Summary
The Rhode Island Supreme Court reviewed cross-appeals from a divorce-property distribution involving premarital bank accounts placed in the spouses' joint names. The court held that the accounts did not become marital property because the trial justice found no intent to create a present ownership interest, vacated the valuation of the marital estate and the $250,000 award, and remanded for reconsideration.
Topics
Practice areas
Questions Presented
- Whether preexisting bank accounts titled jointly during the marriage became marital property by operation of law despite the trial justice's undisputed finding that the owner lacked intent to give the other spouse a present possessory or ownership interest.
- Whether the $250,000 monetary award had to be reconsidered after the jointly titled accounts were excluded from the marital estate.
Holdings
- The jointly titled accounts did not transmute into marital property because the trial justice specifically found that Lawrence lacked the requisite intent to create a present interest for Shari Ann, and that finding was undisputed.
- The monetary award had to be reconsidered because the marital estate was substantially reduced by excluding the improperly included joint accounts.
Key quotations
“Because the trial justice specifically found that Lawrence did not have the requisite intent to create for Shari Ann any present possessory interest in the joint accounts, which finding was undisputed by either party, it was an error of law for the trial justice to then find that the contested joint accounts had transmuted into marital property by operation of law.” (811 A.2d at 1143)
“Since the marital estate must be substantially reduced, the $250,000 award to Shari Ann, which was generous in view of this brief failed marriage, now must be reconsidered because of the reduced value of the marital estate.” (811 A.2d at 1144)
Factual background
Lawrence and Shari Ann married on July 11, 1992, separated just over a year later, and had no children. Before the marriage, Lawrence owned numerous bank accounts and investments, some individually and some through or jointly with others. During the marriage he added Shari Ann's name to twelve accounts containing approximately $483,000, but the trial justice found that he did so only for convenience and estate-planning purposes, did not intend to give her a present interest, retained control of the passbooks, and remained the sole source of the accounts' funding. The only account activity during the marriage was the addition of Shari Ann's name and the accrual of interest.
Procedural history
After a short marriage, the Family Court determined that the marital estate was worth approximately $1.3 million, included twelve accounts funded before the marriage but titled jointly during the marriage, awarded Lawrence the accounts, and ordered him to pay Shari Ann $250,000. The Supreme Court denied and dismissed Shari Ann's appeal, sustained Lawrence's appeal, vacated the portions of the decision determining the marital-estate value and awarding $250,000, and remanded for reconsideration.
Remand instructions
The Family Court must exclude the convenience-added joint accounts from the marital estate, recalculate the value of the marital estate, and reconsider the $250,000 monetary award in light of the corrected valuation and the governing equitable-distribution factors.