                   COURT OF APPEALS OF VIRGINIA


Present: Judges Benton, Elder and Overton
Argued at Richmond, Virginia


JOHN BARRY DONOHUE, JR.
                                      MEMORANDUM OPINION * BY
v.   Record No. 2675-96-2           JUDGE JAMES W. BENTON, JR.
                                           JULY 8, 1997
MARY PATRICIA SHEARON DONOHUE


             FROM THE CIRCUIT COURT OF HENRICO COUNTY
                       James E. Kulp, Judge
           Edward D. Barnes (Barnes & Batzli, P.C., on
           briefs), for appellant.

           J. W. Harman, Jr. (Harman & Harman, on
           brief), for appellee.



      On appeal, John Barry Donohue contests several aspects of a

trial judge's equitable distribution award to his wife Mary

Patricia Shearon Donohue.   The husband presents the following

eight issues:
          1. Whether the trial [judge] erred in
          failing to designate the loans taken from
          [the husband's] 401(k) plan and from his
          mother as items to be reimbursed or credited
          to the [husband] in that such loans were
          taken for the purposes of maintaining the
          marital estate and pay[ing] some other family
          and marital obligations.

           2. Whether the trial [judge] erred in
           ordering an equal division of the stock
           options in that the evidence does not support
           such division.

           3. Whether the trial [judge] erred in
           failing to take into account, when valuing
           the marital assets, the tax consequences
           attributable to the Fidelity Cash Reserves
      *
      Pursuant to Code § 17-116.010 this opinion is not
designated for publication.
          IRA, the Reynolds Metals 401(k) Plan, the
          Reynolds Metals Tax Reservation Act Stock
          Ownership Plan (TRASOP), and the Reynolds
          Metals Incentive Deferral Plan.

          4. Whether the trial [judge] erred in
          finding that the repayment of the loan from
          the [husband's] father's estate and the tax
          refunds credits were items to be reimbursed
          or credited to [the husband] in that they
          were applied to maintain the marital estate
          and pay some other family and marital
          obligations.

          5. Whether the trial [judge] erred in
          ordering an equal division of [the husband's]
          retirement benefits in that the evidence does
          not support such division.
          6. Whether the trial [judge] erred in
          ordering an equal division of the marital
          assets and marital debts in that the evidence
          does not support such division.

          7. Whether the trial [judge] erred in
          failing to address the transfer of various
          items of personal property and to divide the
          family photographs.

          8. Whether the trial [judge] erred in its
          monetary award in that the amount awarded is
          not supported by the [judge's] other rulings.


For the reasons that follow, the decree is affirmed in part and

reversed in part.

                               I.

     The husband and wife were married on September 14, 1974.

The wife was employed two years and ceased full time employment

shortly before their first child was born.    The husband has been

employed since the beginning of the marriage.   Two years after

the marriage, the husband began working for Reynolds Metals

Company, where he continues to be employed.   During his



                              - 2 -
employment, the husband received stock options and other

employment related assets.

     The parties separated on March 1, 1993.    Shortly after their

separation, husband borrowed $50,000 from his 401(k) account at

Reynolds Metals to pay expenses.    After that fund was depleted,

the husband borrowed $33,000 from his mother.   In addition, the

husband received a tax refund for 1993 and a repayment of a loan

the husband had previously made to his father's estate.     Husband

appeals from the final decree entered in 1996 ordering a division

of these debts and assets.
                               II.

                         HUSBAND'S LOANS

     The trial judge refused to allocate the husband's loans

between both parties because he found the husband's "use of these

funds to be a dissipation of marital assets."   We disagree that

the evidence proved a dissipation.

     The evidence proved that shortly before their separation,

the parties expended large amounts of cash for the wife's

automobile and home improvements.    At the time of their

separation, the parties' cash accounts were minimal.   The

husband's salary was the primary source of funds.   The wife was

not employed.

     After the parties separated in 1993, the husband was ordered

by a juvenile court judge to pay $2,442 per month in child

support and $2,800 per month in spousal support.    The letter




                              - 3 -
opinion ordering those payments found that the husband's net

monthly income was $5,323.   The evidence at that time proved that

the husband had borrowed $50,000 from his 401(k) account at

Reynolds Metals and had put the money into a separate fund "to

pay the mortgage and the support."       In ordering support payments,

the letter opinion also ruled that "[the husband] shall be

permitted to deduct the amount of spousal support from the fund

[established by the borrowing and] allocated in anticipation of

the need to pay the mortgage."    The opinion further noted that

"based upon the monies available and expenses of the parties, the

marital residence should be listed for sale immediately."
     Husband testified that "[t]he [borrowed] funds have been

used primarily to give [wife] money, . . . to pay the mortgage[,]

. . . to pay children's sports expenses[, and] . . . for some of

the family medical expenses."    Husband also testified that the

money was used to pay for automobile insurance on his and the

wife's vehicles.   On August 27, 1994, after the $50,000 loan was

depleted, husband borrowed $33,000 from his mother.      Husband used

these funds to continue to pay spousal support and other

expenses.   Although the trial judge found that the juvenile court

judge's letter opinion ordered that the husband was to pay the

spousal support from the borrowed funds, the trial judge refused

to consider these debts to be marital debts and stated that

husband "could not use the marital funds . . . to pay for his

court ordered obligations; to find otherwise, would be to allow




                                 - 4 -
[husband] to pay his court ordered obligations partly from funds

belonging to [wife]."

     As a general rule, "[t]he use of [marital] funds for living

expenses while the parties are separated does not constitute

dissipation."   Clements v. Clements, 10 Va. App. 580, 587, 397

S.E.2d 257, 261 (1990).   Addressing the concept of waste by

dissipation, this Court has ruled that "[d]issipation occurs

'where one spouse uses marital property for his own benefit and

for a purpose unrelated to the marriage at a time when the

marriage is undergoing an irreconcilable breakdown.'"     Id. at

586, 397 S.E.2d at 261 (citation omitted).    When dissipation

occurs, the spouse who used funds in that manner must assume full

responsibility for the debt the spouse created.    See id.   "[T]he

burden is on the party who last had the funds to establish by a

preponderance of the evidence that the funds were used for living

expenses or some other proper purpose."    Id. at 587, 397 S.E.2d

at 261.

     No evidence proved that the funds were used for a purpose

unrelated to the marriage.    The evidence proved that when the

parties separated in 1993 the parties had minimal cash assets to

pay their ongoing expenses.   The husband was obliged by court

order to pay spousal and child support in an amount that was $81

less than the husband's net monthly income.   In ordering that

amount, the judge's opinion letter stated that the fund

containing the borrowed money was an appropriate source for the



                                - 5 -
spousal support payment.   Indeed, the evidence clearly proved

that the parties had no funds to pay the mortgage and that the

use of the borrowed funds, which was approved by the letter

opinion, enabled the parties to maintain the marital residence,

the major asset that they owned.    Thus, we hold that the trial

judge erred in finding dissipation and refusing to consider the

loan obligation a marital debt.    The husband's initial use of the

funds to pay the mortgage and then spousal support was not an act

of dissipation.   See Decker v. Decker, 17 Va. App. 12, 19, 435

S.E.2d 407, 412 (1993) ("[E]xpenditure of funds for items such as

living expenses, support, and attorney's fees, constitutes a

valid marital purpose and is not dissipation or a deliberate

attempt to affect a monetary award.").

     "[A] valid indebtedness secured by marital property reduces

the value of the property to the extent of the indebtedness."

Id. at 18, 435 S.E.2d at 412.     The husband met his burden of

showing that he used the funds properly by proving that the

juvenile court judge approved the expenditure and testifying that

he used the money for family expenses.     The wife offered no

evidence to contradict his testimony.    Thus, the trial judge

erred in failing to reduce the value of the marital estate by the

amount of the indebtedness.   We remand this issue to the trial

judge.

                                III.

                           STOCK OPTIONS



                                - 6 -
     The evidence proved that from 1987 through 1992, husband

received stock options from his employer.   The options could not

be exercised until at least one year after they were granted, and

the options had to be exercised within ten years of the date they

were granted.   At the time of the equitable distribution hearing,

the husband had not exercised any of the options.

     The husband argues that awarding the wife 50% of the

proceeds earned from exercising the options violated the mandate

of Code § 20-107.3(G)(1).   Code § 20-107.3(G)(1), which

authorizes the trial judge to order division of profit-sharing

plans, pensions, and deferred compensation plans, states that the

non-employee spouse shall not receive a share that "exceed[s]

fifty percent of the marital share of the . . . benefits."   The

husband argues that the marital share of the options was only a

fraction of their total value and that by awarding the wife 50%

of their total value the trial judge violated the mandate of Code

§ 20-107.3(G)(1).
     We disagree with the husband's assertion that the marital

share of the stock options was only a fraction of their total

value.   The husband relies on Dietz v. Dietz, 17 Va. App. 203,

213, 436 S.E.2d 463, 470 (1993), where the trial judge determined

that only a fraction of the value of the stock options was

marital property.   However, in Dietz, the employee's right to

exercise the option was conditioned upon his continued employment

for a specified duration.   See id. at 213, 436 S.E.2d at 469.     At




                               - 7 -
the time of the parties' separation, the right to exercise the

options had not yet vested.    See id. at 213, 436 S.E.2d at 470.

Under those facts, the trial judge properly ruled that a portion

of the options was earned after the parties' separation, and

therefore, that portion of the options was not marital property.

 See id.

     In this case, however, the options were fully vested at the

time of the parties' separation and were not conditioned on the

husband's continued employment at Reynolds Metals.    Although the

husband was required to wait for one year before exercising the

options, the right to exercise the options at that time was fully

vested.    Accordingly, husband's reliance on Dietz is misplaced.
     Code § 20-107.3(G)(1) defines the marital share of any

profit-sharing plan as "that portion of the total interest, the

right to which was earned during the marriage and before the last

separation of the parties."   The unconditional right to exercise

the options at a future time certain was earned and vested during

the marriage.   The full value of the options was, therefore,

marital property.

     Accordingly, we hold that the trial judge correctly ruled

that the entire value of the stock options was marital property.

The trial judge did not violate the mandate of Code

§ 20-107.3(G)(1) by granting the wife 50% of the proceeds earned

upon exercise of the stock options.     Furthermore, the record does

not support the husband's argument that the trial judge abused



                                - 8 -
his discretion in awarding the wife 50% of this asset.

                                IV.

                         TAX CONSEQUENCES

     The husband obtained the following assets during his

employment at Reynolds Metals: (1) Fidelity Cash Reserves IRA,

(2) 401(k) Plan, (3) Tax Reservation Act Stock Ownership Plan,

and (4) Management Incentive Deferral Plan.    The trial judge

awarded 50% of these assets to the wife.    The husband argues that

the trial judge erred in refusing to consider the tax

consequences of the division.   We disagree.
     Ruling on a similar issue, this Court recently stated that

"potential [tax] liability is a proper consideration in the

determination of a property division and an award, if it is not

speculative."   Arbuckle v. Arbuckle, 22 Va. App. 362, 367, 470

S.E.2d 146, 148 (1996) (emphasis added).    The trial judge in this

case found that the amount of taxes was speculative because the

evidence did not prove what tax rate would apply to the parties

at the time the money is withdrawn.     The husband's contention

that his current tax bracket should be used in determining the

tax consequences that will result from his future receipt of his

retirement benefits is simply without merit.    We hold that the

trial judge did not err in refusing to factor in possible tax

effects on the ground that a determination of the tax rates

applicable to the parties in the future would be speculative.

                                 V.



                                - 9 -
                    TAX REFUND AND LOAN REPAYMENT

     After the parties separated, the husband received a federal

and state tax refund for 1993.    The estate of the husband's

father also repaid husband for a loan husband had extended to the

estate.   The trial judge classified as marital property one

fourth of the tax refund and all of the loan repayment.

     The husband argues that the monies were not marital property

because they were received after the parties' separation.     We

disagree.    The parties' right to receive both payments had fully

vested before they separated.    Before the separation, the parties

had a claim for repayment of any taxes they overpaid.     Likewise,

they had a claim for repayment of the loan they had extended to

the husband's father's estate.    That the parties were not

actually paid until after the separation is of no moment.
     The husband also argues that because those funds had been

expended for marital purposes before the equitable distribution

hearing, the trial judge should not have considered these monies

as existing assets.    The husband states that he had used the

money to pay for family expenses.      We remand this issue to the

trial judge to determine whether those funds were so used.       See

supra section II.

                                 VI.

            RETIREMENT BENEFITS, MARITAL ASSETS, AND DEBTS

     The husband argues that the record does not support the

trial judge's finding that the wife should receive half of the




                                - 10 -
marital assets.    We disagree.

     The trial judge made the following findings:
          At the time of the marriage, [the wife] was
          employed at the National Institute of Health.

                  She resigned this position to move to
             Ohio to be with [the husband]. She found
             employment in Ohio in December 1974, and
             worked until July 1976, when she again moved
             with [the husband] to Connecticut. [The
             husband] at that time wanted [the wife] to
             stay at home to raise the children, to take
             care of the home, so she's not worked since.

                  [The husband] was with a law firm
             initially and has been employed by Reynolds
             Metals Company . . . since 1976. Initially,
             [the wife] worked and contributed monetarily
             to the well being of the family, the
             acquisition, care and maintenance of the
             marital property.
                  Since the move to Connecticut in 1976,
             her contributions have been nonmonetary.
             [The husband] has contributed mainly
             monetarily to the marriage, but has
             contributed nonmonetarily by assisting the
             children with various things such as
             homework. He's been involved with their
             sporting activities, and has helped the child
             who has had some health problems.


Based upon the evidence, the trial judge found that "each party

contributed equally to the marriage, and to the acquisition, care

and maintenance of the marital property."

     "'The trial court's findings must be accorded great

deference.    Its judgment will not be disturbed on appeal unless

plainly wrong or without evidence to support it.'"     Amburn v.

Amburn, 13 Va. App. 661, 663, 414 S.E.2d 847, 849 (1992)

(citation omitted).    The record supports the trial judge's



                                  - 11 -
rulings.    Accordingly, we cannot say that the trial judge abused

his discretion in awarding half of the marital property to the

wife.

                                 VII.

                           PERSONAL PROPERTY

        The husband filed a motion in the equitable distribution

proceeding seeking, among other things, permission to retrieve

his personal belongings from the marital residence.    In the final

equitable distribution decree, the trial judge awarded all

"personal property located at [the] marital residence" to the

wife.    However, the trial judge also ordered that the wife

"immediately turn over to [the husband] the items of non-marital

[personal] property of [the husband] identified in a previous

exhibit."    The husband's exhibit 7 listed several items of
non-marital personal property.    Thus, the record clearly reveals

that the trial judge did address this issue in the final decree

and made a specific ruling.

        The husband also requested that the trial judge divide

equally all family photographs and memorabilia.    However, the

final decree contained no provision directing the division of the

photographs or otherwise addressing the husband's request.       The

husband properly noted his objection to the trial judge's failure

to address the family photographs in the final order.

Accordingly, we remand this issue to the trial judge for a ruling

on the proper division of the family photographs and memorabilia.




                                - 12 -
                               VIII.

                       AMOUNT OF FINAL AWARD

     The husband argues that although the trial judge stated

clearly his intent to divide the marital assets and debts evenly

between the parties, the final award did not achieve an equal

division.   Therefore, the husband argues, the trial judge's order

is erroneous.   We agree.




                              - 13 -
     The trial judge made the following statements:
          I'm dividing [the marital assets] equally
          . . . that gives a total to [the wife] in the
          amount of $35,157. And to [the husband],
          $47,315.

               The Court orders [the wife] to pay all
          of the marital debts which are listed on her
          submission in the amount of $13,022.

                 *      *    *     *      *   *   *

          The Court further orders that [the husband]
          is to pay [another marital debt] . . . in the
          amount of $6,733. . . .
               Now, taking into account the marital
          debt, which the Court indicated should be
          divided equally among the parties, that
          brings the total for [the wife] at $38,524.
          And [the husband], $53,826.

               The   Court after consideration of all the
          equities   in the case and the factors set
          forth in   section 20-107.3(E), makes a
          monetary   award to [the wife] in the amount of
          $15,300.


Although the trial judge explicitly stated his intention to

divide the marital debts and assets equally between the parties,

an analysis of the above discussion reveals that the trial judge

failed to reach that result. 1
     1
      To account for the debt, the judge ordered the wife to pay
$13,022 and the husband to pay $6,733. Thus, the total debts
were $19,755, and each party should have been responsible for
$9,877.50. However, the trial judge, in addition to requiring
the wife to pay $13,022, apparently credited the wife as having
received an additional $3,367 in assets (the amount of her half
of the debt that the husband was required to pay) for a total of
$38,524 in assets. The net "debt" the judge therefore held the
wife responsible for was $16,389. Similarly, in addition to
requiring the husband to pay $6,733, the trial judge apparently
credited the husband as having received an additional $6,511 in
assets (the amount of his half of the debt that the wife was
required to pay) for a total of $53,826 in assets. The net



                                 - 14 -
     Obviously, if the wife had in her possession $35,157 in

assets and the husband had in his possession $47,315 in assets,

the total amount of assets to be divided was $82,472.   The wife

was ordered to pay $13,022 of the debts and the husband was to

pay $6,733 of the debts, for a total of $19,755.    Thus, the net

marital assets after payment of debts was $62,717.    Equally

divided, each should have received $31,358.50 of the net assets.

     The parties had in their possession, after payment of debts

allocated to them, the following assets:
                 Husband                     Wife

                  $47,315                   $35,157
                  - 6,733                   -13,022
                  $40,582                   $22,135


To effect an equal division, the husband was only required to pay

the wife the difference between $40,582 and $31,358.50 -- a total

of $9,223.50.   A review of the trial judge's calculations

demonstrates that the trial judge committed errors in his

determination of the final award.




"debt" the judge allocated to the husband was $13,244. Moreover,
based on the trial judge's conclusion that the wife had received
$38,524 in assets and the husband had received $53,826 in assets,
the trial judge ordered the husband to pay to the wife $15,300.
Presumably, the purpose of the award was to cause the wife's full
award to be $53,824, just a few dollars less than the total
amount the judge concluded the husband had received. The fallacy
in that conclusion, however, is that after ordering the husband
to pay $15,300, the judge should have reduced the husband's total
award by that amount. Thus, the husband actually received only
$38,526.




                              - 15 -
     For the reasons stated in this opinion, the award must be

recalculated.   Accordingly, we reverse the decree distributing

the marital property and remand the case for reconsideration.

                 Affirmed in part, reversed in part, and remanded.




                              - 16 -
