Commingling and Family Use

April 29, 2020 § 1 Comment

Allison Gaskin inherited two parcels of property during her marriage to her husband, Tony.

When it came time for a divorce, Tony took the position that the two parcels were marital, subject to division. Allison disagreed. After trial, the chancellor found the property to be part of Allison’s separate estate. Tony appealed.

In Gaskin v. Gaskin, handed down April 14, 2020, the COA affirmed. Judge Cory Wilson wrote the unanimous opinion:

¶18. During the course of the marriage, Allison inherited interests in two parcels of land: the first was a fourteen-acre tract of land referred to by the parties as the “White House property,” and the second was a sixty-five-acre tract located at 3506 Highway 18 in Rankin County. The chancellor determined that the White House property had been commingled and converted to marital property because Tony had purchased Allison’s brother’s one-half interest in the property and had “made significant contributions in maintaining the property.” The chancellor further found that the property “ha[d] been used by Tony and the boys for hunting and fishing.” The White House property was valued at $160,000, and the chancellor awarded the property to Allison as part of the division of marital assets.

¶19. Regarding the sixty-five-acre tract of land located at 3506 Highway 18, Tony testified that he occasionally bush-hogged the property and stored some Gaskin Plumbing equipment on the property. The parties stipulated that the total value of this parcel was $607,000. In contrast to the White House property, the chancellor found that the sixty-five-acre parcel Allison inherited had not been “commingled to the extent necessary to classify it as marital
property for the purpose of division between the parties.”

¶20. On appeal, Tony asserts that the chancellor erred in finding that the sixty-five-acre tract of land constituted nonmarital property. He contends that the evidence was clear that he spent substantially more time and effort maintaining the sixty-five-acre property than he did maintaining the White House property. Tony also asserts that he would hunt, fish, and play sports on the sixty-five-acre tract with the boys. He contends that these activities effectively commingled the property and converted it to marital property, not Allison’s separate nonmarital property.

¶21. “When dividing marital assets, the chancery court must first classify the property as marital property or nonmarital property.” McDonald v. McDonald, 115 So. 3d 881, 885 (¶12) (Miss. Ct. App. 2013) (citing Stewart v. Stewart, 864 So. 2d 934, 937 (¶12) (Miss. 2003)). “Marital property is defined as ‘any and all property acquired or accumulated during the marriage. Assets so acquired or accumulated during the course of the marriage are marital assets and are subject to an equitable distribution by the chancellor.’” Id. By contrast, “[i]nter vivos gifts and inheritances are considered nonmarital property unless they have been commingled.” Id. at 886 (¶12) (citing Everett v. Everett, 919 So. 2d 242, 247 (¶19) (Miss. Ct. App. 2005)). “Assets which are classified as nonmarital, such as inheritances, may be converted into marital assets if they are commingled with marital property or utilized for domestic purposes, absent an agreement to the contrary.” Stewart, 864 So. 2d at 937 (¶12) (quoting Boutwell v. Boutwell, 829 So. 2d 1216, 1221 (¶20) (Miss. 2002)).

¶22. Importantly, “we will not substitute our own judgment for that of the chancellor.” McDonald, 115 So. 3d at 886 (¶16). Here, we cannot say that the chancellor erred in finding that the sixty-five-acre property inherited by Allison and her brother remained nonmarital property despite Tony’s assertions that he spent substantial time maintaining the parcel and that he spent time on the property with the couple’s boys. The chancellor found that Tony’s
occasional bush-hogging, equipment storage, and recreational activities with the family were not sufficient to commingle the property with the parties’ marital assets, such that the land should be classified as marital property for the purpose of equitable division. We find that the chancellor did not abuse his discretion in treating the sixty-five acres as nonmarital property, and this issue is without merit. [Fn omitted]

I think the law of so-called “family use” which is the same as the commingling argument here, could use some attention from the MSSC. We have this case at one end, where hunting, fishing, bush hogging, and storing business equipment is inadequate to bring it into the marital estate. And on the other end we have a case such as Rhodes v. Rhodes, in which use of a separate beach condo once a year by the family and the wife’s selection of drapes for it converted it into a marital asset. I whined about Rhodes in this old post.

 

TRIAL BY CHECKLIST: EQUITABLE DISTRIBUTION

August 5, 2010 § 23 Comments

A practice tip about trial factors is here.

The decision in Ferguson vs. Ferguson, 639 So.2d 921, 928-9 (Miss. 1994), sets out the factors that the trial court must address in making a determination of equitable distribution.  Those factors are:

  1. Substantial contribution to the accumulation of the property, based on direct or indirect economic contribution to the acquisition of the property, contribution to the stability and harmony of the marital and family relationships as measured by the quality, quantity of time spent on family duties and the duration of the marriage, and contribution to the education, training or other accomplishment bearing on the earning power of the spouse accumulating the assets.
  2. The degree to which each spouse has expended, withdrawn or otherwise disposed of marital assets and any prior distribution of such assets by agreement, decree or otherwise.
  3. The market value and the emotional value of the assets subject to distribution.
  4. The value of assets not ordinarily, absent equitable factors to the contrary, subject to distribution, such as property brought to the marriage by the parties, and property acquired by inheritance or inter vivos gift by or to an individual spouse.
  5. Tax and other economic consequences, and contractual or legal consequences to third parties, of the proposed distribution.
  6. The extent to which property division may, with equity to both parties, be utilized to eliminate periodic alimony and other potential sources of future friction between the parties.
  7. The needs of the parties for financial security with due regard to the combination of assets, income and earning capacity.
  8. Any other factor that in equity should be considered.

Some principles of equitable distribution to bear in mind:

  • Equitable distribution applies to marital assets, which are assets acquired through the work efforts of one or both parties during the marriage.  Included in the definition of marital assets is added value, as where an asset was the pre-marriage property of one party, but its value was increased during the marriage by contribution.  An example is a 401(k) plan with a value of $10,000 at the time of the marriage that increases through contributions during the marriage to $100,000.  The increased value attributed to contributions is a marital asset. 
  • Equitable distribution does not mean equal distribution.  The division must be equitable, considering all of the Ferguson factors.  Each asset need not be divided; the overall division must be fair. 
  • Equitable division of the marital estate involves four steps:  (1) The trial court classifies each asset as marital or non-marital; (2) The court determines the value of each asset based on the proof, which may require appraisals; (3) The marital assets are divided equitably based on the Ferguson factors; and (4) move on to the Armstrong factors to determine whether, after equitable distribution, alimony is appropriate.
  •  The parties’ separate, or non-marital, assets are not subject to equitable division, although they are to be taken into consideration in the distribution as well as in ajudicating the need for alimony.  The values of non-marital assets must be in the record as well as that of the marital assets. 
  • Equitable distribution may be used to eliminate the need for an alimony award.  As the court stated in Ferguson at 639 So.2d 921, 929 (Miss. 1994), “Alimony and equitable distribution are distinct concepts, but together they command the entire filed of financial settlement of divorce.  Therefore, where one expands, the other must recede.”   
  • The contribution of a homemaker to the marital estate is presumed equal to that of a wage-earner, but the presumption can be overcome with proof that the homemaker’s contribution was actually minimal.
  • A spouse may be granted a greater share based on greater need.
  • In making its allocation of assets, the court considers the asset value net of debt, and may also factor in the amount of debt assigned to a party in determining how to award assets.
  • The valuation date is in the judge’s discretion, but the judge can be influenced by your proof and argument.  Give careful consideration to the date you wish for the assets to be valued.  For example, due to fluctuations in the stock market, it may be in your client’s interest for the valuation date to be closer to the date of the divorce than to the date of separation.  Make your position and its rationale clear to the court.  Caveat: The appellate courts have made it clear that entry of a temporary judgment stops accumulation of marital assets, so that any increased value or newly acquired assets after the temporary are the separate property of the party to whom they are attributable.

Equitable distribution is a complex subject with many nuances that are far beyond the scope of this post.  I recommend that you obtain a copy of Professor Deborah Bell’s Family Law in Mississippi, which includes an exhaustive analysis of the subject at Chapter VI.

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