People getting a divorce generally do not make good business partners. One Oklahoma couple learned this the hard way. After trying to maximize the return on their marital residence, they ended up back in court ten years later.
The Original Plan
When the couple divorced in 1995, they entered into a settlement agreement which placed the marital residence in a Trust “established for the purpose of holding title to and selling same.” Their stated goal was to get the highest and best price for the house. The trust provided that wife would continue to live in the house. Neither the trust nor the settlement agreement were incorporated into the decree dissolving the marriage.
The Plot Thickens
Ten years pass without an offer on the house. The wife still lives there, and is renting rooms to tenants. Husband files suit asking the court to remove wife as trustee, and appoint a receiver for the house. After a contested hearing, the trial court first took control of the trust and ordered the parties to cooperate in selling the house. After 10 months passed without a sale, or even a listing agreement, the trial court appointed a receiver to take control of the property. Wife appealed, and the Oklahoma Court of Civil Appeals affirmed the appointment of a receiver.
The Lesson Learned
Despite the best laid plans of the couple, they failed to maximize their investment in the marital residence. The take-away from this couple’s misfortune – do your best to sever all financial ties to your former spouse in the divorce documents. Lingering financial connections leave opportunity for continuing discord, and abuse of fiduciary relations.
by David Tracy