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Kim v. Kim

Court of Appeals of Ohio, Ninth District, Summit

January 8, 2020

SHANA E. KIM Appellee
v.
JOHN Y. KIM Appellant

          APPEAL FROM JUDGMENT ENTERED IN THE COURT OF COMMON PLEAS COUNTY OF SUMMIT, OHIO CASE No. 2015-10-3198

         APPEARANCES:

          BRADLEY J. BARMEN, ATTORNEY AT LAW, FOR APPELLANT.

          RANDAL A. LOWRY AND ADAM R. MORRIS, ATTORNEYS AT LAW, FOR APPELLEE.

          KENNETH GIBSON, ATTORNEY AT LAW, FOR APPELLEE.

          DECISION AND JOURNAL ENTRY

          JULIE A. SCHAFER JUDGE

         {¶1} Defendant-Appellant, John Y. Kim, appeals the judgments of the Summit County Court of Common Pleas, Domestic Relations Division, granting a divorce decree and awarding Plaintiff-Appellee, Shana E. Kim, attorney fees.

         I.

         {¶2} This appeal stems from a divorce action between John Y. Kim ("Husband") and Shana E. Kim ("Wife"). Husband and Wife were married in 1997 and three children were born of the marriage. Wife filed a complaint for divorce on October 25, 2015. Husband answered and eventually filed a counterclaim for divorce.

         {¶3} Husband is a licensed attorney and financial advisor. He owns Symphony Financial Services, Inc. ("Symphony") and Kim & Associates, LLC ("K&A"). Although Wife worked outside the home in the early years of their marriage, she became a full-time stay-at-home parent in 2003.

         {¶4} Although the parties entered into stipulations as to the value and allocation of some of their marital assets, the matter proceeded to trial on the disposition of specific property, the disposition of the life insurance policies held within an irrevocable trust, and Husband's income available for spousal support. The trial court issued a final decree of divorce on May 26, 2017. The decree provided for property division, spousal support to Wife, a distributive award to Wife, and attorney fees to Wife.

         {¶5} Husband filed a timely appeal, raising five assignments of error. Wife filed a motion to strike Husband's brief alleging that Husband had attached impermissible materials to his brief in violation of Loc.R. 7(B)(10) of the Ohio Ninth District Court of Appeals, and that Husband was seeking to introduce evidence that was not part of the record below. This Court thereafter ordered the non-complying appendix attachments to be stricken, but declined to strike Husband's brief in its entirety.

         {¶6} Husband subsequently filed a motion requesting that this court reconsider its order striking Husband's appendix attachments, arguing that he was not seeking to add new matter to the record because the attachments were properly admitted into evidence at trial, but that "[t]hrough inadvertence or otherwise, the documentation was not submitted to the Court complete." This Court denied Husband's motion because the documents stricken were not permitted to be part of the appendix pursuant to Loc.R. 7(B)(10). This Court noted, however, that Husband was not precluded from submitting the issue to the trial court pursuant to App.R. 9(E).

         {¶7} Husband thereafter filed a motion to correct the record in the trial court pursuant to App.R. 9(E). Following a hearing, the trial court denied Husband's motion and granted Wife attorney fees. Husband filed a timely appeal raising two assignments of error related to the grant of attorney fees.

         {¶8} This Court sua sponte consolidated the appeals. We have reordered the assignments of error for ease of analysis.

         II.

Assignment of Error I
The trial court erred by concluding that the cash value of life insurance policies held within the John Y. Kim Irrevocable Trust constitutes marital property subject to division.

         {¶9} In his first assignment of error, Husband contends that the trial court erred when it determined that the cash value of the life insurance policies held within the John Y. Kim Irrevocable Trust was marital property subject to division.

         {¶10} Pursuant to R.C. 3105.171(B), a court is required during divorce proceedings to determine what of the parties' property constitutes marital property and what constitutes separate property. "Because the determination of whether property is marital or separate is a fact-based determination, we review a trial court's decision under a manifest-weight-of-the-evidence standard." Kolar v. Kolar, 9th Dist. Summit No. 28510, 2018-Ohio-2559, ¶ 30, citing Morris v. Morris, 9th Dist. Summit No. 22778, 2006-Ohio-1560, ¶ 23. Accordingly, before reversing such a judgment, this Court "must determine whether the trier of fact, in resolving evidentiary conflicts and making credibility determinations, clearly lost its way and created a manifest miscarriage of justice." Boreman v. Boreman, 9th Dist. Wayne No. 01CA0034, 2002-Ohio-2320, ¶ 10. In weighing the evidence, we must always be mindful of the presumption in favor of the finder of fact. Eastley v. Volkman, 132 Ohio St.3d 328, 2012-Ohio-2179, ¶ 21. "Only in the exceptional case, where the evidence presented weighs heavily in favor of the party seeking reversal, will the appellate court reverse." Boreman at ¶ 10.

         {¶11} On appeal, Husband argues that the cash value of the life insurance policies held within the John Y. Kim Irrevocable Trust did not constitute marital property because they are not property owned by either spouse. An irrevocable trust is an independent third-party entity, and, generally, neither the trust nor the assets held by such a trust are subject to equitable division in a divorce. See Guagenti v. Guagenti, 3d Dist. Allen No. 1-16-47, 2017-Ohio-2706, ¶ 70. However, "'[m]arital property'" by definition includes "[a]ll interest that either or both of the spouses currently has in any real or personal property," and may include a property interest short of absolute ownership. R.C. 3105.171(A)(3)(a)(ii); see Guagenti at ¶ 71. Property paid for with marital funds, but that is held by a third party, including a trust, may be treated as marital property under some circumstances. Goswami v. Goswami, 152 Ohio App.3d 151, ¶ 61 (7th Dist.2003), citing Baker v. Baker, 83 Ohio App.3d 700, 703 (9th Dist.1992); see Katz v. Katz, 10th Dist. Franklin Nos. 13AP-409, 13AP-417, 2014-Ohio-1255, ¶ 24-25; Vulgamore v. Vulgamore, 4th Dist. Pike No. 16CA876, 2017-Ohio-4114, ¶ 20-24; Janosek v. Janosek, 8th Dist. Cuyahoga Nos. 56771, 86777, 2007-Ohio-68, ¶ 75-76. "The party seeking to have an asset classified as separate property must prove by a preponderance of the evidence that the asset can be traced to separate property." Katz at ¶ 15. Accordingly, we agree with the Third District's holding in Guagenti, that when reviewing a trial court's determination regarding the nature of an irrevocable trust in the context of a divorce proceeding, a "case-by-case approach based upon the intent and conduct of the relevant parties with regard to the formation and the operation of the trust" to be the most appropriate approach and consistent with the manifest weight standard of appellate review. Id. at ¶ 69.

         {¶12} In this case, the trial court made the following findings regarding the John Y. Kim Irrevocable Trust. The parties were married March 29, 1997. Husband executed the John Y. Kim Irrevocable Trust Agreement on July 28, 1999, and was the grantor of the trust. Husband's brother was appointed as trustee and resides in the State of New York. Currently, Wife is the primary beneficiary of the trust and their three children are the secondary beneficiaries. The current corpus of the trust is insurance policies which were purchased with marital monies. At trial, Husband testified that he created the trust because if anything happened to him he wanted to protect his family through the "rights and protections" of a trust because he believed Wife was fiscally irresponsible and did not want her to be a lump sum beneficiary.

         {¶13} Although Husband testified that he spoke to Wife about the trust and explained it to her, the trial court found Wife's testimony that the trust was created without her knowledge or consent to be credible. In making this determination, the trial court noted that Wife testified she first became aware of the trust during the divorce proceedings and that Husband had never discussed the trust with her nor shared a copy of it with her. Wife stated that Husband was the bookkeeper and bill payer during their marriage, prepared their tax returns, and made the vehicle purchasing decisions. She further stated that Husband never discussed finances with her, did not want her to open any mail that contained financial matters, and became angry and told her she was ignorant and had no business sense when she asked about financial matters. Additionally, this Court's own review of the record shows that Husband offered no evidence other than his own testimony to suggest that Wife had any knowledge of the trust. Accordingly, we conclude that the trial court's finding was based on competent credible evidence.

         {¶14} The trial court ultimately concluded that the cash value of the life insurance policies within the trust were marital property because (1) the premiums were paid for with marital monies and (2) despite the fact the policies were held in trust, Husband retained control over the policies and had taken loans against their cash value during the marriage, facts Husband does not dispute. A review of the trial testimony shows that Husband, a self-identified estate and trust attorney, stated that he personally drafted and executed the trust in 1999 and named his brother as the trustee. Although the trust was initially funded with term life insurance with no cash value, Husband later replaced those policies with permanent policies he admitted to purchasing with marital monies. He further testified that although Wife was the current primary beneficiary of the trust, once their divorce is finalized, pursuant to Ohio law, she will be deemed to have predeceased him and their three children will become the primary beneficiaries. Husband testified that he borrowed against the life insurance policies to fund both business and personal obligations, but that he did not discuss the loans with Wife. Finally, the trust requires that each beneficiary of the trust be informed of their right of withdrawal, and although Husband claimed to have letters signed by the beneficiaries of the trust declining their right to make withdrawals, no such letters were presented at trial.

         {¶15} Upon review, we cannot say that this is an exceptional case where the trial court clearly lost its way and created a manifest miscarriage of justice when it determined, under the specific circumstances of this case, that the cash value of the life insurance policies held within the John Y. Kim Irrevocable Trust were marital property subject to division. See Boreman, 2002-Ohio-2320 at ¶ 10. If this Court were to hold otherwise, it would allow a spouse to unilaterally, and without the consent or knowledge of the other spouse, move martial money out of the reach of the other spouse by merely placing it in irrevocable trust.

         {¶16} Husband next argues that the trial court lacked jurisdiction to direct the trustee of the John Y. Kim Irrevocable Trust to take any action pursuant to the trust because neither he nor the trust were joined as parties pursuant to Civ.R. 75(B). A review of the decree, however, shows that the trial court did not order the trustee nor the trust itself to take any action. Rather, the trial court credited the cash value of all the life insurance policies within the trust to Husband when the court sought to equalize the distribution of marital property. Because a domestic relations court "has full equitable powers and jurisdiction appropriate to the determination of all domestic relations matter[, ]" and did not order the trust or trustee to take any action in this case, we conclude that Husband's contention is without merit. Maloney v. Maloney, 160 Ohio App.3d 209, 2005-Ohio-1368, ¶ 57 (2d Dist), quoting R.C. 3105.011; see R.C. 3105.171(B).

         {¶17} Husband's first assignment of error is overruled.

Assignment of Error V
The trial court erred in its designation of the Yamaha Piano as marital property.

         {¶18} In his fifth assignment of error, Husband contends that the trial court erred when it determined that a Yamaha Piano was marital property because the "[p]iano was a ...


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