Divorce & Family
January 20, 2012
Putting All Cards on the Divorce Table . . . Revocable Trusts and Wills now Included
Putting All Cards on the Divorce Table . . . Revocable Trusts and Wills now Included
Billings v. Billings, 2011 VT 116
You’ve provided your attorney with every piece of relevant financial information you could find on you and your spouse. You’ve spent hours carefully completing your financial affidavits (Form 813), you have had your house appraised and your business valued, and have provided information on irrevocable trusts. But, just when you think that every financial card is on the table, you can now expect that any revocable trusts or wills under which you may be a beneficiary are now in the deck.
Until the Billings case, so long as the maker of the document was alive, wills and revocable trusts were not considered marital assets nor counted in any way. Billings, however, changed the game and held that family court may consider your parents’, grandparents’ or other wealthy relatives’ revocable trusts and wills in dividing your other marital property. In this case, the wife wanted to admit evidence of revocable trusts and wills which her husband might be the beneficiary in order to prove that he (unlike her) was likely to receive an inheritance from his parents. The Court denied the husband’s motion to exclude this evidence.
In a typical Vermont divorce, the court takes all of your spouse’s assets and debts into consideration when dividing property. These include your house, vehicles, retirement funds, stocks, jewelry, business assets, interests in irrevocable trusts as well as your mortgage, credit card bills and all other debts. The courts then consider the statutory factors in a property settlement case which may include: length of the marriage; age and health of the parties; employability of the parties; where the property came from and how it was appreciated; and each spouse’s contribution to the marriage.
Until now, factor § 751(b)(8), “the opportunity of each for further acquisition of capital assets and income,” was generally assumed to mean an individual’s potential for future ability to acquire assets (i.e., if one spouse had a significantly higher salary or a great potential for career growth). Now, after Billings, this factor may include revocable trusts or wills under which your spouse may be a beneficiary. The Court reasoned, “The statute does not distinguish between different opportunities based on the means by which the opportunity is created.” ¶ 23.
Strangely, however, revocable trusts and wills are still not marital property. They are not capable of division like the equity in your house or other assets. They are now just a factor the family courts may consider as a spouse’s future acquisition of assets. Because the likelihood of future receipt may be unknown, as the maker could change his/her will or revocable trust, the Court said uncertainty over the timing and amount can be weighed in its consideration. It’s much too early to know how this information may be compelled since the benefactors are not parties to the divorce proceeding. Nor do we know how the Court will interpret this “likelihood-of-expectancy” spectrum, so stay tuned …
To read the Vermont Supreme Court’s opinion, visit:
http://info.libraries.vermont.gov/supct/current/op2010-055.html.