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Home Transferred to Spouse from Sister is Not Marital Property
© 2003 National Legal Research Group, Inc.
COLORADO: Martinez v. Gutierrez-Martinez, 77 P.3d 827 (Colo. Ct. App. 2003).
A home, transferred to the wife during the marriage by her sister, was not marital property. The home was transferred only so that the wife could refinance the mortgage, because the sister could not do so herself, so that the wife held the property in resulting trust for the sister's benefit. The trial court erred by finding insufficient evidence to determine the amount by which certain separate property appreciated in value. The trial court did not err by disbelieving the husband's uncontroverted testimony that certain withdrawals from marital bank accounts had been made by the wife.
In a dissolution of marriage proceeding, the husband disputed several portions of the trial court's order regarding distribution of property.
First, the husband argued that the court below erred in failing to include certain real property as a marital asset. The property, a residence, had been owned by the wife's sister. At some time during the marriage, the sister, because of her own financial difficulties and credit problems, transferred it to the wife so that the wife could refinance the mortgage on the sister's behalf. The sister continued to live in the residence and was responsible for upkeep, maintenance costs, insurance premiums, and mortgage payments. The trial court found that the wife received no beneficial interest from the title transfer, and that the sister was the owner of the property notwithstanding that title was in the wife's name. In affirming the trial court's determination, the appellate court recognized that the presumption that property acquired during the marriage is marital property may be overcome by showing that the property was obtained by one of the methods listed in Colo. Rev. Stat. 14-10-113(2). The form in which title is held is not dispositive in determining whether property is marital. The appellate court concluded that the trial court had, in effect, held that a resulting trust arose when the sister conveyed title to the wife. A resulting trust is one imposed by law when the circumstances surrounding the transfer of property raise the inference that the parties intended to create a trust. The court also noted that a trustee holds trust property separate from his or her personal estate, and that the trust property is not subject to the trustee's creditors. It was concluded that where a spouse takes title to property under circumstances that give rise to a resulting trust, that property has not been "acquired" for purposes of Colo. Rev. Stat. 14-10-113(2) and, therefore, the trust property is not part of the marital estate.
Second, the husband argued that the trial court erred in failing to determine whether two houses owned separately by the parties prior to their marriage had appreciated in value and by failing to consider that appreciation when dividing the marital estate. One, the marital residence, was owned by the husband. He made mortgage payments out of his salary. The second house was owned by the wife prior to the marriage, but was refinanced during the marriage and titled jointly. The wife, however, made all mortgage payments from her earnings.
The trial court found that the evidence was insufficient to determine the properties' increase in value during the marriage, so it distributed to each spouse their separate properties, as well as the accompanying marital equity. The appellate court reversed, finding some basis on the record from which the court could have arrived at a valuation of the properties and the marital appreciation. While the court found that an allocation to each party of their premarital separate property was not improper, it did conclude that a new hearing must be held because the lower court did not take into consideration the properties' appreciation. On remand, stated the appellate court, the trial court must determine the properties' appreciation in value and the part of that increase that is marital property and then redetermine the property division taking those values into consideration. In so doing, that court must look to the economic circumstances of the parties at the time of the rehearing.
Third, the husband contended that the trial court erred in finding that he had improperly dissipated certain funds and had incorrectly calculated the amount dissipated. The appellate court disagreed. The facts established that the husband had removed funds from investment accounts which he controlled, but which were marital property, and deposited such funds into accounts to which the wife had no access. These withdrawals were in anticipation of the dissolution of the marriage. Such facts established a basis for finding dissipation of marital assets, and the trial court was free to disbelieve the husband's uncontroverted testimony that the wife used these funds to make purchases for herself.
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