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Post-Separation Mortgage Payments on Marital Home
© 2003 National Legal Research Group, Inc.
INDIANA: Borjab v. Borjab, 786 N.E.2d 713 (Ind. Ct. App. 2003).
The trial court did not err by reimbursing the husband for both interest as well as principal payments made on the marital home during separation. Where the husband purchased furniture with a down payment before separation, and paid the balance due after separation, the marital estate included the value of the down payment, but not the full value of the furniture. The trial court did not err in holding that the wife's waiver of an inheritance five years before separation, with the approval of the husband, was neither dissipation nor a negative contribution to the marriage. The trial court's failure to award the wife $5,880 out of a marital estate of roughly $1 million was harmless error. The trial court has discretion to give a spouse credit in dividing property equal to the total amount of temporary spousal support paid during the pendency of the case.
In 1999, the parties separated after eight years of marriage. Three children were born of the marriage. The husband was an anesthesiologist with his own practice. The wife worked for a time, but the parties agreed that she would not work after the birth of their first child. The wife filed a petition for divorce in January 2000. The trial court entered a decree dissolving the marriage in 2002. It determined, inter alia, that the marital assets be divided 60% to 40% in favor of the wife, including an order that the family residence be sold and the net proceeds be divided 60% to the wife and 40% to the husband. Both parties appealed.
The wife first asserted that the trial court had erred in granting a motion by the husband which sought to correct an error in the division of the proceeds from the sale of the family residence. The husband was allowed a credit for mortgage, insurance, and tax payments made from the date of the filing of the divorce petition to the date of closing on the court-ordered sale of the residence. The order allowed this credit and right of reimbursement only on the payments of principal, but did not include interest payments. Upon the husband's motion, the trial court corrected this error. The wife appealed, alleging that by granting this motion the court changed the overall division of the assets that resulted in a monetary windfall to the husband by placing the entire responsibility for such debt on the wife. The appellate court disagreed. The court cited to the rule in Indiana that the marital estate is to be closed at the time of the filing of the petition for dissolution. After that date, the husband made all mortgage payments. By granting his motion to correct the error so as to allow reimbursement for the interest portion of such payments as well, the trial court merely restored the parties to the position they had when the petition was filed. Moreover, stated the court, the wife was not forced to bear the entire responsibility for this debt. The interest payments were returned to the husband from the equity in the house 40% of which was to be given to him under the final order. Consequently, the parties divided the cost of the interest payments after the date of the petition.
The wife alleged that the trial court erred in failing to include within the marital estate stock worth $9,800 which had been held by the parties and previously sold by the husband during the marriage. She demanded that she be awarded an additional $5,880 under the 60% to 40% division. The court, on appeal, disagreed that she was entitled to such an additional award. While agreeing that it was error for the court below to fail to include this asset as part of the marital estate, it found the error harmless. The net value of the estate, not including the family residence, was found to be $831,208. The estimated value of the residence was $575,000, albeit subject to an unidentified amount of mortgage indebtedness. Even assuming that there was no equity in such residence, the value of the stocks was only 1% of the marital estate. Given that the wife received 60% of the marital assets, the trial court did not abuse its discretion in the division of assets that it made.
The husband alleged error on the part of the trial court because it included his furniture within the parties' marital property but excluded the wife's earrings. In responding to this allegation, the court noted the rule in Indiana that, typically, property acquired after the final separation date, which is defined as the date of the filing of the petition for dissolution, is excluded from the marital estate. Here, the down payment was made on the furniture prior to the separation date, although it was delivered to the husband post-separation, at which time he paid the balance due. As the down payment came from marital funds, it was properly classified as marital property, and it was this down payment, rather than the furniture itself, that the court classified as marital property subject to distribution. With regard to the earrings, the husband purchased them for his wife and delivered them prior to the date of separation. They were, therefore, marital property. However, because the earrings were given to the wife, and because the parties had stipulated that each party would retain his or her separate personal property and the division ordered by the court was equitable, the earrings were properly excluded from the marital estate. The furniture was not subject to this stipulation regarding the retaining of separate personal property because it was not yet in the husband's possession as of the time of the stipulation, only the down payment having been made.
The husband also complained that the trial court had failed to give him credit when it made its property distribution for payments of temporary maintenance made to the wife. A trial court has discretion to determine whether it will give a party credit in the final division of property for temporary support and maintenance. The appellate court found no abuse of that discretion herein. The husband failed to cite support in the record for his allegation that the wife delayed the proceedings by litigating meritless claims and pursuing a groundless contempt charge.
Finally, the husband claimed that the trial court erred in dividing the marital estate by failing to take into consideration the wife's waiver of her portion of a large inheritance from her father. He argued that this waiver amounted to a disposition of marital assets that should have reduced her share of the marital assets. The trial court found that, in 1995, following the death of her father, the wife did sign a waiver of her rights to share in the estate of her father. That estate consisted of land in the disputed region of the West Bank in the Middle East. She, along with the younger siblings of her family, all renounced their interests in the land in favor of the eldest son. They did so according to the cultural custom in the Middle East that upon the death of the father land should pass to the eldest son. The evidence also showed that when the wife signed the waiver the husband was aware of and approved of it. In determining that there had been no inappropriate disposition of assets by the wife, the appellate court first distinguished dissipation from disposition. "Dissipation," stated the court, involves the frivolous, unjustified spending of marital assets and includes the concealment and misuse of such assets. "Disposition," on the other hand, refers not to transfers or transactions that are wasteful, foolish, or frivolous, but to those that are unusual or out of the ordinary. If one disposes of marital property in an unusual or extraordinary manner, then the presumption of equal division may be rebutted. While the court found that the wife's waiver of the inheritance deprived the marital estate of an asset and disposed of property that would have enriched the estate, the issue was whether the trial court abused its discretion in failing to interpret that waiver as a disposition of assets that would be held against the wife. Factors that should guide the trial court in its determination of a dissipation or improper disposition are whether the expenditure benefited the marriage or was made for a purpose entirely unrelated to the marriage; the timing of the transaction; whether the expenditure was excessive or de minimis; and whether the disposing party intended to hide, deplete, or divert the marital asset. The intent of the party to hide or deplete the marital estate is also a relevant consideration, as is the non-disposing party's consent. Looking to all of the factors as applied to the circumstances herein, but emphasizing the fact that the transfer took place five years prior to the date of separation, which suggests that the wife was not diverting assets in anticipation of divorce and the division of assets, as well as the fact that the husband approved of the waiver at the time, the court, on appeal, concluded that there was no abuse of discretion by the trial court in holding that no improper disposition of marital assets occurred.
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