Opinion ID: 1161647
Heading Depth: 4
Heading Rank: 1

Heading: Characterization of property

Text: When dividing property between divorcing parties, the trial court must distribute all assets acquired during marriage. [26] The proper date for distinguishing marital from post-marital assets is the date when the marriage has terminated as a joint enterprise or when a married couple cease functioning economically as a single unit. [27] Although assets acquired by an unmarried couple during a period of cohabitation are distributed according to a different method [28] and the parties in this case were no longer married after their 1992 dissolution, they stipulated to a June 1995 date of economic separation and agreed that the trial court should consider as marital property all assets accumulated as of that date. Tarie challenges the trial court's characterization of certain items of property as marital. Tarie first argues that the trial court should not have classified the entire Fairview Loop property as a marital asset because Bob's mother, Barbara Lacher, owned half of that property. Prior to dissolution, Bob purchased a one-half interest in the Fairview Loop property with marital funds. Because he used joint funds, the one-half interest was indeed marital property. [29] Bob testified that after the dissolution, he transferred the parties' interest in the property to his mother but that she agreed to transfer the entire property back to him to help settle the lawsuit. Upon redistribution, the trial court awarded to Tarie the value of the entire Fairview Loop property, including the one half of the value owned by ... the mother of the petitioner. But Bob's mother's one-half interest in the property was never marital property and thus was not available for distribution. Moreover, forcing Tarie to take unwanted non-marital property belonging to a third party in lieu of the cash or other marital property necessary to achieve an equitable distribution unfairly benefits Bob. Thus, the trial court erred in including Bob's mother's interest in the Fairview Loop property in its distribution of marital property. Tarie next contends that the trial court erred in considering her entire settlement as marital property. Although both the sexual harassment of which Tarie complained and the filing of her lawsuit occurred during the period that she and Bob were living together and functioning as an economic unit, we agree with Tarie that the entire settlement should not necessarily be classified as marital property. In Bandow v. Bandow, [30] we concluded that the purpose for which the [tort] recovery is received controls its classification. [31] If the recovery compensates for losses to the marital estate, the settlement proceeds should be classified as marital property. [32] But to the extent the recovery compensates for lost post-marital earning, post-marital medical expenses, and [her] pain and suffering (both during and after marriage), the award should be classified as her separate property. [33] Tarie testified that only $5,000 of the settlement was to compensate for lost earnings while the remaining $45,000 was for her personal pain and suffering. Bob presented no controverting evidence. Accordingly, only $5,000 qualifies as a marital asset available for distribution. Moreover, Tarie claims that by the time of trial, the settlement proceeds had been spent on such expenses as child care, clothes for the children, food, house maintenance, and utility expenses, as well as attorney's fees. Thus, the marital portion of the settlement proceeds may have been expended for the benefit of both Bob and Tarie by the time of trial and thus would be unavailable for division. On remand, the trial court should determine whether the $5,000 marital portion of Tarie's settlement remained available for distribution.