Court Opinion

ID: 4678796
Source: CourtListenerOpinion
Date Created: 2021-04-20 13:08:11.900308+00
Date Added: 2024-06-11T08:03:46.749454
License: Public Domain

NOTICE: This opinion is subject to motions for rehearing under Rule 22 as
well as formal revision before publication in the New Hampshire Reports.
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                 THE SUPREME COURT OF NEW HAMPSHIRE

                           ___________________________

7th Circuit Court-Rochester Family Division
No. 2020-0009

         IN THE MATTER OF JONATHAN MERRILL AND LEA MERRILL

                         Submitted: November 19, 2020
                         Opinion Issued: April 20, 2021

      John A. Macoul, of Salem, by brief, for the petitioner.

      MacMillan Law Offices, of Bradford, Massachusetts (Thomas K.
MacMillan on the brief), for the respondent.

      HANTZ MARCONI, J. The petitioner, Jonathan Merrill, appeals a final
divorce decree from the Circuit Court (Foley, J.), arguing that the trial court
erred by: (1) including the assets of a spendthrift trust in the marital estate; (2)
excluding from the marital estate assets owned by the respondent, Lea Merrill,
and her mother as joint tenants; and (3) incorporating parts of the temporary
order into the final decree. We affirm in part, reverse in part, vacate in part,
and remand for further proceedings.

                                         I

       The parties married on February 14, 2005. During the marriage, the
petitioner worked at George Merrill & Son (GEM), his family’s excavation
business, and KEM Realty (KEM), his family’s horse farm. The petitioner owns
a 24.5% interest in GEM and is the beneficiary of the JGM 2012 Trust, which
owns another 20.5% interest in GEM. He also owns a 23.75% interest in KEM.
The petitioner’s salary from GEM was approximately $190,000 per year. In
2009, the parties moved into the house located on the Merrill family’s horse
farm, where they lived rent free. The respondent was a homemaker by
agreement of the parties. On June 19, 2017, the petitioner filed a petition for
divorce.

       On May 16, 2018, the Circuit Court (Stephen, J.) issued a temporary
order requiring the petitioner to pay alimony, child support, and the
respondent’s medical insurance expenses. In addition, the petitioner was
required to pay the mortgage, taxes, and insurance on the parties’ Hampton
Beach condominium as well as the respondent’s credit card debt accrued
before the date of his filing for divorce, the cost of installing carpeting at the
Hampton Beach condominium, and $7,500 for the respondent’s legal and living
expenses. The next day, the trial court found the respondent in contempt of its
pretrial non-hypothecation order for conveying her interest in her mother’s
condominium to her mother, potentially placing it outside the marital estate.
On September 11, 2018, the case was transferred to the Family Division
Complex Docket, and the case went to trial for four days beginning on June 3,
2019. An additional four days were required, and the trial was continued until
October 22, 2019. The trial concluded on October 25, 2019.

       On November 11, 2019, the Circuit Court (Foley, J.) issued a final
divorce decree. The trial court concluded that the petitioner’s shares of his
family businesses, as well as the shares of GEM owned by the JGM 2012 Trust,
belonged in the marital estate, but it excluded the respondent’s ownership
interest in her mother’s condominium. The trial court awarded the respondent
ownership of the Hampton Beach condominium and the petitioner full
ownership of his shares of his family businesses; however, the petitioner was
ordered to pay the respondent $286,165.50 in order to equalize the distribution
of the marital estate. The petitioner was further ordered to pay $3,524 per
month in alimony for eight years. The trial court also incorporated part of the
temporary order into its final decree, requiring the petitioner to pay the
respondent $7,500, assume $13,964.43 of the respondent’s credit card debt,
and cover the cost of installing carpeting in the Hampton Beach condominium.
On January 5, 2020, the petitioner filed a timely appeal in this court.

                                        II

      We review a trial court’s determination of what assets constitute marital
property de novo. In the Matter of Cohen & Richards, 172 N.H. 78, 83 (2019).
Marital property includes “all tangible and intangible property and assets . . .
whether title to the property is held in the name of either or both parties.” Id.
at 84; see also RSA 458:16-a, I (2018). However, “[t]o the extent that a
beneficiary’s interest in a trust is subject to a spendthrift provision, the
beneficiary’s interest is not [marital] property for purposes of RSA 458:16-a, I.”
RSA 564-B:5-502(e)(1) (2019). All marital property is subject to equitable

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division. Cohen, 172 N.H. at 83; see also RSA 458:16-a, II (2018) (requiring
courts to “presume that an equal division is an equitable distribution of
property” unless “an equal division would not be appropriate or equitable”
under the circumstances).

                                         A

       We begin by addressing the petitioner’s argument that assets owned by
the JGM 2012 Trust should be excluded from the marital estate because the
trust is subject to a spendthrift provision. The trial court included in the
marital estate approximately $292,000 of GEM shares that were owned by the
JGM 2012 Trust. The petitioner contends that this was error because the JGM
2012 Trust is subject to a spendthrift provision, and RSA 564-B:5-502
explicitly excludes property owned by a spendthrift trust from the marital
estate. The respondent contends that this argument is not preserved for our
review because the petitioner raised it for the first time in his second motion for
reconsideration and had at least three earlier opportunities to present this
argument to the trial court. We need not decide whether the argument is
preserved, because we conclude that the trial court committed plain error. See
Sup. Ct. R. 16-A.

       The plain error rule is an exception to the contemporaneous objection
rule that allows us to review an unpreserved error on appeal if the error is plain
and affects substantial rights. See State v. Russell, 159 N.H. 475, 493 (2009);
see also Stachulski v. Apple New England, LLC, 171 N.H. 158, 171 (2018). We
apply this rule sparingly and only in circumstances in which a miscarriage of
justice would otherwise result. Stachulski, 171 N.H. at 171. In order to
reverse a trial court decision under the plain error rule: (1) there must be an
error; (2) the error must be plain; (3) the error must affect substantial rights;
and (4) the error must seriously affect the fairness, integrity, or public
reputation of judicial proceedings. Id. We conclude that the trial court’s
decision to include in the marital estate assets owned by the JGM 2012 Trust
constituted plain error.

        In order to determine whether the trial court’s inclusion of trust assets in
the marital estate constituted plain error, we first look to the trust instrument
itself to see if the trust was subject to a spendthrift provision. The
interpretation of a trust is a question of law subject to de novo review. See
Hodges v. Johnson, 170 N.H. 470, 480 (2017). It is well settled that our courts
have shown signal regard for the intention of a settlor of a trust. Id. at 481.
“The intent that matters for our purpose is the intent of the settlor when the
trust was created.” Id. (citation omitted). To determine the intent of the
settlor, our first step is to examine the language according to its plain and
ordinary meaning. Id. We do not consider words or phrases in isolation, but
within the context of the trust instrument as a whole. Id. If a trust instrument

                                         3
is unambiguous, we may not consider extrinsic evidence to vary or contradict
the express terms of the trust instrument. See id.; see also In re Pack
Monadnock, 147 N.H. 419, 423 (2002).

      A trust is subject to a spendthrift provision only if it “restrains both
voluntary and involuntary transfers of a beneficiary’s interest.” RSA 564-B:5-
502(a) (2019). The petitioner contends that the JGM 2012 Trust is subject to a
spendthrift provision. The trust instrument contains the following language:

      The interest of each beneficiary, and all payments of income or principal
      to be made to or for any beneficiary, shall be free from interference or
      control by any creditor or spouse (or divorced former spouse) of the
      beneficiary and shall not be capable of anticipation or assignment by the
      beneficiary.

The respondent contends that this language falls short of the statutory
requirements regarding the creation of a spendthrift trust because it does not
prohibit a beneficiary transfer. We disagree. It is clear from the plain language
of the trust instrument that this provision creates a valid spendthrift trust.
See RSA 564-B:5-502(a). It expressly prohibits all involuntary transfers of
trust assets by prohibiting any interference or control of those assets by
creditors, spouses, and former spouses. In addition, this clause also prohibits
any voluntary transfer of trust assets by preventing beneficiaries from
assigning their rights under the trust instrument. Because we conclude that
this provision restricts both voluntary and involuntary transfers of the
beneficiary’s interest, we conclude that the spendthrift trust provision is valid.

       In this case, all four prongs of the plain error rule have been met. RSA
564-B:5-502 is clear: a beneficiary’s interest in a trust that is subject to a
spendthrift provision is not marital property. RSA 564-B:5-502(e)(1).
Furthermore, the trial court’s inclusion of the trust assets substantially affects
the petitioner’s rights and seriously affects the fairness and integrity of the
judicial proceedings. Stachulski, 171 N.H. at 171. The trial court’s inclusion
of trust assets erroneously increased the value of the marital estate by nearly
$292,000, which otherwise belongs to the JGM 2012 Trust for the benefit of
the petitioner. For these reasons, we conclude that the trial court’s error was
plain, and that the JGM 2012 Trust assets are not marital property.

                                        B

       Next, we turn to the petitioner’s contention that the trial court erred by
failing to include in the marital estate the respondent’s joint interest in her
mother’s condominium. Contrary to the petitioner’s argument, this case does
not turn on the existence of a valid joint tenancy between the respondent and
her mother at the time the petitioner filed for divorce. Instead, the relevant

                                        4
question is whether the respondent’s mother had made a completed inter vivos
gift of an interest in her condominium to the respondent by the time that the
petitioner filed for divorce. An inter vivos gift is “a voluntary transfer of
property by one living person to another living person, without any valuable
consideration, which is perfected and becomes absolute during the lifetime of
the parties.” 38 Am. Jur. 2d Gifts § 6 (2021). In order to complete an inter
vivos gift, there must be donative intent on the part of the donor, delivery, and
acceptance by the donee. Filip v. Bogdan, 123 N.H. 98, 101 (1983); Blasdel v.
Locke, 52 N.H. 238, 243 (1872).

       The trial court determined that the respondent’s mother’s condominium
was conveyed by deed to the respondent and her mother as joint tenants on
May 5, 2017. A corrective deed was then executed on June 21, 2017, again
listing the respondent and her mother as joint tenants. On August 23, 2017,
approximately three weeks after the respondent was served the divorce
petition, the respondent and her mother conveyed the respondent’s interest in
the condominium to her mother alone. The trial court further found that the
respondent was unaware that her name was on the deed to her mother’s
condominium; took no part in the purchase or closing of the property; did not
live in or take possession of the property; and did not spend marital funds to
purchase the property. Even assuming that the respondent’s mother had
delivered the inter vivos gift with donative intent, the facts do not support a
finding that the respondent ever accepted her mother’s gift. See Bradley v.
State, 100 N.H. 232, 236 (1956) (observing that a gift is “wholly inoperative
unless accepted by the donee” (quotation omitted)). Under these
circumstances, the respondent “had no real interest in the property” at the
time the petitioner filed for divorce because she could not accept a gift of which
she did not know. See Barter v. Stewart, 117 N.H. 776, 779 (1977) (concluding
husband had “no real interest” in joint tenancy because, although wife
conveyed property to him for estate planning purposes, she lacked present
donative intent to make inter vivos gift). Accordingly, we conclude that the
respondent’s mother’s condominium is not marital property.

                                        III

       For the foregoing reasons, we affirm the trial court’s exclusion of the
respondent’s mother’s condominium from the marital estate and reverse the
trial court’s inclusion of JGM 2012 Trust assets in the marital estate. Because
we conclude that the trial court erred by including JGM 2012 Trust assets in
the marital estate, we vacate the trial court’s property and alimony awards.
See RSA 458:16-a, II; RSA 458:19, IV(b) (2018) (requiring the trial court to
consider “the property awarded under RSA 458:16-a” in determining amount
and duration of alimony). In so doing, we are vacating the trial court’s
incorporation of the temporary order into its final decree because the trial court
did not consider these expenses in isolation, but rather considered these

                                        5
figures in its equitable division of the marital estate. Cf. In the Matter of
Hampers & Hampers, 154 N.H. 275, 287-88 (2006). In light of our decision, we
do not need to address the petitioner’s remaining arguments.

                                         Affirmed in part; reversed in part;
                                         vacated in part; and remanded.

     HICKS and BASSETT, JJ., concurred.

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