Is debt incurred during the marriage presumed to be marital debt in Virginia’s equitable distribution scheme?
No, the Supreme Court of Virginia ruled in the case of Gilliam v. McGrady, Record No. 090958 (April 15, 2010) http://www.courts.state.va.us/opinions/opnscvwp/1090958.pdf , on appeal from the Virginia Court of Appeals. Husband and wife were married for fifteen years before separating. The husband lost his job after nine years of marriage and became self-employed. The husband kept his business affairs secret from his wife. As the husband failed to pay the employer’s share of required withholding tax, he became personally liable for those taxes, penalties and interest under the trust fund liability imposed by the Internal Revenue Code. Husband also owed the Internal Revenue Service and the Commonwealth of Virginia for unpaid personal income taxes. Both husband and wife accused the other of living beyond their means.
In a prior unanimous published opinion concerning the same case, Gilliam v. McGrady, 53 Va. App. 476, 483, 673 S.E.2d 474, 478 (2009), http://www.courts.state.va.us/opinions/opncavwp/0288082.pdf , the Virginia Court of Appeals held that wife was not liable for husband’s unpaid withholding taxes under a trust fund liability, discussed herein in answer to the question, “Is a trust fund tax liability from husband’s business a marital debt in Virginia subject to apportionment in equitable distribution?”, http://bankruptcydivorceblawg.com/?page_id=242 . The case was remanded, or sent back, to the Albemarle County Circuit Court judge to consider the statutory factors in Virginia Code Section 20-107.3, http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+20-107.3 , in order to classify the debt as marital or separate. On appeal to the Supreme Court of Virginia, the wife assigned error to the Virginia Court of Appeal’s decision on the presumptions and burden of proof applicable to the apportionment between husband and wife of debt incurred during the marriage. The Supreme Court of Virginia recognized that Section 20-107.3 of the Code of Virginia provides for the classification of property and debts differently. Virginia’s equitable distribution scheme does not provide for any presumption with respect to debts incurred during the marriage, as it does for property acquired during the marriage and before the last separation of the parties, in Virginia Code Section 20-107.3(A)(2). With respect to marital debt, Virginia Code Section 20-107.3(E)(7) merely provides that the divorce court judge shall consider “…[t]he debts and liabilities of each spouse, the basis for such debts and liabilities, and the property which may serve as security for such debts and liabilities.” Recognizing the proper separation of powers between the judicial and legislative branches of state government, the Supreme Court of Virginia declined to read into the statute a presumption with regard to marital debts that the Virginia General Assembly did not include. The Supreme Court of Virginia ruled that traditional rules of burden of proof and presumption would apply to debts incurred during the marriage. Proof that debt was jointly incurred creates a prima facie case that the debt is marital debt, and the spouse trying to prove such joint debt is really separate debt of the other spouse would have the burden of persuading the divorce court judge that such debt is separate. The spouse trying to prove that debt incurred in the name of that spouse alone was really marital debt would have the burden of persuading the trial court that the debt was marital.
You should consult with your Virginia divorce lawyer concerning the burdens of proof with respect to debts incurred during your marriage.