On appeal from the Superior Court, Chancery Division, Family Part, Morris County.
Approved for Publication December 12, 1995.
Before Judges Kestin and A. A. Rodriguez. The opinion of the court was delivered by Kestin, J.A.D.
The opinion of the court was delivered by: Kestin
The opinion of the court was delivered by KESTIN, J.A.D.
Defendant appeals from orders of the trial court affecting the Disposition of bonds and other assets he holds for the benefit of his daughters, Mary, Jennifer and Cathleen. The orders required defendant to turn over to a special receiver for distribution to the daughters all the contents of a safety deposit box (the assets) and to pay
* the receiver's fees, with a retainer of $2500;
* $115,597.65 in interest to his daughters, from July 29, 1988;
* $28,000 to Cathleen as reimbursement for her college costs, for which defendant was personally responsible but which had been paid out of the assets held by defendant; and
* $9,600 in counsel fees to the daughters, plus an additional $900 in counsel fees for an enforcement proceeding.
Defendant was also ordered to transfer immediate ownership and possession of all accounts held for the daughters, including a $50,000 certificate of deposit held for Cathleen (mistakenly designated as Jennifer in the order). The orders further required defendant to secure a $5,000 bond as a precondition of receiving case files from defendant's former attorney and denied defendant's requests for
* counsel fees of $7,500 to be charged against the assets held by defendant; and
* repayment of $87,000 in federal taxes defendant alleged he paid on account of the assets held for the benefit of his daughters.
The award to defendant of $11,000 as reimbursement for funds he advanced for the purchase of Cathleen's certificate of deposit is not a subject of this appeal.
The trial court denied defendant's application for a stay, pending appeal, of distribution of the assets; but did order a stay, conditioned upon the posting of a supersedeas bond, to secure other monies defendant had been ordered to pay to his daughters or on their behalf. Defendant posted a cash bond of $250,000.00. On defendant's motion, we stayed the distribution of the assets pending Disposition of this appeal.
The history of this matter dates back to May 17, 1973, when defendant prepared a memorandum memorializing his thoughts after a conversation with his accountant. He wished to give money to his three daughters, then young children 10, 7 and 4 years of age, "without it becoming legally theirs when they are 21," and in a manner that would minimize or eliminate the tax impact from transfers to them. A portion of the memorandum notes defendant's adoption of a plan recommended by the accountant.
He also pointed out another way - the purchase of municipal bonds which I would retain in my name and on which I would pay all taxes, giving them in gifts or in trips the sums of interest, and giving to them each year the maximum amount that the government allows a married man to give to his children. The risk in this, if I understood him correctly, is that after the children are 21, if any of the bonds are called in prior to maturity dates, I would be legally obliged to distribute this sum to them equally or to deposit it to their accounts. This strikes me as sound advice and I have determined to follow it. I will purchase from time to time bonds that might come due in 15, 20, or 30 years and hold them in my account while distributing them to the children each ...