source of funds rule in Missouri

2009In its second amended judgment and decree of dissolution filed on August 22, 2008, the trial court calculated the non-marital interests and marital interests in each of the three farms by applying the source-of-funds rule set forth in Hoffmann v. Hoffmann, 676 S.W.2d 817, 824 (Mo. banc 1984), through the formula set out in In re Marriage of Herr, 705 S.W.2d 619, 625 (Mo.App.1986).

2009Hoffmann adopted the source of funds rule so the marital unit could equitably share in “the appreciated value of the property which is due to general economic conditions.” 676 S.W.2d at 823 .

2012The formula for the source of funds rule as explained in In re Marriage of Herr, 705 S.W.2d 619, 625 (Mo.App.

2009In its second amended judgment and decree of dissolution filed on August 22, 2008, the trial court calculated the non-marital interests and marital interests in each of the three farms by applying the source-of-funds rule set forth in Hoffmann v. Hoffmann, 676 S.W.2d 817, 824 (Mo. banc 1984), through the formula set out in In re Marriage of Herr, 705 S.W.2d 619, 625 (Mo.App.1986).

2002Furthermore, wife requested the trial court to apply the source of funds rule in Brooks v. Brooks, 911 S.W.2d 631, 633 (Mo.App.

1998Under the source of funds rule, since each spouse contributed nonmarital property, each spouse would be “entitled to an interest in the property in the ratio of the [spouse’s] nonmarital investment to the total nonmari-tal and marital investment in the property.” Brooks v. Brooks, 911 S.W.2d 631, 633 (Mo.App.1995).

2003“Under the source of funds rule, whether property is marital or separate depends on the source of the funds that financed the purchase of the property.” Williams v. Williams, 965 S.W.2d 451, 454 (Mo.App.1998).

2003"There is no conflict between the source of funds rule and transmutation; they are merely relevant in different factual situations.” Williams, 965 S.W.2d at 454 . 3 .

1991Sumners v. Sumners, 701 S.W.2d 720 (Mo. banc 1985), held the source of funds rule applied to a dissolution of marriage action which was tried prior to the publication of the Hoffmann opinion and was pending on appeal at the time of that publication.

1986Rita’s brief concedes, at least tacitly, that Randy’s contention is valid if the source of funds rule applies to this action, but argues that the opinion in Hoff-mann was “probably not published until after the trial date.” After Rita’s brief was filed in this court, the supreme court held the “source of funds rule” as announced in Hoffmann should be retrospectively applied, Sumners v. Sumners, 701 S.W.2d 720, 725 [2] (Mo. banc 1985), and that it applied to a dissolution action, like the present one, which was pending on appeal at the time of the Hoff-mann decision although tried “prior to its

2020“While a marital 11 In his reply brief, Husband admits, “Indeed a reasonable inference can be made that the value of [Wife’s] effort to the Business was $20,800 per year” or $83,200.00 during the marriage. 12 Neither party argues that Husband’s labor on behalf of the Business was marital property, presumably because, during the marriage, Husband was well compensated by the Business and his compensation was treated as marital property. 10 interest in separate property can require proof that a spouse contributed substantial services towards the property which led to an increased value of that pr

2020Id.; see also McKown, 108 S.W.3d at 184-85 (finding husband was obligated to give wife a portion of the increased equity in property he acquired before the marriage where the mortgage on the property was paid out of the parties’ joint checking account using marital funds); Rhodus v. McKinley, 16 S.W.3d 615, 618-19 (Mo. App. W.D. 2000) (where husband sold marital property and used the proceeds to pay off a $53,500 business debt, the trial court properly applied the source-of-funds rule to find that the $53,500 increase in the value of the business was marital property).

2014Section 452.330.2(5) dictates that an increase in value during the marriage of property acquired before the marriage is non-marital, “unless marital assets including labor, have contributed to such increases and then only to the extent of such contributions.” When utilizing the source of funds rule, marital contributions include “amounts expended after marriage from other than nonmarital funds toward the purchase of the property and the value of all improvements made after the marriage from other than nonmarital funds.” Alexander v. Alexander, 956 S.W.2d 957, 961 (Mo.App.W.D.1997).

2014Non-marital contributions include “the equity in the property at the time of marriage, plus any *821 reduction of mortgage principal from expenditures of traceable nonmarital funds, and/or the value of improvements made to the property from such nonmarital funds.” Id. (internal quotation omitted).

2011Thus, Husband is correct “that a trial court in a dissolution case should ordinarily separate the marital and non-marital portion of a pension benefit [or retirement plan] according to the source of funds rule and set aside the non-marital portion of the pension benefit to the spouse that earned it.” Id. (citing Taylor v. Taylor, 12 S.W.3d 340, 345 (Mo.App.

2011“Under the source of funds rule, the character of property is determined by the source of funds used to finance the purchase of the property and the property is considered to be acquired as it is paid for.” Taylor, 12 S.W.3d at 345 (citation omitted).

2009Applying the source of funds rule to the remaining $95,843.36 account balance as of the time of trial, the marital portion is $4,974.27; Husband’s nonmarital portion is $90,869.09. 7 *840 “The erroneous characterization of property requires reversal of the order dividing marital property if the error materially impacts the overall distribution of the marital property.” Halupa v. Halupa, 943 S.W.2d 272, 278 (Mo.App.1997); see Thomas v. Thomas, 196 S.W.3d 57, 64 (Mo.App.2005).

2009See, e.g., Thomas v. Thomas, 196 S.W.3d 57, 62 (Mo.App.2005) (applying the source of funds rule to a savings account); Columbo v. Brunkhorst, 217 S.W.3d 333, 334-35 (Mo.App.2007) (remanding the case to apply the rule to retirement accounts); Preston v. Preston, 189 S.W.3d 685, 690-91 (Mo.App.2006) (remand *840 ing the case to apply the rule to bank accounts).

2011See Altergott, 259 S.W.3d at 620 .

2009For a good demonstration of a mathematical application of the source of funds rule, see Altergott v. Altergott, 259 S.W.3d 608, 619 (Mo.App.

2003Yet, “[o]nce the trial court determines property is marital in character, the court’s division of that property is not subject to either the source of funds rule or the transmutation rule.” Lance v. Lance, 979 S.W.2d 245, 248 (Mo.App.1998) (emphasis added).

2003Although these are not the cleanest of records, since the source of funds rule does not apply, Lance, 979 S.W.2d at 248 , these records, along with Husband’s testimony, are sufficient to support the trial court’s finding that Husband contributed non-marital property to the purchase of the West Maple property.

2003McGilley v. McGilley, 951 S.W.2d 632, 638-39 (Mo.App.

2001McGilley v. McGilley, 951 S.W.2d 632, 638-639 (Mo.App.

2019See Comninellis v. Comninellis, 99 S.W.3d 502, 511 (Mo. App. W.D. 2003) (under the source of funds rule, property acquired by a spouse using their own separate funds, in whole or in part, remains that spouse’s separate property to the extent of their contributions from their separate funds).

2005Comninellis, 99 S.W.3d at 513 .

2011Thus, Husband is correct “that a trial court in a dissolution case should ordinarily separate the marital and non-marital portion of a pension benefit [or retirement plan] according to the source of funds rule and set aside the non-marital portion of the pension benefit to the spouse that earned it.” Id. (citing Taylor v. Taylor, 12 S.W.3d 340, 345 (Mo.App.

2007Hall v. Hall, 118 S.W.3d 252, 259 (Mo.App.

2020“While a marital 11 In his reply brief, Husband admits, “Indeed a reasonable inference can be made that the value of [Wife’s] effort to the Business was $20,800 per year” or $83,200.00 during the marriage. 12 Neither party argues that Husband’s labor on behalf of the Business was marital property, presumably because, during the marriage, Husband was well compensated by the Business and his compensation was treated as marital property. 10 interest in separate property can require proof that a spouse contributed substantial services towards the property which led to an increased value of that pr

2020Id.; see also McKown, 108 S.W.3d at 184-85 (finding husband was obligated to give wife a portion of the increased equity in property he acquired before the marriage where the mortgage on the property was paid out of the parties’ joint checking account using marital funds); Rhodus v. McKinley, 16 S.W.3d 615, 618-19 (Mo. App. W.D. 2000) (where husband sold marital property and used the proceeds to pay off a $53,500 business debt, the trial court properly applied the source-of-funds rule to find that the $53,500 increase in the value of the business was marital property).

2019See Beckham v. Beckham, 41 S.W.3d 908, 912 (Mo. App. W.D. 2001) (discussing the "source of funds" doctrine).

2019Under the source of funds rule, "any increase in the value of separate property is marital property if marital assets or marital labor contributed to acquiring that increase." Selby v. Selby, 149 S.W.3d 472, 484 (Mo. App. W.D. 2004).

2014Heck v. Heck, 318 S.W.3d 760, 767 (Mo.App.2010).

2012See Appling v. Appling, 156 S.W.3d 454, 458 (Mo.App.

2009See, e.g., Thomas v. Thomas, 196 S.W.3d 57, 62 (Mo.App.2005) (applying the source of funds rule to a savings account); Columbo v. Brunkhorst, 217 S.W.3d 333, 334-35 (Mo.App.2007) (remanding the case to apply the rule to retirement accounts); Preston v. Preston, 189 S.W.3d 685, 690-91 (Mo.App.2006) (remand *840 ing the case to apply the rule to bank accounts).

2009See, e.g., Thomas v. Thomas, 196 S.W.3d 57, 62 (Mo.App.2005) (applying the source of funds rule to a savings account); Columbo v. Brunkhorst, 217 S.W.3d 333, 334-35 (Mo.App.2007) (remanding the case to apply the rule to retirement accounts); Preston v. Preston, 189 S.W.3d 685, 690-91 (Mo.App.2006) (remand *840 ing the case to apply the rule to bank accounts).

2009Applying the source of funds rule to the remaining $95,843.36 account balance as of the time of trial, the marital portion is $4,974.27; Husband’s nonmarital portion is $90,869.09. 7 *840 “The erroneous characterization of property requires reversal of the order dividing marital property if the error materially impacts the overall distribution of the marital property.” Halupa v. Halupa, 943 S.W.2d 272, 278 (Mo.App.1997); see Thomas v. Thomas, 196 S.W.3d 57, 64 (Mo.App.2005).

2009Applying the source of funds rule to the remaining $95,843.36 account balance as of the time of trial, the marital portion is $4,974.27; Husband’s nonmarital portion is $90,869.09. 7 *840 “The erroneous characterization of property requires reversal of the order dividing marital property if the error materially impacts the overall distribution of the marital property.” Halupa v. Halupa, 943 S.W.2d 272, 278 (Mo.App.1997); see Thomas v. Thomas, 196 S.W.3d 57, 64 (Mo.App.2005).