Domestic Relations – Equitable Distribution – Distributional Factors – Inheritance

On remand from a prior appeal, this court instructed the trial court to make findings of fact regarding the defendant-wife’s inheritance from her father. The trial court erred in its reconsideration of the post-separation inheritance – a distributional factor – by considering it in relation to other distributional factor instead of whether the inheritance would affect the equitable distribution of marital and divisible property.

We reverse the new equitable distribution order and remand for further findings of fact to properly apply the wife’s paternal inheritance as a distributional factor to equitably divide the marital estate.

About four years after the parties separated, the wife received a $1.3 million inheritance from her father. In the trial court’s original equitable distribution order, it made a generalized finding about its application of distributional factors.

The plaintiff-husband appealed. This court reversed and remanded for specific findings as to the inheritance.

In its new equitable distribution order, the trial court did not make findings of fact as to the inheritance’s effect on the equitable division of the marital estate. Instead, it weighed the inheritance’s effect against distributional factors, such as the husband’s retirement and deferred compensation rights, which are his separate property.

Moreover, the trial court improperly speculated on the hypothetical tax consequences of liquidating the inheritance, two-thirds of which was in the form of retirement accounts. The trial court’s order did not actually order liquidation or any action resulting in tax consequences for the wife’s separate property. Therefore, the trial court’s consideration of the tax consequences was speculative and hypothetical.

Our instructions on remand were for the trial court to consider the wife’s inheritance as a distributional factor to equitably distribute the marital estate. On remand, the trial court failed to do so. We reverse the trial court’s order and remand for further findings of fact regarding how the wife’s paternal inheritance affects the equitable distribution of the marital estate under G.S. § 50-20(c).

Reversed and remanded.

Smith v. Smith (Lawyers Weekly No. 012-165-18, 18 pp.) (Robert Hunter, J.) Appealed from Mecklenburg County District Court (Donnie Hoover, J.) Preston Odom, G. Russell Kornegay and John Paul Tsahakis for plaintiff; William Sitton and Andrew Brendle for defendant. N.C. App. Unpub.