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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. John L. Philips v Barbara S. Bremner Philips, Barbara S. Bremner-Philips v John L. Philips (12/18/2020) sp-7495

John L. Philips v Barbara S. Bremner Philips, Barbara S. Bremner-Philips v John L. Philips (12/18/2020) sp-7495

           Notice:   This opinion is subject to correction before publication in the PACIFIC  REPORTER.  

           Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,  

                                                                                                                           

           303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email  

                                                                                                                             

           corrections@akcourts.us.  



                       THE SUPREME COURT OF THE STATE OF ALASKA                                         



JOHN  L.  PHILLIPS,                                                )  

                                                                   )    Supreme  Court  Nos.  S-17202/17221  

                                    

           Appellant and Cross-Appellee,                           )  

                                                                                                                                    

                                                                   )    Superior Court No. 3AN-15-07027 CI  

           v.                                                      )  

                                                                                             

                                                                   )    O P I N I O N  

                          

BARBARA S. BREMNER-PHILLIPS, )
  

                                                                                                                     

                                    

n/k/a BARBARA S. STANLEY,                                          )    No. 7495 - December  18, 2020
  

                                                                   )  

                                   

           Appellee and Cross-Appellant.                           )  

                                                                   )  



                                                                                                                 

                                                   

                      Appeal from the Superior Court of the State of Alaska, Third  

                                                                                                 

                      Judicial District, Anchorage, Andrew Guidi, Judge.  



                                                                                                                       

                      Appearances:   Steven J. Priddle, Law Office of Steven J.  

                                                                                                                           

                      Priddle,  Anchorage,  for  Appellant  and  Cross-Appellee.  

                                                                                         

                      Robin A. Taylor, Law Office of Robin Taylor, Anchorage,  

                                                    

                      for Appellee and Cross-Appellant.  



                                                                                                                  

                      Before:          Bolger,  Chief  Justice,  Winfree,  Maassen,  and  

                                                                                         

                      Carney, Justices.  [Stowers, Justice, not participating.]  



                                             

                      MAASSEN, Justice.  



I.         INTRODUCTION  



                                                                                                                                         

                      A divorcing couple had a community property trust holding title to two  



                                                                                                                                     

rental properties - a fourplex and a mobile home park - that the husband had owned  



                                                                                                                                  

before marriage.  Following trial the superior court divided the marital estate equally,  



                                                                                                                                          

awarding the rental properties to the husband and a large equalization payment to the  


----------------------- Page 2-----------------------

                                                                                                                                 

wife.  Both parties appeal.  The husband argues that the superior court erred when it  



                                                                                                 

found that a bank account in the names of the husband and the mobile home park was  



                                                                                                                       

marital.       The  wife  argues  that  the  court  erred  in  its  interpretation  of  the  Alaska  



                                                                                                                          

Community Property Act when it held that income and appreciation from the rental  



                                                                                                                              

properties in thecommunity propertytrust remained thehusband's separateproperty;she  



                                                                                                                    

also argues that the court clearly erred in some findings of fact and abused its discretion  



                           

when it failed to invade the husband's separate property in order to reach an equitable  



division.  



                                                                                                                              

                    We conclude that the superior court did not err in its interpretation of the  



                                                                                                                    

relevant statutes, did not clearly err in its findings of fact, and did not abuse its discretion  



                                                                                                                 

when dividing the marital estate.  We therefore affirm the superior court's judgment.  



                                 

II.       FACTS AND PROCEEDINGS  



          A.        Facts  



                    John Phillips and Barbara Stanley met in 1981.  For the first few months  



                                                                                                                                    

of their relationship they lived together in John's unit of a fourplex he had built in 1976.  



                                                                                                                        

After about a year, John provided Barbara with a mobile home in the Chateau Mobile  



                                                                                                                         

Home Park, which he also owned; she lived in the mobile home for several years before  



                                                                                                                

moving into a separate unit in John's fourplex.  For the duration of their relationship,  



                                                                                                                         

Barbara and John maintained their own living quarters but, as the superior court found,  



                                                                                                                      

"freely went back and forth between the two units" in the fourplex, living "as husband  



                                                                         

and wife."  They were legally married in 1991.  



                                                                                                                               

                    In August2007John andBarbaracreated acommunity propertytrust -the  



                                                                                                                                    

Phillips Revocable Trust - pursuant to the Alaska Community Property Act, AS 34.77.  



                                                                                                                                

John testified at trial that their purpose was to facilitate the transfer of his properties to  



                                          

Barbara after he died.  The trust document named John and Barbara as co-settlors and  



                                                                                                                      

co-trustees.  There were initially three properties transferred to the trust:  the fourplex  



                                                               -2-                                                        7495
  


----------------------- Page 3-----------------------

and the mobile home park, both owned by John, and a lot in Wasilla, which John bought                                                                                                                          



in his            own name in 1993, two years after he and Barbara were married.                                                                                                                       A fourth   



property was added in 2014, when John purchased a home on Campbell Airstrip Road.                                                                                                                                                  



None of the properties were designated as separate property, and thus, by the trust                                                                                                                                 



document's express terms, all of them became community property once placed in the                                                                                                                                      



             1  

trust.   



                 B.                Proceedings  



                                   The parties separated in May 2015, and John filed for divorce.  John was  

                                                                                                                                                                                



in his late 80s and Barbara in her late 70s. John had significant health problems:  he had  

                                                                                                                                                                                                                       



dealt with lung cancer twice, resulting in the loss of half of each lung, and had recently  

                                                                                                                                                                                                           



undergone heart surgery following a heart attack. His only form of health insurance was  

                                                                                                                                                                                                                       



Medicare, and he received around $28,000 in annual income, excluding rental income  

                                                                                                                                                                  



from his properties. Barbara had medical issues of her own, though the court ultimately  

                                                                                                                                                                                                       



found her to be "in reasonably good health"; she received roughly $47,000 a year in  

                                                                                                                                                                                                                           



teacher retirement income.  

                                                                       

                                   The  court  held  a  multi-day  divorce  trial  that  spanned  several  years.2  

                                                                                                                                                                                                                                   



Althoughtheparties"possess[ed]voluminous personal property,"their disputes centered  

                                                                                                                                                                                                           



on the real property and its income. During the course of the litigation the parties agreed  

                                                                                                                                                                                                               



                  1                Paragraph 1.3                       ofthetrust documentprovidesthat"[a]ll property                                                                               transferred  



to the Trustee and the proceeds thereof shall be known as the community property of the                                                                                                                                  

 Settlors after its transfer in accordance with A.S. 34.75 et. seq., [sic] except to the extent                                                                                                                  

the property transferred                                          to the trust is designated by the Settlor as his/her separate                                                                           

property."  



                 2                 Trial was initially completed in late 2016.  The court then ruled on John's  

                                                                                                                                                                                                                

post-trial motion regarding the proper treatment of appreciation and income from the  

                                                                                                                                                                                                                        

trust property; the ruling required that the court "reopen the trial in order to receive  

                                                                                                                                                                                                             

additional evidence concerning the value of the property placed in the trust when it was  

                                                                                                                                                                                                                    

initially declared community property."  Trial concluded in April 2018.  

                                                                                                                                                                                            



                                                                                                             -3-                                                                                                   7495
  


----------------------- Page 4-----------------------

to sell the Wasilla lot and John sold the Campbell Airstrip home; the proceeds of both                                                                         



sales were placed in the court registry pending the court's division of the marital estate.                                                                                                            



                              Following trial the court found, as relevant here, that the fourplex, the                                                                                      



mobile home park, and the proceeds from the sales of the Wasilla lot and Campbell                                                                                              

                                                                                                                                                                             3  the court  

Airstrip home were community property.                                                           But relying on AS 34.77.030(h),                                                         



found that therental income fromthose marital assets remained John's separateproperty.  

                                                                                                                                                                                                       



                              The court also discussed the parties' bank accounts, only one of which -  

                                                                                                                                                                                                



with First National Bank Alaska (FNBA) - is at issue on appeal.  The owners of the  

                                                                                                                                                                                              



account are identified as John and the mobile home park, with Barbara and the parties'  

                                                                                                                                                                                    



bookkeeper listed as authorized signers.   The superior court found that although the  

                                                                                                                                                                        



rental income would otherwise have remained John's separate property, "[b]y placing  

                                                                                                                                                                                    



the account under joint ownership with [the mobile home park], which is community  

                                                                                                                                                                           



property, John, in effect, designated the account community property."  

                                                                                                                                                                   



                              Finally, the court decided that a 50/50 division of the marital estate would  

                                                                                                                                                                                       



be "just, fair and equitable."  Rather than splitting the two rental properties, the court  

                                                                                                                                                                                         



awarded both the fourplex and the mobile home park to John in consideration of his  

                                                                                                                                                                                              



advanced age, the length of time he had lived there, and the awkwardness of requiring  

                                                                                                                                                                                



the  couple  to  remain  neighbors.                                              The  court  ordered  John  to  make  an  equalization  

                                                                                                                                                                        



payment to Barbara of approximately $387,000, reasoning that this - along with her  

                                                                                                                                                                                              



share of the parties' various liquid assets -would give Barbara enough cash to purchase  

                                                                                                                                                                                 



her own income-producing property should she choose to do so.  

                                                                                                                                                     



                              Both John and Barbara appealed.  

                                                                                     



               3              The statute provides: "Appreciation and income of property transferred to                                                                                          



a   community   property   trust   is   community   property   if   declared   in   the   trust   to   be  

community property."                                  



                                                                                               -4-                                                                                       7495
  


----------------------- Page 5-----------------------

III.        STANDARD OF REVIEW
               



                        "Equitable division of marital property involves three steps:                                                determining  



what   property is available for distribution, valuing the property, and allocating the                                                               



                                    4  

property equitably."                    "The first step, characterizing property as marital or non-marital,                           



                                                                                                                                                  

involves  mixed  questions  of  law  and  fact;  'we  review  the  superior  court's  legal  



                                                                                                                       5 

                                                                                                                                         

conclusions  de  novo  and  its  factual  findings  for  clear  error.'  "                                                   When  reviewing  



                                                                                                                                                      

questions of law de novo, "[w]e interpret statutes 'according to reason, practicality, and  



                                                                                                                                                         

common sense, taking into account the plain meaning and purpose of the law as well as  



                                                6  

                                                                                                                                                    

the intent of the drafters.' "                     When reviewing questions of fact, we find clear error only  



                                                                                                                                                  

"when we are 'left with a definite and firm conviction that the superior court has made  



                       7  

                           

                      

a mistake.' " 



                        The second step in property division, "factual determination of property  

                                                                                                                                             

value, is also reviewed for clear error."8  

                                                                                                                                       

                                                                        "The third step, equitable property distribution,  



                                                                                                                                                         

is reviewed for abuse of discretion[,] and 'we will not disturb the result unless it is  



                              9  

                             

clearly unjust.' " 



            4           Schmitz  v.  Schmitz,  88  P.3d  1116,  1122  (Alaska  2004)  (citations  omitted).  



            5            Wiegers  v.  Richards-Wiegers,  420  P.3d   1180,   1182  (Alaska  2018).   



            6           Dapo  v.  State,  454  P.3d  171,  175  (Alaska  2019)  (quoting  Marathon  Oil  Co.  



v.  State,  Dep't  of  Nat.  Res.,  254  P.3d   1078,   1082  (Alaska  2011)).  



            7           Ethelbah  v.  Walker,  225  P.3d  1082, 1086 (Alaska 2009)  (quoting  Josephine  



B.  v.  State,  Dep't  of  Health  & Soc.  Servs.,  Office  of  Children's  Servs.,  174  P.3d  217,  220  

(Alaska  2007)).  



            8            Wiegers, 420 P.3d at 1182.  

                                                               



            9           Id. (quoting Cartee v. Cartee, 239 P.3d 707, 712 (Alaska 2010)).  

                                                                                                                                 



                                                                           -5-                                                                     7495
  


----------------------- Page 6-----------------------

IV.	      DISCUSSION  



                     In the sections that follow, we first address Barbara's argument that the  

                                                                                                                                  



superior court erred when it determined that the income from the rental properties in the  

                                                                                                                                  



Phillips Revocable Trust remained John's separate property.  We next address John's  

                                                                                                                            



contention that the court erred in deciding that his separate rental income became marital  

                                                                                                                            



when he placed it in a jointly held account. Finally, we address Barbara's argument that  

                                                                                                                                 



the court's 50/50 division of the marital estate was inequitable and relies on several  

                                                                                                                           



errors of fact.  In each instance we affirm the superior court's decision.  

                                                                                                 



          A.	        The Superior Court Correctly Applied AS 34.77.030(h) In Concluding  

                                                                                                                    

                     That  Income  From  The  Community  Trust  Properties  Was  Not  

                                                                                                                               

                     Community Property.  

                                                           



                     Barbara  argues  that  the  superior  court  misinterpreted  the  Community  

                                                                                                                   

Property Act10  

                                                                                                             

                        when it found that appreciation and income from the community trust  



                                                                                                                                  

properties were not also community property. We reject her argument as contrary to the  



                        

plain statutory language.  



                                                                                                                                

                     A  community  property  trust  is  defined  in  AS  34.77.100(a)  as  "an  



                                                                                                                               

arrangement  [in  which]  one  or  both  spouses  transfer  property  to  a  trust,  the  trust  



                                                                                                                           

expressly declares . . . the property transferred is community property under this chapter,  

                                                                             11    Either  spouse's  property,  when  

                                                                                                                             

and  at  least  one  trustee  is  a  qualified  person." 



transferred to a community trust, becomes community property to the extent provided  

                                                                                                              



by the parties' trust agreement, "[e]xcept for property that is classified otherwise in this  

                                                                                                                                 

chapter."12  The treatment of the proceeds of trust property is addressed specifically in  

                                                                                             



          10         AS 34.77.010-.900.   



          11         AS  34.77.100(a).  



          12         AS  34.77.030(a).  



                                                                 -6-	                                                         7495
  


----------------------- Page 7-----------------------

AS 34.77.030(h):               "Appreciation and income of property transferred to a community                              

property trust is community property                        if declared in the         trust to be community property                    ."13  



                      Neither John nor Barbara disputes the validity of their community trust  

                                                                                                                                       



agreement, nor does Barbara contend that the agreement declares "[a]ppreciation and  

                                                                                                              



income of property transferred to" the trust to "be community property."  Rather, she  

                                                                                                                                         



argues that the superior court misinterpreted AS 34.77.030(h) when it held that the  

                                                                                                                                         



income and appreciation of real property in the trust will not be treated as community  

                                                                                                                            



property unless the parties specifically say so in their agreement.  

                                                                                                             



                      "Statutory interpretation in Alaska begins with the plain meaning of the  

                                                                                                                                         

statute's text."14          And under our "sliding scale approach to statutory interpretation, . . .  

                                                                                                                                                



'the plainer the statutory language is, the more convincing the evidence of contrary  

                                                                                                                                

                                                                 15   Thus, "[w]here a statute's meaning appears  

legislative purpose or intent must be.' "                                                                                         

                                                                



clear  and  unambiguous,  .  .  .  the  party  asserting  a  different  meaning  bears  a  

                                                                                                                                           

correspondingly heavy burden of demonstrating contrary legislative intent."16  

                                                                                                                 



                      Barbara's primary contention is that the phrase "if declared in the trust" in  

                                                                                                                                            



subsection .030(h) should be interpreted as modifying "community property"rather than  

                                                                                                                                        



"appreciation and income"; by her reading of the statute, if the "property transferred to  

                                                                                                                                           



a community trust" is "declared to be community property," then the appreciation and  

                                                                                                                   



income of that property are community property as well.  She contends that this reading  

                                                                                                                                  



           13         AS  34.77.030(h)  (emphasis  added).  



           14         Angelica  C.  v.  Jonathan  C.,  459  P.3d   1148,   1156  (Alaska  2020)  (quoting  



 Ward  v.  State,  Dep't  of  Pub.  Safety,  288  P.3d  94,  98  (Alaska  2012)).  



           15         State v. Fyfe, 370 P.3d  1092, 1095 (Alaska 2016) (quoting Adamson  v.  

                                                                                                                                           

Municipality of Anchorage , 333 P.3d 5, 11 (Alaska 2014)).  

                                                                                      



           16         Id.  



                                                                     -7-                                                              7495
  


----------------------- Page 8-----------------------

is required by the Community Property Act's purpose to allow a surviving spouse to take                                                                                                                                                                       



advantage of the "step-up" in the tax basis of community property, an advantage that will                                                                                                                                                                      



be lost if the appreciation does not remain part of the community property. But we reject                                                                                                                                                                 



this argument as contrary to the statute's plain language.                                                                                                                           When the sentence is read                                              



naturally, the phrase "of property transferred to a community property trust" is simply                                                                                                                                    



a descriptive prepositional phrase modifying the sentence's subject, "appreciation and  



income."   If the prepositional phrase is omitted for clarity's sake, the sentence remains                                                                                                                                                        



straightforward and coherent:                                                                "Appreciation and income . . . is community property if                                                                                                                  

                                                                                                                                                      17  To adopt Barbara's reading, on the  

declared in the trust to be community property."                                                                                                                                                                                                                 



other hand, would require that we not just parse the language but actually rewrite it:  

                                                                                                                                                                                                                                                                              



"Appreciation and income of property transferred to a community property trust is  

                                                                                                                                                                                                                                                                    



community property if the property transferred to the trust is declared in the trust to be  

                                                                                                                                                                                                                                                                   



community property." It is not our place to rewrite the statute even if we were convinced  

                                                                                                                                                                                                                                           

that Barbara's reading is the one the legislature intended.18  

                                                                                                                                                    



                                         Because   the   meaning                                                         of   subsection                                    .030(h)                      "appears   clear                                      and  

                                                                                                                                                                                                                                                           



unambiguous,"  Barbara  "bears  a  correspondingly  heavy  burden  of  demonstrating  

                                                                                                                                                                                                                            



                     17                  We   recognize   the   subject-verb   disagreement;   the   compound   subject  



"[a]ppreciation and income" is followed by the singular verb "is." Ordinarily, of course,                                                                                                                                                            

a singular verb follows a singular subject.   See  BRYAN A. G                                                                                                                             ARNER, T                     HE  REDBOOK:    A  

       ANUAL OF LEGAL  STYLE  § 11.23 at 215 (4th ed. 2018).                                                                                                                           It is not clear whether the                                              

M                                                              

subject-verb disagreement in subsection .030(h) is a drafting error or an intentional                                                                                                                                                   

treatment of "[a]ppreciation and income" as a singular unit.                                                                                                                                 See id.                 at 216 ("When a                                   

compound subject is singular in meaning it will take a singular verb," e.g., "Black tie and                                                                                                                                                                     

tails is the designated attire.").                                                                  Either way, we cannot strain the natural reading of                                                                                                            

subsection .030(h) to connect the verb "is" to anything other than the sentence's obvious                                                                                                                                                         

subject, "[a]ppreciation and income."                                                                                  



                     18                  State, Div. of Workers' Comp. v. Titan Enters., LLC, 338 P.3d 316, 321  

                                                                                                                                                                                                                                                              

(Alaska 2014) ("We do not rewrite statutes even when the legislative history suggests  

                                                                                                                                                                                                                                                

that the legislature may have made a mistake in drafting.").  

                                                                                                                                                    



                                                                                                                                 -8-                                                                                                                       7495
  


----------------------- Page 9-----------------------

                                                          19  

contrary legislative intent."                                  We conclude that she has not carried that burden. It is true                                                        



that the legislative history of the Alaska Community Property Act is focused on the tax                                                                                              



advantages to a surviving spouse with property in a community property trust.                                                                                              One of   



the   bill's   sponsors,   Representative   Joe   Ryan,   explained:     "There   is   an   income   tax  



advantage if a person has assets with unrealized gains in community property.                                                                                            This bill   



was   designed   .   .   .   to   allow married                                   Alaskans   to   obtain   the   income   tax  advantages  



available to residents of community property states and to produce business in Alaska"                                                                                    

                                                                                                                  20    However, he observed that the  

by allowing spouses to choose such an arrangement.                                                                                                                                   



bill would apply only to "property for which both spouses decide to take advantage" of  

                                                                                                                                                                                       

it.21     A sectional summary of the bill, prepared by legislative counsel, described what is  

                                                                                                                                                                                        



now AS 34.77.030 as limiting "the classification of property as community property to  

                                                                                                                                                                                       



what the spouses say in a community property agreement or trust, except where this  

                                                                                                                                                                                   

chapter classifies property otherwise."22  Describing what is now subsection .030(h), the  

                                                                                                                                                                                     



summary stated that "appreciation and income of property transferred to a community  

                                                                                                                                 



                                                                                                                                            23  

property trust are community property if the trust says they are." 

                                                                                                                                  



               19            Fyfe,  370  P.3d  at   1095.  



              20             Minutes,  House  Judiciary  Comm.  hearing  on  H.B.  199,  20th  Leg.,  1st  Sess.  



at  Tape  97-61,  Side  A,  No.  2415  (April  23,   1997)  (statement  of  Rep.  Joe  Ryan).  



              21             Id.  at  Tape  97-61,  Side  B,  Nos.  0006-0173.   Representative  Ryan  also  said  



that in the event  of a divorce any assets in a  community property trust "are split 50/50  

because  each  partner  owns  half  of  whatever  is  designated  as  community  property."   Id.  

at  No.  0435.  



              22             THERESA  BANNISTER,  LEGISLATIVE  AFFAIRS  AGENCY,  DIVISION  OF  LEGAL  



           RESEARCH  SERVICES, MEMORANDUM  ON  SECTIONAL  SUMMARY  OF  H.B. 199, THE  

AND                                                                                                                                                                                

"COMMUNITY PROPERTY" BILL at  2 (MARCH  25, 1997) (in Senate Rules Committee file).   

                                                          

                                                                     



              23  

                                          

                             Id. at 3.  



                                                                                           -9-                                                                                  7495
  


----------------------- Page 10-----------------------

                        Another representativewas concernedthatthebillcouldcomplicatedivorce                                                  



                                                                                                                                           24  

proceedings by "creating a collision between estate planning and family law."                                                                           

                                                                                                                                               But as  



                                                                                                                                       

the superior court pointed out in this case, "the legislature reasoned that individuals  



                                                                                                                                                      

creating community property trusts were sophisticated and would seek advice to be  



                                                                                                                                                      

forewarned of any complications.  Thus, the legislature decided that the benefits of the  



                                                25  

                                                    

Act outweighed the risks." 



                        We agree.   Legislative history supports an intent that the law defer to  

                                                                                                                                                       



individual Alaskans as to the content of their community property agreements while at  

                                                                                                                                                        

the same time ensuring that they are aware of the ramifications.26                                                         A plain-language  

                                                                                                                                



            24          Minutes, House Jud. Comm. Hearing on H.B. 199, 20th Leg., 1st Sess. at                                                          



Tape 97-63, Side B, No. 0817 (April 25, 1997) (statement of Rep. Ethan Berkowitz).                                                  



            25          One attorney testifying before the committee characterized community  

                                                                                                                                      

property trusts as "sophisticated agreements, with sophisticated planning," and observed  

                                                                                                                                           

that  clients  could  choose  whether  to  use  them.                                       Minutes,  House  Judiciary  Comm.  

                                                                                                                                             

Hearing on H.B.199, 20th Leg., 1st Sess. at Tape 97-63, Side B, No. 0900 (April 25,  

                                                                                                                                                     

 1997) (testimony of Richard Hompesch II); see also Minutes, House Judiciary Comm.  

                                                                                                                                              

Hearing on H.B. 199, 20th Leg., 1st Sess. at Tape 97-63, Side B, No. 1573 (May 7,  

                                                                                                                                                       

 1997)  (discussing  amendment  from  Rep.  Eric  Croft  to  add  legal  disclaimer  to  all  

                                                                                                                                                      

community property trusts now codified at AS 34.77.100(b)).  

                                                                                     



            26          AS 34.77.100(b) requires "the following language in capital letters at the  

                                                                                                                                                      

beginning of the trust":  

                               



                        THECONSEQUENCESOF THISTRUSTMAYBE VERY  

                                                                                                                        

                        EXTENSIVE,  INCLUDING,  BUT  NOT  LIMITED  TO,  

                                                                                                                           

                        YOUR RIGHTS WITH RESPECT TO CREDITORS AND  

                                                                                                                          

                        OTHER THIRD PARTIES, AND YOUR RIGHTS WITH  

                                                                                                                       

                        YOUR  SPOUSE  BOTH  DURING  THE  COURSE  OF  

                                                                                                                            

                        YOURMARRIAGEANDATTHETIMEOFADIVORCE.  

                                                                                                                                     

                        ACCORDINGLY, THIS AGREEMENT SHOULD ONLY  

                                                                                                                       

                        BE SIGNED AFTER CAREFUL CONSIDERATION.   IF  

                                                                                                                               

                        YOU           HAVE             ANY            QUESTIONS                     ABOUT               THIS  

                                                     

                                                                                                                                   (continued...)  



                                                                          -10-                                                                    7495
  


----------------------- Page 11-----------------------

reading of subsection .030(h) - a "presumption that appreciation and income are not                                                                                                                                                                                                                                                                                                                                                                                  



 covered unless declared so in the trust," as the superior court summarized it - is not                                                                                                                                                                                                                                                                                                                                                                              



inconsistent with these purposes. Therefore, because appreciation and income were not                                                                                                                                                                                                                                                                                                                                                                                 



"declared in the[Phillips RevocableTrust]to becommunityproperty,"thesuperior court                                                                                                                                                                                                                                                                                                                                                                          



did not err when it interpreted AS 34.77.030(h) to mean that the appreciation and income                                                                                                                                                                                                                                                                                                                                                        



 from the community trust properties remained John's separate property.                                                                                                                                                                                                                                                                               



                                     B.	                                 The Superior Court Did Not Clearly Err In Determining That The                                                                                                                                                                                                                                                                                                                        

                                                                         FNBA Account Was Marital Property Subject To Division.                                                                                                                                                                                                                                              



                                                                         Johncontends that becausethesuperior courtfound, pursuantto                                                                                                                                                                                                                                                                                          subsection  



 .030(h), that appreciation and income from the rental properties in the trust did not also                                                                                                                                                                                                                                                                                                                                                                      



become community property, the court must have clearly erred when it found that the                                                                                                                                                                                                                                                                                                                                                           



FNBA bank account                                                                                                  was  community property, as it held only rental income from the                                                                                                                                                                                                                                                                                    



mobile home park and the fourplex.                                                                                                                                                                      John emphasizes that the parties never explicitly                                                                                                                                                                          



 added the FNBA account to the community trust property, although another account was                                                                                                                                                                                                                                                                                                                                                                              



in the trust.                                                   



                                                                         The superior court found that the FNBA account had two listed owners:                                                                                                                                                                                                                                                                                                                                             



John and the mobile home park.                                                                                                                                                      Barbara was identified only as an authorized signer.                                                                                                                                                                                                                                                   



But because the mobile home park itself was community property, the court determined                                                                                                                                                                                                                                                                                                                                      



that the bank account co-owned by the mobile home park was also intended                                                                                                                                                                                                                                                                                                                                                                                   to be  



 community property; thus, the bank account was not just "income of property transferred                                                                                                                                                                                                                                                                                                                                     



to a community property trust" as addressed by subsection .030(h) - it was itself a                                                                                                                                                                                                                                                                                                                                                                                             



                                     26                                  (...continued)
  



                                                                         AGREEMENT,    YOU    SHOULD    SEEK    COMPETENT
  

                                                                         ADVICE.
  



                                                                                                                                                                                                                                                                                                                                                                                                                                                             

The  same  prominent  waiver  is  required  in  community  property  agreements.                                                                                                                                                                                                                                                                                                                                                                                      See  

                    

AS 34.77.090(b).  



                                                                                                                                                                                                                                  -11-	                                                                                                                                                                                                                       7495
  


----------------------- Page 12-----------------------

marital asset. As evidence of this intent, the superior court contrasted the FNBA account                                                                                                                                                                                                       



with other accounts John opened after the couple separated, on which he identified                                                                                                                                                                                                     



himself as the individual owner "dba" the mobile home park and thus avoided naming                                                                                                                                                                                                              



the mobile home park itself as an owner.                                                                                                             The court acknowledged that the funds in the                                                                                                               



FNBA account "may have come exclusively from rental income" from the fourplex and                                                                                                                                                                                                                              



the mobile home park but found that this alone did not defeat the presumption that                                                                                                                                                                                                                          



money in jointly held accounts is marital property.                                                                                                                                        



                                                 In essence, John's argument to the contrary is that the funds in the FNBA                                                                                                                                                                         



account are secondary assets that can be classified only by reference to the funds' source.                                                                                                                                                                                                                                    



"Assets such as bank accounts whose characterization depends on the classification of                                                                                                                                                                            



other assets are known as secondary assets.                                                                                                                     To classify a secondary asset, a trial court                                                                                            



must first identify and then classify the source asset from which it was derived.                                                                                                                                                                                                                       This  

                                                                                                                     27   "The party seeking to establish that a secondary asset  

process is referred to as tracing."                                                                                                                                                                                                                                                                       



is separate property 'always bears [the] burden of proof; thus untraceable assets are  

                                                                                                                                                                                                                                                                                                               

                                                                      28        But even if that secondary asset is shown to be separate property,  

marital property.' "                                                                                                                                                                                                                                                                      

                                                                  



we recognize "a strong presumption that placing [it] into a joint account demonstrates  

                                                                                                                                                                                                                                            

an intent to treat the property as marital."29  

                                                                                                                                                               



                                                 John thus bears the burden of proving both that the money in the FNBA  

                                                                                                                                                                                                                                                                                                   



account began as separate property and that he did not intend to make it marital by  

                                                                                                                                                                                                                                                                                                                 



placing it in the jointly owned account.  John satisfied the first part of his burden; the  

                                                                                                                                                                                                                                                                                                                



funds were indisputably income from community trust property that had been John's  

                                                                                                                                                                                                                                                                                                   



separate property, and the parties did not declare in their trust document that the income  

                                                                                                                                                                                                                                                                                                 



                        27                      Bilbao  v.  Bilbao,  205  P.3d  311,  314  (Alaska  2009)  (citations  omitted).  



                        28                      Id.  (alteration  in  original)  (quoting  Schmitz,  88  P.3d  at   1128).  



                        29                      Miller  v.  Miller,   105  P.3d   1136,   1142  (Alaska  2005).  



                                                                                                                                                       -12-                                                                                                                                               7495
  


----------------------- Page 13-----------------------

would be community trust property as well.                                      30  But John failed to carry the second part   



of his burden; he did not overcome the "strong presumption" that by placing the rental                                                              

income in the joint account he intended to make it marital.                                               31  



                                                                                                                                                                

                        On  appeal  John  makes  no  evidence-based  argument  about  his  intent.  



                                                                                                                                                       

Rather, he contends only that this issue is controlled by the superior court's holding that  



                                                                                                                                                        

appreciation and income from trust properties are not community property unless the  



                                                                                                                                                

trust document declares that they are.  But this argument does not address the "strong  



                                                                                                                                                                

presumption" that arose once John directed his separate income into the joint account.  



                                                                                                                                                            

Because John failed to overcome this evidentiary presumption, we are not left with a  



                                                                                                                                                        

"definite and firm conviction" that the superior court made a mistake when it found that  



                                                                                                             32  

                                                                                              

the FNBA account was marital property subject to division. 



            C.	         The  Superior  Court  Did  Not  Err  Or  Abuse  Its  Discretion  When  

                                                                                                                                                  

                        Dividing The Marital Estate.  

                                                                    



                        Barbara argues that the superior court abused its discretion when dividing  

                                                                                                                                               



the marital estate because it failed to consider the parties' unequal income levels and did  

                                                                                                                                                         



not invade John's separate property, resulting in a property distribution that Barbara  

                                                                                                                                               



claims was not equitable.  Alaska Statute 25.24.160(e) controls the division of property  

                                                                                                                                               



in a community property trust upon divorce. It provides that in distributing "community  

                                                                                                                                        



property under a community property agreement or trust under AS 34.77, unless the  

                                                                                                                                                        



parties have provided in the agreement or trust for another disposition of the community  

                                                                                                                                          



property, the court shall make such disposition . . . as shall appear just and equitable after  

                                                                                                                                                      



            30          See  Section  IV.  A,  supra.  



            31          Miller,   105  P.3d  at   1142.  



            32           Chung  v.  Rora  Park,  339  P.3d  351,  353  (Alaska  2014)  ("Clear  error  'occurs  



when  a review of  the  entire  record leaves us  with a  definite  and  firm  conviction  that  a  

                                 

mistake has been made.").  



                                                                           -13-	                                                                    7495
  


----------------------- Page 14-----------------------

considering all relevant factors," listing four factors.                                    33  Alaska Statute 25.24.160(a)(4)  



provides more generally that the court in a divorce action may provide "for the division                                                  



between   the   parties   of   their   property,"   including   an   invasion   of   separate   property  



acquired   prior   to   marriage,   but   "the   division   of   property   must   fairly   allocate   the  



                                                                                                                                                     34  

economic effect of divorce by being based on consideration of" a list of nine factors.                                                                   



            33         AS   25.24.160(e).    Those   factors are:   "(1)   the   nature   and   extent   of   the  



community  property;  (2)  the  nature  and  extent  of  the  separate  property;  (3)  the  duration  

of   the   marriage;   and   (4)   the   economic   circumstances   of   each   spouse   at   the   time   the  

division of property is to become effective."   Id.  John and Barbara's community trust  

agreement  did  "not  provide  for  a  specific  allocation  of  the[ir]  community  property  in  the  

event  of  a  divorce."   



            34         The AS 25.24.160(a)(4) factors are:  

                                                                                 



                        (A) the length of the marriage and station in life of the parties  

                                                                                                                      

                       during the marriage;  

                                           



                        (B) the age and health of the parties;  

                                                                           



                        (C)  the  earning  capacity  of  the  parties,  including  their  

                                                                                                                        

                        educational backgrounds, training, employment skills, work  

                                                                                                                        

                        experiences,  length  of  absence  from  the job  market,  and  

                                                                                                                          

                        custodial responsibilities for children during the marriage;  

                                                                                                              



                        (D)  the  financial  condition  of  the  parties,  including  the  

                                                                                                                           

                        availability and cost of health insurance;  

                                                                             



                        (E) the conduct of the parties, including whether there has  

                                                                                                                           

                       been unreasonable depletion of marital assets;  

                                                                                              



                        (F) the desirability of awarding the family home, or the right  

                                                                                                                         

                       to live in it for a reasonable period of time, to the party who  

                                                                                                                         

                       has primary physical custody of children;  

                                                                                 



                        (G) the circumstances and necessities of each party;  

                                                                                                         



                        (H) the time  and manner  of acquisition of the property  in  

                                                                                                                             

                        question; and  

                                          

                                                                                                                                (continued...)  



                                                                        -14-                                                                   7495
  


----------------------- Page 15-----------------------

"While the trial court need not make findings pertaining to each . . . factor, its findings                                              

must be sufficient to indicate a factual basis for the conclusion reached."                                                   35  



                       Barbara acknowledges that the superior court considered the four factors  

                                                                                                                             



listed  in  AS  25.24.160(e),  relevant  to  the  division  of  community  trust  property.  

                                                                                                                                                         



Regarding the nature and extent of the community property (subsection (e)(1)) the court  

                                                                                                                                               



explained that John and Barbara's real estate holdings were community property, with  

                                                                                                                                               



the mobile home park producing over $70,000 in annual rental income and the fourplex  

                                                                                                                                         



producing just over $7,000.   The court observed that the mobile home park and the  

                                                                                                                                                  



fourplex were "immediately adjacent" to each other, that living in the fourplex allowed  

                                                                                                                                          



John to "maintain a close watch over the operation of the mobile home park," and that  

                                                                                                     



because the parties could no longer get along, it "would make it awkward" for Barbara  

                                                                                                                                          



to own the fourplex if John retained ownership of the mobile home park. The court also  

                                                                                                                                                



noted that John had lived in the fourplex longer than Barbara and that his advanced age  

                                                                                                                                                 



would make it harder for him to adjust to new surroundings, while Barbara had been  

                                                                                                                                               



spending a lot of time with other family members in Louisiana over the past two years  

                                                                                                                                              



and was better equipped to adapt to a new environment.  

                                                                                                   



                       Regardingthenatureand extentoftheseparateproperty(subsection (e)(2)),  

                                                                                                                                           



the court concluded that the appreciation and rental income belonged to John (with the  

                                                                                                                                                  



exception of the FNBA account), as explained above.  Addressing the third factor, the  

                                                                                                                                                  



duration of the marriage (subsection (e)(3)), the court explained the decades-long course  

                                                                                                                                            



of  John  and  Barbara's  relationship  and  their  varied  living  arrangements.                                                        Finally,  

                                                                                                                                         



considering the parties' relative economic circumstances (subsection (e)(4)), the court  

                                                                           



            34         (...continued)  



                       (I)   the   income-producing   capacity   of   the   property   and   the  

                       value  of  the  property  at  the  time  of  division.  



            35         Cartee  v.  Cartee,  239  P.3d  707,  713  (Alaska  2010).  



                                                                        -15-                                                                  7495
  


----------------------- Page 16-----------------------

                                                                                                                       

again noted that John was in "poorer health" but found that the ex-spouses were similarly  



                                                                                                                            

situated in most other respects, most notably in that both were "aged out of the labor  



                                                                                                                              

market and  dependent on  rental and  pension  income."                                  The  court pointed  out that  



                                                                                                                             

awarding John both the fourplex and the mobile home park would provide him with  



                                                                                                                            

substantial income for the rest of his life, roughly $100,000 per year when his other  



                                                                                                                        

incomesources weretakeninto account, whileBarbara would receive just under $47,000  



                                                                                                                           

in teacher retirement income.  The court ordered "a 50-50 division of the marital estate  



                                                                                                                       

and community property," by which John received the rental properties and Barbara  



                                                                                                                                

received  an  equalization  payment  which  the  court  determined  would  allow  her  to  



                                                                                  

purchase an income-producing property of her own.  



                                                                                                                       

                    The court clearly considered the factors relevant to the division of property  



                                                                                                                                

in a community property trust.   And although Barbara notes that the court failed to  



                                                                                                                     

explicitly address  the  nine-factor  test  of  AS  25.24.160(a)(4)  for  property  divisions  



                                                                                                                               

generally "except to the extent [the factors in the two provisions] overlap," she does not  



                                                                                                

identify any important information that the court left out of its calculus.  



                                                                                                                       

                    Barbara instead challenges several of the court's specific factual findings,  



                                                                                                                              

as well as its ultimate conclusion that a 50/50 split was equitable.  She argues first that  



                                                                     

it was error to find that John was in "poorer health," noting her own significant health  



                                                                                                                              

issues.   The court found that John, at 87, was a two-time cancer survivor and had  



                                                                                                                         

recently undergone heart surgery after suffering a heart attack. Barbara, though a decade  



                                                                                                                                 

younger, had diabetes and high blood pressure, needed injections for pain, was blind in  



                                                                                                                        

one eye, and had recently suffered a serious head injury.  Determining these parties'  



                                                                                                                             

relative health was a nuanced task that could have been affected by the judge's own  



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----------------------- Page 17-----------------------

                                                                                                                                                                         36  

observations of their physical condition at trial, a perspective we lack.                                                                                                     We are not left              



with a "definite and firm conviction" that the court made a mistake in its finding that                                                                                                                  



                                                                                                         37  

John's health was "poorer" than Barbara's.                                                                      



                                                                                                                                                                                            

                                Barbara also argues that the court was clearly mistaken when, in awarding  



                                                                                                                                                                                                         

the fourplex to John, it reasoned in part that he had lived there "significantly longer" than  



                                                                                                                                                                                             

she had; John had lived there for 39 years and Barbara for 34, a difference she contends  



                                                                                                                                                                                               

is insignificant. The context of the court's remark was that John had lived in the fourplex  



                                                                                                                                                                                                               

continuously since he purchased it in 1976 and that at the parties' respective ages it  



                                                                                                                                                                                                          

would be more disruptive for him to move than Barbara; we see no clear error in this  



                                                                                                                                                                                                  

finding, nor in the court's use of the words "significantly longer" to describe John's  



                                                                                                                                                                                                             

tenure.  Relatedly, Barbara argues that the court abused its discretion when it relied on  



                                                                                                                                                                                                           

the fact that she had been spending less time at the fourplex in recent years, ignoring her  



                                                                                                                                                                                                        

testimony that this was due to John's "harassment and verbal abuse."  But Barbara does  



                                                                                                                                                                                                          

not convince us that the court was required to consider her motives when it made this  



                                                                                                                                                     

objective finding about how long each party had lived in the fourplex.  



                                                                                                                                                                                                  

                                Finally, Barbara contends that the court was required to invade John's  



                                                                                                                                                                       

separate property to achieve an equitable division of property.  The superior court has  



                                                                                                                                                                               

"broad discretion in this area" and "[a]n equal division of property is presumptively  

                           38   Under AS 25.24.160(a)(4) the court may invade the separate property of  

equitable."                                                                                                                                                                                                   



a spouse "when the balancing of the equities between the parties requires it." A decision  

                                                                                                                                                                                               



                36               Cf. Sagers v. Sackinger                                 , 318 P.3d 860, 864 (Alaska 2014) (noting that "we                                                              



give particular deference to the trial court's rulings based on the demeanor of witnesses"                                                                                               

and affirming judge's denial of continuance after concluding that movant "was feigning                                                                                                         

the symptoms of his illness").                     



                37              See Chung, 339 P.3d at 353.  

                                                                                           



                38              Brennan v. Brennan, 425 P.3d 99, 106 (Alaska 2018) (citation omitted).  

                                                                                                                                                                                           



                                                                                                    -17-                                                                                              7495
  


----------------------- Page 18-----------------------

to do so, however, "may be undertaken only after the trial court has attempted to use the                                                         



marital   estate   to  balance   the   equities   between   the   parties   in   light   of   the   parties'  



                                 39  

reasonable needs."                    



                                                                                                                                                  

                       Barbara asserts that she "labored for 36 years to maintain and improve" the  



                                                                                                                                                 

community trust properties and is therefore entitled to her share of their appreciation and  



                                                                                                                                         

rental income through invasion of John's separate property, if necessary.  The superior  



                                                                                                                                              

court did not ignore Barbara's contributions to the business, specifically noting her years  



                                                                                                                                             

of managing the properties. But the court determined that her share of the marital estate,  



                                                                                                                                                 

including the equalization payment, provided her enough money to live comfortably and  



                                                                                                                   

to "easily purchase another income-producing rental property, if she still wishes to do  



                                                                                                                                             

so."  Barbara does not convince us that the court failed to seriously consider her needs  



                                                                                                                                                   

and other circumstances or that invading John's separate property was necessary to  

                                                                                                                     40  50/50 division of  

                                                                                                                                                    

balance the equities.  Because the court's "presumptively equitable" 

                                                             41  we conclude that the superior court did not abuse  

the estate was not "clearly unjust,"                                   

                                 



its discretion.  

                          



V.          CONCLUSION  



                       We AFFIRM the judgment of the superior court.  

                                                                                                   



            39         Odom  v.  Odom,   141  P.3d  324,  340  (Alaska  2006).  



            40         Brennan,  425  P.3d  at   106.  



            41          Wiegers  v.  Richards-Wiegers,  420  P.3d   1180,   1182  (Alaska  2018).   



                                                                        -18-                                                                  7495
  

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