2014 VT 45


Coburn v. Cook (2013-057)
 
2014 VT 45
 
[Filed 02-May-2014]
 
NOTICE:  This opinion is
subject to motions for reargument under V.R.A.P. 40 as well as formal revision
before publication in the Vermont Reports.  Readers are requested to
notify the Reporter of Decisions by email at: JUD.Reporter@state.vt.us or by
mail at: Vermont Supreme Court, 109 State Street, Montpelier, Vermont
05609-0801, of any errors in order that corrections may be made before this
opinion goes to press.
 
 

2014 VT 45

 

No. 2013-057

 

David A. Coburn


Supreme Court


 


 


 


On Appeal from


     v.


Superior Court, Rutland Unit,


 


Family Division


 


 


Susan A. Cook


January Term, 2014


 


 


 


 


Nancy
  Corsones, J.


 

John J. Welch, Jr., Rutland, for
Plaintiff-Appellee.
 
Kristina L. Pollard, Rutland, for Defendant-Appellant.
 
 
PRESENT:  Reiber, C.J.,
Dooley, Skoglund, Robinson and Crawford, JJ.
 
 
¶ 1.            
REIBER, C.J.   Husband appeals from the trial court’s
final divorce order.  He argues that the court erred by including certain
items as part of the marital estate, awarding wife a disproportionate share of
the marital estate, and failing to award him maintenance.  We reverse and
remand for additional proceedings.
¶ 2.            
The parties married in December 1997 and separated in March 2010. 
They have a daughter who was born in July 1999.  In January 2013,
following a six-day hearing, the court issued its final divorce order.  It
found as follows:  Wife is forty-eight, husband is fifty-five.  The
parties met in 1996 when wife hired husband to build a ten-stall addition onto
her barn.  Wife had started a horse stabling and training business several
years earlier known as Horse Amour.  Husband later moved in with wife.  The Horse Amour property was valued at $260,000
in 2010.  
¶ 3.            
Husband has been a dairy farmer, farrier, and builder all of his adult
life.  He ran his family’s dairy business through the 1980s.  In
2010, husband’s mother deeded the 162-acre family farm (referred to as the
Danby property) to husband, retaining a life estate as well as the power to
sell or mortgage the property during her lifetime.  The Danby property was
appraised at $515,000 without considering husband’s mother’s reserved rights,
and at $425,000, considering the reservation of rights.  The court found
the appraiser’s opinion credible and reliable, and it valued the property at
$425,000.  Husband also owned a third of an acre adjacent to the farm,
valued at $15,000.  
¶ 4.            
The parties disputed the valuation and distribution of a business known
as Bit Wipes.  The court found that both parties had the idea for Bit
Wipes, both were instrumental in the creation and design of the product, and
both contributed substantially to the eventual design and marketing of the
final product.  The parties made a small profit on the business each
year.  The parties presented no expert evidence, however, as to the value
of this business.  For various reasons, the court set $40,000 as the
business’s fair market value.  The court noted that husband had requested
payment for his interest in Bit Wipes in the form of spousal support.  The
court found no support for this approach in fact or in law.  It explained that
Bit Wipes, like the rest of the marital estate, needed to be analyzed as
marital property in accordance with 15 V.S.A. § 751.
¶ 5.            
The court found that the parties had other sources of income during the
marriage.  Wife taught riding lessons, and held camps, shows, and other
events.  Husband assisted by doing chores, setting up events, and doing
general repairs and upkeep around the farm.  The court found it clear from
the evidence that Horse Amour was a very labor intensive business, and that the
amount of revenue generated from all sources was directly related to the hours
of labor devoted to the various enterprises.  The parties were able to
earn more revenue as a couple than they could earn separately.  
¶ 6.            
The court also analyzed the parties’ current employment and living
situations.  It found that husband worked part-time as a bus driver, and
that he did some farrier work.  Husband lived with his mother and paid for
groceries and other bills as he was able.  The court found that wife
continued boarding horses, giving riding lessons, and having camps and similar
events, in addition to running the Bit Wipes business.  Wife never had
less than $62,000 in gross revenue.  The court found that wife could earn
a good living.  
¶ 7.            
Considering the statutory factors, the court concluded that the net
marital estate should be essentially equally divided.  It awarded wife the
Horse Amour property and an adjacent lot, the Bit Wipes business, as well as
various other items of personal property.  The court awarded husband the
Danby property and the adjacent lot, as well as other items of personal
property.  The court calculated the value of wife’s award at $435,700 and
husband’s at $452,400.  The court declined to order spousal support. 
Husband appealed from the court’s order.  
¶ 8.            
Husband first argues that the trial court erred in awarding wife a 2004
GMC truck that belongs to husband’s adult son.  He points to his
uncontested trial testimony that his son purchased this truck with his own
money.  Wife concedes that the court erred in awarding her this
truck.  Because this asset does not belong to either husband or wife, the
court erred in treating it as marital property.  See 15 V.S.A. § 751(a)
(stating that court has jurisdiction over all property owned by either or both
parties to a divorce).  We therefore strike this portion of the court’s
award.  See Billings v. Billings, 2011 VT 116, ¶ 11, 190 Vt. 487,
35 A.3d 1030 (stating that trial court’s findings will stand on appeal unless
clearly erroneous, and conclusions will stand if supported by findings).  
¶ 9.            
Husband next argues that the court erred by including the Danby property
as part of the marital estate.  He maintains that, given the terms of his
warranty deed, he holds a mere expectancy interest similar to a beneficiary
under a will or revocable trust.  Husband complains that the court failed
to appreciate this fact.  Assuming that the Danby property is excluded as
marital property, husband maintains that wife received a disproportionate share
of the marital estate.  
¶ 10.         The
trial court has wide discretion in distributing marital property, and we will
not disturb the court’s decision “[u]nless the
court’s discretion was abused, withheld or exercised on untenable grounds or to
a clearly unreasonable extent.”  Lalumiere v. Lalumiere, 149 Vt. 469, 471,
544 A.2d 1170, 1172 (1988) (quotation omitted).  
¶ 11.         The
court abused its discretion here.  As noted above, the
court has jurisdiction over all property owned by either or both parties to a
divorce.  15 V.S.A. § 751(a).  We
held in Billings v. Billings that any interest that a husband held as a
beneficiary under a will or revocable trust was not marital property to be
distributed by the court if the testator or settlor was still alive.  2011 VT 116, ¶ 18.  This is because the husband’s
interest was a mere “expectancy.”  Id. ¶ 18 (citing Krause
v. Krause, 387 A.2d 548, 550 (Conn. 1978) (defining expectancy as “the bare
hope of succession to the property of another, such as may be entertained by an
heir apparent,” and providing that “[s]uch a hope is
inchoate, and “has no attribute of property” (additional quotation
omitted))).  We found no reason to distinguish between revocable trusts
and wills.  Id. ¶ 19 (citing Restatement (Third) of Trusts §
25 cmt. a (2003) (stating that with respect to both
revocable trusts and wills, “the testator and the settlor have retained their
complete control over the property that is subject to the will or trust
instrument”)).
¶ 12.         We
noted, however, that such beneficial interest could be considered in arriving
at an equitable distribution of marital property under 15 V.S.A. § 751(b)(8).  Billings, 2011 VT 116,
¶ 23.  That provision allows the court to consider each party’s “opportunity . . . for future acquisition
of capital assets and income,” and the statute does not “distinguish between
different opportunities based on the means by which the opportunity is
created.”[1]
 Id. ¶¶ 20, 23.  We emphasized
that “because a property distribution cannot be modified where a change of
circumstances occurs, it is necessary to have a grasp of predicted future
circumstances to bring about a fair result.”  Id.
¶ 23.  We explained that the trial court must evaluate whether
future receipt of a benefit is likely, mindful that bequests from relatives
make the likelihood of receipt stronger.  Id. ¶
24.  
¶ 13.         Like
the interests involved in Billings, husband’s interest in the Danby
property is inchoate and therefore it cannot be distributed as marital
property.  While husband’s mother purported to convey the Danby property
to husband via warranty deed, the deed stated that it was subject to “Schedule
A,” in which husband’s mother retained a life estate and the power to sell or
mortgage the property during her lifetime.[2]  Husband’s mother retains full
control over the property during her lifetime, and she has not actually
conveyed anything to husband.  See generally Univ. of Vt. v. Wilbur’s
Estate, 105 Vt. 147, 155, 163 A. 572, 575 (1933) (“The law is well settled
that to constitute a valid gift inter vivos
there must be an intention on the part of the donor to transfer the title to
the property to the donee immediately and
irrevocably, accompanied by such delivery as will place the donee
in complete possession and control of the same.”).  Husband has no legally
enforceable right to receive this property.  See 2 B. Turner, Equitable
Division of Property § 6:91, at 476 (3d ed. 2005) (recognizing that courts
generally hold that mere possibility of future inheritance or gift does not
constitute divisible property, and explaining that lack of a legally
enforceable right to receive property distinguishes future inheritances and
gifts from other contingent assets such as unvested pensions, where owning
spouse has a presently existing legal right).  Husband has a mere
expectancy of acquiring the Danby property; he is an “heir
apparent.”   
¶ 14.         That
does not mean, however, that husband’s expectancy interest is irrelevant in the
distribution of the marital estate.  As in Billings, this interest
can be considered with respect to husband’s opportunity to acquire future
assets and income.  There is evidence in the record from which the court
can evaluate the likelihood that husband will acquire this property upon his
mother’s death.  Evidence was also presented as to the value of this
property.  To the extent that the court finds it warranted, the court can
also take additional evidence on this issue.  
¶ 15.         We
thus reverse and remand the court’s decision to allow it to consider the Danby
property under the appropriate statutory provision, although we recognize that
consideration under § 751(b)(8) does not mean that the
distribution of marital property will necessarily change as a result.  See
Billings, 2011 VT 116, ¶ 24 (making similar observation).  Because
the court will be reconsidering its property award, it may also consider on
remand if maintenance is warranted.  See id. ¶ 26
(recognizing that property division and maintenance decisions are interrelated,
and concluding that reconsideration of property distribution warranted
reconsideration of maintenance decision).  Given that the case will
be remanded, we do not reach husband’s final argument that the court’s
distribution of marital property unfairly favors wife.  
Reversed and
remanded.
 
 

 


 


FOR THE COURT:


 


 


 


 


 


 


 


 


 


 


 


Chief
  Justice

 





[1]
 We note that the statute has been amended since the date of the trial
court’s final order.  We apply the statute in effect at the time of the
trial court’s decision below, but we note that application of the new statute
would not appear to change the result.  
 


[2] 
This type of deed is apparently referred to as a “Lady Bird” deed, an “enhanced
life estate” deed, or a “transfer-on-death” deed.  Such deeds “only convey
a future interest” and are “designed to avoid probate, as well as
creditors.”  In the Matter of the Estate of Dolores
Ann Davis, 18 Quinnipiac Prob. L.J. 247, 249 (2005).  No party
challenges the validity of the deed in this case.



