Court Opinion

ID: 4224796
Source: CourtListenerOpinion
Date Created: 2017-11-30 16:08:02.921705+00
Date Added: 2024-06-11T12:46:50.776048
License: Public Domain

FILED
                                                                           Nov 30 2017, 9:28 am

                                                                                CLERK
                                                                            Indiana Supreme Court
                                                                               Court of Appeals
                                                                                 and Tax Court

      ATTORNEYS FOR APPELLANT                                   ATTORNEY FOR APPELLEE
      Laurie Baiden Bumb                                        Erin Bauer
      Bumb & Vowels, LLP                                        Barber & Bauer, LLP
      Evansville, Indiana                                       Evansville, Indiana
      Douglas K. Briody
      Law Office of Doug Briody
      Evansville, Indiana

                                                 IN THE
          COURT OF APPEALS OF INDIANA

      Joseph H. Harrison, Jr.,                                  November 30, 2017
      Appellant-Petitioner,                                     Court of Appeals Case No.
                                                                82A01-1611-DR-2699
              v.
                                                                Appeal from the Vanderburgh
      Terry Royal Harrison,                                     Superior Court
      Appellee-Respondent.                                      The Honorable Robert R.
                                                                Aylsworth, Special Judge
                                                                Trial Court Cause No.
                                                                82D06-1510-DR-1282

      Pyle, Judge.

                                        Statement of the Case
[1]   In this interlocutory appeal in a dissolution action, Joseph Harrison, Jr.,

      (“Husband”) appeals the trial court’s order determining that Terry Royal

      Court of Appeals of Indiana | Opinion 82A01-1611-DR-2699 | November 30, 2017                  Page 1 of 9
      Harrison’s (“Wife”) interests in discretionary irrevocable family trusts were too

      speculative and remote to be included in the marital pot. Concluding that the

      trial court did not abuse its discretion, we affirm its judgment.

[2]   We affirm.

                                                      Issue
              Whether the trial court abused its discretion when it excluded
              Wife’s interests in discretionary irrevocable family trusts from the
              marital pot.

                                                      Facts
[3]   Husband and Wife were married in January 1985. During the course of the

      marriage, Wife’s father, Charles R. Royal, Jr., (“Royal”) established the

      following six irrevocable trusts:

              1)       The Royal Family Irrevocable Investment Trust, effective
                       November 2003;

              2)       The Royal Irrevocable Insurance Trust, effective May
                       2005;

              3)       The Royal Irrevocable Insurance Trust II, effective
                       November 2005;

              4)       The Charles R. Royal, Jr., 2012 Trust Agreement, effective
                       November 2012;

              5)       The 2013 Royal Family Irrevocable Trust, effective
                       November 2013;

              6)       The 2014 Royal Family Irrevocable Trust, effective August
                       2014.

      Court of Appeals of Indiana | Opinion 82A01-1611-DR-2699 | November 30, 2017   Page 2 of 9
      (collectively, “Royal Family Trusts”).

[4]   The provisions of the Royal Family Trusts are nearly identical. 1 Specifically,

      Wife and her four sisters are co-trustees (individually, “Co-trustee”)

      (collectively, “Co-trustees”) of the trusts. They and their children are the trusts’

      beneficiaries. Pursuant to the provisions of the Royal Family Trusts, the Co-

      trustees may only make distributions of income or principal with a majority

      vote. Further, the Royal Family Trusts specifically state that the Co-trustees are

      not required to make any distribution. According to the trusts, “no beneficiary

      has an entitlement of any sort to receive any distribution . . . . Distributions are

      within the sole discretion of the Co-[t]rustees.” (App. Vol. 2 at 24, 46, 68, 87,

      105, 127). Additionally, if a majority of the Co-trustees choose to make a

      distribution to one of the beneficiaries, all of the beneficiaries must receive an

      equal distribution. In 2013, 2014, and 2015, the Co-trustees each took a

      $50,000 distribution.

[5]   Further, upon the death of both of the Co-trustees’ parents, the Co-trustees are

      to apportion and divide the trust property and set aside equal shares to the

      living Co-trustees. Co-trustees are then to determine by majority vote within

      sixty days whether to distribute the shares in full to each Co-trustee or her

      descendants. If the determination is made not to distribute the shares, they are

      1
       The 2012 Trust Agreement contains a marital trust provision for the benefit of Wife’s mother that is not
      present in the other Royal Family Trusts.

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      to be held in trust. If a Co-trustee dies before her parents, the remaining Co-

      trustees are to set aside her share for her collective descendants. The trust sets

      forth specific instructions for distributing it to descendants of the Co-trustees.

[6]   In October 2015, Husband filed a petition for dissolution of marriage. In June

      2016, he filed a petition for a determination that Wife’s interests in the Royal

      Family Trusts constituted marital assets. In July 2016, Wife filed a counter-

      petition for dissolution of marriage. She also filed a response to Husband’s

      determination petition, wherein she argued that the trusts should not be

      considered as part of the marital estate because they were subject to

      discretionary distributions by the trustees. According to Wife, the trusts were

      “too remote” to be considered marital assets and Wife did not presently possess

      a pecuniary value of which the Court might dispose. (App. Vol 3. at 4).

[7]   At the September 2016 hearing on the petitions, Wife argued that she had no

      present interest in the Royal Family Trusts and had no control over

      distributions from the Trusts. Shortly after a hearing, the trial court issued the

      following order denying Husband’s petition:

              1)       Upon review of the matters submitted to the court,
                       including the Royal Family Trust documents themselves,
                       the court believes that the [W]ife’s position in this matter is
                       correct as a matter of law in that the [W]ife’s proportional
                       interest in these discretionary trusts is in fact in the nature
                       of an expectancy, embodies no enforceable rights accruing
                       to her during the parties’ marriage, and she has anticipated

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                       but indefinite opportunities for the future acquisition of
                       assets of income from the Royal Family trusts.

              2)       As such, the court believes the [W]ife’s interest in the
                       Royal Family trusts to be too remote and speculative for
                       the inclusion of any trust assets as marital property and
                       insertions into the marital pot for division by the court in
                       this proceeding.

                       It is therefore ordered by the court that the [H]usband’s
                       request for inclusion as marital property in this proceeding
                       of any property held by the co-trustees in the Royal Family
                       trusts must be and is hereby denied. The court shall not
                       deal with nor include any of the Royal Family trust
                       property as marital property and shall not attempt to nor
                       apportion any of that property between the parties to this
                       proceeding.

      (App. Vol. 2 at 10).

[8]   Husband filed a motion to certify the order for interlocutory appeal. The trial

      court certified the order, and Husband sought this Court’s permission to appeal.

      We granted the request and accepted Husband’s interlocutory appeal.

                                                   Decision
[9]   Husband’s sole argument is that the trial court abused its discretion when it

      excluded Wife’s interests in the Royal Family Trusts from the marital pot. The

      division of marital assets, including a determination as to whether an asset is a

      marital asset, is within the trial court’s discretion. Antonacopulos v.

      Antonacopulos, 753 N.E.2d 759, 760 (Ind. Ct. App. 2001). This Court will

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       reverse the determination of a trial court only if that discretion is abused. Id.

       We have previously explained that an abuse of discretion occurs when the trial

       court’s decision is clearly against the logic and effect of the facts and

       circumstances before the court. Id. We will not reweigh the evidence or judge

       the credibility of witnesses, and we consider only the evidence most favorable to

       the decision of the trial court. Id. Further, the party challenging the trial court’s

       property division must overcome a strong presumption that the court complied

       with the statutory guidelines. Id. This presumption is one of the strongest

       presumptions on appeal. Id.

[10]   It is well-settled that in a dissolution action, 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 the final

       separation of the parties, or acquired by their joint efforts. INDIANA CODE § 31-

       15-7-4(a); Falatovics v. Falatovics, 15 N.E.3d 108, 110 (Ind. Ct. App. 2014). For

       purposes of dissolution, property means “all the assets of either party or both

       parties.” I.C. § 31-9-2-98. “The requirement that all marital assets be placed in

       the marital pot is meant to insure that the trial court first determines that value

       before endeavoring to divide property.” Montgomery v. Faust, 910 N.E.2d 234,

       238 (Ind. Ct. App. 2009). “Indiana’s ‘one pot’ theory prohibits the exclusion of

       any asset in which a party has a vested interest from the scope of the trial

       court’s power to divide and award.” Wanner v. Hutchcroft, 888 N.E.2d 260, 263

       (Ind. Ct. App. 2008). While the trial court may decide to award a particular

       asset solely to one spouse as part of its just and reasonable property division, it

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       must first include the asset in its consideration of the marital estate to be

       divided. Hill v. Hill, 863 N.E.2d 456, 460 (Ind. Ct. App. 2007). The systematic

       exclusion of any marital asset from the marital pot is erroneous. Wilson v.

       Wilson, 409 N.E.2d 1169, 1173 (Ind. Ct. App. 1980).

[11]   Despite this broad definition of property for the purposes of the dissolution

       statutes, some property interests are still considered too remote to be assets

       capable of division. Fiste v. Fiste, 627 N.E.2d 1368, 1372 (Ind. Ct. App. 1994),

       disapproved of on other grounds by Moyars v. Moyars, 717 N.E.2d 976, 979 n.2 (Ind.

       Ct. App. 1999). For example, in Loeb v. Loeb, 261 Ind. 193, 301 N.E.2d 349

       (1973), a case of first impression, the Indiana Supreme Court considered

       whether the husband’s vested remainder subject to a condition subsequent in a

       trust created by his mother should have been included in the marital estate. In

       holding that it should not have been included, the supreme court noted that the

       central question was whether the husband’s future interest was so remote that it

       should not have been included in the marital pot. Id. at 353. Noting that the

       husband’s interest was subject to a complete defeasance because if he

       predeceased his mother, he would take nothing under the trust, the Indiana

       Supreme Court held that the husband was “not presently possessed of any

       pecuniary value which could have been before the court for disposition.” Id.

       Accordingly, the supreme court affirmed the trial court’s exclusion of the

       husband’s remote interest in the trust from the marital pot. Id. See also Fiste, 627

       N.E.2d at 1371-72 (holding that where husband’s grandfather had devised real

       estate first to his wife for life, then to their daughter (husband’s mother) for life,

       Court of Appeals of Indiana | Opinion 82A01-1611-DR-2699 | November 30, 2017    Page 7 of 9
       and then to her child or children in fee, husband’s remainder interest in the real

       estate was too remote to be considered marital property, as it was subject to a

       complete defeasance if he predeceased his mother).

[12]   Here, as in Loeb and Fiste, Wife’s interests in the Royal Family Trusts are

       subject to a complete defeasance because if she should predecease her parents,

       she would take nothing from the trusts. In addition, during her lifetime, Wife

       will receive nothing unless a majority of the co-trustees elect to make a

       disbursement. The Royal Family Trusts do not require them to do so. As in

       Loeb and Fiste, Wife’s interests in the Royal Family Trusts are too remote. Wife

       is “not presently possessed of any pecuniary value which could have been

       before the court for disposition.” See Loeb, 301 N.E.2d at 353. 2 Accordingly,

       2
         We disagree with Husband’s argument that Loeb is no longer good law because it was overruled by
       INDIANA CODE § 31-1-11.5-2, which was enacted in 1985 and defines marital property as “all the assets of
       either party or both parties.” As Wife points out, this Court recognized this statutory change in Fiste, 627
       N.E.2d at 1372. After acknowledging the change, we applied Loeb to the facts of the case before us and
       determined that Roger Fiste’s remainder interest in real estate was too remote to constitute marital property.
       Id. This Court also discussed and analyzed Loeb in Falatovics, 15 N.E.3d at 110-11 and in England v. England,
       865 N.E.2d 644, 649 (Ind. Ct. App. 2007), trans. denied. Loeb is still good law.

       We further note that Husband’s reliance on Moyars, 717 N.E.2d at 976, is misplaced. There, during David
       Moyars (“David”) and Mechelle Moyar’s (“Mechelle”) marriage, David and his siblings inherited real estate
       as tenants in common subject to a life estate in David’s mother. Mechelle later filed for divorce. In valuing
       the marital estate, the trial court excluded David’s remainder interest in the inherited property. Mechelle
       appealed. We concluded as follows:

                David’s interest is not too remote to be included in the property settlement award. David
                owns a remainder interest as a tenant in common with his two siblings, subject to a life
                estate in his mother. David’s interest became vested at his father’s death. Although
                David has no legal present possessory interest in the land, we note that he and Mechelle
                have in fact enjoyed the possession of a portion [of] the land for many years now.
                Further, unlike in Loeb v. Loeb, 261 Ind. 193, 301 N.E.2d 349 (1973), David’s interest in
                the real property does represent a present pecuniary interest; David could sell or mortgage
                his interest if he chose to. Remainder interests, like fee simple interests, are capable of
                valuation.... David’s interest in the property is a valuable asset. Thus, we hold that
                David’s vested remainder in the real estate was not too remote to be included in the
                property division.

       Court of Appeals of Indiana | Opinion 82A01-1611-DR-2699 | November 30, 2017                       Page 8 of 9
the trial court did not abuse its discretion by excluding Wife’s interests in the

Royal Family Trusts from the marital pot.

Affirmed.

Barnes, J., and Brown, J., concur.

Id. at 979. Here, however, Wife does not have possession of her interests in the Royal Family Trusts, and
they do not represent a present pecuniary interest because she has nothing to sell. Further, her interests are
not capable of valuation.

Lastly, we also disagree with Husband’s contention that Wife’s receipt of Royal Family Trust distributions in
the past supports his argument that the trusts should be included in the marital pot. Instead, we find
instructive the Supreme Court of Colorado’s determination that the “fact that some income has been
distributed to the wife, at the sole discretion of the [co-]trustees, [does not] change the nature of the
underlying trust.” In re Marriage of Jones, 812 P.2d 1152, 1156 (Colo. 1991). Wife is correct that her interests
in the Royal Family Trusts “remain subject to the pure discretion of the Co-Trustees regardless of past
distributions. Her receipt of distributions in previous years does not guarantee future distributions.” (Wife’s
Br. 13).

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