Valuing a marital estate and phantom selling expenses

15 January 2022
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Category: Blog
15 January 2022, Comments: 0

Ahles v. Ahles Docket # 351545

This case involves an appeal as of right of an Amended Default Judgment of Divorce.

The Court of Appeals reversed the trial Court and vacated the portion of the Amended Default Judgment of Divorce ordering defendant pay the plaintiff to equalize the marital estate.

This was the second appeal in this matter.

The Parties purchased a home in 1995. At the time the judgment of divorce was entered in September 2017, plaintiff had the home appraised. The value of the home was determined to be $135,000 and owed $105,726.42 on the mortgage.

At the time the original default judgment of divorce was entered, if the trial court had ordered plaintiff to “share some equity with” defendant, she would have been unable to get a mortgage on the home on her own, and that she would have had to sell the marital home, with 7% commission going to a realtor. Plaintiff agreed that 7% of $135,000 would yield $9,450 in commission to a realtor.

Plaintiff also provided testimony regarding other items of personal property owned by the parties during the marriage and testified that the distribution of personal property was fair, and that “considering the valuable tools,” the “award of the house to [plaintiff] without payment of equity” was fair.

Plaintiff testified that the parties did not have any joint debts, other than the mortgage. Plaintiff had financed the living room furniture, and was paying off that account on her own. All other furniture in the home had been hand-me-downs.

After the conclusion of plaintiff’s testimony, the trial court made findings of fact on the record.

The trial court found that Defendant would be awarded his tools, the Plaintiff the furniture in the home, as well as various vehicles. The Court also ordered the Parties to share in the equity of the marital home. The equity, however, will be reduced by the cost that would be to sell the marital home, as that would be the distribution, by a commission that would normally be charged at 7%.

Defendant argues on appeal that the trial court’s factual findings are unsupported by the record evidence, and thus cannot stand. The Court of Appeals agreed and found as follows:

A trial court must make specific findings of fact regarding the value of each disputed piece of marital property awarded to each party in the judgment. A trial court’s findings of fact are inadequate if they are not sufficiently specific to enable the parties to determine the approximate values of their individual awards by consulting the verdict along with the valuations to which they stipulated.

 

They held that while there is no mathematical formula used to determine how marital property should be divided, distribution must be equitable. In order to determine if a piece of marital property has been equitably divided, the value of any property at issue must be known.

Generally, the party seeking to include property for distribution in the property settlement bears the burden of proving the reasonably ascertainable value of the property. If that party does not meet his burden, then the property should not be considered an asset subject to distribution.

Defendant argues that the trial court erred by reducing the equity in the marital home by 7%, which would represent a realtor’s commission if the home were to be sold, and by assigning “arbitrary” and “speculative” values to personal property in ordering him to pay $3,325 to plaintiff in order to “equalize the marital estate.”

The Court of Appeals concluded that the trial court erroneously deducted a 7% realtor’s commission on the sale of the home if it were to sell for $135,000 a and concluded that the trial court’s original valuation of the marital home was accurate, and that parties’ joint equity in the marital home as of September 2017 was $29,273.58, or $14,636.79 each.

The Court of Appeals agreed with defendant that the trial court’s factual findings regarding the value of personal property was inadequate. The fact that the Plaintiff sought to include items in the marital estate, yet failed to present any reasonably ascertainable evidence and the trial court subsequent assigning value to plaintiff’s unsubstantiated estimate, made the trial court’s finding not based on any fact in evidence, and thus was speculative, inadequate, and cannot sustainable.

The Court of Appeals vacate the portion of the Amended Default Judgment of Divorce ordering defendant pay $3,325 to plaintiff to equalize the marital estate, and remand for entry of a Second Amended Default Judgment of Divorce consistent with their opinion.

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