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JOINT TITLE AND THE GIFT EXCEPTION
© 1995 National Legal Research Group, Inc.
"Transmutation" is a key concept in dual classification jurisdictions. In essence, it refers to a change in the status of property from separate to marital or - less frequently - from marital to separate. One very common way in which such a change occurs is when separate property is titled in the parties' joint names.
Most jurisdictions adhere to the view that a spouse's conveyance of separate property into joint title presumptively creates a gift to the marital estate, thereby transmuting the separate property into marital property unless the spouse who contributed the separate property proves that he or she did not intend to make a gift. Most states even apply the gift presumption when the joint titling occurs in a transaction in which property is acquired from a third party. But where separate property becomes marital through joint titling, courts typically recognize the origin of the jointly titled property through a disproportionate award to the spouse who contributed the separate property.
Part I of this article discusses the view that separate property presumptively loses that character when it is placed in joint title. Part II reviews statutes and cases that have rejected the view that joint titling presumptively creates a gift. Part III discusses rebutting the gift presumption, and Part IV highlights cases on the issue of taking the separate property contribution into account at the division stage.
In many states the presumption of gift applies to separate funds placed in a joint account, and a few of the cases cited in this article involve funds in joint accounts. However, the classification of separate funds deposited into joint accounts is sufficiently complicated to warrant separate treatment and is beyond the scope of this article. For a discussion of that topic, see "Funds in Bank Accounts," 6 Equitable Distribution J. 133-37 (1989).
I. Majority View - Presumption of Gift
General Rule. Under a long-standing and well-established common-law rule, a husband's transfer of his property into a tenancy by the entirety presumptively resulted in a gift to the other spouse. See generally 41 C.J.S. "Husband and Wife" Sec. 105(a) (1991). In most states, the common-law rule survived the demise of the title system of distributing property between divorcing spouses. Hence, a transfer of separate property from one spouse to the husband and wife presumptively results in a gift for purposes of classifying property upon marriage dissolution. E.g., Lewis v. Lewis , 785 P.2d 550 (Alaska 1990); Lofton v. Lofton , 23 Ark. App. 203, 745 S.W.2d 635 (1988); Husband T.N.S. v. Wife A.M.S. , 407 A.2d 1045 (Del. 1979); Turpin v. Turpin , 403 A.2d 1144 (D.C. 1979); Robertson v. Robertson , 593 So. 2d 491 (Fla. 1991) (real property); Amato v. Amato , 596 So. 2d 1243 (Fla. DCA 1992) (personal property); Conrad v. Bowers , 533 S.W.2d 614 (Mo. Ct. App. 1975); Parsons v. Parsons , 101 A.D.2d 1017, 476 N.Y.S.2d 708 (1984); McLean v. McLean , 323 N.C. 543, 374 S.E.2d 376 (1988); Chastain v. Posey , 665 P.2d 1179 (Okla. 1983); Madden v. Madden , 336 Pa. Super. 532, 486 A.2d 401 (1984); Quinn v. Quinn , 512 A.2d 848 (R.I. 1986); Trimnal v. Trimnal , 287 S.C. 495, 339 S.E.2d 869 (1986); Batson v. Batson , 769 S.W.2d 849 (Tenn. Ct. App. 1988); Whiting v. Whiting , 183 W. Va. 451, 396 S.E.2d 413 (1990); Bonnell v. Bonnell , 117 Wis. 2d 241, 344 N.W.2d 123 (1984); see also Powers v. Powers , 568 So. 2d 255 (Miss. 1990).
Policies Behind Presumptive Gift Rule. In one common factual scenario that produces a transmutation dispute, a spouse who owns separate property (premarital, gifted, or inherited property, for example) transfers it into the spouses' joint names. Perhaps even more frequently, property is purchased with separate funds during marriage, but title is taken in joint tenancy. Both of these scenarios evidence the former owner's intention that the property become marital, according to Professor Clark:
[D]ealing with property in these ways creates a rebuttable presumption of a gift to the marital estate. This presumption is based also upon the provision in many marital property statutes that property acquired during the marriage is presumed marital. The presumption can be rebutted by evidence of circumstances clearly indicating an intent that the property remain separate.
2 H. Clark, The Law of Domestic Relations in the United States Sec. 16.2 at 185 (2d ed. 1987). Underlying the joint titling gift presumption is the perception that the deliberate act of transferring title raises a justifiable expectation in the other spouse that the property belongs to both parties, so that it should be classified as marital unless the other spouse was made aware of a contrary intent on the part of the donor. See McLeod v. McLeod , 74 N.C. App. 144, 327 S.E.2d 910 (1985) (applying gift presumption furthers the probable intent of the spouses to share the jointly titled property; joint title leads donee spouse to expect that property will be shared, and the property should be classified as marital to protect those expectations unless the donor spouse's contrary intention was made clear). The documentary nature of such a transfer helps guard against mistakes about whether the transferor really intended to change ownership interests in the property.
The majority view on the effect of joint titling fosters the partnership concept of marriage which is the basis for equitable distribution, the West Virginia Supreme Court said in Whiting v. Whiting, supra . If joint titling did not imply a gift to the marital estate, the court reasoned, it would be extremely difficult for a spouse to claim an interest in jointly titled property for which the other spouse paid most of the consideration. Absent affirmative proof of an unequivocal gift of separate property in such circumstances, the joint property of the spouses would be held to be the separate property of only one spouse despite documentary proof of co-ownership and a statutory preference for marital property, reflected in the statute's definition of marital property as all property except for certain limited categories of nonmarital property. That would be a regressive result, the court said. "Instead, by recognizing that the transfer of title to the names of both husband and wife reflects an intent to donate the property to the marital estate, we give basic credence to the act of making a joint title and to the partnership or shared enterprise concept of marriage." 396 S.E.2d at 421; accord Quinn v. Quinn, supra (doctrine of transmutation is consistent with recognition of marriage as a partnership; refusal to recognize the doctrine would unfairly permit a spouse, after exchanging and placing nonmarital property in joint names and after years of marriage, to defeat the other spouse's rights).
Arkansas law on property held as a tenancy by the entirety is unique: Such property is not within the reach of the equitable distribution statute and is thus divided by legal title. Crowder v. Crowder , 303 Ark. 562, 798 S.W.2d 425 (1990); Warren v. Warren , 273 Ark. 528, 623 S.W.2d 813 (1981). Relation to Source-of-Funds Rule. Under the source-of-funds doctrine adopted in numerous dual classification jurisdictions, property acquired partly with marital funds or labor and partly with separate funds is allocated between the marital estate and the separate estates according to their respective contributions to the acquisition of the property. Does the source-of-funds rule take precedence over the judicial presumption of gift that arises when one spouse titles his property in both spouses' names? Under the source-of-funds rule, the separate and marital components of the jointly titled property would be sorted out by looking at contributions to acquisition, whereas under the gift presumption, the jointly titled property would be marital property unless the presumption was rebutted.
The court in Whiting held that the source-of-funds doctrine may not be used to characterize as separate property that property which has been transferred to joint title during marriage. Tracing the parties' contributions to classify the property as marital or nonmarital ignores the effect of the joint titling of property and is incompatible with the partnership concept of marriage, the court said. Accord Weiss v. Weiss , 122 Wis. 2d 688, 365 N.W.2d 608 (Ct. App. 1985) (after separate property was converted to marital property by its transfer into joint tenancy, there was no longer any separate property to trace, and tracing was not required); McLeod v. McLeod, supra (presumption of gift, rather than the source-of-funds rule, governs the classification of property transferred into tenancy by the entireties).
Furthermore, a state's adoption of the source-of-funds doctrine does not preclude courts in that jurisdiction from holding that a transfer into joint title presumptively creates a gift to the marital estate. E.g., Stephens v. Stephens , 842 S.W.2d 909 (Mo. Ct. App. 1992) (doctrine of transmutation for joint titling of separate property was not abrogated by state's judicial adoption of source-of-funds rule); Kramer v. Kramer , 709 S.W.2d 157 (Mo. Ct. App. 1986) (same). Contra Grant v. Zich , 300 Md. 256, 477 A.2d 1163 (1984) (discussed below).
Relation to Transmutation by Commingling. Some jurisdictions have enacted statutory amendments restricting the circumstances under which commingling of separate and marital property causes transmutation. Spouses in these jurisdictions have seized upon such an amendment to construct an argument against transmutation by gift through joint titling. Courts have held, however, that the doctrine of transmutation through joint titling remains unaffected by restrictions on the doctrine of transmutation through commingling. E.g., In re Marriage of Nagel , 133 Ill. App. 3d 498, 478 N.E.2d 1192 (1985) (rejecting husband's argument that common-law presumption of gift should not be applied to parties' jointly titled home in light of statutory amendments limiting doctrine of transmutation through commingling); Stephens v. Stephens, supra (doctrine of transmutation for joint titling of separate property was not abrogated by amendment that provides that nonmarital property does not become marital merely by commingling it with marital property).
Impact of Marital Property Presumption. Although Professor Clark suggested in the above-quoted passage that the joint title gift presumption is based partly upon the marital property presumption, the gift presumption has been recognized in jurisdictions without a marital property presumption. For example, before North Carolina enacted a marital property presumption, the state's high court held that the lack of a marital property presumption in the state equitable distribution statute did not weigh against the recognition of a marital gift presumption. McLean v. McLean, supra .
Time of Joint Titling. The presumption has been held to apply even where the joint titling occurred before marriage. In re Marriage of Hacker , 239 Ill. App. 3d 658, 606 N.E.2d 648 (1993) (husband's down payment on marital home titled in joint tenancy was presumptively a gift to the marital estate even though the house was purchased two months before marriage).
Exchanged Property Held in Joint Title. The gift presumption applies not only when one spouse conveys his or her property to both spouses, but also when the spouses take joint title to property purchased during the marriage with separate funds. E.g., Pascale v. Pascale , 274 N.J. Super. 429, 644 A.2d 638 (App. Div.), cert. granted , 138 N.J. 266, 649 A.2d 1286 (1994) (by selling her premarital stock and using the proceeds for a down payment on the jointly titled marital home, the wife made an interspousal gift and did not retain a separate ownership interest in the proceeds from sale of the stock); Madden v. Madden, supra (when husband sold property he acquired by gift during marriage and used the proceeds to purchase bonds in spouses' joint names, the bonds were marital property); Quinn v. Quinn, supra (gift presumption applied where proceeds from sale of husband's inherited property were used to acquire jointly titled marital residence); Weiss v. Weiss, supra (where husband contributed funds gifted to him by his parents in purchasing jointly titled residence, those funds lost their status as separate property).
Arguably, where the acquired property was purchased with both separate and marital funds, the spouses' decision to title the property jointly merely reflects that fact and does not necessarily indicate that the spouse contributing separate property intended to donate it to the marital estate. Although this argument has been almost uniformly rejected, Maine's high court held that the presumption of donative intent that arises where one spouse transfers nonmarital property into joint names does not apply where spouses acquire property in joint names from a third party in exchange for a combination of marital and nonmarital funds. The intent to make a donation to the marital estate manifested by a transfer of property from one spouse to both spouses jointly is not present where the spouses purchase property in joint names from a third party, the court said. Indeed, joint ownership of property acquired with both marital and nonmarital funds is the only way to represent the fact that the purchase price came from both spouses, the court said. Without limiting the presumption of donative intent to situations where the facts raise an inference that the spouse who contributed separate property intended to make a gift to the marital estate, the source-of-funds rule would be abandoned for any property titled in joint names, the court reasoned. Dubord v. Dubord , 579 A.2d 257 (Me. 1990). The gift presumption still applies in Maine where a spouse purchases property with nonmarital funds and voluntarily chooses joint title. McCracken v. McCracken , 617 A.2d 1034 (Me. 1992).
Gifts in Joint Title from Third Parties. Some cases have applied the gift presumption when the parties receive property in joint title as a gift from a third party. E.g., In re Marriage of Hunter , 223 Ill. App. 3d 947, 585 N.E.2d 1264 (1992); Tubbs v. Tubbs , 755 S.W.2d 423 (Mo. Ct. App. 1988); Loving v. Loving , ___ N.C. App. ___, 455 S.E.2d 885 (1995). In Loving , the North Carolina Court of Appeals held that real property deeded to the spouses by the husband's parents was marital property. Even if the property was intended as a gift only to the husband and was therefore his separate property, he was presumed to have made a gift to the marital estate when he directed that the title be placed in the entireties, the court said. It rejected the husband's argument that the presumption of gift applies only when a spouse uses separate property to acquire other property titled in the entireties. The presumption also applies, the court held, when a spouse directs that title to his separate property be placed in the entireties, because the other spouse would reasonably expect that it would be an addition to marital property.
Arguably, the gift presumption does not come into play in the context of jointly titled property gifted by a third party. In that context, the issue is whether the third party made a gift to both spouses or only to one spouse. A deed or document which names both spouses as recipients constitutes strong evidence that the gift was intended for both the husband and the wife. See O'Neal v. O'Neal , 703 S.W.2d 535 (Mo. Ct. App. 1986) (rejecting contention that gift was to husband individually, because deed conveyed property jointly to both spouses); Niles v. Niles , 157 A.D.2d 951, 550 N.Y.S.2d 208 (1990) (rejecting claim that property was gift to husband alone, where property was conveyed to both spouses as tenants by the entirety); cf. Portuondo v. Portuondo , 570 So. 2d 1338 (Fla. DCA 1990) (tax records clearly showed that husband's parents made a gift to both husband and wife when they forgave the mortgage on the couple's home).
The titling of the gifted property is not determinative, especially in the face of strong evidence indicating a contrary intent. See In re Marriage of Martens , 406 N.W.2d 819 (Iowa Ct. App. 1987) (property from wife's father should be excluded from marital estate even though it had been deeded to both spouses, because record established compelling evidence that gift was made to wife alone); cf. Hunt v. Hunt , 85 N.C. App. 484, 355 S.E.2d 519 (1987) (down payment on home was gift to husband alone even though some checks were written to wife as well as to husband).
II. No Presumption of Gift
The gift presumption for separate property placed in joint title has been rejected either wholly or partially in a few states, including Maryland, Virginia, and Iowa.
Maryland. In Grant v. Zich, supra , Maryland's high court rejected the majority view and held that the source-of-funds doctrine should be applied to allocate the property between the separate and marital estates according to their respective contributions to the acquisition of property.
Effective October 1, 1994, however, the Maryland equitable distribution statute was amended in a way that altered the law with respect to real property held in a tenancy by the entirety. Under the new law, "[m]arital property includes any interest in real property held by the parties as tenants by the entirety unless the real property is excluded by valid agreement." Md. Fam. Law Code Ann. Sec. 8-201(e)(2) (Cum. Supp. 1994). The amendment also added the phrase "Except as provided in paragraph (2) of this subsection" to the subsection which lists categories of nonmarital property not included in the definition of marital property. As a result of the amendment, it appears that real property held in a tenancy by the entirety must be classified as marital property even if the real property was acquired in whole or in part with premarital, gifted, or inherited funds. On the other hand, the amendment did not expressly abrogate Grant for transfers of property into other forms of joint title which give both spouses an ownership interest in the property.
The court in Grant reasoned that the judicial adoption of the source-of-funds rule means that classification of property upon marriage dissolution is not dependent upon the legalistic concept of title. The common-law gift presumption incorrectly favors title over contributions to acquisition and is at odds with the policy of the Maryland equitable distribution statute, the court said.
As a historical matter, however, the rejection of title as a factor in classifying property stemmed from the harshness of the common law in cases where property acquired by the labor of the marital partnership was titled in the name of only one spouse. Courts and legislatures alike felt that titling property in the name of only one spouse did not necessarily signify an intent to deprive the other of a share in that property, yet at common law courts had no jurisdiction to divide property titled in the name of one spouse. On the other hand, as the wide acceptance of the common-law gift presumption in the equitable distribution context suggests, joint titling of separate property may indeed show that the parties intended to change ownership interests in it. The recent statutory amendment in Maryland evinces legislative disagreement with Grant 's declaration that title is irrelevant when classifying entireties property.
One reason that the court in Grant gave for rejecting the majority view was that applying the gift presumption would in essence constitute transmutation. But as subsequent courts in other jurisdictions have recognized, the source-of-funds approach and the doctrine of transmutation can coexist in equitable distribution jurisdictions. That is, the separate and marital components of an asset should be sorted out under the source-of-funds approach to determine which interests to allocate to the separate and marital estates, unless there is strong evidence that the parties intended to share the entire property, in which case the separate components are transmuted to marital property. E.g., Stephens v. Stephens, supra .
The holding in Grant had the general effect of diminishing the property available for distribution and thus limiting the court's power to make an equitable award. Ordinarily, application of the source-of-funds doctrine results in more property being included in the marital estate, since it prevents classification of an entire asset as separate property merely because title to that asset had been acquired before marriage. An unfair result does not necessarily occur when separate property transferred into joint title is held transmuted to marital property by application of the gift presumption, because the former owner's contribution can still be considered at the division stage.
Iowa and Ohio. Several years ago the Iowa Court of Appeals changed course on the effect of joint titling. In re Marriage of Hoffman , 493 N.W.2d 84 (Iowa Ct. App. 1992) (en banc); In re Marriage of Wertz , 492 N.W.2d 711 (Iowa Ct. App. 1992).
For gifted and inherited property, the donor's intent and surrounding circumstances determine whether the property must be set aside to the recipient, not whether the property was placed in joint ownership, the court held in both cases. It overruled In re Marriage of Butler , 346 N.W.2d 45 (Iowa Ct. App. 1984) (separate property of one spouse is transformed into marital property when it is placed in some form of joint ownership).
The Ohio Court of Appeals used broad language rejecting the rule of transmutation through joint titling in a case involving deposits of separate funds into a joint account. Funds that the husband brought into the marriage were his separate property under the source-of-funds rule even though he placed the funds into joint accounts, the court held. Kahn v. Kahn , 42 Ohio App. 3d 61, 536 N.E.2d 678 (1987).
The source-of-funds rule is favored over the blind application of a rule stating that where property is placed in joint title, it is presumed to be a gift from one spouse to the other, the court declared. An unvarying rule resulting in a gift to one spouse whenever property is titled jointly encourages married couples to isolate separate property in contemplation of divorce. This type of planning could have a detrimental impact upon the marital relationship, the court said. Equitable principles must take precedence over the technicalities of transmutation, the court added.
The Ohio legislature subsequently adopted a comprehensive equitable distribution statute which does not expressly address the effect of joint titling, although it does contain very detailed rules for separating out the separate and marital interests in mixed property. Ohio Rev. Code Ann. Sec. 3105.171.
Virginia. Virginia amended its equitable distribution statute in 1991 to apply dual classification principles to jointly titled assets. See Va. Code Ann. Sec. 20-107.3(A)(3)(f), (g) (Repl. Vol. 1995).
Va. Code Ann. Sec. 20-107.3 (A)(2) defines marital property in part as "all property titled in the names of both parties, whether as joint tenants, tenants by the entirety or otherwise, except as provided by subdivision A 3." Va. Code Ann. Sec. 20-107.3(A)(3) (f), (g) provides in part:
f. When separate property is retitled in the joint names of the parties, the retitled property shall be deemed transmuted to marital property. However, to the extent the property is retraceable by a preponderance of the evidence and was not a gift, the retitled property shall retain its original classification.
g. Subdivisions A 3 d, e [relating to commingled property] and f of this section shall apply to jointly owned property. No presumption of gift shall arise under this section where (i) separate property is commingled with jointly owned property; (ii) newly acquired property is conveyed into joint ownership; or (iii) existing property is conveyed or retitled into joint ownership. For purposes of this subdivision A 3, property is jointly owned when it is titled in the name of both parties, whether as joint tenants, tenants by the entireties, or otherwise.
Two points should be noted about this statutory language. Dual classification principles are to be applied "to the extent the property is retraceable by a preponderance of the evidence and was not a gift." This language appears to mean that if the separate property owner did in fact intend a gift to the other spouse, the jointly titled property must be classified as marital. This conclusion is consistent with the statutory provision which lists as separate property gifts from a source other than the other party . Va. Code Ann. Sec. 20-107.3(A)(1)(ii). In view of that provision, interspousal gifts are marital property, including interspousal gifts which are titled in joint names. On the other hand, joint titling of separate property raises no presumption of a gift, so the spouse claiming marital classification cannot rely on a presumption and must prove a gift through circumstances that show donative intent.
For example, in a case decided under the pre-1991 Virginia statute, the Virginia Court of Appeals held that real estate which had been the husband's separate property was marital in view of his testimony that he caused it to be titled in his and his wife's names as a "matter of heart." That testimony acknowledged an irrevocable gift, the court reasoned. McClanahan v. McClanahan , 19 Va. App. 399, 451 S.E.2d 691 (1994); see also Westbrook v. Westbrook , 5 Va. App. 446, 364 S.E.2d 523 (1988) (written declaration by husband that the parties owned his separate property home "together").
III. Rebutting the Gift Presumption
Two different theories exist on rebutting the gift presumption: the legal title rule and the beneficial interest rule, as so called in a leading treatise. B. Turner, Equitable Distribution of Property Sec. 5.18 at 21-215 (1994). Most cases do not expressly distinguish between these two theories or use those labels, but the reasoning in each case reveals which theory underlies the result.
The distinction between the theories can be crucial. Although it is difficult to rebut the presumption under the beneficial interest rule, it is virtually impossible to do so under the legal title rule. Hence, it is imperative for counsel to identify which theory would best advance the classification sought by the client and invoke cases which support that theory.
Legal Title Rule. This approach views donative intent as the intent to convey legal title without consideration. Thus, any deliberate conveyance into joint title necessarily results in a gift, because the recipient received a legal interest in the property and gave nothing in return. E.g., Hall v. Hall , 734 P.2d 666 (Idaho Ct. App. 1987) (deed conveying separate property into joint title evidenced a gift, and parol evidence rule barred extrinsic evidence to the contrary), aff'd on other grounds , 116 Idaho 483, 777 P.2d 255 (1989); Weeks v. Weeks , 650 A.2d 945 (Me. 1994); Coffey v. Coffey , 119 A.D.2d 620, 501 N.Y.S.2d 74 (1986); Brown v. Brown , 352 Pa. Super. 267, 507 A.2d 1223 (1986); Weiss v. Weiss, supra .
Under this view, the donor spouse's explanation of why title was placed in joint tenancy is not relevant to rebut the gift presumption because it is not a denial of title transfer, but is rather a statement of the reasons for the gift. Stated differently, motivation for the transfer is irrelevant to whether the transferor intended to make a gift to the marital estate, and the transfer of separate property into joint title results in a gift even if it was done to avoid estate taxes, Coffey v. Coffey, supra , or to obtain financing, Lalime v. Lalime , 629 A.2d 59 (Me. 1993).
Under cases following the legal title rule, the presumption of a gift to the marital estate is not irrebuttable, but it may be overcome only by showing that the transferring spouse did not intend to transfer the property to joint ownership or was induced to do so by fraud, coercion, duress, or deception. E.g., In re Marriage of Strobel , 821 S.W.2d 579 (Mo. Ct. App. 1982) (where wife's name was added to documents by attorney or secretary without husband's knowledge or consent, transaction did not result in marital property); see also Weeks v. Weeks, supra (conveyance into joint tenancy for the purpose of enabling wife to finance a business constituted a gift, in absence of evidence of coercion or that husband did not intend to transfer the property); McClellan v. McClellan , 873 S.W.2d 350 (Tenn. Ct. App. 1993) (wife's threat to file for divorce if husband did not title home in her name did not constitute duress so as to avoid conclusion that home was transmuted to marital property).
Beneficial Interest Rule. Cases following this approach turn on whether the transferor intended to give the other spouse a real beneficial interest in the jointly titled property. If the "donor" spouse intended to transfer legal title only and not to give a beneficial ownership interest, then the nominal conveyance does not result in marital property. See In re Marriage of Rink , 136 Ill. App. 3d 252, 483 N.E.2d 316 (1985).
Under this approach, the gift presumption can be rebutted by any proof that persuades the trial court, usually by clear and convincing evidence, that the joint titling was not intended to convey a beneficial interest to the other spouse. In an Illinois case, an appellate court said that some of the factors are (1) the size of the alleged gift relative to the entire estate; (2) who paid the purchase price, made improvements, and paid taxes for the property with solely acquired funds and exercised control and management over the property; (3) when the asset was purchased; and (4) how the parties handled their prior financial dealings with each other. The central issue, however, is the intent of the donor, the court said. The husband's testimony that he placed his property in joint tenancy to gain temporary respite from the wife's nagging did not negate donative intent, the court said. In re Marriage of Marriott , 264 Ill. App. 3d 23, 636 N.E.2d 1141 (1994).
The most effective way of rebutting the gift presumption is by showing a legitimate purpose for the joint titling other than changing the beneficial ownership. Cases have found that the presumption was rebutted, for example, where the joint titling was done for estate planning purposes, e.g., In re Marriage of Davis , 215 Ill. App. 3d 763, 576 N.E.2d 44 (1991); Shepherd v. Shepherd , 526 So. 2d 95 (Fla. DCA 1987), or for financing purposes, e.g., Berry v. Breslain , 352 N.W.2d 516 (Minn. Ct. App. 1984).
Convenience has sometimes been viewed as a credible explanation for joint titling without donative intent. Compare In re Marriage of Rink, supra (property remained separate because transfer was intended to facilitate withdrawals by blind husband); McGarrity v. McGarrity , ___ A.D.2d ___, 622 N.Y.S.2d 521 (1995) (funds inherited by the husband remained his separate property even though he deposited them into the parties' joint accounts, where he made the deposits for the sake of convenience and not with donative intent) with Quinn v. Quinn, supra (presumption not rebutted by evidence that transfer was for convenience); In re Marriage of Sokolowski , 232 Ill. App. 3d 535, 597 N.E.2d 673 (1992) (presumption not rebutted, where transfer was based on husband's fear that possible future health problems might prevent him from making future payments).
As noted in In re Marriage of Marriott, supra , the parties' treatment of the property and the size of the property compared to the total marital property are factors that often influence the court. E.g., In re Marriage of Salisbury , 643 S.W.2d 821 (Mo. Ct. App. 1982) (presumption not rebutted, where jointly titled property was used as marital home during 14-year marriage); Zito v. Zito , 196 Ill. App. 3d 1031, 554 N.E.2d 541 (1990) (presumption that arose from joint titling of wife's home was not strengthened by the fact that the parties paid the mortgage with marital funds, they each claimed one-half of the mortgage interest and real estate taxes as deductions, and the husband assumed an obligation under refinanced mortgage); In re Marriage of Guerra , 153 Ill. App. 3d 550, 505 N.E.2d 748 (1987) (presumption of gift rebutted in view of very large size of property transferred into joint title).
Testimony by Transferor Spouse. As noted above, under the legal title rule, testimony by the transferor spouse about his motive for the transfer is simply irrelevant, as long as the title transfer was deliberate and not the result of fraud or duress.
Under the beneficial interest rule, the transferor's testimony about the motive of and purpose for the conveyance into joint title is relevant evidence on the issue of donative intent. A transferor must be allowed to testify about his intent or purpose in placing his property in joint tenancy, an Illinois appeals court held. "We cannot imagine evidence that is much more relevant to the question of donative intent than the testimony of the donor himself as to that intent," the court declared, holding that it was improper to preclude the husband from testifying about his intent. In re Marriage of Cecil , 202 Ill. App. 3d 783, 560 N.E.2d 374, 377 (1990).
On the other hand, the spouse's testimony need not be accepted as persuasive. In re Marriage of Cecil, supra (trial court should consider all the circumstances and other evidence in determining what weight to give to the donor's testimony). In a recent Illinois case, an appeals court held that the transferor spouse cannot rebut the gift presumption merely by testifying that he or she did not intend to make a gift to the marital estate. E.g., In re Marriage of Smith , 265 Ill. App. 3d 249, 638 N.E.2d 384 (1994). Without going quite that far or announcing a general rule, many courts have held that the gift presumption was not rebutted where the only evidence offered in rebuttal was the transferor's own testimony that no gift was intended. E.g., In re Marriage of Hacker, supra ; In re Marriage of Smith , 892 S.W.2d 767 (Mo. Ct. App. 1995) (wife's self-serving testimony that she did not intend to make a gift was entitled to little weight).
Statements by the transferor are more credible when they amount to an admission against interest, e.g., McClellan v. McClellan, supra (home transferred into joint title by husband was marital, where husband had testified that he purchased the house "for the family"); McClanahan v. McClanahan, supra (husband admitted property was conveyed to wife as a "matter of heart").
Since the burden of rebutting the presumption is on the person claiming lack of donative intent, the presumption is not rebutted if the court does not credit the transferor's evidence. If possible, counsel for the transferor spouse should attempt to prove objective facts that support the client's testimony. E.g., Dotsko v. Dotsko , 244 N.J. Super. 668, 583 A.2d 395 (App. Div. 1990) (deposit of separate funds into joint account for 18 days was not an interspousal gift where tax structure of transfers, as well as husband's withdrawal of exact amount of interest earned on the funds for the 18-day period, indicated intent that property remain nonmarital).
Revoking the Gift. Since the transmutation of separate property placed in joint title occurs at the time of the joint titling, the transferor may not rebut the gift presumption by recanting or revoking the gift. See, e.g., Holmes v. Holmes , 613 So. 2d 511 (Fla. DCA 1993) (home was marital because wife executed a deed to place title in parties' joint names, even though she never recorded it and tore up the deed around the time of the marital breakup); see also McClanahan v. McClanahan, supra (gift was complete, and therefore irrevocable, when husband caused the property to be titled in the parties' joint names without any reservation that would authorize revocation of the gift).
IV. Award of Transmuted Property
The transferor spouse frequently loses the classification battle, by failing to rebut the gift presumption, but nevertheless wins the war, by convincing the court to take the separate property contribution into account at the division stage.
Generally, it has not been held an abuse of discretion to award the former owner the disputed property or a greater share of other marital property in recognition of the separate property contribution, as long as other factors do not make such a distribution unfair. See McClellan v. McClellan, supra (not error to award husband jointly titled marital residence which was purchased with his separate funds); In re Marriage of Smith , 892 S.W.2d 767 (Mo. Ct. App. 1995) (not an abuse of discretion to award wife jointly titled marital home which was acquired with wife's separate funds, despite trial court's error in classifying home as wife's separate property). It is proper to consider a spouse's separate contribution to jointly titled property at the division stage of the equitable distribution process. Whiting v. Whiting, supra (when determining whether to deviate from statutory presumption of unequal division, proper to consider separate property contribution under factor pertaining to expenditure of separate property to acquire or improve marital property); Nuss v. Nuss , 65 Wash. App. 334, 828 P.2d 627 (1992) (origin of community property as one party's separate property may be considered as a reason for awarding all or a disparate share thereof to that party).
In contrast, the West Virginia Supreme Court reversed a decree awarding the wife the entire marital home, which had been acquired with money gifted by the wife's parents but titled in the parties' joint names. The trial court had said that the distribution was necessary to avoid providing the husband with an enormous windfall, but the high court found fault with the trial court's failure to refer to specific statutory factors that would support a decision to divide the marital residence other than equally. The court remanded for further findings of fact and conclusions of law, without indicating whether the statute would permit the trial court to award the home to the wife. Pratt v. Pratt , ___ W. Va. ___, 454 S.E.2d 400 (1994).
The Virginia Court of Appeals held that a husband could not be granted a monetary award based upon his former separate ownership of property that he had given to the marital partnership. His testimony that he caused the property to be titled in his and his wife's names as a "matter of heart" acknowledged a gift that was irrevocable, the court explained, and that irrevocable gift could not be changed by entry of a monetary award based upon his contribution to it. The property was marital, and the parties' equities, rights, and interests in it were equal, so it was inequitable to make a monetary award that ordered a return of the gift. The husband "may not successfully claim a monetary award based upon a gift he made at a time when the marriage was more serene," the court declared. McClanahan v. McClanahan, supra , 451 S.E.2d at 694.
McClanahan was decided under the statute in effect before the 1991 amendments, discussed above, requiring the application of dual classification principles to jointly titled property and rejecting the presumption of gift for jointly titled property. The decision may still control for interspousal gifts titled in the spouse's joint names, because the amended statute states that the retitled property retains its original classification to the extent it was not a gift.
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