Indiana Case: What to Do if Property Held by Third Party

What to do if spouse had titled property in another person's property during marriage?

Put bluntly that is the subject of Krstin Nicevski v. Greta Nicevski , an Indiana Court of Appeals decision from July 8, 2009. Not that there is much new here. The opinion relies heavily on In re Marriage of Dall, 681 N.E.2d 718 (Ind. Ct. App. 1997).

Here are the facts from page 2:

Krstin and Greta were married on September 3, 1997, and three children were born of the marriage. On May 6, 1999, Krstin‟s parents entered into a contract for the construction of a home in Allen County and acquired the title to the lot. Krstin‟s parents signed the settlement statement, procured title insurance in their own names, and paid the settlement charges from their own bank account. They also made payments on the construction contract in June and September 1999. The real estate taxes and drain assessments were in the parents‟ names and they paid all taxes and assessments from 2001 through 2006. After construction on the residence was finished, Krstin and Greta lived in the house and made rent payments to his parents.

The Court of Appeals held that the house was not part of the marital estate.

What went wrong? The in-laws were not made parties to the divorce.

Here, as in Dall, the title to the residence was owned by nonparties—Krstin‟s parents. And Krstin‟s parents were not joined as necessary nonparties pursuant to Trial Rule 12(B)(7)—indeed, they did not even testify at trial. Though Greta argues that Krstin has waived any argument because he did not object to her failure to join his parents at trial or seek to join them himself, we agree with the Dall court that reliance on the waiver doctrine does not resolve this case.1 Without the titleholders‟ presence at trial, the trial court was without authority to adjudicate the issue of the ownership of that property. We fully acknowledge that the trial court assessed witness credibility and chose to credit Greta‟s testimony over Krstin‟s, and we do not second-guess that decision. Unfortunately, pursuant to Dall, the trial court simply did not have the power to include the residence in the marital estate. Therefore, we find that the trial court erred by including the residence in the marital estate and directing Krstin to make a payment of $40,000 to Greta.

That is at pages 6-7 of the opinion and omits a footnote.