Dayal v. Lakshmipathy

2020 Ohio 5441, 163 N.E.3d 683
CourtOhio Court of Appeals
DecidedNovember 25, 2020
DocketWD-19-049
StatusPublished
Cited by5 cases

This text of 2020 Ohio 5441 (Dayal v. Lakshmipathy) is published on Counsel Stack Legal Research, covering Ohio Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dayal v. Lakshmipathy, 2020 Ohio 5441, 163 N.E.3d 683 (Ohio Ct. App. 2020).

Opinion

[Cite as Dayal v. Lakshmipathy, 2020-Ohio-5441.]

IN THE COURT OF APPEALS OF OHIO SIXTH APPELLATE DISTRICT WOOD COUNTY

Anisha Dayal Court of Appeals No. WD-19-049

Appellant/Cross-Appellee Trial Court No. 2016DR0166

v.

Narendranath Lakshmipathy DECISION AND JUDGMENT

Appellee/Cross-Appellant Decided: November 25, 2020

*****

Fritz Byers and Sheldon Slaybod, for appellant/cross-appellee.

Martin J. Holmes, Sr., for appellee/cross-appellant.

ZMUDA, P.J.

I. Introduction

{¶ 1} Appellant/cross-appellee, Anisha Dayal, appeals the judgment of the Wood

County Court of Common Pleas, Domestic Relations Division, classifying the property

held in the Naren Lakshmipathy Irrevocable Trust as marital property for purposes of

division of property in this divorce action. Appellee/cross-appellant, Narendranath Lakshmipathy, also appeals the trial court’s judgment, which ordered him to reimburse

appellant the sum of $397,500 for her share of his 2018 income taxes.

{¶ 2} The parties to this divorce action were married on May 25, 1992. At the

time, appellee, a board certified anesthesiologist, had just finished his first year of

internship in internal medicine. Subsequently, appellee entered into a fellowship

program in pain management at Tufts Medical School in Boston, Massachusetts. Upon

completion of the program in June 1997, the parties moved to Toledo so that appellee

could accept a position at St. Charles Hospital.

{¶ 3} Over the next two to three years, appellee developed a pain management

practice in Findlay, Ohio, known as Pain Management Group, LLC (“PMG”). In an

effort to streamline the business operations of PMG, appellee partnered with a friend,

John Bookmyer, in January 2009. Pursuant to an agreement reached between appellee

and Bookmyer, appellee retained a 90 percent ownership interest in PMG and Bookmyer

received a 10 percent ownership interest in PMG. Appellee’s interest in PMG is held by

appellee’s holding company, Dravidian Capital Management, Inc., which holds

ownership interests in several other business entities as well.

{¶ 4} PMG’s operations expanded over time and, as of January 22, 2018, PMG

was engaged in over 40 business arrangements, described by appellee as either joint

ventures or management service agreements with local hospitals. According to the

affidavit of property filed with the trial court, the value of PMG at the time of the

evidentiary hearing was $21,536,000. In addition to his interest in PMG and numerous

2. other items of value listed on the affidavit, appellee held a checking and an investment

account (collectively, the “NASM account1”) with First Federal Bank that was funded

primarily through distributions from Dravidian, which had a balance of approximately

$11,400,000 at the time of the hearing. During the pendency of these proceedings, in

April and June 2018, appellee withdrew a total of $795,000 from the NASM account with

the trial court’s permission, in order to pay his estimated income taxes.

{¶ 5} Given his extensive assets, appellee created the Naren Lakshmipathy

Irrevocable Trust (the “Trust”) in December 2012. According to his hearing testimony,

appellee created the Trust in an effort to “protect assets for the family. That was the

intent.” At an earlier deposition, appellee stated that the Trust was created “so [his]

children and Anisha could have moneys available, which are to secure their future.”

Explaining the difference in these two answers, appellee stated the following on redirect

examination at the evidentiary hearing:

My understanding of the question, I’m saying the purpose of setting up the

account, the purpose I had the trust was to protect assets. In using words

such as their financial future, it would also include me in their financial

future. I would not set something up where it excludes myself in their

financial security. So the intent was for me to be included in their financial

1 NASM is an acronym built upon the first names of the parties and their two children.

3. security. I would not intentionally [set] something up where it excluded me

from a fund I created for them and not be inclusive in that process.

{¶ 6} The trust agreement creating the Trust was drafted by appellee’s attorney,

Jon Liebenthal, and admitted into evidence as defendant’s exhibit F. The agreement was

executed on December 22, 2012, by appellee, as grantor, appellant, as trustee, and

Liebenthal, as special trustee. At the time of execution, appellee and appellant were

living together as husband and wife. Consequently, Liebenthal indicated that he had no

reason to plan for the contingency that the couple would eventually be divorced.

{¶ 7} During his hearing testimony, Liebenthal explained the purpose behind

forming the Trust. Liebenthal stated that the federal estate tax exemption amount was

$5 million in 2012, and was scheduled to “sunset and get reduced to $1 million. So we

did this for several clients at the end of 2012. We wanted to take advantage of the bigger

estate tax exemption.” Liebenthal recommended the creation of an irrevocable trust in

2012 “as a means of helping to preserve [appellee’s] net worth.”

{¶ 8} Liebenthal expounded that the primary difference between a revocable and

irrevocable trust is that a revocable trust is subject to modification, amendment, and

termination by the grantor, whereas an irrevocable trust is not. Thus, the grantor of an

irrevocable trust, according to Liebenthal’s understanding, “does not have the use or

benefit of [the trust’s] assets and has no way to control that function.” Liebenthal went

on to agree with appellant’s counsel’s statement that a grantor of an irrevocable trust, in

4. order for the trust to retain its irrevocable status, “must forever relinquish all right, title,

and interest in the corpus of the trust.”

{¶ 9} Because of the irrevocable nature of the Trust, the property held by the Trust

would no longer belong to appellee, and would thus be excluded from appellee’s estate.

Consequently, this property would not be subject to estate taxation in the event of

appellee’s untimely death.

{¶ 10} To accomplish the goal of creating an irrevocable trust, Liebenthal drafted

a trust agreement containing the following language, in relevant part:

XI. GENERAL TRUST PROVISIONS

***

O. Separate Property

Property of any character, including income, held for or paid to a

non-Grantor beneficiary under this Trust Agreement shall be owned by

such beneficiary (beneficially, when held for such beneficiary), as separate

property and not as community property, it being the Grantor’s intent that

such property is in the nature of a gift or inheritance from the Grantor.

XIII. TRUSTS IRREVOCABLE

This Trust Agreement and each trust estate created in this Trust

Agreement are expressly declared to be irrevocable, and the Grantor

expressly waives all rights and power, acting alone or with others, to alter,

5. amend or change the terms or conditions of this Trust Agreement in whole

or in part.

By this trust agreement, the Grantor hereby renounces any interest,

either vested or contingent, in the income or principal of any trust estate

created hereunder, and relinquishes all possession or enjoyment of, or the

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Cite This Page — Counsel Stack

Bluebook (online)
2020 Ohio 5441, 163 N.E.3d 683, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dayal-v-lakshmipathy-ohioctapp-2020.