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Tag: separate property

Clark v. Clark – 2023 UT App 111 – divorce, exhibits, dissipation

Clark v. Clark – 2023 UT App 111

THE UTAH COURT OF APPEALS

SUSAN JEANNE CLARK,

Appellee,

v.

RICHARD LEE CLARK,

Appellant.

Opinion

No. 20210713-CA

Filed September 28, 2023

Fourth District Court, Heber Department

The Honorable Jennifer A. Brown

No. 184500153

Karra J. Porter and Kristen C. Kiburtz, Attorneys for Appellant

Julie J. Nelson, Attorney for Appellee

JUDGE AMY J. OLIVER authored this Opinion, in which JUDGES

MICHELE M. CHRISTIANSEN FORSTER and RYAN D. TENNEY

concurred.

OLIVER, Judge:

¶1        Richard Lee Clark appeals from the district court’s decision following a two-day divorce trial. Clark challenges several aspects of the court’s ruling, including a discovery sanction for his failure to timely disclose his trial exhibits under rule 26 of the Utah Rules of Civil Procedure; findings relating to his claim that his ex-wife, Susan Jeanne Clark, dissipated the marital estate; and the court’s division of the marital property. We affirm the district court’s ruling with the exception of one aspect of the district court’s marital property determination, which we vacate and remand for additional findings.

BACKGROUND

¶2        Richard and Susan[1] married in 2002, when Richard was in his sixties and Susan was in her fifties. Richard was retired from military service and from employment as an attorney with the Department of Justice. Susan owned a wallpaper business when she met Richard but quit working shortly after they married. For the next six years, Richard and Susan lived off Richard’s retirement income from both the Army and the Department of Justice.

¶3        In 2008, Richard came out of retirement to work for a government contractor in Afghanistan, where he lived for thirty-eight months. During that time, Richard’s retirement and employment income of $814,627 was deposited into a joint account that Susan controlled. Richard returned home to find “probably about $100,000 . . . had been saved” in the joint bank account—much less than he expected—yet he said nothing to Susan at that time.

¶4        Three years after his return, Richard moved into the basement of the marital home. The following year, in 2016, Susan transferred approximately $78,000 from their joint account into her personal account, prompting Richard to confront her about what he viewed as missing money from his time in Afghanistan. Two years later, in 2018, Susan filed for divorce. Shortly afterward, Richard purchased a Harley-Davidson motorcycle with financing, which he paid off in 2020.

¶5        At the time of their divorce, Richard and Susan owned two real properties—a condo in Norfolk, Virginia (Mooring Drive), and a home in Kamas, Utah (Ross Creek). Richard had purchased Mooring Drive before the marriage for approximately $205,000. In 2003, Richard added Susan to the title of Mooring Drive, which allowed her to vote at the condominium association’s meetings and to join the board. The following year, Richard and Susan used equity loans on Mooring Drive to finance the purchase and construction of Ross Creek. From 2009—when Susan moved to Utah and Richard was in Afghanistan—until June 2019, Richard rented Mooring Drive out to others and the revenues were deposited into his separate account that was designated to pay for the property’s expenses.

¶6        During their marriage, the parties took out an equity loan on Ross Creek that matured, along with one of the equity loans from Mooring Drive, in 2019. With the divorce still pending, Susan agreed to refinance Ross Creek’s mortgage to pay off the two equity loans that were due, but only if Richard would stipulate that Mooring Drive and Ross Creek were marital property and were subject to equitable division in their pending divorce. Richard agreed, and the parties stipulated that “the Ross Creek and Mooring Drive properties shall remain marital property and shall be subject to equitable division in the parties’ divorce notwithstanding that the Ross Creek home and Mooring Drive property will no longer be jointly titled.”

¶7        In April 2019, the Mooring Drive tenants’ lease expired. Richard decided he could only offer the tenants a month-to-month lease until his divorce was over. When the tenants declined to renew and moved out in June, Richard withdrew $30,000 from the joint bank account, claiming that he needed the funds to cover Mooring Drive’s expenses. After a hearing, the court entered temporary orders in December 2019, permitting Richard to access equity in Ross Creek to pay off debt on Mooring Drive but denying his “request for financial relief based on the loss of rental income because [Richard] ha[d] not made any attempt to secure new renters.”

¶8        Trial was originally scheduled for June 2020, but when the COVID-19 pandemic hit and courts were required to hold bench trials virtually, Richard declined to proceed with a virtual trial, and it was continued without a date. In February 2021, the court held a pretrial scheduling conference and rescheduled the trial for May 2021. The court’s pretrial order stated the parties must produce pretrial disclosures on or before April 26, 2021, pursuant to rule 26(a)(5)(B) of the Utah Rules of Civil Procedure.

¶9        Richard missed the deadline. A week after it passed, he requested a continuance to hire trial counsel. Richard had been representing himself as a pro se litigant despite being eighty-four years old and not having practiced law since 1988. According to Richard, health issues arose that made him “no longer physically and mentally capable of representing” himself. The court granted the motion, rescheduling the trial for June. The new deadline for pretrial disclosures became May 24, but Richard did not submit his pretrial disclosures until June 10—eleven days before trial.

¶10      The two-day trial began with Susan’s objection to Richard’s untimely pretrial disclosures. Susan contended that Richard had “ample opportunity” to produce his pretrial disclosures given the multiple continuances of the trial. In response, Richard claimed his failure to meet the disclosure deadline was harmless because he had previously produced as discovery responses the 339 pages of financial documents—including check registers, paystubs from 2008 to 2009, and bank account information from 2011 to 2012— that he sought to admit as exhibits 2 through 8. Yet Richard did not file certificates of service for those responses, and neither party’s counsel could confirm whether Richard had previously sent the documents in exhibits 2 through 8 to Susan, leaving the district court with only Richard’s testimony to support the claim that he had previously disclosed the exhibits. The district court sustained Susan’s objection as to exhibits 2 through 8, excluding them from trial.

¶11      Both Susan and Richard testified at trial. Susan testified Richard had transferred $30,000 from their joint account to his personal account in June 2019 and contended she was entitled to half of that amount. Susan also testified about her exhibits that provided recent balances in her bank and retirement accounts.

¶12      On cross-examination, Susan admitted she had not looked for work and was unemployed despite the court’s urging in 2020 for her to seek employment. Richard then peppered Susan about numerous expenditures during his time in Afghanistan, to which Susan replied that it “was a number of years ago” and she “ha[d] no recollection at all” of the transactions. Susan did state, however, that when Richard left for Afghanistan, she recalled they “had very large credit card balances” that Richard instructed her “to start paying off” while he was away.

¶13 First testifying as Susan’s witness, Richard answered questions about some of the marital property. He testified about a recent appraisal of Mooring Drive that valued it at $390,000, his three life insurance policies that all list Susan as the beneficiary, and his purchase of the Harley-Davidson in May 2019. Susan then introduced a pleading Richard had filed with the court in November 2019 that stated, in relevant part, he had “owned three motorcycles, selling the last one when [he] moved to Norfolk,” but he has “never ridden a Harley-Davidson.” Richard replied that he had “misstated the fact,” both in that pleading and at a hearing the same month when he told the court he did not own a Harley-Davidson. Richard testified he should receive three-fourths of the equity in Mooring Drive because he purchased it before the marriage. Unable to provide a figure for what the property was worth when he married Susan, Richard claimed that “the[] prices have gone up and gone down a great deal” since their marriage, but his best guess was that Mooring Drive appreciated from $205,000 to $350,000 between 2000 and 2002. Richard continued to do some impromptu math on the stand to clarify how much equity he felt he was owed, asserting that since Mooring Drive was recently appraised at $390,000 and had been worth $350,000 in 2002—by his best guess—there is $40,000 of equity for them to divide, but then he admitted such valuation “is something I’m just not knowledgeable about.”

¶14      As his own witness, Richard testified about Susan’s alleged dissipation during his time in Afghanistan. Richard’s excluded exhibits went to the issue of dissipation, so without the financial documents from that period, Richard sought to prove Susan “dissipated money while [he] was in Afghanistan” through his testimony about his earnings and typical expenses during that time frame. Using the excluded exhibits to refresh his recollection, Richard estimated their monthly expenses before he left were approximately $10,000 to $11,000. Richard also challenged Susan’s testimony about credit card balances, claiming that “there weren’t any large credit card balances before [he] left.”

¶15      At the conclusion of trial, the district court asked both parties to submit proposed findings of fact and conclusions of law in lieu of closing arguments. After issuing an oral ruling, the district court memorialized its decision in written findings of fact and conclusions of law. The court found that Richard’s “testimony was insufficient to establish his [dissipation] claim” and that Richard had “failed to meet his burden of demonstrating dissipation.” The court also found “problems with the credibility of both parties,” specifically finding that Susan’s “credibility was lacking with regards to the dissipation issue” and Richard’s “credibility was lacking with regards to his motorcycle purchase.” Susan was awarded Ross Creek’s equity, and Richard was awarded Mooring Drive’s. The court awarded Susan $2,500 per month in alimony and an offset of $43,474 (from Richard’s purchase of the Harley-Davidson and his $30,000 withdrawal from the joint account) “to achieve an equitable division of the estate.” The court found Richard “withdrew $30,000 from the joint account without [Susan’s] knowledge or consent and deposited it into his own personal account,” but it made no findings as to how Richard spent the $30,000.

ISSUES AND STANDARDS OF REVIEW

¶16      Richard raises three main issues for our review. First, Richard challenges the district court’s exclusion of his exhibits for his failure to comply with rule 26(a)(5) of the Utah Rules of Civil Procedure. A district court “has broad discretion regarding the imposition of discovery sanctions,” and when we apply “the abuse of discretion standard to the district court’s imposition of a particular sanction, we give the district court a great deal of latitude.” Bodell Constr. Co. v. Robbins, 2009 UT 52, ¶ 35, 215 P.3d 933 (cleaned up).

¶17 Second, Richard contends the district court erred in its application of the burden of proof on Richard’s dissipation claim. A district court’s “allocation of the burden of proof is . . . a question of law that we review for correctness.” Salt Lake City Corp. v. Jordan River Restoration Network, 2018 UT 62, ¶ 20, 435 P.3d 179.

¶18      Finally, Richard challenges the district court’s division of the property, including the court’s finding that the marital estate included Mooring Drive and the Harley-Davidson, and its decision to deduct from the marital estate the $30,000 Richard withdrew from the parties’ joint account. A district court “has considerable discretion considering property division in a divorce proceeding, thus its actions enjoy a presumption of validity,” and “we will disturb the district court’s division only if there is a misunderstanding or misapplication of the law indicating an abuse of discretion.” Beckham v. Beckham, 2022 UT App 65, ¶ 6, 511 P.3d 1253 (cleaned up).

ANALYSIS

I. Pretrial Disclosures

¶19      Richard asserts the district court abused its discretion in excluding his exhibits 2 through 8 for failure to comply with rule 26(a)(5) of the Utah Rules of Civil Procedure because he “produced the documents that comprised the exhibits” during discovery and any “technical non-compliance with that rule” was “harmless.” We disagree.

¶20      Rule 26 governs “disclosure and discovery” in civil matters and requires parties to provide “a copy of each exhibit, including charts, summaries, and demonstrative exhibits, unless solely for impeachment, separately identifying those which the party will offer and those which the party may offer . . . . at least 28 days before trial.” Utah R. Civ. P. 26(a)(5). A party who fails to timely disclose exhibits “may not use the undisclosed witness, document, or material at . . . trial unless the failure is harmless or the party shows good cause for the failure.” Id. R. 26(d)(4). A district court “has broad discretion in selecting and imposing sanctions for discovery violations under rule 26,” and “appellate courts may not interfere with such discretion unless there is either an erroneous conclusion of law or no evidentiary basis for the district court’s ruling.” Wallace v. Niels Fugal Sons Co., 2022 UT App 111, ¶ 26, 518 P.3d 184 (cleaned up), cert. denied, 525 P.3d 1267 (Utah 2023).

¶21      Richard does not dispute that he failed to timely disclose exhibits 2 through 8. Instead, Richard argues he produced the documents in those exhibits to Susan in earlier discovery responses, so his failure to timely file pretrial disclosures was harmless, and he further argues that it was Susan’s burden to prove she had not received them. In response, Susan asserts it was Richard’s burden, not hers, to prove that he produced the documents earlier in discovery, and the failure to file his pretrial disclosures pursuant to rule 26(a)(5) was not harmless. We agree with Susan on both fronts.

¶22 First, “the burden to demonstrate harmlessness or good cause is clearly on the party seeking relief from disclosure requirements.” Dierl v. Birkin, 2023 UT App 6, ¶ 32, 525 P.3d 127 (cleaned up), cert. denied, 527 P.3d 1107 (Utah 2023). Second, Richard failed to carry his burden of demonstrating harmlessness. Although Richard “assured [his counsel] that he [had] produced records related to this 2008-to-2012 timeframe,” he did not file the required certificates of service. See Utah R. Civ. P. 26(f) (requiring a party to file “the certificate of service stating that the disclosure, request for discovery, or response has been served on the other parties and the date of service”). Thus, Richard failed to prove that the documents had previously been produced.

¶23 But even if he had proved prior production, excusing pretrial disclosures if the documents were produced earlier in discovery would “eviscerate[] the rule that explicitly requires parties to” serve a copy of the documents they intend to use “in their case-in-chief at trial.” Johansen v. Johansen, 2021 UT App 130, ¶¶ 19, 26, 504 P.3d 152 (rejecting argument to follow the spirit of rule 26 rather than “the plain language of rule 26” regarding pretrial disclosures); see also Utah R. Civ. P. 26(a)(5)(A)(iv) (requiring pretrial disclosure of “each exhibit” the party will or may offer at trial). And expecting a party to sort through hundreds, if not thousands, of pages of documents that were produced earlier by the other side during discovery and then expecting the party to predict which ones the opposing party might seek to admit at trial would be harmful and would violate the intent of rule 26.

¶24 Ultimately, “a court’s determination with respect to harmlessness . . . . is a discretionary call,” and our review of it “is necessarily deferential.” Johansen, 2021 UT App 130, ¶ 11 (cleaned up). Thus, the district court was well within its “broad discretion” to exclude Richard’s exhibits 2 through 8 under these circumstances. See Wallace, 2022 UT App 111, ¶ 26 (cleaned up).

II. Dissipation

¶25 Richard claims the district court erred in finding that he failed to meet the burden of proof on his dissipation claim. We disagree.

¶26      “The marital estate is generally valued at the time of the divorce decree or trial.” Goggin v. Goggin, 2013 UT 16, ¶ 49, 299 P.3d 1079 (cleaned up). “But where one party has dissipated an asset,” the “trial court may, in the exercise of its equitable powers,” “hold one party accountable to the other for the dissipation.” Id. (cleaned up). A court’s inquiry into a dissipation claim may consider “a number of factors,” such as “(1) how the money was spent, including whether funds were used to pay legitimate marital expenses or individual expenses; (2) the parties’ historical practices; (3) the magnitude of any depletion; (4) the timing of the challenged actions in relation to the separation and divorce; and (5) any obstructive efforts that hinder the valuation of the assets.” Wadsworth v. Wadsworth, 2022 UT App 28, ¶ 69, 507 P.3d 385 (cleaned up), cert. denied, 525 P.3d 1259 (Utah 2022).

¶27 The burden of proof for dissipation initially falls on the party alleging it. See Parker v. Parker, 2000 UT App 30, ¶ 15, 996 P.2d 565 (stating that a party seeking to assert dissipation must make an “initial showing of apparent dissipation”). The district court correctly concluded that Richard bore the “burden of demonstrating dissipation.” To meet the “initial showing of apparent dissipation,” the party alleging dissipation must first show evidence of dissipation. Id. ¶¶ 13, 15. Only after “present[ing] the trial court with evidence tending to show that [Susan] had dissipated marital assets” does the burden shift to Susan “to show that the funds were not dissipated, but were used for some legitimate marital purpose.” Id. ¶ 13.

¶28 Richard’s documentary evidence on this issue had been excluded by the court, so the only evidence he presented was his testimony in 2021 that his income while in Afghanistan from 2008 to 2012 exceeded the estimated historical marital expenses from before 2008, some thirteen years earlier. Richard asserts that his testimony alone should suffice for an initial showing of dissipation. In Parker v. Parker, 2000 UT App 30, ¶ 15, 996 P.2d 565, the husband “presented the trial court with evidence” that detailed how the wife had dissipated marital assets—exact beginning and ending balances for eight bank accounts, the marital expenses during the time in question, and specific checks the wife wrote to herself—thus shifting the burden to the wife. Id. ¶ 13. But Richard, like the wife in Parker, only “testified in conclusory and cryptic terms,” and thus “wholly failed to meet [his] burden.” Id. ¶ 14.

¶29      Therefore, the district court was well within its discretion to decide that Richard’s uncorroborated testimony about Susan’s spending that occurred many years before either party contemplated divorce[2] was insufficient evidence to meet his initial burden of proving dissipation. Accordingly, the district court did not err in its finding that Richard failed to meet his burden of proof on the dissipation claim.

III. Marital Property

¶30      Richard presents three challenges to the district court’s division of the marital property. First, Richard asserts he is entitled to his premarital contribution to Mooring Drive. Second, he alleges the Harley-Davidson he purchased during the pendency of the divorce is his separate property. Third, Richard claims the court should not have deducted from the marital estate the $30,000 that he withdrew from the joint account in June 2019.

We affirm the district court’s decision on Richard’s first two challenges and vacate the decision on the third, remanding the matter for additional findings.

A.        Mooring Drive

¶31      Although the district court awarded Richard the equity in Mooring Drive when it divided the marital estate, it did not also award Richard any premarital equity in the property for three reasons. First, it found that Richard “formally stipulated that Ross Creek and Mooring Drive were marital property subject to division in this divorce action.” Second, it found that “through a series of refinances, [Richard] transferred equity from Ross Creek to Mooring Drive, and paid expenses associated with both properties with marital funds.” Third, it found that Richard “formally conveyed the property to himself and [Susan] in 2003” when he added Susan’s name to the title. Because we affirm the district court’s decision not to award Richard any premarital equity on the basis of the parties’ stipulation, we do not address the other two reasons the district court relied upon.

¶32 Richard and Susan stipulated that “the Ross Creek and Mooring Drive properties shall remain marital property and shall be subject to equitable division in the parties’ divorce, notwithstanding that the Ross Creek home and Mooring Drive property will no longer be jointly titled.” Richard now claims that despite the language of the stipulation, he “never agreed that he should not be compensated for his premarital and separate contributions to Mooring Drive before the property became marital.” Furthermore, Richard argues, “nowhere in the stipulation did he agree that he was waiving his premarital equity in that property.”

¶33 Richard’s argument is flawed. “Parties to a divorce are bound by the terms of their stipulated agreement.” McQuarrie v. McQuarrie, 2021 UT 22, ¶ 18, 496 P.3d 44. And according to the “ordinary contract principles” that govern “contracts between spouses,” see Ashby v. Ashby, 2010 UT 7, ¶ 21, 227 P.3d 246 (cleaned up), “if the language within the four corners of the contract is unambiguous, the parties’ intentions are determined from the plain meaning of the contractual language,” Green River Canal Co. v. Thayn, 2003 UT 50, ¶ 17, 84 P.3d 1134 (cleaned up). See also Mind & Motion Utah Invs., LLC v. Celtic Bank Corp., 2016 UT 6, ¶ 24, 367 P.3d 994 (holding that “the best indication of the parties’ intent is the ordinary meaning of the contract’s terms”); Ocean 18 LLC v. Overage Refund Specialists LLC (In re Excess Proceeds from the Foreclosure of 1107 Snowberry St.), 2020 UT App 54, ¶ 22, 474 P.3d 481 (holding that where the “contract is facially unambiguous, the parties’ intentions are determined from the plain meaning of the contractual language . . . without resort to parol evidence” (cleaned up)).

¶34      Richard essentially argues that the district court erred when it refused to go beyond the stipulation’s language and infer his intention from what he omitted. But the district court was correct when it interpreted the parties’ intentions by what the plain language of the stipulation does say and not by what it does not. Therefore, the district court did not abuse its discretion when it abided by the parties’ stipulation and included Mooring Drive as marital property, “subject to equitable division.”

B.        The Harley-Davidson

¶35      “Prior to the entry of a divorce decree, all property acquired by parties to a marriage is marital property, owned equally by each party.” Dahl v. Dahl, 2015 UT 79, ¶ 126, 456 P.3d 276. Thus, the presumption is that property acquired during the pendency of a divorce is marital, not separate. Richard failed to rebut this presumption regarding the Harley-Davidson motorcycle he purchased because he failed to present evidence that he used separate funds.

¶36 Richard argued that he purchased the Harley-Davidson from separate, rather than marital, funds in his proposed findings of fact and conclusions of law.[3] To be clear, Richard does not assert that the Harley-Davidson is separate property because he purchased it after the parties separated or after Susan filed for divorce. Instead, he argues the only funds available to him to purchase the motorcycle came from his “separate premarital retirement income.” Richard’s argument fails for two reasons. First, Richard did not present evidence to support his argument that the funds he used to purchase the motorcycle came from separate, not marital, funds. Instead, Richard essentially places his burden on the district court by asserting, on appeal, that “[t]here was no marital account identified by the district court from which [Richard] could have made that purchase.” But Richard, not the court, bears the burden of identifying where the funds came from that he used to purchase the motorcycle.

¶37      Second, the district court found credibility problems with Richard’s testimony about the Harley-Davidson, concluding that Richard’s “credibility was lacking with regards to his motorcycle purchase.”[4] A district court “is in the best position to judge the credibility of witnesses and is free to disbelieve their testimony” or “disregard such testimony if it finds the evidence self-serving and not credible.” Ouk v. Ouk, 2015 UT App 104, ¶ 14, 348 P.3d 751 (cleaned up).

¶38      In sum, as “property acquired during [the] marriage,” the Harley-Davidson is presumptively “marital property subject to equitable distribution.” Dahl, 2015 UT 79, ¶ 26. Richard bore the burden of proof to rebut the presumption that the funds he used to purchase the Harley-Davidson were not marital, and he presented no credible evidence to the district court to support that position. Thus, the district court did not abuse its discretion by including the motorcycle in the marital estate.

C.        $30,000 Offset

¶39      Finally, Richard challenges the district court’s decision to include in the marital estate the $30,000 he withdrew from the joint account. The district court agreed with Susan that because Richard had made a unilateral withdrawal from the joint account during the pendency of the divorce, he should be held accountable for that withdrawal. Richard, on the other hand, claims he used the money for marital expenses, paying costs associated with Mooring Drive. Susan argues the money could also have been spent on personal items including travel and motorcycle payments and accessories. “How the money was spent, including whether [the] funds were used to pay legitimate marital expenses or individual expenses,” Wadsworth v. Wadsworth, 2022 UT App 28, ¶ 69, 507 P.3d 385 (cleaned up), cert. denied, 525 P.3d 1259 (Utah 2022), is a critical question that needs to be resolved.

¶40 Divorce cases often require district courts to make numerous findings of fact. And generally speaking, “for findings of fact to be adequate, they must show that the court’s judgment or decree follows logically from, and is supported by, the evidence” and such findings “should be sufficiently detailed and include enough subsidiary facts to disclose the steps by which the ultimate conclusion on each factual issue was reached.” Armed Forces Ins. Exch. v. Harrison, 2003 UT 14, ¶ 28, 70 P.3d 35 (cleaned up). Moreover, when it comes to the “unequal division of marital property,” a district court must “memorialize[] in . . . detailed findings the exceptional circumstances supporting the distribution.” Bradford v. Bradford, 1999 UT App 373, ¶ 27, 993 P.2d 887 (cleaned up). “Without adequate findings detailing why [one spouse] should be entitled to such an unequal split of the marital estate, we cannot affirm the court’s award.” Fischer v. Fischer, 2021 UT App 145, ¶ 29, 505 P.3d 56; see, e.g.Rothwell v. Rothwell, 2023 UT App 50, ¶ 57, 531 P.3d 225 (concluding that “we simply do not have enough information” to rule on whether the funds were marital or separate, “let alone to conclude that the district court

. . . erred”).

¶41      We face the same dilemma here. The district court made no findings as to how Richard spent the $30,000. The written ruling merely states, “In June 2019, [Richard] withdrew $30,000 from the joint account without [Susan’s] knowledge or consent and deposited it into his own personal account.” “We will not imply any missing finding where there is a matrix of possible factual findings and we cannot ascertain the trial court’s actual findings.” Hall v. Hall, 858 P.2d 1018, 1025–26 (Utah Ct. App. 1993). Without “adequate findings” on whether Richard used the funds for marital expenses or not, “we cannot affirm,” nor properly review, the court’s decision to offset the $30,000 against Richard in its division of the marital estate. See Fischer, 2021 UT App 145, ¶ 29. Therefore, we vacate this portion of the decision and remand the matter to the district court for it to enter findings on how the funds were spent.

CONCLUSION

¶42 The district court did not abuse its discretion when it excluded Richard’s exhibits for failure to comply with rule 26(a)(5) of the Utah Rules of Civil Procedure. The district court also did not err in its conclusion that Richard failed to meet the burden of proof for his dissipation claim nor did it abuse its discretion in how it divided the marital estate with respect to Mooring Drive and the Harley-Davidson. We vacate the district court’s decision to offset the $30,000 against Richard when it divided the marital estate and remand the matter for the district court to enter additional findings and to alter its conclusion as may be necessary.


[1] Because the parties share the same surname, we refer to them by their first names, with no disrespect intended by the apparent informality.

[2] Susan invites us to join some other states in drawing a bright-line rule concerning the timing of a dissipation claim and limit pre-separation dissipation claims to those occurring (1) in contemplation of divorce or separation or (2) when the marriage is in serious jeopardy or undergoing an irretrievable breakdown. Under our caselaw, the district court is empowered to consider the “timing of the challenged actions in relation to the separation and divorce” as one of several factors when determining “whether a party should be held accountable for the dissipation of marital assets.” Marroquin v. Marroquin, 2019 UT App 38, ¶ 33, 440 P.3d 757 (cleaned up). We see no need to alter this approach. Assessing timing as one factor among many provides the greatest flexibility to the district court to consider all the circumstances in a particular case, and we believe the district court is in the best position to evaluate the importance of such evidence on a case-by-case basis.

[3] Because the district court directed the parties to submit proposed findings of fact and conclusions of law in lieu of closing arguments, Richard’s argument was preserved for our review.

[4] Indeed, in its oral ruling, the court stated that Richard “lied to the Court about the purchase of the motorcycle.”

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Knight v. Knight – 2023 UT App 86 – trusts and alimony

Knight v. Knight – 2023 UT App 86

THE UTAH COURT OF APPEALS

JARED M. KNIGHT,

Appellee,

v.

REBECCA B. KNIGHT,

Appellant.

Opinion

No. 20210080-CA

Filed August 10, 2023

Third District Court, Salt Lake Department

The Honorable Robert P. Faust

No. 184902185

Julie J. Nelson, Taylor Webb, and Stephen C. Clark,

Attorneys for Appellant

Bart J. Johnsen and Alan S. Mouritsen,

Attorneys for Appellee

JUDGE DAVID N. MORTENSEN authored this Opinion, in which

JUDGES RYAN D. TENNEY and AMY J. OLIVER concurred.

MORTENSEN, Judge:

¶1        After a trial on cross-petitions, the district court entered

findings of fact and conclusions of law and a final decree divorcing Rebecca and Jared Knight. Rebecca[1] appeals several aspects of the divorce decree, including the court’s determination that she had no interest in a trust Jared’s father established before the marriage and several of the court’s calculations related to alimony. We affirm the district court’s ruling with respect to Jared’s trust, and we affirm in part and reverse in part with respect to the alimony calculations.

BACKGROUND

¶2        In October 1994, Jared’s father, L. Randy Knight, created the RKF Jared M. Knight Trust (the Trust), an irrevocable trust. Randy named Jared as the sole beneficiary of the Trust and transferred a significant interest in RKF, LLC—an Arizona limited liability company formed in 1994 by Randy—to the Trust. The trust agreement for the Trust (Trust Agreement) specified that the Trust would be governed by Arizona law. The Trust Agreement also contained a “spendthrift provision” declaring that Jared lacked the “right to assign, transfer, encumber, or hypothecate his . . . interest in the principal or income of the [T]rust in any manner.” Additionally, the Trust Agreement granted Jared a power of withdrawal over the Trust principal such that Jared could withdraw up to one-fourth of the principal at age 30 (June 2002), up to one-third of the principal at age 35 (June 2007), and all the principal at age 40 (June 2012). To exercise this power, Jared would need to make “a request in writing.”

¶3        In October 1995, Jared and Rebecca were married. During their marriage, the parties enjoyed a lavish lifestyle funded, in part, by the wealth of Jared’s family.

¶4        In March 2008, Rebecca and Jared executed a “Property Agreement” (the Property Agreement), which stated, “All property which is now owned by JARED or by REBECCA, individually, . . . is hereby declared to be, and hereby is, the community property of JARED and REBECCA.” The Property Agreement specified that “to the extent necessary, JARED and REBECCA each hereby gives, grants, conveys and assigns to the other an interest in his or her property . . . so as to transmute[2] such property into the community property of JARED and REBECCA.” The Property Agreement further declared, “All property hereafter acquired by JARED and REBECCA, or either of them, . . . shall be deemed to be, and hereby declared to be, the community property of JARED and REBECCA.” However, the Property Agreement carved out an exception: “Notwithstanding the foregoing, any property received by JARED and REBECCA by gift or inheritance after the date of this [Property] Agreement shall be the sole and separate property of the person receiving it, unless that person declares otherwise in writing.” The Property Agreement is, like the Trust, governed by Arizona law.

¶5        In 2016, the Trust was decanted[3] into a new trust. The new trust named Jared as sole initial trustee and therefore permitted Jared to distribute to himself, “upon his written request, up to the balance of the principal of his trust at any time.”

¶6        In April 2018, Jared filed for divorce. Rebecca ultimately filed an amended counterclaim alleging that the principal of the Trust was marital property and therefore subject to equitable distribution under the terms of the Property Agreement.

¶7        Jared filed a motion for partial summary judgment on this point, arguing that the Property Agreement “did not transmute assets held by the [Trust]” into marital property. Jared asserted that the Property Agreement did not apply to the Trust because, at the time he entered into the Property Agreement, he did not own the Trust principal under Arizona law. He pointed to the statute in effect in 2008—the year the parties entered into the Property Agreement—which stated that “if the trust instrument provides that a beneficiary’s interest in principal is not subject to voluntary or involuntary transfer, the beneficiary’s interest in principal shall not be transferred.” Ariz. Rev. Stat. Ann. § 14­7702(a) (2008). The statute further specified that a court may not order the satisfaction of a money judgment against a beneficiary until “[a]fter an amount of principal becomes immediately due and payable to the beneficiary.” Id. § 14-7702(b). It explained that “[i]f an amount of principal is due and payable only at a future date, or only on the occurrence of a future event, whether the occurrence of that event is within the control of the beneficiary, the amount of the principal is not immediately due and payable to the beneficiary.” Id. Jared asserted that the Trust’s “disbursement mechanism squarely fit[] within the framework of Arizona Revised Statute Section 14-7702(B) as it was written in 2008” because the Trust’s requirement that Jared submit a written request for disbursement of the Trust principal rendered the principal “not immediately due and payable.” See id. And Jared argued that, because he never submitted a written disbursement request or withdrew any principal of the Trust, “[a]s a matter of Arizona law as it existed at the time that the Property Agreement was executed in 2008, no amount of the Trust principal is ‘now owned’ or ‘hereafter acquired’” by Jared, so the Property Agreement did not apply to the Trust.

¶8        Rebecca opposed Jared’s motion and filed her own motion for partial summary judgment. Rebecca argued that Jared’s beneficial interest in the Trust was a property interest that Jared owned at the time of the Property Agreement. She also asserted that Jared’s power of withdrawal gave him an ownership interest in the Trust principal that he was eligible to withdraw as of the date of the Property Agreement. She said, “Consistent with the common understanding of ‘property’ as comprising a set of rights (a ‘bundle of sticks’ in the law-school formulation), if among those rights a person has the right to control the disposition of an asset, that asset is his property, and he has ownership of the property.” Rebecca further avowed that “[t]he Arizona statute on which Jared relies . . . has nothing to do with the question before this [c]ourt” because it applies to “the rights of ‘creditors’ to access property held in trust for a beneficiary when the trust features a ‘spendthrift’ clause” and Rebecca was not a creditor. Accordingly, Rebecca claimed that the Trust’s spendthrift clause “did not limit Jared’s ability to transmute his property interest in the Trust or its underlying assets into community property, and he plainly did so by signing the Property Agreement.” Rebecca argued that the Restatement (Third) of Trusts instead applied and made it “clear that trust assets subject to an exercisable power of withdrawal are ‘property.’” (Citing Restatement (Third) of Trusts § 56 cmt. b. (Am. L. Inst. 2003) (“Trust property subject to a presently exercisable general power of appointment (a power by which the property may be appointed to the donee, including one in the form of a power of withdrawal), because of the power’s equivalence to ownership, is treated as property of the donee.” (emphasis added))).

¶9        The court denied Rebecca’s motion for partial summary judgment and granted Jared’s. The court reasoned that “the legal position taken in [t]he Restatement (Third) of Trusts § 56 was not the law in Arizona until 2009, when it [was] partially codified as part of the Arizona Trust Code,” and it rejected Rebecca’s argument that “the spendthrift clause specifically disengages for purposes of the exercise of a power of withdrawal [and] expressly allows a trustee to transfer withdrawn property to a beneficiary.” The court determined, instead, that Arizona Revised Statutes section 14-7702 applied because—regardless of whether Rebecca was a “creditor”—“that statute . . . define[d] when an amount is due and payable and separately define[d] the rights of creditors.”

Accordingly, the court concluded that “[n]o amount of the Trust principal is due or payable within the meaning of that statute, and it is therefore protected against . . . the disbursement sought by [Rebecca].” The court thus ruled that because Jared’s interest in the Trust principal was “not subject to voluntary or involuntary transfer,” see Ariz. Rev. Stat. Ann. § 14-7702(a) (2008), it could not be transferred through the Property Agreement.

¶10 The parties then proceeded to trial on the other issues involved in their divorce, including distribution of the marital estate and alimony. The district court entered its order, later entering its findings of fact and conclusions of law and issuing the divorce decree. As relevant to this appeal, in its alimony calculations, the court made several reductions to Rebecca’s claimed expenses.

¶11      First, the court made several modifications to the expenses Rebecca submitted related to home maintenance. The court eliminated the snow removal expense of $175 per month, stating, “The parties never paid for snow removal during the marriage[,] and this expense was not part of the marital [lifestyle].” It eliminated the monthly “[p]ool/[s]pa maintenance” expense of $373.33, reasoning that “[t]he parties did not have pool maintenance expense[s] during the marriage as the pool was maintained by the parties” and “[t]his new expense was only incurred after separation and because [Rebecca] is not cleaning the pool despite acknowledging she is capable of doing so.” And it eliminated the monthly landscaping expense of $414.66 because “[t]his was not an expense that was incurred during the marriage as the yard work was done by the parties themselves.” It continued, “[Rebecca] further acknowledged that she is capable of yard work. Also, [Jared] has not requested that he [have] third parties do his yard maintenance.”

¶12      Next, the district court modified several of Rebecca’s expenses related to health and personal care. It reduced Rebecca’s health care insurance expense from $757 per month to $411 per month, explaining,

[Rebecca] is not incurring this expense but is covered under the parties’ current policy. In addition, no written evidence was provided as to the costs for health care coverage for [Rebecca]. [Rebecca] acknowledged the $757 was for a policy with no deductibles[,] which is not the same level of policy the parties currently have in place, which has [an] $8,000 a year deductible. Further, the [c]ourt has received evidence in other cases that health care coverage for a single person can be obtained in the $400 to $500 a month range. Therefore, the [c]ourt adjusts [Rebecca’s] coverage to be consistent with [the] current known expense of health care of the parties and which [Jared] established at $411 a month.

The court also reduced Rebecca’s expense for personal grooming from $949.83 per month to $500 a month. It stated,

[Rebecca’s] evidence of getting a haircut twice a year and having her nails and eye lashes done monthly to every six (6) weeks did not establish this claimed and requested expense of $11,397.96 a year for personal expenses. [Jared] did not ask for any personal grooming as part of his expenses relating to the marital standard of living[,] and he [is] not getting the $500 [Rebecca] is being awarded.

¶13 Finally, the court made several adjustments to Rebecca’s claimed expenses related to savings. The court eliminated Rebecca’s “[s]avings [p]lan contribution” of $2,500 per month. The court explained,

[Rebecca] admitted that this amount was only an estimate on her part in that she thought the parties may have saved $30,000 a year. [Jared’s] testimony was the parties did not contribute to any savings plan for the parties in any amount on a monthly or regular basis. Rather, the parties would save money as they had it in differing amounts and when there were sufficient funds to purchase what they wanted, the parties would spen[d] the money on cars and other purchases. No savings program was done during the marriage. In addition, [Jared] has not requested a savings plan as part of his expenses, and he is entitled to the same marital standard as [Rebecca].

The court eliminated “[r]etirement deposits” of $500 per month, stating,

The evidence adduced at trial established the parties never saved $500 a month for retirement. Further, [Jared] did not ask for retirement as part of his expenses relating to the marital standard of living[,] giving further credibility to this fact. The evidence was any retirement amounts for the parties was only set aside and deposited in three (3) of the twenty-seven (27) years of marriage.

The court eliminated Rebecca’s “additional capital/investment funds” of $7,279 monthly because “[t]he testimony and evidence established there never was any such capital or investment funds like this during the marriage. Further, no testimony was provided as to how this figure was arrived at to be claimed in the first place.” The court declared that “[t]his is simply a request, which is unfounded and which the [c]ourt finds is an attempt to inflate [Rebecca’s] expenses.”

¶14      Rebecca now appeals.

ISSUES AND STANDARDS OF REVIEW

¶15 Rebecca presents three issues on appeal. First, she asserts that “the district court erred when it determined, on summary judgment, that Rebecca had no interest in [the] Trust.” “When an appellate court reviews a district court’s grant of summary judgment, the facts and all reasonable inferences drawn therefrom are viewed in the light most favorable to the nonmoving party, while the district court’s legal conclusions and ultimate grant or denial of summary judgment are reviewed for correctness.” Massey v. Griffiths, 2007 UT 10, ¶ 8, 152 P.3d 312 (cleaned up).

¶16 Second, Rebecca argues that even “if the district court’s interpretation and application of Arizona law to the Trust and the Property Agreement were correct, it nonetheless abused its discretion when it refused to divide the Trust on equitable grounds.” “District courts have considerable discretion concerning property distribution in a divorce[,] and we will uphold the decision of the district court unless a clear and prejudicial abuse of discretion is demonstrated.” Gerwe v. Gerwe, 2018 UT App 75, ¶ 8, 424 P.3d 1113 (cleaned up).

¶17      Third, Rebecca contends that “the district court erred in its calculation of alimony.” “A district court’s award of alimony is reviewed for abuse of discretion.” Id. ¶ 9. “Although trial courts have broad latitude in determining whether to award alimony and in setting the amount, and we will not lightly disturb a trial court’s alimony ruling, we will reverse if the court has not exercised its discretion within the bounds and under the standards we have set,” including if the court commits legal error. Bjarnson v. Bjarnson, 2020 UT App 141, ¶ 5, 476 P.3d 145 (cleaned up).

ANALYSIS

I. Rebecca’s Interest in the Trust

¶18      Rebecca argues that the district court erred in ruling that she was not entitled to an equitable share of the Trust. Rebecca first asserts that the court erred in applying the 2008 Arizona Trust Code (the 2008 Code) because the 2009 Arizona Trust Code (the 2009 Code) applied retroactively and indicated that Jared’s power of withdrawal gave him an ownership interest subject to transmutation under the Property Agreement. She also argues, alternatively, that even if the 2008 Code applies, Jared’s interest in the Trust was marital property. Jared counters that the 2008 Code applies, that his “interest in the Trust principal was bound by a valid spendthrift provision” at the time of the Property Agreement, and that it was therefore not transferrable through the Property Agreement.

¶19 We agree with Jared and uphold the district court’s decision on this issue. First, we conclude that the 2009 Code does not retroactively modify the nature of Jared’s interest in the Trust at the time of the Property Agreement.[4] Even if application of the 2009 Code would have the effect Rebecca claims, we cannot apply that version of the code.

¶20      Arizona law indicates that “beginning on January 1, 2009[,] . . . [the 2009 Code] applies to all trusts created before, on or after January 1, 2009.” Act of Dec. 31, 2008, ch. 247 § 18(A)(1), 2008 Ariz. Sess. Laws 1179, 1179 (2nd Reg. Sess.). The parties entered the Property Agreement in March 2008. Because this date predates January 1, 2009, the 2009 Code had not taken effect at the time the parties signed the Property Agreement and therefore had no application to the Trust. Indeed, the Arizona Legislature did not leave this point ambiguous but rather included a specific provision stating that “[a]n act done before January 1, 2009[,] is not affected by this act.” Id. Arizona caselaw has interpreted this exception to mean that the preexisting law governed until January 1, 2009. See Favour v. Favour, No. 1 CA-CV 13-0196, 2014 WL 546361, ¶ 30 (Ariz. Ct. App. Feb. 11, 2014) (stating that a previous statute “governs actions taken by a trustee prior to implementation of the Arizona Trust Code . . . on January 1, 2009,” and that the earlier statute “recognized the trustee’s investment and management authority,” so “as a matter of law, [the trustee] had the authority to invest, trade, diversify, and manage trust assets prior to January 1, 2009” (cleaned up)); In re Esther Caplan Trust, 265 P.3d 364, 366 (Ariz. Ct. App. 2011) (“The past principal distributions are not governed by [the 2009 Code]. That statute became effective after the challenged distributions were made. The predecessor statute . . . merely required a trustee to keep the beneficiaries of the trust reasonably informed of the trust and its administration. The record establishes that [the appellee] complied with these relatively minimal requirements.” (cleaned up)).

¶21      Accordingly, at the time the parties signed the Property Agreement, the 2008 Code was in effect. If the parties had signed the Property Agreement on, say, January 2, 2009, the 2009 Code could retroactively apply to the Trust—though it was created in 1994—to govern its terms. But because the Property Agreement was signed before the 2009 Code went into effect, the 2009 Code’s retroactivity provision also had no effect. Therefore, Jared’s interest in the Trust for the sake of the Property Agreement was whatever existed under the 2008 Code, and any restrictions of the Trust as of March 2008 had full effect and were not modified by the 2009 Code. Put another way, Jared could not give an interest in property in 2008 that he did not have the right to transfer.

¶22 Under the 2008 Code, the Trust’s spendthrift provision prevented Jared from transmuting his interest in the Trust into marital property.[5] The 2008 Code specified that “if [a] trust instrument provides that a beneficiary’s interest in principal is not subject to voluntary or involuntary transfer, the beneficiary’s interest in principal shall not be transferred.” Ariz. Rev. Stat. Ann. § 14-7702(a) (2008). The Trust was subject to a spendthrift provision, declaring that Jared lacked the “right to assign, transfer, encumber, or hypothecate his . . . interest in the principal or income of the [T]rust in any manner.” Consequently, Jared’s interest in the Trust was “not subject to voluntary or involuntary transfer,” so his interest was not eligible for transfer. See id.see also In re Indenture of Trust Dated Jan. 13, 1964, 326 P.3d 307, 312 (Ariz. Ct. App. 2014) (“A valid spendthrift provision makes it impossible for a beneficiary to make a legally binding transfer.” (emphasis added) (cleaned up)).

¶23      In an effort to avoid the restrictive effect of the Trust’s spendthrift provision, Rebecca argues that “[t]ransmuting property is distinct from transferring property” and therefore “Jared did not transfer any interest” when he allegedly transmuted his interest in the Trust through the Property Agreement. Citing State ex rel. Industrial Commission of Arizona v. Wright, 43 P.3d 203 (Ariz. Ct. App. 2002), Jared responds that Arizona caselaw rejects this argument:

[In Wright], the court explained that the term “transfer” “includes any transaction in which a property interest was relinquished.” Because transmuting a property interest from separate property to community property surrenders the transferor’s entitlement to half of his or her separate property, the court reasoned, such a transmutation qualifies as a “transfer” of that property.

(Citations omitted.) Rebecca responds that the holding of Wright applies “only in the specific context of the Uniform Fraudulent Transfers Act.”

¶24 In Wright, the Arizona Court of Appeals considered a premarital agreement that was fraudulently modified after a husband fell subject to a workers’ compensation claim. Id. at 204. The modification stated that separate earnings would be community property, thus attempting to evade a judgment against the husband’s earnings. Id. The court held that the transmutation of the husband’s earnings constituted a transfer under the Uniform Fraudulent Transfers Act:

Before the modification, [the husband] held a sole interest in the entirety of his future earnings. The effect of the modification was to transfer that entire interest to the community. [The wife] would have a right to dispose of those earnings now dedicated to the community that she did not have when they were [the husband’s] separate property. Additionally, upon dissolution of marriage, [the husband] would have surrendered all entitlement to half of those earnings. Hence, [the husband] has transferred an asset within the meaning of [the Uniform Fraudulent Transfers Act].

Id. at 205. While the Wright court did conclude that the parties’ actions satisfied the broad statutory definition of a transfer under the Uniform Fraudulent Transfers Act, see id., and while Rebecca is correct that the Uniform Fraudulent Transfers Act is not at issue here, the court’s analysis is still useful. If we accept Rebecca’s argument that the Property Agreement transmuted Jared’s interest in the Trust, then—like in Wright—before the Property Agreement, Jared’s interest in the Trust was solely his and the Property Agreement served to “transfer that entire interest to the community.” See id. And upon divorce, Jared “would have surrendered all entitlement to half of” his interest in the Trust. See id. Accordingly, while we are not applying the definition of “transfer” from the Uniform Fraudulent Transfers Act, we conclude that a transmutation here would have been a transfer. In terms of the bundle of sticks formulation that Rebecca referenced in her motion for partial summary judgment, Jared would be giving Rebecca access to and an interest in whatever sticks he was holding at the time he signed the Property Agreement—sticks that she did not previously hold.[6]

¶25      Our conclusion that Jared’s purported transmutation of the Trust into marital property would have constituted a transfer is supported by the language of the Property Agreement itself. The Property Agreement indicated that “to the extent necessary, JARED and REBECCA each hereby gives, grants, conveys and assigns to the other an interest in his or her property . . . so as to transmute such property into the community property of JARED and REBECCA.” (Emphasis added.) This language belies Rebecca’s argument that the transmutation only changed the nature of—but did not affect a transfer of—Jared’s interest. And this language also runs up against the language in the Trust’s spendthrift provision forbidding Jared from “assign[ing], transfer[ing], encumber[ing], or hypothecat[ing] his . . . interest in the principal or income of the [T]rust in any manner.” Accordingly, we agree with the district court that the Property Agreement had no effect on the Trust and that, therefore, Rebecca does not have a legally cognizable interest in the Trust.

II. Equitable Grounds for Dividing the Trust

¶26 Rebecca contends, alternatively, that “[r]egardless of whether the Property Agreement granted Rebecca a legally cognizable interest in the Trust itself, the district court was required to consider the Trust as part of the marital property for the sake of equity.” She asserts that “[d]istrict courts must equitably divide the marital estate” and quotes Dahl v. Dahl, 2015 UT 79, 459 P.3d 276, for the propositions that “Utah law presumes that property acquired during a marriage is marital property subject to equitable distribution” and “[t]o the extent that the Trust corpus contains marital property, Utah has a strong interest in ensuring that such property is equitably divided in the parties’ divorce action.” Id. ¶ 26. Rebecca points us to Endrody v. Endrody, 914 P.2d 1166 (Utah Ct. App. 1996), in which a husband’s parents had established a trust after the parties were married and had named the wife as one of the beneficiaries. Id. at 1167–68. This court affirmed a district court’s ruling that the trust assets were not available for distribution as marital assets but that the husband’s shares in the trust were marital property, an equitable share of which should be placed in a constructive trust for the wife’s benefit. Id. at 1170. Rebecca concludes, “In short, Jared’s interest in the Trust was marital property. And even if the Trust assets were not available for distribution, the court was required to consider the Trust as part of the marital property for equitable purposes.”

¶27      Rebecca’s argument misses the mark. We have concluded, as did the district court, that Jared’s interest in the Trust was not marital property or part of the marital estate subject to distribution. This is a distinct conclusion from one stating that trust funds are marital property but the trust principal is not available for distribution. Therefore, caselaw addressing equitable distribution of trust funds that are marital property is inapposite. And Rebecca provides no support for the position that she should be awarded an equitable portion of the value of the Trust’s principal despite a holding that she is not entitled to any portion of Jared’s interest in the Trust.[7] Accordingly, we uphold the district court’s decision that Rebecca is not entitled to any portion of or equivalent sum for Jared’s interest in the Trust.

III. Alimony

¶28      Rebecca next contends that the court erred in its alimony calculations when it made several deductions to Rebecca’s claimed expenses. Rebecca insists that she “does not raise a factual challenge” but instead “challenges the district court’s method of reduction and justification for doing so.” She asserts that the district court “misconstrued Utah law” when it adjusted her expenses.

¶29 Under Utah law, courts must consider in alimony determinations the factors listed in Utah Code section 30-3-5, including “(i) the financial condition and needs of the recipient spouse; (ii) the recipient’s earning capacity or ability to produce income, including the impact of diminished workplace experience resulting from primarily caring for a child of the payor spouse; [and] (iii) the ability of the payor spouse to provide support.” Utah Code § 30-3-5(10)(a); see also Jones v. Jones, 700 P.2d 1072, 1075 (Utah 1985); English v. English, 565 P.2d 409, 411–12 (Utah 1977). “An alimony award should also advance, as much as possible, the primary purposes of alimony.” Rule v. Rule, 2017 UT App 137, ¶ 14, 402 P.3d 153 (cleaned up). Alimony is intended “(1) to get the parties as close as possible to the same standard of living that existed during the marriage; (2) to equalize the standards of living of each party; and (3) to prevent the recipient spouse from becoming a public charge.” Jensen v. Jensen, 2008 UT App 392, ¶ 9, 197 P.3d 117 (cleaned up).

¶30      We have previously explained,

Alimony is not limited to providing for only basic needs but should be fashioned in consideration of the recipient spouse’s station in life in light of the parties’ customary or proper status or circumstances, with the goal being an alimony award calculated to approximate the parties’ standard of living during the marriage as closely as possible.

Rule, 2017 UT App 137, ¶ 14 (cleaned up); see also Davis v. Davis, 749 P.2d 647, 649 (Utah 1988) (“The ultimate test of the propriety of an alimony award is whether, given all of these factors, the party receiving alimony will be able to support him- or herself as nearly as possible at the standard of living enjoyed during marriage.” (cleaned up)); Savage v. Savage, 658 P.2d 1201, 1205 (Utah 1983) (“One of the chief functions of an alimony award is to permit the parties to maintain as much as possible the same standards after the dissolution of the marriage as those enjoyed during the marriage.”). And “in terms of alimony, the marital standard of living analysis is about whether the parties’ proposed points of calculation are consistent with the parties’ manner of living and financial decisions (i.e., the historical allocation of their resources).” Mintz v. Mintz, 2023 UT App 17, ¶ 24, 525 P.3d 534, cert. denied, 523 P.3d 730 (Utah 2023).

A.        Home Maintenance

¶31      Rebecca alleges that the district court improperly reduced her claimed expenses related to home maintenance, including expenses for snow removal, pool and spa maintenance, and landscaping. She argues that Jared took care of these tasks during the marriage and she should now be compensated for the cost of hiring other individuals to accomplish these tasks. In her words, “Rebecca’s marital standard of living was that someone else did the pool maintenance, snow removal, and landscaping. Since that person has moved out, she is left without the standard of living to which she was accustomed.”

¶32 Rebecca’s argument on this point is fatally flawed. A court’s inquiry in evaluating historical expenses to determine alimony involves the marital standard of living—not a separate standard of living for each person within the marriage. See Davis, 749 P.2d at 649 (describing “the standard of living enjoyed during marriage” (cleaned up)); Rule, 2017 UT App 137, ¶ 14 (considering “the parties’ standard of living during the marriage” (cleaned up)); Jensen, 2008 UT App 392, ¶ 9 (discussing the “standard of living that existed during the marriage” as one but the “the standards of living of each party” after divorce as two (cleaned up)). The marital standard of living is that which the parties shared, and courts consider the parties as a single unit when evaluating that standard. We can only imagine the chaos that would ensue if divorcing partners could expense every task their former spouses previously performed.[8] Instead, we reemphasize that “in terms of alimony, the marital standard of living analysis is about whether the parties’ proposed points of calculation are consistent with the parties’ manner of living and financial decisions (i.e., the historical allocation of their resources).” Mintz, 2023 UT App 17, ¶ 24. Rebecca admits that the couple did not historically allocate funds to these expenses while the parties were married, so they cannot be considered part of the marital standard of living. And the court found as much, stating, “[t]he parties never paid for snow removal during the marriage[,] and this expense was not part of the marital [lifestyle]”; “[t]he parties did not have pool maintenance expense[s] during the marriage as the pool was maintained by the parties”; and landscaping “was not an expense that was incurred during the marriage as the yard work was done by the parties themselves.” Therefore, the court was correct in reducing Rebecca’s claims for these categories when calculating her expenses for the sake of alimony.[9]

¶33 However, Rebecca did provide evidence that the parties had historically paid some amount for bark replacement and lawn aeration. In a financial declaration, she listed a monthly expense of $126.66 for “[b]ark for the year,” and she indicated that “[t]his [was] based on an actual historical expense of $3,040.00 every 2 years.” She also listed a monthly expense of $5 for aerating and stated that “[t]his [was] based on an actual historical expense of $30 paid twice per year.” Additionally, she testified that the parties had historically replaced bark and that doing so was “quite costly.”[10] Jared, in a memorandum submitted to the court, admitted that bark was an expense that the parties had previously paid and did not contest the aerating expense. Therefore, the costs associated with bark replacement and lawn aeration were part of the marital standard of living such that they were not properly excluded from consideration in the court’s alimony calculations. Accordingly, because the facts are otherwise undisputed on this issue, we reverse on this point and instruct the court to enter expenses for Rebecca of $5 per month for lawn aeration and $126.66 per month for bark replacement.

B.        Health and Personal Care

1.         Health Insurance

¶34      Rebecca asserts that the district court abused its discretion in reducing her claimed expense for health insurance. At trial, she informed the court that she was still on Jared’s family’s health insurance plan but explained her claimed cost of $757 monthly: “This was a quote that I sought out. . . . It does not have any deductible. . . . [H]istorically our deductible [was] put on an HSA card that was covered by the Knight Group.” Both parties agreed that the historical deductible, which had been paid by the Knight Group, was around $8,000.

¶35 The court reduced Rebecca’s health insurance expense to $411 per month, the number Jared gave as the historical amount the parties paid for health care services through an HSA card. The court explained, “[N]o written evidence was provided as to the costs for health care coverage for [Rebecca]. [Rebecca] acknowledged the $757 was for a policy with no deductibles[,] which is not the same level of policy the parties currently have in place, which has [an] $8,000 a year deductible.” The court indicated that its adjustment was “consistent with current known expense[s] of health care of the parties and which [Jared] established at $411 a month.”

¶36 This conclusion was in keeping with the court’s determination that monetary support from the Knight family qualified as gifts and could not be considered in determining the marital standard of living or the parties’ expenses. It noted, “[I]n this case . . . a large portion of these things the parties were enjoying was the result of the generosity and the benefits of others. When there’s . . . no guarantee or no requirement to have those additional funds come in . . . to have this lifestyle, you know, they’re not going to be able to have it.” The court again said, “You can’t count gifts . . . that were given at the discretion of other individuals to say you’re entitled to continue to receive those gifts and have those funds coming in to you to maintain a standard of living that you may have [had] when you received those gifts . . . .”

¶37 The court’s stance on this issue is correct: the gifts from Jared’s family, despite being a regular feature of the marriage, may not be properly considered in calculating Rebecca’s needs or Jared’s ability to pay alimony. See Utah Code § 30-3-5(10)(a). The alimony factors refer only to the finances of the spouses, not those of outside parties. Id.see also Jones v. Jones, 700 P.2d 1072, 1075 (Utah 1985). Additionally, we have enunciated previously that past gifts are not to be considered in the alimony calculus: “[T]he court could not base its prospective order on past gifts that have no assurance of being continued because [a donor] has no legal obligation to continue providing the monetary support that she has in the past.” Issertell v. Issertell, 2020 UT App 62, ¶ 26, 463 P.3d 698.

¶38      Accordingly, the court did not abuse its discretion when it determined that Rebecca did not provide qualifying evidence of her future health insurance expenses because she submitted only a quote for a plan without a deductible. The parties both testified that they had a deductible during the marriage, and Rebecca is not entitled to a health insurance plan better than the one the parties had during the marriage. The fact that the parties’ deductible was historically paid by the Knight Group does not impact our analysis because those payments were “past gifts that have no assurance of being continued because [the Knight Group] has no legal obligation to continue providing the monetary support that [it] has in the past.” See id. And without evidence from Rebecca on which it could rely, the court did not abuse its discretion in accepting the amount Jared put forth as the parties’ historical health insurance cost.[11] See Sauer v. Sauer, 2017 UT App 114, ¶ 10, 400 P.3d 1204 (“Once the court determined that there was no evidence that was both credible and relevant regarding [the recipient spouse’s] reasonable housing needs, it was appropriate for the court to impute a reasonable amount based on other evidence provided by the parties. . . . We therefore see no impropriety in the trial court’s decision to impute housing needs to [the recipient spouse] in the same amount as [the payor spouse] had claimed was reasonable . . . .”). We affirm on this point.

2.         Personal Grooming

¶39      Rebecca also asserts that the court abused its discretion in reducing Rebecca’s claimed expense for “personal grooming.” The court stated that it was “reduc[ing] personal grooming by $449.83, from $949.83 to $500 a month,” because Rebecca’s “evidence of getting a haircut twice a year and having her nails and eye lashes done monthly to every six (6) weeks did not establish this claimed and requested expense of $11,397.96 a year for personal expenses.” The court also stated that Jared “did not ask for any personal grooming as part of his expenses relating to the marital standard of living[,] and he was not getting the $500 [Rebecca was] being awarded.”

¶40 Rebecca takes issue with the court’s findings and reasoning, asserting,

[T]his was not the evidence. She testified that she gets her eyelashes and nails done every two weeks, not “monthly to every six (6) weeks.” She testified that in addition to getting her hair cut, she also gets a perm. She testified that she gets a full body wax. She also testified that she has costs for “toenails.” She also testified that she has “maintenance” costs. She stated that to reach this number she “went through [her] credit card statements and added up for a year’s worth of” these expenses. She testified that “obviously this is historically . . . what I spent.”

Opposing counsel did not dispute Rebecca’s expenses, but simply opined that he thought “the maximum would be . . . $500 a month. $6000 a year for personal grooming is quite a nice budget.” But what opposing counsel thinks qualifies as “quite a nice budget” is not the test in Utah. Instead, the test is the marital standard of living, and Rebecca’s testimony—unchallenged by contrary evidence— was that she spent $949.83 per month.

Second, the district court reduced Rebecca’s personal grooming expenses because Jared “did not ask for any personal grooming as part of his expenses relating to the marital standard of living and he was not getting the $500 [Rebecca] is being awarded.” That is irrelevant. If Jared spends nothing on personal grooming, or if he has no monthly expenses because the Knight family pays for them all, that does not mean that Rebecca’s estimated expenses are inaccurate.

¶41      We agree with Rebecca on all fronts. The court would have acted within its discretion if it had found Rebecca’s evidence unreliable or had determined that Rebecca’s claimed expenses were unreasonable in light of the couple’s marital standard of living. See Woolums v. Woolums, 2013 UT App 232, ¶ 10, 312 P.3d 939 (“The district court’s evaluation of and reliance on [one spouse’s] testimony, along with its own determinations of the reasonableness of the claimed expenses, fell squarely within its broad discretion to determine an appropriate alimony award.”). But that is not what it did. It disregarded Rebecca’s evidence of historical spending and substituted a figure provided by Jared’s counsel with no evidentiary basis. Jared’s counsel’s thoughts on what makes “quite a nice budget” are irrelevant. The court’s inquiry should have been rooted in Rebecca and Jared’s marital standard of living, as indicated by their historical spending. See Mintz v. Mintz, 2023 UT App 17, ¶ 24, 525 P.3d 534, cert. denied, 523 P.3d 730 (Utah 2023).

¶42      A court’s inquiry into the marital standard of living must evaluate the specific circumstances of that couple, and expenses that are unreasonable in light of one couple’s marital standard of living may be reasonable in light of another couple’s marital standard of living. “Indeed, we have explained that alimony is not limited to providing for only basic needs but should be fashioned in consideration of the recipient spouse’s station in life in light of the parties’ customary or proper status or circumstances.” Rule v. Rule, 2017 UT App 137, ¶ 14, 402 P.3d 153 (cleaned up). And “the goal” of the inquiry is “an alimony award calculated to approximate the parties’ standard of living during the marriage as closely as possible.” Id.see also Davis v. Davis, 749 P.2d 647, 649 (Utah 1988) (“The ultimate test of the propriety of an alimony award is whether, given all of these factors, the party receiving alimony will be able to support him- or herself as nearly as possible at the standard of living enjoyed during marriage.” (cleaned up)); Savage v. Savage, 658 P.2d 1201, 1205 (Utah 1983) (“One of the chief functions of an alimony award is to permit the parties to maintain as much as possible the same standards after the dissolution of the marriage as those enjoyed during the marriage.”). Rebecca testified that the marital standard of living included significant spending on her personal grooming. The court acted improperly when it discarded this evidence and substituted another amount without properly concluding that Rebecca’s evidence was inadequate or her expenses were unreasonable in light of the marital standard of living.

¶43      It was also improper for the court to base its determination, in part, on Jared’s lack of submission for this budget line item. There is no need for courts to limit one party’s expenses to those the other party also claims. See Utah Code § 30-3-5(10)(a) (including as a factor in determining alimony “the financial condition and needs of the recipient spouse”). In fact, doing so increases the risk of gamesmanship between the parties. There is already a risk that divorcing spouses may inflate their claimed expenses in an effort to sway the alimony calculation in their favor: payor spouses might attempt to minimize their ability to provide support by claiming high expenses, while recipient spouses might inflate their expenses to claim that their needs are great. See id. But limiting a recipient spouse’s potential expenses to only those categories claimed by the payor spouse dangerously alters this already-thorny calculation. In situations where a payor spouse’s ability to pay is unlikely to be an issue, the payor spouse would face a significant incentive to omit many expenses and thereby drastically reduce the receiving spouse’s needs. But the danger is not just in these situations. In any case, a payor spouse would be incentivized to identify categories for which the recipient spouse would likely have higher expenses and omit those. In other words, payor spouses could significantly undercut alimony awards by strategically omitting expenses. Accordingly, we caution courts not to apply such faulty reasoning when calculating alimony. Instead, courts should base their findings on expenses that are reasonable in light of the couple’s unique marital standard of living. See Mintz, 2023 UT App 17, ¶ 24.

¶44      On this front, we clarify that a couple’s marital standard of living may include disparate spending by the parties on various categories during the marriage. Throughout the marriage, one spouse may spend more—even significantly more—than the other on personal grooming, entertainment, travel, or any number of other expense categories. A partner may embrace the age-old adage’s modernized mantra of “happy spouse, happy house,” may derive independent pleasure from a spouse’s purchases, or may observe a spouse’s spending habits—whether for monthly follicle support treatments or Jazz tickets only one spouse actually uses—through gritted teeth. But for the sake of calculating alimony, we assume that the parties agreed on their household expenditures such that whatever was historically spent by the parties during the marriage constitutes the couple’s marital standard of living, even if the spending was lopsided—or, indeed, one-sided—within a given expense category. See Davis, 749 P.2d at 649; Rule, 2017 UT App 137, ¶ 14. Consequently, whether Jared truly spent nothing on personal grooming historically or he simply elected to omit his expenses in that category, the court erred in limiting its acceptance of Rebecca’s personal grooming expenses based on Jared’s lack of submission.

¶45      The court abused its discretion when it applied the wrong legal standard to Rebecca’s claimed expenses for personal grooming. Because the court did not find Rebecca’s evidence unreliable or determine that Rebecca’s claimed expenses were unreasonable in light of the couple’s marital standard of living, we reverse its decision on this point and instruct it to modify its findings to include the $949.83 per month consistent with the parties’ marital standard of living.

C.        Savings and Other Funds

1.         Savings Plan

¶46      Rebecca asserts that the court wrongfully entirely rejected her expense for a “[s]avings [p]lan” of $2,500 per month. First, she points to the court’s statement that “[Jared] has not requested a savings plan as part of his expenses, and he is entitled to the same marital standard as [Rebecca].” As we have discussed, such a consideration has no place in the alimony analysis under Utah law. Additionally, the court summarized the evidence related to a savings plan:

[Rebecca] admitted that this amount was only an estimate on her part in that she thought the parties may have saved $30,000 a year. [Jared’s] testimony was the parties did not contribute to any savings plan for the parties in any amount on a monthly or regular basis. Rather, the parties would save money as they had it in differing amounts and when there were sufficient funds to purchase what they wanted, the parties would spen[d] the money on cars and other purchases.

From this, the court concluded that “[n]o savings program was done during the marriage.” But in so concluding, the court misapplied Utah law on this subject.

¶47      In Mintz v. Mintz, 2023 UT App 17, 525 P.3d 534, cert. denied, 523 P.3d 730 (Utah 2023), we considered a similar question of whether “the district court erred in excluding from the alimony award an amount reflective of historical investment” where a couple had a habit of investing money “essentially as savings.” Id. ¶¶ 2, 16. There, the parties’ testimonies established that “[b]efore 2014, they made deposits into investment accounts ‘when money was left over after normal marital spending,’ and after 2014, they made direct deposits into investment accounts as part of [the husband’s] employment.” Id. ¶ 2. We reiterated that, in situations like these, “[t]he critical question is whether funds for post-divorce savings, investment, and retirement accounts are necessary because contributing to such accounts was standard practice during the marriage and helped to form the couple’s marital standard of living.” Id. ¶ 17 (quoting Bakanowski v. Bakanowski, 2003 UT App 357, ¶ 16, 80 P.3d 153). We noted that “when the Bakanowski court provided the test for appropriate consideration of savings, investment, and retirement accounts in alimony calculations, it cited” another case “in which the court reasoned that because the parties had made regular savings deposits, including savings in the alimony award could help maintain the recipient spouse’s marital standard of living.” Id. ¶ 18 (cleaned up). Then we clarified that “an event must certainly be recurring but need not be uniformly systematic to be considered ‘regular.’ Indeed, something can be done ‘regularly’ if done whenever the opportunity arises, though the actual time sequence may be sporadic.” Id. ¶ 19 (cleaned up). So, we explained,

Even if savings deposits and investments do not occur on an exact timetable, such marital expenditures can be considered a standard practice in those infrequent and unusual circumstances where a party can produce sufficiently persuasive evidence that savings deposits and investments were a recurring marital action whenever the opportunity arose, though the actual time sequence may be sporadic.

Id. ¶ 20 (cleaned up). And we concluded that the parties’ testimonies that they made substantial deposits into investment accounts “at least annually” “established that the parties followed a regular pattern, i.e., a standard practice, of investing a portion of their annual income.” Id. ¶ 21 (cleaned up).

¶48 We then considered the question of whether the parties’ standard practice of investing contributed to their marital standard of living, because “to justify an alimony award that includes an amount for investment, the parties’ acts of investing must also contribute to the ‘marital standard of living.’” Id. ¶ 22 (quoting Bukunowski, 2003 UT App 357, ¶ 16). We concluded that the parties’ standard practice of investing did contribute to their marital standard of living, so we remanded “the case to the district court to recalculate alimony based on the amount that the couple’s historical investment contributed to the marital standard of living.” Id. ¶ 28. The same is true for savings: a court must determine whether a couple’s standard practice of saving contributed to their marital standard of living to incorporate savings into an alimony award. See id.

¶49 Here, such a conclusion is less apparent from the district court’s findings than was true in Mintz. The court’s description of Rebecca’s testimony of annual savings and of Jared’s testimony that the parties would save to fund large purchases certainly suggests that savings may have been a standard practice during the marriage that contributed to the marital standard of living. See id. ¶¶ 20–22; Bukunowski, 2003 UT App 357, ¶ 16; Kemp v. Kemp, 2001 UT App 157U, paras. 3–4. But the court’s findings regarding the regularity of the couple’s savings habits are insufficient for us to hold that this standard is clearly met. Still, the court’s conclusion that “[n]o savings program was done during the marriage” does not clearly follow from its other findings, given our caselaw on this topic. The court’s focus strictly on monthly savings habits is myopic and at odds with precedent, and the court provides no explanation for its interpretation of Jared’s testimony that the parties did not save on a “regular basis.” Therefore, we conclude that the court exceeded its discretion on this matter insofar as it applied the incorrect legal standard. See Bjarnson v. Bjarnson, 2020 UT App 141, ¶ 5, 476 P.3d 145 (“We will reverse [an alimony award] if the court has not exercised its discretion within the bounds and under the standards we have set . . . .” (cleaned up)). We remand this matter for the court to make additional findings as to the regularity of the parties’ savings deposits. On remand, “the court should, as a legal matter, ensure it employs the correct legal definitions of standard practice and marital standard of living, apply the facts of [this] case to those definitions, and then determine whether the facts as found meet the criteria for a savings-based alimony award.” Mintz, 2023 UT App 17, ¶ 17.

2.         Retirement

¶50      Rebecca also asserts that the court erred in entirely rejecting her submitted expense for “[r]etirement deposits” of $500 per month. The court explained that “[t]he evidence adduced at trial established the parties never saved $500 a month for retirement. . . . The evidence was any retirement amounts for the parties was only set aside and deposited in three (3) of the twenty-seven (27) years of marriage.” The court again improperly discussed the point that “[Jared] did not ask for retirement as part of his expenses relating to the marital standard of living,” but rather than relying on this point to deny Rebecca’s claim for a retirement savings provision in the alimony award, the court stated that this point gave “further credibility to th[e] fact” that the parties did not regularly save for retirement. More importantly, and unlike for the savings category, the court’s conclusion that there was no standard practice of saving for retirement flows from its findings on the irregularity of the parties saving for retirement while married.

¶51 Furthermore, Rebecca does not argue on appeal that the court applied the wrong legal standard here. She explains that Jared did not submit a retirement expense because he “is worth literally millions of dollars and Rebecca, when she was married, also anticipated having millions of dollars available for retirement.” She argues that “[t]o even come close to approximating the marital standard of living, Rebecca must start to save for retirement.” But this is not in line with our caselaw. Again, we look to the parties’ “historical allocation of their resources” to determine their marital standard of living, id. ¶ 24, and Rebecca does not argue that the parties historically allocated their resources by saving regularly for retirement. Therefore, the court did not abuse its discretion in determining that saving for retirement was not a feature of the marital standard of living and, accordingly, removing that claimed expense when calculating alimony. We affirm on this point.

3.         Additional Capital/Investment Funds

¶52 Finally, Rebecca contends that the court was wrong to reject her expense for “additional capital/investment funds” of $7,279 monthly. The court did so because “[t]he testimony and evidence established there never was any such capital or investment funds like this during the marriage. Further, no testimony was provided as to how this figure was arrived at to be claimed in the first place.” The court declared that “[t]his is simply a request, which is unfounded and which the [c]ourt finds is an attempt to inflate [Rebecca’s] expenses.” Rebecca argues on appeal that this “is incorrect” and that her “[f]inancial [d]eclaration provide[d] a detailed explanation of how the figure was computed: ‘This is an amount based on funds the parties historically had available from [Jared’s] family wealth for discretionary investments . . . .’” This argument does not prevail. As we have explained, past gifts are excluded from the alimony calculus. See Issertell v. Issertell, 2020 UT App 62, ¶ 26, 463 P.3d 698. The funds that were historically available for investment were gifts, and as such, they are not properly considered as a standard practice contributing to the marital standard of living. See id.Mintz, 2023 UT App 17, ¶¶ 20–22. Therefore, the court was acting within its discretion as to this item, and we affirm its decision in this respect.

CONCLUSION

¶53      The district court did not err in determining that Rebecca had no interest in the Trust, and it did not abuse its discretion in deciding against dividing the Trust on equitable grounds. We affirm in this respect.

¶54 As to alimony, the court exceeded its discretion when it applied the wrong legal standard when calculating several of Rebecca’s expenses. Accordingly, we reverse the court’s decision with respect to Rebecca’s personal grooming expenses and the expenses associated with lawn aeration and bark replacement. We also remand the matter for further factual findings as to the regularity of the parties’ savings deposits and a determination of whether, applying the law correctly, the parties’ savings habits constituted a standard practice contributing to the marital standard of living. We affirm the remainder of the court’s alimony determinations.

 

Utah Family Law, LC | divorceutah.com | 801-466-9277

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Can a divorced spouse claim rights to a previous primary residence?

Can a divorced spouse claim rights to a previous primary residence?

A court can, in exceptional circumstances, award a spouse some or all of your premarital and separate property that is clearly not a marital asset. In the jurisdiction where I practice family law (Utah), the rule in caselaw is:

Dunn v. Dunn, 802 P.2d 1314 (Utah Ct.App. 1990):

The general rule is that equity requires that each party retain the separate property he or she brought into the marriage, including any appreciation of the separate property. Burt v. Burt, 799 P.2d 1166, 1168 (Utah Ct.App.1990) (separate property, in this case inherited property, includes “its appreciated value” during the marriage). Exceptions to this general rule include whether the property has been commingled, whether the other spouse has by his or her efforts augmented, maintained, or protected the separate property, and whether the distribution achieves a fair, just, and equitable result. Id.; Noble v. Noble, 761 P.2d 1369, 1373 (Utah 1988).

Elman v. Elman, 245 P.3d 176 (Utah Ct.App. 2002):

In distributing property in divorce proceedings, trial courts are first required to properly categorize the parties’ property as marital or separate. See, e.g., Kelley v. Kelley, 2000 UT App 236,¶ 24, 9 P.3d 171. Generally, trial courts are also required to award premarital property, and appreciation on that property, to the spouse who brought the property into the marriage. See Dunn v. Dunn, 802 P.2d 1314, 1320 (Utah Ct.App.1990); see also Mortensen v. Mortensen, 760 P.2d 304, 308 (Utah 1988).

6¶ 19 However, separate property is not “totally beyond [a] court’s reach in an equitable property division.” Burt v. Burt, 799 P.2d 1166, 1169 (Utah Ct.App.1990). The court may award the separate property of one spouse to the other spouse in “ ‘extraordinary situations where equity so demands.’ ” Id. (quoting Mortensen, 760 P.2d at 308); see also Rappleye v. Rappleye, 855 P.2d 260, 263 (Utah Ct.App.1993) (“ ‘Exceptions to this general rule include whether … the distribution achieves a fair, just, and equitable result.’ ” (quoting Dunn, 802 P.2d at 1320)).

Utah Family Law, LC | divorceutah.com | 801-466-9277

https://www.quora.com/Can-a-divorced-spouse-claim-rights-to-a-previous-primary-residence/answer/Eric-Johnson-311

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Can a divorced spouse claim rights to a premarital primary residence?

Can a divorced spouse claim rights to a premarital primary residence?

A court can, in exceptional circumstances, award a spouse some or all of your premarital and separate property that is clearly not a marital asset. In the jurisdiction where I practice family law (Utah), the rule in caselaw is:

Dunn v. Dunn, 802 P.2d 1314 (Utah Ct.App. 1990):

The general rule is that equity requires that each party retain the separate property he or she brought into the marriage, including any appreciation of the separate property. Burt v. Burt, 799 P.2d 1166, 1168 (Utah Ct.App.1990) (separate property, in this case inherited property, includes “its appreciated value” during the marriage). Exceptions to this general rule include whether the property has been commingled, whether the other spouse has by his or her efforts augmented, maintained, or protected the separate property, and whether the distribution achieves a fair, just, and equitable result. Id.; Noble v. Noble, 761 P.2d 1369, 1373 (Utah 1988).

Elman v. Elman, 245 P.3d 176 (Utah Ct.App. 2002):

In distributing property in divorce proceedings, trial courts are first required to properly categorize the parties’ property as marital or separate. See, e.g., Kelley v. Kelley, 2000 UT App 236,¶ 24, 9 P.3d 171. Generally, trial courts are also required to award premarital property, and appreciation on that property, to the spouse who brought the property into the marriage. See Dunn v. Dunn, 802 P.2d 1314, 1320 (Utah Ct.App.1990); see also Mortensen v. Mortensen, 760 P.2d 304, 308 (Utah 1988).

6¶ 19 However, separate property is not “totally beyond [a] court’s reach in an equitable property division.” Burt v. Burt, 799 P.2d 1166, 1169 (Utah Ct.App.1990). The court may award the separate property of one spouse to the other spouse in “ ‘extraordinary situations where equity so demands.’ ” Id. (quoting Mortensen, 760 P.2d at 308); see also Rappleye v. Rappleye, 855 P.2d 260, 263 (Utah Ct.App.1993) (“ ‘Exceptions to this general rule include whether … the distribution achieves a fair, just, and equitable result.’ ” (quoting Dunn, 802 P.2d at 1320)).

Utah Family Law, LC | divorceutah.com | 801-466-9277

https://www.quora.com/Can-a-divorced-spouse-claim-rights-to-a-previous-primary-residence/answer/Eric-Johnson-311

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What are ways divorcees reach a mutual agreement when splitting up their assets?

What are ways divorcees reach a mutual agreement when splitting up their assets?

What they often do (but shouldn’t): rationalize and justify their greed and pettiness in advancing their “arguments”* for why they should get what they want. This results in claims for obviously lopsided divisions of marital property and to false and fatuous claims that what is marital property is actually “my separate property” and “that was a gift from my parents to us, so now that we are divorcing, it’s mine.” Being greedy and petty in the division of marital assets is self-defeating because it often leads to wasting more time, effort, and money than the property is worth.

What they could—and usually should—do: 1) think like your divorce court judge will think and do what the law requires your judge to do, i.e., divide all marital property equally (meaning an equal division of the value of the property), unless there are clearly evident exceptional circumstances that equitably warrant an uneven division of marital property.

*the definition of the word “argument” is not what many people believe. An argument is not the same as a quarrel. An argument is “a reason or set of reasons given with the aim of persuading others that an action or idea is right or wrong.”

Utah Family Law, LC | divorceutah.com | 801-466-9277

https://www.quora.com/What-are-ways-divorcees-reach-a-mutual-agreement-when-splitting-up-their-assets/answer/Eric-Johnson-311?prompt_topic_bio=1

 

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , ,

What are ways divorcees reach a mutual agreement when splitting up their assets?

What are ways divorcees reach a mutual agreement when splitting up their assets?

What they often do (but shouldn’t): rationalize and justify their greed and pettiness in advancing their “arguments”* for why they should get what they want. This results in claims for obviously lopsided divisions of marital property and to false and fatuous claims that what is marital property is actually “my separate property” and “that was a gift from my parents to us, so now that we are divorcing, it’s mine.” Being greedy and petty in the division of marital assets is self-defeating because it often leads to wasting more time, effort, and money than the property is worth.

What they could—and usually should—do: 1) think like your divorce court judge will think and do what the law requires your judge to do, i.e., divide all marital property equally (meaning an equal division of the value of the property), unless there are clearly evident exceptional circumstances that equitably warrant an uneven division of marital property.

*the definition of the word “argument” is not what many people believe. An argument is not the same as a quarrel. An argument is “a reason or set of reasons given with the aim of persuading others that an action or idea is right or wrong.”

Utah Family Law, LC | divorceutah.com | 801-466-9277

https://www.quora.com/What-are-ways-divorcees-reach-a-mutual-agreement-when-splitting-up-their-assets/answer/Eric-Johnson-311?prompt_topic_bio=1

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Brown v. Brown – 2020 UT App 146 – marital vs. non-marital assets

2020 UT App 146
THE UTAH COURT OF APPEALS
JERRY V. BROWN, Appellant, v. YVONNE A. BROWN, Appellee.

Opinion
No. 20190543
Filed October 29, 2020

Fourth District Court, Provo Department
The Honorable Derek P. Pullan
No. 154403120

Julie J. Nelson, Troy L. Booher, and Alexandra Mareschal, Attorneys for Appellant

Ron W. Haycock Jr., S. Spencer Brown, and Scarlet R. Smith, Attorneys for Appellee

JUDGE GREGORY K. ORME authored this Opinion, in which
JUDGES RYAN M. HARRIS and DIANA HAGEN concurred.

ORME, Judge:

¶1        Jerry V. Brown appeals the district court’s determination in this divorce proceeding that his dental practice was marital property and that his ex-wife, Yvonne A. Brown, was therefore entitled to half its value. Jerry[1] also appeals the district court’s award of $96,409.72 to cover pre-decree expenses Yvonne incurred over nearly a two-year period while the divorce was pending. We reverse in part, affirm in part, and remand for revision of the divorce decree.

BACKGROUND

¶2        In 1986, Jerry purchased a dental practice and building. By 1996, he had completely paid off the purchase price. During a portion of this ten-year period, Jerry was married to his first wife, with whom he had four children. After Jerry and his first wife divorced, Jerry and Yvonne married in 1996. Yvonne had also been married previously and brought three children into the marriage. In 1999, Jerry and Yvonne had a child together. They divorced in 2011 but remarried approximately one year later.

¶3        Soon after their first marriage to each other, Yvonne began working at the practice. After about a month, however, Jerry and Yvonne decided that it was not a good fit. They determined that Yvonne should stay home and care for their blended family from then on, but she occasionally filled in at the practice on an emergency basis. Regardless of the hours Yvonne worked, the practice paid her a monthly salary, depositing her paycheck into Jerry and Yvonne’s joint bank account.

¶4        During both his marriages to Yvonne, Jerry kept the practice’s accounts separate from the couple’s joint accounts. Jerry testified that he did not “at any time . . . put personal funds from [his] personal account or [their] marital accounts into [the practice].” And Yvonne testified that Jerry was “controlling with finances” and threatened to fire his employees if they discussed the practice’s finances with her. Yvonne’s sister, who worked at the practice, testified that Jerry kept the finances “quiet” and would not discuss them with Yvonne. She further testified that whenever Yvonne would “come to the office, he’d empty the cashbox and walk across the street and deposit all of the money into the bank.”

¶5      In addition to drawing his regular salary, Jerry paid expenses attributable to the marriage, such as the couple’s mortgage payments, vehicle payments, insurance bills, travel expenses, and other obligations, using funds from the practice’s account. Jerry also deposited $6,000 from the practice’s account into the couple’s joint account each month, which Yvonne used to pay household expenses. But because Yvonne did not have access to any other bank accounts, if she needed extra money, she “had to ask for it, and usually it became very heated because [Jerry] controlled all of [the] finances.”

¶6        In 2002, Jerry and Yvonne built an $860,000 home that came with a $5,722 monthly mortgage obligation. Around this time, Jerry also renovated the practice’s building and financed it solely by a loan secured by the building, which resulted in a $4,000 monthly payment that he paid from the practice’s revenue. Yvonne testified that the practice’s new debt affected the family’s lifestyle, income, activities, and travel. She further explained that they “had to make a lot of sacrifices financially at the time to offset [the] income” that stayed in the practice instead of being used to supplement the available marital funds. And around 2004 or 2005, Jerry attempted to open a second office to expand the practice, which proved unsuccessful. This investment, too, was funded solely by the practice.

¶7        After the couple’s first divorce and their subsequent remarriage in 2012, Yvonne began attending school to become an esthetician and eventually obtained her master’s degree in that field. Jerry paid for her schooling from the practice’s revenue. In 2013, Yvonne opened a spa at the practice, for which Jerry added three rooms to the practice’s building. This new spa company was a separate entity from the practice and had a separate bank account. Jerry testified that he spent “well over $200,000” of the practice’s revenue on spa equipment to help Yvonne get established.

¶8      In June 2015, the couple separated again. Around this time, Yvonne started another spa company in a different location and moved all the equipment that Jerry had purchased with funds from the practice to this new location. After this separation, Jerry and Yvonne continued to engage in financial transactions. Jerry had refinanced the practice’s building in May 2015 and obtained $200,000, which he was solely responsible for repaying, and gave half—$100,000—to Yvonne. For a time, he continued to deposit $6,000 a month into a bank account for Yvonne. Jerry also kept making monthly payments of $2,200 on a laser he had purchased in 2015 for Yvonne’s business until it was paid off in March 2019, even though Yvonne had agreed to make the payments. Jerry also continued to help Yvonne by investing over $120,000 in her new spa company. Jerry testified that he did this because he was “hoping that [they] might be able to work things out because [finances were their] biggest problem,” and he hoped that those issues would be resolved if her business became profitable.

¶9 In June 2017, Jerry and Yvonne realized that reconciliation was no longer a possibility and decided to divorce once again. Jerry made two more deposits of $6,000 in June and July into a personal account for Yvonne, and in August he deposited another $4,500. From September through December he deposited only $2,500 a month, and he did not deposit any money from January through July 2018. The court then ordered Jerry, starting in August 2018, to pay Yvonne temporary alimony in the amount of $1,607 per month,[2] which Jerry paid until trial in April 2019.

¶10 After trial, the court entered its findings of fact and conclusions of law, dividing the marital estate and deciding other issues pertinent to the divorce. Only two parts of those findings and conclusions, which were later folded into the divorce decree, are relevant to this appeal. First, the court ruled that “[b]ecause marital funds were expended for the benefit of [the practice, it] was converted from Jerry’s separate property to marital property.” The court based this ruling on its finding that

[o]n two occasions, Jerry decided to use income from [the practice] to reinvest in the practice. First, in 2004 or 2005 Jerry opened a second dental office. . . . Opening that office required capital. Accordingly, through [the practice], Jerry secured a loan. The monthly payment on the loan was $2,000. The . . . office was a failed venture. . . . Jerry used income from [the practice] to pay for this failed expansion, thereby decreasing the funds he routinely pulled from [the practice] to pay marital expenses as he routinely had done.

Second, in 2003 during the first marriage Jerry decided to renovate the [practice’s building]. The renovation required capital. Jerry used available funds from [the practice] as well as a loan to pay for the renovation. . . . The monthly payment was $4,000. This monthly obligation left less money for Jerry to pull from [the practice] to pay for marital expenses as he routinely had done. According to [Yvonne], the renovation debt reduced the family income and [a]ffected “what we did and how we traveled.”[3]

¶11 Second, the court ruled that Yvonne was entitled to $96,409.72 in “pre-decree reasonable monthly expenses.” The court based this amount on the extent to which Yvonne’s reasonable expenses from June 2017 until April 2019—found by the court to be $9,464.45 per month—exceeded her monthly income, i.e., the amounts Jerry made available to her, her own earned income, and the amount she received from the sale of a laser. Specifically, it found that

[Yvonne’s] monthly shortfall—for which she should have had access to marital funds but did not—can be calculated.

  • For the two months from June and July 2017, [Yvonne’s] monthly income was $8,839.92, her earned income plus the $6,000 Jerry paid to her. Her monthly expenses exceeded her income by $624.53 each month, for a total shortfall of $1,249.00.
  • For August 2017, [Yvonne’s] monthly income was $7,339.92, her earned income plus the $4,500 Jerry paid to her. Her monthly expenses exceeded her income by $2,124.53, the total shortfall for that month.
  • For the four months from September to December 2017, [Yvonne’s] monthly income was $5,339.92, her earned income plus the $2,500 Jerry paid to her. Her monthly expenses exceeded her income by $4,124.53 each month, for a total shortfall of $16,489.12.
  • For the seven months from January to July 2018, [Yvonne’s] monthly income was $2,839.92, her earned income. Her monthly expenses exceeded her income by $6,624.53 each month, for a total shortfall of $46,371.71.
  • For the ten months from August 2018 to April 2019, [Yvonne’s] income was $4,446.92, her earned income plus the $1,607 paid to her by Jerry. Her monthly expenses exceeded her income by $5,017.53 each month, for a total shortfall of $50,175.30.
  • Prior to the decree, [Yvonne] sold one of the lasers for $10,000.00 and used this money to pay her monthly expenses.

¶12      Jerry appeals.

ISSUES AND STANDARDS OF REVIEW

¶13 Jerry raises two issues. First, he asserts that the district court erred when it determined that the practice had become a marital asset. “[W]hether property is marital or separate is a question of law,” which we review for correctness. Liston v. Liston, 2011 UT App 433, ¶ 5, 269 P.3d 169.

¶14 Second, Jerry contends that the district court erred in ordering him to pay Yvonne $96,409.72 in expenses incurred by her during the pendency of the divorce proceeding that were not covered by her income and marital funds. We review property decisions and alimony awards with considerable deference, reversing only where the district court has exceeded the sound exercise of its discretion. See Hartvigsen v. Hartvigsen, 2018 UT App 238, ¶ 4, 437 P.3d 1257.

ANALYSIS

  1. The Practice

¶15 Jerry argues that the district court erred in concluding that the practice—which was unquestionably his separate property at the outset of his marriage to Yvonne—became a marital asset based solely on the fact that practice funds were frequently used to cover family expenses and, at times, the amount of this marital subsidy was reduced to help expand the practice. “The presumption is that marital property will be divided equally while separate property will not be divided at all.” Lindsey v. Lindsey, 2017 UT App 38, ¶ 32, 392 P.3d 968. “Married persons have a right to separately own and enjoy property, and that right does not dissipate upon divorce.” Id. “The general rule is that equity requires that each party retain the separate property he or she brought into the marriage, including any appreciation of the separate property.” Dunn v. Dunn, 802 P.2d 1314, 1320 (Utah Ct. App. 1990). “However, separate property is not totally beyond a court’s reach in an equitable property division.” Elman v. Elman, 2002 UT App 83, ¶ 19, 45 P.3d 176 (quotation simplified). Utah law has identified three circumstances that support an award of separate property to the other spouse. Lindsey, 2017 UT App 38, ¶ 33. These circumstances are: (1) “when separate property has been commingled” with marital property; (2) “when the other spouse has augmented, maintained, or protected the separate property”—otherwise known as the contribution exception; and (3) “in extraordinary situations when equity so demands.” Id.

¶16 Here, the court did not rule that the practice had been commingled[4] with marital property, or that this was an extraordinary situation. Rather, it concluded that the contribution exception applied. The contribution exception may be satisfied in three ways: (1) “when one spouse brings assets into the marriage and the other spouse’s prudent investment of those assets substantially increases their value”; (2) “when marital funds are expended or marital debt is incurred for the benefit of one spouse’s separate property”; or (3) potentially, “when one spouse works for a business owned by the other spouse but is not paid a wage or salary.” Id. ¶ 35 (quotation simplified).

¶17      Here, the first contribution variant does not apply because it is undisputed that Yvonne did not play a role in investing the practice’s assets to substantially increase their value. The third variant is likewise inapplicable because although Yvonne did work at the practice for a time, she was paid a monthly salary for that work and, indeed, she was paid that salary even when she did not work. Rather, the court relied on the second variation of the contribution exception when it ruled, “Because marital funds were expended for the benefit of [the practice, it] was converted from Jerry’s separate property to marital property.” This determination was erroneous because it is clear from the record that no marital funds were ever used to benefit the practice; the flow of funds was only in the opposite direction.

¶18      To reach its conclusion, the court determined that money that stayed within the practice became marital property simply because Jerry, having previously been more amenable to using money from the practice to pay for family expenses, reduced the amount of those transfers to help fund expansion of the practice. The court reasoned that the practice was converted to a marital asset because funds that were normally diverted from the practice to cover family expenses were instead retained to build the practice. This premise does not satisfy the contribution exception because the practice was at all times a separate asset, and the flow of money went in only one direction: from the practice’s accounts to the personal and joint accounts of Yvonne and Jerry. Once this money left the practice and entered these accounts, that money then became marital property.[5] Cf. Keiter v. Keiter, 2010 UT App 169, ¶ 19, 235 P.3d 782 (“[E]arned income from employment or from rendering professional services during a marriage falls within the usual definition of marital property.”).

¶19 But this one-way flow did not convert the source of that money, i.e., the practice, into a marital asset. The practice therefore never lost its separate character because no money from a marital source was ever used for the benefit of the practice, even though the converse was true. Cf. Schaumberg v. Schaumberg, 875 P.2d 598, 603 (Utah Ct. App. 1994) (holding that because husband used a marital loan to “maintain and augment” a business asset, that “changed [the asset’s] character from a personal asset to a marital asset”). And this is true even though Jerry at times reduced the amount of money that left the practice to help fund the family’s expenses. Given that Yvonne’s work at the practice was financially compensated—indeed, overcompensated—the only way that the practice in this case could have become a marital asset is if money from Yvonne’s and Jerry’s personal and joint accounts had been regularly used to shore up the practice or the parties took out a marital debt to fund the practice. See Lindsey, 2017 UT App 38, ¶ 35. Cf. Keiter, 2010 UT App 169, ¶ 24 (holding that a husband’s personal and medical practice’s accounts were “inextricably commingled” and both were marital assets because the husband deposited his salary into both accounts and paid for business and personal expenses from both accounts) (quotation simplified). Here, in contrast, the court explicitly found, with our emphasis, that “Jerry decided to use income from [the practice] to reinvest in the practice.” Thus, the practice retained its separate character because the money that became a marital asset after leaving the practice never returned to the practice. Nor were other marital assets used to subsidize the practice.

¶20 Yvonne claims that Keiter, 2010 UT App 169, requires affirmance of the district court’s decision. There, the husband’s income from his medical practice, which income was a marital asset, see id. ¶ 19, “would be deposited along with his separate earnings into his personal account [and] medical practice account . . . [t]hen, both business and personal expenses would be paid from those accounts,” id. ¶ 24. Given this routine, the Keiter court determined that both accounts were marital assets because “they were ‘inextricably commingled’ with both separate and marital income.” Id. Yvonne claims that the same scenario is present here because Jerry “deposited some income into his joint account with [her], some into a personal bank account, and some into [the practice’s] account [and] paid family expenses from each account.” But the critical difference between Keiter and the case at hand is that in Keiter the husband’s salary was deposited into the medical practice’s and the marital account, thus commingling the practice’s account with marital funds, and he then used the funds from both accounts to pay for both business and personal expenses, thereby using marital funds to support and improve his separate property. That is classic commingling, a theory that the district court here correctly avoided. See supra ¶ 16 & note 4.

¶21      Unlike in Keiter, Jerry never deposited his salary—marital income—into the practice’s account, which would have thereby “inextricably commingled” marital funds with separate funds. See Keiter, 2010 UT App 169, ¶ 24 (quotation simplified). Furthermore, Jerry never used marital funds to pay for business expenses, as was the case in Keiter. Rather, Jerry’s salary left the practice’s account and entered his personal account or a marital account and was never used to cover the practice’s expenses, which the district court specifically found when it stated that only the practice’s own assets were used to expand the practice. And while personal expenses were often covered with additional funds from the practice’s account, this was a one-way flow—no marital funds were ever used to pay for business expenses. The district court therefore erred in treating the practice as a marital asset and awarding Yvonne a portion of the value of the practice.

  1. Pre-decree Expenses

¶22 Jerry next argues that the district court exceeded its discretion by ordering him to “reimburse [Yvonne] for almost all of her claimed expenses during the twenty-two-month[6] pendency of their separation.”

¶23 “Prior to the entry of a divorce decree, all property acquired by parties to a marriage is marital property, owned equally by each party.” Dahl v. Dahl, 2015 UT 79, ¶ 126, 459 P.3d 276. “For this reason, it is improper to allow one spouse access to marital funds to pay for reasonable and ordinary living expenses while the divorce is pending, while denying the other spouse the same access.” Id.

¶24 Here, the district court ruled that, “[p]ursuant to the rule articulated in Dahl, [Yvonne]—like Jerry—was entitled to access marital funds to pay her reasonable monthly expenses incurred while the divorce was pending.” The court then ordered Jerry, who effectively had control of the marital funds, to pay Yvonne for her expenses insofar as they exceeded the income she earned plus amounts Jerry advanced while the divorce was pending. The net amount, with a further offset for the value of a laser she sold for $10,000, amounted to $96,409.72.

¶25      Jerry argues that the district court improperly applied our Supreme Court’s holding in Dahl. In that case, the Court held that the district court erred in requiring the wife, who was not living in the marital home and had no access to the marital estate during the pendency of the divorce, to repay her ex-husband money that he had paid her from the marital estate during the course of the divorce proceedings for her living expenses. Id. ¶ 125. The Court ruled that because these funds came from the marital estate and were used to pay the wife’s pre-decree living expenses, she was not obligated to repay the money. Id. ¶¶ 128–129.

¶26      Jerry argues that Dahl does not apply to this case and does not “stand for the proposition that the spouse with access to the marital estate must pay all of the other spouse’s living expenses during the pendency of the divorce.” This argument reflects a misunderstanding of Dahl. The point of Dahl is not that only one spouse may have “access to the marital estate” but that both do, and both are entitled to rely on it to cover their “reasonable and ordinary living expenses” pending entry of the divorce decree.[7] Id. ¶ 126.

¶27 It is true that Dahl is on a slightly different footing than this case. In Dahl, our Supreme Court held that the wife did not have to repay the money she received from the marital estate, rather than, as here, directing that the marital estate would cover the shortfall in her expenses.[8] The Court in Dahl explicitly stated, “Prior to the entry of a divorce decree, all property acquired by parties to a marriage is marital property, owned equally by each party,” and “it is improper to allow one spouse access to marital funds to pay for reasonable and ordinary living expenses while the divorce is pending, while denying the other spouse the same access.” Id. (emphasis added). It further elaborated that “allowing both spouses equal access to marital funds during the pendency of a divorce promotes the goal of a fair, just, and equitable distribution of marital property.” Id. (emphasis added) (quotation otherwise simplified). Thus, Dahl stands for the proposition that both spouses are entitled to equal access to the marital estate to fund their reasonable and ordinary living expenses pending the divorce. In accordance with this proposition, the district court appropriately ordered the marital estate to reimburse the shortfall in Yvonne’s pre-decree living expenses with reference to the expense level it deemed reasonable, to the extent those expenses exceeded her earned income, asset sale, and the diminishing amounts Jerry made available to her.[9] At this point, while Jerry might be signing the check, the adjustment is conceptually made from the marital estate—not from funds that are his own separate property. See supra note 8.

¶28 Jerry further argues that the district court’s award should have been offset by the $100,000 he gave Yvonne in May 2015, the value of the equipment he bought for her spa business, the $120,000 he additionally contributed to her business, and other money that he transferred to her from the practice’s accounts. This argument is unavailing. First, the equipment assisted Yvonne in earning an income and paying her bills. That earned income reduced the amount of Yvonne’s monthly shortfall. The cost of that equipment cannot, years later, be used as an offset against Yvonne’s pre-decree living expenses, especially where Yvonne’s earned income already offset those expenses. Second, because the majority of these transactions occurred before the couple’s decision in 2017 to seek a divorce, it was not unreasonable for the court to ignore these transactions when making its award for living expenses after that decision was made, as Yvonne was still entitled to the benefit of the marital estate to help cover those living expenses, as was Jerry, up until the divorce decree was entered.[10]

¶29 The court did, however, make a simple calculating error when it ruled that “[f]or the ten months from August 2018 to April 2019, [Yvonne’s] income was $4,446.92, her earned income plus the $1,607 paid to her by Jerry. Her monthly expenses exceeded her income by $5,017.53 each month, for a total shortfall of $50,175.30.” Both parties agree that the time period actually amounted to nine months, not ten. Thus, the award corresponding to that period should be reduced by $5,017.53. On remand, the district court needs to adjust its pre-decree expense award accordingly.

CONCLUSION

¶30 The district court erred in concluding that the practice had become a marital asset because no marital funds were used to enhance the practice and the practice had not otherwise lost its character as a separate asset. Beyond a simple calculating error and the apparent oversight detailed in note 10, however, the court did not exceed its discretion in its pre-decree expense ruling that required the marital estate to cover the shortfall in Yvonne’s reasonable living expenses, as found by the court, because Yvonne had an equal right to the marital estate to pay those expenses.

¶31 We remand to the district court to amend its decree to incorporate appropriate changes, in accordance with this opinion.

Utah Family Law, LC | divorceutah.com | 801-466-9277

 

 

[1] Because the parties share the same surname, we refer to them by their first names, with no disrespect intended by the apparent informality.

[2] Following trial, the district court found that this amount was too low “because Jerry had significantly understated his income” and ruled that Jerry’s actual ability to pay was $2,687 per month. The court established this amount as alimony going forward. The court’s alimony determination is not at issue in this appeal.

[3] In view of the brief hiatus between the parties’ two marriages, corresponding to only one year in a twenty-three-year period when the parties were otherwise married, in adjudicating their second divorce, the district court essentially evaluated their circumstances as though they were parties to a single continuous marriage. In this atypical circumstance and on the facts of this case, this approach seems entirely reasonable, the parties appear to have acquiesced in it during the course of this proceeding, and neither party challenges it on appeal.

[4] We agree that the practice never became a marital asset under the theory of commingling because Jerry kept the practice’s accounts and the couple’s personal accounts separate at all times. No money ever came back to the practice once it entered the parties’ personal and joint accounts. Thus, it is clear that the practice was never commingled with marital property, even though practice funds were made available, when Jerry saw fit, to subsidize the marital estate.

[5] The district court considered Jerry’s historical use of business funds to pay marital expenses in calculating alimony.

[6] Jerry refers to this period as twenty-two months but it is clear that the time frame in question is actually twenty-three months. This is calculated from the time the couple separated in June 2017 up until trial in April 2019. When including June 2017 and April 2019 in the calculation, this is a twenty-three month period.

[7] Pursuant to Dahl, the marital estate must pay for the “reasonable and ordinary living expenses” of each party during the pendency of their divorce proceedings. Dahl v. Dahl, 2015 UT 79, ¶ 126, 459 P.3d 276. While Yvonne’s expenses during the relevant period may seem high, Jerry has made no claim that these expenses, as found by the district court, were unreasonable in light of the marital standard of living.

[8] Jerry characterizes the district court’s order to reimburse Yvonne for her monthly expenses as requiring him to pay it. But Jerry mischaracterizes what the court actually did. Conceptually, it did not order him to pay all her expenses but ordered the marital estate to cover Yvonne’s expenses, an estate in which Yvonne had equal share and to which she should have had equal access. See id. Jerry further argues that he should have to pay only half, at most, of the court’s pre-decree expenses award. This argument is unavailing, however, because Jerry took control of the marital estate to continue to cover his own expenses but deprived Yvonne of that same benefit. Thus, Jerry is required to cover the shortfall in Yvonne’s living expenses from the marital estate, to which he deprived Yvonne access while their divorce was pending.

[9] As explained above, see supra ¶ 11, once the decision was made to divorce, Jerry initially channeled $6,000 in marital funds per month to Yvonne, leaving a shortfall of only a little over $600 per month. When that allowance dropped to zero for seven months in 2018, the monthly shortfall increased by more than tenfold, to over $6,600.

[10] There is, however, an expense that Jerry calls to our attention that is on a different footing, namely the $2,200 monthly payment for a laser that he continued to make even after the couple’s June 2017 decision to divorce, and which he continued to pay until March 2019, as specifically found by the district court. It is undisputed that Yvonne agreed to make those payments, but she did not do so. The court did not circle back and deal with these payments when determining its award of pre-decree expenses to Yvonne, even though the court allowed an offset for the $10,000 Yvonne realized upon sale of another laser that Jerry financed, which surely seems analogous. Jerry’s argument that he should have had a further offset for half of the payments made for this laser during the relevant period is persuasive. (As explained above, and as consistent with the district court’s approach, this offset would be only for the payments made between the time the couple decided to divorce in June 2017 and the time Jerry paid off the laser in March 2019.) On remand, the court should deal with this loose end and further adjust the award for Yvonne’s pre-decree expenses as may be appropriate.

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How can I protect my assets before getting married without prenup?

How can I protect my assets before getting married without prenup?

Short answer: One option (not a very good one, frankly, but about the best there is under the circumstances as you describe them in your question) is: 1) own no major/valuable property before you are married (in other words, your spouse would probably not seek (and the court would probably not award to your spouse any part of) things like your clothes and personal effects, so you could live in a house and drive a car you lease and thus have no such “big ticket” items that could be sold and the proceeds of sale awarded to your spouse in divorce; 2) save nothing in the bank or in investments and retirement accounts, so that there is nothing like in which your spouse could try to claim an interest; and 3) ensure that you do not earn more than your spouse does, so that your spouse cannot make an easy argument for alimony.

Your real question may be this instead: How can I prevent losing too much (being treated unfairly) financially in divorce? If that is your question, it is a very good and very common one.

After all, most reasonable people would agree that what a couple acquires together during marriage is considered “their” property, “our” property, instead of “there’s yours and there’s mine”.

For example:

  • A couple marries and buys a house together in which they live for years. Sure, it may have been that one spouse worked full time while the other stayed home to take care of the kids and the house, but they’re a team, partners (in both a legal sense and a practical sense).
  • Saving up for retirement. It’s common for one spouse to be better able to pursue a career and advance in it (thus making more money for retirement) when the other spouse stays home with the children (at least while they are quite young) and keeps house. Both spouses understand that one hand washes the other.

The decision to purchase the house and the decision to have one spouse be the primary breadwinner and the other the children’s primary caretaker was made together, for mutual benefit. The spouse with the full-time job knew in advance that he/she would be sharing the house and retirement funds with his/her spouse and worked for the money needed to fund these things. It’s understood that these things are marital property that would be divided equally in the event of divorce. It makes sense.

But there are other issues that aren’t so clear cut. Many people—mostly husbands, but a growing number of wives—have this sense that:

  • “divorce should not result in my being financially exploited”;
  • “divorce should not result in being robbed of what was mine before marriage and what I acquired for myself during marriage”;
  • “I shouldn’t have to continue to support a spouse financially if I’ve done nothing to make divorce necessary; if my spouse wants out of the marriage and files for divorce, then he/she should do so with the understanding and expectation that with the end of the marriage comes the end of any and all of my obligations to support my spouse due to the fact that he/she is no longer my spouse”;
  • spouses who:
    • don’t carry their fair share of the weight during the marriage, who don’t do their best to contribute, and/or become financially dependent upon the other spouse as a result of being lazy (as opposed to spouses who are or become, due to disabilities beyond their control, financially dependent on the other spouse); and/or
    • abuse the other spouse and/or children, commit adultery, or waste marital resources (e.,, refuse to uphold their marital responsibilities with impunity)

are moochers in divorce when they demand that the people to whom they are no longer married nevertheless keep supporting them financially. There is something inherently unfair in that concept.

In response to these questions and concerns the best answers for me personally are:

  • If I am truly worried that my marriage could end in divorce to a gold digger, the solution does not lie in trying to figure out a way to protect my assets but in not marrying the suspected gold digger.
  • I did not marry to keep tabs on how much I have to lose in divorce. Yes, there are risks in trusting my spouse with my welfare (both physical and emotional), but the opportunity to enjoy a happy marriage is worth the risk to the right person. Now please understand: I get that sometimes you can do everything right and marry someone who was great but who later changed and turned on you. That’s sad, but not enough of a reason to avoid marriage, in my opinion. Well-rounded married people are generally much happier than well-rounded single people. Don’t deny yourself the joys and blessings of marriage out of the fear of divorce. There is no meaning to success without the risk of and the fight against failure.
  • There is no more reliable and cost-effective way to protect your assets in divorce than with a well-drafted prenuptial agreement. Warning: even the most well-drafted prenuptial agreements are not iron-clad, but they are better than nothing (far better) if you are concerned about protecting yourself from being raped and pillaged financially in divorce.

Utah Family Law, LC | divorceutah.com | 801-466-9277

https://www.quora.com/How-can-I-protect-my-assets-before-getting-married-without-prenup/answer/Eric-Johnson-311

Tags: , , , , , , , , , , , , , , , , , ,

How can I protect my assets before getting married without prenup?

How can I protect my assets before getting married without prenup? Short answer: One option (not a very good one, frankly, but about the best there is under the circumstances as you describe them in your question) is:

1) own no major/valuable property before you are married (in other words, your spouse would probably not seek (and the court would probably not award to your spouse any part of) a portion of things like your clothes and personal effects, so you could live in a house and drive a car you lease and thus have no such “big ticket” items that could be sold and the proceeds of sale awarded to your spouse in divorce;

2) save nothing in the bank or in investments and retirement accounts, so that there is nothing like in which your spouse could try to claim an interest; and

3) ensure that you do not earn more than your spouse does, so that your spouse cannot make an easy argument for alimony.

Your real question may be this instead: How can I prevent losing too much (being treated unfairly) financially in divorce? If that is your question, it is a very good and very common one. After all, most reasonable people would agree that what a couple acquires together during marriage is considered “their” property, “our” property, instead of “there’s yours and there’s mine”. For example: a couple marries and buys a house together in which they live for years. Sure, it may have been that one spouse worked full time while the other stayed home to take care of the kids and the house, but they are a team, partners (in both a legal sense and a practical sense).

Another example: Saving up for retirement. It is common for one spouse to be better able to pursue a career and advance in it (thus making more money for retirement) when the other spouse stays home with the children (at least while they are quite young) and keeps house. Both spouses understand that one hand washes the other. The decision to purchase the house and the decision to have one spouse be the primary breadwinner and the other the children’s primary caretaker was made together, for mutual benefit. The spouse with the full-time job knew in advance that he/she would be sharing the house and retirement funds with his/her spouse and worked for the money needed to fund these things. It is understood that these things are marital property that would be divided equally in the event of divorce. It makes sense. But there are other issues that are not so clear cut. Many people—mostly husbands, but a growing number of wives—have this sense that:

  1. a) “divorce should not result in my being financially exploited”;
  2. b) “divorce should not result in being robbed of what was mine before marriage and what I acquired for myself during marriage”;
  3. c) “I shouldn’t have to continue to support a spouse financially if I’ve done nothing to make divorce necessary; if my spouse wants out of the marriage and files for divorce, then he/she should do so with the understanding and expectation that with the end of the marriage comes the end of any and all of my obligations to support my spouse due to the fact that he/she is no longer my spouse”;
  4. d) spouses who: don’t carry their fair share of the weight during the marriage, who don’t do their best to contribute, and/or become financially dependent upon the other spouse as a result of being lazy (as opposed to spouses who are or become, due to disabilities beyond their control, financially dependent on the other spouse); and/or spouses who abuse the other spouse and/or children, commit adultery, or waste marital resources (i.e.,, refuse to uphold their marital responsibilities with impunity); and
  5. e) spouses who are moochers in divorce when they demand that the people to whom they are no longer married nevertheless keep supporting them financially. There is something inherently unfair in that concept.

In response to these questions and concerns the best answers for me personally are:

One, if I am truly worried that my marriage could end in divorce to a gold digger, the solution does not lie in trying to figure out a way to protect my assets but in not marrying the suspected gold digger.

Two, I did not marry to keep tabs on how much I have to lose in divorce. Yes, there are risks in trusting my spouse with my welfare (both physical and emotional), but the opportunity to enjoy a happy marriage is worth the risk to the right person.

Now please understand: I get that sometimes you can do everything right and marry someone who was great but who later changed and turned on you. That is sad, but not enough of a reason to avoid marriage, in my opinion. Well-rounded married people are generally much happier than well-rounded single people. Do not deny yourself the joys and blessings of marriage out of the fear of divorce. There is no meaning to success without the risk of and the fight against failure.

Three, there is no more reliable and cost-effective way to protect your assets in divorce than with some wise financial planning and a well-drafted prenuptial agreement.

Warning: even the most well-drafted prenuptial agreements are not iron-clad, but they are better than nothing (far better) if you are concerned about protecting yourself from being raped and pillaged financially in divorce.

Utah Family Law, LC | divorceutah.com | 801-466-9277

Tags: , , , , , , , , , , , , , , , , , , , , , ,

Will my husband be legally an owner of a company that I start just because he is my husband?

¶ 12 A succinct summary of contribution cases is provided in Kunzler v. Kunzler, 2008 UT App 263, 190 P.3d 497, where this court addressed the wife’s argument that she was entitled to part of her husband’s separate business property because, although “she was not his partner in the business [at issue,] she was his partner in the business of marriage.”5 Id. ¶ 19 n. 5. In his partially dissenting opinion, Judge Davis discussed Dunn v. Dunn, 802 P.2d 1314 (Utah Ct.App.1990), and Elman v. Elman, 2002 UT App 83, 45 P.3d 176. See Kunzler, 2008 UT App 263, ¶ 19 n. 5, 190 P.3d 497. In both of those cases, the nonowner spouse was awarded a portion of the other spouse’s separate property. See Dunn, 802 P.2d at 1318; Elman, 2002 UT App 83, ¶ 24, 45 P.3d 176. As stated in Kunzler, “the wife [in Dunn] ‘performed bookkeeping and secretarial services without pay’ for the husband’s medical practice, and therefore the business ‘was founded and operated through the joint efforts and joint sacrifices of the parties.’ ” 2008 UT App 263, ¶ 19 n. 5, 190 P.3d 497 (quoting Dunn, 802 P.2d at 1318). Judge Davis also discussed Elman, where

the wife “not only managed the household, but also grew the parties’ marital properties. She secured the land for and was in charge of building the parties’ Park City home.” … The Elman court awarded the wife half of the increase in value of the properties during the marriage “given the unusual responsibilities she assumed.”

Id. (emphasis in original) (quoting Elman, 2002 UT App 83, ¶ 24, 45 P.3d 176).

¶ 13 As noted in the parties’ briefs, there are cases predating Mortensen, Elman, and Dunn that appear to apply a more liberal standard in determining the appropriateness of awarding separate property to a nonowner spouse on the basis of contribution. In Lee v. Lee, 744 P.2d 1378 (Utah Ct.App.1987), this court reversed the trial court for failing to award the wife an equitable share of the husband’s corporation, acquired during the marriage, where “the wife assisted in the operation of the corporation by assuming clerical duties, including typing, answering the phones, and paying bills. Moreover, the wife also reared the parties’ two children and performed domestic duties, allowing the husband to participate full-time in the business.” Id. at 1380. In Savage v. Savage, 658 P.2d 1201 (Utah 1983), the Utah Supreme Court noted that the trial court’s property distribution—granting the wife forty percent of the value of the husband’s company—was within its allotted discretion, in part, “while it is true that the [wife] took no responsibility for the business, it was her assumption of the domestic burdens which made possible the [husband’s] full-time participation in the business.” Id. at 1204.

¶ 14 Mortensen, Dunn, and Elman appear to require more active participation and contribution by the nonowner spouse in order to qualify under the contribution category of Mortensen. As noted in Mortensen, the results are different where there is “effort made by the nondonee or nonheir spouse to preserve or augment the asset,” as compared to situations where there is a “lack of such efforts.” 760 P.2d at 306.

Child v. Child, 194 P.3d 205 (Utah Ct.App. 2008):

“The general rule is that equity requires that each party retain the separate property he or she brought into the marriage, including any appreciation of the separate property.” Dunn v. Dunn, 802 P.2d 1314, 1320 (Utah Ct.App.1990). Such separate property can, however, become part of the marital estate if

(1) the other spouse has by his or her efforts or expense contributed to the enhancement, maintenance, or protection of that property, thereby acquiring an equitable interest in it, or (2) the property has been consumed or its identity lost through commingling or exchanges or where the acquiring spouse has made a gift of an interest therein to the other spouse.

(Mortensen v. Mortensen, 760 P.2d 304, 308 (Utah 1988) (citation omitted)).

Stonehocker v. Stonehocker, 176 P.3d 476 (Utah Ct.App. 2008):

Evidence in divorce action supported trial court’s finding that wife had only “token involvement” in business and that the business’s value was solely attributable to husband’s personal, professional reputation, such that husband was entitled to business.

Keyes v. Keyes, 351 P.3d 907 (Utah Ct.App. 2015):

Trial court’s findings in property distribution proceedings regarding division of inventory acquired during marriage, which was held by husband’s landscaping business, were inadequate to support determination that wife was entitled to marital percentage of that inventory; trial court failed to explain how wife had obtained an interest in the business inventory, especially in light of trial court’s other findings that landscaping business was husband’s separate property and that inventory was purchased using business resources.

Dunn v. Dunn, 802 P.2d 1314, 1317-1319 (Utah Ct.App 1990):

A. The Professional Corporation

Marital property is ordinarily all property acquired during marriage and it encompasses all of the assets of every nature possessed by the parties, whenever obtained and from whatever source derived.” Gardner v. Gardner, 748 P.2d 1076, 1079 (Utah 1988) (quoting Englert v. Englert, 576 P.2d 1274, 1276 (Utah 1978)). In Sorensen v. Sorensen, 769 P.2d 820 (Utah Ct.App.1989), we affirmed the trial court’s conclusion that the accounts receivable, tangible assets, and goodwill of a professional practice were includable in the marital estate, to the extent they were accumulated during the marriage, in a situation where the husband began his dental practice six years before the marriage began. Id. at 832.

Mrs. Dunn’s position is more conservative than the prevailing view in Sorensen in that she does not assert an interest in her husband’s ongoing practice. Rather, Mrs. Dunn asserts an interest in the tangible assets of a corporation that was established during the marriage.

In Lee v. Lee, 744 P.2d 1378 (Utah Ct.App.1987), we considered a nine year marriage during which the husband established a corporation. The wife contributed some bookkeeping. More significant were her domestic contributions which freed her husband to participate full time in running the business. We held in Lee that the wife was entitled to her full equitable share of the corporation because of the parties’ joint efforts in establishing and maintaining the corporation. Id. at 1380–81.

Here, Mrs. Dunn argues, and we agree, that the trial court abused its discretion by characterizing Dr. Dunn’s professional corporation as a nonmarital asset. The corporation was founded and its assets accrued during the marriage and she performed bookkeeping and secretarial services without pay for the corporation. Thus, the corporation was founded and operated through the joint efforts and joint sacrifices of the parties. In addition, because Dr. Dunn chose to work sixty to seventy hours per week, he left Mrs. Dunn with the sole responsibility of running the household and managing the household accounts. Further, she was left without his companionship and domestic contributions during those hours. While she was not his partner in the business of orthopedic surgery, she was his partner in the “business” of marriage and her efforts were necessary contributions to the growth of his practice and the business. As such, she is entitled to her fair share in any marital assets derived from their joint efforts in that endeavor. Lee, 744 P.2d at 1380–81.

The lower court found that the “net tangible assets are not marital assets and are not subject to division in this action.” Other than this assertion, the court gave no reason for this finding and we can find no support for it in the record. We therefore reverse and remand for an equitable, which in this case means equal, distribution of the net tangible assets of the professional corporation.

B. Royalty Rights

This court recently affirmed that the right to future income is a marital asset where that right is derived from efforts or products produced during the marriage, even in cases where that right cannot be easily valued. Moon v. Moon, 790 P.2d 52, 56–57 (Utah Ct.App.1990) (right to use sculpture molds is a marital asset); see also Sorensen, 769 P.2d at 827; Woodward v. Woodward, 656 P.2d 431, 432–33 (Utah 1982).

Dr. Dunn argues that the development of the surgical instruments for implanting artificial knees came as a result of twenty-six years of education and training, most of which predated this marriage. He implies that since all of the necessary knowledge, skill and expertise was not acquired during the marriage, Mrs. Dunn should not share in the resulting profits. We find this argument without basis in law or in equity.

Mrs. Dunn asserts, and we agree, that the lower court abused its discretion in finding she had no marital interest in Dr. Dunn’s royalty rights for his invention of surgical instruments used for implanting artificial knees. She argues that the instruments were invented during the marriage, that nothing in the royalty contract conditions the payment of royalties upon Dr. Dunn’s personal services, and that Dr. Dunn himself characterized the income as “installment payments from the sale of property” on the parties’ joint 1987 income tax return. This contract, executed December 1, 1985, entitles Dr. Dunn to fixed quarterly payments totaling $375,000 between 1986 and 1990; $243,750 of the royalties earned during the marriage remained to be paid at the time of trial.

The lower court found that the contract would be “worthless” without his future personal services. However, although Dr. Dunn did spend time demonstrating the instruments, it was not specifically required by the contract. This contract, unlike the one pertaining to the artificial hip devices, is a royalty agreement and not a personal services agreement.

The record indicates that the knee contract is not conditioned upon Dr. Dunn’s personal services and that the primary benefit to Zimmer for the contract is the right to distribute the artificial knee instruments. Because the lower court found that Dr. Dunn traveled twenty-eight days per year doing business that related “equally to the hip agreement and the knee agreement,” and because Dr. Dunn is entitled to be recompensed for his time, we remand this issue to the lower court to deduct an amount equal to fourteen days of personal service from the value of the knee contract and to treat the remainder as a marital asset and to value it as of the date of the divorce and distribute to Mrs. Dunn her equitable share, which, in this case, would be one half.

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Will the court compensate me if my spouse destroys my property?

I purchased a vehicle on payments prior to marriage; husband burned up vehicle; now it’s a delinquent debt on me, in divorce trial, can it be ask he consumes half of that delinquent debt?

Normally your premarital asset would be awarded to you as your separate property, and if it’s encumbered by a loan, you would be held solely responsible for the loan,

But because your husband abused and damaged the vehicle during the marriage, if you could prove that he did so without your consent, you might persuade the court to take that into account when dividing the marital estate (the marital estate is the property acquired during the marriage). For example, the court could divide the marital estate less than equally, with you receiving slightly more of the value of the marital estate than your husband does to compensate you for the damage he did to your vehicle.

It is also possible that the court could order your husband to pay the loan balance on the vehicle, if the court felt it fair. the court would have the power to do such a thing, if it felt that fairness warranted or dictated such a thing.

Utah Family Law, LC | divorceutah.com | 801-466-9277

https://www.quora.com/I-purchased-a-vehicle-on-payments-prior-to-marriage-husband-burned-up-vehicle-now-it-s-a-delinquent-debt-on-me-in-divorce-trial-can-it-be-ask-he-consumes-half-of-that-delinquent-debt/answer/Eric-Johnson-311?prompt_topic_bio=1

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If you inherit property during your marriage, is your spouse entitled to any?

Great question. The answer is (for Utah, where I practice divorce and family law), generally, no, your spouse is not entitled to half of property you inherited during the marriage.

Here is the answer for the jurisdiction where I practice law (Utah):

Premarital property, gifts, and inheritances may be viewed as separate property, and in appropriate circumstances, equity will require that each party retain the separate property brought to the marriage. However, the rule is not invariable. Burke v. Burke, 733 P.2d 133, 135 (Utah 1987) (footnotes omitted). Watson v. Watson, 837 P.2d 1 (Utah Ct. App. 1992).

In Utah, trial court making “equitable” property division pursuant to divorce statute should generally award property acquired by one spouse by gift and inheritance during marriage, or property acquired in exchange thereof, to that spouse, together with any appreciation or enhancement of its value, unless other spouse has by his or her efforts or expense contributed to enhancement, maintenance, or protection of that property, thereby acquiring equitable interest in it, or property has been consumed or its identity lost through commingling or exchanges or when acquiring spouse has made gift of interest therein to other spouse. Utah Code Ann. §30-3-5. Mortensen v. Mortensen, 760 P.2d 304 (Utah 1988).

Premarital property, gifts, and inheritances may be viewed as separate property, and in appropriate circumstances, equity will require that each party retain separate property brought to marriage; however, the rule is not invariable. Burke v. Burke, 733 P.2d 133 (Utah 1987).

In property division incident to divorce, inherited or donated property, including its appreciated value, is generally separate from marital estate and hence is left with receiving spouse. Burt v. Burt, 799 P.2d 1166 (Utah Ct. App. 1990).

Wife’s inheritance maintained its separate character even though inherited funds had been substantially changed in form, where inheritance was readily traceable to segregated accounts, portfolios and real estate. Burt v. Burt, 799 P.2d 1166 (Utah Ct. App. 1990).

As general rule, premarital property, gifts, and inheritances may be viewed as separate property when making distribution of property in divorce proceeding; however, in appropriate circumstances one spouse may be awarded property which other spouse brought into marriage. Naranjo v. Naranjo, 751 P.2d 1144 (Utah Ct. App. 1988).

Utah Family Law, LC | divorceutah.com | 801-466-9277

https://www.quora.com/If-you-were-to-inherit-real-estate-from-your-parents-is-your-spouse-entitled-to-half-of-it-due-to-marriage/answer/Eric-Johnson-311

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What can you do to protect inheritance from becoming marital property?

Each state’s divorce laws are different. Whether your jurisdiction treats inherited property as marital property is something you will need to determine by inquiring with an attorney who knows your jurisdiction’s laws.

In the jurisdiction where I practice law (Utah), gifts from persons other than your spouse and inheritances are considered separate property and will stay separate property unless they are “commingled” with marital property, meaning that if you were to receive an inheritance from Uncle Milt and then use that money to buy a family house or car in your and your spouse’s name the house or car would become marital property. *

*There is an exception to this rule that can sometimes come into play, which is known as “tracing” If one can “trace” the inherited money that went in to the purchase of the family house or car, you may be able to get what money you contributed to the purchase credited back to you as your separate property.

So if you know you are going to inherit money in the next five years, technically that shouldn’t be a divorce concern, right? After all, gifts from someone other than your spouse and inheritances are non-marital and separate property, right?

Utah Family Law, LC | divorceutah.com | 801-466-9277

https://www.quora.com/If-you-know-you-are-both-heading-toward-divorce-with-your-spouse-and-inheriting-the-estate-of-a-dying-parent-both-in-the-next-five-years-what-can-you-do-to-protect-that-inheritance-from-becoming-marital-communal/answer/Eric-Johnson-311

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