Court Opinion

ID: 9614074
Source: CourtListenerOpinion
Date Created: 2023-08-22 04:22:10.868993+00
Date Added: 2024-06-11T08:50:57.503811
License: Public Domain

Justice QUINN
dissenting in part:
I respectfully dissent from Part I of the court’s opinion. Section 14-10-113(4), 6B C.R.S. (1987), states that an asset acquired by either spouse during the marriage by gift, bequest, devise, or descent shall be considered as marital property to the extent that its present value exceeds its value at the time of acquisition. The majority holds that any increase in value of the corpus of a testamentary trust during the marriage of the beneficiary is not marital *1159property because the trust was purely discretionary and the beneficiary,. Patricia Jones, has nothing more than a mere expectancy until such time as the trustees elected to make a payment to her. Maj. op. at 1156-1157. I view the interest of Patricia Jones in the testamentary trust as a vested beneficial interest in trust property. Consequently, I would hold that the increase in the value of the trust assets during the marriage constitutes marital property under section 14-10-113(4).
In In re Marriage of Grubb, 745 P.2d 661 (Colo.1987), we held that a husband’s interest in a vested but unmatured employer-supported pension plan constituted marital property subject to division in a dissolution proceeding, even though the receipt of benefits under the plan was contingent upon the husband’s survival until the actual commencement of retirement. We emphasized in Grubb that “[a] rule directed to the disposition of property in a dissolution proceeding can only be as sound as the economic reality which it attempts to service.” 745 P.2d at 664. Prior to our decision in Grubb, we had held in Ellis v. Ellis, 191 Colo. 317, 552 P.2d 506 (1976), that military retirement pay was not marital property because it lacked any of the following elements: “cash surrender value; loan value; redemption value; lump sum value; and value realizable after death.” 191 Colo, at 319, 552 P.2d at 507. We had also held in In re Marriage of Mitchell, 195 Colo. 399, 579 P.2d 613 (1978), likewise decided prior to Grubb, that employee contributions to the Public Employees Retirement Association fund were marital property because there was nothing uncertain about the employee’s right to the money, since the employee could quit work and withdraw the contributions. 195 Colo, at 403, 579 P.2d at 616. In Grubb, we disavowed our prior analysis of marital property in Ellis and Mitchell because such analysis failed to account for the “economic reality” of the interest in question. Grubb, 745 P.2d at 664. We went on to conclude in Grubb that, although the husband’s receipt of pension payments under a vested but unmatured pension plan is contingent on some future event, this contingency “does not render the plan so speculative as to remove it from the category of marital property.” 745 P.2d at 665. By a similar analysis, the discretionary nature of the testamentary trust in this case does not render Patricia Jones’ interest in the increase in the value of the trust corpus so speculative as to render it something other than marital property.
The creation of a trust results “in the creation in the beneficiary of an interest in the subject matter of the trust.” Restatement (Second) of Trusts, § 74 comment a (1959). An equitable interest in trust property is regarded as a property interest of the same kind as a trust res and is more than a mere chose in action. Senior v. Braden, 295 U.S. 422, 433, 55 S.Ct. 800, 803, 79 L.Ed. 1520 (1935); see also Brown v. Fletcher, 235 U.S. 589, 599, 35 S.Ct. 154, 157, 59 L.Ed. 374 (1915); II W. Fratcher Scott on Trusts, § 130 at 406 (1987). In this case, the settlor, Lois Distel, created a testamentary trust which gave the trustees, one of whom was Lois’ husband and the other the First National Bank of Boulder, the right to distribute income and invade the principal to the extent “necessary or desirable for the health, welfare, comfort, support, maintenance and education” of Patricia Jones, who is Lois’ daughter, or Lois’ husband. The trustees have no obligation to preserve the corpus of the trust for future beneficiaries, nor are they obligated to equalize or prorate the distributions to the beneficiaries. Patricia Jones’ interest in the trust, far from being an unvested future interest, became absolutely vested at the time of her mother’s death. While the trustees have discretion in distributing the income and principal, the fact remains that Patricia Jones benefitted by the increase in the value of the trust corpus and received approximately $38,000 from the trust over a period of five years during her marriage. This substantial distribution belies the notion that her interest in the trust corpus was a mere expectancy rather than a property interest.
Where, as here, a spouse has a vested beneficial interest in a testamentary trust and receives substantial trust income dur*1160ing the marriage, the spouse’s vested beneficial interest constitutes a property interest in the subject matter of the trust, with the result that any increase in value of the trust corpus should be subject to division as marital property pursuant to section 14-10-113(4). Several courts in other jurisdictions have concluded that a spouse’s interest in future benefits, in some cases less certain than Patricia Jones’ interest in the trust under consideration, was subject to division in a dissolution proceeding. In Davidson v. Davidson, 19 Mass.App. 364, 474 N.E.2d 1137 (1985), for example, a father established a testamentary trust for his wife with the remainder interest in his married son. Because the trustees had uncontrolled discretion to invade the principal for the benefit of the settlor’s wife, the married son's remainder interest was uncertain. The court nevertheless concluded that the married son’s remainder interest under the testamentary trust, “while it may have been at the outer limits, constituted a sufficient property interest” to make it part of the married son’s marital estate for purposes of property division. Id. at 1144. Neither the “uncertainty of value” nor the “inalienability” of the married son’s interest by virtue of a valid spendthrift clause were sufficient “to preclude consideration of the interest as subject to division.” Id. (footnote omitted). In Trowbridge v. Trowbridge, 16 Wis.2d 176, 114 N.W.2d 129 (1962), a father created a life estate in his wife and a remainder interest in his married son after the death of the settlor’s wife and the married son’s attainment of the age of forty years of age, with the settlor’s wife having power to invade the principal under certain conditions. Despite the fact that the married son could possibly receive nothing under the trust, the court “had no doubt” that the son’s interest was subject to division in a divorce proceeding, 114 N.W.2d at 134; cf. McGinley v. McGinley, 388 Pa.Super. 500, 565 A.2d 1220 (1989) (husband’s vested future interest in testamentary trust was “property,” even though husband’s right to receipt of the trust corpus was subject to divestment if he did not survive his father; because, however, husband’s interest vested at his birth, it was not “marital property” under Pennsylvania statute defining such property as property acquired during marriage).1
Although the issue of apportioning the increase in the value of the trust during the marriage to Patricia Jones may present a somewhat difficult question, similar difficulties in valuation are faced by trial courts every day. As in the case of valuing prospective pension payments, a court can employ any of several alternatives. One alternative might to place a value on Patricia Jones’ interest in the increased value of the trust corpus by utilizing a table similar to that for valuing a remainder interest for purposes of estate taxes. McCain v. McCain, 219 Kan. 780, 549 P.2d 896, 900 (1976). Another alternative might consist of ordering a percentage of future funds received by the beneficiary to be paid over to the other spouse. Trowbridge, 114 N.W.2d at 134. Other alternative methods can be employed, based on a trial court’s “experience, insight and knowledge.” Davidson, 474 N.E.2d at 1145, n. 12.
I would reverse the judgment of the court of appeals and hold that Patricia Jones has a vested beneficial interest in her mother’s testamentary trust, that such interest is a property interest, and that any increase in value of the trust corpus during her marriage is “marital property” subject to division in a dissolution proceeding. I accordingly dissent from Part I of the court’s opinion.

. In addition to our decision in In re Marriage of Grubb, 745 P.2d 661 (1987), other Colorado cases have recognized that the value of marital property need not be immediately ascertainable in order to be subject to division. For example, the court of appeals in In re Marriage of Fields, 779 P.2d 1371 (Colo.App.1989), held that an un-liquidated personal injury claim arising during marriage is marital property. In another case, the court of appeals held that an attorney's contingency fees were valuable contract rights and as such constituted part of his marital estate, even though the fees were payable after dissolution. In re Marriage of Vogt, 773 P.2d 631 (Colo.App.1989).