Property Distribution - § 5-2 (B)

        (B)       Burden of Proof/Tracing

2015---David v. David, Va. Ct. of Appeals, Published, No. 0653-12-2
The evidence supported the trial court’s conclusion that the increase in the value of Husband’s separate property brokerage account during the marriage resulted from Husband’s significant personal efforts in managing the account. Under Code of Virginia 20-107.3(A)(3)(a), the owner spouse’s customary care, maintenance, and upkeep of separate property does not qualify as significant personal efforts. Thus, in the context of a stock account, routine adjustments to the portfolio, such as adding stocks that are performing well and culling underperforming stocks, does not constitute significant personal effort. Here, although the number of stock trades Husband made in the brokerage account during marriage was not particularly high, the evidence showed that Husband was deeply absorbed with the account and spent hours researching the stocks.

2014---Cano v. Davidson, Va. Ct. of Appeals, Unpublished, Record No. 1817-13-3.
Trial court did not err in rejecting Husband’s claims that he contributed separate property to fund various improvements to the marital residence where Husband failed to present evidence to clearly establish the amount and source of the funds and how much his contributions increased the value of the marital residence.
It was not error for the trial court to award Husband the amount of down payment he made on the property from separate funds, even though he did not show the value of that contribution at the time of trial.

2014---Peck v. Peck, Va. Ct. of Appeals, Unpublished, No. 0587-13-4.
Wife, a financial advisor, had a book of business prior to the marriage. Husband bore the burden of showing that Wife made contributions of personal effort to the book of business during the marriage and the book of business increased in value. Husband, who failed to present credible evidence of the value of the book of business on the date of the marriage, did not meet this burden.

2014---David v. David, Va. Supreme Ct., Record No. 122145.
When a non-owning spouse seeks to establish that an increase in the value of separate property during the marriage is marital property, the non-owning spouse is not required to prove causation. Based on the plain language of Code of Virginia 20-107.3(A)(3), the burden to disprove causation rests with the owning spouse. Once the non-owning spouse presents prima facie evidence of the spouse’s personal efforts during the marriage or the contribution of marital property to separate property and an increase in the value of the property, the burden of disproving causation shifts to the owning spouse.

2013---Canedo v. Canedo, Va. Ct. of Appeals, Unpublished Opinion, No. 0851-12-4.
The trial court did not err in classifying certain property as Husband’s separate property where Wife failed to present evidence of the value of Husband’s property on the date of the marriage. Although Wife presented appraisals that compared the current value of the home with and without certain renovations made during the marriage, she failed to offer any evidence to show the value of the residence at the time of marriage. Absent proof of the value of the residence at the time of the marriage, the trial court could not find that the value of the property increased during the marriage.

2013---Crater v. Crater, Va. Ct. of Appeals, Unpublished Opinion, No. 1933-12-3.
The trial court did not err in characterizing certain Certificates of Deposit as marital property where the property was purchased during the marriage and Husband failed to offer any evidence of the source of the funds used to acquire the property, other than his testimony.

2013---Milam v. Milam, Va. Ct. of Appeals, Rec. No. 0837-12-4 (UO)
Property purchased post-separation is presumptively separate. Limitations on Husband’s ability to present evidence based on a motion in limine did not prevent the court from finding certain property separate where admitted evidence showed that the property was purchased post-separation by Husband and Wife presented no evidence that the property was marital.

2012---Pratt v. Pratt, Va. Ct. of Appeals, Unpublished, No. 2394-10-4
Despite re-affirming its prior holding that wife’s “personal efforts” were insufficient to transmute husband’s separate interest in the marital home to marital property (see Pratt v. Pratt, Va. Ct. of Appeals, Unpublished, No. 2394-10-4 (Dec. 20, 2011)), the Court of Appeals remanded the matter to the trial court to determine whether husband used separate or marital property to acquire his previous wife’s one-half interest in the home. Although husband received the home as part of the divorce from his previous wife, the home was not actually re-titled into his sole name until after he and his current wife were married. Thus, at the time of the marriage, husband held only a one-half undivided interest in the home. When husband refinanced the mortgage on the home after the marriage to his current wife, he acquired his previous wife’s one-half interest, which, pursuant to Va. Code §20-107.3, was presumably marital property. Because the Court of Appeals was unable to determine from the evidence whether husband used marital or separate property as collateral for refinancing the home, the Court was unable to determine whether husband was able to trace to separate property the one-half interest he acquired from his previous wife.

2012--- Mograbi v. Abdellatif, Va. Ct. of Appeals, Unpublished, No. 1518-11-4
The trial court did not err in finding that husband failed to meet his burden of tracing a separate interest in the marital residence. Though husband had purchased a home prior to the marriage, evidence revealed that the mortgage was paid with marital funds during the marriage, and that significant improvements to the property were made during the marriage, some directly through wife’s personal labor, all of which significantly increased the value of the home. When that first home was sold, the proceeds were deposited into a joint account and commingled with other marital funds. The parties later used that same joint account to purchase the land for and construct the now-existing marital residence. The trial court was not plainly wrong in finding that husband “absolutely [could] not show a distinct, discrete identification” of any separate interest in the newly constructed marital residence.

2012---Parsons v. Parsons , Va. Ct. of Appeals, Unpublished, No. 1051-11-4
The trial court erred in awarding wife any interest in the marital residence, despite the fact that the residence was acquired during the marriage and titled jointly.  The parties’ premarital agreement provided that all income earned by a party during the marriage would remain that party’s separate property, and husband adequately traced at trial each monetary contribution to the acquisition of the residence to his separate property.  The trial court similarly erred in awarding Wife an interest in an investment account, the source of which husband adequately traced to his separate property.

2011---Stevens v. Stevens, Va. Ct. of Appeals, No. 0498-11-3
The trial court did not err in finding a farm that the parties purchased from husband’s parents’ trust during the marriage to be marital property. Though husband’s parents initially set up a trust that would cause husband, along with his brothers, to inherit the farm, husband, wife, husband’s brothers, and husband’s mother agreed that husband and wife would purchase the farm from the trust, and did so while the mother was still alive. The purchase removed the farm from the trust, and thus, no portion of the farm was left to be inherited by husband when husband’s mother died.

2011--- Pratt v. Pratt, Va. Ct. of Appeals, Unpublished, No. 2394-10-4
Trial court erred in finding that wife’s personal efforts as a homemaker, efforts to decorate the house and contribute to the upkeep and maintenance of the house were sufficient to transmute the house into marital property. Husband acquired the home prior to the marriage, and he remained solely obligated on all debt for it. Wife’s evidence demonstrated no value added by her efforts, nor were her efforts those considered by the law to be “significant” for purposes of transmutation. Furthermore, the trial court erred when considering evidence of “some payments” towards the mortgage with marital funds to be sufficient to transmute otherwise separate property to marital property. Said payments, unless sufficiently traced, constituted contributions of marital property to separate property, and were thus transmuted to separate property.

2011--- Duva v. Duva, Va. Ct. of Appeals, Unpublished, No. 0117-11-1
The trial court did not err determining that the equity in property owned by husband prior to the marriage and titled solely in husband’s name throughout the marriage was marital. The parties began renting the property during the marriage. The trial court properly classified the rental income as marital property, based on evidence that the personal efforts of the parties – (i) the decision to rent the house; (ii) painting the house; (iii); replacing a septic system; (iv) collecting rent; and (v) other managerial activities were responsible for the generation of rental income. Moreover, the rental income was deposited into a joint account, where it was combined with marital funds and used to pay mortgage principal.

2011---Campbell v. Campbell, Va. Ct. of Appeals, Unpublished, No. 1629-10-2
The trial court did not err in finding that husband failed to adequately trace his pre-marital separate property contributions to a business that he incorporated during the marriage, and that he failed to adequately establish that the increase in the value of the business post-separation occurred entirely from his post-separation personal efforts. Based on the commingling of separate and marital property for the entire length of the marriage, and based on the trial court’s determination that husband’s memory as to when he acquired what he alleged to be pre-marital separate property was unreliable, the trial court properly concluded that husband had not met his burden of tracing to overcome the marital property presumption.

Property acquired using the proceeds from a loan takes on the classification of any property used to secure that loan. The burden is then on the party claiming an alternative classification to demonstrate that the loan is discharged using property that is similarly alternatively classified. The trial court did not err in finding that a business begun by husband post-separation was marital property. Though the new business was presumed separate property based on the date of acquisition, wife met her burden of proving that marital property was used to acquire the new business by demonstrating that money for the downpayment on the new business came from a business that the court had deemed marital property, and by demonstrating that the remainder of the funds used to open the new business came from a loan that was secured using property of the marital business as collateral. Once wife overcame the initial separate property presumption, husband bore the burden of demonstrating that the loans for the new business had been discharged with separate property. Husband failed to meet that burden.

2011---Frye v. Frye, Va. Ct. of Appeals, Unpublished, No. 1829-10-4
The trial court erred in classifying as part marital a residence purchased by husband prior to the marriage and titled in his name alone, based on the erroneous assumption that, because the mortgage on the residence was paid off during the marriage, it must have been paid using marital funds. After husband had established that the house was purchased prior to the marriage and had remained titled in his name alone, wife bore the burden of proving that marital funds were used to pay the mortgage after the date of marriage.

2011---Pascarella v. McCoy, Va. Ct. of Appeals, Unpublished, No. 0485-10-1
The trial court did not err in finding that wife failed to trace her separate interest in otherwise marital properties where wife failed to produce evidence regarding the amount of equity she had in the properties at the time of marriage. Additionally, when the parties withdrew almost all of the equity in the properties through a refinance subsequent to marriage, the trial court was left without any means of determining what, if any, remaining equity was marital or separate. The refinance essentially “severed any link between wife’s prior separate interest and the transmuted marital property.”

2010---Olsen v. Mackay, Va. Ct. of Appeals, Unpublished, No. 1553-09-4
Where there has been significant activity in the form of multiple deposits to and withdrawals from a commingled account, a party seeking to retrace the contributed property, in addition to tracing contributed funds to the commingled account and proving that those discrete funds maintained their identity within the account, may be required to show the intent contemporaneous with each new transaction involving the account in order to prove that the parties intended to keep the contributedproperty separate and distinct from the remainder of the commingled account. This intent may be established by direct or circumstantial evidence.

     Trial court did not err in holding that wife successfully traced husband's deposit of settlement proceeds, which the court classified as marital property, into an investment account classified as husband's separate property. Although husband argued that significant activity in the account in the years following the deposit of the settlement proceeds caused the proceeds to lose their marital identity, Husband himself testified that, with the exception of some money used towards renovating the marital residence, no disbursements from the account were specifically tied to the portion of that account attributable to the settlement proceeds. That testimony, coupled with the fact that the settlement proceeds, when deposited, comprised a significant majority of the account, was sufficient evidence to retrace the marital portion of the account.

2010---Leake v. Taylor, Va. Ct. of Appeals, Unpublished, No. 0737-09-4
The trial court did not err in refusing to consider in equitable distribution two vehicles that wife owned prior to marriage, despite the parties’ stipulation that marital funds had been used to pay down loans on the vehicles. Husband provided no evidence that the vehicles had increased in value, but instead relied on the premise that the payment of loans alone proved that the equity in the assets had increased. Evidence of an increase in value was required for husband to meet his burden of proving that contributions of marital funds increased the value of otherwise separate property.

2010---Davis v. Davis, Va. Ct. of Appeals, Unpublished, No. 1241-09-2
Husband failed to carry his burden of proof to trace funds that he used to acquire CD's during the marriage to separate property. Despite husband's testimony that he used proceeds from the sale of a tract of timber that he owned pre-marriage to purchase one of the CD's, evidence showed that husband received those proceeds approximately six months before purchasing the CD, and husband failed to offer any documentary proof to account for those funds during the six month delay. Furthermore, on the same day that he purchased the CD, husband also wrote a check from his business account to himself for $60,000. Although husband testified that this was to repay a loan he had made to the business, he produced no records of such a loan and could not explain what the $60,000 was used for.

Husband testified that a second CD was acquired solely from funds he inherited from his first wife. However, the record showed that husband purchased this CD in his company's name, almost 15 years after he inherited from his first wife. The trial court did not accept husband's testimony that the money sat untouched in his business account for those 15 years, and concluded that it was more likely that the CD was purchased with profits from husband's business, which was marital property.

Trial court did not err in concluding that wife successfully traced the source of two accounts acquired during the marriage to her separate property. Although no documentary evidence of tracing was provided, husband failed to offer any evidence to either rebut or otherwise challenge the testimony by wife and her brother that the accounts were purchased with funds inherited from wife's mother.

2009---Dougherty v. Dougherty, Va. Ct. of Appeals, Unpublished, No. 0213-09-4
Husband failed to rebut the presumption that the interest he acquired in two partnerships during the marriage was marital property. Despite the fact that another partnership in which he had a separate property interest paid certain expenses on behalf of the two partnerships in question, husband's percentage interests in each of the three partnerships never changed, and the payment of the expenses did not constitute an "exchange" such that the separate property partnership could be argued to have been "pledged" or otherwise "used" to acquire husband's interest in the two partnerships at issue.

2009---Layne v. Layne, Va. Ct. of Appeals, Unpublished, No. 0978-09-3
The trial court did not err in concluding that wife met her burden of proving that a condominium, acquired by husband prior to the marriage, was hybrid property due to increases in value resulting from substantial personal efforts during the marriage. The parties resided in the condo for the first year of their marriage, then maintained it as rental property. The trial court found that wife's assistance in finding renters, leasing the property, calling repairmen, collecting rent, and writing checks for the mortgage constituted significant personal efforts sufficient to transmute the increase in the value of the condo to marital property. Furthermore, the parties' joint funds were used to reduce the mortgage owed on the property.

2009---Riley v. Riley, 2009 Va. App. Unpublished, 91
Trial court did not err in refusing to apply the Brandenburg formula to divide the net proceeds of the parties' real estate.  Husband did not prove that his separate funds were not comingled with marital funds, nor did he provide "sufficient third-party institutional proof" to trace his separate funds.

2009---Showalter v. Showalter, 2009 Va. App. Unpublished, 78
Trial court did not err in holding that Husband failed to meet his burden to re-trace separate property he contributed to a corporation owned by he and his siblings.  When Husband transferred his land, which was partly separate property, the land ceased to exist as an asset owned by either of the parties and instead became the property of a separate entity - the corporation.  Husband received stock in the corporation in exchange for the land transfer but the corporate stock was a new asset that came into being and into Husband's possession during the marriage.  Husband did not provide enough evidence to allow the trial court to determine what part if any of that corporate stock was separate property. 

2008---Chretien v. Chretien, 53 Va. App. 200
Va. Code § 20-107.3(H)  expressly provides that a personal injury recovery is part marital and part separate property.  Due to the overall presumption in favor of marital property, the party alleging that some portion of a personal injury recovery is separate property has the burden of proving what, if any, portion of that recovery is not attributable to lost wages or uncompensated medical expenses, and thus, separate property.

2008---McIlwain v. McIlwain, 52 Va. App. 644
Where both parties contributed separate and marital property to a bank account titled in the name of a company started during the marriage, the parties intended to use these funds to build a new home, and the parties used the account to pay marital debts, no evidence suggested that either party intended to keep his/her portion of the funds separated from the marital funds in the account.  No evidence suggested that withdrawals by Husband were taken from his separate proceeds, or marital proceeds, or some combination thereof; rather, the parties treated the account as a unified source of funds to pay marital debt, effectively treating the entire account as marital.

2008---McIlwain v. McIlwain, 52 Va. App. 644
To trace his separate assets, Husband needed to do more than prove that at one point he had deposited 60% of the source funds for the account.  He also needed to prove that, even though those funds were commingled with funds from other sources, his separate fund proceeds remained discernibly separate in character.

2007---Tesfay v. Tesfay, Va. Ct. of Appeals, Unpublished, No. 1260-06-4 (Mar. 27, 2007)
Trial court did not err in finding that Husband presented sufficient credible evidence that his contributions toward the purchase of the marital home were derived from separate property.  The documentary evidence shows Husband had three accounts before his marriage, traced those funds into a Bank of America brokerage account in his sole name, and thence from that account specifically to the realtor and closing agent dealing with the marital home.

2006---Robbins v. Robbins, 48 Va. App. 466
When a spouse commingles separate and marital funds in a single account created during the marriage, the spouse claiming a separate share must shoulder the burden of tracing.  Proof of separate classification of the source funds may be straightforward, but proving the classification of withdrawn funds requires an examination of where the withdrawn funds went, when and why they were transferred, for what purpose they may have been ultimately used, and what contemporaneous financial records show about each.  The pro rata withdrawal theory goes wrong because it seeks not to infer actual intent, but rather serves as a substitute for it.

2006---Robbins v. Robbins, 48 Va. App. 466
Trial court erred in accepting Husband's tracing argument and classifying his shares in a professional association as hybrid property with a 93.16% separate interest.  Absent proof to the contrary, court presume that all assets acquired during the marriage remain marital property.

2005---Wiese v. Wiese, 46 Va. App. 399
Trial court erred in classifying marital residence as solely marital property.  Husband traced $35,097 as separate property used for the down payment on the residence, and neither refinancings nor the equal division of a portion of the proceeds from the third refinancing, standing alone or in conjunction, transmuted the equity in its entirety into marital property.

2005---Wiese v. Wiese, 46 Va. App. 399
Once a party claiming separate interest retraces his contribution, the burden shifts to the other party to prove a gift.  The three elements of a gift are (1) intention, (2) delivery/transfer, and (3) acceptance.

2005---Robinson v. Robinson, 46 Va. App. 652
Trial court erred in classifying the bulk of the parties' assets, including the marital home, the joint bank account, and the vehicles, as marital property, where the assets were traceable to Husband's trust income.  Husband sustained his burden of re-traceability.  The trial court did not find that Husband gifted Wife a share of the assets.  Additionally, assets did not increase in value as the result of Wife's personal efforts.  Placing trust income in a savings account did not increase its value.

2004---Cirrito v. Cirrito, 44 Va. App. 287
For purposes of determining whether increases in the value of separate property during the marriage are marital property, the following three-tiered burden of proof applies: First, the owning spouse must prove that the property is separate property as defined in Va. Code §20-107.3(A)(1). Second, the non-owning spouse, pursuant to Va. Code §20-107.3(A)(3)(a), has the burden to prove (i) contributions of marital property or personal efforts were made and (ii) the separate property increased in value. To the extent the non-owning spouse claims the increase in value was attributable to personal efforts, the non-owning spouse must prove that the personal efforts were “significant” and resulted in “substantial appreciation” of the owning spouse’s separate property interest. Third, once the non-owning spouse overcomes the presumption of separateness of the increase in value, the burden shifts to the owning spouse to prove that the increase in value or some portion thereof was not caused by contributionof marital property or significant personal effort. (citing Martin v. Martin, 27 Va. App. 745 (1998) and Gilman v. Gilman, 32 Va. App. 104 (2000)).

2002---Bchara v. Bchara, 38 Va. App. 302
Where Husband claims that marital efforts transmuted Wife's separated property into marital property, he has burden of proving that personal efforts were significant and resulted in substantial appreciation of separate property.  Proceeds from sale of jointly owned home were Wife's separate property where Wife contributed funds for construction of home, and putting home in joint names was not a gift.

1999---Holden v. Holden, 31 Va. App. 24
Husband successfully traced the $17,000.00 proceeds from the sale of his separate comic book collection.  Trial court ruling to the contrary reversed.

1998---Barker v. Barker, 27 Va. App. 519
Tracing principles discussed - multiple source tracing and multiple destination tracing. The party claiming a separate interest in transmuted property bears the burden of proving re-traceability.

1997---von Raab v. von Raab, 26 Va. App. 239
The party claiming a separate interest in transmuted property bears the burden of proving re-traceability.

1991---Thomas v. Thomas, 13 Va. App. 92
Husband failed to sustain his burden of proving what, if any, portion of a personal injury settlement he received during the marriage was separate property. The evidence established that the award excluded attorney’s fees and most medical expenses, that the husband’s injuries precluded him from pursuing his regular employment, and that, although he began receiving Social Security benefits, they amounted to a sum substantially less than his pre-accident income. Absent a showing by husband of what, if any, portion of the settlement proceeds were for non-economic losses, the trial court was entitled to conclude the whole settlement to be marital.

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