Birath v. Birath

• Citation: 53 Ohio App.3d 31,558 N.E.2d 63
• Decision Date: 28 July 1988
• Docket Number: No. 87AP-105,87AP-105
• Parties: BIRATH, Appellant and Cross-Appellee, v. BIRATH, Appellee and Cross-Appellant. *
• Court: United States Court of Appeals (Ohio)

Page 31

53 Ohio App.3d 31

558 N.E.2d 63

BIRATH, Appellant and Cross-Appellee, v. BIRATH, Appellee and Cross-Appellant. ^*

No. 87AP-105.

Court of Appeals of Ohio, Tenth District, Franklin County.

July 28, 1988.

Syllabus by the Court

1. Tax-shelter consequences may be a relevant factor to be considered by the court when awarding alimony.

2. The value of a tax shelter is not the value of physical property but, rather, is intangible in nature and consists primarily of tax savings which necessarily will be realized in the future.

3. The amount necessary for child support is that amount necessary to maintain for the children the standard of living they would have enjoyed had the marriage continued. The amount reasonable for child support includes consideration of other factors including the financial resources and needs of both the custodial and non-custodial parent. (R.C. 3109.05, construed.)

4. An award of alimony may include an allowance for reasonable attorney fees. A decision to award or not award attorney fees should not be interfered with absent a clear showing of abuse or prejudice by the trial court.

5. Error may not be predicated upon a ruling which admits or excludes evidence unless a substantial right of the party is affected, and the substance of the evidence must be made known to the court. (Evid.R. 103, applied.)

Michael L. Close, Columbus, for appellant and cross-appellee.

Andrea R. Yagoda, Columbus, for appellee and cross-appellant.

WHITESIDE, Presiding Judge.

Plaintiff, John F. Birath, Jr., appeals from a decision of the Franklin County Court of Common Pleas, Division of Domestic Relations, and raises assignments of error, as follows:

"IA. The trial court errored [sic ] in awarding a property division that in effect awarded after-acquired assets (cash) of the plaintiff to the defendant.

"IB. The trial court errored [sic ] in not allowing the plaintiff cash setoffs for any cash contributions he made to tax shelters of the parties in the years subsequent to the divorce.

" * * * " ¹

Defendant, Jane C. Birath, also appeals and raises five assignments of error as follows:

"1. The trial court abused its discretion in its award of alimony.

"2. The trial court abused its discretion in ordering only $800.00 per month child support and ordering appellee to pay one-half [of] all uncovered medical expenses.

"3. The finding of the trial court that appellant-husband was not in arrears for child support and alimony was against the manifest weight of the evidence and contrary to law.

"4. The trial court abused its discretion in requiring that appellee's share of the tax shelter savings be reduced by the tax benefit she realizes after deducting real estate taxes and mortgage interest.

"5. The trial court abused its discretion to the prejudice of appellee-wife in excluding relevant evidence during the trial."

The parties terminated their nineteen-year marriage on March 6, 1986, although the parties agreed to use December 31, 1985 as a division date since they had been separated prior to the time of the filing of the divorce. Three children were born of the marriage and, at the time of the divorce, two remained at home and the third was enrolled in college. The trial court awarded defendant custody of the minor children and required plaintiff to pay defendant $400 per month per child in child support and $1,150 per month to defendant as sustenance alimony, deductible to plaintiff and taxable to defendant. The trial court awarded defendant the marital residence, her IRA account, her checking and savings accounts, her automobile, household goods in her possession, Kodak and Kemper stock, and thirty-three percent of plaintiff's Keogh plan assets to be transferred pursuant to a "Qualified Domestic Relations Order," thereby assuring no tax consequences under federal tax law.

Additionally, the court concluded that:

" * * * having heard no credible evidence indicating there is any arrearage on temporary orders finds that there is no arrearage and concludes that no amounts are owning by Plaintiff to Defendant on said account.

"The Court being mindful that there is no present, current, or fair market value in any tax shelter held by the Plaintiff in his name, and mindful that any value that said assets might have to the Plaintiff are speculative based on his future earnings, future place of employment, and perspective [sic ] changes in tax law, does award all of those tax shelters to the Plaintiff. Those are specifically: the Bricker & Eckler building company, Springwood Apartments, ABS and AFG Leasing."

So finding, the court ordered:

" * * * [A]s further alimony, not deductible by the Plaintiff and not taxable to the Defendant, payable in cash and terminable upon the death of either party or the remarriage of the wife, that the Plaintiff shall pay to the Defendant one-half of the difference between the net tax savings generated for the Plaintiff by those shelters after subtracting the tax benefit of the interest and taxes on the residence of the parties which has been awarded to the Defendant."

Lastly, the court stated that it " * * * being mindful of the value of the attorney fees rendered by the attorney for the Defendant, does award as and for further alimony, taxable to the Defendant and deductible to the Plaintiff, the sum of Five Thousand Dollars ($5,000.00) which shall be paid at the rate of Two Hundred Dollars ($200.00) per month * * *."

Plaintiff, in his first assignment of error, contends that the trial court erred in awarding as property-division alimony to defendant cash payments of a portion of plaintiff's future tax savings generated as a result of tax shelters acquired during the marriage and in doing so without considering the additional money plaintiff was required to invest in those tax shelters. By her fourth assignment of error, defendant contends that the trial court erred in reducing the amount she would have received from the tax-shelter benefits by the amount of tax savings received as a result of mortgage-interest payments.

The trial court has broad discretion to make property-alimony awards. The Supreme Court in Conner v. Conner (1959), 170 Ohio St. 85, 9 O.O.2d 480, 162 N.E.2d 852, and Blakemore v. Blakemore (1983), 5 Ohio St.3d 217, 5 OBR 481, 450 N.E.2d 1140, stated that an abuse of discretion may be found only where the determination of the trial court is unreasonable, arbitrary or unconscionable. An appellate court may not simply substitute its own judgment of factual or discretionary issues for those of the trial court. The Supreme Court in Cherry v. Cherry (1981), 66 Ohio St.2d 348, 20 O.O.3d 318, 421 N.E.2d 1293, and Wolfe v. Wolfe (1976), 46 Ohio St.2d 399, 75 O.O.2d 474, 350 N.E.2d 413, emphasized the importance of leaving discretion to the trial court to determine an equitable property distribution based on the facts and circumstances of each case. Additionally, these cases state that a potentially equal division should be the starting point of analysis, and neither party should make a profit at the expense of the other.

In the case before us, it is evident from the record that the trial court endeavored to determine the present value of the tax shelters at issue so as to include them in its potentially equal division of property. Both parties offered a significant amount of testimony as to the value to be given to the tax shelters, the plaintiff arguing that there was no present value and the future value was too speculative to determine in the present, and the defendant offering testimony as to the present value based on assumptions about the future. The court found that the tax shelters have no current value and concluded that the testimony was "speculative in nature" and depended in part on future tax law, plaintiff's continued employment at his current pay rate, and plaintiff's position as a partner at the Bricker & Eckler law firm.

However, the trial court then proceeded to order that, as future alimony, not deductible by plaintiff or taxable to defendant, the plaintiff would pay to defendant, in cash, one half the difference between the net tax savings generated for the plaintiff by those tax shelters after subtracting the tax benefit of interest and tax payments on the parties' marital residence which was awarded to the defendant.

R.C. 3105.18 directs the trial court to allow alimony as it deems reasonable to either party and such alimony (whether property division or sustenance) may be allowed in real or personal property, or both, or by a sum of money payable either in gross or installments as the court deems equitable. R.C. 3105.18 does not differentiate between property-division alimony and sustenance alimony but, rather, lists only factors to be considered. The Supreme Court in Berish v. Berish (1982), 69 Ohio St.2d 318, 23 O.O.3d 296, 432 N.E.2d 183, emphasized that it is the equitableness of the result which must stand the test of fairness on review.

Traditionally, the courts of Ohio in dividing the assets of the parties start with a potentially equal division of present assets (see Cherry, supra, and Wolfe, supra ), and proceed to determine whether and in what amount sustenance alimony is required. This court (e.g., see Buckles v. Buckles [1988], 46 Ohio App.3d 102, 546 N.E.2d 950), has continually reiterated that sustenance alimony and property-division alimony are necessarily interrelated parts of a single whole under R.C. 3105.18 and that, to the extent feasible, each party should enjoy, after termination of marriage, a standard of living comparable to that standard established during marriage but as necessarily adjusted by the various factors of R.C. 3105.18(B). R.C. 3105.18 does not contemplate that, in the absence of extraordinary circumstances, one party will enjoy the same or a higher standard of living while the other party is forced to live on a greatly reduced standard of living from that established during the...