Friday, December 2, 2005

Case Law Development: Dishonest, High Risk Investing of Spouse's Inheritance is Not Financial Misconduct

In order to justify awarding property upon divorce as compensation for financial misconduct, a spouse must prove more than mere high risk investing,  but must prove affirmative misconduct.  In this case, husband rigidly controlled all the family's finances, becoming irate if Wife sought access to accounts or financial information.  He invested marital funds in high-risk day trading.  When Wife received an inheritance, Husband insisted that she turn the funds over to him for investment, which she did.  Despite her request that he invest the funds safely, he invested them as he did all other marital funds and lost most of the money.  He did not tell her about the loss until the divorce. 

The Ohio Court of Appeals held that the trial court erred in finding that this conduct justified a distributive award to Wife to compensate for the lost inheritance funds.  The court noted that "although Husband's behavior was clearly irresponsible, bordering on dishonesty, his actions do not rise to the level of financial misconduct .... Financial misconduct requires more than dishonest behavior [but] requires a wrongdoing that interferes with a spouse's property rights and results in profit to the wrongdoer from the alleged misconduct or stems from an intentional act meant to defeat the other spouse's distribution of assets."

Bucalo v. Bucalo, 2005 Ohio 6319, 2005 Ohio App. LEXIS 5678 (November 30, 2005)
Opinion on the web at http://www.sconet.state.oh.us/rod/newpdf/9/2005/2005-ohio-6319.pdf (last visited December 1, 2005 bgf)

http://lawprofessors.typepad.com/family_law/2005/12/in_order_to_jus.html

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