Is a Virginia divorce court required to apply any particular formula, like those from the Brandenburg or Keeling cases, consistently to trace separate and marital interests during equitable distribution?
No, a Virginia divorce court is not required to apply either the Brandenburg formula or the Keeling formula or any particular formula consistently, as long as the outcome is equitable. In the published opinion of Rinaldi v. Rinaldi, 53 Va. App. 61, 669 SE2d 359 (Va. App. 2008), the Virginia Court of Appeals reviewed a divorce court judge’s decision to use two different formulas in equitable distribution of the parties two parcels of real estate. The husband owned a house in the City of Richmond titled in his name alone. After the parties married, they moved into his house and later refinanced it with a joint mortgage loan. The husband received an inheritance from his mother two years after the parties were married, which would be considered separate property under Virginia law. He used a portion of that separate property along with a small amount of marital property as a 25% down payment on a parcel of riverfront property. The husband and wife used marital funds to pay the mortgage on the riverfront property. The property appreciated substantially during the marriage. During the course of the party’s marriage, wife earned more than twice as much as husband, as wife worked as a lawyer and husband tended to a construction business on an unsteady basis. Wife testified that husband had used marijuana on a daily basis which hurt his business and his family life, ultimately causing wife to file for divorce.
The Virginia divorce court used two different approaches to tracing the separate and marital interest in the two parcels of real estate, the first approach having been established on the Kentucky case of Brandenburg v. Brandenburg, 617 SW2d 871 (Ky. App., 1981) and recognized in Virginia in Hart v. Hart, 27 Va. App. 46, 497 S.E. 2d 496 (Va. App., 1998) and the second approach having been established in Virginia in the case of Keeling v. Keeling, 47 Va. App. 484, 624 S.E.2d 687 (Va. App., 2006). On the house in the City of Richmond, the judge used the Brandenburg approach, which can be summarized as dividing the equity in the property according to the same percentages of separate property contributions to total contributions and marital property contributions to total contributions. On the riverfront property, the divorce court judge used a variation of the Keeling approach, which can be summarized as dividing the equity in the property according to the percentages of separate property contributions to the original purchase price with the balance of equity being marital property. After determining what was separate and what was marital, the divorce court judge equitably divided the marital property 60% to wife and 40% to husband, based on wife’s greater monetary and nonmonetary contributions to the marriage. Husband appealed, objecting to the division of marital property and that the judge used two different approaches to tracing separate and marital property in the real estate.
The Virginia Court of Appeals upheld the trial court judge’s decision. The appeal court ruled that it had not adopted an exclusive method for tracing the separate and marital portions of hybrid property. In Keeling the court had recognized that the Brandenburg formula could produce an unfair result when there is a significant down payment of separate property, a significant marital mortgage, substantial appreciation due to market forces, and no evidence that either the down payment or the mortgage disproportionately contributed to the couple’s ability to acquire and hold the property. Keeling, 497 Va. App. at 491, 624 S.E.2d at 690. As long as the result was equitable, the divorce court judge could use the Brandenburg approach for the City of Richmond home and the Keeling approach for the riverfront property. Furthermore, Virginia does not require that a spouse who retraces separate funds used to make a down payment on property held by the husband and wife together must be awarded appreciation in the exact percentage in which the divorce court judge awards appreciation on the marital share. Addressing the division of marital property, the Virginia Court of Appeals restated the rule that there is no presumption of an equal distribution of marital assets, or that the divorce court must start with a 50-50% presumption. The appeals court upheld the trial court’s 40-60 division of marital property based on the factors in Virginia’s equitable distribution statute, Section 20-107.3 of the Code of Virginia.
You should consult with your Virginia divorce lawyer concerning the various approaches to tracing separate and marital property during equitable distribution.