2020-0051, In the Matter of Wm. Michael Earley and Ryanne Earley

advisor at the time as the trustee. T he only other asset owned by the Trust is a Trust of 2000 (Trust), funding it with ten dollars and appointing their financial the respondent’s parents (O’Neils) established T he O’Neil Family Irrevocable The trial court found or the record supports the following facts. In 2000,

part, and remand. decisio n is contrary to RSA 564 - B:5 - 502 (2019), we reverse in part, vacate in RSA 458:16 - a (Supp. 2020). Because we conclude that the trial court’s her interest in the trust as marit al property subject t o equitable division under established by her parents. She argues that the trial court erred by classifying Michael Earley, part of her interest in an irrevocable life ins urance trust decree issued by the Circuit Court (Lemire, J.) awarding the petitioner, Wm. DONOVAN, J. The respondent, Ryanne Earley, appeals a final divorce

Rockefeller on the brief), for the respondent. Burns, Bryant, Cox, Rockefeller & Durkin, P.A., of Dover (Christ i ne M.

Wm. Michael Earley, self - represented party, by brief.

No. 2020 - 0051 7th Circuit Court - Dover Family Division

page is: http://www.courts.state.nh.us/supreme. a.m. on the morning of their release. The direct address of the court’s home reporter@courts.sta te.nh.us. Opinions are available on the Internet by 9:00 to press. Errors may be reported by e - mail at the following address: editorial errors in order that corrections may be made before the opinion goes Hampshire, One Charles Doe Drive, Concord, New Hampshire 03301, of any Readers are requested to notify the Reporter, Supreme Court of New well as formal revision before publication in the New Hampshire Reports. NOTICE: This opinion is subject to motions for rehearing under Rule p. 2 22 as 2

limi tations. If any beneficiary predeceases the O’Neils, that beneficiary’s ultimate distribution of their interests in the Trust, subject to certain power s of appointment, allowing them to direct, through their wills, the survives the la ter - surviving parent. The beneficiaries also have testamentary Trust’s assets to the three beneficiaries, provided that each of the beneficiaries Upon the death of the la ter - surviving parent, the trustee will distribute the have no right to receive any principal or income distributions from the Trust. The O’Neils, who were still living at the time of the trial court’s order,

the Internal Revenue Code. See p. 2 26 U.S.C. § 2503 (b) (2018). can demand an amount that exceeds the annual gift tax exclusion set forth in year in which the transfer i s made, whichever date is earlier. No beneficiary thirty days of receiving notice of the transfer or by the last day of the calendar withdrawal right lapses if the beneficiary fails to demand distribution within unrestricted right” to demand their apportioned amounts of the transfer. This receiving notice of the transfer, the beneficiaries have an “absolute and the trustee to appor t ion the transfer equally among the beneficiaries. After to apporti on any amount of the transfer to the beneficiaries, the Trust directs among some or all of the beneficiaries, equally or unequally. If the O’ Neils fail transfer to the Trust, they may direct the t rustee to apportion the transfer In addition, the Trust provides that if the O’Neils make any inter vivos

from the control or claim of any spouse. manner, and all payments to or interest of any beneficiary shall be free subject to the interference or control of creditors or others in any way or equitable or other process, including any bankruptcy proceeding, or be such beneficiary, and shall not be reached by, o r be subject to, any legal, alienated or in any other manner assigned or pledged or promised by hereunder, either as to income or principal, shall not be anticipated, Except as herein otherwise provided, the interest of any beneficiary

the following sp endthrift provision: comfort, education . . . and maintenance in health.” The Trust also contains indirect benefit of said [beneficiary], for his [or her] support in reasonable in come or principal to the beneficiaries “as it shall think proper for the direct or Trust].” The trustee may exercise this discretion by making distributions of Trust] from time to time in its sole discretion pursuant to the terms of [the beneficiaries. The Trust permit s the trustee to “make distributions from [the The Trust names the respondent and her two siblings as equal one - third

annual insurance premium. self - sustaini ng, meaning that the interest the policy generates pays for the as of June p. 2 2019, the cash value of the policy was $184,9 p. 3 30.42. The Trust is the second of the O’Neils to die. The policy’s death benefit is $2 million, and, The policy lists the O’Neils as the insureds and is payable upon the death of flexible premium variable life insurance policy issued to the O’Neils in 2001. 3

spendthrift provision from being classified as marital property. We agree. 502(e), which precludes any beneficial interest in a trust that is subject to a of her interest in the Trust as marital property was contrary to RSA 564 - B:5 - O n appeal, the respondent first argues that the trial court’s classification

no vo. In the Matter of Chamberlin & Chamberlin, 155 N.H. 1 p. 3 3, 16 (2007). property under RSA 458:16 - a, I, presents a question of law, which we review de assets. Id. The trial court’s determination as to what assets are marital a, I. Id. Then, it must exercise its discretion to equitably distribute those as a matter of law, what assets constitute marital propert y under RSA 458:16 - Richards, 172 N.H. 78, 83 (2019). Accordingly, the trial court must determine, decree of divorce is considered marital property. In the Matter of Cohen & parties.” RSA 458:16 - a, I. Any pr operty acquired up to the date of a final parties, whether title to the property is held in the name of either or both intangible property and assets, real or personal, belonging to either or both so equitably. RSA 458:16 - a, II. Marital property includes “all tangible and In divorce cases, if the trial court apportions marital property, it must do

denied. This appeal followed. decree. The respondent filed a motion for reconsideration, which the trial court the O’Neils to the Trust for five years following the effective date of the divorce distributions that the respondent withdraws from inter vivos tran s fers made by respondent’s remainder interest in the Trust, as well as one - half of any future sixth of the cash value of the life insurance policy, reflecting one - half of the See RSA 458:16 - a. Accordingly, the trial court awarded the petitioner one distributions from the Trust was marital property subject to equitable division. T he trial court disagreed, con cluding that her interest in receiving future any portion of post - divorce distributions that she may receive from the Trust. constituted marital property, but argued that the petitioner was not entitled to respondent conceded that the distributions she received during the marriage entitled to any portion of the respondent’s interest in the Trust. The T he trial court held a hearing on the issue of whether the petitioner wa s I n 2017, the parties filed for divorce, citing irreconcilable differences.

these dist ributions benefi tted the family. from the Trust, all of which totaled $65,000. The parties do not dispute that the Trust. Between 2001 and 2008, the respondent received five distributions The parties married in 2002, about two years after the O’Neils created

of someone else. the beneficiary exercises his or her testamentary power of appointment in favor distribution will pass to his or her living issue, apportioned per stirpes, unless p. 4 4

determination to the extent that it awarded the petitioner one - sixth of the cash For the foregoing reasons, we reverse the trial court’s property division

decision, we need not consider the respondent’s remaining arguments. 502(e). Because this conc lusion requires that we reverse the trial court’s the Trust as marital property subject to equitable division. See RSA 56 p. 4 4 - B:5 conclude that the trial court erred by classifying the respondent’s interest in Therefore, in light of the spendthrift provision set forth in the Trust, we

Krueger, 1 p. 4 46 N.H. 669, 672 - 73 (2001) (quotation and brackets omitted). courts do not question the wisdom or expediency of a statute.” Scheffel v. The statutory mandate in RSA 564 - B:5 - 502(e) is clear, and “it is axiomatic that is subject to a spendthrift provision from being classified as marital pr operty. law differs; RSA 564 - B:5 - 502(e) expressly prohibit s any interest in a trust that marital property to be considered for division.” Id. However, New Hampshire Massachusetts, courts have recognized that such trusts can be included in the Flaherty that “[a]lthough spendthrift trusts have been held valid in are unpersuaded that Flaherty controls our decision today. We explained in at 341. Despite certain factual similarities between Flaherty and this case, we . . . do[es] not preclude our treatment of the interest as marital property.” Id. 34 0 - 4 1. Applying Massachusetts law, we held that “the anti - alienation clause alienation clause similar to the spendth rift provision in this case. Id. at 338, parents was marital property, even t hough the trust contained an anti the defendant’s remainder interest in an irrevocable trust created by his Flaherty, 138 N.H. 337 (1994), is controlling. In Flaherty, we determined that T he petitioner, on the other hand, argues that our decision in Flaherty v.

(decided April 20, 2021). equitable division. See In the Matter of Merrill & Merrill, 17 p. 4 4 N.H. __, __ the respon dent’s interest in the Trust is not marital property subject to of the clear statutory mandate set forth in RSA p. 5 564 - B:5 - 502(e), we agree that as required by RSA 564 - B:5 - 502(a), and is therefore enforceable. Thus, in light restrains both voluntary and involuntary transfer of the respondent ’ s interest, the spendthrift provision, we assume, without deciding, that it suffic iently any way or manner.” Because the petitioner does no t challenge the validity of process, . . . or be subject to the interference or control of creditors or others in interest “shall not be reached by, or be subject to, any legal, equitable or other promis[ing]” her interest in the Trust, and by providing that the respondent’s “anticipat[ing], alienat[ing] or in any other manner assign[ing] or pledg[ing] or “either as to income or principal” by prohibiting the respondent from spendthrift provision set forth in the Trust protects the respondent’s interest beneficiary’s interest . . . [i]s not property for purposes of RSA 458:16 - a, I.” The beneficiary’s interest in a trust is subject t o a spendthrift provision, the RSA 564 - B:5 - 502(e) states, in relevant part: “To the extent that a 5

HICKS, BASSETT, and HANTZ MARCONI, JJ., concurred.

of our ruling that the respondent’s interest in the T rust is not marital property. the property division determination and remand for further proceedings in light effective date of the divorce decree. Accordingly, we vacate the remainder of withdraws from inter vivos transfers made to the Trust within five years of the value of the life insurance policy and one - half of any amount the respondent