In re the Marriage of Bonnie Balanson and Richard Balanson

Summary

The Colorado Supreme Court reviewed issues arising from the dissolution of Bonnie and Richard Balanson's marriage, including the classification of employee stock options, a remainder interest in a discretionary family trust, and interspousal gifts. The court held that interspousal transfers may qualify as gifts under certain circumstances, employee stock options granted for future services are not marital property until the employee has an enforceable right to them, and a discretionary trust remainder may constitute property for dissolution purposes. The court also addressed the effect of property-division errors on maintenance and attorney-fee awards and remanded in part while affirming in part.

Holdings

1. An interspousal transfer is not presumed either to be a gift excluded from marital property or to be marital property in every circumstance. Property placed in joint tenancy by one spouse during marriage may be presumed marital absent clear and convincing evidence to the contrary, while a transfer to the other spouse may qualify as a gift if it involved contemporaneous intent to make a gift, delivery, and acceptance.
2. An error in property division is reversible when, viewed in relation to the overall distribution, it affects the substantial rights of the parties. Errors affecting only a small percentage of the marital estate may be harmless, but aggregate errors affecting a substantial portion of the estate require remand.
3. An employee stock option constitutes property for dissolution purposes when the employee has a presently enforceable contractual right to the option, regardless of whether the option is presently exercisable. Options granted in exchange for future services do not constitute property until the required services have been performed.
4. A beneficiary's future vested remainder interest in a trust is property rather than a mere expectancy even when the value is uncertain and the trustee or income beneficiary may invade the corpus for specified purposes. Bonnie's interest was separate property because it was acquired by gift during the marriage, but appreciation in that separate property during the marriage was marital property.
5. Substantial errors in property division or significant changes in the value of marital property may require reconsideration of maintenance. Attorney-fee awards must also be reconsidered when property-division errors materially alter the parties' financial resources.
6. The child-support award was properly affirmed because the trial court's calculation of the wife's maintenance needs, based on reducing prior family expenses for a family of four to expenses for a family of two, included the child's pro rata share of general family living expenses.

Questions Presented

1. Whether the treatment of Richard's employee stock options was moot after the options expired and, if not, whether options granted for future services constituted marital property before the required services were completed.
2. Whether Bonnie's remainder interest in the family trusts constituted property rather than a mere expectancy and whether it was marital or separate property.
3. Whether transfers from one spouse to another during marriage necessarily constitute marital property or may qualify as gifts excluded from marital-property classification.
4. Whether the trial court's errors in classifying and valuing property were harmless when considered in relation to the overall marital estate.
5. Whether the trial court was required to reconsider maintenance and attorney fees in light of errors in property division and a substantial decrease in the value of marital property.
6. Whether the child-support award properly accounted for the child's share of general family living expenses.

Disposition

reversed_and_remanded