Award to Wife of $40 Million of Husband's Separate Property was Proper

In the case of In re Marriage of Larson and Calhoun, a Washington Court of Appeals upheld a ruling in a marriage dissolution case which awarded approximately $40 million of the husband's separate property to the wife.

Background and Procedural History

The parties were married in 1986. The husband was a retired Microsoft executive and minority owner of the Seattle Mariners. He acquired an equity interest in Microsoft before the marriage as his own separate property. He also acquired considerable wealth during the marriage, primarily through the exercise of Microsoft stock options.

Following a three-week trial, the Superior Court issued a property division order that included an award to the wife of more than $40 million of the husband's separate property. The husband was ordered to transfer certain shares of Microsoft stock that were valued at approximately $14 million and to make three cash payments totaling $27 million.

The Decision of the Court of Appeals

The Court of Appeals upheld the circuit court's ruling. In dissolution cases, the trial court must make a "just and equitable" distribution of the parties' property and liabilities, and all property interests, both community assets and separate property, are considered in the division. In determining what is a just and equitable distribution the court has "broad discretion" based on the circumstances of the case. The court considers all "relevant factors," some of which include:

• The duration of the marriage;
• The nature and extent of the community property;
• The nature and extent of each spouse' separate property; and
• The economic circumstances each spouse will face when the property distribution becomes effective.

Prior court rulings have determined that a just and equitable distribution does not necessarily require an equal distribution, and under fairness principles separate property does not always have to be awarded to the owner.

Questions of fairness will not be reversed on appeal unless the court's decision amounts to a "manifest abuse of discretion." The decision must be manifestly unreasonable or be outside the range of acceptable choices or based on untenable grounds or untenable reasons.

The appeals court stated that the superior court's ruling was well within its broad discretion. The superior court decided that an award to the wife of some of the husband's separate assets was needed to achieve a "just result." The superior court's decision was based on two objectives.

First, the award recognized the wife's contributions to the marital community. The wife made major intangible contributions in terms of care provided to the parties' children and foster children, and their other, narrower business interests. She oversaw major construction projects and philanthropic work.

Second, the award provided for the wife's short- and long-term financial security. She had a college degree in English literature but was not employed during the marriage. By comparison, the husband obtained considerable employment and investment experience during the marriage, giving him the ability to obtain and manage additional wealth in the future. The wife would leave the marriage in a far less advantageous position than the husband. The $40 million separate property award of Microsoft stock and cash provided the wife with liquid assets. An additional community property award to the wife of $139 million, comprised primarily of real property and an art collection, nonliquid assets, provided for the wife's long-term financial needs.

Contact an Attorney

Individuals facing divorce and other family law matters are strongly urged to seek the advice and assistance of a competent attorney experienced in such matters to ensure that their legal rights are protected.