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Accumulated Income from Separate Property
© 2004 National Legal Research Group, Inc.
MISSOURI: Greiner v. Greiner, 146 S.W.3d 442 (Mo. Ct. App. 2004).
The trial court erred by treating as separate property an investment account started before the marriage, to which no funds were contributed during the marriage. Some of the growth in the account was accumulated interest income, and all income from separate property is marital property, regardless of cause. On the facts, however, the error was harmless. A home acquired by the husband after separation, with a marital property down payment, was properly treated as marital property.
The husband appealed that portion of the divorce decree which equitably divided the parties' marital assets. The marital assets totaled $444,500. The husband received 51% of the assets, and the wife received 49% of the assets.
The husband first contested the lower court's classification of a particular investment account as the wife's separate property. The account had been established prior to the marriage by a contribution from the wife and her mother of $500 each. No additional contributions were made for the next thirty years but the account increased from $1,000 to $19,187. The court below classified the entire account as nonmarital as there was no evidence that the account had been commingled with marital assets or that the wife intended to gift her premarital interest in the account to the marital estate. The husband asserted that, aside from the lack of commingling or the intent to make a gift, any increase in the account's value that accrued during the marriage was marital property. The court on appeal agreed. While it recognized that there are exceptions to the statutory pronouncement that all property acquired during the marriage is presumed to be marital, including "the increase in the value of property acquired prior to the marriage . . . unless marital assets, including labor, have contributed to such increases and then only to the extent of such contributions," Mo. Rev. Stat. Ann. 452.330.2(5), it also held that prior Missouri court decisions have concluded that the phrase "increase in value" does not include income earned during the marriage from property acquired prior to the marriage. Thus, concluded the appellate court, the wife's premarital $500 investment could be properly characterized as her separate property, but any interest or dividends that she earned from the account during the marriage became part of the marital estate. The trial court erred, therefore, in assigning the entire value of the investment account to the wife as her separate property. It should have determined the marital portion of the increased value of the account and then included that amount in the marital property set aside to the wife.
However, the appellate court found that this error did not necessarily require reversal unless it resulted in a property division so unduly weighted in the wife's favor as to indicate an abuse of the trial court's discretion. In examining the record, it noted that while the exact amount of the marital portion of the account was unknown it would likely be only as much as one-half of its value, or roughly $9,000. As the husband received 51% of the $444,500 in marital assets, a reversal of the property distribution award in order to reflect this marital interest would have made the property division slightly more equalized, with each party receiving 50%. The court found that this classification error caused only a 2% differential in the husband's favor and did not affect the overall fairness or equity of the property division. Since the error did not result in an abuse of discretion, there was no ground for reversal.
The husband also complained of error by the trial court in its inclusion of his $3,231 down payment on his new house as a marital asset because those funds did not exist at the time of the trial and had been incorporated into a parcel of real estate that had no equity. He also complained that the lower court double-counted the asset by characterizing the down payment as marital property and then declaring the real estate as the husband's separate property. The appeals court rejected both assertions. The real estate was purchased after the husband had left the marital abode after the date of the hearing but before the entry of the dissolution judgment. The home was valued at $225,000, subject to a mortgage for the same amount, despite the husband's down payment. The husband's assertion that the trial court had classified this property as his separate estate was erroneous. Instead, it treated the home as marital property and merely divided the parties' assets and awarded the marital home to the wife and this newly purchased property to the husband. The new home was properly characterized as marital property because it was purchased during the marriage and with marital funds. While the home had no equity value as a result of the mortgage and financing terms, the trial court was reasonable in factoring the husband's expenditure of $3,231 in marital funds to acquire this substantial asset. Therefore, there was no classification error, and there was no double-counting the value of the new home so as to require reversal.
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