In re Marriage of Githens

• Decision Date: 01 April 2009
• Docket Number: 150416210; A130128.
• Citation: 204 P.3d 835,227 Or. App. 73
• Parties: In the Matter of the MARRIAGE OF Robert GITHENS, Petitioner-Respondent, and Christie Githens, Respondent-Appellant, and Sarah "Sally" Moffett, Other-Respondent.
• Court: Oregon Court of Appeals

204 P.3d 835

227 Or. App. 73

In the Matter of the MARRIAGE OF Robert GITHENS, Petitioner-Respondent, and Christie Githens, Respondent-Appellant, and Sarah "Sally" Moffett, Other-Respondent.

150416210; A130128.

Court of Appeals of Oregon.

Argued and Submitted September 3, 2008.

Decided April 1, 2009.

John A. Hudson, Eugene, argued the cause and filed the briefs for appellant.

Jeffrey E. Potter argued the cause for respondents. With him on the briefs were Gardner, Honsowetz, Potter, Budge & Ford, Eugene, and Mindy Wekselblatt.

Before LANDAU, Presiding Judge, and SCHUMAN, Judge, and ORTEGA, Judge.

LANDAU, P.J.

The issue in this domestic relations case is the extent to which husband's beneficial interest in his mother's revocable trust can be taken into account in dividing the parties' marital property. The trial court concluded that, because the trust is revocable at the whim of the settlor, husband's interest in it is entirely speculative and, as a result, not subject to division. Wife appeals, arguing that the court erred in failing to award half of husband's beneficial interest in the trust to her and in failing to take evidence of the trust's value and the likelihood that it would, in fact, be revoked. Husband argues that, because of the inherently speculative nature of a beneficial interest in a revocable trust, the trial court did not err in declining to treat it as marital property.

Resolving the parties' dispute requires us to interpret the controlling statute, ORS 107.105(1)(f), which authorizes the court in a dissolution case to divide the "real or personal property" of the parties. It is an issue of first impression. Nevertheless, it has long been the law of this state that mere expectancies are not "property" in the ordinary meaning of the term, and we find in the wording of the statute no intention to depart from that general rule. Because the beneficial interest in a revocable trust is, necessarily, a mere expectancy, we conclude that the trial court did not err. We therefore affirm.

I. FACTS

The relevant facts are not in dispute. Husband and wife were married to each other for 23 years. At the time of trial, both were in their early fifties. Throughout the marriage, husband worked as a farmer and truck driver. At the time of trial, he worked for a rental company, earning approximately $2,500 per month. Wife also worked outside the home throughout the marriage, either part-time or full-time. At the time of trial, she worked half-time as a cook at a retirement center, earning approximately $1,100 per month.

Beginning in 1982, the parties lived in a house that was located on a 100-acre grass seed farm on Oaklea Drive in Junction City and that was owned by husband's mother (mother). The parties paid no rent. The house was in bad condition when they moved in, and they both worked on modernizing and reconditioning it. Mother paid for most of the improvements, although wife also contributed to the project with some of the proceeds from the sale of a house that she had lived in before the marriage and with money that she had received from a settlement after an automobile accident.

Mother lived in a house on a different 100-acre grass seed farm that she owned near High Pass Road, in Junction City. She also owned an adjacent unimproved 100-acre parcel. When the parties married, husband stood to inherit half of mother's property, including her grass seed farms and the buildings on them. In 1999, after the parties had been married for 17 years, mother altered her estate plan and created a revocable trust. At the time of trial, the trust had not been revoked.

Mother and wife got along well, even up to and after the parties separated; at her deposition, mother testified, "We have always visited up a storm. I always enjoy her." Mother gave both parties substantial financial assistance, including $15,000 to wife when wife's son from a previous marriage had legal trouble. At one point, mother intervened on wife's behalf to prevent husband from evicting her. At the time of trial, mother was 77 years old and experiencing some obvious symptoms of dementia.

Before trial, wife's attorney served four subpoenas duces tecum, two each on husband's mother and husband's sister, seeking their appearance for deposition and trial, as well as documents relevant to mother's revocable trust. Mother and the sister moved to quash the subpoenas and for a protective order. The court, apparently concluding that the contents of mother's revocable trust were per se irrelevant, granted those motions and denied wife's motion for reconsideration of that decision, although mother and the sister ultimately testified by deposition and at trial, albeit not about the trust. In response to wife's argument that, at the very least, the existence of the trust could be relevant, the court accepted, without objection, husband's counsel's stipulation:

"I will stipulate that in the current revocable trust that his mother has, that upon her death, as it presently is worded he would share equally with his sister in the proceeds that she left at her death."

During trial, the court denied wife's second motion to reconsider the order to quash, but—over husband's objection—received from husband's attorney a sealed copy of the trust document and, before ruling, reviewed it. The court refused to admit any other evidence about the trust.

At trial, wife argued that she was entitled to a one-half interest in husband's beneficial interest in mother's revocable trust. Husband argued that, because of the revocable nature of the trust, his interest in it was entirely speculative and, as a result, not property that is subject to division.

The trial court divided the parties' personal property, debts, and retirement accounts, which were all of comparable value. There was no real property to divide, as the Oaklea Drive farm on which the parties resided was still owned by mother, and they owned jointly no other real property at the time of the trial.

The trial court wrestled with the question whether a beneficial interest in a revocable trust is "property" that may be divided in a dissolution case. Ultimately, it issued two letter opinions on the subject, the first answering the question in the affirmative, but the second answering the question in the negative.

In its first letter opinion, the trial court summarized its dilemma in the following terms:

"There is a substantial question as to whether and how the Court should value Husband's interest in [mother's] trust. On the face of it, the trust is revocable and Husband has not yet received any measurable interest in the properties involved. The actual total value of the assets included in the trust are unknown to the court."

The court noted that mother had been present in court and "appeared not to be in the best of health." The court suggested that mother appears to be suffering from the effects of dementia. Nevertheless, the court concluded, husband could actually predecease his mother and receive nothing under the trust. In the end, the court found that husband's interest in the revocable trust "is more real than speculative." The court then decided to divide the interest as follows:

"This being a long-term marriage with the circumstances as set forth herein, the Court has concluded that the best, and fairest way to deal with husband's interest in this asset, however it may be defined or valued, is to award Wife a non-interest bearing judgment for one-half of the value of Husband's portion of the trust, valued as of dissolution but payable as of the date of distribution, whenever made to Husband.

"* * * * *

"To offset the significant difference in personal property values awarded to Husband, Husband shall * * * pay to Wife the sum of $12,042 as an equalizing judgment."

Both parties petitioned for reconsideration. The court took the petitions under advisement and issued an amended letter opinion, in which the court changed its mind about the nature and divisibility of husband's interest in mother's trust:

"This case presents a factual situation that, in this court's view, is very likely to be inequitable and unfair to Wife in the reasonably near future. This Court is obligated, nevertheless, to follow the law as the Court finds it. The Court, albeit reluctantly, has concluded that the case law regarding revocable trusts dictates that the Court should modify its Opinion Letter in several particulars including regarding any eventual trust proceeds."

In the amended letter opinion, the court deleted its conclusion that the fairest way to deal with the case is to award wife a one-half interest in husband's interest in the trust. The court commented that, although it continued to have concerns about mother's health, "evidence to prove she is incompetent is very limited." As a result, the court explained, "[t]his Court must conclude that the Trust at issue is revocable and that Husband's interest therein is speculative and one not subject to division as a marital asset."

The court noted that its decision not to divide husband's interest in the trust as property posed a problem as to how "to arrive at a fair, equitable and just result for each of the parties." To address that problem, the court increased the amount of the equalizing judgment, requiring husband to pay wife a total of $30,042, an increase of $18,000.

II. ANALYSIS

Wife appeals, advancing seven assignments of error. In her first assignment, wife contends that the trial court erred in failing to order an expedited pretrial hearing and to provide her with notice and an opportunity to be heard on husband's motions to quash her subpoenas and further erred in failing to reconsider its order granting husband's motions. In the remaining assignments, wife contends that the trial court erred in refusing to take evidence concerning the nature and value of mother's revocable trust and in refusing to award wife a one-half interest in...