Virginia Equitable Distribution: Millionaires, Marital Waste and Spousal Support

Can one spouse pay temporary spousal support by making withdrawals from marital accounts?  Can one spouse pay for his attorney’s fees by making withdrawals from marital accounts?  Can one spouse pay for his mortgage payments and household expenses from marital funds while the divorce case is pending?  Wouldn’t it be unfair for the payor spouse to continue to deposit his work income into his own separate account for his sole benefit moving forward while paying for his various obligations by withdrawing funds from marital accounts that otherwise would be available to the payee spouse at the divorce trial?

In Wright v. Wright, 61 Va. App. 432 (2013), the parties owned marital property well in excess of a million dollars.  Husband was an esteemed partner at the law firm of Hunton & Williams, LLP, where he was very well compensated.  Wife was an unemployed homemaker with an undergraduate degree magna cum laude from Duke University and an M.B.A. from the University of Virginia.  The parties separated on July 11, 2008.  The parties had their divorce trial in December of 2011.  While their divorce case was pending, Wife was awarded a temporary award of spousal support pending their final hearing.

Husband apparently decided that he would not pay his spousal support obligation out of his copious work income.  He instead paid for it out of a marital account having a not insignificant balance on the date of separation: $2,695,275.  He, in fact, withdrew $834,335 out of this account to pay for numerous expenses for a mere 1 ½ years.  These expenses included his wife’s spousal support, his attorney’s fees, his expert witness’s fees, his daughter’s school tuition and other related costs, the real estate taxes on the marital home, and sums owed for jointly filed income tax returns for 2008 and 2009.

Husband also apparently decided that he would not pay the mortgage on the marital home out of his work income.  He instead paid for it out of another marital account having a not insignificant balance on the date of separation: $105,610.75.   He, in fact, made so many mortgage payments out of this account in a mere 1 ½ years that its value was only $5,178 on the date of trial.

In sum, Husband effectively reduced the size of the marital estate by about one million dollars in about 1 ½ years by paying for expenses that look questionable on first blush.  Wife, not unexpectedly, was quite upset that she might not get her rightful share of this missing million dollars or so.  She, somehow, managed to scrounge back $95,838 of these missing funds at trial on equitable grounds but, unfortunately for her, the trial court said tough luck as to the rest.  It held that there was no marital waste of these funds under established caselaw, meaning that the following expenses were for proper marital purposes: court-ordered spousal support (Thomas v. Thomas, 40 Va. App. 639 (2003)), attorney’s fees for the divorce action (Amburn v. Amburn, 13 Va. App. 661 (1992)), daughter’s school tuition (Clements v. Clements, 10 Va. App. 580 (1990)), mortgage payments (Anderson v. Anderson, 29 Va. App. 673 (1999)), and household expenses (Clements).

Wife, nevertheless, appealed.  Wife’s argument on appeal was essentially that this is ridiculous.  Husband makes so much money!  Husband surely had not paid for all of these types of expenses out of marital assets in the past!  Why can he just go from previously using just some small sliver of these accounts to pay these types of expenses prior to the marital separation to using some massive slice of the marital pie after the marital separation!  Or, put it another way, why can he just go from presumably using almost all of his work income to pay for these types of expenses prior to the marital separation to using almost none of his work income to pay these types of expenses after the marital separation?  Surely that would be some pretty damning evidence of his intent to diminish the marital estate regardless of whether the expense had some tie to the marriage, no?[1]

Va. Code § 20-107.3(E)(10) states that the trial court shall determine the amount of any monetary award in performing an equitable distribution of the marital estate after consideration of, inter alia, the “use or expenditure of marital property by either of the parties for a nonmarital purpose or the dissipation of such funds, when such was done in anticipation of divorce or separation or after the last separation of the parties.”  As such, marital waste occurs when such an expenditure is for a nonmarital purpose or done in a deliberate attempt to dissipate the size of the marital estate available for the monetary award.  See, e.g., Thomas.  Given that Husband’s expenditures were for marital purposes per past caselaw, the court was left to consider whether this was some deliberate attempt to dissipate the size of the marital estate and whether some new guideline should be brought to bear to address these scenarios.  Unfortunately for Wife, the appellate court was not about to overturn the trial court’s discretionary findings on Husband’s intent, nor was it going to create some new arbitrary guideline on how to determine unfair diminishment of marital assets from one spouse failing to sufficiently dip into one’s work income or separate assets.  As such, Wife had no chance on appeal.  Thankfully, however, the appellate court did not foreclose this type of argument from ever getting traction in future divorce trials: “Such a determination surely must be made, if at all, in the trial court.”


[1] Sadly, the opinion does not detail counsel’s precise argument or its deeper factual foundation, if any.  Rather, the writer assumes that some variation of this argument was made given the implications in the opinion and common experience practicing in this area of law.

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