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Does a wife’s ability to withdraw from an IRA account constitute a material change warranting a reduction in spousal support?

Yes, according to Wright v. Wright, CL09-4587-01, from the Circuit Court of the City of Richmond, Virginia, the ability to withdraw qualifies as a material change that was unforeseeable at the time of the final order of divorce and justified a reduction in the husband’s spousal support payments.

The Circuit Court of Richmond City, Virginia, granted the parties’ final order of divorce and determined spousal support in 1992.  Eighteen years later, the husband made a motion to modify spousal support. In his motion, the husband argued the wife no longer needed spousal support and that his income had been substantially reduced.  The divorce judge had awarded to the wife in equitable distribution substantial investments and the former marital residence. Since the time of the award, the husband alleged the wife had increased her investments and available income. Moreover, he argued the wife now qualified for Social Security and could withdraw from her IRA account, and her assets would continue to grow as she became Medicaid-eligible.

In response to the husband’s motion, the wife alleged that the investment scheme was foreseeable at the time of the final decree and, thus, should not constitute a material change in circumstances.  In addition, she alleged any reduction in the husband’s earnings should be noted as the result of his voluntary actions, and he still had the ability and assets to pay support.

Legally, the Court may increase, decrease, or terminate an amount or duration of spousal support upon motion by either party. Va. Code. Ann. §20-109(A).   In order to modify support, the party seeking the change must prove 1) a material change in circumstances occurred, and 2) that the material change justifies modification of the award. Barrs. v. Barrs, 45 Va. App. 500, 612 S.E.2d 227 (2005).  This material change must have happened following the most recent judicial review and “must bear upon the financial needs of the dependent spouse or the ability of the supporting spouse to pay.” Street v. Street, 24 Va. App. 2, 480 S.E.2d 112 (1997). If the party seeking the change presents a prima facie case (evidence sufficient to prove the case), the opposing party must either present counter evidence or leave the question for the court’s discretion.

In Wright, the Circuit Court examined the factors established in Va. Code §20-107.1(E) as the basis of its determination. The Court held that the wife’s investment increases after the equitable distribution award were foreseeable and did not constitute a material change. However, the Court held that the wife’s ability to withdraw from her IRA account was unforeseeable at the time of the final divorce; therefore, it should be considered a material change. Because the wife voluntarily created the account and could now withdraw from it, the Court determined that the money could be treated as imputed income. Moreno v. Moreno, 24 Va. App. 190, 480 S.E.2d 792 (1997).  The Circuit Court of the City of Richmond Virginia noted that the court in the Rogers case held that the wife could withdraw half the amount in the IRA and be taxed at the rate applicable to a 30% tax bracket.  In Wright, the Circuit Court granted the husband’s motion to amend support payments as he had established a material change in circumstances and that the change justified a change in support.   The court scheduled the case for another hearing on the appropriate amount of the modification of support.

You should consult with your divorce lawyer in Richmond, Virginia, or Richmond Divorce Lawyer James H. Wilson, Jr., concerning how your retirement, or the retirement of your former spouse, might affect a spousal support obligation.

Can an equitable distribution award be based on an older spouse’s future needs without erroneously becoming an award of support?

In White v. White, Record No. 1345-09-4 (Va. App. 2010), the Virginia Court of Appeals held that future needs could properly be considered as it relates to age and mental and physical condition in determining equitable distribution, consistent with the court’s prior narrow holding in Reid v. Reid, 7 Va. App. 553, 375 S.E.2d 533 (Va. App. 1989), that earning capacity could not  be considered in equitable distribution under the catch-all, “necessary or appropriate… to arrive at a fair and equitable monetary award” factor of Virginia Code §20-107.3(E)(11).

In White, the husband and wife were married for 21 years before separating. The husband filed for divorce in the Circuit Court, neither party sought support, but both parties requested equitable distribution. The husband argued that his age and medical condition should be considered in the award under Virginia Code §20-107.3(E), because he was getting older and suffered from a serious degenerative disease. The trial court held although age and physical and mental condition was not a predominant factor, it should be considered. Thus, the trial court valued the parties’ assets and awarded 55% to the husband and 45% to the wife, and the wife subsequently appealed.

In her appeal, the wife argued that the trial court misunderstood the differences between an equitable distribution award and spousal support by weighing the husband’s future needs in the award calculation.  The wife alleged that the Court of Appeal’s holding in Reid precluded the trial court from considering any future needs under any circumstances in making an award. In Reid, the trial court awarded an enhanced distribution award based on the payor spouse’s future income and the payee spouse’s need for future housing, and the Court of Appeals reversed, holding, “It is axiomatic that whatever the future may hold for either of the parties has no bearing on the issue of the appropriate division of what has been accumulated by their contributions during the marriage.”  Reid v. Reid, 7 Va. App. At 565, 373 S.E.2d at 540 (Va. App. 1989).

The Court of Appeals in White distinguished its holding from Reid, stating that Reid did not preclude an enhanced award under Virginia Code §20-107.3(E). The Court of Appeals said Reid only addressed future needs in the context of the catch-all factor of the equitable distribution statute. Since this case involved consideration of future needs under the mandatory factor of age and physical and mental condition, the trial court did not err by considering the husband’s needs. The Court affirmed that since age does not affect the parties’ contributions to the marriage, it is a valid indicator of financial need, because as parties get older, they have more medical expenses and less income to pay for their needs. Thus, the Court of Appeals affirmed that the trial court’s award of a greater percentage of the parties’ assets to the husband based on his future needs as they related to his age and health.

You should consult with your Virginia divorce attorney concerning the application of the equitable distribution factors to your situation.

Will a divorce court judge give a wife the first right to purchase the former marital residence in equitable distribution in Virginia?

Yes, in the case of Trujillo v. Trujillo, CL07-525, the Circuit Court of Salem City allowed the wife the first right of purchase of the former marital residence in equitable distribution because it had been her childhood home that the couple purchased from her mother.

The husband and wife were married for nearly ten years before separating.  They had one minor child at the time of the divorce, whose custody and visitation had previously been decided.  At the time of the separation, the husband obtained an ex parte injunction removing the wife from the marital residence due to her drug addiction, abuse, and death threats to her husband.  The husband had been awarded primary physical custody of their son with reasonable supervised visitation rights to the mother.  At trial, the divorce court judge noted wife’s extraordinary recovery from her addiction, allowed her unsupervised visitation, and transferred further proceedings to the Juvenile and Domestic Relations District Court.

At issue in equitable distribution were two houses owned by the parties, the former marital residence which was the wife’s childhood home and a rental property next door titled in husband’s name alone with a mortgage loan in both husband and wife’s names. The wife claimed a separate interest in the marital home, alleged that she had bought the house from her mother six years prior to her marriage for $45,000.00, along with extra money “under the table”.   Moreover, wife testified that she had paid $22,910.58 on the purchase money debt before she and the husband refinanced it in 2002, at which time the mother deeded it to the parties as tenants by the entireties.

The wife’s testimony was contradicted by her mother, who testified that the wife had not bought the house, but had entered into a rent-to-own contract.  The mother denied that she had received any “under-the-table payments.” Under the contract between the mother and the wife, the deed would have been delivered upon final payment of the note.  Instead, the husband and wife chose to purchase the home from the mother before the rent-to-own contract matured.  The judge held that purchase converted all of the wife’s former payments into rent under the terms of the former contract, with no bearing on equitable distribution.  Later, the couple refinanced the original purchase money mortgage for home improvements and the construction of a garage.  The parties also borrowed money on the husband’s credit card to finish the garage, resulting in a judgment against the husband which the court found to be marital debt.

The second property, the rental home, was purchased during the marriage but it was titled in the husband’s name alone. The court found that the husband purchased the home, which the parties later refinanced for $65,000.00. The couple had rented the home for $670.00 per month, while the monthly note payment totaled $557.00 per month, leaving them a net profit of $113.00 per month before repairs and maintenance.  The husband had kept all the rental payments after the parties separated.

To determine equitable distribution, the Court weighed the testimony of the parties, their experts, and the witnesses. Applying Virginia Code §20-107.3, the court noted that since equitable distribution can only be made on jointly held property, the rental property home did not fall under the terms of Virginia Code §20-107.3(c). Therefore, the Court held that the husband should retain ownership of that property. Upon presentation of the evidence on the marital residence, the City of Salem Circuit Court concluded that the wife made a deliberate choice not to complete the rent-to-own contract, which, according to the terms of the contract, converted all of her former payments into rental payments. Since the parties bought the property jointly, the debt was marital debt.  The Court also noted that the $11,215.36 borrowed on the husband’s credit cards, since it was used for marital purposes, was to become a lien on the husband’s one-half undivided interest upon entry of the divorce decree.

The Court held that the value of the residence should be based on the husband’s appraised values, because that appraisal considered the interior as well as the exterior of the home. Therefore, the court found that the value of the marital residence was $80,300.00. Both parties wanted to purchase the home.  The divorce court judge gave the wife the first right of purchase because it was her childhood home, she tried to purchase it, and the parties bought it from her mother.  The wife was given the first right to purchase provided she refinanced the loans on the property and removed husband’s liabilities on the property within 90 days.  If the wife failed to purchase the property within 90 days, then husband would have the same right to purchase under the same terms. If neither party purchased the home, then the house would be sold, and the proceeds would be split equally between the parties, with the debts to be paid and divided upon the sale.

You should consult with your Virginia divorce lawyer concerning your prospects for retaining the former marital residence in equitable distribution.

Will a Virginia divorce court impute a minimum wage income to a stay-at-home mother living beyond her means on credit?

Yes, according to Huston v. Huston, Record No. 2808-09-4 (Va. App. 2010), an unpublished Virginia Court of Appeals case affirming the ruling of the Virginia Circuit Court judge who held that such an imputation of income could fairly be made to the mother due to her ability to bring in a full-time income.

In this case, the mother appealed from a final divorce decree in which the trial court granted the father legal and physical custody of one of the parties’ sons.  In her appeal, the mother argued that the trial court erred in three ways: (1) by denying her an impartial de novo standard of review on appeal; (2) conducting an in camera interview with the parties’ minor child without the presence of a court reporter; and (3) by imputing income despite the fact she was a stay-at-home mother for 26 years. Upon reviewing the record, the Virginia Court of Appeals held that the trial court did not err in its decisions and affirmed its ruling on these issues.

The parties married on January 25, 1982, separated on September 1, 2007, and later divorced in December of 2009. During the period of their marriage, the parties had eight children, three of whom were minors at the time of separation.  In July of 2007, Jacob, one of the parties’ adult sons, filed for custody and visitation of L, one of the minor children. The mother filed for custody, visitation, and support of the other two minor children, J. and T.. The Virginia Juvenile and Domestic Relations District Court (JDR Court) issued an order that granted the father legal and physical custody of J. and legal and physical custody of T. to the mother. After establishing a visitation schedule for both the mother and father, the Court dismissed Jacob’s petitions with prejudice.

After the Juvenile and Domestic Relations District Court’s ruling, the mother filed a divorce complaint and made a motion for pendente lite relief (an agreement or court order made while a matter, such as the parties’ divorce in this case, is pending).  Upon agreement by both parties, the Court consolidated both the divorce action and the mother’s appeal of the Juvenile and Domestic Relations District Court’s ruling. Following a two-day pendente lite hearing, the trial court issued a memorandum and a letter opinion that it incorporated into the final order. In the final order, the trial court adopted all of the orders entered by the Juvenile and Domestic Relations District Court and noted that the only remaining issue between the parties’ involved the minor child J’s custody. Because the parties agreed that T. would remain with the mother and L. would remain with the father, the trial court stated that Jacob (the adult son) was no longer a party to the proceedings. During the final hearing on the issue, the Virginia Circuit Court heard the evidence of the parties and J’s in camera testimony, the trial court granted custody of L. and J. to father and custody of T. to mother.

The father argued the mother’s appeal should fail because the court did not have jurisdiction when the mother failed to notify Jacob of the appeal. However, as the court noted, this argument did not succeed because the trial court had issued a final order stating that Jacob would not longer be party to the proceedings, and neither party appealed that order dismissing Jacob’s appeal.  Upon dismissal, Jacob was no longer a party and the mother was not required to notify him of her appeal to the Virginia Court of Appeals.

In the second issue, the mother argued that the trial court improperly denied her an impartial de novo standard of review. The father asserted that the mother did not preserve the issue for appeal by objecting contemporaneously. As the Court noted, it cannot consider a claim of trial court error as a grounds for reversal “where no timely objection was made, except to attain the ends of justice.” Marshall v. Commonwealth, 26 Va.App. 627, 496 S.E.2d 120 (1998).  The Virginia Court of Appeals noted that the mother’s appeal on this issue could not succeed, because the trial court reviewed the JDR court’s opinion, and the trial court stated that it reached its own conclusions. Because the trial court made its own consideration, held a two-day pendente lite hearing, and the mother was allowed to put on her evidence, the mother had not been denied an impartial de novo standard of review, despite the divorce court judge’s recitation of the holding and reasoning from the Juvenile and Domestic Relations District Court judge.

The key issue in this case, however, involved the mother’s argument that the trial court erred in imputing income to her.  Income can be imputed to a party under Virginia Code Section 20-108.1(B)(3), to deviate from the presumptively correct amount of child support calculated according to the guidelines.  In Huston, the trial court imputed income at a rate of $7.25 per hour (minimum wage) for forty hours per work, for a total of $1250 per month.  The Warren County Circuit Court noted the standard for imputation of income in its decision.

In setting or modifying spousal or child support, a court may impute income to a party voluntarily unemployed or underemployed. See Calvert v. Calvert, 18 Va. App. 781, 447 S.E.2d 875 (1994).  Whether a person is voluntarily unemployed or underemployed is a factual determination. In evaluating a request to impute income, the trial court must ‘consider the [parties’] earning capacity, financial resources, education and training, ability to secure such education and training, and other factors relevant to the equities of the parents and the children.” Niemiec v. Commonwealth, 27 Va. App. 446, 499 S.E.2d 576 (1998).

In considering the issue, the Court established that the mother had been a stay-at-home mother throughout the marriage, during which time she homeschooled all of their eight children. Moreover, the Court found that this decision was mutual, based on the number of children the parties had. As the children grew up and the parties separated, however, the mother stubbornly insisted on staying at home, relying on credit to pay bills and make ends meet. The Circuit Court judge stated, “Reality must set in. She must become gainfully employed and contribute to her own support.” The wife put on evidence that she had served as a child care provider briefly in 2007, a position in which she earned $8.50 per hour. In addition, she testified that she was in the process of becoming a certified reading specialist for dyslexic children. Initially, she anticipated an income of $20 per hour, and after receiving certification, she estimated $40 per hour for her services. In the meantime, she had been earning approximately $300 per month for various small jobs.   The Virginia Court of Appeals noted that the record indicated that the mother had a high school education, was in the process of obtaining certification, only home-schooling one child, and had the ability to earn money. Therefore, the appellate court held that the trial court did not err by imputing income to the mother.

You should consult with your Virginia family law lawyer concerning the possibility of imputing income to a parent in your child support matter.

 

Is it a violation of the automatic stay in a second bankruptcy to file a motion to show cause and to set a hearing date in a divorce case, when the contempt hearing itself follows the dismissal of the bankruptcy case?

Not according to Drakeford v. Drakeford, Record No. 1919-06-4 (Va. Ct. App. 2007), an unpublished Virginia Court of Appeals case, where the court upheld the trial court’s finding of contempt for failing to pay a monetary award after the dismissal of  husband’s second bankruptcy case.

When a debtor files a second bankruptcy case within a year of a prior pending bankruptcy case, then the automatic stay expires thirty days after the filing, unless the debtor makes a motion at a hearing within thirty days to extend the automatic stay by showing good faith, as provided under 11 U.S.C. §362(c)(3).  In the Drakeford case, the husband’s first chapter 13 case, filed to avoid a rule to show cause, was dismissed for failure to comply with the relevant bankruptcy rules.  Although the bankruptcy case had been pending at the time of the first show cause hearing, the divorce court judge nevertheless held the husband in contempt of court for failing to pay the first installment of a monetary award and had him jailed until he produced a certified check for the first installment in the amount of $25,000.  The husband did not appeal the first finding of contempt.

Shortly before the second monetary installment became due, the husband filed a second bankruptcy case, but failed to extend the automatic stay, as described above.  As a result, the automatic stay expired thirty days after the filing.  While the automatic stay was still in effect, the wife had filed a second motion to show cause against the husband and the Virginia Circuit Court judge set a hearing date on her motion.   At the hearing, the husband argued that the automatic stay in effect on the date the motion to show cause was filed prevented the court from enforcing the monetary award. The trial court found the husband in contempt and again incarcerated him until he paid the second monetary installment to the wife.

The Court of Appeals upheld the decision of the trial court, noting that the trial court did not take any action against the husband that would affect his property or his bankruptcy estate during the thirty day period that the automatic stay was in effect.  By so holding, the Court of Appeals focused on the actual hearing date, when the stay was no longer in effect, rather than the process filed against the husband while the stay was in effect.

In Drakeford, the husband could have avoided the second contempt holding in the Virginia Circuit Court had he filed for an extension of the automatic stay in bankruptcy court and for a show cause against wife for proceeding against him in the divorce case.

You should consult with your Virginia bankruptcy or divorce lawyer concerning the applicability of the automatic stay in bankruptcy to your state court divorce proceedings.

Can a husband trade a house in return for wife’s promise not to seek child support in Virginia?

No.   In Azhandeh v. Azhandeh, Record No. 1064-10-4 (Va. Ct. App. 2010), the Court of Appeals of Virginia determined that the husband’s appeal was without merit, because the parties’ previous settlement agreement (and corresponding limitations on child support) was null and void..  While the case does not directly concern bankruptcy law in Virginia, the issue has bearing on what financial obligations of the party can be bargained away, and what cannot.  In bankruptcy, domestic support obligations have a special status which renders them nondischargeable priority claims under 11 U.S.C. 507 and 11 U.S.C. 523, the determination and enforcement of which are not stayed by the automatic stay under 11 U.S.C. 362.

In Azandeh, the parties had been married for seven years prior to separation.  The husband and wife recited an oral agreement in open court which, under Virginia Code Section 20-155 , is enforceable when recorded and transcribed by a court reporter (in effect creating a written agreement).  Under the terms of the parties’ recited and transcribed agreement, the mother would have sole legal and physical custody of the child and the father would have visitation rights.  The husband agreed to give up his share of marital property to wife in exchange for her promise not to seek child support from him for a period of ten years.   Counsel advised the court that the parties had been counseled about the enforceability of such an agreement to waive child support.

Shortly after entry of the final divorce decree, the mother filed a motion for child support in violation of the agreement. The father objected, arguing that the mother violated the mutual agreement.  After hearing the arguments of both parties, the Virginia Circuit Court judge entered an order stating that the agreement “relative to child support is null and void because it is violative of clearly established law” and ordered the father to pay monthly child support according to the statutory guidelines.

In his appeal to the Virginia Court of Appeals, the father asserted the trial judge’s decision regarding the provision in the agreement being null and void was incorrect.  In response, the mother argued that the Virginia Supreme Court’s decision in Kelley v. Kelley, 248 Va. 95, 449 S.E.2d 55 (1994), applied..  In Kelley, the husband and wife established that the husband would transfer all of the equity in the marital home to the wife in exchange for the husband’s not being responsible for child support, and should a court order child support, the wife would provide reimbursement. The Supreme Court of Virginia held that the agreement was null and void because it violated clearly established law, and it stated, “parents cannot contract away their children’s rights to support nor can a court be precluded by agreement from exercising its power to decree child support.”

Here, although the father argued the facts differed from Kelley because he was only eliminating his child support obligation for a fixed period of 10 years rather than eliminating it completely, the Court of Appeals disagreed and affirmed the divorce court judge’s decision that the parties’ agreement violated the law, specifically Virginia Code §20-109.1, by not allowing the court to exercise its power to determine child support..  Moreover, the Virginia Court of Appeals pointed out that the father had mistakenly combined notions of equitable distribution and child support by arguing that he should be relieved from his obligation because the wife had received all of the equity in the martial residence.  In fact, child support was a right of the child, not a right of the mother that she could bargain away.  The Court recognized that child support is separate from equitable distribution.  The mother did not receive a “huge windfall” of property because the Circuit Court ordered child support; rather, the child obtained her right to receive the support that was legally owed to her. Thus, the Court of Appeals held that the Virginia trial court judge’s determination that the parties’ agreement was null and void was correct and affirmed the husband’s monthly child support payments.

While not discussed in the court’s opinion, an interesting question remains about whether a party to a well-drafted written separation agreement might be entitled to damages from the breaching party for not honoring the agreement.

You should consult with your Virginia divorce lawyer or Richmond divorce lawyer James H. Wilson, Jr., to discuss how to best structure your separation agreement or property settlement agreement.

Will a wife’s use of her pension fund after she moves out from the marital residence then returns to live in a separate bedroom constitute marital waste?

Yes. In Wynn v. Wynn, Record No. 2400-09-1 (Va. Ct. App. 2010), another case illustrating the marital troubles caused by financial difficulties, the Virginia Court of Appeals affirmed the Virginia Circuit Court’s findings that the wife had committed marital waste and held that the divorce judge’s rulings on the husband’s pension funds, business, and spousal support questions were correct.

On appeal, the wife alleged five counts in which the trial court erred: 1) by determining that she committed marital waste by spending her pension, 2) by not valuing the husband’s business in the equitable distribution, 3) by awarding the husband a portion of his incurred attorney’s fees, 4) by awarding her only 35% of the husband’s pension fund, and 5) by not appropriately considering the statutory factors before denying spousal support.

The parties married on March 1, 1985. Two years later, as the result of the wife’s mishandling of their finances, the parties stopped having joint financial accounts. By 1994, the parties stopped wearing their wedding rings. Although they separated and occasionally cohabitated during the next few years, the husband testified that as of November 2000, they had no intention of living together or resuming the marital relationship. The wife, however, alleged that the final date of separation was in November 2006. At the trial court hearings, the Court found that the wife cashed in her $32,000 pension during this time, and while the wife claimed that she used the funds for living expenses, the evidence established that in fact the husband primarily covered her expenses. In addition, the Court held that the husband’s business only made a profit during 2008 and even though the wife had contributed somewhat during earlier years, her efforts were too remote to include her in the profit sharing. Because the evidence was too insubstantial on the issue, the Court chose not to include the business in calculations for equitable distribution. Instead, the Court awarded the wife 35% of her husband’s pension funds. The Court, however, denied her claim for spousal support based on the evidence of the wife’s Bachelor’s degree and real estate license, claiming that she had the capacity to earn as much as her husband.

In reviewing the issue of marital waste, the Circuit Court noted the definition of waste: “Waste occurs ‘where one spouse uses marital property for his own benefit and for a purpose unrelated to the marriage at a time when the marriage is undergoing an irreconcilable breakdown.’” Smith v. Smith, 18 Va. App. 427, 444 S.E.2d 269 (1994). 02.  Moreover, the Court established that according to Clements v. Clements, 10 Va. App. 580, 397 S.E.2d 257 (1990), the party charged with dissipation bears the burden of showing that the funds were used for a proper purpose. The wife contends that her use of the funds did not constitute waste because of the date of separation. Under her theory, the date of separation did not occur until 2006; therefore, the marriage could not have been “undergoing an irreconcilable breakdown” when she cashed in her pension. The trial court, however, believed the husband’s testimony that the separation occurred in November 2000, when the wife moved out. Even though she moved back in 2003, it was a temporary situation that the husband allowed because the wife had been living in her car.  The parties lived in separate bedrooms in the marital residence and wife paid rent to the husband.  Moreover, since the wife failed to produce any evidence that she used the funds for a proper purpose, the Court held that the trial court correctly awarded a credit of $15,000 of the wife’s pension to the husband.

On the issue of the valuation of the husband’s business, the Court of Appeals affirmed the divorce court judge’s holding. The wife argued that the court failed to consider the assets of the business as statutorily required for valuation of all marital property. Specially, she alleged that the business was valued at $24,328.75, of which she should have received a percentage. According to Virginia Code §20-107.3, a trial court must value the parties’ separate and marital property before making a monetary award. As the Court noted, however, “Virginia’s trial courts may, without doing violence to the statute make a monetary award without giving consideration to the classification or valuation of every item of property, where the parties have been given a reasonable opportunity to provide the necessary evidence to prove classification or valuation but through their lack of diligence have failed to do so.” Bowers v. Bowers, 4 Va. App. 610, 359 S.E.2d 546 (1987).  In this situation, the trial court determined that due to the sparse evidence on the issue and the fact that the business only started to make a profit after the parties separated, it was acceptable to not consider the business in making the calculation of the monetary award, and the Court of Appeals agreed.

Although the wife also argued that the trial court erred by only awarding her only 35% of the husband’s pension, the Circuit Court denied her appeal, citing Ranney v. Ranney, 45 Va. App. 17, 608 S.E.2d 485 (2005), which held that the Court should not reverse the trial court’s ruling unless it is clear that the lower court abused its discretion. See also Bosserman v. Bosserman, 9 Va. App. 1, 384 S.E.2d 104 (1989).  As Matthews v. Matthews, 26 Va. App. 638, 496 S.E.2d 615 (2006) established, Virginia law does not create the presumption of equal distribution for equitable distribution.. Thus, because the trial court considered the statutory factors in Virginia Code §20-107.3, the trial court’s decision was correct.

The Virginia Court of Appeals ruled that the Virginia Circuit Court judge’s decision to award attorney fees to the husband was not an abuse of the trial court’s discretion because the wife had re-opened the case and proceeded pro se, resulting in additional expenses to the husband.  Finally, the Court would not consider wife’s claim that the trial court failed to consider the statutory factors in denying her spousal support, as she had failed to properly preserve the issue for appeal by specifying her objection.

You should consult with your Virginia divorce lawyer concerning marital waste and equitable distribution in Virginia.

Can a Virginia divorce judge allocate the entirety of a bankruptcy debt to the husband in equitable distribution when the parties’ separation agreement does not mention the chapter 13 bankruptcy proceeding, but provides that each party would be responsible for debts incurred by the parties prior to their separation?

No, according to the unpublished opinion of Strickland v. Strickland, record No. 0314-07-2 (Va. Ct. App. 2007), where the Virginia Court of Appeals reversed the Chesterfield County Circuit Court judge’s ruling found that the chapter 13 bankruptcy debt was solely husband’s responsibility.

The parties married on May 12, 1990, and in 1996, they had a child.  Throughout the time of the marriage both parties worked, but the husband brought in a more substantial income. In 2002, the parties filed a joint petition for a Chapter 13 bankruptcy. Under the plan, the parties’ joint federal taxes, utilities bills, home mortgage, credit cards and other debts were consolidated, and the schedule set the repayment amount at $500 per month (taken directly from the husband’s paycheck) until the $25,000 had been repaid. The husband had continued to make payments toward the debt.

On November 11, 2003, the husband, anticipating separation with the wife, committed in writing that he would put their home in the wife’s name, pay $1,000 per month for the wife and daughter, remove the wife’s name from the car loan, give his wife full custody of their daughter, and “pay all bankruptcy.”  A month later, the parties separated, and they entered in an “agreement and stipulation in accordance with section 20-109 and 20-109.1 of the Code of Virginia” (the Agreement), which the wife’s attorney had prepared.  The terms of the Agreement included provisions for child and spousal support at $500 per month for each. Furthermore, the parties agreed they would be “fully and individually responsible for…any debts incurred by the parties prior to their separation,” but it also provided that the husband would assume sole possession of their jointly owned 2002 Kia Sportage and assume its lien while the wife would be removed from both the title and the lien. The Agreement, however, remained silent on the issue of the parties’ joint bankruptcy debt.

From December 2003 through October 2004, the husband paid the wife $1,000 per month for support. After that time, however, the husband notified the wife that he would decrease his monthly payments, withholding an amount that would offset her portion of the bankruptcy debt retroactive to December 2003. In 2004, however, the husband’s Kia was repossessed for failure to repay the loan, and subsequently, the bankruptcy plan was modified to include the $5,972.38 debt from the Kia.

The wife filed a complaint seeking a divorce in July of 2006, and in her complaint, she asked the trial court to affirm, ratify, and incorporate the Agreement into the divorce decree. In addition, she filed a motion to establish child and spousal support arrearage, based on her claim that the husband had improperly reduced his payments of $1,000 per month since October 2004. In response, the husband filed a cross-complaint, arguing that the wife had violated the Agreement because she had failed to pay her portion of their joint bankruptcy debt, and he asked the court to not approve the Agreement with respect to spousal support, or in the alternative, to credit him the wife’s portion of the bankruptcy debt. The trial court granted the parties’ divorce in November 2006 and ordered that the Agreement be ratified and incorporated but not merged into the final decree; however, the Court made no reference to the bankruptcy debt, leaving the discharge entirely to the husband.  In January 2007, the Circuit Court had a hearing to address issues of the support payments since October 2004, whether the bankruptcy debt was marital, and if it were, then what offset the husband would be permitted. At the hearing, the Chesterfield County Circuit Court judge found that the bankruptcy debt was the husband’s “sole debt,” that he was not permitted an offset against his support obligations, and that the support order was retroactive to the date of the Agreement.

On appeal, the husband alleged that although the $5,972.38 from the Kia was properly allocated as separate debt, the rest of the debt was joint marital debt. Moreover, since the Agreement had provided that the each of the parties would be responsible for “debts incurred by the parties prior to their separation,” the trial court erroneously attributed all the bankruptcy debt to him.  In determining the issue, the Court of Appeals examined Virginia Code §20-109.1, which provides that the parties may affirm, ratify, and incorporate a valid agreement into the final divorce decree. In addition, the appeals court noted that once incorporated, an agreement becomes “a term of the decree … enforceable in the same manner as any provision of such decree.” Campbell v. Campbell, 32 Va. App. 351, 528 S.E.2d 145 (2000).  The husband alleged that the evidence did not support the trial court’s determination of the bankruptcy debt as his sole responsibility. See Stumbo v. Stumbo, 20 Va. App. 685, 460 S.E.2d 591 (1995) (holding that the allocation of debt as either marital or separate must have a proper foundation). Here, the Virginia Court of Appeals ruled that the agreement established that the parties would be liable for the debts incurred prior to the separation, there was no ambiguity in the language of the Agreement, the bankruptcy debt was marital debt and had been incurred prior to separation, and the Chesterfield County Circuit Court had erroneously allocated the bankruptcy debt entirely to the husband. Therefore, the Court of Appeals reversed the arrearage determination of the trial court and remanded the matter to the Circuit Court of Chesterfield County for final resolution.

You should consult with your Virginia divorce lawyer concerning the treatment of your bankruptcy debt in equitable distribution.

How will a court equitably divide marital assets when two parties have comingled their personal and business finances?

In Reynolds v. Reynolds, CH05-140 (2005), the City of Salem Circuit Court held that the husband had to pay the wife a monetary award for the inequities he had created between their assets and that the parties could decide to buy each other out on the two marital properties or sell them and divide the proceeds.

The parties were married in 1988, and following their marriage, they purchased a carpet cleaning franchise and started their own business. The husband’s role in the business included cleaning carpets, training employees, repairing equipment, soliciting business, and supervising employees on the job. The wife managed that business’s marketing, bills, and other administrative matters. Furthermore, after the parties had children, the wife also managed the house and the children. Both parties worked full time at the business; however, the parties did not separate the finances of their personal lives from the business finances. When money came in, they used it for either personal or business expenses. Both parties took cash as needed, without telling the other how much they took. They used credit cards to interchangeably buy both household goods and business supplies. Together, the parties also invested in their business, marital residence, lakefront property, rental property, a boat, and securities and retirement accounts.

After the separation, the wife continued working at the business for twenty-one months until the Court removed the wife from the business operation so it could remain a viable marital asset. At that time, the Court ordered the husband to pay child and spousal support to cover the needs that the wife had previously provided from the joint funds. The wife and the children continued to live in the marital home, and around that time, she attended and subsequently graduated college with a business degree in marketing. The husband during this period purchased a wood floor refurbishing franchise and spent a great deal of time building this business at the expense of the carpet cleaning business. Moreover, he used money from the other business to purchase the wood floor business and pay its operating costs. Although he tried to keep this operation a secret, his actions caused the carpet cleaning business to become less successful, and he simply kept the profits from the floor business without accounting for them to the wife.

To make an equitable distribution in this case, the Court weighed the parties’ testimony, the witnesses, the oral and written arguments of the parties, and the exhibits presented in evidence. Moreover, the Court applied Virginia Code §20-107.3 and the factors specifically laid out in §20-107.3(E), as well as examining the equities involved. The Court then detailed specifics for equitable distribution of each of the following disputed categories: the marital real property, the marital carpet cleaning business, marital vehicles, investment and retirement accounts, miscellaneous property, marital debt and attorney fees.

The Court determined that all of the parties’ real estate constituted marital assets; only the husband’s purchase of a residence after the separation differed—the Court considered this property as a hybrid, because he made the $14,000 down payment with marital funds. The other two properties were the marital residence valued at $270,000.00 and the lakefront property valued at $489,000.00,which the Court determined should be divided equally between the parties, with both assuming one-half of any remaining debts on the properties. Moreover, the Court noted that the wife could buy out her husband’s interest in the marital home. Because she wanted to continuing to live in the marital home, the Court determined that she could buy the husband’s interest by paying one-half of the difference between its appraised value and the current payoff of its note. Likewise, if the husband wanted to keep the lakefront property, he could perform the same valuation and pay off the wife’s interest. If he chose not to do so, the property would be sold, and the result would be equitably divided between the parties.

In regards to the marital carpet cleaning business, the Court accepted the husband’s expert valuation of the business, placing its worth at $185,000.00.  Although the Court permitted the husband to purchase his wife’s share for $92,500.00 within 90 days, it held that a failure to buy out the wife’s half would force the parties to sell the business and split the proceeds equally. In addition, the Court examined the evidence on the parties’ marital vehicles and determined that the husband had a separate vehicle purchase after the separation. The other vehicles, however, included a 2001 Tahoe, a 2001 Stingray 22 foot boat, and a boat trailer. Due the difficulty in separating these assets, the Court determined that the parties would simply keep the vehicles in their possession and the total value of the marital assets would be divided equally.

After hearing evidence on the accounts, miscellaneous property, and marital debts, the Court determined that each party would keep his or her own IRA account and a joint share of the joint account. Moreover, the stimulus money received by the husband was to be divided equally, because the husband provided the sole support for the children. Finally, the Court held that all debts acquired during the marriage were to be considered joint and should be divided equally. Therefore, the Court gave the parties discretion whether to buy out the other’s share in the marital real estate or business and later report for a final division of the assets.

You should consult with your Virginia divorce lawyer regarding the equitable distribution of your personal and business property.

Does lack of co-parenting justify a modification of child custody in Virginia?

Not necessarily according to Piccirillo v. Atkins, Record No. 2064-09-4 (Va. Ct. App. 2010), an unpublished case in which the Virginia Court of Appeals summarily affirmed the Virginia Circuit Court’s ruling granting physical custody of the parties’ child to the father.  Although the Virginia courts generally encourage co-parenting between parents and would like a child to have a close and continuing relationship with two fit parents, a lack of communication and co-parenting on the part of one parent will not necessarily result in a change of custody from that parent to the cooperative parent, if the best interests of the child are served by being in the custody of the non-cooperative parent.

The mother alleged four counts in which the trial court erred: (1) awarding custody to the father in light of the evidence and Virginia Code §20-124.3 factors; (2) not considering the father’s unilateral and deceptive relocation to Maryland as a “material change of circumstances”; (3) awarding custody to father even after establishing that the father did not want to co-parent with the mother or respect her wishes; and (4) awarding custody to the father when that decision had the effect of relocating the child to Maryland. Upon review, the Fairfax County Circuit Court affirmed the trial’s court’s decision and dismissed the appeal.

The parties were married one year when their only child together was born. Three years later, the parties separated, and they divorced two years after their separation.  Just prior to the divorce, the trial court entered a custody consent decree, awarding the parties shared joint legal and physical custody over the child, with custody rotating on a weekly basis. Both parties subsequently remarried.  The father filed a motion for a protective order against the mother and her new husband, after the child told the father that his stepfather had been abusing him without any intervention from the mother.  The Juvenile and Domestic Relations District Court issued a preliminary protective order and appointed a guardian ad litem for the child.  Although, the JDR court denied the motion for a protective order a month later, the mother was not able to see her child until the final custody hearing four months later.  Nevertheless, the guardian ad litem recommended counseling for the child.

Both parents filed motions for a change of custody in the Virginia Circuit Court. In addition, the father filed motion requesting that the court name a particular licensed clinical social worker for the child over the mother’s objections of bias, and that a custody evaluation be made, and the court granted the father’s motions. The trial judge the custody issues in January 2009, and after a review of Virginia Code §20-124.3, the court granted temporary physical custody to the father, giving the mother a transitional visitation schedule.  On June 25, 2009, the trial court reviewed what happened in the case since January and held that the parties would have joint legal custody with the father having physical custody in Maryland.

According to the mother, the Virginia Circuit Court judge erred because of the evidence at trial, the custody factors in the Virginia Code, and the father’s refusal to co-parent with the mother. As the trial judge established, however, the child’s best interests always play the most important role in consideration. See Farley v. Farley, 9 Va. App. 326, 387 S.E.2d 794 (1990). Moreover, unless the trial court abused its discretion or the evidence contradicts the court’s ruling, the appeal must affirm the lower court’s order. See Brown v. Brown, 30 Va. App. 532, 518 S.E.2d 336 (1999).

In addressing the mother’s argument that the trial court did not consider the factors in Virginia Code Section §20-124.3, the Court noted that the trial court had discussed them at length both in the January hearing and in the review at the June 2009 hearing. The mother alleged that the court should have taken the father’s e-mails, refusals to consider her requests, and his “deceptive” move to Maryland to be with his pregnant wife (rather than commuting between the Maryland home and the home in McLean, Virginia) into account before ruling. The Fairfax Court, however, found that it had been and continued to remain in the father’s custody, because he was comfortable there, and he was not comfortable in his mother’s home because of his stepfather.

Responding to the mother’s appeal, the Court noted Ferguson v. Stafford County Dep’t of Soc. Servs., 14 Va. App. 333, 417 S.E.2d 1 (1992), which states, “Where the record contains credible evidence in support of the finding made by that court, we may not retry the facts or substitute our view of the facts for those of the trial court.”  While the mother contended that the custody arrangement and the relocation to Maryland was not in the child’s best interests, the Court found that though the mother and stepfather’s relationship with the child had improved, it was still in the child’s best interests to live with his father and stepmother. To support this decision, the Court pointed to Sullivan v. Knick, 38 Va. App. 773, 568 S.E.2d 430 (2002) which establishes that the trial court’s decision must remain in place, unless evidence demonstrates that the decision was plainly wrong.  See also Parish v. Spaulding, 26 Va. App. 566, 496 S.E.2d 91 (1998) (holding that when deciding whether a child’s relocation is proper, the court must consider the child’s welfare as the primary concern). Therefore, the Virginia Court of Appeals summarily affirmed the Circuit Court’s ruling and held that physical custody would remain with the father.

You should consult with your Virginia child custody lawyer regarding the impact of a lack of co-parenting in your case.