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Commingling Separate Property with Separate Property
© 2004 National Legal Research Group, Inc.
VIRGINIA: Fowlkes v. Fowlkes, 42 Va. App. 1, 590 S.E.2d 53 (2003).
The trial court erred by holding that the husband's separate property became marital property when it was used to pay for an addition to the parties' home, which was the wife's separate property. The husband's separate contributions were traceable, and on the facts they were not intended as a gift.
When the parties married, they agreed that the husband would sell his premarital home and that the parties would live in the premarital home owned by the wife. In addition, they planned on making improvements to her home, including the building of an addition. The husband entered into a contract with a builder and during the construction paid $24,800 in related costs and expended other sums in purchasing items from vendors which were used in completing the project. The wife made the final payment of $16,000, using funds acquired prior to the marriage. The parties and the trial court agreed that the wife's home was separate property prior to the construction of the addition. As to the addition, the trial court concluded that it was marital property, having been acquired during the marriage, Va. Code Ann. 20-107.3, thus making the resulting home part marital and part separate. The court stated that it was dealing with a distribution of the house and not with the distribution of the parties' individual contributions to the addition, although such individual contributions were taken into account in determining the monetary award. The trial court valued the addition at $42,000 and, after considering the relevant statutory factors, made a monetary award to the husband of $25,000.
The appellate court reversed. It found error in the conclusion of the trial court that the addition was marital property. The court recognized that all property acquired during a marriage is presumed to be marital property, and that the party who claims that it is separate property bears the burden of rebutting the presumption. Nevertheless, it found that the parties had agreed that separate funds were used to construct the addition, and no evidence suggested that marital funds were used to make mortgage payments.
Separate property can become untraceable when mixed with other property, but the undisputed evidence showed that the separate contributions were traceable on the facts. The wife did not use any marital funds for the purchase of the home. She held sole title to the property. She did not take any actions indicating an intent to turn her separate property over to the marital estate. To the contrary, she resisted the husband's demands to transfer the title. The addition, which was attached to and part of the wife's original home, was maintained as part of her original, separate home. As for the husband, although he paid a substantial portion of the construction cost of the addition, he never received title to the house or the addition. Marital funds were not contributed to the property. While the trial court found that each party had made nonmonetary contributions to the construction of the addition, there was no finding that these contributions were significant or resulted in substantial appreciation of the value of the wife's home.
The court of appeals concluded that the contributions were made to the property from both the wife's separate property and the husband's separate property. The parties' contributions were not commingled to the point where tracing was impossible. There was no evidence that either party intended to make a gift of his or her separate contributions to the marital estate. The trial court's finding that the addition was marital property was therefore an error of law. Without marital property to evaluate, the lower court was not empowered under the principles of equitable distribution to grant a monetary award to the husband.
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