Case Title: Kasser v. Kasser

Citation: 179 Vt. 259, 2006 VT 2, 895 A.2d 134

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 2006-01-06T00:00:00Z

Document:
Kasser v. Kasser (2003-065); 179 Vt. 259; 895 A.2d 134

2006 VT 2

[Filed 06-Jan-2006]


       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,
  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.


                                  2006 VT 2

                                No. 2003-065


  Lawrence N. Kasser	                         Supreme Court

                                                 On Appeal from
       v.	                                 Windham Family Court


  Eileen M. Kasser	                         September Term, 2005


  Robert Grussing III, J.


  Matthew T. Birmingham, III of Birmingham & Moore, P.C., Ludlow, for
    Plaintiff-Appellee.

  Martha M. Davis of Law Office of Martha M. Davis, Windsor, for
    Defendant-Appellant.


  PRESENT:  Reiber, C.J., Dooley, Johnson, Skoglund and Burgess, JJ.

        
       ¶  1.  REIBER, J.  Wife Eileen M. Kasser appeals from the family
  court's final divorce order, which divided the parties' sizeable marital
  estate.  The parties' wealth stems largely from hotel investments, title to
  which are held by husband Lawrence N. Kasser and various trusts.  Husband
  and wife agreed that, in dividing the marital estate, the court should not
  liquidate the hotel properties, nor should it invade the trusts.  The
  family court assessed the value of the hotel properties and the trusts, in
  addition to other assets, and determined the portion attributable to the
  marital estate.  Wife argues that the court abused its discretion in
  determining the value of the marital estate, dividing the marital assets,
  and calculating maintenance.  We affirm.

       ¶  2.  The family court made the following findings.  Husband and wife
  were married in 1980.  They have three children together, two of whom are
  in college, and one of whom, a minor, attends a private boarding school. 
  Husband was born in 1943, and he was trained as an architect.  Wife was
  born in 1949, and she holds a bachelor's degree in fine arts.  The parties
  moved to Vermont in 1981.  Since that time, with one small exception, wife
  has been a full-time homemaker.  Between 1981 and 1988, husband worked as
  an architect.  During this time, the parties enjoyed a modest lifestyle. 

       ¶  3.  In 1987, husband began acquiring hotel properties.  In 1988,
  husband  received $1,400,000 from the sale of a family business, and he
  closed his architectural practice.  In 1991, husband's father died. 
  Husband's share of the estate, $750,000, was placed in the Lawrence Kasser
  Irrevocable Trust.  This trust pays income to husband for life.  When
  husband dies, the parties' children receive the income and, eventually, the
  principal.  The parties also created irrevocable trusts in their children's
  names, and they regularly contributed the maximum amount allowed by law to
  each trust, i.e., $60,000 per year.  After 1994, husband became more
  involved in the purchase of hotel properties.  The parties' lifestyle
  improved, and they became affluent. 

       ¶  4.  In late 1996, wife became disenchanted with husband and with
  her life in Vermont.  She contemplated divorce.  In the summer of 1997, she
  moved to Boston, where husband and the parties' minor child later joined
  her.  In June 1998, husband and child returned to Vermont.  In February
  1999, husband initiated divorce proceedings. 
   
       ¶  5.  The family court held a five-day hearing and issued a lengthy
  final divorce order in January 2003.  The court first assessed the value of
  eight hotel properties, relying heavily on testimony provided by husband's
  expert, whom it found credible.  The court found that the first hotel
  property, referred to as the "Exit 6" property, was worth $60,000, and it
  was owned by the children's trusts.  A second property, the Springfield
  Holiday Inn, was owned by a sub-chapter S corporation called Preferred
  Motor Inns of New England, Inc. (PMI).  The children's trusts held 99% of
  the PMI stock, while husband owned 1%.  The court found that the
  Springfield property was worth $1,400,000, and husband's 1% share was worth
  $14,000.  Husband also owned a 50% share in a Holiday Inn in Weirton, West
  Virginia.  This hotel had a net equity value of negative $1,170,000, and
  husband's 50% share was negative $585,000.  The court also assessed the
  value of five additional hotel properties in which husband held a 50%
  interest.

       ¶  6.  Based on its findings, the court concluded that the full net
  equity value of the eight hotel properties was $7,499,000.  Taking
  husband's 1% interest in the Springfield Holiday Inn into account, the
  court found that husband's interest in these hotels was $3,064,000.  The
  court recognized that the parties sharply disagreed as to the value of
  husband's interests in the various hotel properties, particularly the
  effect of husband's 50% ownership.  The court rejected husband's argument
  that his "minority" shares were without value, and instead found that
  husband's partial ownership diminished the present value of his interest by
  25%-33%.  The court thus found that husband's interest in the hotel
  properties was worth between $2,000,000 and $2,225,000.  
   
       ¶  7.  The court turned next to the Lawrence Kasser Irrevocable
  Trust, which had a value of $850,000.  The court found that husband
  received approximately $1250 per month in income from the trust, and he
  also used the trust as a source of borrowing for his hotel investments. 
  The court explained that husband had a limited right to invade the
  principal of the trust for his benefit during his lifetime, but a prudent
  fiduciary would not exercise that right absent dire need, which appeared
  unlikely given husband's financial situation.  Thus, because husband did
  not have an unlimited right  to the principal, the court considered this
  asset as a source of income only.  The court determined the value and
  ownership of numerous other assets, including a condominium in New York
  City and three condominiums in Vermont owed primarily by the children's
  trusts.
         
       ¶  8.  The court found that husband also had an investment account,
  called the Streamway Investment Account, with a value of $551,673.  The
  bulk of the account's assets were in three promissory notes.  One note had
  a face value of $200,000 but it did not pay interest and was not being
  amortized.  A second note was from PMI for $250,000, which paid $2000 in
  monthly interest.  A third note from the Falmouth Motel for $100,000 paid
  $1250 in monthly interest.  The account also held a small investment in
  another entity, which had a value of $1784.  The court found that, in
  total, husband received $3250 per month in interest from the Streamway
  account. 

       ¶  9.  Based on extensive findings, the court concluded that the gross
  marital estate was worth approximately $3,160,000.  The court arrived at
  this figure by adding together the diminished value of the hotel/motel
  properties ($2,100,000), the net value of the marital homestead ($285,000),
  husband's interest in a company called Vermont Teas ($30,000), husband's
  IRA accounts ($118,000), wife's IRA ($27,000), two cars ($15,000), the
  Streamway Investment Account ($551,500), husband's personal checking
  account ($5000), husband's interest in another business ($10,000), and a
  tractor ($20,000).  The court considered this a somewhat flexible figure
  given the nature of the marital assets and the many variables inherent in
  the valuation process. 
   
       ¶  10.  In reaching its conclusion, the court considered wife's
  assertion that the value of the PMI stock, the Exit 6 property, and the New
  York and Vermont condominiums held by the children's trusts should be
  considered marital assets.  Wife argued that husband had transferred these
  assets to the children's trusts in fraud of her rights in the marital
  estate.  The court rejected this argument and found that the establishment
  of the children's trusts, and the contributions to them and their
  management, had been prudent and not done with any purpose to deplete the
  marital estate.  The court found that husband had faithfully contributed to
  these trusts the maximum amount allowed by the gift tax law, i.e., $20,000
  per child or $60,000 per year.  The court explained that wife was aware of
  the establishment of the children's trusts and was generally aware of the
  transactions taking place with respect to them.  Based on these and other
  findings, the court found that husband's actions had been undertaken with
  the intent of wisely providing for the children's future while preserving a
  source of income and borrowing.
   
       ¶  11.  The court next considered how best to distribute the marital
  assets, mindful of the parties' stipulation that the assets not be
  liquidated nor the trusts invaded.  In addition to other assets, the court
  awarded husband his interests in the hotel businesses and related entities,
  as well as his interests in the various trusts.  Husband received the
  marital home, with a net value of $285,000.  He was ordered to pay wife
  $345,000 to offset this award, which the court considered a partial
  division of the overall marital estate.  Husband was also ordered to pay
  wife $300,000 as an additional distribution of cash in lieu of marital
  property, payable in ten annual payments of $30,000 at a 6% interest rate,
  plus interest on the unpaid balance at a rate of 6% per year.  Husband was
  also ordered to buy wife a new car at a cost of $40,000, maintain health
  insurance for wife, and name wife as a beneficiary in his life insurance
  policy.  Based on a pretrial stipulation between the parties, the court
  also ordered husband to pay the "reasonable" expenses of wife's financial
  expert.  The court found that of the $37,465 that remained outstanding on
  the expert's bill, $20,000 was reasonable and should be paid by husband. 
  The court held wife responsible for the balance. 

       ¶  12.  The court turned next to maintenance.  It found that the
  parties had enjoyed an affluent lifestyle and wife had no income other than
  the $3500 per month that husband was paying during the divorce proceedings. 
  The court noted that husband had also been paying for all of wife's
  household expenses, including the mortgage, during this period, and thus
  the $3500 monthly payment had been available to wife solely for her
  personal needs.  Based on numerous findings, the court concluded that, in
  light of its distribution of the marital estate, including the $712,000
  awarded to wife ($345,000 in cash; $300,000 payable over ten years at 6%
  interest; her IRA worth $27,000; and a $40,000 car), and considering the
  factors set forth in 15 V.S.A. § 752, wife's reasonable needs, as best
  could be determined absent reliable evidence from her, were approximately
  $6000 per month.

       ¶  13.  The court found it difficult to determine husband's monthly
  income given the nature of his hotel holdings, and the fact that his tax
  returns did not necessarily reflect income that was actually available to
  him.  Based on numerous findings, the court concluded that husband earned
  $25,000 per month, or $300,000 per year.  In evaluating husband's expenses,
  the court noted that husband offered to pay the full educational expenses
  of his two eldest children, without objection from wife.  He also agreed to
  pay the educational expenses of the parties' youngest child, who was
  enrolled in private school.  The court considered these payments as a
  factor in the income-expense analysis.  Taking all of the evidence into
  consideration, the court concluded that husband's reasonable personal
  expenses were $15,000 per month.
   
       ¶  14.  Based on its findings, the court ordered husband to pay wife
  $5500 per month beginning in February 2003, $6500 per month beginning July
  1, 2003, and $7500 per month beginning in July 2006.  In other words, wife
  will receive $78,000 per year in maintenance between July 2003 and July
  2006, and $90,000 per year thereafter.  Wife appealed from the court's
  final order.  

       ¶  15.  Wife first argues that the family court erred in calculating
  the value of the marital estate.  She asserts that the court should have
  included the value of the PMI stock and the Exit 6 property because husband
  transferred these assets to the children with the intent to deprive her of
  her fair share of the marital estate.  Wife maintains that she was not
  notified of the transfers, nor did she consent to them.  According to wife,
  husband continues to treat PMI as his own property despite the  stock
  transfer.  She notes that he holds the only voting stock in the company, he
  spent $750,000 to renovate the Springfield Holiday Inn owned by PMI, he
  receives a salary from PMI, PMI pays the rent on his New York City
  apartment, and PMI paid for his car.  As to the Exit 6 property, wife
  states that husband spent $140,000 of marital assets for its purchase.  
   
       ¶  16.  We find no abuse of discretion.  The family court is
  authorized to equitably divide and assign marital property, and it may
  consider various statutory factors in making its decision.  Cabot v. Cabot,
  166 Vt. 485, 500,