Billings v. Billings

• Decision Date: 14 October 2011
• Docket Number: No. 10–055.,10–055.
• Parties: Natalie W. BILLINGS v. Jireh S. BILLINGS, Sr.
• Court: Vermont Supreme Court

2011 VT 116

35 A.3d 1030

Natalie W. BILLINGS

v.Jireh S. BILLINGS, Sr.

No. 10–055.

Supreme Court of Vermont.

Oct. 14, 2011.

Melvin Fink, Ludlow, for Plaintiff–Appellant.

Julie A. Frame and Robert W. Katims of Hoff Curtis, Burlington, for Defendant–Appellee.

Present: REIBER, C.J., DOOLEY, JOHNSON, SKOGLUND and BURGESS, JJ.

DOOLEY, J.

¶ 1. Plaintiff wife appeals the family court's final judgment order in this divorce proceeding. Wife makes the following three arguments on appeal: (1) the family court abused its discretion by granting husband's motion in limine excluding evidence of any revocable trusts or wills under which he may be a beneficiary; (2) the family court abused its discretion when it refused to include as marital property suitable for distribution two irrevocable trusts of which husband is a beneficiary; and (3) the family court abused its discretion by nullifying husband's maintenance arrearage of $8,312.74. For the reasons set forth below, we reverse and remand.

¶ 2. The material facts are undisputed. The parties were married on June 8, 1985, and they had been married for twenty-four years at the time of their final divorce hearing. The parties have three children, one of whom is a minor.

¶ 3. By agreement of the parties, wife was not regularly employed and stayed home with the children through much of the marriage. Wife is now marginally employed and has arthritis, which makes her less employable. The family court attributed to wife a current annual income capacity of $12,000. Husband is primarily employed by Gillingham and Sons, Inc., a general store in Woodstock that has been in his family for over a century. He earns $57,864 annually from this employment. Husband is also a director, shareholder, and officer of the Woodstock Aqueduct Company, which operates a water system for Woodstock Village. At the time of divorce, husband owned two shares of the company solely and three shares jointly with wife. Each share was worth $35 and paid irregular dividends of $1.00 annually. Husband is paid a salary of $21,000 annually for his work at the Aqueduct Company.

¶ 4. The parties' financial situation is meager. One of the primary reasons for their strained finances is the decision they made to send all three children to private boarding schools once they reached the seventh grade. As a consequence of this expense, virtually no equity remains in any of the parties' jointly acquired assets, nor do they have any money saved for retirement. In addition, the parties have significant debt. The parties' relatively bleak financial situation was exacerbated during the marriage by poor business and real estate decisions.

¶ 5. At the time of divorce, the parties had few assets of great value. Their most significant asset was husband's partial interest in his parents' home, which was placed in a qualified residence trust in 1997 and which had since vested in the beneficiaries, that is, husband and his three siblings. The Town of Woodstock's assessed value of the home is $1,180,500. No other evidence of the value of this asset was presented to the family court, nor was any evidence introduced as to the value of husband's interest in the property—a one-quarter discounted interest, at best. Because of the lack of evidence, the family court concluded that it could not make a reasonable finding regarding the actual value of husband's interest in his family's property.

¶ 6. Besides husband's interest in the home, the family court found that the parties held five additional assets of value. The first of these was husband's 0.5% ownership interest in Gillingham's. The family court found there was no evidence presented as to the value of this interest. The second was husband's ownership of approximately 5.5% of the stock of a company named Swift Properties, Inc. The family court again found that the value of this small interest was unknown. The next asset was husband's ownership of approximately 0.247% of a company called Barberry Hill Corporation, an interest that husband shared jointly with his mother and that was not valued by either party at the family court. The fourth additional asset included ownership interests in two businesses, Billings and Sons, Inc. and Bridgewater Mill, LLC, which own commercial condominium spaces in Bridgewater, Vermont. Billings and Sons was owned by both husband and wife, while husband owns 60% of Bridgewater Mill, LLC with a separate business partner. Wife provided no evidence of the value of these properties. Husband calculated that his interest in the properties was worth $723,620 against which there was a debt of $855,512, leaving a total debt of $131,892. The final remaining asset is a life insurance trust fund, funded by husband's father. It is a term life insurance fund of unknown value, and husband is one of multiple beneficiaries. The family court noted that the assets attributable to the marriage were, for the most part, gifts from the husband's family that were not specifically intended to benefit wife.

¶ 7. Besides marital assets, the parties had significant personal debt at the time of their divorce. The total balance of unsecured personal debt was approximately $170,070. Overall, the family court found that “[t]he crippling extent of the personal debt is hard to reconcile with the family income.” The family court gave some weight to husband's testimony that wife had a tendency to spend excessively and to take on debt beyond their capacity to repay it. However, the family court made clear that it considered the parties' dire financial situation “a joint responsibility.”

¶ 8. The family court distributed the parties' significant assets as follows. Property deemed to be of minimal or unproven value that was given to the couple by the husband's family was awarded to husband. This included: the Gillingham's stock, the interest in Swift Properties, the interest in Barberry Hill, the interest in Billings and Sons and Bridgewater Mill, LLC, and the partial interest in husband's father's life insurance trust. The family court also awarded husband the interest in his parent's home because it could not value the asset given the available evidence and because of “the limited utility of the asset, [its] current lack of ability to be sold and its familial provenance.” Wife was awarded the three jointly owned shares of the Woodstock Aqueduct Company, while the two solely owned shares were awarded to husband. The court assigned approximately $125,000 of the parties' debt to husband and $45,000 to wife. In consideration of the high debt obligation assigned to husband, the family court nullified his arrearage obligation of $8,312.74, which he owed to wife under their temporary spousal maintenance order. Lastly, the family court awarded wife $5,000 held by her attorney.

¶ 9. In addition to distributing marital property, the family court also awarded wife permanent spousal maintenance. The family court arranged this maintenance as follows: $2,500 per month until April 1, 2010; $2,000 per month from April 1, 2010 until December 1, 2013; $2,700 per month from December 1, 2013 until December 1, 2016; and $3,000 per month thereafter.

¶ 10. On the first day of the parties' divorce hearing, husband submitted a motion in limine seeking to exclude evidence, whether documentary or testimonial, of any revocable trusts or wills of which he might be the beneficiary. The court granted this motion; thus in allocating marital property and awarding maintenance, the family court considered no evidence related to husband's possible opportunity for the acquisition of future assets through inheritance from wills or trusts.

¶ 11. This Court reviews family court judgments in divorce proceedings under an abuse of discretion standard. “When fashioning an equitable award, the [family] court must explain the underlying rationale for its decision, which we will not disturb absent a showing that the court abused its discretion.” Wade v. Wade, 2005 VT 72, ¶ 13, 178 Vt. 189, 878 A.2d 303 (citation omitted). In general, trial courts have “wide discretion within the limits of 15 V.S.A. § 751 ... in formulating awards of property upon divorce.” Atwood v. Atwood, 143 Vt. 298, 300, 465 A.2d 1354, 1355 (1983). The family court's factual findings stand on appeal if supported by any credible evidence in the record, and we will uphold the court's legal conclusions if supported by the findings. Wade, 2005 VT 72, ¶ 9, 178 Vt. 189, 878 A.2d 303.

¶ 12. On appeal, wife first argues the family court abused its discretion by granting husband's motion in limine because this decision improperly excluded consideration of husband's beneficial interest in any revocable trust as marital property and precluded the court's consideration of evidence that might indicate each party's opportunity for future acquisition of assets and income pursuant to 15 V.S.A. § 751(b)(8). She next contends that the family court abused its discretion by refusing to include as marital property suitable for distribution husband's interest in his parents' qualified personal residence trust and in his father's life insurance trust. Finally, wife claims that the family court abused its discretion by nullifying husband's maintenance arrearage of $8,312.74. We disagree that the family court abused its discretion in distributing the irrevocable trusts and in nullifying the maintenance arrearages; however, we reverse and remand the case on the issue of the court's grant of husband's motion in limine, and all monetary awards must be reconsidered in light of this decision.

¶ 13. We first address wife's claim that the family court abused its discretion by granting husband's motion in limine. We agree with husband that any interest he has as beneficiary under a will or revocable trust is not marital property if the testator or settlor is still alive. We agree, however, with wife that such a beneficial interest can be considered in allocating marital property...