Court Opinion

ID: 9897286
Source: CourtListenerOpinion
Date Created: 2023-11-14 19:09:41.747926+00
Date Added: 2024-06-11T09:15:42.061212
License: Public Domain

FILED
                                                                        Sep 20 2023, 8:33 am

                                                                            CLERK
                                                                        Indiana Supreme Court
                                                                           Court of Appeals
                                                                             and Tax Court

ATTORNEYS FOR APPELLANT                                   ATTORNEYS FOR APPELLEE
Nadine E. McSpadden                                       Katherine A. Rich
Sarah C. Jenkins                                          Jessie Cobb-Dennard
Taft Stettinius & Hollister LLP                           The Northside Law Firm
Indianapolis, Indiana                                     Westfield, Indiana
Amanda R. Blystone
Broyles Kight & Ricafort, P.C.
Indianapolis, Indiana

                                           IN THE
    COURT OF APPEALS OF INDIANA

Juliet C. Roberts,                                        September 20, 2023
Appellant-Petitioner,                                     Court of Appeals Case No.
                                                          23A-DN-588
        v.                                                Appeal from the Marion Superior
                                                          Court
John A. Roberts, Jr.,                                     The Honorable Jennifer J. Hubartt,
Appellee-Respondent.                                      Magistrate
                                                          Trial Court Cause No.
                                                          49D14-2201-DN-182

                                 Opinion by Judge Brown
                               Judges Crone and Felix concur.

Brown, Judge.

Court of Appeals of Indiana | Opinion 23A-DN-588 | September 20, 2023                           Page 1 of 14
[1]   Juliet C. Roberts (“Wife”) appeals the trial court’s denial of her motion for

      summary judgment requesting a finding regarding the marital assets subject to

      division in this dissolution proceeding. We affirm.

      Facts and Procedural History

[2]   Wife and John A. Roberts, Jr., (“Husband”) were married in 1962. Harriet

      Cain, who was Wife’s mother, created a trust (the “Trust”) in June 1967 and

      amended and restated the trust instrument on December 21, 1981. The Trust

      instrument, under “ITEM VI,” titled “Trusts for Daughters,” provides:

              A.       The Trustee shall pay to said daughter all of the net income
                       in convenient installments not less frequently than quarterly.

              B.       The Trustee shall distribute to said daughter, or to such
                       recipient as she may designate, so much or all of the trust
                       principal as she may, from time to time, direct by an
                       instrument or instruments in writing delivered to the Trustee;
                       provided, however, that such right to withdrawal shall not
                       apply to undivided interests in assets, such as the Settlor’s
                       farm, the distribution of which, in the opinion of the Trustee
                       and the Adviser, would substantially diminish the fair market
                       value of the remaining undivided interests held by the Trustee.

      Appellant’s Appendix Volume II at 35-36. Under “ITEM XII,” titled

      “Miscellaneous Provisions Applicable To all Trusts Hereunder,” it provides:

              E.       The interest of each beneficiary in the income or principal of
                       a trust under this instrument shall be free from the control or
                       interference of any creditor of a beneficiary or of any spouse
                       of a married beneficiary and shall not be subject to
                       attachment or susceptible of anticipation or alienation.

      Court of Appeals of Indiana | Opinion 23A-DN-588 | September 20, 2023        Page 2 of 14
      Id. at 43-44. Harriet died in November 1985 and was survived by her three

      children, Wife, John Frenzel III (“Frenzel”), and Suzanne Baldwin

      (“Suzanne”). Husband was appointed as the trustee of the Trust in February

      2013. Suzanne died in March 2019 and was survived by her four children,

      including Michael Baldwin (“Michael”).

[3]   In October 2019, Michael filed a petition for relief under cause number 49D08-

      1910-TR-42618 (“Cause No. 618”) alleging that Husband had breached his

      duties as trustee and failed to follow terms of the Trust. The petition stated

      that, on June 14, 2019, Husband had sent an email to Michael’s attorney

      stating: “The trust consists of Farms and oil wells on those farms. (Royalty

      interests). The Trust also owns two limited liability Real Estate Partnerships.

      The Farms are the Kinney Farm (850.24 acres), the Stum Farm (492.50 acres),

      and the Cartwright Farm (75.0 acres).” Id. at 68. The petition also stated that,

      on June 19, 2019, Husband sent an email to Michael’s attorney stating:

              Yes, I stated that [Michael] will receive all distributable income and
              assets on a timely basis. The key word is “distributable.” None of
              the assets in the [Trust] can be distributed[.] You will note in ITEM
              VI of the trust, paragraph B, that such right of withdrawal shall not
              apply to undivided interests in assets such as settlor’s farm, the
              distribution of which, in the opinion of the Trustee and the adviser,
              would substantially diminish the fair market value of the remaining
              undivided interests held by the trustee. It is impossible legally to
              distribute any assets as the these [sic] assets are only 50% owned by
              the [Trust]. There is another Trust that owns the other 50%
              undivided interest in the assets. The Baldwins have the right to
              participate in 44.444% of 50% of undivided interests in the assets.
              Therefore there is nothing to discuss as these assets cannot be

      Court of Appeals of Indiana | Opinion 23A-DN-588 | September 20, 2023     Page 3 of 14
              distributed. The Baldwins will receive all income . . . and if any
              assets are sold they will receive their shares. . . .

      Id. at 70. A settlement agreement was entered in Cause No. 618 in May 2020.

[4]   On January 7, 2022, Wife filed a petition for dissolution of marriage in the

      Marion Superior Court under cause number 49D14-2201-DN-182 (“Cause

      No. 182”). On January 11, 2022, the Marion Superior Court issued an

      order under cause number 49D08-2201-TR-870 relating to the Trust which

      removed Husband and appointed Borkowski Legal Services LLC d/b/a/

      Arrow Fiduciary Services as trustee. In April 2022, Wife filed a motion

      for summary judgment under Cause No. 182 requesting a finding that her

      interest in the Trust is not a marital asset. In her memorandum, Wife

      argued the Trust met the requirements of a spendthrift trust. She further

      argued that she “has no present pecuniary interest divisible in the

      dissolution action because, pursuant to the terms of the [Trust], she does

      not have a right to withdraw any principal from the [Trust] and, therefore,

      there are no assets divisible in the dissolution action related to the

      [Trust].” Id. at 24.

[5]   Husband filed a response arguing that “[b]oth parties to this action are

      elderly and the trust distributions have served as the lion’s share of their

      monthly income for some time,” Wife “receives monthly distributions

      from the Trust,” and “[t]hose distributions are occurring currently, are not

      remote, and are subject to division as a marital asset.” Id. at 72. He

      argued “[t]hose funds are also subject to a claim from [him] for spousal
      Court of Appeals of Indiana | Opinion 23A-DN-588 | September 20, 2023        Page 4 of 14
      maintenance,” he “will be claiming that the increased distributions from

      the Trust are due in part to his actions on behalf of the Trust,” and he will

      be “arguing for an unequal division of the assets in his favor given that the

      economic circumstances of [Wife] are greater than his economic

      circumstances.” Id. at 72-73.

[6]   On November 23, 2022, the court held a hearing. Wife called Rebecca Geyer, a

      board-certified trust and estate specialist in Indiana, who testified the Trust

      instrument contains a spendthrift provision. Wife’s counsel referred to a

      document with a date ending October 31, 2022, and Geyer indicated the

      document was an accounting showing the inventory or assets held by the Trust.

      When asked “are all of the assets owned by the trust, what would be considered

      undivided interests and assets,” she testified:

              From my review, the answer to that is yes with, I don’t know what
              uh specifically is in the fifth third account,[1] but it looks like that’s
              just a clearing account that holds the income like farm income from
              cash rent and things that is received as well as the oil royalty interest
              before they’re distributed out to the beneficiaries. But everything
              else contains undivided interests in real estate holdings and those
              are owned [in] part by this trust, and it’s my understanding they’re
              owned in part by another trust as well.

      1
       Under a heading for beginning inventory, the accounting includes a line for a Fifth Third account with a
      value of $8.43. The accounting also indicates there were proceeds from the sale of a building of $11,516.24
      and there was an ending inventory of $2,000 attributable to income and $1,988.50 attributable to principal.

      Court of Appeals of Indiana | Opinion 23A-DN-588 | September 20, 2023                            Page 5 of 14
      Transcript Volume II at 13-14. When asked about the sources of the Trust’s

      income, Geyer testified “there may be a little bit of bank interest” which was

      “pretty minimal” and the primary income sources included rents associated

      with the farms and royalties associated with approximately twenty wells. Id. at

      18-19. She indicated that, to her knowledge, there was no written agreement

      with the tenant who farmed the property. She stated that a well can stop

      producing, which happens frequently, leading to the termination of the

      associated royalty. When asked if it was possible to determine the income from

      the mineral rights in the future, she indicated she could look at tax returns to

      determine the royalties previously received but she did not have any idea how

      to anticipate the future royalties.

[7]   On cross-examination, Geyer indicated the accounting for the period of July 18,

      2022, through October 31, 2022, showed that Wife received a little over

      $130,000 during that period. She indicated the Trust instrument referred to the

      settlor’s farm as an example of an undivided interest but did not specifically

      reference oil or mineral rights. She indicated Wife was receiving distributions

      from the Trust at least quarterly, and when asked “at least by reviewing the tax

      returns, it looks like that has increased over the last couple of years,” she

      answered affirmatively. Id. at 29. When asked “we don’t know as we sit here

      today, if the trustee would determine any distribution of assets to be quote,

      substantially diminishing the fair market value of the remaining assets,” she

      answered “[c]orrect.” Id. at 34.

      Court of Appeals of Indiana | Opinion 23A-DN-588 | September 20, 2023      Page 6 of 14
[8]   Wife’s counsel argued there was no dispute regarding the assets held by the

      Trust. She asserted that Wife’s interest in the Trust is too remote to be divided

      in the dissolution and that Wife “doesn’t have the ability to sell a portion of her

      interest” and “can’t force the trust to sell any assets.” Id. at 38. She argued the

      income from the farms and wells varied and was not guaranteed. She also

      argued that, while the court could consider Wife’s future income in determining

      whether to deviate from an equal division and in considering a request by

      Husband for spousal maintenance, the court could not consider the future

      income to be a marital asset to be divided. Husband’s counsel argued Wife has

      the ability to request distributions of the corpus of the trust and “[t]his court has

      no idea, if [Wife] were . . . to request a distribution of certain trust assets, what

      the value of those would be versus the other assets.” Id. at 41. His counsel also

      argued a spendthrift trust was not created because Wife had the ability to

      request distributions.

[9]   On December 19, 2022, the trial court issued an order denying Wife’s motion

      for summary judgment and providing:

              4.       The [Trust] consists primarily of farms, oil wells on those
                       farms, and limited liability real estate partnerships. The
                       primary income distributed to the beneficiaries is a result of
                       royalties from the oil wells.

                                                      *****

              7.       Trial Rule 56 provides that Summary Judgement may be
                       granted regarding one or all issues in a matter, provided there is
                       no genuine issue of material fact. Here, [Husband] has raised a
                       genuine issue of material fact regarding the meaning and effect

      Court of Appeals of Indiana | Opinion 23A-DN-588 | September 20, 2023        Page 7 of 14
                        of the Trust language in Section VI. B. of the instrument. While
                        the Court may determine, after final hearing and the
                        consideration of facts, testimony, and evidence, that the [Trust]
                        should not be considered a marital asset, the Court does not
                        determine the same as a matter of law.

       Appellant’s Appendix Volume II at 13-14. Upon Wife’s request, the trial court

       certified its interlocutory order for appeal and this Court accepted jurisdiction.

       Discussion

[10]   We review an order for summary judgment de novo, applying the same standard

       as the trial court. Hughley v. State, 15 N.E.3d 1000, 1003 (Ind. 2014). The

       moving party bears the initial burden of making a prima facie showing that there

       are no genuine issues of material fact and that it is entitled to judgment as a

       matter of law. Manley v. Sherer, 992 N.E.2d 670, 673 (Ind. 2013). If the moving

       party succeeds, then the nonmoving party must come forward with evidence

       establishing the existence of a genuine issue of material fact. Id.

[11]   Wife maintains that her interest in the Trust does not constitute marital

       property to be divided in the dissolution. She argues that “[a]ll the assets held

       by the Trust are indivisible,” “the Trust owns only 50% of those assets,” and

       she has “no current right to demand distribution of the Trust principal.”

       Appellant’s Brief at 13. She argues the spendthrift provision applies to her

       interest in the Trust income and principal. She contends her interest in the

       Trust is too remote to be included in the marital pot and that she has no right to

       demand a distribution of Trust assets. She also argues the Trust’s future income

       is uncertain and does not constitute a marital asset.
       Court of Appeals of Indiana | Opinion 23A-DN-588 | September 20, 2023      Page 8 of 14
[12]   Husband argues there is a question as to whether the Trust is a spendthrift trust

       and that the Trust provisions “allow for distribution of assets should the Trustee

       and the Adviser not find the same would substantially diminish the fair market

       value of the remaining undivided interests held by the Trustee.” Appellee’s

       Brief at 8. He argues Wife’s expert indicated that “the distributions [Wife] had

       been receiving had increased over the last couple of years” and “did not testify

       that the farmland or oil wells could not be distributed to [Wife] without

       substantially diminishing the fair market value of the remaining undivided

       interests held by the trustee.” Id. at 9.

[13]   To the extent we must interpret the Trust instrument, the interpretation of a

       trust is a question of law. Fulp v. Gilliland, 998 N.E.2d 204, 207 (Ind. 2013).

       The primary purpose in construing a trust instrument is to ascertain and give

       effect to the settlor’s intention. Id. If the trust is capable of clear and

       unambiguous construction, we give effect to the trust’s clear meaning. Id.

[14]   Ind. Code § 31-15-7-4 governs the division of property in dissolution actions

       and requires that the trial court divide the property in a just and reasonable

       manner. The court shall presume that an equal division of marital property

       between the parties is just and reasonable, and the trial court may deviate from

       an equal division when that presumption is rebutted. Ind. Code § 31-15-7-5. It

       is well-established that all marital property goes into the marital pot for

       division, whether it was owned by either spouse before the marriage, acquired

       by either spouse after the marriage and before final separation of the parties, or

       acquired by their joint efforts. Campbell v. Campbell, 993 N.E.2d 205, 213 (Ind.

       Court of Appeals of Indiana | Opinion 23A-DN-588 | September 20, 2023         Page 9 of 14
       Ct. App. 2013). “Property” means “all the assets of either party or both

       parties” including “(1) a present right to withdraw pension or retirement

       benefits; (2) the right to receive pension or retirement benefits that are not

       forfeited upon termination of employment or that are vested . . . but that are

       payable after the dissolution of marriage; and (3) the right to receive disposable

       retired or retainer pay . . . acquired during the marriage that is or may be

       payable after the dissolution of marriage.” Ind. Code § 31-9-2-98. The Indiana

       Supreme Court has held that “[t]he phrase ‘all assets’ is broadly inclusive and is

       not limited to the list of examples that follows it.” Bingley v. Bingley, 935 N.E.2d

       152, 155 (Ind. 2010). The “one pot” theory specifically prohibits the exclusion

       of any asset from the scope of the court’s power to divide and award. Kendrick

       v. Kendrick, 44 N.E.3d 721, 728 (Ind. Ct. App. 2015), trans. denied. While the

       court may ultimately determine a particular asset should be awarded to one

       spouse, it must first include the asset in its consideration as to how the marital

       estate should be divided. Id.

[15]   Further, this Court has observed that a right to receive future payments can be

       considered property. Helm v. Helm, 873 N.E.2d 83, 87-88 (Ind. Ct. App. 2007)

       (the right to certain retirement benefits, matured stock options, and structured

       settlement payments may constitute marital property). The common

       denominator is whether the interest in the future payment is vested. Id. at 88.

       “The word ‘vest’ generally means either vesting in possession or vesting in

       interest. Vesting in possession connotes an immediate existing right of present

       enjoyment, while vesting in interest implies a presently fixed right to future

       Court of Appeals of Indiana | Opinion 23A-DN-588 | September 20, 2023     Page 10 of 14
       enjoyment.” Id. (citations omitted). See also Vadas v. Vadas, 762 N.E.2d 1234,

       1235-1236 (Ind. 2002) (property with a vested interest at the time of dissolution

       may be divided as a marital asset). On the other hand, some property interests

       are considered too remote or speculative to constitute assets capable of division.

       See Harrison v. Harrison, 88 N.E.3d 232, 235-236 (Ind. Ct. App. 2017) (noting

       the wife’s interests in certain trusts were subject to complete defeasance because

       she would take nothing if she predeceased her parents and would receive

       nothing during her lifetime unless a majority of the trustees elected to make a

       disbursement, and concluding the wife was not presently possessed of any

       pecuniary value which could have been before the court for disposition) (citing

       Loeb v. Loeb, 261 Ind. 193, 301 N.E.2d 349, 353 (1973) (holding the husband’s

       interest in a trust was subject to complete defeasance because he would take

       nothing under the trust if he predeceased his mother and thus he was “not

       presently possessed of any pecuniary value which could have been before the

       court for disposition”)), trans. denied.

[16]   The record reveals that, pursuant to the terms of the Trust, Wife began

       receiving payments from the net income of the Trust during her marriage to

       Husband and is receiving payments from the Trust at least quarterly. The Trust

       instrument requires the trustee to pay Wife her share of “all of the net income in

       convenient installments not less frequently than quarterly.” Appellant’s

       Appendix Volume II at 35. The Trust holds a fifty percent interest in three

       farms containing more than 1,400 acres, approximately twenty active oil wells,

       and two limited liability real estate partnerships. Geyer testified the Trust’s

       Court of Appeals of Indiana | Opinion 23A-DN-588 | September 20, 2023    Page 11 of 14
       primary sources of income include the rents associated with the farm property

       and the royalties associated with the oil wells. She further testified that the

       accounting for the period beginning July 18, 2022 and ending October 31, 2022,

       showed Wife received a little over $130,000 and that the payments to Wife had

       increased over the previous couple of years. Unlike in Harrison and Loeb, Wife’s

       interest in the Trust is not subject to complete defeasance—indeed, she is

       receiving payments from the Trust. In light of the Trust’s assets, sources of

       income, and ongoing mandatory payments, we cannot say that Wife’s interest

       is too remote or speculative to be capable of division or that she does not have a

       presently fixed right to future enjoyment. Given the broad language in

       Indiana’s statutes governing the division of marital property and our caselaw

       that all marital property goes into the marital pot for division, we cannot say the

       trial court erred in denying Wife’s motion for summary judgment.

[17]   To the extent Wife asserts the Trust contained spendthrift provisions, “[a]

       spendthrift trust is one in which the beneficiary is unable to transfer, assign, or

       alienate his right to future payments of income or principal, and which provides

       the beneficiary’s creditors are unable to subject the beneficiary’s interest to the

       payment of their claim while in the hands of the trustee.” United States v.

       Grimm, 865 F. Supp. 1303, 1311 (N.D. Ind. 1994) (citing Brosamer v. Mark, 540

       N.E.2d 652 (Ind. Ct. App. 1989), aff’d, 561 N.E.2d 767 (Ind. 1990); Ind. Code §

       30-4-3-2(a)). “There are three requirements for a trust to be a spendthrift trust.

       First, the settlor may not be a beneficiary of the trust. Second, the beneficiary

       must not have any present dominion or control over the plan corpus. Third, the

       Court of Appeals of Indiana | Opinion 23A-DN-588 | September 20, 2023     Page 12 of 14
       trust must contain an anti-alienation clause which prevents the beneficiary from

       voluntarily or involuntarily transferring his interest in the trust.” Id. (citing

       Matter of Jones, 43 B.R. 1002 (N.D. Ind. 1984)). The Trust expressly provides

       the trustee “shall distribute . . . so much or all of the trust principal as [Wife]

       may, from time to time, direct.” Appellant’s Appendix Volume II at 36. The

       Trust also states this right does not apply “to undivided interests in assets . . .

       the distribution of which, in the opinion of the Trustee and the Adviser, would

       substantially diminish the fair market value of the remaining undivided interests

       held by the Trustee.” Id. The designated evidence does not establish as a

       matter of law that the Trust does not hold any assets which may be distributed

       pursuant to these terms. We cannot say the trial court was required to grant

       Wife’s motion for summary judgment on this basis.

[18]   With that said, we express no opinion as to whether the trial court should

       ultimately determine that Wife’s interest in the Trust should be awarded to her

       or the appropriate method of valuing or awarding a portion of Wife’s interest in

       future distributions from the Trust. See 146 AM. JUR. PROOF OF FACTS 3D 197,

       Proof of Equitable Distribution of Oil or Mineral Rights in Divorce (2015) (“[W]here

       the interest is too speculative to obtain a definite valuation, the court may

       award a percentage interest in the mineral or oil rights in the equitable

       distribution of the marital estate. . . . Where a trust is involved, the interest may

       become more speculative because the trustee may not allow a distribution to the

       Court of Appeals of Indiana | Opinion 23A-DN-588 | September 20, 2023       Page 13 of 14
       beneficiary and thus this consideration must be taken into account when

       analyzing its valuation.”) (footnotes omitted). 2

[19]   For the foregoing reasons, we affirm the trial court.

[20]   Affirmed.

       Crone, J., and Felix, J., concur.

       2
         “For example, in [Holte v. Holte, 837 N.W.2d 894 (N.D. 2013)], [the] court held that a husband had a
       present property interest in a trust that generated income from mineral interests, such that proceeds from [the]
       trust were properly included in [the] marital estate when distributing property in divorce proceeding. [T]he
       husband had received income from the trust, and the trust was irrevocable. The husband’s income from the
       trust that generated the income from the mineral interests was too speculative to value, and therefore, the
       wife was entitled to a percentage of the future income from the trust in a property division in a divorce
       proceeding where, although the husband had a fixed one-fourth interest in all royalties and other income
       from the trust, mineral production levels, mineral values, and other factors that were subject to fluctuation
       affected the income from the trust.” 146 AM. JUR. PROOF OF FACTS 3D 197 (footnote omitted).

       Court of Appeals of Indiana | Opinion 23A-DN-588 | September 20, 2023                             Page 14 of 14