Irwin Union Bank v. Long
160 Ind. App. 509, 312 N.E.2d 908 (1974)

  • Victoria and Philip got a divorce. As part of the settlement, she obtained a judgment for $15k.
    • Phillip did not pay the $15k.
    • Philip did have a trust fund set up by his mother at Irwin Union Bank.
      • The trust agreement allowed Philip to withdraw up to 4% of the principle per year, with written notice.
      • That's a general inter vivos power of appointment.
  • Victoria sued Irwin to get the money in the trust.
  • The Trial Court found for Irwin Bank and declared that any funds which were not exempt from execution should be given to Victoria, and ordered them to pay her up to 4% of the trust assets per year. Irwin Bank appealed.
    • Irwin Bank argued that Phillip's right to withdraw 4% per year was a power of appointment. Since he had not exercised that power, Irwin Bank was not authorized to pay it out.
    • Victoria argued that Philip had an absolute right to take the 4% whenever he wanted, so the money was reachable. It wasn't a power of appointment, it was a vested property right.
  • The Appellate Court reversed.
    • The Appellate Court found that Philip had a power of appointment because in essence he had the ability to direct the disbursement of money he didn't own. Until the money came out of the trust it was not owned by Philip, and therefore Victoria could not seize it to pay Philip's debt.
      • "Like any other offer to donate property to a person, no title can vest until he accepts the offer, nor can a court of equity compel him to accept the property against his will, even for the benefit of creditors."
  • So basically, it was as if Philip's mother was holding out a handful of money saying, "go on, take it." Until Philip accepts, and takes the money, it is still legally his mother's. Victoria couldn't take Philip's mother's property to pay Philip's debts.
    • The only thing Victoria could do was wait until Philip exercised his power, at which point the money would be his and she could grab it immediately.
  • The Court in this case was very strict, and a number of States have Statutory provisions that would have allowed Victoria to reach Phillip's trust (after the rest of Phillip's assets were exhausted.)