SAVOY v. SAVOY (2020)

MEMORANDUM AND ORDER PURSUANT TO RULE 23.0

Richard E. Savoy (husband) appeals from a judgment of divorce nisi entered by a judge of the Probate and Family Court as it relates to division of the marital estate with Geraldine S. Savoy (wife) pursuant to G. L. c. 208, § 34. We reverse the portion of the divorce judgment concerning the treatment of the wife's trust and remand the matter for further proceedings. We otherwise affirm.

Discussion. 1. Date of marriage termination. The husband argues that the judge erred in finding (for purposes of determining the value of the marital estate) that the marriage ended at the time of the divorce in February 2017, rather than the date of the parties' separation in March 2006. The judge's determination as to when a marriage effectively has terminated is a finding of fact, which we review for clear error. See Mass. R. Dom. Rel. P. 52 (a); Savides v. Savides, 400 Mass. 250, 252 (1987). A finding is “clearly erroneous when, although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed” (quotation omitted). Martin v. Martin, 70 Mass. App. Ct. 547, 549 (2007).

Here, although the parties had lived apart since March 2006, they continued to share finances and to participate in the marital relationship, which from the outset was a partnership “based upon a financial and emotional connection, but lacked intimacy.” Even after the wife moved to New York, the parties counted on each other for emotional support. They spoke weekly by telephone, with the wife “shar[ing] her innermost thoughts with [the h]usband.” The wife continued to wear her wedding ring. She returned to the marital home multiple times per year, spending alternating Christmases and most Fourth of July holidays there. On her visits, the husband would drive her to and from the marital home; in addition, the couple would dine together. The parties continued to exchange Christmas gifts until 2012 or 2014. The husband also visited the wife several times in Florida, where the wife also lived after she moved out of the marital home.

After March 2006, the parties also continued to be financial partners. They filed joint tax returns until 2015. The husband cosigned the wife's New York apartment leases every year through 2017. From 2006 to 2013, the husband provided the wife with $2,500 per month and paid the wife's credit card bills. She continued to provide the husband with health insurance, and he collected disability payments as her spouse. Although the parties retained divorce lawyers in 2011, neither party filed until February 2017. On this record, the judge's finding that the parties' marriage terminated on the date of filing for divorce is not clearly erroneous.

2. Wife's trust interest. The husband next argues that the judge erred by declining to treat the wife's interest in the “Fitchett Trust” granted to her by her now-deceased mother as a marital asset subject to equitable division, but rather as an “expectancy of future acquisition” attributed to the wife. “[W]hether an interest in a trust is sufficiently similar to a property interest that may be included in a marital estate and thus subject to equitable division ․ is a question of law.” Pfannenstiehl v. Pfannenstiehl, 475 Mass. 105, 110 (2016). Our review is thus de novo. See Canisius v. Morgenstern, 87 Mass. App. Ct. 759, 760 (2015).

“Whether a trust may be included in the divisible marital estate requires close examination of the particular trust instrument to determine whether the interest is a ‘fixed and enforceable’ property right ․ or ‘whether the party's interest is too remote or speculative ․’ ” Pfannenstiehl, 475 Mass. at 111-112, quoting D.L. v. G.L., 61 Mass. App. Ct. 488, 499 (2004). This turns on the attributes of the specific trust, requiring evaluation not only of the trust instrument but also the facts and circumstances of each case. See id. at 112. “Interests in discretionary trusts generally are treated as expectancies and as too remote for inclusion in a marital estate, because the interest is not ‘present [and] enforceable’; the beneficiary must rely on the trustee's exercise of discretion, does not have a present right to use the trust principal, and cannot compel distributions.” Id. While this is generally true, the particular “facts and circumstances” of the specific trust at issue must be evaluated. Id.

Here, as the judge found, the wife's interest in the trust was “neither remote nor speculative”; she “has essentially unfettered ability to utilize significant funds from the [trust] to support herself,” a situation that was likely to continue into the future until she depletes the principal. Under the trust instrument, distributions of income are subject to the unrestrained discretion of the wife.² She may make distributions of principal to herself (as both trustee and beneficiary) pursuant to an “ascertainable standard” allowing her to distribute “whatever amounts of principal deemed advisable for the maintenance, education, support and health needs of any Trustee hereunder who is also a beneficiary.” This standard, in essence, requires the wife to distribute principal to herself “with an eye toward maintaining [her] standard of living in existence at the time the trust was created.” Id. at 113. There are eight other living beneficiaries,³ and the beneficiary class is still open.⁴ However, the trust instrument does not set forth a similar ascertainable standard on behalf of the trust's other beneficiaries. Compare id. at 114 (trust not included as marital asset where husband was one of eleven known beneficiaries in open class, husband was not trustee, and distributions by trustees were subject to ascertainable standards for each beneficiary). Moreover, because the wife is the sole trustee, her right to receive trust income and principal is not “subject to the condition precedent of the trustee having first exercised [her] discretion” in determining the needs of the trust's open class of beneficiaries. Id.

The wife's actual performance as trustee confirms her treatment of the trust as her property. In 2013, the trust had approximately $1.8 million in principal, consisting of stocks, and in addition held real estate in Florida. Since becoming trustee, she has distributed approximately $1,390,000 to herself. Contrast id. at 114-115 (trustees made no distributions to husband in some years). She has the ability to live in, sell, or rent the Florida residence. See Lauricella v. Lauricella, 409 Mass. 211, 216 (1991) (judge erred in declining to consider husband's interest in trust as marital asset for purposes of equitable division where husband had present, enforceable, equitable right to use property for his benefit by living in property or renting out property for income). The other beneficiaries (her children and grandchildren) understand that she lives off the trust, have not objected to the wife's distributions to herself, and have received only modest distributions to date.⁵ The wife effectively has a “present right to use the trust principal, and can[ ] compel distributions.” Pfannenstiehl, 475 Mass. at 112. Given her broad powers over the trust assets, the trust is subject to equitable distribution as a marital asset even though the beneficiary class is open. See, e.g., Ruml v. Ruml, 50 Mass. App. Ct. 500, 512 (2000) (family trust with open beneficiary class including husband's issue was properly treated as marital asset in view of husband's broad powers of appointment in trust assets). Compare Levitan v. Rosen, 95 Mass. App. Ct. 248, 254 (2019) (relying on fact that beneficiary class is closed in determining that trust was marital asset). The wife's interest in the trust is not a “mere expectancy” too remote for inclusion in a marital estate. Id.

Conclusion. So much of the judgment as states that the wife's interest in the trust is not a marital asset for purposes of consideration under G. L. c. 208, § 34, is reversed, and the matter is remanded for further proceedings consistent with this memorandum and order. In all other respects, the judgment is affirmed. On remand, “[w]e leave the questions of valuation and division to the judge's broad discretion.” Lauricella, 409 Mass. at 217. Nothing in this memorandum and order precludes the judge, on remand, from redividing the property on an equitable basis supported by findings of fact and a rationale.⁶

So ordered.

affirmed in part; reversed and remanded

FOOTNOTES

2.   The trust provides: “Trustee shall hold and administer the entire Trust property and any divisions thereof and shall pay or apply the net income among the lineal descendants of Grantor, in whatever amounts and in whatever proportions and for whatever purposes, as Trustee, in Trustee's discretion, shall deem advisable.”

3.   At the time of the trial, herself, her three children, and her three grandchildren were beneficiaries of the trust.

4.   The trust instrument directs the trustee to pay the “net income among the lineal descendants of Grantor,” in her unrestrained discretion.

5.   At the death of the settlor, the wife made a $25,000 payment to each of her three children. She also made annual gifts of $14,000 to each, along with Christmas gifts ranging from $500 to $3,700. She also has made modest contributions to their vacations.

6.   The wife's requests for appellate fees and costs and dismissal of the husband's appeal are denied.