554 P.3d 1137
Utah Ct. App.2024Background
- John and Tara Hillam married in 2000 and had three children. John was the primary earner, working at Maverik, Inc. and receiving deferred compensation in the form of so-called "stock options" and "stock payouts."
- In late 2012, John, while facing marital difficulties, created an irrevocable trust (the Trust) in Nevada, funding it with stock options valued at $350,000, with himself and his family as beneficiaries, but including a clause eliminating Tara's rights if they divorced.
- John filed for divorce in 2017, after which multi-year, contentious proceedings followed, involving custody, support, and complex trust and property issues.
- At the temporary orders stage, John’s 2017 stock payout (~$570,000) was counted as income for purposes of alimony and support, not as a marital asset.
- The district court granted summary judgment that the Trust was valid and its contents could not be divided in divorce, but later trial proceedings focused on whether John dissipated marital assets by placing them in the Trust and whether Tara should share in the 2017 payout.
- Tara appealed, challenging the handling of the Trust, alleged asset dissipation, and the non-division of the 2017 payout.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can assets in the irrevocable Trust be divided in divorce? | Trust should be divided as marital property due to improper transfer, invalid creation, or public policy violation. | Trust was validly created under Nevada law; John could transfer his own property during marriage, and public policy arguments weren’t raised below. | Most arguments were unpreserved; on the preserved claim, court found no basis to overturn the Trust’s exclusion from the marital estate. |
| Did John dissipate marital assets by placing stock options into the Trust? | The transfer was done to deprive Tara of marital rights, constituting dissipation. | Transfer was for legitimate tax purposes, consistent with prior conduct, and Tara was not excluded from relevant information. | Remanded: Trial court erred in analysis of two dissipation factors (depletion/magnitude and obstructive efforts); must reconsider dissipation question. |
| Should Tara have received half of the 2017 stock payout? | Payout was earned during marriage and should be divided as marital property. | Payout was already included as imputed income, increasing support obligations; treating it as an asset now would be inequitable. | Affirmed: Court acted within discretion in treating the payout as income; no abuse of discretion found. |
| Was the Trust void for public policy or creditor law reasons? | Trust should be void under Utah creditor law and public policy doctrines. | Arguments not preserved at trial; Trust complied with governing law. | Court declined to address these issues due to lack of preservation. |
Key Cases Cited
- Dahl v. Dahl, 459 P.3d 276 (Utah 2015) (addressed revocable trusts and equitable distribution in divorce)
- Rayner v. Rayner, 316 P.3d 455 (Utah Ct. App. 2013) (standards for determining asset dissipation)
- Wadsworth v. Wadsworth, 507 P.3d 385 (Utah Ct. App. 2022) (factors in dissipation analysis)
- Porenta v. Porenta, 416 P.3d 487 (Utah 2017) (creditor relationship upon contemplation of divorce)
- Clark v. Clark, 537 P.3d 633 (Utah Ct. App. 2023) (discretion in property division and dissipation analysis)