Opinion
No. 4-808 / 04-0622
Filed February 9, 2005
Appeal from the Iowa District Court for Linn County, Thomas M. Horan, Judge.
Richard Berndt appeals the property division, alimony, and life insurance provisions of a dissolution decree. AFFIRMED.
Crystal Usher of Nazette, Marner, Wendt, Knoll Usher, Cedar Rapids, for appellant.
Margaret Lainson of Meardon, Sueppel Downer, Iowa City, for appellee.
Heard by Huitink, P.J., and Mahan, Miller, Vaitheswaran, JJ., and Nelson, S.J.
Senior Judge assigned by order pursuant to Iowa Code section 602.9206 (2005).
Richard Berndt appeals the property, alimony and life insurance provisions of a dissolution decree. We affirm.
I. Background Facts and Proceedings
Richard and Judy Berndt married in December 1970. They remained married for thirty-three years.
When the couple met, Richard was a sophomore at Iowa State University. Judy was working as a secretary at a veterinary diagnostic lab and had completed one year at Iowa State as well as a one-year secretarial training program.
Richard graduated with an architectural degree. For the first eight years of the marriage, both parties earned wages. Richard worked as an architect, and Judy as an administrative assistant.
The couple's first child was born in 1978 and the second in 1981. After the birth of the first child, the couple decided that Judy would not work outside the home. At the time of trial, Judy had been out of the workforce for twenty-five years.
Richard changed jobs and eventually began working for Shive-Hattery, an architectural firm in Cedar Rapids. At the time of trial, he was manager of the office with an annual income of approximately $130,000.
Richard and Judy separated in October 1999. Richard petitioned for a dissolution about two and a half years later. Following trial, the district court set aside certain gifted and inherited property to each party and awarded Judy $829,336 of the parties' assets and Richard $677,097. The court ordered Richard to pay Judy $2,000 per month in alimony, to continue until either party dies or remarries, but in no event beyond "Richard's retirement after the age of 65." The court ordered the alimony obligation secured by a life insurance policy. Richard appealed.
II. Property
We begin by noting that the parties were financially secure during their marriage, with assets exceeding $1.5 million. The source of much of their wealth was inherited and gifted property. Judy inherited a house in Charles City, a Floyd County farm, and $349,000 in cash assets. Richard inherited approximately $229,000 in cash and was given EE bonds valued at $21,288.
According to Judy, the district court dealt with this property by setting aside to each party the "things" that party had inherited or received as a gift and by including the "cash" gifts and inheritances in the assets subject to division. Richard contends this division was inequitable. He argues that (A) the farm and home given to Judy should have been subject to division, (B) the savings bonds given to him should have been set aside to him and (C) the assets should have been equally divided.
A. Charles City Home and Floyd County Farm
The district court found that the Charles City house and the Floyd County farm "came from Judy's mother and father and had been in her family for years." The court further found:
There was no evidence presented at trial of an independent, close relationship between Richard Berndt and his in-laws. There was some evidence that some improvements were made on the farm and that maintenance and taxes were paid on the Charles City home. The minimal rent from the farm paid the real estate taxes on it.
The court concluded "it is equitable to set aside the parcels of real estate Judy inherited from her mother and father as her separate property."
Richard does not dispute the court's findings, but instead argues that other facts militate in favor of including the house and farm in the property subject to division. See Iowa Code § 598.21(2) (2001) (stating gifted and inherited property is not subject to property division "except upon a finding that refusal to divide the property is inequitable to the other party"); In re Marriage of Martens, 406 N.W.2d 819, 822 (Iowa Ct.App. 1987) (setting forth factors for consideration in deciding whether to include inherited and gifted property in assets subject to division). With respect to the home, he notes the property was held in joint tenancy for several years, had never been rented, and was maintained with joint funds of approximately $500 per month. With respect to the farm, Richard again notes the property was held in joint tenancy and joint funds were used to construct a building on the property and to maintain it.
These additional facts do not render the district court's decision inequitable. Richard conceded that during at least part of the time that the parties were expending funds to maintain the properties, their joint account contained "payments from an annuity" left to Judy by her father. Additionally, Judy testified that the farm was rented and the rent generally covered taxes and other incidental costs. It was also clear that Richard only sought to have the appreciation on the farm subject to distribution. This amount was $35,200 and was more than offset by the $349,000 of Judy's inheritance that the court subjected to distribution. Finally, the decision to treat the home and farm as separate property is consistent with the entire property distribution scheme. Each party received between $168,000 and $188,000 in separate property. Each contributed cash to the property distribution, with Judy contributing more. Under these circumstances, the district court's decision to set aside the home and the farm to Judy was equitable.
Richard introduced probate documents assigning a $29,300 value to the farm at the time of inheritance. According to Richard, the property was worth $64,500 at the time of trial.
The district court found the total value of Richard's gifts and inheritances to be approximately $211,500 and the total value of Judy's gifts and inheritances to be approximately $489,900.
B. Savings Bonds
The district court included in the property subject to division savings bonds inherited by Richard and valued at $21,288. The court reasoned that this amount was offset by Judy's "large cash inheritance." We discern no inequity in this decision.
C. Distribution Disparity
Under the district court's property division, Judy received fifty-five percent of the property and Richard received forty-five percent. The court reasoned that
[t]his disparity is substantially less than the disparity between the totals of gifted and inherited property contributed by each, but it does reflect the fact that Richard has been the spouse primarily responsible for earning the income which also contributed to the accumulation of the martial assets.
Richard takes issue with this division, asserting that "[a]lthough Judy's cash inheritances were greater than Richard's certainly, Richard's contribution by way of earnings was much greater than Judy's."
Judy correctly notes that Iowa is an equitable division state and assets should be divided equitably, not necessarily equally. See In re Marriage of Webb, 426 N.W.2d 402, 405 (Iowa 1988). The district court's unequal division reflects Judy's uncompensated contribution to the marriage as a homemaker. See In re Marriage of Schissel, 292 N.W.2d 421, 423 (Iowa 1980). As noted, it also reflects her contribution of substantial inherited and gifted assets. On our de novo review of the record, we conclude the award is equitable.
III. Alimony
The district court ordered Richard to pay permanent, or traditional, alimony to Judy in the amount of $2,000 per month until either party dies, Judy remarries, or Richard retires after age sixty-five. The court focused on the length of the marriage, the "traditional" roles the parties played in their marriage, and the great disparity in the parties' earning capacities. The court highlighted the following circumstances justifying traditional alimony:
Berndt is a marriage of over 33 years. At the time of the marriage Judy Berndt had completed one year of college and one year at a secretarial school. Judy worked as a secretary to enable Richard to complete his course work for a degree in architecture. She moved to accommodate Richard's career. She continued to work to accumulate marital savings until her first child was born. After this, by mutual agreement, she dropped out of the work force and devoted herself to being a homemaker and mother. At trial she had been out of the work force for 25 years. She knew she had to get employment which she estimated would pay her $20,000.00 a year — approximately one-sixth of what Richard was earning.
On appeal, Richard suggests that Judy should only receive rehabilitative alimony of $1,000 per month for five years to allow Judy to "re-establish herself in the job market." We disagree.
A court is required to consider the following in determining the extent and duration of spousal support:
The earning capacity of the party seeking maintenance, including educational background, training, employment skills, work experience, length of absence from the job market, . . . and the time and expense necessary to acquire sufficient education or training to enable the party to find appropriate employment.
Iowa Code § 598.21(3)(e). These factors warrant an award of traditional alimony. Specifically, the parties mutually decided that Judy would leave the workforce on the birth of their first child. Judy remained out of the workforce for twenty-five years. At the time of trial, she was fifty-five years of age. She testified, "[a]fter 33 years of being devoted to my family, I am now faced with [twenty-five] years of being out of the work force and looking at entry level positions because I have no higher education." When asked if she had plans to return to college, she stated, "It's a little hard to contemplate. By the time I put in that time to further my college education, by the time I would get a job that would be lucrative enough to offset the expense, I don't have that much time left." She estimated that she would qualify for medical terminology or secretarial positions with annual salaries of $20,000. Notably, Richard did not dispute this testimony and, indeed, estimated an even lower earning capacity. In re Marriage of Clinton, 579 N.W.2d 835, 839 (Iowa Ct.App. 1998) (citing In re Marriage of Geil, 509 N.W.2d 738, 742 (Iowa 1993)) ("In a marriage of long duration, alimony can be used to compensate a spouse who leaves the marriage at a financial disadvantage, especially where the disparity in earning capacity is great.").
A court is also to consider:
The feasibility of the party seeking maintenance becoming self-supporting at a standard of living reasonably comparable to that enjoyed during the marriage, and the length of time necessary to achieve this goal.
Iowa Code § 589.21(3)(f). This factor justifies an award that is higher in amount and duration than the award proposed by Richard. Judy's financial affidavit establishes that she requires more than $1000 per month in alimony to continue living at a standard enjoyed during the marriage. In addition, Judy testified,
now I am faced with the necessity of obtaining employment in order to support myself, and I cannot do that and meet my budget on a salary which I would be capable of commanding, and I need assistance in order to meet my budget and not have to dip into any assets.
As for Richard's proposal that alimony end in five years, Judy's relatively advanced age, limited education, and dated work experience suggest that a five year award would leave her insecure for several years. While Richard claims the property settlement ensures her security, Judy testified she required that property to assist her in retirement. See In re Marriage of Hogeland, 448 N.W.2d 678, 682 (Iowa Ct.App. 1989).
Turning to Richard's ability to pay, the record reflects he was giving Judy more than $2,000 per month during the period of separation. His financial affidavit establishes he can continue to do so. See In re Marriage of Giles, 338 N.W.2d 544, 546 (Iowa Ct.App. 1983) (noting spouse had "wherewithal to provide more").
On our de novo review of the record, we agree with the district court that Judy is entitled to traditional alimony in the prescribed amount.
IV. Life Insurance
We are left with one final issue, whether the district court acted equitably in ordering Richard to name Judy as a beneficiary on his life insurance policy. The contested provision of the decree states:
So long as the Petitioner has an obligation to pay alimony/spousal support to the Respondent, he shall name the Respondent as beneficiary of life insurance on his life with death benefits of at least $100,000. When the Petitioner reaches the age of 62, the death benefits may be reduced to $60,000.
Richard argues that he should not be required to name Judy as the beneficiary on his life insurance policy because his spousal support obligation ends upon his death. Judy responds, "the purpose of this life insurance provision is to replace the loss of alimony if Richard should die before he retires after [sixty-five] or before Judy remarries."
Appellate opinions support Judy's reading of the contested provision. In In re Marriage of Debler, 459 N.W.2d 267, 270 (Iowa 1990), the Iowa Supreme Court reversed an award of alimony post-dating the death of the payor but required the payor to list his former spouse as a beneficiary on his life insurance policy "as long as [his] obligation for alimony continues under the decree." Similarly, in In re Marriage of Mouw, 561 N.W.2d 100, 101, (Iowa Ct.App. 1997) our court affirmed a provision ordering a payor to maintain life insurance with the payee as beneficiary "as long as he had any support obligation under the decree." In light of these opinions, we reject Richard's challenge to this provision of the decree.
We did, however, limit the amount of the policy "to the amount necessary to secure an obligation." Mouw, 561 N.W.2d at 102. Richard does not take issue with the amount ordered by the district court.
V. Appellate Attorney Fees
Judy requests appellate attorney fees. Awards are discretionary. In re Marriage of Ales, 592 N.W.2d 698, 704 (Iowa Ct.App. 1999).
This appeal was not frivolous and Judy is capable of paying her own fees. Therefore, we decline to order Richard to pay all or a portion of Judy's appellate attorney fees.