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Lerman v. Lerman

August 4, 2009

ADRIANNE A/K/A "ANDEE" C. LERMAN, PLAINTIFF-RESPONDENT,
v.
DAVID LERMAN, DEFENDANT.
THE PEARL LERMAN REVOCABLE TRUST, RICHARD B. SABRA AND ROY LERMAN, TRUSTEES, APPELLANTS.



On appeal from the Superior Court of New Jersey, Family Part, Bergen County, Docket No. FM-02-26962-87.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued January 6, 2009

Before Judges Winkelstein and Gilroy.

Appellants, The Pearl Lerman Revocable Trust (the Trust), and its trustees, Richard B. Sabra and Roy Lerman, appeal from the November 9, 2007 order of the Family Part directing that Bank of America (BOA) turn over $50,000 of the Trust's funds to the Bergen County Probation Services Division (Probation) in partial payment of defendant David Lerman's alimony and child support arrearages. We reverse.

I.

On February 26, 1976, Florida resident Pearl Lerman (the grantor) established the Trust. On May 10, 2002, the grantor executed the "Third Amended and Restated Pearl Lerman Revocable Trust U/A/D February 26, 1976." The grantor had three children: Toby L. Appel, Roy Lerman, and defendant. On the grantor's death sometime prior to December 2004, the Trust's balance of approximately $1,500,000 was evenly divided amongst the grantor's three children. Pursuant to Article 7.2 of the Trust, Roy Lerman and Toby Appel each received approximately $500,000 outright. The remaining funds were distributed to a trust established under Article VIII of the Trust (David's Trust).

Defendant is the lifetime beneficiary of David's Trust. Paragraph 8.1 of Article VIII provides that disbursements of funds from David's Trust are within the Trustees' absolute discretion.

The Trustee may, in the Trustee's sole and absolute discretion, distribute to or for the direct or indirect benefit of DAVID LERMAN so much of the net income and/or principal from David's Trust, up to the whole thereof, during his lifetime, as Trustee deems advisable. DAVID LERMAN nor any other person or entity shall [have] any right to require or compel Trustee to make any distribution for any purpose whatsoever. Trustee is expressly exonerated and held harmless from any and all liability to DAVID LERMAN or any other person or entity by reason of the exercise or non-exercise of Trustee's discretionary powers granted herein. Any portion of the net income not so distributed shall be added to and become principal of David's Trust annually.

Pursuant to Paragraph 8.2 of Article VIII of the Trust, upon defendant's death, the balance of his share is to be distributed to his lineal descendents, per stirpes. Defendant has two children from his marriage with plaintiff, both of whom are emancipated.

Article IX of the Trust provides for a restriction against alienation. The Article provides:

No share or interest of any beneficiary shall vest in the beneficiary until actually paid or delivered to him or her by Trustee; nor shall any share or interest of any beneficiary be liable for his or her debts, or be subject to the process or seizure of any [c]court, or be an asset in bankruptcy of any beneficiary. No beneficiary shall have the power to anticipate, pledge, assign, sell, transfer, alienate or otherwise encumber his or her interest in any trust created hereunder in any way, or in the income therefrom; nor shall any interest in any manner be liable for, of subject to, the debts, liabilities or obligations of any such beneficiary or claims of any sort against such beneficiary.

Following distribution of Roy Lerman's and Toby Appel's shares, the Trust's remaining assets were transferred into the Trust's two accounts at BOA in Florida. One account, ending in Nos. -2759, is in the name of the Trust and has a balance of $508,455.05. The funds in that account are held as security for a letter of credit the Trustees authorized the BOA to issue at defendant's request to secure a loan from an Australian bank to a business in which defendant has an interest. The second account ending in Nos. -6055 is in the name of the Trust "F/B/O David Lerman," and has a balance of $66,574.06.

In 1987, plaintiff Adrianne Lerman filed a complaint for divorce against defendant in the Superior Court of New Jersey. On August 15, 1990, the trial court entered a dual judgment of divorce. On December 18, 1992, the court entered a judgment against defendant for failure to pay child support. On April 18, 1996, the court entered an amended judgment against defendant in the amount of $298,873 for alimony, child support arrearages, and equitable distribution. As of November 9, ...


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