Conundrum Revisited
| Publication year | 2010 |
| Pages | 10 |
| Citation | Vol. 23 No. 3 Pg. 10 |
Vol. 23, No. 3, 10. Conundrum Revisited
Volume 23 No. 3
May/June 2010
In the 1998 article, The Conundrum of Gifted, Inherited and Prenmital Property in Divorce, UTHA BAR JOURNAL, Volume XI, No. 3, April 1998, the question of how courts treat gifted, inherited, and premarital property was explored. The inconsistency of the decisions of the appellate courts rotating between the fairly definitive language oiMortensen v. Mortensen, 760 P.2d 304 (Utah 1988), and the equitable approach actually effected in the Mortensen case and utihzed in Burke v. Burke, 733 P. 2d 133 (Utah 1987), was addressed and analyzed. A series of decisions from the Utah Appellate Courts was examined. These decisions traced the evolution of utilization of the Burke approach, that is, equitably deciding how to treat this property; sometimes returning it to the person to whom it had been gifted or who owned ft before the marriage or by whom ft was inherited during the marriage, other times treating ft as though ft was marital, utiftzftig equitable division principles.
After publication of the article. Judge Michael D. Lyons also examftied the subject in a subsequent article. Source of Funds Rule -Equitably Classifting Separate and Marital Property, Utah Bar Journal, Volume XI, No. 6, wherein he suggested a mathematical approach to deaffng with the problem.
Examining the cases since these articles appeared, ft appears that the rule emerging is that articulated by the concurring justices. Justices Christine Durham and Michael Zimmerman, in Mortensen, that is:
760 P2d at 310As I read the majority opinion, the rules articulated today require only that in the usual case not fitting within one of the exceptions spelled out by Justice Howe, property acquu-ed by one spouse during the marriage through gift or inheritance should be awarded to that spouse upon divorce. I take this to be nothftig more than avarialion on the analogous rule applicable to property brought into the marriage by one party: in the usual case, that property is returned to that party at divorce, absent exigent circumstances. Preston v. Preston, 646 P.2d 705, 706 (Utah 1982).
The exceptions articulated by Justice Howell, to which Justices Durham and Zftnmerman referred, were (1) the other spouse has, by his or her efforts or expense, contributed to the enhancement, maintenance or protection of the property, thereby acquiring an equitable interest in ft, or (2) the property has been consumed or its identity lost through commftigfing or exchanges, or (3) where the acquiring spouse has made a gift of an interest therein to the other spouse. See id at 308-09.
The cases decided since 1998 indicate that the Utah Court of Appeals is continuing to develop the equitable rule, not the hard-and-fast rule stated Mortensen, which, as was pointed out in the original article, is honored more in the breach than by enforcement. For practicing lawyers, this means in any case involving premarital, inherited, or gifted property, there is no hard-and-fast rule that we can articulate for our cUents. Rather, we must teU them that ft is a question of equity which is going to have to be resolved by a trial court ff the matter cannot be settled in some fashion. Any doubt about this was dispeUed by the court of appeals in Olsen v Olsen, 2007 UT App 296,169 P3d 765, when the court declared:
Id. ¶ 23Utah statutory law provides for "equitable orders relating to the.. .property" of divorcing spouses. Utah Code Ann. § 30-3-5(1) (Supp. 2007); see alsoRosendahlvRosendahl, 876 P2d 870, 874 (Utah Ct. App. 1994) (stating that the court has the power to distribute marital property "in an equitable manner" and need not "consider property division fti isolation"). In Utah, marital property is ordftiarfty divided equaUy between the divorcftig spouses and separate property, which may fticlude premarital assets, inheritance, or sftnilar assets, wftl be awarded to the acquuing spouse. See Bradford V Bradford, 1999 UT App 373,¶ 23,993 P2d 887 ("property acquired by one spouse by gift and inheritance during the marriage [should be awarded] to that spouse" (alteration in original) (internal quotations marks omitted)); Haumont v. Haumont, 793 P.2d 424 (Utah Ct. App. 1990) (noting premarital property generally retained by acquiring spouse). Nevertheless, a trial court "'may, in the exercise of its broad discretion, divide the property equitably, regardless of its source or time of acquisition.'" Oliekan v. Oliekan, 2006 UT App 405, ¶ 28, 147 P. 3d 464 (quoting Haumont, 793 P.2d at 424 n.1).
The court went on to rule on the specific question presented that while social security benefits are separate property, a trial court could make appropriate adjustments in the division of marital property considering that right to income because separate property should be awarded to its "owner."
Other cases since 1998, both published and unpublished, demonstrate ways the courts have applied the evolving equitable principles and provided guidance as to how these cases should be processed and decided. While no definite rule is declared, this body of common law provides a framework in which to work.
The Utah Court of Appeals in Elman v. Elman, 2002 UT App 83, 45 P.3d 176, articulated the rule frequently restated and applied thereafter: the trial court must define the property as separate or marital. The marital property should generally be divided equally between the parties, and the separate property (gifted, inherited, or premarital) awarded to its owner. However, separate property could be divided if one of the exceptions existed. While the court sought to limit the case to the unusual question of valuing an above-market appreciation in separate property made possible by...
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