COURT OF APPEALS OF VIRGINIA 

Present: Chief Judge Fitzpatrick,* Judges Elder and Annunziata 

Argued at Richmond, Virginia 

MICHAEL L. LUCZKOVICH 

 OPINION BY 

v. Record No. 2975-96-2 CHIEF JUDGE JOHANNA L. FITZPATRICK 

 FEBRUARY 24, 1998 

KATHERINE H. LUCZKOVICH 

FROM THE CIRCUIT COURT OF CHESTERFIELD COUNTY 

John F. Daffron, Jr., Judge 

 Deanna D. Cook (Bremner & Janus, on briefs), 

for appellant. 

 W. Christopher Currie for appellee. 

 In this domestic appeal, Michael L. Luczkovich (husband) 

contends the trial court erred in its equitable distribution 

decision of November 8, 1996. Husband argues that the court 

erroneously: (1) classified husband's severance pay as marital 

property; (2) classified three mutual funds as marital property; 

(3) classified husband's profit sharing retirement plan as 

marital property; (4) failed to reduce the proceeds from the sale 

of the marital residence by the amount of the equity line balance 

on the residence; and (5) classified two accounts as marital 

property. Wife contends the court erroneously: (1) failed to 

value certain accounts as of the date of separation; (2) failed 

to value one account at the date closest to the taking of 

evidence; (3) valued wife's vehicle; and (4) failed to award wife 

 

 *On November 19, 1997, Judge Fitzpatrick succeeded Judge 

Moon as chief judge. 
 2 

attorney's fees and costs. For the following reasons, we affirm 

in part, reverse in part, and remand. 

I. Background 

 The parties married on October 10, 1981. Husband testified 

that he and wife separated in April 1991, but that he did not 

recall when he formed the intent for the separation to be 

permanent. He admitted that they continued to have sexual 

relations throughout the summer of 1991, but that he decided the 

marriage was irretrievably broken "the late summer of '91. I 

don't know exactly when." Wife testified that she did not 

recognize husband's intent to end the marriage until the fall of 

1991. She stated: "The way I remember it, it was not ever 

initially whether we were going to end the marriage. It was 

whether he was going to return to [the marital residence]. He 

informed me in November of [1991] that he was not." 

 The January 5, 1995 final decree of divorce reserved issues 

related to the equitable distribution of the parties' marital 

property, debts, spousal support, and legal fees. The parties 

submitted evidence by deposition, and the attorneys presented 

closing arguments on September 1, 1994. On July 13, 1995, the 

court indicated to the parties that it had made a preliminary 

determination of the estate's value and that it should be divided 

equally. The court then deferred formal ruling pending the 

resolution of certain issues regarding the division of the 

tangible personal property. As of September 1995, no ruling had 
 3 

been made with regard to the marital estate. On September 18, 

1995, wife filed a motion to have the value of the various 

marital assets updated. The court granted the motion. However, 

husband failed to supply the requested information, and wife 

withdrew the motion. 

 The trial court issued its final letter opinion regarding 

equitable distribution and attorney's fees on July 31, 1996. The 

court "valued the parties' assets as of September 1, 1994, the 

date of the evidentiary hearing." The court ruled that, in 

accordance with Code § 20-107.3(E), an equal division of the 

marital estate was appropriate and each party would receive 

$307,557.31 as their equitable award. 

 The court made the following specific findings: 

 The Court also includes the Standard Drug 

profit sharing plan in the marital 

estate. . . . The Court finds that the funds 

accumulated in this plan are marital 

property. 

 . . . [T]he Court finds that [the three 

Vanguard mutual funds numbered 40, 73, and 

21] were funded by transfers from accounts 

holding marital funds. The Court notes that 

[husband] depleted over $70,000 in marital 

funds after the parties [sic] separation. 

While [husband] contends that he used these 

funds to pay expenses of [wife], [husband] 

does not indicate any payee or produce any 

cancelled checks and he fails to establish by 

a preponderance of the evidence that the 

funds were spent in the manner he suggests. 

Accordingly, the Court concludes that these 

funds were used to establish the three mutual 

fund accounts in question and includes the 

mutual funds in the marital estate. 

* * * * * * * 

 . . . [T]he Court includes the entire 
 4 

 

proceeds from the sale of the marital home, 

$51,391.00, in the marital estate. 

 Finally, after careful consideration, 

the Court finds that attorney's fees are not 

justified. The Court finds that these fees 

were rendered to protect each parties' [sic] 

interests and the parties must bear their own 

attorney's fees and costs. 

 A final equitable distribution order was entered on November 

8, 1996. 

II. Severance Pay 

 The proper classification of severance pay is an issue of 

first impression in Virginia. Husband contends the trial court 

erred in classifying his severance pay as marital property. He 

argues that his severance pay should be considered his separate 

property because he negotiated and received the severance package 

two years after the dissolution of the marital partnership, and 

the package was not compensation for services provided during the 

marriage. We agree. 

 Husband began working for Standard Drug Company on December 

1, 1990. In late June or July 1993, two years after the parties 

separated, husband negotiated a severance agreement with Standard 

Drug.1

 His position was eliminated on October 11, 1993, as a 

 1The "Executive Severance Agreement" included the following 

provision: 

 In recognition of the Executive's substantial 

contribution to the Corporation, and to 

encourage the Executive to remain with the 

Corporation pending the sale of the 

Corporation's stock or assets, the 

Corporation would like to provide additional 

compensation to the Executive if 

substantially all the Corporation's stock or 

assets are sold. The Board of Directors has 
 5 

result of the company's acquisition by CVS. Husband testified 

that the severance package included a lump sum distribution "in 

excess of $300,000 pre-tax" and "eight months worth of continuing 

salary plus benefits." Without making a specific finding, the 

trial court classified the lump sum distribution as marital 

property.2

 On appeal, the trial court's award of equitable distribution 

will not be reversed "[u]nless it appears from the record that 

the [court] has abused [its] discretion, that [it] has not 

considered or has misapplied one of the statutory mandates, or 

that the evidence fails to support the findings of fact 

underlying [its] resolution of the conflict in the equities." 

McClanahan v. McClanahan, 19 Va. App. 399, 401, 451 S.E.2d 691, 

692 (1994) (citation omitted). Property acquired after the last 

separation is presumed to be separate unless the party claiming 

otherwise proves that the property "was acquired while some 

vestige of the marital partnership continued or was acquired with 

marital assets." Dietz v. Dietz, 17 Va. App. 203, 211-12, 436 

S.E.2d 463, 469 (1993). "Where partnership efforts have 

contributed nothing to the acquisition . . . of the property, no 

 

determined that the compensation to be 

provided under this Agreement is reasonable 

 compensation for the services rendered and to 

be rendered by the Executive. 

(Emphasis added). 

 2The classification of the continuing salary and benefits 

portion of the package is not contested on appeal. 
 6 

basis exists for its being classified as a marital asset." Id.

at 211, 436 S.E.2d at 468. 

 Although the classification of severance pay is a question 

of first impression in Virginia, several sister states have 

addressed this issue. Those decisions provide that the 

touchstone of the classification is whether the severance pay was 

intended to compensate the employee for efforts made during the 

marriage or to replace post-separation earnings. See, e.g., 

Franklin v. Franklin, 859 P.2d 479 (N.M. Ct. App. 1993), cert.

denied, 858 P.2d 1274 (N.M. 1993) (severance pay received after 

divorce as compensation for future earnings is separate 

property); Ressler v. Ressler, 644 A.2d 753 (Pa. Super. 1994) 

(severance pay is separate property).3

 The nature of post-separation severance pay as replacement 

for post-separation wages supports a classification of separate 

property. 

 Severance pay compensates the wage earner for 

the economic exigencies and detriments 

resulting from permanent separation from 

service without fault . . . [and] is intended 

primarily to alleviate the consequent need 

for economic readjustment and to compensate 

for certain losses attributable to dismissal. 

In re Marriage of Bishop, 729 P.2d 647, 649 (Wash. App. 1986) 

(severance pay is separate property and distinguishable from 

 

 3But see Brotman v. Brotman, 528 So.2d 550 (Fla. Dist. Ct. 

App. 1988) (severance pay received after separation but before 

dissolution was acquired during the marriage and is marital 

property). 
 7 

deferred compensation). Accord In re Holmes, 841 P.2d 388 (Colo. 

Ct. App. 1992) (although based on length of service provided 

during the marriage, severance payment is conditional on 

termination and replaces expected loss of income, therefore it is 

separate property). See also Ryan v. Ryan, 619 A.2d 692, 695 

(N.J. Super. Ct. Ch. Div. 1992) (severance payment where amount 

was based on husband's past services to employer was compensation 

for past labor and therefore marital property. However, "[i]f 

the payment [had been] intended to replace post-marital earnings, 

it [would be] separate property."). Additionally, severance pay 

is "a mere expectancy"; it has no value until the termination of 

employment. Bishop, 729 P.2d at 650. Consequently, when 

termination does not occur during the marital partnership and the 

right to severance pay is not established during the marriage, 

severance pay is separate property. See Biddlecom v. Biddlecom, 

495 N.Y.S.2d 301 (N.Y. App. Div. 1985) (severance pay is 

husband's separate property because the right to receive the 

payout did not exist prior to the commencement of the divorce 

action). 

 As a replacement for lost future wages, which is contingent 

upon termination, a severance package is analogous to an early 

retirement incentive plan. Several states have found that 

post-separation payments under such incentive plans are the 

employee's separate property.4 See McClure v. McClure, 647 

 

 4But see, e.g., In re Heupel, 936 P.2d 561 (Colo. 1997) (en

banc) (voluntary separation incentive payments are retirement pay 
 8 

N.E.2d 832, 841 (Ohio Ct. App. 1994), cert. denied, 645 N.E.2d 

1260 (Ohio 1995) (despite being based on years of service, armed 

forces voluntary separation incentive payments are analogous to 

severance payments which "attempt to compensate . . . for future 

lost wages" and are therefore separate property); LaBuda v. 

LaBuda, 503 A.2d 971 (Pa. Super. 1986), cert. denied, 524 A.2d 

494 (Pa. 1987) (early retirement incentives are not marital 

property where husband's right to receive the benefits did not 

accrue prior to the parties' separation; wife could not have 

expected to enjoy these payments since neither party knew husband 

would receive the payments until after they separated); Boger v. 

Boger, 405 S.E.2d 591 (N.C. App. 1991) (payment under early 

retirement incentive plan is separate property). 

 In the instant case, at the time of the separation husband 

had been employed with Standard Drug for only a few months. 

Neither party expected the sale of Standard Drug. Husband 

negotiated the severance agreement almost two years after the 

parties separated. Consequently, the severance package is 

presumed to be separate property. To overcome the presumption, 

wife bears the burden of showing the lump sum payment compensated 

husband for services rendered during the marriage. See Dietz, 17 

Va. App. at 211-12, 436 S.E.2d at 469. 

 

rather than severance pay and are marital property); Fisher v. 

Fisher, 462 S.E.2d 303 (S.C. Ct. App. 1995) (voluntary separation 

incentive payments are tantamount to retirement benefits and are 

marital property). 
 9 

 On its face, the executive severance agreement indicated 

that the package was in recognition of husband's "substantial 

contribution to the Corporation, and to encourage the Executive 

to remain with the Corporation pending the sale" and "for the 

services rendered and to be rendered." Wife argues that this 

language proves that the severance pay was intended as 

compensation for services rendered during the marriage. However, 

the agreement also stated that the Executive would receive the 

severance compensation "if substantially all the Corporation's 

stock or assets are sold." The entire severance package, 

including the lump sum payment, was contingent upon the 

occurrence of a condition: the sale of Standard Drug. This 

condition did not occur during the marriage, and, as a 

consequence, husband's right to the lump sum payment did not 

accrue before the separation. The purpose of the severance 

agreement was related to the sale of the corporation, not to 

husband's work during his marriage. Consequently, we hold that 

wife failed to meet her burden, and the trial court erred in 

classifying the lump sum payment as marital property. 

III. Vanguard Mutual Funds 

 Between July 18 and December 11, 1991, husband opened 

Vanguard Mutual Funds 21, 40 and 73, titled in his name. Wife 

offered evidence that husband opened the accounts with money 

transferred from the parties' marital account. Husband testified 

that the funds were established after separation with his 
 10 

post-separation earnings. On June 30, 1993, Fund #21 had a 

balance of $18,295.61, Fund #40 had a balance of $26,290.30, and 

Fund #73 had a balance of $13,025.35. 

 The trial court found the three accounts "were funded by 

transfers from accounts holding marital funds" and that after the 

separation, husband "depleted over $70,000 in marital funds." 

Although husband argued that he used this money to pay wife's 

expenses, the trial court found that he "fail[ed] to establish by 

a preponderance of the evidence that the funds were spent in the 

manner that he suggests." The trial court concluded "that these 

funds were used to establish the three mutual fund accounts in 

question," and it included the mutual funds in the marital 

estate. After the trial court's final letter opinion, husband 

provided his own summaries of the sources of the mutual fund 

money. 

 Husband argues the trial court abused its discretion by 

classifying the three mutual funds as marital property.5

 This 

argument lacks merit. Property acquired after separation is 

presumed to be separate property unless the party claiming 

otherwise demonstrates that it was obtained with marital funds. 

See Dietz, 17 Va. App. at 210, 436 S.E.2d at 468. "In 

determining whether credible evidence exists [to support the 

court's finding,] the appellate court does not retry the facts, 

 

 5Although husband addressed the question of the $70,000 as a 

waste issue, this was not the approach of the trial court. 
 11 

reweigh the preponderance of the evidence, or make its own 

determination of the credibility of witnesses." Moreno v. 

Moreno, 24 Va. App. 190, 195, 480 S.E.2d 792, 795 (1997) 

(citation omitted). In the instant case, wife offered credible 

evidence that the mutual funds were established with marital 

assets. The trial court did not abuse its discretion in finding 

the mutual funds to be marital property. 

IV. Profit Sharing Plan 

 Husband began working for Standard Drug on December 1, 1990, 

and began participation in the company profit sharing plan on 

July 1, 1991. The trial court classified the plan as a marital 

asset and valued it at $22,976.63, the balance as of December 31, 

1993. 

 Husband argues that the parties separated before he became 

eligible to contribute to the plan and that Code § 20-107.3(G)(1) 

requires the profit sharing plan to be valued at the time of 

separation.6 He claims the plan did not exist at the time of 

separation and concludes that the entire balance is his separate 

property. 

 Although the parties physically separated in April 1991 and 

husband asserts that he formed the intent to terminate the 

 

 6"The court may direct payment of a percentage of the 

marital share of [a profit-sharing plan] . . . which constitutes 

marital property . . . . 'Marital share' means that portion of 

the total interest, the right to which was earned during the 

marriage and before the last separation of the parties, if at 

such time or thereafter at least one of the parties intended that 

the separation be permanent." Code § 20-107.3(G)(1). 
 12 

marriage in the late summer of 1991, he did not evince that 

intent until November 1991. Husband could not simply rest on his 

argument that the separation occurred before the profit sharing 

plan began. The trial court had discretion to conclude that the 

separation occurred after the profit sharing plan began, and once 

it did so, the burden shifted to husband to establish the amount 

of his post-separation contributions and how much of the plan was 

his separate property. "'All property including that portion 

of . . . [a profit-sharing plan] acquired by either spouse . . . 

before the last separation of the parties . . . is presumed to be 

marital property in the absence of satisfactory evidence that it 

is separate property.'" Frazer v. Frazer, 23 Va. App. 358, 370, 

477 S.E.2d 290, 295 (1996) (quoting Code § 20-107.3(A)(2)). 

Husband failed to provide evidence establishing the portion of 

the plan that was his separate property, relying instead on his 

contention that the plan was entirely separate. It was within 

the trial court's discretion to reject this argument and classify 

the entire balance as marital when husband failed to provide 

evidence sufficient to determine how much of the plan was his 

separate property. 

V. Equity Line on Marital Residence 

 During the marriage and prior to December 1993, the parties' 

marital home was encumbered by a mortgage and an equity line of 

credit. Shortly after they filed for divorce, the parties 

refinanced the mortgage and paid off the equity line. Without 
 13 

consulting wife, husband borrowed against the equity line of 

credit. In June 1994 the new outstanding balance was 

approximately $44,000.7

 Husband asserted that he used $14,000 to 

pay "[t]he mortgage payment and all the utilities [sic] bills and 

so forth associated with [the marital residence]" for wife, and 

he used the balance "for investment purposes for which I owe the 

money back. She does not have any interest or obligation for 

that difference." When asked what he did with this money, 

husband answered that he "loaned it to [his] businesses." 

Husband provided no evidence of these loans. 

 On December 7, 1994, the parties received $26,270.14 in net 

proceeds from the sale of the marital residence. The equity line 

balance on the property was $25,121.41 at that time. According 

to husband's testimony, he spent $14,000 of the equity line funds 

on marital expenses for wife. The trial court disregarded the 

equity line balance, valued the property at $51,391, and included 

it in the marital estate. 

 Husband contends the trial court abused its discretion by 

failing to discount the value of the marital residence by the 

amount of the outstanding balance on the equity line of credit. 

As a general rule, "the use of [marital] funds for living 

expenses while the parties are separated does not constitute 

dissipation." Clements v. Clements, 10 Va. App. 580, 587, 397 

 

 7During this period of time husband was being paid over 

$10,000 a month from his severance package and his net pay was 

approximately $6,000 per month. 
 14 

S.E.2d 257, 261 (1990) (citations omitted). However, "the burden 

is on the party who last had the funds to establish by a 

preponderance of the evidence that the funds were used for living 

expenses or some other proper purpose." Id. at 587, 397 S.E.2d 

at 261. Husband had exclusive control of the equity line funds. 

He incurred the debt without authority from wife, and he offered 

insufficient proof of his use of these funds for marital 

expenses. Consequently, the trial court did not abuse its 

discretion by implicitly classifying the equity line debt as 

husband's separate responsibility and valuing the marital home 

without including the equity line. 

VI. Vanguard IRA and Davenport Account 

 The balance of husband's Vanguard IRA at the parties' 

separation was $73,122.39. The balance as of October 1993 was 

$47,161.50. Husband testified that the value decreased due to 

the market decline and that he made no withdrawal or transfer of 

funds from this particular IRA. He also stated that the funds in 

this account came from "self-employment earnings" from 1988-1990. 

 The trial court valued this asset as of the date of the 

evidentiary hearing at $118,529.80. 

 At the time of separation, the equity in the Davenport 

account was $8,534. The balance as of October 1993 was $42,394. 

 Husband testified that the increase in this account came from 

the market increase. He stated that he "believed" he had 

deposited $20,000 since the parties' separation, but he could not 
 15 

remember where this amount came from. The trial court valued 

this asset as of the date of the evidentiary hearing at 

$50,444.50. 

 Husband argues the trial court erred in classifying these 

accounts as entirely marital, since he deposited money in them 

after the separation. Property is presumed to be marital if it 

was "acquired by either spouse during the marriage, and before 

the last separation of the parties," unless evidence proves that 

the property is separate. Code § 20-107.3(A)(2). In the instant 

case, husband offered only his own testimony to establish that 

the deposits into these accounts were his separate property. 

"'The weight which should be given to evidence and whether the 

testimony of a witness is credible are questions which the trier 

of fact must decide.'" Morse v. Commonwealth, 17 Va. App. 627, 

631, 440 S.E.2d 145, 147-48 (1994) (quoting Bridgeman v. 

Commonwealth, 3 Va. App. 523, 528, 351 S.E.2d 598, 601 (1986)). 

Absent credible evidence establishing the separate nature of at 

least a portion of the funds, we cannot hold that the trial court 

erred in classifying these accounts as marital assets. 

VII. Wife's Additional Issues 

 Wife contends the trial court erred in valuing her Ford 

Escort at $9,500 rather than $8,500, as indicated by the only 

evidence submitted on the issue. The court provided no 

explanation for its deviation from the evidence, and the basis 

for the $9,500 value does not appear in the record. Because the 
 16 

trial court's value for wife's vehicle lacks evidentiary support 

and may be merely a typographical error, we remand for 

determination of the proper value. 

 Wife also argues that the trial court erred in failing to 

value Vanguard account #5195-1030 as of the date closest to the 

evidentiary hearing on September 1, 1994. Wife contends the 

proper value of the account is $84,089.40, the value in August 

1994, while the court valued the account at $42,722.88, its value 

in 1993. In its letter opinion, the trial court indicated that 

the parties' assets were valued "as of September 1, 1994," and it 

valued the other assets as close to that date as possible. The 

court offered no explanation for its failure to use the August 

1994 statement to value account #5195-1030. We hold that the 

trial court erred in treating this asset differently without 

explanation, and we remand for determination of the proper value. 

 Additionally, wife contends the trial court erred in valuing 

four of the parties' joint accounts as of the date of the 

evidentiary hearing rather than the date of separation. Wife 

claims the combined value of these accounts was $125,545.98 when 

the parties separated while the combined value at the time of the 

evidentiary hearing was $34.45. Wife concedes that the inclusion 

of mutual fund accounts 21, 40 and 73 recovered $60,036.91, but 

she argues the remaining $65,509.07 is unaccounted for. 

 Under Code § 20-107.3(A), at least twenty-one days before 

the evidentiary hearing, a party may submit a motion for an 
 17 

alternate valuation date. Wife failed to file a motion to value 

the property as of the date of separation. While wife did file a 

motion to update values, she subsequently withdrew it. 

Consequently, we cannot hold that the trial court abused its 

discretion in valuing the parties' assets as of September 1, 

1994, the date of the evidentiary hearing. 

 Wife lastly argues the trial court erred in failing to award 

her attorney's fees and costs. She contends the disparity in the 

parties' incomes and their relative resources requires reversal. 

 An award of attorney's fees lies within the sound discretion of 

the trial court. See Stumbo v. Stumbo, 20 Va. App. 685, 460 

S.E.2d 591 (1995). In the instant case, the trial court gave 

"careful consideration" to the question of attorney's fees and 

found that an award of fees was not justified. We cannot hold 

the court abused its discretion in declining to award attorney's 

fees and costs. For the foregoing reasons, we affirm in part, 

reverse in part, and remand. 

 Affirmed in part,

reversed in part,

and remanded.