## Facts

- Cheryl Guinn (wife) and David Guinn (husband) married in 1987; the marriage was dissolved in 2002.
- In 1990, during the marriage, husband’s parents created and funded an irrevocable generation-skipping trust.
- The trust was initially funded with $400,000 in publicly traded stock, with later contributions of $16,000 (1999) and $51,000 (2000), totaling $467,000 in contributions.
- By the time of the permanent orders hearing, the trust corpus had appreciated to about $818,869.
- The trust required the trustees to distribute the trust’s “net income” to husband in annual or more frequent distributions.
- The trustees also had discretion to distribute principal to husband if reasonably necessary for his health, maintenance, support, and education.
- Upon husband’s death, the trust corpus would remain in trust for the benefit of husband’s descendants; husband’s children held the remainder interest.
- Husband had no power of appointment and no right to direct the trust’s disposition, investment decisions, or the allocation of receipts and expenses between income and principal.
- The trustees had broad authority, including investing in any kind of property and determining, in reasonable discretion, what counted as income versus principal; capital gains were generally allocated to principal, and distributions to husband generally reflected interest and dividend income.
- In the dissolution proceedings, wife conceded husband had no property interest in the trust corpus but argued his income interest was a property interest that should be treated as marital property subject to division.
- The trial court concluded husband’s income interest was not “property” under C.R.S. § 14-10-113, did not classify it as marital or separate, and did not include it in the property division; wife appealed.

## Issues

1. Whether a spouse’s lifetime right to receive mandatory distributions of a trust’s “net income,” when the spouse has no interest in the corpus and no control over investment or income/principal allocation, constitutes “property” under C.R.S. § 14-10-113 for purposes of marital property division.

## Decision

- The Colorado Court of Appeals affirmed.
- The court held husband’s income interest as a lifetime income beneficiary was not “property” for purposes of C.R.S. § 14-10-113.
- Because the interest was not “property,” the dissolution court was not required to classify it as marital or separate or to include it in the divisible estate.

## Legal Principles

- A dissolution court applies a threshold inquiry under C.R.S. § 14-10-113: it must first decide whether an interest is “property” before deciding whether it is marital or separate and subject to division.
- “Property” in this setting requires more than a speculative or uncertain benefit; the analysis focuses on the nature and enforceability of the spouse’s rights in the interest claimed.
- A trust interest is less likely to be treated as “property” for divorce division when the spouse has no present or vested right in the trust corpus, no power to control the corpus or its investment, and no ability to affect how receipts and expenses are allocated between income and principal.
- A mandatory distribution clause does not, by itself, make a beneficiary’s income interest “property” when trustees retain broad discretion that can materially affect what “net income” exists and therefore what the beneficiary will receive.
- Trust interests with a vested remainder or other concrete rights in the corpus are analytically different from a pure lifetime income-beneficiary interest with no remainder rights and no control.

## Conclusion

In re Marriage of Guinn holds that a husband’s lifetime right to receive the “net income” from an irrevocable trust—where trustees control investment and the income/principal allocation and the husband has no ownership interest in the corpus or remainder rights—is not “property” under C.R.S. § 14-10-113 and therefore is excluded from the marital estate for purposes of equitable division.


In re Marriage of Guinn, 93 P.3d 568 (2004)