
tax debt.
See In re
___ ______
allow
requiring revocation
of the trust.").
Rather,
we hold that
entire
Home
the
amend or
entire
revoke, which,
if exercised, could
result in
the
absolute
discretion
to
pay
income and
principal
to
the
proportion she
other beneficial
is settlor, trustee
-2929
and
a beneficiary.
Fay
under
we stated
that
"a power
of revocation
cannot be reached
1981).
by creditors."
George
______
Massachusetts
remains
law where,
reserved by the
as
665 F.2d 7,
correct
in that
8 (1st
Cir.
interpretation
case, the
of
only power
Because
mortgages
proceeds
otherwise
of
the
replace
sale
of
the
the mortgages
421
nursing
as
homes
trust
U.S. 330,
attaches to the
that
property.
334
would
Cf.
__
(1975) (when
property
subject
to
tax
lien
is
transferred,
the
lien
B.
Nursing Home
life,
as sole trustee
sister
Dzialo,
"in equal
shares."
Paragraph
subject to the
and
for her
dispose
limitations herein
of any
interest in
this
not a Trustee."
found
11 gives
-30-
Fay the
the
expressed, acquire,
that paragraph
11 of
trust [to]
The
own,
the same
magistrate judge
power to
treat the
30
principal
the
In reaching
observed
was
that
conclusion,
the
884 F.
Supp. at 609-10.
magistrate
judge
first
also so as
attacked."
Id.
__
at
607.
Against
this
backdrop,
the
that
the
term
"any
interest"
"beneficial interest"
trust.
Id.
__
at 609.
or the
so
because
"interest"
mean
either
could
is
"beneficial" is
only
used
other
without
instance
being
in
which
modified
of the
against Fay as
the
Fay's
by
interest"
This was
the
word
the
word
to the "interest
of
any
beneficiary
principal."8
The
hereunder,
magistrate
either
judge
as
then
to
income
read
out
or
of
____________________
8.
"[t]he interest
of any
income or to principal,
or in any manner
be subject
as to
the interference or
subject
shall not
bankruptcy proceedings, or
nor the
-3131
paragraph 11
the phrase
expressed,"
based
instrument
trustee.
could
trust.
erred
as
on
his
imposing no
Id. at 609.
__
treat
"subject to the
on
of
the
and income
We
hold
law in
as
that the
trust
Fay's powers
Id. at 609-10.
__
matter of
interpretation
limitation
the principal
as a
limitations herein
as
that Fay
her own
free of
magistrate judge
interpreting paragraph
11 as
giving Fay the power to treat the principal and income of the
trust
as her
instrument
own.
First,
_____
purpose to
we
mislead
fail to
or an
see
in the
unusual
trust
or unfair
herself as
it significant that
on the
seemed to find
as trustee
holds
of the trust
beneficial
"shares of
without offering
The
trust instrument's
in this
Id. at 607-09.
__
definition of
____________________
the various
statement of the
by any beneficiary."
-3232
in
the
separation
property,
which
interest
in the
Scott on Trusts,
of
is
in
the
interest
the trustee,
trust, which
99.
legal
is in
from
in
the
the
trust
beneficial
the beneficiaries.
legal title to
in nature.
N.E.2d 1104,
1106
of
an
intention to
respect to
create
property, [which]
fiduciary relationship
with
by whom
with
the
(internal
property
for
the
quotation marks
benefit
and citations
"beneficial
interests" in
of
N.E.2d 337,
another
person")
omitted); National
________
338 (Mass.
1950)
the
trust
property);
Worcester
_________
1911) (trustee
holds title
to the
receive
much
so
discretion, but no
trustee
principal; beneficiary
of
it
as
necessary
absolute right
to real
proceeds
as his
own); cf.
__
in
to the fund
property as her
has
a right
the
to
trustee's
itself).
a beneficiary may
-3333
Academy,
_______
legal
of
609 F.2d
32, 35
in order
to manage
broad powers to
trust's business.
to the
1979) (trustee
is the
hold,
(1st Cir.
the
trust property,
do so as a
and typically
practical way of
has
conducting the
that is, to
That
the
beneficiaries' interests
were "personal
Where, as
the
trust
instrument
directs
that
interests
the
trust
assets
and
be
(Mass. 1917).
____________________
9.
proceeds thereof,"
maintain
the
and
trust property
was "authorized
and
invest
to manage
and
and reinvest
the
-3434
The
language
beneficial interest .
providing
that
"ownership
of
the beneficiary
to call
for a partition or
or for an
1991);
it
is
correct
beneficiaries
do
statement
not
hold
at 942.10
of
See,
___
(1st Cir.
As set forth
the
law
of
trusts
title to
the
trust
above,
that
property;
____________________
10.
Trusts that
similar purpose
that have a
a business trust or
and depends
on
the
relative
beneficiaries, whether
powers of
been litigated,
the
trustees
and
the trust is
commercial,
of shares.
132 (1st
118 F.2d
1941); Gardiner,
________
49 F.2d 992;
In re Village
______________
120 B.R.
1990); In
__
245 (Bankr.
D. Mass.
Hall, 41
____
Taxation,
________
N.E.2d 30;
148 N.E.
1925); Dana,
____
(Mass.
593 (Mass.
N.E.2d 211
116 N.E.
941;
1914); Williams v.
___________
See also
___ ____
J. on
Legis.
499
(1993).
That question
is
not before
us, but
Home
Trust
are
a "lawful
method
of
transacting
-3535
Although
we
are
somewhat
concerned
about
the
language
for an
beneficiaries
had petitioned
Briggs v. Crowley,
_________________
spendthrift
224 N.E.2d
provisions
Massachusetts.
like
court
for
an
the
one
here
accounting.
1967).
are
valid
And
in
Second, we
______
think
that the
interpretation of
the
is extraordinarily strained,
not
follow
beneficiaries
even
other
from
than
that
Fay
interpretation
do
not
have
it does
that
the
enforceable
eliminate
those interests
in
her own
favor.
Although we
is
not
susceptible
attributed
to it
of
the meaning
when viewed
instrument as a
whole.
account of
distribution of
the
the
in the
magistrate
context of
powers
the trust
did not
take
trust
that
in the
judge
Fay
did
not
reserve
to
herself
the
right
to
to
-3636
The trust
is to terminate
terminated
earlier
outstanding,
at
beneficiaries,
which
the
terminates,
the trust,
twenty years
"by
majority
meeting
of
vote
the
The
of
all
trustee
and
be
shares
the
trustee
may
not
vote.
Whenever
trust "may
be amended
the
trust
up the affairs of
them.
or may
shares owned by
or altered
in any
part
whatever . . .
majority percentage of
A settlor
grant them
to others, Crocker, 28
_______
"cannot be revoked or
do
N.E.2d at 7,
to herself or
but a trust
power to
terms."
1963)
(citations omitted).
402
See also
___ ____
N.E.2d 76,
Markell v. Sidney B.
_____________________
92
(Mass. App.
N.E. 946
(Mass.
(Mass.
1917).
Ct.
(Mass. 1949);
The Highland
revoked by
the beneficiaries
Pastures
power
to
holding a majority
alter
or
amend,
of shares.
Home Trusts as
those
holding
part of her
majority
of
-3737
beneficial shares
could
eliminate Fay
power
to amend
other
as
"in any
beneficiaries
a beneficiary
by exercising
part whatever."
could
have
ousted
their
Furthermore,
Fay
as
the
trustee.
a new trustee
without
a power to
trust
property
immediately
to
create a
Scott on Trusts
them,
they
new trust,
can
revoke the
naming a
trust
new trustee.
and
108
cmt. i.
trustee
the other
beneficiaries, who
have enforceable
interests in
the trust.
amount
least
While Fay
earnings in
such
some distribution at
beneficiaries."
Furthermore,
beneficiaries in addition
that time,
the assets
must be
liquidated and
At
the proceeds
Although
Fay
beneficiary,
the
unilaterally
alter, amend
is
the
settlor,
trust instrument
or revoke
-3838
gives
trustee
her
the trust,
and
no power
to
limits her
discretion as
right
to receive
proportion
powers
trustee to
to the
therefore
income as
a beneficiary
shares owned
were not
so
by her.
limits her
to an
Fay's
centralized as
amount in
rights and
to
make the
In light
of the trust
power
11 does
instrument as
a whole,
we
Fay has
the
beneficial
interest, so
that paragraph
11 means
that Fay,
the trustee,
conditions
trust;11
in
and procedures
receive annual
set forth
distributions out
in the trust
in the
declaration of
of net
earnings
See
___
____________________
11.
Paragraph 13
hereby
created
provides
shall
not
that "the
be
beneficial
transferrable
interests
or assignable
writing."
beneficiaries of
The
trustee
must
notify
a beneficiary's offer to
the
remaining
be
chosen to
ascertain
the value
of
the
of
beneficiary desiring to
restriction
thirty
days
from
sell may do
the
date
of
so
the
than one
shares
12.
beneficiary are to
succeed to
his or her
trust.
-3939
rights under
the
1990)
stated
(trust
without
impropriety
exercise
though he
"any
instrument
become
were not
beneficiary
a trustee.").
could
mean
undistributed income, so
free
"[a]ny
trustee
may
hereunder
and
interest"
trustee
that
App. Ct.
control of
trust
the term
principal
and
of the
the
Alternatively,
of the trust
(who could
(1980) (trustees
of shareholders "as if
owners of
was "subject
Under any
interpretation, Fay
manage and dispose of the same for the benefit of the holders
of the shares."
In sum,
we hold
property of
the
"rights to
attach
property" to
because
powers, rights
trusts,
the
which
trust
instrument
and interests in
gives the
the federal
defines the
-40-
tax lien
could
various
law of
Fay enforceable
40
The lien
of Fay's
Home Trust
that constitutes
property"
under Massachusetts
to whatever aspect
present "property or
law.13
While a
rights to
federal tax
lien attaches
to property
and rights
to property that
the
not
as property by
U.S. __,
held
state law.
113 S. Ct.
that
while
1526, 1530
federal
(1993).
tax
Thus,
lien
__
courts have
attaches
to
of
income
or principal,
corpus when he
it does
or she has
1994); In re Cavanaugh,
_______________
1993);
(Bankr.
attach to
no present right
F. Supp. 572,
153 B.R.
not
See also
___ ____
the trust
to receive
576-77 (D.
it.
Conn.
140
B.R.
400,
404, 407
("a federal
attach to
____________________
13.
The
spendthrift
beneficial
interest
beneficiary.
N.E. at 419.
clause
is
because
See Morrissey,
___ _________
Moreover,
she
federal
both
to
Fay's
and
140
a spendthrift clause
of the substantive
lien attaches.
is
as
settlor
ineffective
is "merely
[property] right"
to which
-4141
taxpayer's
vested
periodic payments
right, under
a trust
or distributions
. .
to receive
of property then
due or
Fay's
net
receive annual
earnings in proportion to
until
the trust
property
settlor
and
right to
right.
See
___
earlier is
keep it
"creditors
under the
terminates
beyond
can reach
the
distributions from
a presently
at 420.
in trust for
reach
the maximum
of
his
her death or
vested
Because "a
creditors,"
amount which
Fay's
the trustee
[her]
benefit."
1954),
citing
Restatement
(Second)
of
Fay's
right
than
right to
sell her
Trusts
156(2)
citations omitted).
share is
not
a present
her
consent.
co-beneficiaries without
at
least their
passive
under
U.S. at
56.
Fay's
similar
to Bess's
right to
right
sell her
to exchange
beneficial share
his policy
357
is
for cash,
limited by
-4242
Bess's right to
cash in
distinction is critical
tax
unqualified.
insofar as conferred
This
to which a
by the trust
(7th
Cir.
840 F.2d
Cf. Chicago
__ _______
1352, 1354-56
in
the
proceeds
specifically
member's
of
the
granted
in
sold, was
internal claims
right to sell a
of such
the
property interest
been involuntarily
after
sale
membership
rules,
in the
the
full
seat, which
the remainder of
were paid.).
Although
as
extent
of
had already
the proceeds
we have
except
not
qualified
is property,
other
beneficiaries'
attempted to sell it
or
right
therefore is
buy
Fay's
to an outsider without
share
to
not a
share
she
consulting them
present right
if
to sell her
to property.
The
Fay's
is
not paid),
because
she will
-4343
then
be holding
her
own
Nor does
trust corpus.
As
Fay have
a beneficiary,
of it
as long
rights in this
as
continues, and
In re Cowles, 143
_____________
property," so
B.R.
5, 10
or division
has "only
(Bankr. D.
creditors could
the
the
She has
trust principal.
his
in the
title to
the trust
trust
she has no
no right to receive
Cf.
__
Mass. 1992)
or all of
reach the
the
entire
had the
_____
right
to withdraw 5/6 of
was permitted
to reach
that part
of the
so his creditor
trust principal).
share
of the
liquidated assets
during life
only if
trust
during
her
lifetime;
otherwise,
her
those
terminate the
her
executors,
death.
As set
law,
whether
"whether,
established
in
forth in
right in
substance,
to constitute
accrued to its
trust
the
an
holder," that
has
Massachusetts
vested depends
interest
interest or
is, whether it
is
on
sufficiently
right which
is subject
has
to
defeat
-4444
to defeat by
to exercise a
power
not vest
until the person holding the power can no longer exercise it.
Reiser,
______
389 N.E.2d
possibility
corpus
of
terminate
the
that Fay
during
majority
at 770;
her
the
Clemons, 126
_______
might
receive a
lifetime
hinges
holders
of
N.E.2d 193.
share
on
of the
whether
beneficial
shares
The
trust
or not
vote
to
trust by removing
her as a beneficiary.
Thus, it does
law.
the
tax
debt is
still unpaid),
because
she will
then be
Assuming that a
not vote to
majority of
the beneficiaries
do
her
executors,
assigns
will succeed
to
In Bess, the
____
Supreme
Court
policy
administrators or
be anomalous to
view as 'property'
upon
her
the
beneficiary
insured's
comes to
Massachusetts,
death
an
when his
end."
the right of a
Id.
__
right
at
to
change
55-56.
But
only
the
in
-4545
share
death
the
paid over to
beneficiary's lifetime.
See, e.g.,
___ ____
trust
instrument
of
trust,
Whether
to
the
there will
however, the
provided
that
beneficiary's
be any
In those cases,
unequivocally
successors
interest in
the
over, free
upon
the trust
death.
to which
Fay's
heirs
or assigns
could
succeed
depends, again,
on
as a
beneficiary.
successors
receive
therefore is
property.
120
F.2d
decedent
We
think that
income
or
too ethereal to
eliminate Fay
Fay's right
principal
to have
from
the
constitute a present
her
trust
right to
whatever beneficial
assuming
interest she
141,
143 n.2
(1st
holds at that
unpaid.
Cir.
Cf.
__
1941)
time, again
Welch v. Paine,
______________
(creditors of
of kin).
We
remand to
the magistrate
judge to
fashion an
order
enforcing the
tax
lien
on
Fay's present
to her share.
to discern
That the
does
not
right
to
in proportion
alter the
conclusion
that
the
lien
-4646
550 F.2d
at 685;
Raihl v. United
________________
States, 152 B.R. 615, 619 (Bankr. 9th Cir. 1993), but it does
______
not
flow
executed
from that
conclusion
upon immediately.
held in
Coluccio,
________
51
constructive
is
342
trust
are
co-owned
located."14
be
FDCPA, property
(2d
Cir.
1995)
property),
28
can
337,
is subject to execution
it
Under the
F.3d
the property
Cir. 1970).
trust is "co-owned
that
U.S.C.
3203(a);
(funds
in
which
the
property
State in which
28
U.S.C.
3010(a).
In Massachusetts,
a trust cannot be
terminated in
the
trust provide,
other
than the
Alexander,
_________
an
at least
debtor.
upon in one of
of net
two ways.
of
See
___
75 N.E. at 91.
annual share
Forbes,
______
are beneficiaries
140
N.E.
at
421;
First,
even though it
be executed
ordinarily
where there
be reached and
is
by sale, appraisal or by
any means
____________________
14.
When
section
the
IRS seeks
to
collect other
than
through a
-4747
ch. 214
3(6).
of the court."
Mass.
Gen. L.
at 710;
Alexander, 75
_________
N.E.
receive
annual distributions
at 92.
from net
Thus,
Fay's right
to
earnings conceivably
could be sold
could
be ascertained and a
share of
buyer found.
Alternatively, her
due
140
Cir. 1992);
terms of the
as it comes
Cohn, 855 F.
____
magistrate
judge may
proceed
Supp. 572,
F. Supp. 752,
trust.
576-77;
758 (N.D.
550 F.2d at
according
Forbes,
______
685.
to either
Cal.
The
method,
IV.
CONCLUSION
__________
On
remand,
the
judgment
should
be
modified as
follows:
proceeds
of the sale of
Nursing
Homes)
proceeds.
to
plus
is entitled to
$11,686.22 (the
accumulated
on
the
interest
those
$16,046.63
(the proceeds
of
the sale
of
the Highland
amount
determined to be presently
magistrate
judge shall
fashion an
-4848
payable to the
order enforcing
IRS.
The
the tax
earnings of
-4949