§6.4 Specific Assets

JurisdictionOregon
§ 6.4 SPECIFIC ASSETS

§ 6.4-1 Generally

Some assets are easily identified and divided, while others are not. The house and bank accounts that once composed the family's total assets are now joined by more esoteric assets, such as business goodwill, pension plans, and personal-injury awards. In addition, several categories of assets may encompass multiple components that can be treated differently by the court, such as the value associated with a premarital interest or an individual acquisition, as compared to the value that might have appreciated due to joint effort occurring during the marriage. Following the court's directive in In re Marriage of Kunze, 337 Or 122, 133-37, 92 P3d 100 (2004), each asset must now be considered individually, at least as acquisition and rebuttal arguments are considered (see § 6.1-1 to § 6.1-3), which makes identification and analysis of individual assets of paramount importance to lawyers.

§ 6.4-2 Appreciation in Value

The appreciation in value of a separate asset that occurs during the marriage is itself a marital asset subject to both division by the court and the two rebuttable presumptions—equal spousal contribution (see § 6.1-3) and contribution of a homemaker (see § 6.1-3(c)). This is true even though one spouse may have separately acquired, or even separately held, a particular asset throughout the marriage. In re Marriage of Massee, 328 Or 195, 206-08, 970 P2d 1203 (1999).

The same result applies to an increase in the value of separately owned property brought into the marriage. Thus, the increase in a pension plan that occurs (even a passive, interest-only increase) during the marriage is a "marital asset" because it was "acquired" during the marriage.

Massee is the most commonly cited case regarding marital appreciation. In Massee, 328 Or at 205-08, the wife worked primarily as a home-maker during the parties' brief marriage, but claimed a right to half of the appreciation in value of the husband's separately owned assets that occurred during the marriage. The court held that the appreciation was a marital asset, and that the Court of Appeals erred when it failed to assess the homemaker-spouse's contribution to the "enterprise of homemaking." Massee, 328 Or at 205-08. A homemaker-spouse contributes to the acquisition of marital assets because the performance of domestic tasks by one spouse frees the other to devote energy and concentration to other tasks that may generate marital assets.

Examples of assets that may appreciate in value during a marriage include the following:

(1) Land, whether individually acquired during the marriage or owned before the marriage. See, e.g., Massee, 328 Or at 206-08 (the increase in value of the husband's farmland during the short-term marriage was a marital asset).

(2) Rental properties. See, for example, In re Marriage of Debord, 95 Or App 544, 547-48, 770 P2d 81, adh'd to as modified on recons, 96 Or App 767, 770 P2d 81 (1989). The wife was entitled to an equal share in the increase in the value of rental properties acquired during the short-term marriage even though the properties themselves were traceable to, and were awarded to, the husband. This was "just and proper" because the wife had worked to maintain the rental properties without drawing a salary and had enhanced the husband's ability to use his own money to acquire the properties by using money from her own business for household and living expenses. Debord, 95 Or App at 548.

(3) Premarital real property. In In re Marriage of Niman, 206 Or App 259, 136 P3d 105 (2006), the court considered it appropriate to divide the appreciation of the husband's premarital Vancouver property, and distinguished the factual situation from the court's refusal in In re Marriage of Kunze, 337 Or 122, 92 P3d 100 (2004) (see, e.g., § 6.1-1), to divide the appreciation in property that "was virtually a passive investment throughout the marriage [where the other spouse] did not contribute in any way to the increase in value." Niman, 206 Or App at 267 (quoting Kunze, 337 Or at 617-18). Instead, the court relied on the wife's substantial contributions to the family enterprise as a homemaker. "Even though neither party made a substantial, targeted, contribution to the marital appreciation in the Vancouver property, wife's uncompensated contributions as a homemaker and caregiver for the parties' children have preserved, in the face of husband's challenge, the presumption that she contributed equally to that appreciation." Niman, 206 Or App at 267-68.

(4) Retirement accounts. In In re Marriage of Fuernsteiner-Perin & Perin, 211 Or App 23, 29, 153 P3d 151, rev den, 343 Or 33 (2007), the appreciation that occurred during the marriage in the husband's retirement plan was, at most, "passive." "Passive gain without any input of marital assets or joint marital effort suffices to overcome the presumption of equal contribution." Fuernsteiner-Perin, 211 Or App at 29.

(5) Business. In In re Marriage of Fields, 234 Or App 451, 228 P3d 614 (2010), although the court held that the wife rebutted the presumption of equal contribution as to the initial gift of an asset (farming business entity) from her parents, the court divided appreciation that occurred on the asset during the marriage equally, although the husband's name was never placed on the asset. The court cited the totality of the circumstances in making its ruling, finding that (a) the husband assisted the wife in managing the asset without being fully compensated for his work, (b) the husband's stewardship of the asset contributed to an increase in the asset's value, (c) the parties commingled their finances throughout the long-term marriage, (d) the wife integrated her interest in the asset into the parties joint finances, and (e) the husband relied on the wife's separately held assets in his financial planning. Fields, 234 Or App at 455-56.

In In re Marriage of Hixson, 235 Or App 217, 230 P3d 946, clarified on recons, 235 Or App 570, 232 P3d 996 (2010), the court found that although the wife functioned as a homemaker during the marriage, the husband's overall contribution to the appreciation in value of his premarital veterinary business was greater than the wife's, and the husband therefore rebutted the presumption of equal contribution as to that appreciation. The court later went on to award the wife an equal share of the appreciation in its overall just and equitable award.

(6) Investments. In In re Marriage of Lind, 207 Or App 56, 139 P3d 1032 (2006), the husband successfully rebutted the presumption of equal contribution with regard to his separately held premarital investment portfolio. The wife argued that she should be entitled to the appreciation in the value of the investments that occurred during the marriage, whether it was through market forces or through the husband's management. The court found that the value of the portfolio actually declined during the marriage, but said that even if appreciation had occurred, it resulted from market forces. "[S]uch passive appreciation in separately held assets is itself separately held." Lind, 207 Or App at 65.

There may also be an argument that the nontitled spouse should share in the appreciation in value that occurred before the marriage, during a period of premarital cohabitation. See In re Marriage of Rudder, 230 Or App 437, 458-59, 217 P3d 183, rev den, 347 Or 365 (2009) (although not a marital asset, appreciation of an asset during a period of premarital cohabitation may be considered in the "just and proper" division of property); In re Marriage of Carlson, 236 Or App 291, 298-301, 236 P3d 810 (2010), rev den, 349 Or 602 (2011). But see Lind, 207 Or App at 62-63, declining to consider the appreciation on the husband's investment account that occurred during the period of cohabitation before marriage.

A party wishing to maintain that appreciation as separate property must rebut the statutory presumption that both spouses have contributed equally to the acquisition of that asset (the appreciation) during the marriage. ORS 107.105(1)(f). See Massee, 328 Or at 207. For ideas and cases, see the discussion and examples discussed in § 6.1-3(a) to § 6.1-3(a)(4) for arguments for and against rebutting the presumption of equal contribution, many of which consider appreciation specifically. See also § 6.1-3(c) regarding the homemaker presumption and its use in defeating rebuttal arguments, which typically relate to appreciation accumulated during the marriage. Finally, review again Kunze, 337 Or 122, in which the Oregon Supreme Court dealt with appreciation on a number of different assets and analyzed each based on its individual facts to arrive at varying outcomes.

§ 6.4-3 Bonuses

In In re Marriage of Tofte, 134 Or App 449, 459, 895 P2d 1387 (1995), the wife unsuccessfully argued to the trial court that the $36,000 annual bonus the husband received while the case was pending should be treated as property and divided with her. After reviewing the wife's claim that the money should also be included in the calculation of the appropriate level of child support, the Court of Appeals deemed the bonus not property, but included it in the husband's income for support-calculation purposes.

§ 6.4-4 Disability Pay

The United States Supreme Court has ruled that a state court could not treat "military retirement pay that has been waived [by the retiree] to receive veterans' disability benefits" as property divisible on divorce. Mansell v. Mansell, 490 US 581, 583, 594-95, 109 S Ct 2023, 104 L Ed 2d 675 (1989). However, the Mansell decision does not prevent the court from considering a veteran's disability pay (or other disability payments) in its decision on the issues of child support and spousal support. See In re Marriage of Landis, 200 Or App 107, 112, 113 P3d 456 (2005), in which the court held that disability payments are divisible as long as the disability payments are not a substitute for waived retirement...

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