Opinion
No. 3-182 / 02-1159
Filed May 14, 2003
Appeal from the Iowa District Court for Polk County, Scott D. Rosenberg, Judge.
Petitioner appeals the district court's property division and alimony award, and requests appellate fees. AFFIRMED AS MODIFIED.
Leslie Babich of Babich, Goldman, Cashatt Renzo, P.C., Des Moines, for appellant.
Joseph Bertogli, Des Moines, for appellee.
Considered by Vogel, P.J., and Miller and Eisenhauer, JJ.
Frede Gruenwald appeals from the district court's property division and alimony award, and requests appellate attorney fees. We affirm in part and modify in part.
Background Facts . Frede Gruenwald and John Donald Gruenwald were married in February 1991. At the time of trial, Frede and Donald were sixty-five and seventy-one years old, respectively. Both parties are retired. They have no children together, though they both have adult children from previous marriages.
Both before and during the first few months of the marriage, Frede received an inheritance from her mother, the amount of which is in dispute. Donald received bank stock through both gifts and inheritance from his parents decades before this marriage. The stock increased in value significantly during the marriage. The monthly dividends Donald received from this stock were placed into a joint money market account with Frede and contributed to the parties' substantial monthly income. Donald also purchased certificates of deposit as the earnings accumulated. Beginning Christmas 1992, Donald gifted a total of 27,600 shares of Wells-Fargo stock to his four children in accordance with estate planning advice.
The amount of shares increased through stock splits and other similar market transactions not within a shareholder's control.
Donald retired soon after the marriage in May 1991. Frede continued to work until 2000 when she retired to take care of Donald after he had a series of mini-strokes. Donald fully recovered with the help of medication and Frede resumed part-time employment until the end of 2001. Frede suffers from a variety of chronic conditions requiring medication: high cholesterol, osteoporosis, acid reflux, depression, and anxiety.
The district court set aside Donald's inheritance of stock as a separate asset, however it did not set aside Frede's cash inheritance from her mother. Donald was ordered to make monthly alimony payments of $1,300 for five years. Freda appeals.
Scope of Review . We conduct a de novo review of dissolution proceedings. Iowa R.App.P. 6.4. We defer to the district court's findings, but are not bound by them. Iowa R.App.P. 6.14(6)( g).
Property Division . Frede claims the district court, in making the property distribution, should have considered the increased value during the marriage of Donald's stock. She further claims the annual gifting of stock to Donald's children decreased the total asset value and income derived from the stock. Finally, Frede argues the inheritance she received from her mother's estate should be set aside to her, before the property division is made.
Iowa does not require an equal division of marital assets, but rather the courts look to see what is fair and equitable under the circumstances. In re Marriage of Russell, 473 N.W.2d 244, 246 (Iowa Ct.App. 1991). As a general matter inheritances received prior to or during the marriage are not subject to a property division, unless failing to include them among the marital assets would be inequitable to the other party. Iowa Code § 598.21(2) (2001); In re Marriage of Muelhaupt, 439 N.W.2d 656, 659 (Iowa 1989). In making this decision we consider a number of factors, including contributions to each party's economic welfare and the care, preservation, and improvement of the property, the special needs of either party, the length of the marriage, and any other consideration that would render the property's exclusion unfair to the other spouse or a child. Muelhaupt, 439 N.W.2d at 659.
Donald inherited twenty-one shares of Davenport Bank Trust Company stock after his mother's death in 1963. Due to stock splits, by February 1991, Donald owned 3,100 shares of Davenport Bank Trust Company. In January 1992, the stock was worth $219,164. At the time of trial, due to further stock splits and corporate changes, Donald owned 72,288 shares of Wells-Fargo stock worth $3,319,465. Neither party contributed to the preservation and improvement of the stocks nor were additional shares purchased during the marriage. See id. The dividends were placed into a joint account and used by the couple for living expenses. During Frede and Donald's eleven-year marriage, the couple experienced a comfortable lifestyle, not having to concern themselves with money or expenses. Donald retired a few months after they were married. Except for staying home to take care of Donald after he suffered several mini-strokes, Frede worked until 2001. While Frede contributed her income to the parties' joint use, forty percent of the couple's total income received during the marriage came from the generous monthly dividends from the stock. Frede argues the standard of living made possible in part by Donald's stock dividends created a reasonable expectation of a continued standard of living. See In re Marriage of Wallace, 315 N.W.2d 827, 831 (Iowa 1981) (stating standard of living made possible by inheritance "will naturally and reasonably" lead spouse to anticipate that standard to continue).
Donald had owned 6,200 shares of Davenport Bank Trust Company stock but split the stock equally with his first wife because she was very close with his parents, they were married for thirty-six years and had four children together.
The worth of the stock as of the date of marriage is unknown.
The district court divided the joint account, in which the monthly dividends were placed, as well as the certificates of deposit purchased from stock dividends, equally between the parties. However, the district court set aside all the Wells-Fargo stock to Donald. Frede claims the increased value in the stock during the marriage should have been included in the property division.
The mere fact Donald's stock fortuitously skyrocketed during the marriage does not control our decision to affirm the district court's decision to set aside the stock to Donald. See generally In re Marriage of Campbell, 623 N.W.2d 585, 587 (Iowa Ct.App. 2001) (holding the date of asset valuation as the date of trial even where the stock fortuitously increased after separation but before trial). Other factors such as Donald's contribution to the marriage of the stock dividends and the equal division of the joint account and certificates of deposit funded with the dividends, along with the gifted and inherited sources of the stock, the fact this was not an extremely lengthy marriage, and our modification of the amount of alimony as discussed below, lead us to affirm the district court's setting this asset aside to Donald. See In re Marriage of Van Regenmorter, 587 N.W.2d 493, 495 (Iowa Ct.App. 1998) ("We consider the award of alimony in conjunction with the property award."). As such, it is unnecessary to address Donald's gifting of stock to his children during the marriage.
Frede also received an inheritance of $75,078 from her mother's estate and claims that amount should have been set aside to her. Before distribution to the beneficiaries, Frede borrowed $10,385 against her share and also received an advance of $10,000. This left Frede's share at $51,740 plus an executor's fee of $3,967, totaling $55,707. The district court used the figure $55,707 in discussing her inheritance.
We agree with Frede that the district court should have used the $75,078 figure, as evidenced by the distribution chart prepared by the executor's attorney. However, we do not agree with Frede that the whole amount should be set aside as inherited property. Evidence at trial established that Frede and Donald each contributed approximately $30,000 of inherited assets for the purchase of the marital home and another $12,500 for decorating and furnishing the home. The marital home therefore represented separate funds of both Frede and Donald. As the district court divided the equity of the home equally between Frede and Donald, both received back their separate funds. A further return of these funds to Frede would not be equitable.
We do not believe the executor's fees should have been considered part of the inheritance, as such fees are considered earnings and reported as income. 26 U.S.C.A. § 61.
There remains however, $32,578 cash which Frede claims to have brought to the marriage from her inheritance from her mother. Frede testified the cash was used to pay part of the living expenses of the parties. We agree this infusion of inherited cash should be restored to Frede and modify accordingly. See In re Marriage of Wendell, 581 N.W.2d 197, 199 (Iowa Ct.App. 1998) (citing In re Marriage of Miller, 452 N.W.2d 622, 624 (Iowa Ct.App. 1989)) ("Premarital property does not merge with and become marital property simply by virtue of the marriage."). Because the district court did not set aside this cash to Frede, all was part of the marital property which was nearly equally divided. Therefore, we restore to Frede one-half of the $32,587 or $16,294, which is the one-half of Frede's inheritance which was part of the distribution to Donald. Our decision to restore fungible, inherited cash to Frede is largely dependent on the facts of this case in striving to produce an equitable result. Here, Donald leaves the marriage with $3,319,465 of inherited property. Setting aside Frede's inheritance to her is appropriate to achieve equity under these circumstances.
Spousal Support . The district court ordered Donald to pay monthly alimony of $1,300 for five years. Frede appeals requesting alimony of $3,000 per month continuing until Frede remarries or the death of either party.
In addition to the length of the marriage, it is appropriate for the court to consider the age and health of the parties, their educational level and earning capacity, the feasibility of the party seeking alimony becoming self-supporting at a comparable standard of living, any property distribution made in the decree, the tax consequences and the provisions of any prenuptial agreement.
Iowa Code § 598.21(3); In re Marriage of Spiegel, 553 N.W.2d 309, 320 (Iowa 1996).
[T]he spouse with the lesser earning capacity is entitled to be supported, for a reasonable time, in a manner as closely resembling the standards existing during the marriage as possible without destroying the right of the party providing the income to enjoy at least a comparable standard of living as well.
In re Marriage of Hayne, 334 N.W.2d 347, 351 (Iowa Ct.App. 1983).
The district court found Frede had separate property of $321,457, which consisted primarily of a premarital IRA account. It then awarded her joint assets of $170,722 leaving her with a net worth of $492,179. Donald received $3,392,016 in separate property (including the stock), and $181,488 in joint assets leaving him with a net worth of $3,573,504.
This will change slightly with the restoration of inherited funds to Frede.
Frede receives $811 per month in social security, $132 per month in pension benefits, and $1,300 per month alimony; a total of $2,243. Frede estimated her monthly expenses to be $4,353. While we question some of her estimated monthly expenses, we do agree she should be able to enjoy a comfortable lifestyle in her retirement years. We also consider the award of all the income producing stock to Donald which has yielded far in excess of his needs. See In re Marriage of Vanderpol, 529 N.W.2d 603, 606 (Iowa Ct.App. 1994) (citing In re Marriage of Jones, 309 N.W.2d 457, 460 (Iowa 1981)). We modify to award Frede $2,000 per month, until the death of either party or Frede's remarriage, whichever occurs first.
Appellate Attorney Fees . Frede seeks attorney fees on appeal. Such an award is discretionary and is determined by assessing the needs of the requesting party, the opposing party's ability to pay, and whether the requesting party was forced to defend the appeal. In re Marriage of Gaer, 476 N.W.2d 324, 330 (Iowa 1991). Given the relative financial positions of the parties, we order Donald to pay $2,000 for Frede's appellate attorney fees. Costs of this appeal to be assessed to Donald.