Divorce Loans vs. Divorce Gifts
Divorce encourages shenanigans. A common shenanigan is to recast history so that certain events are slanted more favorably to your side. Such tactics usually enrage the other party, making a costly trial more likely. Sometimes, a trial is just unavoidable.
In the recent case of Bass v. Bass, 2014-Ohio-2667, both parties wanted the marital home. For a variety of reasons, the trial court awarded the home to the wife. The husband complained that the court erred because the wife got to enjoy improvements to the house, including a swimming pool and a gazebo, that he financed through a loan from his son. The husband wanted the wife to re-pay one-half of the loan to his son.
Both the trial court and appeals court sided with the wife. An examination of the facts revealed that:
- Husband had no loan documents;
- The beginning balance was either $38,000 or $39,000;
- Husband had made about 30 payments of about $360 each to Citibank, a loan taken out for his sons’ behalf;
- According to the husband, the balance was still $35,000; and
- Husband did not list the debt to his son on his bankruptcy schedules.
Husband argued that the trial court erred in finding that the money from his son was a gift. The Court of Appeals disagreed, stating that the trial court did not in fact find that the son’s financing was a gift; rather, conflicting evidence showed that the husband failed to prove that a loan to his son existed. Therefore, the wife received the house, along with the swimming pool and gazebo, without any obligation to pay anything to her step-son.
Is this fair? Of course not. The end result is that the son paid for a swimming pool and gazebo for his step-mother. The poor husband did not get the house he wanted and no doubt had to move to a hot, humid climate without a swimming pool in sight.
Not so fast, however. The evidence also showed that husband had tax liability of more than $400,000 and had served prison time for welfare fraud. The trial court found his testimony “less than credible” and that it was not likely that he had the means to qualify for a loan to buy-out the wife’s interest in the marital home. With that background, the trial court probably thought he was just pulling another financial shenanigan in a new venue–this time, divorce court.
Neither party received an award of attorney fees from the other. The divorce process no doubt let the husband down twice. As far as the wife, she had to endure two separate court cases. At least she could console herself by sipping a frothy drink beside her free swimming pool.