Trial court within Its Discretion on Marital Estate Tax Issues, but Abused Discretion in Ordering Husband to Pay for Child’s Graduate School

Family Law Case Review

Case: In the Matter of the Marriage of: Mark A. Del Priore v. Jill E. Del Priore
by Mike Kohlhaas, Bingham Greenebaum Doll

HELD: Trial court was within its discretion when it taxed Husband’s share of the marital estate with funds that Husband withdrew from a joint account while the case was pending, without Wife’s knowledge, but Husband could not account for how he expended them.

HELD: Trial court abused its discretion when it ordered Husband to pay for a child’s graduate school expenses.

HELD: Trial court properly declined to consider the tax consequences of its property division order where Husband failed to present evidence of any such consequences, nor made any case that Husband would be required to liquidate tax-sensitive assets awarded to him in order to meet his property equalization obligations to Wife.

FACTS AND PROCEDURAL HISTORY:
Husband and Wife married in 1988. Wife filed for divorce in 2013 and, at the time of their final hearing, the parties’ three children were 22, 20, and 18.

Shortly after filing, the trial court issued a standard Trial Rule 65(E) restraining order on assets. However, the parties had a significant TD Ameritrade account and, in 2014, Husband withdrew approximately $470,000 to pay various marital and children’s expenses. At the final hearing, Husband accounted for all but $93,344 of these funds. Consequently, in its Decree, the trial court effectively assigned the unaccounted for funds to Husband as part of his share of the property division.

On Husband’s appeal, no abuse of discretion was found on this issue. The Court of Appeals agreed that Husband, having withdrawn these funds, was obligated to account for their disbursement for marital purposes, or be subject to having them assigned to his side of the property division. The Court agreed that the evidence Husband presented as to how these funds were used was unpersuasive, and appeared to predate when the funds were withdrawn from the joint account.

The trial court’s Decree also required Husband to pay for the graduate school expenses of the parties’ daughter. Noting the Indiana Supreme Court’s recent Allen case, which held that a post-secondary educational expense order latitude “does not include graduate and professional school expenses,” the Court found error and reversed this portion of the Decree.

Finally, the trial court’s Decree awarded various assets to Husband, and required Husband to make cash equalization payments to Wife. The trial court did not consider the latent tax implications of the assets awarded to Husband. On review, the Court of Appeals observed that Husband did not present any evidence of tax consequences related to the assets awarded to him and, further, nothing in the record indicated that Husband would be required to liquidate tax-sensitive assets in order to pay Wife her property settlement payments. Therefore, the trial court’s lack of consideration of this issue was not error.

The Decree was affirmed, other than as to the term requiring Husband to pay for graduate school expenses.

To view the text of this opinion in its entirety, click here: In the Matter of the Marriage of: Mark A. Del Priore v. Jill E. Del Priore

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James A. Reed and Michael R. Kohlhaas of Bingham Greenebaum Doll represent clients in a wide spectrum of relationship transition and wealth planning matters, including premarital agreements, estate planning, cohabitation, separation, divorce (especially involving high net worth individuals and/or complex asset issues), custody, parenting arrangements, adoption, and domestic partnerships. Bingham Greenebaum Doll, a multidisciplinary law firm serving regional, national, and international clients, is the fourth-largest law firm in Indiana. The firm’s main practices include corporate, property, litigation, labor, government law, and personal services law. Visit the firm’s website at www.bgdlegal.com.

ICLEF • Indiana Continuing Legal Education Forum, Indianapolis, IN

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