In Re the Marriage of Janet McMillan and Gary Jones Upon the Petition of Janet McMillan, petitioner-appellee/cross-appellant, and Concerning Gary Jones, respondent-appellant/cross-appellee.

• Court: Court of Appeals of Iowa
• Decided: October 26, 2016
• Docket: 15-1916
• Status: Published

Opinion

IN THE COURT OF APPEALS OF IOWA

No. 15-1916 Filed October 26, 2016

IN RE THE MARRIAGE OF JANET MCMILLAN AND GARY JONES

Upon the Petition of JANET MCMILLAN, Petitioner-Appellee/Cross-Appellant,

And Concerning GARY JONES, Respondent-Appellant/Cross-Appellee. ________________________________________________________________

Appeal from the Iowa District Court for Allamakee County, John J.

Bauercamper, Judge.

Gary Jones appeals, and Janet McMillan cross-appeals, the economic

provisions of the decree dissolving their marriage. AFFIRMED.

Erik W. Fern of Putnam, Fern & Thompson Law Office, P.L.L.C., Decorah,

for appellant.

Christopher F. O’Donohoe of Elwood, O’Donohoe, Braun & White, L.L.P.,

New Hampton, for appellee.

Considered by Danilson, C.J., and Vaitheswaran and Tabor, JJ. 2

TABOR, Judge.

Gary Jones appeals the economic provisions of the decree dissolving his

marriage to Janet McMillan, who cross-appeals. Gary claims the district court

should have awarded him a portion Janet’s premarital inheritance. Janet

contends the court should not have ordered her to pay Gary $50,000 for his

contributions to their ten-year marriage. Reviewing the record de novo, but

giving weight to the district court’s credibility determinations, we find the decree

achieved equity between the parties.

I. Facts and Prior Proceedings

Janet inherited substantial assets when her husband Daniel McMillan died

in 2000. Gary and Janet married in March 2005. They had no children together,

but Janet’s daughter, who is now married, lived with the parties for about sixty

days during their marriage. Gary contributed to the daughter’s living expenses.

Janet’s inherited assets, for the most part, remained in separate bank accounts

after the marriage. Generally, the parties did not use her inherited funds to

enhance or maintain their standard of living. At the time of the dissolution, the

value of her inheritance—including the bank accounts and two houses1—was

more than $700,000.

At the time of the August 2015 dissolution trial, Gary was fifty-three years

old, employed by an agri-business company, and planned to continue this

employment. He provided health insurance for the family through his employer.

Gary’s gross income increased during the marriage from $25,500 in 2005 to

1 One house was the parties’ homestead, valued at $108,600, and the second property, including a six-car garage, was valued at $112,300. 3

$40,400 in 2013. Janet was sixty years old and had a high school education.

She had worked as a bookkeeper in Daniel’s business but was not employed

prior to or during her marriage to Gary. Janet’s taxable, unearned income

remained between $14,400 and $19,200 during the marriage.2

The district court issued a decree dissolving their marriage in November

2015. The court divided the marital assets and debts. The parties had agreed to

the valuation of many assets. During the course of the marriage, Janet

deposited around $100,000 into the parties’ joint accounts. When the parties

separated, Janet withdrew $20,700 of the remainder and left one-half for Gary,

who withdrew $19,700. Janet then withdrew the final $1000 and closed the

account. At trial, Gary still had $19,700, while Janet had spent most of her

withdrawal on post-separation living expenses. The court awarded Janet’s

remaining funds to her and the $19,700 to Gary. Thus, Gary received a portion

of the funds Janet deposited into the joint account. Janet had also borrowed

$10,000, and the court assigned this debt to her. Gary left the marriage debt

free.

The court concluded Janet’s inheritance was not a marital asset and found

“no basis for invoking [the] exception.” Thus, the district court did not include her

inheritance in its property division. Ultimately, the court found Gary’s

contributions “through his improvements to [Janet’s] home, provision of family

2 Janet’s receipt of $48,000 in unearned income in 2005 appears to be an aberration from the general income stream generated by her inheritance. The other high-income year occurred in 2008 at $19,200, followed by unearned income from 2009 to 2013 as follows: $14,400; 16,500; $15,600; $16,200; and $16,800. 4

health insurance, and payment of joint living expenses require some

compensation.” The court ordered Janet to pay Gary $50,000.

Gary appeals and Janet cross-appeals.

II. Standard of Review

We review the district court’s decision de novo. See In re Marriage of

McKenzie, 709 N.W.2d 528, 531 (Iowa 2006). We examine the entire record and

decide anew the legal and factual issues properly presented. See In re Marriage

of Rhinehart, 704 N.W.2d 677, 680 (Iowa 2005). But “we recognize that the

district court was able to listen to and observe the parties and witnesses.” In re

Marriage of Gensley, 777 N.W.2d 705, 713 (Iowa Ct. App. 2009). Consequently,

we give weight to the district court’s findings of fact, especially when considering

the credibility of witnesses, but we are not bound by them. See In re Marriage of

Brown, 778 N.W.2d 47, 50 (Iowa Ct. App. 2009). We will disturb the district

court’s ruling only when there has been a failure to do equity. See In re Marriage

of McDermott, 827 N.W.2d 671, 676 (Iowa 2013).

III. Analysis

A. Gary’s Appeal

Gary seeks twenty-five percent of Janet’s inherited assets or, minimally,

$219,000—asserting because Janet “lived off of Gary” during the marriage, it is

inequitable to exclude all of her inherited property from the marital estate.

Marriage partners are entitled to an “equitable share of the property

accumulated through their joint efforts.” In re Marriage of Liebich, 547 N.W.2d

844, 849 (Iowa Ct. App. 1996). Iowa courts “divide the property of the parties at

the time of divorce, except any property excluded from the divisible estate as 5

separate property.” In re Marriage of Schriner, 695 N.W.2d 493, 496 (Iowa

2005). Our statutes exclude inherited property from the distribution of property.

See Iowa Code § 598.21(5) (2015). Thus, dissolution courts generally award

inherited property to the recipient spouse, “independent from the equitable

distribution process.” Schriner, 695 N.W.2d at 496.

But our analysis does not end there. The exclusion of Janet’s inherited

property under section 598.21(5) “is not absolute. Iowa has a hybrid system that

permits the court to divide inherited . . . property if equity demands in light of the

circumstances of a spouse . . . .” See id.; see also Iowa Code § 598.21(6). We

consider the following factors in deciding whether it would be inequitable to

exclude Janet’s inherited assets from division:

(1) contributions of the parties toward the property, its care, preservation, or improvement[ ]; (2) the existence of any independent close relationship between [Daniel] . . . and [Gary]; (3) separate contributions by the parties to their economic welfare to whatever extent those contributions preserve the property for either of them; (4) any special needs of either party; (5) any other matter[,] which would render it plainly unfair to [Gary] . . . to have the property set aside for the exclusive enjoyment of [Janet].

See McDermott, 827 N.W.2d at 679 (citation omitted).

As to the first factor, from the time she received the inheritance until the

time of trial, Janet kept most of her inherited money in accounts bearing only her

name. Janet had more experience in financial management than Gary, and

Janet’s investment of her inheritance did not bear any characteristics of a “family

decision.” Before the marriage, Janet purchased two houses. Both debt-free

houses remained titled in her name, and one became the parties’ marital home. 6

Gary paid for and completed physical improvements to both properties and also

paid the taxes, utilities, and insurance. But Gary also benefitted by living in one

house (mortgage free) and by storing his brother’s extra car and his own tools in

the sizable garage on the other property. Further, Gary moving into Janet’s

home when the parties married allowed him to sell his own home, pay off all of

his accumulated debts—both mortgage and credit card—and still bring $5000

from the home sale into the marriage. We conclude the first factor does not

support making Janet’s inherited property an exception to the general rule.

Similarly, the second factor does not aid Gary in his quest to include

Janet’s inherited property in the marital estate. No independent relationship

existed between the two husbands.

Gary emphasizes the third factor, claiming Janet not working and his

providing for both parties by his employment preserved the inherited property to

Janet’s sole benefit because Janet did not have to spend down her inheritance

for living expenses. But Janet was not working at the time the parties married,3

and by their own choosing, the parties did not depend upon her inherited assets

for their standard of living during their ten-year marriage. See In re Marriage of

White, 537 N.W.2d 744, 746 (Iowa 1995) (stating “in situations in which the

inherited property does not change in form following its receipt,” the court should

set it aside as nonmarital).

Further, while Gary’s employment was the marital financial base, Janet

independently contributed to the marriage by cooking, shopping, housekeeping,

3 Janet testified her last job was in 2002 when she was an unpaid bookkeeper for Daniel’s business. 7

doing the laundry, preparing the parties’ income tax returns, and paying the

marital bills and taxes. Importantly, “marriage does not come with a ledger.” In

re Marriage of Fennelly, 737 N.W.2d 97, 103 (Iowa 2007). “Each person’s total

contributions to the marriage cannot be reduced to a dollar amount. Many

contributions are incapable of calculation, such as love, support, and

companionship.” Id. at 104. Accordingly, we do not emphasize “financial

matters” over “other contributions made to a marriage in determining an equitable

distribution.” Id. After considering all of the circumstances, we do not find the

third factor overcomes the general exclusion of Janet’s inherited property.

The fourth factor likewise does not support Gary’s argument. Janet is

older, has some health problems, and has not been gainfully employed for many

years. Janet’s social security will pay her only $423 per month, or $5076 each

year, and she will need to rely on her inherited assets to fund reasonable living

expenses.4 Meanwhile, Gary is younger, in good health, and will be able to

continue his current employment for more than a decade, which will allow him to

make additional contributions to his retirement accounts. Gary also leaves the

marriage with more than $105,000 in retirement savings, some of which is due to

Janet’s “nagging” him to save for retirement.

Finally, as the fifth factor does not support Gary’s cause, we decline to

modify the district court’s ruling regarding Janet’s inheritance.

4 Gary calculates Janet will need, at a minimum, $21,400 per year to be financially self- sufficient. 8

B. Cross-Appeal

Janet summarily challenges the portion of the decree requiring her to pay

Gary $50,000. Because the district court treated the parties equitably in its

overall property distribution, we affirm. See Iowa Code § 598.21(5)(i) (instructing

courts to consider each parties’ economic circumstances in determining an

equitable property division); Rhinehart, 704 N.W.2d at 683 (“[T]his court

[considers] nonmarital assets that are available for the future support of a spouse

in determining an equitable allocation of marital property.”).

IV. Conclusion

Janet and Gary did not have a long-term marriage, which distinguishes

this case from Fennelly. See 737 N.W.2d at 99. Janet is sixty years old, is

currently not employed, and has some health issues. While she may be able to

gain some employment, Janet is highly unlikely to earn an income equivalent to

Gary’s wages. Significant to the property division is the fact the decree awarded

no alimony to Janet. In light of her age, education, lack of employment, and past

work experience, she will need the income from her inheritance to sustain her

standard of living. At age fifty-three, Gary is younger and earns an income

sufficient to replicate the parties’ standard of living during the marriage. Gary

already has some retirement savings, and he received $50,000 in the decree. In

consideration of all these facts, we conclude the property division is equitable to

both parties.

AFFIRMED.