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November 14, 2011 Newsletter Archive

Billings v. Billings, 2011 VT 116

Recently, the Supreme Court of Vermont handed down a very controversial decision in Billings v. Billings. The decision has estate planning attorneys reeling. While it is not an easy read, we are delighted that Attorney Cara Cookson has so intelligently (and entertainingly) summarized the salient points in Billings. Read on and learn what it may mean for your future estate planning, and call us if you have any questions.

Meet Our Guest Writer: Cara L. Cookson, Esq.

Cara CooksonCara Cookson is an attorney at Langrock, Sperry & Wool, LLP in Burlington and Middlebury, Vermont. She works primarily on family law and employment law matters, as well as civil litigation. "'Till Death Do Us Part" is re-printed from "SCOV Law" a blog on Vermont Supreme Court issues, where Ms. Cookson is a regular contributor: www.scovlegal.blogspot.com.

You can find more information about Ms. Cookson and about Langrock, Sperry & Wool at www.langrock.com.


'Till Death Do Us Part

By Cara Cookson

Billings v. Billings, 2011 VT 116

Can you hear the buzz in Vermont lawyer-land? Could it be? Has it finally happened? Yes, dear family law practitioners and estate planners, it's true! The SCOV has finally cited George Eliot and her 1871 epic, Middlemarch!

In quoting Eliot's Dorothea Brooke, SCOV rules that one's inheritance from mom and pop is such a sure thing that the family court can consider it when dividing the proverbial pot 'o' divorce property. After all if you get cleaned out in divorce, your parents probably will feel bad enough to keep you named in the will that landed you broke in the first place.

Am I right?

Personally, I always thought Middlemarch was about the unfairness and uncertainty that results from dead hand control. During Eliot's time, traditional primogeniture was eroding as written wills grew increasingly popular and legally recognized, the result often leading to even greater injustice for women like Dorothea. The whole book is about foregoing inheritance in favor of independence and true love. As for the uncertainty of inheritance, Eliot devotes an entire plot line to a mystery codicil and its contents. Such devices are one of the many ways we can draw parallels between modern-day Woodstock, Vermont and Victorian England...

But I digress.

Consider this case to be the new model of the middle class divorce for this millennium — a smattering of impressive-sounding assets that are difficult to value or headed underwater combined with a lot of consumer debt and one potent promise of inheritance.

No doubt, seasoned divorce attorneys and estate planners have been watching and waiting for this case, in hopes of finally knowing what to do about Nanna's will and whether will make it to the chopping block in Timmy's divorce (and whether that good-for-nothing-blank-in-law is going to keep ruining everything even after Nanna dies, God rest her soul).

This case addresses three issues: 1) whether the trial court should have allowed evidence about the husband's interest in revocable trusts; 2) whether the trial court should have considered husband's interests in two irrevocable trusts as part of the marital property suitable for distribution; and 3) whether the family court properly crossed out some unpaid spousal maintenance, accrued while the divorce was on the cooker, in order to balance the property distribution at the end.

Setting aside the maintenance issue, there are two separate concepts at play here. First is the question of whether a future inheritance is even relevant, (and thus admissible,) when devising an overall scheme for how much marital property each party should receive taking into consideration each party's relative ability to acquire more assets in the future. This issue is illuminated in a case like this one, where wife put her professional career on the back-burner for twenty years and now has such limited employment prospects that she could not possibly retain a style of living even close to that which she became accustomed without receiving a greater chunk of the property pie (and don't forget maintenance). Meanwhile, it's assumed that husband, the primary-breadwinner, will just keep doing it. The second, and perhaps thornier issue, is whether any form of future inheritance should be considered actual marital property and therefore subject to possible division. This issue derives from the ever-expanding concept of "marital property," which doesn't always require good, present title anymore.

So here are the rules, and pay attention to these rules, because they're tricky:


ONE: Future interests in REVOCABLE TRUSTS and WILLS are not marital property, and therefore not subject to division, but (and this is a big but) they may be considered when dividing the marital property.


These days, says SCOV, revocable trusts and wills are virtually the same device because these devices won't result in an actual property interest for a long time-Nanna's health and continued good opinion toward Timmy, abiding. Neither can be considered the expected beneficiary's property, let alone marital property. However, the possibility that one could receive an inheritance in the future, based on the fact that the party is currently named in one of these devices, can be considered when dividing up the assets (and debts) that actually do constitute marital property. Here is where the SCOV cites Middlemarch. But tell that to Fred Vincy. Or Dorothea Brooke for that matter.


TWO: Beneficiary interests in IRREVOCABLE TRUSTS are marital property, so hire a valuation expert.

Here, wife argued that the family court did not consider husband's interests in two irrevocable trusts to be marital property subject to division and failed to put a value on them when the court awarded them to husband. In many more words, SCOV reminds us that if you want the family court to put a value on something, you have to feed it evidence-so get that expert!

But more importantly, does any one feel a bit of a draft coming in? There's a crack left uncovered in this ruling. The SCOV says that the family court did consider husband's interests in the trusts as marital property and did so properly. After all, they were awarded to husband; so the family court must have assumed jurisdiction over them in order award them.

But does this mean that the family court could have awarded them to wife?


The sound you just heard was a statewide shudder by estate planners trying not to faint in the hallways with worry about what going to happen to their beautiful, airtight trust documents.


THREE: The trial court can nullify a maintenance arrearage that accrues during the temporary period prior to the divorce when formulating the final property division.

Wife understandably cried foul at the family court's decision here, because it rewarded husband's flagrant disregard of the temporary order. But SCOV reasoned that the trial court has wide discretion and it has the ability to "allocate" debt, and when you combine that authority together, you come out with the authority to nullify debt, too.

And that's the news, folks. Chief Justice Reiber offers a concurrence and dissent (mostly dissenting), arguing that if the "expectancy" of a revocable trust is too speculative to be considered marital property, then it is too speculative to be considered when dividing the assets. After all, predicting the future is a dangerous business, and property awards cannot be modified down the road when Nanna turns on Timmy.

Now, back to Middlemarch and George Eliot's advice to those of us in the learned professions:

It is an uneasy lot at best, to be what we call highly taught and yet not to enjoy: to be present at this great spectacle of life and never to be liberated from a small hungry shivering self — never to be fully possessed by the glory we behold, never to have our consciousness rapturously transformed into the vividness of a thought, the ardor of a passion, the energy of an action, but always to be scholarly and uninspired, ambitious and timid, scrupulous and dim-sighted.




Book Review: Blood & Money: Why Families Fight Over Inheritance and What to do About It

Here's a riddle. When does administering an estate resemble a cross between an intricate labyrinth and a house of mirrors? The answer to this question is found in veteran Estate Planning Attorney P. Mark Accettura's new book Blood & Money, Collinwood Press.

Most of us do not think of administering a decedent's estate as a trip through a maze where at each turn things are not what they seem. Yet for some families, this comparison isn't far fetched. According to Accettura, family members gripped by the need for approval from their loved ones and wracked by noxious testators may create epic fights over inheritances.

Accettura argues that money is not generally the root of most estate conflicts. Rather, he claims that primeval forces cause familial infighting. Factor in an inherent need to be accepted, the deep anxiety that death provokes, and even a testator's underlying mental disorder, and the result may create a toxic environment in families. Although he acknowledges that our survival is also dependent on cooperation and conflict resolution, and on empathy and forgiveness, ingredients of unhealthy parent-child-sibling relationships together with the vulnerability of aging relatives, may be the recipe for a poisonous brew of inheritance battles when a loved one dies.

Of course, if you are an estate planning attorney, you know that most estates do not unravel into the morass of which Accettura writes, and he acknowledges this fact too. The truth is that most estate matters resolve themselves with relatively little issue among family members. Yet for families that are affected the problems that arise frequently create irreconcilable rifts. Inheritance battles break families apart irreparably and are the stuff of legend, literature and pop culture, and perhaps lend themselves to a small bit of Schadenfreude too.

Accettura has created an easy book, charming at times, full of anecdotes and tales of caution, accessible to lay people and very relevant not only to attorneys but also to financial advisors, accountants and others who work with life planning. Beyond evolution, Accettura provides a logical progression and speaks thoughtfully as to why some testators disinherit their family members and how toxic inheritance is derived. To add clarity he provides a detailed account of the Brook Aster story and discusses at length the vulnerability of frail elders. Chapters which discuss legal capacity, undue influence and legal protections and remedies may seem to drag. Attorneys are probably already familiar with this subject matter and lay people may find it tedious. Ultimately, however, these chapters provide a brief primer, and may prove useful to family members who are concerned with potential wrong doing. Accettura provides a brief history of the "legacy of the legacy" that is entertaining, if not thought provoking.

Perhaps the most relevant chapter of all is that which delineates steps we can take to minimize, mitigate or avoid leaving troubled estates.

To lay the foundation for his case, Accettura literally begins at the "dawn of man" primarily relying on theories of evolutionary psychology, a relatively new way of explaining human behavior which contends that humans evolved both psychologically and behaviorally in their environment. It is through this lens that the author allows us to understand the relationships at the core of the book: "parenting, sibling rivalry, greed, kinship, aggression, favoritism, forgiveness, fear of exclusion and altruism." (p. 15).

If there is a shortcoming to Accettura's approach it is that he takes on a massive amount of scientific theory suitable for its own treatises and texts. That is not to say that Accettura does not have a valid point in his thesis, and he has certainly done his research. The book took him four years to write and it is very well cited. Notwithstanding Accettura's theories, it is a bit overwhelming to consider all of human evolutionary psychology, and then immediately launch into a discussion of disinheritance, and the theory has a tendency to neatly back into itself. Still, the author's desire to unearth the nature behind why we humans may make estate planning decisions in the way that we do is admirable. He refuses to simply begin with the assumption that we are just wired this way, without further attempting to offer proof to this end. In this way, Accettura offers a unique approach to the issue of why families fight over inheritances. He makes it easy for us to understand how we are predisposed to some very bad behaviors which may present themselves if we do not use compassion and caring to enlighten our more base instincts and learn to empathize with those that we may fear the most.

Blood & Money is the type of relevant read every attorney should have in his or her library. It is just the sort of book that we may be inclined to give to certain clients and family members, and undoubtedly one that will inspire further consideration of who we are as humans and just how far we have (or have not) come as a species over time. At the end of the day, Accettura's primary consideration is helping lay persons, and correspondingly their professionals, strive to protect what many would argue is our greatest legacy: family harmony and cohesiveness.

Melendy Moritz PLLC is a client centered boutique firm. We focus on your unique needs by providing the individualized legal counseling and advising tailored to your specific situation.

We concentrate on the planning that matters to you.
Call us at 603.643.6072 or 802.457.9492


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