Chilkott v. Chilkott

• Decision Date: 20 March 1992
• Docket Number: No. 90-346,90-346
• Citation: 607 A.2d 883,158 Vt. 193
• Court: Vermont Supreme Court
• Parties: Cynthia R. CHILKOTT v. Robert B. CHILKOTT.

Page 883

607 A.2d 883

158 Vt. 193

Cynthia R. CHILKOTT v. Robert B. CHILKOTT.

No. 90-346.

Supreme Court of Vermont.

March 20, 1992.

Catherine E. Clark and Gregory Jeffers, Law Clerk (on the brief), Burlington, for plaintiff-appellee.

Richard W. Affolter of Sheehey Brue Gray & Furlong, Burlington, for defendant-appellant.

Before ALLEN, C.J., and GIBSON, DOOLEY, MORSE and JOHNSON, JJ.

MORSE, Justice.

Defendant husband appeals the property award in this divorce. His principal claim is that the trial court's valuation of a trust was erroneous because the trust was not subject to the jurisdiction of the court within the meaning of 15 V.S.A. § 751 (equitable distribution of marital property). He also argues that, even if the trust was properly taken into account in distributing the marital assets, the trial court erred in accepting an expert's opinion as to its value. Finally, husband contends that the uneven distribution of the property was unfair and unreasonable. Because we conclude that the trust was marital property and the trial court did not abuse its discretion in evaluating it and making its overall property distribution, we affirm.

Husband was one of the beneficiaries of an inter vivos trust which his father created. The trust became irrevocable when his father died. Securities funded the trust, and at the time of the final hearing were valued at $220,000. The death of father entitled husband's mother to all the trust income for her life. The trustee had power to invade the principal for the mother's health, maintenance and welfare, but had not done so. Mother, eighty-seven-years-old, was alive at the time of trial.

When mother dies, husband, if he is alive, will receive the income from the trust and an unrestricted right to invade the principal. At husband's death, plaintiff wife would receive the income for life. Upon the death of all income beneficiaries, the remainder, if any, will be paid to the donor's grandchildren, or if they are deceased, to their issue by right of representation, free of the trust.

At trial, wife called an actuarial expert, who testified that husband's present interest in the trust was valued at $128,034. Husband did not offer any evidence contradicting this testimony other than cross-examination, and the court adopted this figure in its findings of fact.

Husband received a property distribution worth approximately $197,000, including his interest in the trust, his business, pension, stocks, an automobile, and a snowmobile. Wife was awarded marital property valued at approximately $220,000, including the marital residence, her one-half interest in real estate located in New Hampshire, the homestead furnishings, and personal property associated with her ceramics business.

Husband and wife were married for approximately 33 years and raised four children. At the time of the divorce, husband was living, rent free, with his mother, from whom he also received money for expenses. A college graduate, husband was the primary wage earner during the marriage. The court found that husband's net income after the divorce would be $1,700 per month. Wife, also a college graduate, was currently working in a nursing home. She had worked as a medical secretary in 1958, and then in a school lunch program. Aside from the ceramics business, which had no net earnings during its five years of operation, wife had no other employment skills. Wife's earned net income was $978 per month, and she was awarded $357 a month in maintenance.

Both parties drank excessively until 1981, when wife addressed her drinking habit. She has abstained from alcohol since 1983. Denying that he had a drinking problem, husband continued to drink, despite the advice of physicians and his then-living father.

I.

Husband initially claims that the trial court abused its discretion by including in the property distribution his interest in the trust, because it was an asset not "owned" by him within the meaning of 15 V.S.A. § 751. We conclude that husband's interest in the trust was marital property subject to distribution under § 751(a).

Under 15 V.S.A. § 751(a), "[a]ll property owned by either or both of the parties, however and whenever acquired" is subject to the court's jurisdiction. See also Lynch v. Lynch, 147 Vt. 574, 576, 522 A.2d 234, 235 (1987) (any form of ownership by either spouse makes property subject to the jurisdiction of the court). Although the trust represents to the parties a future, contingent interest, the trust is a form of property subject to ownership. ^* See Guild v. Prentis, 83 Vt. 212, 214, 74 A. 1115, 1116 (1910) (ownership may be of fee or a lesser estate); Restatement of Property § 10 (1936) (owner is a person with an interest in property); G. Bogert, Trusts § 37, at 133 (6th ed. 1987). Our conclusion derives from the principle, adopted by states with property division statutes resembling ours, that property ownership ought not "to be determined by the wooden application of technical rules of the law of property." Davidson v. Davidson, 19 Mass.App. 364, 371, 474 N.E.2d 1137, 1144 (1985).

In Vermont, § 751(a) has been applied to property interests with characteristics similar to those at issue here. In Osborn v. Osborn, 147 Vt. 432, 434, 519 A.2d 1161, 1163 (1986), we held that a share of an undistributed estate was marital property subject to § 751(a) even though it was not known whether it had any value and even though it could not be distributed to the other spouse. The inability to distribute the estate was not an impediment because creative alternatives were available to effect an equitable distribution of the property. Id.; see also Hendrick v. Hendrick, 142 Vt. 357, 361, 454 A.2d 1251, 1253 (1982) (describing alternatives when a specific property cannot be distributed). In McDermott v. McDermott, 150 Vt. 258, 259-60, 552 A.2d 786, 787-88 (1988), § 751(a) was applied to a pension. Although the pension in McDermott had vested, but not matured, vesting was not critical to the outcome. Most courts follow the rule that vesting is not necessary for a pension to be considered marital property. See L. Golden, Equitable Distribution of Property § 6.13, at 171 n. 130 (1983).

II.

The real issue here is not whether husband's trust interest is marital property but instead whether the future interest is so remote that it has no ascertainable present value or whether its value, in the words of the McDermott Court, "can be assessed without excessive speculation." McDermott, 150 Vt. at 260, 552 A.2d at 788; see Note, The Trust in Marital Law: Divisibility of a Beneficiary Spouse's Interests on Divorce, 64 Tex.L.Rev. 1301, 1354 (1986). This was not a situation where the trust was ambulatory, making husband's interest a "bare hope of succession to the property of another." Rubin v. Rubin, 204 Conn. 224, 229, 527 A.2d 1184, 1187 (1987). Husband's father was dead at the time of the property division, making the trust irrevocable. Therefore, husband's remainder interest in the trust was fixed and no longer inchoate. See Davidson, 19 Mass.App. at 372, 474 N.E.2d at 1144 (death of donor "fixed" remainderman's interest, even though it was subject to a condition of survivorship). The trust would become worthless only if the trustee exhausted the principal for the mother's care. Husband's mother, the life tenant, was eighty-seven-years-old at the time of trial and had never drawn on the corpus of the trust. Wife's expert witness made assumptions in valuing husband's interest in a reasonable way in light of these facts and general economic and life expectancy factors.

The difficulties in valuing husband's interest in the trust are similar to those encountered in valuing a pension because the value of the pension is contingent on the worker reaching retirement. Once we accept the pension contingency, the contingencies in the instant case do not defeat the applicability of § 751(a). Wife's actuarial expert testified that the same principles apply to valuing trusts as to valuing pensions. We have held that the use of such an expert is a proper method to determine the value of a pension in evaluating a spouse's opportunity for the future acquisition of capital assets and income. Victor v. Victor, 142 Vt. 126, 129, 453 A.2d 1115, 1117 (1982). The expert took into account the age, situation and past conduct of husband's mother with respect to the trust. She also analyzed the situations of the parties using annuity mortality tables. Husband's cross-examination may have served to weaken the weight of the expert's opinion, but it did not completely eliminate its probative value.

The court's acceptance of the expert's estimate of husband's financial interest in the trust was not clearly erroneous. V.R.C.P. 52(a)(2). The actuary, qualified as an expert in the field, served to "assist the trier of fact to understand the evidence." V.R.E. 702. Certainly, the court could have attributed some value to husband's expectancy interest, and the actuary's opinion gave the court guidance in valuing it. In short, the expert advice improved the reliability of the fact-finding on the value of husband's interest in the trust.

Finally, we note that the court perceptively required an "immediate offset method" of distribution rather than a ...