Dayal v. Lakshmipathy , 2020 Ohio 5441 ( 2020 )

[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
right to income from, the property of any trust estate, and all right and
power, whether alone or in conjunction with others, to designate the
persons who shall possess and enjoy the principal or income of any such
trust estate.
{¶ 11} According to Liebenthal, the Trust was funded by appellee in December
2012 with deposits totaling $4,554,698. These deposits are reflected in a 2012 gift tax
return filed by appellee on April 10, 2013. Prior to a 2016 amendment to the Trust
Agreement, the income taxes generated by the Trust were paid by appellee through the
use of an escrow account created specifically to pay such taxes and the administration
expenses associated with the Trust. However, Liebenthal acknowledged that appellee’s
decision to pay the income taxes generated by the Trust did not nullify his relinquishment
of any interest in the corpus of the Trust.
{¶ 12} When asked about the irrevocable nature of the trust, appellee
acknowledged that the trust had to be irrevocable in order to receive the financial benefits
that motivated him to create the Trust. Appellee admitted that the funds he used to fund
the Trust did not constitute a loan for which he would be repaid.
6.
{¶ 13} For her part, appellant testified that she did not know the details
surrounding the formation of the Trust at the time of her execution of the trust agreement.
During her deposition, appellant stated that she did not have any discussions with
appellee regarding the Trust prior to its formation. Appellant first became aware of the
extent of the assets held by the Trust during the pendency of these proceedings.
{¶ 14} Following 24 years of marriage, appellant filed her complaint for divorce
on September 9, 2016. After appellee filed his answer and counterclaim on November 4,
2016, the matter proceeded to discovery. Thereafter, a five-day evidentiary hearing
before a magistrate was held on January 22-24, March 29, and August 13, 2018.
{¶ 15} On April 6, 2018, appellee filed a motion to withdraw funds, in which he
sought an order from the trial court allowing him to withdraw $394,000 from the NASM
account, which would be used to pay his first quarter estimated income taxes for 2018.
On April 13, 2018, the magistrate issued her order granting appellee’s motion and
permitting him to withdraw the requested funds.
{¶ 16} Approximately three months later, on June 7, 2018, appellee filed a second
motion to withdraw funds, this time seeking an order that would permit him to withdraw
$401,000 in order to pay his second quarter estimated income taxes for 2018. Once
again, the magistrate granted appellee’s motion. In her June 22, 2018 order granting the
motion, the magistrate noted that “this interim distribution authorized by this Order will
be taken into consideration at the time the Court determines the final distribution of
marital assets.”
7.
{¶ 17} Following the hearing, the parties resolved nearly every disputed issue, as
set forth in an agreed-upon order issued by the magistrate on February 12, 2019.
Relevant to the present appeal, the order provides in part:
[T]he parties agree and acknowledge that they will submit to the Court for
its decision two issues, to be decided on the basis of evidence in the record
as of the date of this Order, without additional testimony or documentary
evidence, and the parties’ arguments. Those two issues are:
1. The Court shall determine whether the assets held in the Trust,
including the property known as 608 Sixth Street, Brooklyn, NY and the
funds held by and in the name of the Trust are marital assets subject to
equitable division, as Defendant contends, or are separate property not
subject to division between the parties, as the Plaintiff contends. For
purpose of this determination, the parties stipulate that the value of the
assets in the trust is six million seven hundred and ninety thousand two
hundred and fifty-one dollars ($6,790,251.00).
***
2. The Court shall determine whether Plaintiff is entitled to be paid
an amount equal to 50% of the moneys Defendant withdrew from the
NASM account in April and June, 2018, pursuant to Court Orders, to pay
his estimated income taxes. The parties stipulate that the total amount
8.
Defendant withdrew from the NASM account pursuant to those orders is
$795,000.
{¶ 18} In accordance with the magistrate’s February 12, 2019 order, the parties
each filed briefs outlining their arguments regarding the two remaining issues on
February 25, 2019. Thereafter, on March 7, 2019, the magistrate issued her decision
resolving the two outstanding issues. In her decision, the magistrate ruled in favor of
appellee as to the Trust issue and held that the Trust is marital property subject to
equitable division. The magistrate found in favor of appellant as to the NASM account
issue, ordering appellee to reimburse appellant in the amount of $397,500, an amount
equal to half of the $795,000 withdrawal appellee made in order to pay his 2018
estimated income taxes.2
{¶ 19} On March 19, 2019, appellant filed objections to the magistrate’s decision,
in which she took issue with the magistrate’s conclusion that the Trust is marital property
subject to equitable division. For his part, appellee also filed objections to the
magistrate’s decision on March 27, 2019, arguing that the magistrate wrongly determined
that appellant was entitled to reimbursement for the $795,000 withdrawal from the
NASM account and contending that the trial court correctly classified the Trust as marital
property.
2
A clerical mistake was made on the magistrate’s March 7, 2019 order, which indicated
an award of $375,000 instead of $397,500. The mistake was corrected by the magistrate
upon the issuance of an amended decision on March 12, 2019, which reflects an award of
$397,500 to appellant.
9.
{¶ 20} Upon consideration of the parties’ objections to the magistrate’s decision,
the trial court issued its order on May 6, 2019. In its decision, the trial court overruled
the parties’ objections, approved and adopted the magistrate’s decision, classified the
Trust as marital property, and ordered appellee to reimburse appellant the sum of
$397,500.
{¶ 21} Subsequently, on June 20, 2019, the trial court entered its final judgment
entry of divorce incorporating its rulings with respect to the two unresolved issues. The
entry was signed by both the trial court and the magistrate. In response to the entry, the
parties each filed notices of appeal. Upon our initial review of the entry, we determined
that it did not constitute a final appealable order, prompting us to remand the matter to
the trial court for a final appealable order.
{¶ 22} In compliance with our remand instructions, the trial court issued a final
appealable judgment entry of divorce on October 17, 2019. Thereafter, the parties
amended their notices of appeal, rendering the matter decisional.
B. Assignments of Error
{¶ 23} On appeal, appellant assigns the following error for our review:
The trial court committed legal error, and abused any discretion it
may have had, by ruling that the Irrevocable [Trust] is marital property,
subject to equitable division.
10.
{¶ 24} In his cross-appeal, appellee assigns the following error for our review:
As the parties agreed to file a joint 2018 income tax return and split
any overpayment or refund, the trial court abused its discretion in ordering
Ned to “refund” Anisha half of the amount withdrawn from the NASM
account to pay the 2018 income tax estimates.
II. Analysis
A. Classification of the Trust Assets as Marital or Separate
{¶ 25} In appellant’s sole assignment of error, she argues that the trial court
abused its discretion in classifying the Trust as marital property rather than separate
property.
{¶ 26} In divorce proceedings, the domestic relations court must first determine
what constitutes marital property and what constitutes separate property. R.C.
3105.171(B). This determination involves mixed questions of law and fact, and is
therefore not a discretionary matter. Schober v. Schober, 6th Dist. Ottawa No.
OT-08-061, 2009-Ohio-4408, ¶ 26, citing Murphy v. Murphy, 4th Dist. Lawrence No.
07CA35, 2008-Ohio-6699, ¶ 17. Instead, we review the domestic relations court’s
characterization of property under the manifest weight of the evidence standard. Id. “We
will not reverse a judgment as against the manifest weight of the evidence if it is
supported by some competent, credible evidence.” Sullinger v. Sullinger, 6th Dist. Lucas
No. L-18-1079, 2019-Ohio-1489, ¶ 41, citing Blake Homes, Ltd. v. FirstEnergy Corp.,
173 Ohio App. 3d 230, 2007-Ohio-4606, 877 N.E.2d 1041, ¶ 62 (6th Dist.).
11.
{¶ 27} Under R.C. 3105.171, the terms “marital property” and “separate property”
are defined, in pertinent part, as follows:
(A) As used in this section:
***
(3)(a) “Marital property” means, subject to division (A)(3)(b) of this
section, all of the following:
(i) All real and personal property that currently is owned by either or
both of the spouses, including, but not limited to, the retirement benefits of
the spouses, and that was acquired by either or both of the spouses during
the marriage;
(ii) All interest that either or both of the spouses currently has in any
real or personal property, including, but not limited to, the retirement
benefits of the spouses, and that was acquired by either or both of the
spouses during the marriage;
(iii Except as otherwise provided in this section, all income and
appreciation on separate property, due to the labor, monetary, or in-kind
contribution of either or both of the spouses that occurred during the
marriage;
***
(b) “Marital property” does not include any separate property.
***
12.
(6)(a) “Separate property” means all real and personal property and
any interest in real or personal property that is found by the court to be any
of the following:
***
(iii) Passive income and appreciation acquired from separate
property by one spouse during the marriage;
***
(vii) Any gift of any real or personal property or of an interest in real
or personal property that is made after the date of the marriage and that is
proven by clear and convincing evidence to have been given to only one
spouse.
{¶ 28} Property acquired during a marriage is generally presumed to be marital
property, unless it can be shown to be separate. Johnson v. Mills, 8th Dist. Cuyahoga No.
102241, 2015-Ohio-4273, ¶ 18. The burden of proof regarding the classification of
certain property as “separate property” lies with the party seeking such classification.
Tincher v. Tincher, 5th Dist. Fairfield No. 2019 CA 00028, 2020-Ohio-3352, ¶ 64, citing
Passyalia v. Moneir, 5th Dist. Stark No. 2016 CA 00182, 2017-Ohio-7033, ¶ 18.
{¶ 29} Here, the Trust was initially funded with assets that were acquired during
the course of the marriage and thus constituted marital property. However, appellant
argues that the Trust assets became her separate property when appellee created the Trust
naming her as the beneficiary and completely divested himself of the Trust assets.
13.
{¶ 30} In order to prove that the property contained in the Trust is her separate
property under R.C. 3105.171, appellant must demonstrate that it was gifted to her by
appellee as contemplated under R.C. 3105.171(A)(6)(a)(vii). “Title to property does not
determine whether it is marital or separate. Further, either party may acquire separate
property through a gift after the date of the marriage. That reasonably includes an inter
vivos gift from one spouse to the other.” (Citations omitted.) Williams-Booker v.
Booker, 2d Dist. Montgomery Nos. 21752 and 21767, 2007-Ohio-4717, ¶ 23; see also
Comella v. Comella, 8th Dist. Cuyahoga No. 90969, 2008-Ohio-6673, ¶ 46, citing Slife v.
Slife, 10th Dist. Franklin Nos. 85AP-701 and 85AP-920, 1987 WL 32231 (Dec. 31, 1987)
(stating property that would otherwise be classified as marital property “is no longer
marital property when given as a gift from one spouse to another.”).
{¶ 31} The essential elements of an inter vivos gift are: “(1) [the] intent of the
donor to make an immediate gift, (2) delivery of the property to the donee, [and]
(3) acceptance of the gift by the donee.” Barkley v. Barkley, 119 Ohio App. 3d 155, 694
N.E.2d 989 (4th Dist.1997), fn. 2, citing Bolles v. Toledo Trust Co., 132 Ohio St. 21,
4 N.E.2d 917 (1936). Generally, the donee has the burden of showing, by clear and
convincing evidence, that the donor made an inter vivos gift. Kovacs v. Kovacs, 6th Dist.
Sandusky No. S-09-039, 2011-Ohio-154, ¶ 12, citing Helton v. Helton, 114 Ohio App. 3d
683, 686, 683 N.E.2d 1157 (2d Dist.1996).
{¶ 32} In this case, there is no question that appellee delivered the property to
appellant (as beneficiary) when he deposited $4,554,698 into the Trust in 2012.
14.
Additionally, appellant’s acceptance of the assets is evidenced by her execution of the
Trust Agreement naming her beneficiary of the Trust. Thus, the question we must
address is whether appellee’s transfer of funds into the Trust was performed with the
requisite donative intent to constitute an inter vivos gift.
{¶ 33} Upon review of the evidence presented in this case regarding the creation
and funding of the Trust, we find that appellee possessed the requisite donative intent to
make an inter vivos gift to appellant as beneficiary of the Trust. Indeed, the language of
the Trust Agreement makes it clear that such donative intent existed at the time the
marital property was transferred into the Trust. In particular, the Trust Agreement states
that the property held by the Trust for the benefit of the Trust beneficiaries “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.” (Emphasis added.) Moreover,
in the Trust Agreement, appellee “renounce[d] any interest, either vested or contingent, in
the income or principal of any trust estate created hereunder, and relinquishe[d] all
possession or enjoyment of, or the right to income from, the property of any trust estate
* * *.”
{¶ 34} When asked about the irrevocable nature of the Trust created by the Trust
Agreement, appellee acknowledged that the Trust had to be irrevocable in order to
receive the financial benefits that motivated him to create the Trust, namely the
avoidance of estate taxes on the funds transferred into the Trust for the benefit of appellee
15.
and the parties’ children. Moreover, appellee filed a 2012 estate tax return shortly after
funding the Trust, which reflects appellee’s position at the time that the deposits
constituted gifts entitling him to certain tax benefits with respect to the value of the assets
transferred into the Trust ($4,554,698).
{¶ 35} Taken together, the language of the Trust Agreement, appellee’s testimony
at trial, and appellee’s filing of the 2012 gift tax return establish that appellee possessed
the requisite donative intent to make an inter vivos gift to appellant. At the time he
created the Trust in 2012, appellee relinquished all interest in the assets used to fund the
Trust so that the assets would not be depleted by the federal estate tax applicable at the
time, and in order that appellant (and his children thereafter) would be provided for in the
event of his death.
{¶ 36} Now, eight years later, appellee advances an argument that is inconsistent
with his actions in 2012 and in contravention to his characterization of the transfer of
funds into the Trust that he took in filing his 2012 gift tax return. In essence, appellee
seeks to reclassify his transfer of funds into the Trust because the couple’s relationship
has now deteriorated. However, the developments that have transpired over the
intervening years since the Trust was created do not vitiate the donative intent that
appellee possessed at the time of the transfer of funds in 2012.
{¶ 37} “‘Many gifts are made for reasons that sour with the passage of time.’
Unfortunately, gift law does not allow a donor to recover/revoke an inter vivos gift
simply because his or her reasons for giving it have ‘soured.’” Cooper v. Smith,
16.
155 Ohio App. 3d 218, 2003-Ohio-6083, 800 N.E.2d 372, ¶ 25 (4th Dist.), quoting
Albanese v. Indelicato, 25 N.J.Misc. 144, 145, 51 A.2d 110 (2d Dist.1947). This reality
remains true even in cases such as this involving inter-spousal transfers of marital
property. See Comella, supra, at ¶ 62-63. In Comella, the court indicated:
The best approach is to treat gifts exchanged during marriage as absolute
and irrevocable inter vivos gifts unless the donor-spouse has expressed an
intent stated directly to the donee-spouse at the actual time of gifting that
the gift is conditioned on the continuation of the marriage. In the instant
case, Thomas did not impose conditions on the gifts at the time of their
making by directly stating to Patricia that if stated conditions failed, the
gifts would fail. Absent such a situation, traditional gift law prevails, and
the completed inter vivos gifts made by Thomas were absolute and
irrevocable.
Id. at ¶ 63.
{¶ 38} Likewise, in this case, there is no evidence in the record to suggest that
appellee attached conditions to the establishment of the Trust. Indeed, the evidence
establishes just the opposite, as any such conditions would have thwarted appellee’s
stated purpose for establishing the Trust, namely the avoidance of federal estate tax by
virtue of his complete divestment of the assets transferred into the Trust, for the benefit of
appellant and, upon her death, his children.
17.
{¶ 39} In our decision in Soley v. Soley, 2017-Ohio-2817, 82 N.E.3d 43 (6th
Dist.), we addressed a related argument. There, the husband deeded some of his real
estate to his wife during the course of the couple’s marriage in order to evade his
creditors. Id. at ¶ 2. Subsequent to the transfer, the couple began to experience marital
difficulties leading to the filing for divorce. In the divorce action, husband argued that
the transferred real property remained his separate property (the real estate was held by
husband prior to the marriage) because it was transferred only to avoid creditors and not
as an inter vivos gift.
{¶ 40} Upon consideration of husband’s argument, the domestic relations court
agreed that the transfer of the property did not constitute a gift and therefore did not
convert the separate property into marital property. Id. at ¶ 4. The court determined that
husband did not possess the requisite donative intent when he executed the quitclaim
deed for the purpose of avoiding his creditors. Id.
{¶ 41} On appeal, we acknowledged that “the mere execution of a deed
transferring title from one spouse to another does not convert property that is otherwise
separate property into marital property.” Id. at ¶ 22. We noted that “‘the form of title is
relevant to, but not conclusive of, the classification of property as being either marital or
separate.’” Id., quoting Barkley v. Barkley, 119 Ohio App. 3d 155, 161, 694 N.E.2d 989
(4th Dist.1997). Nonetheless, we held that husband acted with donative intent when he
transferred the property in order to avoid creditors. Id. at ¶ 26.
18.
 {¶ 42} In arriving at our decision, we approvingly cited to the reasoning
articulated by the Tenth District in Neighbarger v. Neighbarger, 10th Dist. Franklin No.
05AP-651, 2006-Ohio-796. In that case, the husband transferred farmland via quitclaim
deed to his wife to shield it from potential civil judgments against him. The husband
argued that the property remained his separate property in the subsequent divorce action.
The Tenth District rejected the husband’s argument, stating:
There is no question that [husband] intended, in 1990 [the year in which
husband transferred the property to wife], to create a legal barrier between
himself and the property. His stated objective was to shelter his assets from
any financial risk arising from the criminal charges against him. If the
outcome of the criminal trial had been different, he most certainly would
have argued that he had no assets to satisfy whatever financial liability
might have arisen, including his child support obligations. Having made
that choice for his own benefit in 1990, to the detriment of his children and
creditors, we will not allow [husband] to turn his deliberate action into a
legal fiction for his own benefit again. He intended to transfer the property
and, as evidenced by the quitclaim deed, he did transfer the property.
Id. at ¶ 25.
{¶ 43} After noting the foregoing analysis from the Tenth District’s Neighbarger
decision, we went on to examine the Third District’s decision in Strasburg v. Strasburg,
3d Dist. Auglaize No. 2-10-12, 2010-Ohio-3672. Relying upon the Tenth District’s
19.
reasoning in Neighbarger, the court in Strasburg held that the relinquishment of all legal
rights to farmland by transfer of property via quitclaim deed to a spouse for the purpose
of avoiding creditors constitutes a gift for purposes of classifying the property as separate
or marital property. Id. at ¶ 22. In Strasburg, the husband testified that he inherited
farmland from his father’s estate during the marriage, and that he conveyed the property
to his wife via quitclaim deed because he was concerned about the risk that he would be
sued. Id. Like the court in Neighbarger, the Third District found that the husband
transferred his inherited farmland via quitclaim deed immediately upon his
inheritance, and that, had [husband] been sued, he doubtlessly would have
argued that the farmland was [wife’s] sole property, and was not an asset
subject to any ensuing financial liability. * * * Regardless of [husband’s]
testimony that he did not intend to relinquish ownership or waive his rights
to the property, the fact remains that [husband] deeded the farmland to
[wife] solely via quitclaim deed, and did not retain any reserved rights or
joint rights to the property. Thus, [husband’s] testimony about his motives
for the transfer was wholly inconsistent with his actions in making the
transfer. As [husband’s] testimony established that he relinquished all legal
rights to the farmland upon its transfer to [wife], we cannot find that the
trial court erred in concluding that the farmland was not [husband’s]
separate property.
Id.
20.
 {¶ 44} The foregoing cases address the effect of an inter-spousal transfer of
property, albeit by deed rather than irrevocable trust, where the husband sought to
completely divest himself of any interest in the transferred property to create a legal
barrier between himself and the property. Similarly, in this case, appellee sought to
shield several million dollars from potential federal estate tax liability by creating the
Trust naming appellant as the beneficiary, funding it, and filing a federal gift tax return
evidencing the transfer. Applying the reasoning we articulated in Soley, we find that
appellee’s actions establish the requisite donative intent to make an inter vivos gift.
{¶ 45} In light of the foregoing, we conclude that the evidence presented below
establishes that appellee’s transfer of the assets contained in the Trust constituted an inter
vivos gift to appellant under R.C. 3105.171(A)(6)(a)(vii). Since appellee gifted his
interest in the assets to appellant, the assets are appellant’s separate property. Therefore,
we find that the trial court’s classification of the property as marital property was against
the manifest weight of the evidence.
{¶ 46} Accordingly, we find appellant’s assignment of error well-taken. Having
found that the Trust assets are appellant’s separate property pursuant to an inter vivos
gift, we must remand this matter to the trial court for the court to equitably distribute the
property under R.C. 3105.171.
B. NASM Account
{¶ 47} In appellee’s assignment of error, he argues that the trial court abused its
discretion in finding that appellant was entitled to be reimbursed for half of appellee’s
21.
$795,000 withdrawal from the NASM account, which he used to pay his 2018 income
taxes.
{¶ 48} “As to determinations regarding property awards in divorce proceedings, a
trial court ‘“may divide property as it deems equitable, * * * [with] broad discretion in
arriving at an equitable property division.”‘” Baum v. Perry-Baum, 6th Dist. Wood No.
WD-18-085, 2019-Ohio-3923, ¶ 16, quoting Berish v. Berish, 69 Ohio St. 2d 318, 319,
432 N.E.2d 183 (1982), quoting Cherry v. Cherry, 66 Ohio St. 2d 348, 355, 421 N.E.2d
1293 (1981). Unless the trial court’s decision amounts to an abuse of discretion, this
court cannot substitute its judgment for that of the trial court. Kaechele v. Kaechele,
35 Ohio St. 3d 93, 94, 518 N.E.2d 1197 (1988). An abuse of discretion connotes that the
trial court’s attitude in reaching its decision was unreasonable, arbitrary or
unconscionable. Blakemore v. Blakemore, 5 Ohio St. 3d 217, 219, 450 N.E.2d 1140
(1983).
{¶ 49} Here, the parties stipulated below that the NASM account was marital
property subject to equitable division. The trial court permitted appellee to make several
withdrawals from the NASM account in order to pay his estimated federal income taxes
for 2018, but indicated that it would address such withdrawals in its subsequent
distribution of the marital estate. In the distribution, the trial court directed appellee to
reimburse appellant after finding that appellee’s use of marital funds held in the NASM
account benefited only appellee.
22.
{¶ 50} In his brief, appellee argues that this finding was unreasonable because the
parties filed a joint income tax return in 2018. Appellee contends that the parties agreed
to share equally in any income tax refunds or overpayments on their 2018 income taxes,
and therefore both parties benefited from appellee’s withdrawal of the funds and use of
such funds to make estimated income tax payments.
{¶ 51} In response, appellant contends that the trial court considered the fact that
the parties paid their 2018 income taxes jointly in its decision. Appellant notes that the
trial court considered and rejected appellee’s contention that his payment of income taxes
benefited appellant.
{¶ 52} In its decision, the trial court addressed appellee’s joint tax argument,
finding that “[s]uch a sharing of tax burdens for 2018 might be equitable if the parties
equally shared in the 2018 income, but Wife received, at most, 8% ($30,000 of $375,000)
of Husband’s monthly income for the first six months of the years.”
{¶ 53} We have reviewed the record in its entirety. Based upon that review, we
find that the trial court’s determination that appellant only received 8 percent of the
couple’s income is supported by the record. As noted above, the trial court has broad
discretion in fashioning its award. We do not find that the court abused its discretion
when it determined that it would be equitable to make appellee responsible to pay the
income tax obligations of the couple, where appellee received 92 percent of the couple’s
income during the pendency of this action.
{¶ 54} Accordingly, we find appellee’s sole assignment of error not well-taken.
23.
III. Conclusion
{¶ 55} Having concluded that the trial court’s classification of the property
contained in the Trust was against the manifest weight of the evidence, the judgment of
the Wood County Court of Common Pleas, Domestic Relations Division, is reversed, and
this matter is remanded to the trial court so that it may make an equitable division of the
property under R.C. 3105.171(B). The trial court’s judgment is affirmed in all other
respects. Costs are to be assessed to appellee pursuant to App.R. 24.
Judgment reversed, in part,
and affirmed, in part.
A certified copy of this entry shall constitute the mandate pursuant to App.R. 27.
See also 6th Dist.Loc.App.R. 4.
Mark L. Pietrykowski, J. _______________________________
JUDGE
Christine E. Mayle, J.
_______________________________
Gene A. Zmuda, P.J. JUDGE
CONCUR.
_______________________________
JUDGE
This decision is subject to further editing by the Supreme Court of
Ohio’s Reporter of Decisions. Parties interested in viewing the final reported
version are advised to visit the Ohio Supreme Court’s web site at:
http://www.supremecourt.ohio.gov/ROD/docs/.
24.