Court Opinion

ID: 6330875
Source: CourtListenerOpinion
Date Created: 2022-04-13 16:08:06.189599+00
Date Added: 2024-06-11T09:23:06.299468
License: Public Domain

The slip opinion is the first version of an opinion released by the Chief Clerk of the
Supreme Court. Once an opinion is selected for publication by the Court, it is
assigned a vendor-neutral citation by the Chief Clerk for compliance with Rule 23-
112 NMRA, authenticated and formally published. The slip opinion may contain
deviations from the formal authenticated opinion.

     IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

Opinion Number: ________________

Filing Date: April 5, 2022

No. A-1-CA-38534

AUDREY JUNE AUTREY,

      Petitioner/Counterrespondent-Appellant,

v.

CLINT A. AUTREY,

      Respondent/Counterpetitioner-Appellee.

APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY
Jane C. Levy, District Judge

Michael Danoff & Associates, P.C.
Michael L. Danoff
Brett J. Danoff
Albuquerque, NM

for Appellant

Cortez & Hoskovec
Michelle Cortez
Albuquerque, NM

L. Helen Bennett
Albuquerque, NM

for Appellee
                                    OPINION

YOHALEM, Judge.

{1}   In this divorce proceeding, Audrey June Autrey (Wife) appeals the district

court’s characterization of assets and debts as separate or community property and

the division of marital assets and debts between her and Clint A. Autrey (Husband).

Wife contends that twenty-eighty of the district court’s findings of fact are without

supporting evidence in the record, and, that as a result, the district court erred in

concluding that (1) the business started by the couple during the marriage, AJAC

Enterprises, Inc. (AJAC), is community property, rather than the separate property

of Wife; (2) the rent allegedly charged and a loan allegedly made to AJAC by Wife’s

father and the company owned by him are Wife’s separate debts; (3) Wife is not

entitled to interim support; (4) Wife is not entitled to reimbursement for the

gambling losses she alleged Husband incurred during the marriage and paid with

community funds; and (5) the parties’ Albuquerque residence (the Corona home) is

an asset of a revocable trust and is therefore divisible marital property. With the

exception of the court’s finding that the Corona home was held in a revocable trust,

and the court’s conclusion that the home was, therefore, marital property, we hold

that the district court’s findings of fact are supported by substantial evidence and

that the court correctly applied the law to its findings. With regard to the Corona

home, we find that the Corona home was held in an irrevocable trust for the benefit
of the parties’ son, and was therefore not marital property. We affirm on all issues

with the exception of the court’s treatment of the Corona home as community

property and remand for further proceedings consistent with this opinion.

BACKGROUND

{2}   The parties were married on April 6, 1991. Their one child, Phoenix Autrey,

was a minor at the time of trial, but turned eighteen in July 2019, just before the

judgment was entered. Phoenix was not separately represented in the district court

proceedings characterizing and dividing the parties’ property. The district court

determined it had jurisdiction over Phoenix at the time of trial, but not as of July

2019 when Phoenix reached the age of majority.

{3}   The parties separated in 2006. Wife petitioned for legal separation in 2006,

but that petition was dismissed in 2007 for lack of prosecution. Husband and Wife

remained married for ten more years, continuing to work together, but living apart

until 2017, when Husband reopened the divorce case and filed a counterpetition for

dissolution of marriage.

{4}   During the marriage, AJAC was a highly successful construction business that

earned a sizeable income. The parties acquired substantial real property during the

marriage, including two homes in New Mexico and a condominium in Arizona.

{5}   In 2002, with the assistance of legal counsel, the parties created three trusts: a

Family Revocable Trust, and two identical irrevocable Qualified Personal
Residential Trusts (QPRTs). Husband and Wife put the Corona home, their marital

residence, into the QPRTs—the Audrey June Autrey Irrevocable Trust, and the Clint

A. Autrey Irrevocable Trust.

{6}   The district court was asked to address the characterization and distribution of

these assets, to address Wife’s claim for interim support, and to consider whether

gambling losses during the marriage paid with community property must be

reimbursed to the community.

{7}   Following a three-day trial, where more than two hundred exhibits were

admitted into evidence, both parties filed extensive proposed findings of fact and

conclusions of law. After considering both filings, the district court entered 141

findings of fact and 56 conclusions of law, along with a final decree of dissolution

of marriage.

{8}   Additional facts concerning each of the contested issues are detailed below to

the extent necessary to our decision.

DISCUSSION

{9}   We note at the outset that in our review of the district court’s findings of fact,

we do not reweigh the evidence but instead decide whether each challenged finding

was supported by substantial evidence, indulging every reasonable inference in favor

of the district court’s disposition. Wisznia v. N.M. Hum. Servs. Dep’t, 1998-NMSC-

011, ¶ 10, 125 N.M. 140, 958 P.2d 98. The testimony of a single witness, if found
credible by the district court, is sufficient to constitute substantial evidence

supporting a finding. State v. Hamilton, 2000-NMCA-063, ¶ 20, 129 N.M. 321, 6

P.3d 1043. “As a reviewing court we do not sit as a trier of fact; the district court is

in the best position to resolve questions of fact and to evaluate the credibility of

witnesses.” State v. Urioste, 2002-NMSC-023, ¶ 6, 132 N.M. 592, 52 P.3d 964.

“[W]hen there is a conflict in the testimony, we defer to the trier of fact.”

Buckingham v. Ryan, 1998-NMCA-012, ¶ 10, 124 N.M. 498, 953 P.2d 33.

I.     The District Court Did Not Err in Determining That AJAC Was
       Community Property and Not Wife’s Separate Property
{10}   Wife argues that the district court erred by designating the parties’ business,

AJAC, as community property. Wife makes two arguments in support of her claim

that AJAC is her separate property. First, although Wife admits that the business was

started after the parties’ marriage, Wife claims that it was funded solely with her

separate property and retained its status as her separate property throughout the

marriage. Wife next argues that, even if AJAC was funded with community

property, Husband knowingly and intentionally waived his community interest in

the business.

A.     Wife Failed to Rebut the Presumption That Property Acquired During
       Marriage Is Community Property
{11}   The status of property acquired during a marriage is determined at the time

the property is acquired and by the manner of its acquisition. Bayer v. Bayer, 1990-

NMCA-106, ¶ 12, 110 N.M. 782, 800 P.2d 216. Property acquired by either or both

spouses during their marriage is presumptively community property. NMSA 1978,

§ 40-3-12(A) (1973). The party seeking to establish such property as separate—in

this case, Wife—has the burden of rebutting that presumption by a preponderance

of the evidence. Hodges v. Hodges, 1984-NMSC-031, ¶ 6, 101 N.M. 67, 678 P.2d

695. The presumption can be rebutted by a showing that property acquired during

marriage was acquired with a spouse’s separate funds, as Wife attempted to show in

the district court. See NMSA 1978, § 40-3-8(A)(4) (1990) (noting that property

acquired by either spouse by gift is separate property). Such property generally

retains its status as separate property even if the other spouse later contributes funds

or labor to that property. Campbell v. Campbell, 1957-NMSC-001, ¶ 80, 62 N.M.

330, 310 P.2d 266.

{12}   Wife relies on these principles of law, claiming that because Husband did not

specifically refute her testimony that AJAC was started with a $2,000 gift to her

from her mother, the district court was required to find that AJAC was acquired with

Wife’s separate funds and remained her separate property throughout the marriage.

The district court found, however, that Wife’s testimony that AJAC was funded with

a $2,000 gift from her mother was not credible, that Wife generally was not a
credible witness, and the “vast majority of the evidence” supported AJAC being a

community asset built during the marriage.

{13}    “It is for the [district] court to weigh the testimony [and] determine the

credibility of witnesses.” Lopez v. Adams, 1993-NMCA-150, ¶ 2, 116 N.M. 757, 867

P.2d 427. “If a finding is made against the party with the burden of proof, we can

affirm if it was rational for the [district] court to disbelieve the evidence offered by

that party.” Id. Our review of the record reveals evidence that supports the rationality

of the district court’s decision not to credit Wife’s testimony about having received

a $2,000 gift. Wife did not support her testimony with any documentation of the gift;

the $2,000 amount alleged was unlikely to have been sufficient to fund the launch

of a corporation engaged in heavy earth-moving; and undisputed evidence showed

that Husband was involved from the outset in every aspect of creating and running

the corporation. Even the name of the corporation reflected Husband’s ownership

interest. Husband testified AJAC stood for “A.J. and Clint,” a combination of Wife’s

and Husband’s names. Notably also, the district court finding that it was the parties’

joint efforts, as joint owners and business partners, that made the business a success

for many years, is not challenged on appeal. Given the evidence before the district

court, we conclude that the district court did not err in refusing to credit Wife’s

unsupported and self-serving testimony that she started the business with a $2,000

gift.
B.     Substantial Evidence Supports the District Court’s Findings That
       Husband Did Not Intend to Waive His Community Property Interest in
       AJAC and That There Was No Consideration for Such a Waiver

{14}   Wife next claims that even if AJAC was funded with community property, as

the district court found, Husband waived his community interest in the corporation,

thereby transmuting AJAC into her separate property. Wife relies on incorporation

documents filed with the State of New Mexico at the start of the business that names

her as the sole shareholder of AJAC, together with shares of stock issued in her name

and, in particular, a statement in the incorporation documents signed by Husband,

waiving his community property rights.

{15}   Although the district court acknowledged the terms of these incorporation

documents, it found that they were not sufficient to establish that Husband had

intentionally waived his entire ownership interest in the jointly founded and jointly

run company that was the couple’s life work, in light of Husband’s testimony that

he did not understand that these documents would allow Wife to claim sole

ownership of the company, and that, even if he did intend to give up his interest,

there was no consideration for his waiver, as required by New Mexico law.

{16}   The district court was correct that a waiver of a community property interest

is effective only if the spouse signing the document understood that the spouse was

giving up a significant community interest and intended to make that gift to the other

spouse. See Gabriele v. Gabriele, 2018-NMCA-042, ¶ 21, 421 P.3d 828 (holding
that clear and convincing evidence of a spouse’s intent to transmute community

property to the sole and separate property of the other spouse is required to overcome

the presumption that property acquired during the marriage is community property).

{17}   Wife argues that the signed incorporation documents show, on their face, that

Husband understood he was giving up his ownership interest and that he intended to

do so. Wife’s argument minimizes Husband’s testimony to the contrary. Husband

testified that he signed the waiver to allow the company to qualify for a preference

for women-owned companies in the award of government contracts and did not

understand that Wife could subsequently claim that he had given up his community

interest in the company. The testimony of a single witness constitutes substantial

evidence if it is credited by the district court, as was Husband’s testimony here. See

State v. Soliz, 1969-NMCA-043, ¶ 8, 80 N.M. 297, 454 P.2d 779. We, therefore,

reject Wife’s claim that there is insufficient evidence in the record to support the

district court’s finding that Husband did not intend to give up his community interest

in AJAC.

{18}   We agree as well with the district court’s conclusion of law that, to be

enforceable in a divorce proceeding, a contract between spouses where one of them

gives up a right to claim a community interest in an asset, effectively transmuting

the property into the separate property of the other spouse, must be supported by

consideration. See Gilmore v. Gilmore, 2010-NMCA-013, ¶ 27, 147 N.M. 625, 227
P.3d 115. Wife agrees that consideration is required and argues that Husband’s

consideration for giving her his interest in AJAC was his compensation for his duties

as an officer and employee of AJAC. Such compensation, however, appears to have

been consideration for work performed, not for his waiver of his community

property interest. Moreover, the Court has held that the promise of at-will

employment does not place any actual constraints on an employer’s future conduct,

and is, accordingly, an illusory promise that cannot serve as consideration. Piano v.

Premier Distrib. Co., 2005-NMCA-018, ¶¶ 8, 19, 137 N.M. 57, 107 P.3d 11 (holding

that an arbitration agreement entered into by an employee in exchange for the

“illusory promise” of continued at-will employment lacked consideration). Thus, to

the extent that Wife argues that Husband’s at-will employment at the company that

he cofounded was consideration for his forfeiture of all ownership rights in that

company, we are not persuaded. We will, therefore, not disturb the district court’s

conclusion that Wife failed to rebut the presumption that AJAC was community

property.

II.    The District Court’s Findings Rejecting Wife’s Claim That AJAC Was
       in Debt to Macchu Picchu, a Company Owned by Wife’s Father, for
       Both Rent and Loan Repayment Were Supported by Substantial
       Evidence
{19}   We next address Wife’s arguments regarding debts allegedly owed by AJAC

to Macchu Picchu, a company owned by Wife’s father, Steven DeYapp. Macchu
Picchu owned the building where AJAC’s offices were located. Wife claimed at trial

that AJAC owed Macchu Picchu substantial back rent, together with amounts due

on a promissory note on a loan obtained by Macchu Picchu for the benefit of AJAC.

Wife argues on appeal that, having determined that AJAC is community property,

the district court was required to treat back-rent owed by AJAC and AJAC’s debt on

the promissory note as community debt. Wife seeks reversal of the district court’s

conclusion that, if AJAC has any debt for rent or on the promissory note, those

amounts are Wife’s separate debt.

{20}   Wife’s argument is based on a misunderstanding of the district court’s

decision. The district court treated the amounts allegedly owed to Macchu Picchu as

Wife’s separate debt because the evidence failed to show either that these amounts

were actually owed by AJAC, or that, if they were owed, they were legitimate debts

that benefited the corporation, as opposed to gifts or personal loans from Wife’s

father, Steve DeYapp, to Wife.

{21}   The only evidence in the record showing these were actual debts was the

testimony of Wife and Wife’s father, Mr. DeYapp. Although Wife alleged that

AJAC rented office space from Macchu Picchu for many years, Wife did not

introduce into evidence either a rental agreement entered into by AJAC or

documents verifying the rent paid, or the amount still unpaid. Mr. DeYapp gave

conflicting testimony at trial as to whether AJAC owed any rent to Macchu Picchu
and was unfamiliar with rental documents and unsure of the amount allegedly owed

by AJAC each month. Mr. DeYapp also testified that he never expected AJAC to

pay rent and that he would not charge AJAC rent if his daughter was experiencing

financial difficulty. His testimony is sufficient to support the district court’s finding

that AJAC did not owe Macchu Picchu money for unpaid rent and that, if any money

was owed, there was no evidence of benefit to the company rather than to Wife

personally. We, therefore, find no error in the district court’s characterization of

rental debt, if any, as the separate debt of Wife.

{22}   With regard to the promissory note, Mr. DeYapp testified that Macchu Picchu

had taken out a loan on the building AJAC occupied and lent the money to AJAC,

entering into a promissory note with AJAC, signed by Mr. DeYapp and Wife,

requiring AJAC to repay Macchu Picchu. The court found that there was no evidence

of payments having been made by AJAC on the promissory note, though such

payments had been due monthly since 2018. To the extent debt was actually owed,

the district court again concluded that there was no evidence that this was a

legitimate debt which benefited the corporation, as opposed to a gift or a loan from

Wife’s father, Mr. DeYapp, to Wife.

{23}   The district court was permitted to resolve the conflict in Mr. DeYapp’s

testimony concerning the existence of rental debt and to find Wife’s and Mr.

DeYapp’s self-serving testimony that AJAC was required to make the payments on
Macchu Picchu’s debt not credible. Wife had the burden to establish the existence

of these debts. The district court, therefore, did not err in refusing to include these

alleged, but unproven, debts in its list of community debt subject to division. We

again find no basis for reversal.

III.   The District Court Acted Within Its Discretion With Regard to Interim
       Support
{24}   We next address Wife’s arguments regarding interim support. On appeal,

Wife claims that it was undisputed that she was entitled to at least $128,360 in

interim support and that the district court’s decision to deny her those funds was

without support in the record.

{25}   The district court findings were based on the court’s review of twenty-six

interim worksheets Wife prepared and introduced into evidence. The district court

reviewed the worksheets and found that Wife’s calculation of her expenses during

the course of the litigation, and her list of the community debts she had allegedly

paid, were “not credible and lacked supporting evidence regarding payments of the

community bills.” The district court found, and this Court agrees, that the documents

entered into evidence to support her request are “a series of bills without any

evidence as to where the funds came from to pay the bills.” Importantly, the district

court found that the exhibits introduced by Wife did not reveal whether Wife was

seeking repayment twice for payment of community debts: once as interim support,
and again by listing the same debts as divisible community debt. The court

concluded that if Wife had indeed used community credit cards to charge these

interim costs, “requiring Husband to pay Wife interim [support] while also assuming

half of the current . . . debt [on those cards] would be inequitable.” The district court

also found that Wife had taken advances on the parties’ community funds to support

herself during the pendency of the case, without clearly accounting for those funds

and had imputed income to Husband, but not to herself.

{26}   Wife does not argue that the court’s findings are without support in the record.

Instead, she points to Husband’s agreement that, under the court’s temporary interim

order, he would owe her approximately $128,000 in interim support and asks that

this Court to enforce the interim order. That order, however, reserved authority to

make a decision about interim support following a full hearing on the division of the

parties’ assets and debts. The district court, therefore, was not bound to implement

the terms of that order and was free to consider the evidence of the parties’

circumstances and the availability of community property for division. “Whether to

order spousal support, how much to order, and the duration of the order are within

the sound discretion of the district court.” Rabie v. Ogaki, 1993-NMCA-096, ¶ 5,

116 N.M. 143, 860 P.2d 785. Wife has not shown that the district court’s reasons for

denying interim spousal support were either unreasonable or without support in the

evidence. We see no abuse of discretion in the district court’s decision to deny Wife
retrospective interim support given both the accounting issues raised by Wife’s

exhibits and Wife’s substantial income during the separation, which was to continue

after the decree was entered. The district court did not abuse its discretion in

choosing to equitably divide the parties’ community debts and assets, rather than

awarding Wife interim support. We will, therefore, not disturb the district court’s

decision.

IV.    The District Court’s Conclusion That Wife Failed to Demonstrate That
       the Community Was Entitled to Reimbursement for Husband’s
       Gambling Losses Incurred During the Marriage Is Supported by
       Substantial Evidence in the Record
{27}   We next address Wife’s argument that the district court erred in not requiring

Husband to reimburse the community for Husband’s gambling losses, which he

incurred and paid with community funds during the marriage. Wife’s argument

assumes that she need only establish that the gambling losses were Husband’s

separate debt to support her claim that reimbursement of the community is required.

We do not agree.

{28}   Although Wife challenges what she claims is the district court’s finding that

Husband’s gambling losses were a community debt, the district court makes no such

finding. The district court, instead, correctly concluded that even assuming the

gambling losses were a separate debt, as provided by NMSA 1978, Section 40-3-9.1

(1997), whether the losses must be repaid to the community upon divorce depends
on whether there was some special circumstance, such as breach of fiduciary duty to

Wife by Husband or violation of a court order, so that the expenditure constituted

waste of community assets. Otherwise, community funds once spent are not

available assets subject to distribution in a divorce proceeding. Irwin v. Irwin, 1996-

NMCA-007, ¶ 13, 121 N.M. 266, 910 P.2d 342 (“[O]nce community personal

property or earnings are expended, . . . there is no community asset to be shared or

managed, and the spouse making the expenditure has no duty to reimburse the

community absent some special circumstance such as violation of a court order or

breach of a fiduciary duty to the other spouse.”).

{29}   In the context of a gift by one spouse of substantial community property to a

third party, without the knowledge or consent of the other spouse and in

contemplation of divorce, our Supreme Court adopted the following rule to guide

when repayment to the community is required:

       (1) [E]ach spouse has the power to manage and dispose of the community’s
            personal property;
       (2) subject to a fiduciary duty to the other spouse; and

       (3) absent intervening equities, a gift of substantial community property to a
           third person without the other spouse’s consent may be revoked and set
           aside for the benefit of the aggrieved spouse.

Roselli v. Rio Cmtys. Serv. Station, Inc., 1990-NMSC-018, ¶ 23, 109 N.M. 509, 787

P.2d 428. Payment to a creditor by one spouse of a separate debt with community

property is subject to the same rules. See Fernandez v. Fernandez, 1991-NMCA-
001, ¶¶ 11-12, 111 N.M. 442, 806 P.2d 582 (relying on Roselli to require a spouse

to repay money paid to a creditor with community property without the consent of

the other spouse and in violation of the fiduciary duty owed by one spouse to

another).

{30}   The question on appeal, therefore, is whether the district court’s conclusion

that there was no waste of community property occasioned by payment during the

marriage of Husband’s gambling losses is supported by substantial evidence. Wife

relies on the amount paid over the years (allegedly $240,000), and on her own

testimony that “she was not aware of [Husband] writing checks from AJAC to pay

for his gambling debts” to claim that the district court’s decision was without support

in the record.

{31}   We conclude that substantial evidence supports the district court’s conclusion

that Wife failed to establish that Husband used community funds to pay for his

gambling losses without her agreement, or that the amount of Husband’s losses was

$240,000, rather than being offset by gains. The record shows that Husband agreed

in his testimony that he went on several gambling trips during the years he and Wife

were married and were living together. He testified that Wife accompanied him on

those trips and also gambled. Husband testified that while they sometimes incurred

substantial losses, they also won substantial amounts, which offset those losses.

Husband testified that Wife at one point told him that a safe deposit box they jointly
controlled contained over $600,000 in cash from gambling wins. Wife did not

contradict this testimony. It was undisputed that the losses were paid with checks by

AJAC, the parties’ joint business. In sum, although the record is uncontroverted that

gambling occurred during the marriage, Wife put forward no evidence other than her

own testimony as to the amount of the net losses, that those losses were solely

attributable to Husband’s gambling and not Wife’s gambling as well, and that she

was unaware that the losses were paid by AJAC with community funds. We again

defer to the district court’s finding that Wife’s testimony was not credible, and

therefore agree with the district court that there was no evidence in the record that

established the essential elements of a breach of fiduciary duty, a lack of consent by

Wife, or even the amount of the separate debt, necessary to establish a right to

reimbursement.

V.     The District Court Erred in Finding That the Corona Home Was in a
       Revocable Trust and in Characterizing It as Community Property
{32}   We note at the outset that the evidence of the terms of the various trusts created

by the parties was entirely documentary. Where evidence is entirely documentary,

the appellate court “is in as good a position as the trial court to determine the facts

and draw its own conclusions.” Flemma v. Halliburton Energy Servs., Inc., 2013-

NMSC-022, ¶ 13, 303 P.3d 814 (internal quotation marks and citation omitted). We
therefore review the questions concerning the disposition of the parties’ QPRTs and

the Autrey Revocable Trust de novo.

{33}   In 2002, with the assistance of legal counsel, Husband and Wife established

three trusts: the Autrey Revocable Trust, the Audrey J. Autrey Qualified Personal

Residence Trust, and the Clint A. Autrey Qualified Personal Residence Trust.

Husband and Wife transferred each of their interests in the Corona home, then the

family residence, into their respective QPRTs.

{34}   The parties’ QPRTs are, by their terms, irrevocable trusts. A QPRT is a type

of trust authorized by federal tax law as a way to transfer a residence to family

members, usually to the children, without paying gift or estate tax. See 26 U.S.C.

§ 2702(a)(3)(A)(ii); 26 C.F.R. § 25.2702-5(a)(1) (2022). Husband and Wife each

testified that they formed the QPRTs with the intent of ensuring that their home was

protected for their son, Phoenix.

{35}   For the first ten years of the trusts’ existence, Husband and Wife, according

to the terms of the trusts, had the right “to use and occupy the residence as a personal

residence” and the right to receive any income from the trusts. Upon the expiration

of the original period of ten years, the beneficial interest in the Corona home was

transferred to the parties’ only child, to be managed in a fiduciary capacity by the

trustees. During Phoenix’s minority, the home could be used by Husband and Wife

for Phoenix’s benefit and for their incidental benefit as his caretakers as well. When,
however, Phoenix attained the age of majority, the Corona home was required to be

held by the trustees for his sole benefit. Distributions of property, or earnings from

rent or other use of the home are to be made to meet Phoenix’s needs, at the

discretion of the trustees. Husband was the trustee of his trust and Wife the trustee

of her trust. The assets of the trusts need not be distributed in whole until Phoenix’s

death, in the discretion of the trustees based on Phoenix’s needs.

{36}   The trusts were created in 2002; the initial ten-year period expired in 2012

when Phoenix was eleven years old. Wife continued to live in the home while

Phoenix remained a minor, a use permitted by the trust documents. Phoenix attained

the age of majority in July 2019, after the divorce hearing, but before judgment was

entered.

{37}   The parties introduced into evidence both the Autrey Revocable Trust and the

two QPRTs. The documents were authenticated by Vickie Wilcox, the attorney who

drafted the trusts. Ms. Wilcox testified that the Corona home had been transferred to

the parties’ QPRTs, and the district court admitted the deeds showing the transfer to

the trusts into evidence. Ms. Wilcox did not testify as an expert, and the district court

relied on its own review of the trust documents.

{38}   Following trial, the district court adopted verbatim Husband’s proposed

findings as to the Corona home. The court found that the Corona home was “[t]he

only asset in the trust identified in Exhibit 31,” the Autrey Revocable Trust. The
court further found that “[n]either party testified that the Autrey Revocable Trust

could not be revoked.” Relying on these findings, the district court held that the

Corona home is community property, and distributed the Corona home to Wife. The

court also revoked all of the parties’ trusts in its final decree.

{39}   We agree with Wife that the district court’s finding that the Corona home was

held in the revocable Autrey Trust is not supported by substantial evidence in the

record. The district court’s finding appears to be a mistake. The testimony of Ms.

Wilcox and the documents in evidence conclusively establish that the Corona home

is an asset of the parties’ irrevocable QPRTs, and not of the Autrey Revocable Trust.

The court’s findings are therefore not supported by substantial evidence in the record

and “may not be sustained on appeal.” Hertz v. Hertz, 1983-NMSC-004, ¶ 23, 99

N.M. 320, 657 P.2d 1169.

{40}   Husband invites us to affirm the district court’s decision that the Corona home

is community property under the “right for any reason” doctrine. See State v.

Gallegos, 2007-NMSC-007, ¶ 26, 141 N.M. 185, 152 P.3d 828 (“[W]e will affirm

the trial court’s decision if it was right for any reason so long as it is not unfair to the

appellant for us to do so.”). Husband urges this Court to conclude that it would be

inequitable to not revoke the QPRTs because the gift and estate tax benefits are no

longer useful to Husband and Wife given their changed financial circumstances, and

by revoking the QPRTs, more property would be available to the community.
{41}   We decline Husband’s invitation to decide this issue under our “right for any

reason doctrine.” Husband’s argument that the district court in a divorce case can

exercise its equitable powers to divide property held in an irrevocable trust has been

rejected by this Court in Vanderlugt v. Vanderlugt, 2018-NMCA-073, ¶ 21, 429 P.3d

1269. Vanderlugt holds that although property held in a revocable trust is considered

marital property subject to division because the settlor spouse can revoke the trust

and thus continues to own the property, the same cannot be said for an irrevocable

trust. Id. ¶¶ 15-16. The equitable interest in the trust property belongs to the

beneficiary of an irrevocable trust and cannot be modified by the settlor.

{42}   In this case, at the time of the divorce, the full equitable interest in the Corona

home had vested in Phoenix. Although Husband and Wife retained some control of

the property as trustee of their respective QPRT, this is not an ownership interest:

they are bound by fiduciary duty to protect and use the trust assets solely for the

benefit of Phoenix. There is, therefore, no beneficial community interest to divide.

See id. ¶ 16.

{43}   To the extent Husband is arguing that the district court had the authority to

revoke the QPRTs, even if Husband and Wife do not, we do not agree. Our Supreme

Court held in Oldham v. Oldham that revocation of an irrevocable trust can be

accomplished only pursuant to the provisions of the Uniform Trust Code (UTC).

2011-NMSC-007, ¶ 15, 149 N.M. 215, 247 P.3d 736 (“Revocation of wills and trusts
is governed by mandatory statutes. We must honor legislative intent that wills and

trusts be revoked in strict accordance with the statutory methods and formalities

established by the . . . UTC.”). Pursuant to the UTC, revocation of an irrevocable

trust cannot be accomplished without the agreement of the beneficiary, together with

other specific conditions. See NMSA 1978, §§ 46A-4-410 (2003), -411 (2007).

Phoenix, the beneficiary of the trust, was not joined in this proceeding, and

revocation of the trust was, therefore, not permissible under the UTC. It was

therefore error for the district court to revoke the QPRTs.

{44}   Our decision is without prejudice to any claim that Husband may assert to

seek modification or termination of the QPRTs in a proceeding where all parties are

joined. We express no opinion on the merits of such a challenge.

CONCLUSION

{45}   We reverse solely with respect to Wife’s claim of error regarding the treatment

of the Corona home as community property and the revocation by the court of the

irrevocable QPRTs. In all other respects, we affirm. We remand to the district court

to address, in the exercise of its discretion, the change in the value of the couple’s

community assets required by the restoration of the Corona home to the irrevocable

QPRTs.

{46}   IT IS SO ORDERED.

                                       _________________________________
                              JANE B. YOHALEM, Judge

WE CONCUR:

_________________________________
J. MILES HANISEE, Chief Judge

_________________________________
JACQUELINE R. MEDINA, Judge