Marital Residence.jpgA spouse contributing separate property (most commonly pre-marital, gifted, or inherited funds) to the purchase of the marital residence does not make a gift of (half of) that payment to the other spouse, even if the residence is held by the parties jointly.

So was the holding of the Appellate Division, Fourth Department, in its September 28, 2012 decision in Pelcher v Czebatol. The appellate court affirmed the ruling of Monroe County Supreme Court Justice Joanne M. Winslow, who had granted the wife’s motion for an order determining that she was entitled to a credit from the proceeds of the sale of that residence in the amount of $149,500 used for the purchase of that home.

It is well settled that a spouse is entitled to a credit for his or her contribution of separate property toward the purchase of the marital residence, including any contributions that are directly traceable to separate property, even where, as here, the parties held joint title to the marital residence.

The wife had established that her mother had transferred approximately $150,000 in mutual funds to the wife’s mutual fund account. The wife withdrew the funds from that account and deposited them into her individual checking account. From that individual account, the wife paid $149,500 toward the purchase of the marital residence.

The appellate court noted that contrary to the husband’s contention, Justice Winslow properly determined that, although title to the marital residence was taken as tenants by the entirety (jointly-owned by the husband and wife), the wife did not contribute her separate property toward the purchase of the home as a gift to her husband.

Reading this decision, it would appear that the wife had died prior to the divorce. Thus, the divorce action should have “abated.” A divorce action must end if it is not completed before the death of a spouse (unless all that remained was the “ministerial” act of entering the Judgment of Divorce to reflect an otherwise completed matter).

However, Seema Ali Rizzo, Esq., of Gallo & Iacovangelo, LLP, of Rochester, counsel for the wife, advises that the hearing resulting in the decision was held in December, 2010. While the husband’s appeal from Justice Winslow’s decision was pending, the divorce was granted and judgment was entered. When the wife passed away, she was already divorced. The wife’s mother (executrix of the wife’s estate) was substituted for the wife on the appeal.

David A. Merkel, Esq., of Merkel & Merkel, LLP, also of Rochester, represented the husband.