Gordon v. Gordon: Valuation of the Marital Estate

Posted by Steven D. Eversole | Jun 10, 2015 | 0 Comments

In Gordon v. Gordon, a case from the Supreme Court of Hawaii, husband and wife met in Las Vegas in the summer of 1992 and were married in Hawaii in 1997. When the couple was first dating, husband lived in Hawaii and was still legally married but separated from his first wife. He made trips to Las Vegas for work and spent time with his girlfriend during these business trips. She also made several trips to Hawaii to spend time with him.

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During her visits to Hawaii, she would often stay with him at his personal residence. A year after they met, she moved to Hawaii to live with him at his residence. In 1995, she purchased her own residence, and both parties moved into it a few months after the closing. When husband's divorce from his first wife was made final, he and his second wife, then girlfriend, had been living at her new residence for around a year. She was paying the monthly mortgage without any financial assistance from husband. As noted above, the couple legally married in December of 1997.

Following their marriage, they filed a joint married tax return with the IRS. Husband was elected to handle completing and filing the tax return and paying any taxes owed to the IRS. As part of their tax return, the couple claimed a home interest tax deduction of around $40,000, though the residence was fully paid for by wife.

During their divorce proceedings, trial court used this tax return as primary evidence of each party's pre-marital estate when calculating property division as part of the divorce.  There were 13 rental properties and three business listed on the tax return.   There was also a listing for three properties in Texas owned by wife and multiple properties given to husband as part of the divorce from his first wife.

The parties continued to live in the marital home until 2010, and, during that time, each party obtained multiple home equity lines of credit (HELOCs) on the marital home and used most of the money as down payments for their business ventures. The remainder of the money was placed in a bank account in wife's name.

Some money from additional HELOCs was used to pay the couple's outstanding tax liability, and over $300,000 was placed in husband's personal bank account. To make matters more complicated, it is alleged husband started dating another woman and had her live at one of the properties owned by the couple and set up a massage parlor as his girlfriend's business on one property.   Wife also alleged husband took various trips to Las Vegas with his girlfriend and her child and spent money on his own tax liability, which wife did not know about.

This led to marital fights, which ultimately led to the divorce. Following the divorce, judge awarded wife alimony in addition to property from the marital estate. Husband appealed, based upon a claimed lack of evidence supporting how trial court calculated the parties' marital estate. The appellate court reversed trial court's award of alimony, because it was not supported by sufficient evidence.

As our Birmingham divorce attorneys can explain, having multiple separate accounts and pre-marital assets can greatly complicate the divorce process. It is sometimes necessary to perform a complete forensic accounting to trace all relevant assets.

Additional Resources:Gordon v. Gordon, June 4, 2015, Supreme Court of Hawaii

About the Author

Steven D. Eversole

J.D., Samford University's Cumberland School of Law, Birmingham, Alabama B.A., University of Alabama, Tuscaloosa, Alabama

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