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Commingling of Inherited Property
© 2003 National Legal Research Group, Inc.
OREGON: In re Marriage of Van Horn, 185 Or. App. 88, 57 P.3d 921 (2002).
The trial court did not err by making an equal division of real property acquired with inherited funds. The wife had regularly commingled inherited trust money with marital funds, and this regular commingling made an equal division equitable even though the funds actually used to acquire the real property itself were not commingled.
The parties were married and lived in California. After six years of marriage, they separated in May 1999. It had been the husband's third marriage and the wife's fourth marriage. Both parties were employed during the course of the marriage. The wife received trust fund distributions ($100,000 per year as of the date of dissolution) as well as a significant inheritance from her grandfather. The husband and wife also received a yearly gift of $10,000 from the wife's father.
While their employment income and the yearly gifts were deposited into a joint account, the wife deposited her trust fund distributions into a separate money market account, although she would routinely transfer money from that account into their joint account to meet joint expenses. This separate account was opened to prevent the husband's former wife from trying to use the wife's trust fund income to increase spousal and child support. Other accounts and credit cards were maintained by the husband and the wife in their joint names.
In May 1997, the parties purchased a property in Oregon with the intention of moving there. The $130,000 purchase price was paid from the wife's separate money market account, and title was taken in her name alone, again for the purpose of protecting it from any future action by the husband's former wife. The parties began constructing a house on the Oregon property. Costs were primarily paid from the wife's separate account, although she would on occasion use funds from their joint account, which she reimbursed from her separate account. By agreement of the parties, the wife lived and worked on the Oregon property full time, while the husband traveled back and forth from California in order to assist in the construction until he located employment in Oregon and could relocate.
At trial, the wife sought the Oregon property in its entirety, arguing that the husband had not contributed economically or otherwise to its acquisition. The property and the house had a value of $477,000, with $226,000 still owed on it. The trial court awarded the husband one-half of the $251,000 equity in the property. It held that while the wife purchased the property in her own name and entered into a contract to build the house separately the husband was involved in its planning and worked on the site preparation and construction of the house on numerous occasions. The court further found that the manner in which the property was titled had more to do with the conflict between the husband's former wife rather than an effort by the wife to keep her inheritance separate from her husband. Moreover, it reasoned that even though the parties had separate bank accounts they treated their money as family assets and it was spent on a regular basis for family activities and expenses.
The wife appealed, arguing that although the property was properly categorized as marital property under Or. Rev. Stat. Ann. 107.105(1)(f) she successfully rebutted the statutory presumption of equal contribution, thereby entitling her to the entire property. The Oregon Court of Appeals disagreed and affirmed the trial court's determination.
Under O.R.S.A. 107.105(1)(f), because the property was acquired during the course of the marriage, it is a marital asset and subject to the presumption of equal contribution. The burden of overcoming that presumption fell here to the wife. In deciding whether the presumption had been rebutted, the court first had to determine the magnitude of each spouse's overall contribution to the acquisition of the marital asset. On this point, the court noted that despite the fact that the wife had paid for the property and construction costs exclusively with the inheritance trust funds in her separate money market account, and the husband did nothing to aid in the acquisition of such inheritance, the parties had commingled their assets. While one spouse's demonstration that an inheritance or property acquired therefrom was obtained free from any contribution from the other spouse may rebut the presumption of equal contribution, such presumption is only one consideration in determining a property division which is just and proper in all of the circumstances. Other equitable considerations, such as the commingling of separate funds with family funds, may support an equal division of property even though the presumption of equal contribution has not been overcome.
The evidence before the trial court supported its determination that the husband was entitled to share in the value of the property. The following was deemed significant by the appeals court: The wife's separate money market account was opened for the purpose of preserving funds deposited therein against the potential claims of the husband's former wife rather than as a division of the parties' financial affairs; the title to the property was placed in the wife's name alone for the same reason; it was a practice of the wife to transfer her trust fund income into the parties' joint account as needed to pay housing and other expenses; the proceeds of the sale from the parties' California home, which was held jointly, were deposited into the wife's separate account; the parties had planned their finances around the wife's trust fund distributions and the wife assured the husband that because of such large distributions they would have nothing to worry about again; and the husband had contributed time and effort in securing the completion of the construction of the house.
Based upon this evidence, the court concluded that although the husband did not contribute to the acquisition of the money that ultimately paid for the Oregon property, given the fact that the wife contributed her trust fund money to the joint uses of the parties to such a large extent, she failed to rebut the statutory presumption of equal contribution, or, if she had rebutted the presumption, equity demanded that the husband still share in the value of the property. While the money may have been segregated in name, declared the court, it was not meant to be segregated in practice. (DB)
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