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COA: Only property owned prior to final separation can be included in marital pot

January 19, 2017

Only property that is owned or acquired before the date a dissolution petition is filed in a divorce proceeding can be included in the marital pot, the Indiana Court of Appeals found Thursday in an opinion that overturned a lower court’s decision to include stock options vested after the date of a couple’s final separation in the marital pot.

During George and Jennifer Fischer’s divorce proceedings, which began in October 2014, George Fischer testified that he had worked for E*Trade since 2011 and earned a base salary plus discretionary bonuses and stock options. Among the stock options was $149,739.62 granted by his employer and vested for the year 2015, which he testified he chose to keep in his stock options account.

Jennifer Fischer told the Lake Superior Court that she wanted it to grant her an interest in the stock options her soon-to-be ex-husband had acquired during their marriage, regardless of whether they had vested when she filed her petition in October 2014. When the trial court issued its dissolution decree in November 2015, the order found that George Fischer’s unvested stock options are not part of the marital estate and, thus, are not divisible. However, the court also found that because the $149,739.62 were acquired during the marriage and vested prior to the final hearing in August 2015, those stock options should be included in the marital estate.

Thus, the court awarded Jennifer Fischer 60 percent of the stock options vested in 2015. George Fischer appealed in George S. Fischer v. Jennifer M. Fischer, 45A05-1512-DR-2328, arguing that the 2015 stock options are income, not an asset, and that the trial court abused its discretion by including the options in the marital pot because they were acquired in his own right following the parties’ final separation.

An unanimous panel of the Indiana Court of Appeals agreed with George Fischer’s argument for two reasons.

First, Judge Margaret Robb noted that “marital property” includes property owned by either spouse before the marriage, acquired through joint efforts or acquired in their own right before the final separation, which occurs when the petition for dissolution is filed. Thus, because the $149,739.62 did not vest until sometime in 2015, after the October 2014 dissolution petition, the trial court’s inclusion of those stock options in the marital pot was clear error and an abuse of discretion, the judge wrote.

Second, the appellate panel noted that although the trial court determined that the 2015 options were part of the marital pot, it treated those options as an asset rather than as income when determining George Fischer’s child support obligation.

“The value of George’s stock options cannot be both property and income depending on the year and circumstances,” Robb wrote. “As the $149,739.62 is not an asset subject to division as marital property, it is properly considered income subject to the trial court’s child support order regarding income over the weekly threshold.”

Thus, the appellate panel reversed the trial court’s dissolution order and remanded the case to the trial court to amend the decree of dissolution.
 

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