Billings v. Billings, 2011 VT 116 (Dooley, J.) (Reiber, C.J., concurring and dissenting.)

Wife appeals from final judgment in this divorce proceeding, arguing that the family court abused its discretion by granting husband’s motion in limine excluding evidence of any revocable trusts or wills under which he may be a beneficiary. We reverse and remand.

We agree with husband that any interest he has as beneficiary under a will or revocable trust is not marital property if the testator or settlor is still alive. Under 15 V.S.A. § 751(a), “[a]ll property owned by either or both of the parties, however and whenever acquired, shall be subject to the jurisdiction of the court. Title to the property, whether in the names of the husband, the wife, both parties, or a nominee, shall be immaterial . . . .” Although we have not addressed the issue, the near unanimous holdings around the country are that a beneficiary’s interest under a will is only an expectancy that is not subject to the jurisdiction of the family court. Thus the family court determined correctly that any revocable trusts or wills under which husband may be a beneficiary are not marital property to be distributed by the court.

We agree, however, with wife that such a beneficial interest can be considered in allocating marital property between the parties if it creates an “opportunity . . . for future acquisition of capital assets and income” under 15 V.S.A. § 751(b)(8). We conclude that consideration of likely receipt of future inheritances and trust assets or proceeds may be considered under § 751(b)(8). The fact that the beneficiary interest is merely an expectancy during the life of the testator or settlor prevents that interest from being marital property but does not prevent it from being considered under § 751(b)(8). Indeed, 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. Depending upon the circumstances, the court can find that future receipt is likely—that is, it creates a real opportunity to acquire assets in the future. We conclude that the family court improperly granted the motion in limine that preemptively excluded evidence about the extent of husband’s potential interest in revocable trusts and wills.

Reiber, C.J., concurring and dissenting, agrees with the majority’s holding that a beneficial interest in a revocable trust is a mere “expectancy” that must be excluded from the marital estate, but disagrees with its corollary holding that such an “expectancy” may be considered in dividing the marital property. It is precisely the permanent nature of a property award that dictates against the consideration of such inherently speculative interests as revocable trusts, which turn entirely on circumstances beyond the party’s control and may never eventuate. To predicate a division of marital property upon an interest “revocable at the will of the settlor, at any time and for any reason,” is no more fair or reasonable than attempting to apportion that interest.