DL v. GL, No. 01-P-1253.

• Decision Date: 16 July 2004
• Docket Number: No. 01-P-1253.
• Parties: D.L. vs. G.L.
• Court: Appeals Court of Massachusetts

61 Mass. App. Ct. 488

811 NE 2d 1013

D.L. vs. G.L.

No. 01-P-1253.

Appeals Court of Massachusetts, Middlesex.

December 12, 2003.

July 16, 2004.

Present: PERRETTA, KANTROWITZ, & BERRY, JJ.

Joel A. Kozol (Matthew S. Kozol with him) for D.L.

Paul M. Kane (Joan E. Kolligian with him) for G.L.

KANTROWITZ, J.

At issue is whether the husband's interest in seven trusts, the assets of which are valued in excess of $100 million, should have been included in the marital estate for purposes of division under G. L. c. 208, § 34.¹ Not at issue are millions of other dollars and interests from which both parties will benefit.

The wife appeals from amended supplemental judgments² of the Probate and Family Court, claiming that the judge erred (1) in excluding these trusts from the marital estate; (2) in awarding the husband six businesses while awarding her one restaurant; and (3) by awarding insufficient alimony and child support. The husband cross-appeals, alleging the judge failed to consider the tax implications of the judgments. Orders on two motions for relief from judgment are also at issue.

Except for the durational limitation on the alimony award, we affirm.

Facts. D.L. and G.L. were married in November, 1986, and separated ten years later in October, 1996. One child was born of the union in March, 1989. Both parties are in their mid-forties, well-educated³ and in excellent health, although the husband has had issues with alcohol, depression, and anger management.

G.L. was born into a family whose wealth dates back for generations. Numerous complex trusts, in which he has interests, were established by his family at various times prior to the parties' marriage. The husband is also the settlor and beneficiary of a revocable trust (not at issue here) that was created in 1990. The trust, over which he has total control, holds his "personal portfolio" and receives income distributions from four of the contested trusts.⁴ During the marriage, it served as the parties' primary source of income.

Shortly before the parties' marriage, the husband purchased, for $350,000, a restaurant in Boston, and made extensive improvements, which were financed by his trust income.⁵ At the time of trial, the restaurant was worth approximately $525,000. Prior to and during the marriage, the husband, using his own money or money from loans, invested in various corporations and in start-up corporation projects and acquired interests in various entertainment entities, having a combined approximate value of $436,522. Although the income from these businesses has fluctuated, the gross annual income is approximately $151,000. The husband's wealth also enabled him, and later the parties together, to purchase substantial interests in real estate.

The wife also comes from a family of substantial means. She is the "sole present income and principal beneficiary" of an irrevocable trust (the Generation Skipping Trust #1), valued at $1,172,437.50, and has an interest, of "nominal" value, in a second trust (the Generation Skipping Trust #2). She also owns, as a tenant in common with her father, mother, and sister, a summer residence located in Nantucket worth in excess of $4 million. Her father's holdings, as to which she has an expectancy, are valued at over $30 million.

The husband's financial status allowed the parties to enjoy a "wealthy, upper-class lifestyle" and an "affluent, high income" station in life. They lived in an eight bedroom, eight bathroom home⁶; purchased at auction the finest furniture, rugs, china, and jewelry; entertained frequently; traveled extensively; belonged to exclusive private social clubs; and employed a full-time nanny and cleaning help. Although the wife did not make any significant financial contributions to the marriage,⁷ she was primarily, if not exclusively, responsible for child rearing and homemaking duties. In addition, she organized the parties' social activities, "managed the household," oversaw the substantial renovations to the marital home, and contributed to the preservation and maintenance of certain of the husband's assets, particularly his restaurant in Boston.

The judgments. A main issue at trial, and before us, is whether the seven trusts should have been included within the marital estate. In resolving this question, the judge placed emphasis "on how the parties viewed and treated the trusts during the marriage, the structure and terms of each of the trust instruments, the history of distributions of income and principal, as well as the internal knowledge of the terms of the particular trust instruments and how they were managed."

The judge concluded that the husband had a "present vested interest" in the revocable trust that should be included within the marital estate but that his interests in the seven other family trusts should not. Although these other trusts were excluded from the marital estate, the husband's beneficial interests in them were considered with reference to the husband's opportunity to acquire assets and income in the future. In addition, to the extent that the husband received discretionary income on a regular basis from four of the family trusts, the judge considered such income in calculating the orders for alimony and child support.

In articulating her rationale for excluding the "other trusts," the judge stated that the husband had "either a contingency attached to his interests or his interests were purely discretionary or remote." She also noted that prior to the divorce action, the parties had minimal, or even no, knowledge of the nature and value of some of the trusts. Further, there was never any expectation, present or future, during the marriage, to invade and receive any of the husband's principal interests in any of the family trusts; nowhere in the history of the management of the trusts had there been a payment from the corpus of the trusts to either the husband or any other named beneficiary; and the trusts had "never been a part of the fabric of the marriage" (other than as income derived by the parties from the trusts).

Also excluded from the marital estate were the wife's interests in the Generation Skipping Trusts, the judge reasoning that they were created after the parties' separation and that the wife had only a "remote contingent" interest in the second trust. In addition, the judge excluded from the marital estate the wife's interest in the Nantucket property, as the wife's father's estate plan did not purport to grant the wife a saleable interest in the property.⁸

The judge concluded that the primary assets of the parties that were subject to equitable division included the marital home, the husband's revocable trust, the husband's business-entertainment entities, and the Boston restaurant. The judge awarded the wife $800,000 for her interest in the marital home; the sum of $1,016,060, representing thirty-five percent of the value of the revocable trust; the Boston restaurant; one-half of the husband's IRA account (valued at $42,021); various bank and IRA accounts valued in excess of $10,000; and jewelry and furniture of significant value. The judge also ordered the husband to pay alimony to the wife in the amount of $1,500 per week, until the wife either remarried or died, or ten years had passed. Child support in the amount of $800 per week, exclusive of the child's private school tuition and educational costs, which the husband was to pay from funds held in a trust for the child, was also ordered. In addition, the husband was ordered to pay the wife $150,000 for counsel fees, over and above the more than $500,000 already paid by him on the wife's behalf.

The law. The general principles bearing upon the inclusion of an asset in, or the exclusion of an asset from, the marital estate are summarized in S.L. v. R.L., 55 Mass. App. Ct. 880, 882-883 (2002):

"General Laws c. 208, § 34, defines the scope of a trial judge's discretion to assign interests in the marital estate to the wife or husband, based on a number of specified factors. . . . Separate from the division of assets within the estate is the question whether certain assets properly are considered a part of the estate. In making the determination of what to include in the estate, the judge is not bound by traditional concepts of title or property. `Instead, we have held a number of intangible interests (even those not within the complete possession or control of their holders) to be part of a spouse's estate for purposes of § 34.' Baccanti v. Morton, 434 Mass. 787, 794 (2001), quoting from Lauricella v. Lauricella, 409 Mass. 211, 214 (1991). `When the future acquisition of assets is fairly certain, and current valuation possible, the assets may be considered for assignment under § 34.' Williams v. Massa, 431 Mass. 619, 628 2000. . . . Interests considered too remote or speculative for inclusion within the estate are instead weighed under the § 34 criterion of `opportunity of each spouse for future acquisition of capital assets and income' in dividing the marital property"⁹ (emphasis added).

An "expansive," rather than a restrictive, approach to what constitutes marital property is appropriate. Davidson v. Davidson, 19 Mass. App. Ct. 364, 371 (1985). See Bongaards v. Millen, 440 Mass. 10, 24 (2003) (dictum). Whether a party's interest in trust property is part of the estate for purposes of § 34 is a question of law. Lauricella v. Lauricella, 409 Mass. at 213 n.2. But compare Baccanti v. Morton, 434 Mass. at 796-804 (unvested stock options).

The seven excluded trusts. We now turn to the trusts at issue.

(1) The Children's Trust. The Children's Trust is an irrevocable trust that was established by the husband's grandmother in September, 1962. Pursuant to its terms, the trust property was divided into equal shares — one for the husband and one for each of his three siblings. Each share, including the husband's, was placed in a separate trust for the benefit of that person and...