Opinion ID: 887711
Heading Depth: 1
Heading Rank: 5

Heading: The inclusion of Jim's inheritance in the District Court's property division

Text: ¶19 Relying on § 40-4-202, MCA, Jim argues that his future inheritance should not be included in the marital estate or the court's property division because Liz did not contribute to its facilitation or maintenance. ¶20 The relevant portion of § 40-4-202, MCA, provides: (1) In a proceeding for dissolution of a marriage . . . the court, without regard to marital misconduct, shall . . . finally equitably apportion between the parties the property and assets belonging to either or both, however and whenever acquired and whether the title thereto is in the name of the husband or wife or both. In making apportionment, the court shall consider the duration of the marriage and prior marriage of either party; the age, health, station, occupation, amount and sources of income, vocational skills, employability, estate, liabilities, and needs of each of the parties; custodial provisions; whether the apportionment is in lieu of or in addition to maintenance; and the opportunity of each for future acquisition of capital assets and income. The court shall also consider the contribution or dissipation of value of the respective estates and the contribution of a spouse as a homemaker or to the family unit. In dividing property . . . acquired by gift, bequest, devise, or descent . . . the court shall consider those contributions of the other spouse to the marriage, including: (a) the nonmonetary contribution of a homemaker; (b) the extent to which such contributions have facilitated the maintenance of this property; and (c) whether or not the property division serves as an alternative to maintenance arrangements. ¶21 Since the Uniform Marriage and Divorce Act (UMDA) became effective in January 1976, the inheritance and gift provisions of this statute have been applied on numerous occasions and with varying results. In Morse v. Morse (1977), 174 Mont. 541, 571 P.2d 1147, we held that the wife's cash inheritance received during the marriage was properly an asset of the marital estate at the time of dissolution. In In re Marriage of Brown (1978), 179 Mont. 417, 587 P.2d 361, we determined that the wife had acquired a vested interest in a ranch inherited by her husband during their marriage, as a result of her non-monetary contributions as a mother, homemaker and part-time ranch hand, as necessary. ¶22 In Balsam v. Balsam (1979), 180 Mont. 129, 589 P.2d 652, on the other hand, we affirmed the district court's determination that pre-marital trust fund cash and stock was not. . . the product of any marital effort by either of them, but [was] purely a gift toward which the wife has made no contribution and, therefore, any entitlement in her should take this factor into account. Balsam, 180 Mont. at 134, 589 P.2d at 654. ¶23 The Balsam decision was subsequently embraced in In re Marriage of Herron (1980), 186 Mont. 396, 608 P.2d 97, in which we determined that because nearly all of the property accumulated by the Herrons could be traced to gifts or bequests from the wife's father, an equal distribution constituted an abuse of the district court's discretion. We said: If none of the value of the property is a product of contribution from the marital effort, the District Court can justifiably find that the non-acquiring spouse has no interest in the property. Herron, 186 Mont. at 404, 608 P.2d at 101. See also In re Marriage of Smith (1995), 270 Mont. 263, 891 P.2d 522, wherein we affirmed the district court's conclusion that the husband was not entitled to any of the wife's pre-marital property because he failed to demonstrate that his actions in any way maintained or increased the value of the corpus of the trust[]. Smith, 270 Mont. at 268, 891 P.2d at 525. ¶24 In 1998, this Court decided In re Marriage of Engen, 1998 MT 153, 289 Mont. 299, 961 P.2d 738, in which we held that the condominium purchased during the marriage by the husband with funds acquired through the sale of a family home given to him before the marriage should be awarded exclusively to him. This decision was based on the fact that the couple had lived in the condominium only a short time and there was no evidence that the small increase in the property's value was due to any contribution by the wife to its maintenance. Engen, ¶¶ 34 and 42. Therefore, the rule of Engen can be restated as while gifted or inherited property acquired during the marriage may be included in the marital estate, if none of the value of the property is a product of contribution from the marital effort, the district court can justifiably find that the non-acquiring spouse has no interest in the property. See also Herron ; In re Marriage of Stewart (1988), 232 Mont. 40, 45, 757 P.2d 765, 768; In re Marriage of Luisi (1988), 232 Mont. 243, 245, 756 P.2d 456, 458. ¶25 Subsequently, in In re Marriage of Foreman, 1999 MT 89, 294 Mont. 181, 979 P.2d 193, the Court determined that [t]he underlying policy of equitable apportionment of marital assets would be thwarted by a wooden application of the rule emphasized in Marriage of Engen . . . . Foreman, ¶ 25. In Foreman, under his father's will, Ronald Foreman inherited a one-third interest in the remainder of his parents' Nebraska property, subject to a life estate for his mother. While the Foremans never lived on the property, received any income from it, nor made any tax or business contributions to it ( Foreman, ¶ 9), they did rely on the property as a means to pay off future marital debt; therefore, they lived beyond their own financial means throughout their marriage. Foreman, ¶¶ 10 and 22. Ronald's wife, Kathy, testified that she relied on her husband's representations to justify their pursuit of comfortable lifestyles rather than saving for retirement. Foreman, ¶ 22. We concluded that Ronald enjoyed a vested remainder interest that could be included in the marital estate. We also held that while Kathy admitted she never directly contributed to the maintenance of the Nebraska property, she, nonetheless, facilitated the maintenance of the property by her contributions as a homemaker and by allowing all of her earnings to be consumed in pursuit of their lifestyles. Foreman, ¶ 27. We surmised that the property's value was preserved by the total consumption of all earned income, without which the couple presumably would have had to borrow against the value of Ronald's vested remainder interest . . . . As a result, we held that Kathy was entitled to an equitable share of the property's preserved value. Foreman, ¶¶ 28 and 29. See also In re Marriage of Davis, 1999 MT 218, 295 Mont. 546, 986 P.2d 408 (Wife's income was used to support the household and improve the marital home, in addition to her contributions as homemaker and caregiver to husband's mother, all of which entitled her to a substantial and equitable share of the full value of the marital home that husband had owned prior to the marriage.). ¶26 Most recently, in In re Marriage of Herrera, 2004 MT 40, 320 Mont. 71, 85 P.3d 781, husband Richard appealed the district court's award of part of his $23,000.00 retirement fund to wife Teresa during dissolution. This Court, returning to the rule emphasized in Engen, reversed the district court's award to Teresa on the ground that she had not contributed to the appreciation or preservation of Richard's retirement account. Herrera, ¶ 29. ¶27 While no clear rule emerges from these previous decisions, the most analogous cases lead to a conclusion that while Liz contributed substantially to the marital assets and estate by raising the couple's children, general homemaking activities, and contributing all of her earnings to the marital estate, these contributions did not, in any way, facilitate the maintenance or enhance the value of the Trust from which Jim was to inherit future income. In fact, nothing Liz did or failed to do during the marriage had any impact whatsoever on either the value or distribution provisions of the Trust. As a result, we are compelled to conclude that Liz is not entitled to an equitable share of the Trust's preserved or appreciated value and the Trust should not have been included in the marital estate. Smith, 270 Mont. at 268, 891 P.2d at 525. ¶28 Notwithstanding that the District Court may not distribute any portion of the Trust's future income to Liz, the District Court may nonetheless consider Jim's future income from the Trust when distributing the existing marital estate. Under § 40-4-202(1), MCA, in equitably apportioning the marital property and assets between the parties, the court shall take into consideration several factors, including, but not limited to, the length of the marriage, the age of the parties, their occupations, their needs, and the opportunity of each for future acquisition of capital assets and income. See In re Marriage of Dalley (1988), 232 Mont. 235, 241, 756 P.2d 1131, 1133. In the case before us, Jim has a vested remainder interest in the Trust; unless he dies before his mother or she depletes the Trust prior to her death, Jim will begin receiving income from the Trust upon her death. Therefore, we conclude that, in dividing the marital estate, upon remand, the District Court may consider Jim's inheritance as providing an opportunity for future acquisition of capital assets.