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.