Appeal from Superior Court, Caledonia Unit, Family Division,
Robert R. Bent, J.
William P. Neylon, St. Johnsbury, for Plaintiff-Appellee.
Deborah T. Bucknam of Bucknam & Black, P.C., St.
Johnsbury, for Defendant-Appellant.
PRESENT: Reiber, C.J., Dooley, Skoglund, Robinson and Eaton,
1. This case calls upon us to consider the effect in a
divorce case of a grantor's amendment to a revocable
trust that changed the beneficiary from husband to
husband's son, thereby keeping the trust property out of
the marital estate and shielding it from wife's claims.
Wife appeals the family division's final property
division award. In particular, she challenges the trial
court's refusal to enforce a subpoena requiring grantor
father to testify about the trust and his capacity to change
its beneficiary and argues that the family court should have
included the trust assets as part of the marital estate. We
2. The material facts are as follows. The parties married in
1984 and have two children, both of whom are now adults. The
parties earned comparable incomes during their marriage.
Their primary asset is their marital home, which the parties
stipulated is valued at $140, 000. Each party has two
retirement accounts, which are roughly equal in net value
after considering loans, and wife has a vested inheritance
from her mother's estate of around $4000. Lastly, wife
owes $16, 000 for a student loan executed on behalf of the
3. At issue in this appeal is the status of a revocable trust
that husband's parents established in 1999. The parents
placed their real estate properties in the trust, which
included their house-located near the parties' marital
home-and a camp at a lake in Barnet. The parents named themselves
as trustees and husband as the sole beneficiary; husband
would become a successor trustee when either of his parents
became unable to act as trustee. The trust document provided
that the grantors could amend the trust at any time, and that
upon the death of both grantors, the trust could not be
amended or revoked and the trustee would distribute the trust
assets to the beneficiary. The trust also contains a
Certificate of Deposit (CD) that was valued at around $38,
000 at the time of the last hearing and a savings account.
The parties used the trust's CD to secure a $38, 000 loan
4. Father moved in with the parties following the death of
husband's mother in 2011; husband and wife jointly cared
for him. The parties separated in early 2014, and husband
filed for divorce in April of that year. About two years
after the parties separated, husband moved into his
parents' house with father. Father's health declined
over the course of the divorce proceedings. When the family
court held a status conference in January 2015, father was
living in a rehabilitation center.
5. At that January 2015 status conference, the parties
discussed the parents' revocable trust and considered the
relevance of this Court's decision in Billings v.
Billings, 2011 VT 116, ¶ 23, 190 Vt. 487, 35 A.3d
1030, and the Legislature's subsequent amendment of 15
V.S.A. § 751(b)(8) in response to the Billings
decision. Shortly thereafter, in February 2015, with the help
of an attorney, father signed an amendment to the trust that
changed the sole beneficiary of the revocable trust from
husband to the parties' son.
6. In July 2015, shortly before the first day of the
contested final hearing,  wife filed two subpoenas: one to be
served upon the rehabilitation center where father was
living, requiring production of father's medical records,
and the second to be served upon father, requiring him to
testify in the upcoming final divorce hearing. Husband filed
motions to quash both subpoenas. The court apparently did not
resolve the motions at the first day of the contested divorce
hearing, and took them up on the second day of the contested
final hearing, in March 2016. By that time, a lawyer for
father had entered an appearance and moved on father's
behalf to quash the subpoenas. After taking some testimony,
the court granted the motions to quash.
7. The court quashed the subpoena for father's medical
records on the basis of father's doctor-patient
privilege. The court rejected wife's argument that
husband's procurement of a letter concerning father's
health from a doctor at the rehabilitation facility amounted
to a waiver of father's doctor-patient privilege because
the court concluded, after taking evidence, that father
himself had not actually authorized this disclosure.
8. Regarding the subpoena wife served upon father, the court
relied on 15 V.S.A. § 751(b)(8)(C)(ii), which provides
that third parties to a divorce shall not be required to
provide documentation or testify about their "revocable
estate planning instruments, " unless a party to the
divorce has an interest in the trust that is vested and not
capable of modification or divestment. The court rejected
wife's argument that the trust was not "capable of
modification or divestment" because father did not have
the testamentary capacity to amend the trust-an assertion she
contended father's testimony would support. The court
noted the difference between competence and testamentary
capacity, as well as the ebbs and flows in cognitive capacity
that often accompany dementia. Concluding that the
Legislature did not intend for courts to try to sort through
these issues concerning a third party's testamentary
capacity in connection with a revocable trust, the court
interpreted the statute to be referring to the nature of the
trust, and not to the mental state of the grantor. Because
the grantor was still alive, the trust in this case was still
capable of modification.
9. The court closed the evidence at the conclusion of the
March 2016 hearing. Father died in April 2016 and wife moved
to re-open the evidence in the divorce proceeding, arguing
that his death meant that husband had acquired a significant
amount of assets from the trust. The court granted wife's
motion and held a hearing in June 2016. At the hearing,
the parties primarily focused on the trust's CD and the
student loan that was taken out in wife's name for the
parties' son. In documents wife submitted to the court
after the hearing she argued that the court should include
the trust assets as part of the marital estate because the
son was a nominee beneficiary of the ...