Careful! Exaggerating Expenses for Alimony Purposes Can Backfire

January 25, 2013
By The McKellar Law Firm, PLLC on January 25, 2013 1:00 PM |

In the case of Willocks v. Willocks, No. E-2012-00378-COA-R3-CV (Tenn. Ct. App. January 10, 2013), Tennessee divorce attorneys are shown some potential ramifications of dissipating the marital estate and filing false expense affidavits, as well as an example of when property can be classified as separate (and therefore not subject to equitable distribution) even when acquired during the marriage.

Facts: The parties married in 1994, and Husband brought substantial separate inherited assets to the marriage. Wife worked for about 6 years, earning about $30,000 per year. Husband filed for divorce in 2008 after a separation that began in 2007. Husband began paying Wife $2,000 of temporary spousal support in July 2009. The trial court awarded Wife retroactive alimony of $12,000 upon her motion showing $700 of monthly income and $4,400 in monthly expenses. At trial, Wife amended these numbers, claiming $2,600 in expenses and $934.00 in income per month. After the trial, the court entered a Memorandum Opinion, finding that Wife's affidavits were untruthful and she had "secretly and fraudulently" spirited away $100,000 of marital assets. The court awarded Wife marital assets of $383,848 (including the $100,000)and Husband was given $257,206 of marital property and separate property worth $685,100, including an AIG annuity. The court also awarded Wife $900 per month of alimony in futuro, to continue until one party's death or Wife's remarriage or cohabitation.
Issues: Wife argues that the alimony award was improperly low and Husband argues the amount was too high. Secondly, Wife argues that the annuity should have been deemed marital property.

Analysis: Regarding the award of alimony, the trial court must look to the factors found at T.C.A. §36-5-121(I)(1-12). The two most important factors are the disadvantaged spouse's need and the payor's ability to pay. The parties' income in 2006 was over $500,000, which came from Husband's inherited interest in his family's business and estate. When the trial occurred, those assets were not producing income, as the estate had been closed and the business hadn't paid a dividend in three years. The trial court made an important finding that these assets could not maintain the previous standard of living. The court also found Wife's affidavit of expenses was not accurate and noted that she admitted that they were false. As to fault, the court found that Wife's "extreme jealousy" contributed to the end of the marriage. In light of these findings and Wife's dissipation of marital assets, the Appellate Court found that the $900 per month alimony award was appropriate and proper.

Secondly, Wife argues the annuity should be classified as marital property. The Court looked to T.C.A. §36-4-121 which defines separate property as "property acquired in exchange for property acquired before the marriage or income from and appreciation of property owned by a spouse before marriage except when characterized as marital property." Husband bought the annuity during the marriage with separate funds. Husband testified that the purchase came from separate funds acquired prior to the marriage and Wife did not contribute to the purchase. Further, Wife's argument that the property was transmuted from separate to marital fails because no evidence in the record shows that she substantially contributed to preservation or appreciation of the annuity. Accordingly, the Appellate Court upheld the classification of the annuity as Husband's separate property.