Opinion ID: 1652426
Heading Depth: 1
Heading Rank: 3

Heading: Personal residences

Text: The Skokoses acquired three personal residences during their marriage# 10 Edgehill Road in Little Rock, and 131 Hosta Bay and 1519 Long Point Lane in Hot Springs. Each was held by them as tenants by the entireties. The Chancellor found that they were not marital property at the time of the divorce because the Skokoses had conveyed them to qualified personal residence trusts (QPRTs) after agreeing between themselves to do so. The QPRTs were created apparently for the purpose of avoiding taxation ( i.e., estate planning) but to maintain family control of the residences. Joe Gelzine, an attorney who drafted the QPRT documents, testified that the device creates three interests in the property thus conveyed: (1) a reversionary interest in the grantor, (2) a possessory interest in the grantor, and (3) a contingent remainder interest in beneficiaries of the trust. The grantor to a QPRT can end the trust, forfeiting the tax benefits, and thus obtain his or her reversionary interest. The evidence was conflicting as to whether Mr. or Ms. Skokos was the prime mover in setting up the QPRTs. We do know, however, that while Mr. Skokos was away, participating in the Desert Storm operation in 1991, Ms. Skokos, with Mr. Gelzine's help, quitclaimed her interest in the Edgehill residence to the Skokos family trust of which Mr. Skokos was trustee. As Mr. Skokos's attorney in fact, she likewise quitclaimed his interest to the family trust. By special warranty deed, Mr. Skokos thereafter conveyed the Edgehill property to himself, individually, and then he conveyed the property to the QPRT by special warranty deed, also signed by Ms. Skokos. A similar transaction occurred with respect to the Hosta Bay property. The Skokoses' two children were the contingent remaindermen named in these trusts. Mr. and Ms. Skokos conveyed the Long Point Lane property by quitclaim deed to Ms. Skokos, individually, and she then conveyed it by special warranty deed to herself as trustee of a QPRT. The contingent remainderman was Dr. Kemp Skokos, Theodore Skokos's brother. Ms. Skokos's deposition testimony indicated that the gift to Kemp Skokos was made in gratitude for assistance (presumably financial) he had given as the Skokoses entered the cellular-telephone business. Pursuant to these arrangements, Mr. Skokos, as grantor, retained a 25-year possessory interest in the Edgehill and Hosta Bay properties, and Ms. Skokos retained a 15year possessory interest in the Long Point Lane property. Ms. Skokos lost her possessory interests in the Edgehill and Hosta Bay residences and was compensated for them in the divorce decree. The parties, however, were not required to account for the value of the reversionary interests they retained in those properties. Ms. Skokos contends the conveyances to the QPRTs should be set aside because she was overreached by a dominant spouse in creating them. See Shipp v. Bell, 256 Ark. 89, 505 S.W.2d 509 (1974). There was evidence that Ms. Skokos is a college-educated person who sold real estate for a time and was thus at least somewhat familiar with property transactions, having been a million dollar club salesperson. The Skokoses' son, who was a law student when the QPRTs were created, recalled his mother discussing the trusts and acknowledging their effects with some concern over what might happen should she and Mr. Skokos ever divorce. Mr. Skokos is an attorney, and thus perhaps obviously more knowledgeable about such transactions than Ms. Skokos, but he contends that he had not heard of the QPRT idea before he left the country, that he was gone in 1991 when Ms. Skokos began the process, and that it was her idea to do so. It is enough to say that, where there is a factual dispute about the conditions surrounding the making of a deed, the determination by the Chancellor, whose job it is to assess the credibility of the witnesses, Lawson v. Lawson, 226 Ark. 643, 291 S.W.2d 518 (1956), will not be reversed unless it is clearly erroneous, Cavin v. Cavin, 308 Ark. 109, 823 S.W.2d 843 (1992), or unless it is clearly against the preponderance of the evidence, Weber v. Weber, 256 Ark. 549, 508 S.W.2d 725 (1974), viewing the evidence in the light favorable to the appellee. Dennis v. Dennis, 239 Ark. 384, 389 S.W.2d 631 (1965). We must remand the case, however, for reconsideration of distribution of the parties' interests in the marital residences, not for any further consideration of the validity or effectiveness of the QPRT instruments and preceding conveyances, but because the reversionary interests that were created and acquired by the parties during the marriage were clearly marital property, see Ark.Code Ann. § 9-12-315(b) (Repl.1993), and those reversionary interests were erroneously not considered in the distribution of the marital property.