Divorce and the Family Farm

Here, husband challenged the trial court’s decree dissolving his 18-year marriage, arguing that the court miscalculated the amount he owed his ex-wife as a “cash equalization” payment and that the court wrongly considered his farm rental income when determining his child support obligation. The couple had three children born of the marriage. The husband worked an off-farm job in manufacturing and also owned 130 acres of farmland which he cash rented to his father.  The ground was purchased prior to the marriage in 1990 for $90,000 (before marriage the husband had already paid $28,000 down on the property and completed $26,000 of tiling work). The trial court awarded the farm to the husband but required him to make a cash payment of $175,000 to his spouse as an “equalization” payment and to resolve the divorce equitably. The trial court also set the husband’s child support obligation at $871/month. 

The husband appealed, contesting the trial court’s cash equalization order. He maintained that the trial court did not “give him credit” for the premarital equity he built in the farmland, did not account for tax issues, and improperly considered nearly $152,000 he received as gifts from his family. By his calculations, he determined that he should have been assessed roughly $40,000 as a cash equalization to set things right with his spouse. 

In Iowa, equitable division does not always mean that there is equal division of every asset. The court must look at several factors, including the length of the marriage, the contribution of each party to the marriage, the earning capacity of the parties, and the economic circumstances of each party. As to the family gifts, the appellate court reiterated Iowa common law that gifts received by either party prior to the marriage or during the marriage are the property of the recipient, unless refusal to divide the gifts is inequitable to the other party of the children of the marriage. In other words, gifted property may be divided when it is unjust to do otherwise. In the end, the appellate court affirmed the trial court’s division of the gifts, because the husband was unable to provide evidence that the gifts were solely given to him and not to both spouses. In fact, the husband’s father seemed to indicate that the gifts were intended for the family, at trial. 

The court next addressed the tax issue. The ex-husband complained that the trial court’s order or cash equalization would force him to sell the land to satisfy the judgment. He argued that the court should have included the $122,000 tax liability he would incur if the asset was liquidated into their assessment. The court disagreed, finding no evidence that the property would have to be sold to satisfy the equalization payment. 

As to child support, the husband stated that the trial court “ignored” the losses he incurred from his livestock operation and factored in the “net rental income” from the farm into his net monthly income. He argued that the court’s assessment of net rental income was “speculative” because of the “uncertainties” of farming. The appellate court concluded that the rent was low and the husband’s father was getting a “very favorable rent.” Thus, the net rental income from the farm should have been included in the child support calculations. In re Marriage of Adams, No. 1-502/10-1909 (Iowa Ct. App. Aug. 10, 2011)