173 A.3d 345
Vt.2017Background
- Parties married in 1984; divorce filed by husband in 2014. Major marital assets: marital home (stipulated $140,000) and roughly equal retirement accounts; wife had small inheritance and student loan liability for son.
- Husband had been named sole beneficiary of his parents’ 1999 revocable trust (parents were trustees). The trust held real property (parents’ house and a camp), a CD (~$38,000) and a savings account; trust allowed amendment by the grantors while alive.
- After the mother’s death (2011) and during the divorce, the father (grantor) executed an attorney-assisted amendment (Feb. 2015) changing the beneficiary from husband to the parties’ son. Father later lived in a rehabilitation center and died in April 2016.
- Wife subpoenaed father (and his medical records) to testify about his capacity to amend the trust and procure documents; the family court quashed both subpoenas based on doctor–patient privilege and 15 V.S.A. § 751(b)(8)(C)(ii).
- Wife moved to include the trust assets in the marital estate (claiming nominee status, equitable ownership, unjust enrichment, or that husband effectively controlled the assets); the family court excluded the trust assets but adjusted property division to account for husband’s benefit (e.g., wife granted nine-year exclusive right to live in marital home).
- On appeal, the Vermont Supreme Court affirmed: (1) subpoenas properly quashed and (2) trust assets correctly excluded from the marital estate, though the family court permissibly considered husband’s use of trust benefits in dividing marital property.
Issues
| Issue | Collins (Wife) Argument | Collins (Husband) Argument | Held |
|---|---|---|---|
| Whether family court erred in quashing subpoenas for father’s testimony and medical records | Father lacked testamentary capacity and husband pressured him; father’s testimony/records necessary to invalidate the amendment | Third parties to divorce cannot be compelled to testify about revocable estate-planning instruments unless a party’s interest is vested and unmodifiable; doctor–patient privilege protects records | Quash affirmed: medical privilege applies; § 751(b)(8)(C)(ii) bars subpoena because beneficiary interest was not vested while grantor alive and statute addresses trust terms not grantor capacity |
| Whether the trust assets should be included in the marital estate because father’s change of beneficiary was improper | The son is a nominee; husband effectively controlled/owned the trust assets so they should be marital property | Trust was revocable, father had the right to amend; husband never held title and had only a revocable/future interest; no record evidence of nominee arrangement | Exclusion affirmed: trust assets are not marital property; nominee and fraudulent-transfer cases inapposite; family court did consider husband’s benefit from the trust when dividing property |
| Whether equitable remedies (constructive trust / piercing trust form) justify treating trust assets as marital property | Husband unjustly enriched; court should craft equitable relief to include trust assets in marital distribution | Beneficiary (son) now has vested legal interest; any breach claims belong in probate; piercing veil theory novel and unsupported | Rejected: remedies against husband belong in probate (breach of trust); depriving beneficiary would be inequitable; veil-piercing not adopted here |
| Whether family division was proper forum to adjudicate grantor’s testamentary capacity | Family court can consider capacity in divorce context to reach marital property issues | Testamentary capacity/trust administration belongs to probate court; allowing family court risks inconsistent judgments and harms nonparties | Family court not the proper forum; probate division is appropriate forum for trust-administration/capacity challenges |
Key Cases Cited
- Billings v. Billings, 190 Vt. 487, 35 A.3d 1030 (Vt. 2011) (background precedent on trusts referenced by parties and court)
- Nevitt v. Nevitt, 155 Vt. 391, 584 A.2d 1134 (Vt. 1990) (nominee doctrine—transfers to third parties to defeat marital distribution may be disregarded)
- Clayton v. Clayton, 153 Vt. 138, 569 A.2d 1077 (Vt. 1989) (fraudulent transfers in anticipation of divorce unenforceable)
- Weed v. Weed, 185 Vt. 83, 968 A.2d 310 (Vt. 2008) (constructive trust/unjust enrichment as equitable remedies)
- Agway, Inc. v. Brooks, 173 Vt. 259, 790 A.2d 438 (Vt. 2001) (corporate veil-piercing standard; cited by court in discussing analogous trust-“piercing” theory)