Court Opinion

ID: 9514313
Source: CourtListenerOpinion
Date Created: 2023-08-06 22:48:34.77628+00
Date Added: 2024-06-11T09:06:16.012657
License: Public Domain

GILBERTSON, Justice
(concurring in part and dissenting in part).
[¶ 59] 1. Property Division
[¶ 60] The trial court, in its allocation of the $1,307,998 of assets of the parties, awarded $972,246 or 74% of the assets to Patricia and $335,734 or 26% of the assets to Michael. While this appellate court has traditionally given trial judges considerable latitude in the disposition of assets, I find this allocation to be an abuse of discretion. Voelker v. Voelker, 520 N.W.2d 903, 907 (S.D.1994). The major factor which results in this lop-sided award is the trial court’s treatment of various trust assets of approximately $562,232,10 of which Patricia is a beneficiary, to be “non-marital property.” The error is compounded by the inclusion of Michael’s major asset, the proceeds of his partnership buyout from his CPA firm, into the marital assets and dividing it in half for purposes of distribution.
[¶ 61] We have held that South Dakota is an “all property state” which results in all property of both of the divorcing parties being subject to equitable division by the trial court, regardless of title or origin. Endres v. Endres, 532 N.W.2d 65, 68 (S.D.1995); Radigan v. Redigan, 465 N.W.2d 483, 486 (S.D.1991). This is in accord with the dictates of SDCL 25-4-44 which authorizes division of assets upon a divorce “whether the *238title to such property is in the name of the husband or the wife.” “The statute [SDCL 25-4-44] is specific that title does not control the distribution of the property in a divorce action.” Clement v. Clement, 292 N.W.2d 799, 801 (S.D.1980).
[¶ 62] The factors to be included for determining property division are: (1) duration of the marriage; (2) value of property owned by the parties; (3) ages of the parties; (4) health of the parties; (5) competency of the parties to earn a living; (6) contribution of each party to the accumulation of property; and (7) income-producing capacity of the property owned by the parties. Clement, 292 N.W.2d at 801. Rather than applying the above factors- and our prior case law, the trial court made its determination that Patricia’s trust assets were nonmarital property based solely on the intent of her father and grandmother. It held in its bench decision, incorporated into the Findings of Fact:
There were assets which the court finds were gifts to Patricia Billion, that were not intended to go to Michael Billion from Patricia Billion’s family. It appears clear that her family made gifts to her which THEY INTENDED TO BE TO HER ONLY, and that’s very clear through the testimony that at least Miss Billion’s father did not see these assets as being commingled, but saw them going to his daughter, (emphasis added)
Likewise, Finding of Fact # 9 states in part, “The Court finds that it was the intent that these gifts were not to be treated as marital property and, in fact, were not treated as marital property.”11 There is no basis in our case law to set aside the above-cited seven factors and remove a substantial portion of the assets from the status of being a marital asset based solely on the intent of the grant- or.12 In fact there is substantial authority to the contrary.
[¶ 63] In Clement, the husband received a sizable inheritance from his father which was invested in real estate. The wife put her earnings from her job towards the payment of family expenses. We held that the wife had contributed substantially to the marital assets and an equal division of all property was appropriate including the proceeds of the husband’s inheritance. 292 N.W.2d at 801.
[¶ 64] In Prentice v. Prentice, 322 N.W.2d 880 (S.D.1982), the husband received a gift of farm land from his father prior to the marriage. During the eight years of marriage, the wife put her earnings towards the payment of the family expenses and obligations. The trial court excluded the gift from the marital assets. We reversed, holding that it was an abuse of discretion not to include the realty as a marital asset given the contributions of the wife to it and to the family. Id. at 883. Essentially the same result occurred in Garnos v. Garnos, 376 N.W.2d 571, 573 (S.D.1985) and Buseman v. Buseman 299 N.W.2d 807 (S.D.1980).
[¶ 65] Most recently in Heckenlaible v. Heckenlaible, 1996 SD 32, 545 N.W.2d 481, the majority of this Court held realty gifted to a couple as an advancement on the husband’s inheritance, a scant six months before separation and filing of divorce, to be a divisible marital asset. The duration of the marriage was 26 years. The fact that the wife made no contribution towards the acquisition or upkeep of the realty during this six-month period was not found to be a basis for excluding the realty from the marital corpus.
[¶ 66] In the case now before us, Michael worked long and hard to secure an excellent standard of living for his family. During the course of this marriage Michael earned $1,455,000 which was contributed to the support of the family. While Patricia’s contribu*239tions of $337,570 from the trust to the family should not be ignored, Michael’s contributions clearly allowed Patricia the option of retaining assets in the trust rather than being forced to sacrifice them to support the family and meet its financial obligations and expenditures.13 Unlike Bennett v. Bennett, 516 N.W.2d 672 (S.D.1994), and Heckenlai-ble, supra, where the assets arrived at the eleventh hour of the marriage, here the assets were in the marital estate during all, or a substantial portion, of the marriage and, despite withdrawals for family use, had impressively appreciated during that time period.
[¶ 67] Those cases wherein we have allowed exclusion of gifted or inherited assets from the marital corpus have been on the basis that the nonbeneficiary spouse did nothing to contribute toward the accumulation of the property and did not further its acquisition by assuming family obligations. See Bennett, 516 N.W.2d 672, 677; Voelker, 520 N.W.2d 903, 908; and Andera v. Andera, 277 N.W.2d 725, 728 (S.D.1979). The facts of these cases stand in stark contrast to Michael’s contribution of $1,455,000 in earnings to the family during the marriage.
[¶ 68] Although all of the above cases deal with division of realty either gifted to or inherited by the husband, the same legal principles applied therein should be applied to the facts now before us. “All property” clearly includes both real and personal property. Bennett, 516 N.W.2d at 677. Gender of either party is not a consideration in a property division in a divorce. Lien v. Lien, 278 N.W.2d 436, 438 (S.D.1979); Orr v. Orr, 440 U.S. 268, 99 S.Ct. 1102, 59 L.Ed.2d 306 (1979). The intent of the grantor or testator, or for that matter, the intent of the beneficiary or heir who is involved in the marriage, is also not the evidentiary basis for determination of this issue. Attention to the manner of acquisition exalts form to the exclusion of the above-cited seven substantive criteria.14 Heckenlaible, 1996 SD 32 at ¶ 36, 545 N.W.2d at 487 (Gilbertson, J., dissenting). See also Saint-Pierre v. Saint-Pierre, 357 N.W.2d 250, 258 (S.D.1984) (trial court is not bound to set aside inherited property, but may properly consider it as part of the property to be divided). In the past, we have not hesitated to reverse such inequitable, lopsided property divisions as inadequate. Laird v. Laird, 322 N.W.2d 254, 257 (S.D.1982); Johnson v. Johnson, 471 N.W.2d 156, 161 (S.D.1991).
I would reverse and remand on issue one for an equitable division of the property in accordance with the above-cited authority.
[¶ 69] 2. Alimony Award
In isolation, I have no dispute with the trial court’s determination to award rehabilitative alimony to Patricia of $600 per month for twelve months. It will take that period of time for her to reach her earning capacity. Given the total assets of the marriage, it is a small amount. However, in fairness to both Patricia and Michael, as I would reverse the disposition of the marital assets, the trial court must also be permitted to review the alimony award in conjunction with the property division. Kanta v. Kanta, 479 N.W.2d 505, 511 (S.D.1991) (amount of alimony must be reconsidered in light of holding remanding property division for reconsideration); Strickland v. Strickland, 470 N.W.2d 832, 838 (S.D.1991). Thus, I would reverse and remand on issue two.
*240[¶ 70] 3. Child Support
[¶ 71] The trial court awarded child support of $1,237 per month for two children based on extrapolation of the guidelines when applied to the parties’ income.
[¶ 72] SDCL 25-7-6.1 requires child support for “necessary maintenance, education and support.” The child support award must be based upon the reasonable financial needs of the children. Brandriet v. Larsen, 442 N.W.2d 455, 461 (S.D.1989); Bruning v. Jeffries, 422 N.W.2d 579 (S.D.1988). The state has an interest in protecting the welfare of its children which includes their standard of living. Feltman v. Feltman, 434 N.W.2d 590, 592 (S.D.1989). “[T]he essential inquiry remains the actual needs and standard of living of the children.” Bloom v. Bloom, 498 N.W.2d 213, 217 (S.D.1993). Extrapolation beyond the maximum guidelines level is permissible, but not mandated, where the parents’ joint income exceeds the guidelines’ upper limit. Ochs v. Nelson, 538 N.W.2d 527, 530 (S.D.1995). Thus, what becomes “necessary maintenance, education and support” under SDCL 25-7-6.1 clearly varies with, the facts of each case with consideration being given to the lifestyle to which the child was accustomed before the divorce.
[¶ 73] Patricia cites Ochs as authority for the trial court’s result in this case. However Ochs dealt with a mother and father who had never married and lived in very different financial worlds. The mother lived on the edge of poverty while the father lived in substantial affluence. We held it appropriate to require child support above the guidelines to allow the child to live in essentially the same lifestyle whether he experienced his father’s world or his mother’s world. Ochs, 538 N.W.2d at 531.
[¶ 74] Clearly such is not the case here. The trial court granted Patricia’s request and justified its extrapolation solely on the lifestyle to which the children had been accustomed during the course of the marriage. Patricia exits the marriage with no mortgage or rental payments, no car payments or any debts whatsoever. Thus none of her financial resources are reduced by such obligations and she can devote her finances to current and future living costs.
[¶ 75] Patricia sought $1550 per month or over $50 per day for food and movies. Patricia justifies this amount on the ground that she runs an open house which allows the neighbor children to eat with her children as they wish. Such hospitality may be commendable but the statute only requires Michael to support his children and not the neighborhood children as well.
[¶ 76] Patricia also requested $400 per month for a “personal trainer” for one child despite the fact there had been no such expenditure during the course of the marriage. The sizable expenditure of $1600 per month for keeping show horses is also not within the statutory definition of “necessary expenditures.”
[¶ 77] Factually, this case is much closer to Bloom, 498 N.W.2d 213, than it is to Ochs. In Bloom, we held that designer clothes, cellos, ballet lessons and language camps were not necessities of life despite the comfortable financial situation of the noncustodial parent. Id. at 218.
[¶ 78] Either parent with sufficient financial means can provide such items to his or her child if they choose. Whether to provide such amenities of life to one’s child should be up to the discretion of that parent. I find nothing in the guidelines or interpretative case law which requires a noncustodiál parent to be forced to finance such activities via involuntary child support. Id.
[¶ 79] I would hold the trial court was within its discretion in its calculation of the parties’ income but it abused its discretion in its extrapolation of Michael’s child support based on the “needs” of the children as requested by Patricia which are clearly luxury expenditures not contemplated by our support statutes. Therefore, I would reverse and remand on issue three.
[¶ 80] 4. Attorney’s Fees
[¶ 81] I would affirm the decision of the trial court in refusing to award attorney’s fees to Michael.

. Although Finding of Fact # 8 states Patricia brought $562,232 in trust assets to the marriage, that finding is in error. The evidence shows she brought $83,036 in trust assets to the marriage. The difference between $83,036 and $562,232 accounts for the gain realized to the trust, assets during the course of the marriage, after withdrawals of some $337,570 during that period.

. The majority also cites to various changes in wills and trusts by Patricia to show that she intended to keep her property, just that, her property. This is of minimal relevance when analyzed under our seven criteria for determining property division in a divorce, and in light of SDCL 25^4-44.

. The majority also cites to a 1981 “waiver” executed by Michael concerning Patricia's assets. At the commencement of trial, the parties stipulated that this “waiver” did not constitute a postnuptial agreement and was not legally binding. It was introduced for the limited purpose of showing the intent of the parties at the time the document was signed. In making its property division, the trial court apparently gave the document no evidentiary weight as it did not mention the document.

. The parties strongly disagree over the extent to which Michael may have contributed funds he either possessed or earned, to the trust. It is clear however that Michael did contribute funds to the trust to some extent as the trial court found, "there has been commingling within the account."

. Even if one accepts this legal premise advanced by the majority, the facts still do not support its result. $390,047 of the $562,232 which the majority finds to be “non-marital” assets is contained in a trust which is under the sole control of Patricia and not her father or grandparents. It is the Patricia Speier Trust of which Patricia is both the grantor and beneficiary and which is fully revocable by her. As noted by the majority, the remaining $172,185 is in a Sequoia Funds investment and "was purchased by Patricia with proceeds from her trust.” But for her voluntary creation of this trust, these funds would have been in the marital assets along with all of those contributed by Michael. Can one anticipating an upcoming divorce now avoid division of assets merely by putting them in a revocable trust? I would respectfully but emphatically state that this should not be the law in this State.