Getting “Popped” for Depleting Assets Before Divorce in Alabama

Nearly every divorce lawyer gets them: questions about whether it might be a good idea to sell the car to Uncle Fred for $1 “so she won’t be able to get her hands on it” in the expected divorce. Nearly every lawyer (we hope) has the same answer: “Don’t go there. Judges don’t like to be made the fool and won’t put up with it.”

Usually, that’s that, and the issue dies. Now and then, though, you get to see what happened when one of the spouses actually did (apparently) try to deplete the marital estate in expectation of divorce, and the judge actually did (apparently) pop him. Such is the case in Ryland v. Ryland, Case No. 2070146 (Ala Civ. App. January 9, 2009).

The parties had been married 30 years. The opinion is lengthy and fact-filled, but a summary will do here. The trial court found that the husband, the primary breadwinner, had systematically built up his own investment assets while neglecting the family home and the comfort of his wife and three children. Both shortly before and after the wife filed for divorce, the trial court found, he transferred various marital assets to third parties for below-market consideration, and then in some cases continued to pay to maintain those assets.

The trial court called the husband’s efforts “an obvious sham intended to preclude the wife from claiming any interest in them.” The husband also wrote checks to “cash” for a total of $78,000 and admitted under oath that he thought it was okay to give money away to keep his wife from getting it. He testified that he was disabled (although he hadn’t applied for benefits) and therefore had no income.

The trial court ordered an equal division of the marital estate ($395,661.36 for each party), ordered the husband to pay $375 per month of alimony while he paid the college expenses of their youngest child, and then to pay $1,000 per month of alimony after the child finishes college. The trial court also ordered the husband to pay the wife’s attorney fee of $16,920. Because some of the property division could be accomplished only by payment of cash from the husband to the wife, the trial court ordered the husband to execute a mortgage to the wife on all properties he owned or acquired in the future until the wife was paid in full. The husband appealed.

The appeals court opinion is more a recitation of the facts than a legal analysis. The appeals court noted repeatedly as it described the husband’s behavior how each incident could have affected the husband’s credibility in the eyes of the court, or provided basis for the court’s determination that the husband had greater ability to pay than he testified, or both.

The appeals court did reverse the trial court on one point: it ruled that the trial court should have conditioned the husband’s obligation to pay for his son’s college education on the son’s performance in college. So the appeals court reversed on this issue. Given the breadth of the trial court’s findings and the appeals court’s approving recitation of the evidence supporting those findings, this can only be characterized as throwing the husband a bone.

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