Alaska Supreme Court Opinions made Available byTouch N' Go Systems and Bright Solutions


Touch N' Go
, the DeskTop In-and-Out Board makes your office run smoother.

  This site is possible because of the following site sponsors. Please support them with your business.
www.gottsteinLaw.com

You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Odom v. Odom (08/11/2006) sp-6034

Odom v. Odom (08/11/2006) sp-6034, 141 P3d 324

     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,
     e-mail corrections@appellate.courts.state.ak.us.


            THE SUPREME COURT OF THE STATE OF ALASKA


WILLIAM L. ODOM, )
) Supreme Court Nos. S- 11905/11925
Appellant/ )
Cross-Appellee, ) Superior Court No.
) 3AN-03-05181 CI
v. )
) O P I N I O N
CAREY P. ODOM, )
) No. 6034 - August 11, 2006
Appellee/ )
Cross-Appellant. )
)


          Appeal  from the Superior Court of the  State
          of    Alaska,   Third   Judicial    District,
          Anchorage, Mark Rindner, Judge.

          Appearances:   Bruce  A. Bookman,  Bookman  &
          Helm,  Anchorage,  for Appellant  and  Cross-
          Appellee.    Peter  J.  Maassen,   Ingaldson,
          Maassen  &  Fitzgerald, P.C., Anchorage,  for
          Appellee and Cross-Appellant.

          Before:   Bryner,  Chief  Justice,  Matthews,
          Fabe,  and  Carpeneti, Justices.   [Eastaugh,
          Justice, not participating.]

          FABE, Justice.

I.   INTRODUCTION
          These  cross-appeals  arise from a judgment  concerning
custody  and  dividing property in a divorce proceeding.  William
(Bill)  Odom  challenges as excessive the  amount  by  which  his
separate  estate  was  invaded as well as the  award  of  primary
physical  custody of the children and the ancestral home  to  his
former    wife,    Carey   Odom.    Carey    cross-appeals    the
characterization  of  Bills interests in his  family  company  as
separate property and also challenges as inadequate the amount by
which  Bills separate property was invaded.  Because the superior
court  did not abuse its discretion in determining custody or  in
awarding  the  ancestral home, we affirm both decisions.  Because
Carey  did  not  meet her burden of showing that  Bills  separate
interests  had become marital property, we affirm that  decision.
But because the invasion of Bills separate property in the amount
of  $2,250,000  was  erroneous, we vacate that determination  and
remand for further proceedings.
II.  FACTS AND PROCEEDINGS
          Bill  and Carey Odom were married on June 16, 1990  and
have  two children, Brittany, born in 1994,  and Hilary, born  in
1997.   The  parties separated in May 2002.  The  superior  court
issued  its  findings of fact and conclusions of law,  decree  of
divorce,  and  child custody order on February  22,  2005.   Bill
filed  a  motion  to reconsider, which was granted  in  part  and
denied in part.1  This appeal and cross-appeal followed.
     A.   The Custody Order
          Bill  and Carey were awarded joint legal custody.  Bill
was  also  required to pay child support of $2,500  monthly,  all
private  school  expenses,  and the childrens  health  insurance.
Bill  does  not  appeal  these rulings and  challenges  only  the
physical custody order.  The superior court had issued an interim
order  whereby  Carey  was awarded primary  physical  custody  on
weekdays  during  the  school year,  with  Bill  having  weekend,
holiday,  and  extended summer visitation rights. At  the  trial,
Carey sought to have this interim order made permanent while Bill
sought joint physical custody in the form of a two-week-on,  two-
week-off schedule.
          The  superior  court  awarded  Carey  primary  physical
custody  and  provided Bill visitation with  the  children  three
weekends per month (from Friday after school to Sunday evening or
to  school on Monday morning as the parties may agree), alternate
Thanksgivings, shared Christmas vacations, and Fathers  Day.   In
addition,  he was allowed a three-week block of time  during  the
summer.   Additional visitation could be arranged as agreed  upon
jointly  by  Bill and Carey.  Bill appeals the award  of  primary
physical custody to Carey.
     B.   The Award of the Anchorage Home
          Bill  appeals  the  award of the Odom  family  home  in
Anchorage  to  Carey. Because it was his family  home,  Bill  had
repeatedly requested that he be awarded the Anchorage home during
trial.   But  the superior court awarded the Anchorage  house  to
Carey  because she had been awarded primary physical  custody  of
the  children.  The superior court took notice of the  fact  that
Bill  had  a  substantial attachment to the  home  and  therefore
awarded  Bill  the  right of first refusal to purchase  the  home
          should Carey predecease Bill or choose to sell the house.  Bill
appeals the award of the Anchorage house to Carey.
     C.   The Property Division
          A primary issue at trial was whether Bills interests in
Odom  Enterprises2  had become part of the marital  estate.   The
superior  court found that Bills interests were separate property
but determined that an equitable distribution demanded that it be
invaded.   This  invasion raised the question of  the  extent  to
which Bills separate estate was to be invaded.
          Bills  interests in Odom Enterprises include  interests
in  the Odom Company as well as in two related partnerships.  The
Odom  Company was founded by Bills father, Milt Odom.  Milt  Odom
died  in  1988, before Bill and Careys marriage.  At the time  of
Milt  Odoms  death, Bill owned 7% of the Odom Company shares  and
that  amount  had decreased to 5.6% by the time of trial.   Bills
5.6% holding would be worth $1,139,062 based on the price of $116
per  share,  a  value presented by Bills experts to the  superior
court.  In addition, Milt Odoms estate is expected at some future
date to distribute Milt Odoms share of the company to each of the
three  Odom brothers; Bill will then own approximately  one-third
of  the  company.  That distribution is not likely to  occur  for
another eight years due to tax issues.
          Bill also owns a one-third interest in two partnerships
that   are  related  to  the  Odom  Company:  the  Odom  Brothers
Partnership  and  the  Odom Real Estate  Partnership.  The  first
partnership was created in 1994 by the Odom Company  as  part  of
its business plan and was neither Bills idea nor managed by Bill.
The  second  partnership was created in  1989,  before  Bill  and
Careys  marriage.   Bills  shares in the  two  partnerships  were
valued at $84,760 and $477,984, respectively.
          The  superior court estimated that the value  of  Bills
interests   in  Odom  Enterprises,  including  his  undistributed
inheritance,  totals at least $6.3 million and may  be  worth  as
much  as  $8.6  million.  Because Bills interests were  inherited
before the marriage, or created using entirely premarital assets,
they  were  presumptively  unavailable for  distribution  in  the
divorce.    There   is   no  dispute  that  Bills   undistributed
inheritance  from his fathers estate is separate  property.   But
Carey argued in the trial below that Bills interests in the  Odom
Company and partnerships had become part of the marital estate as
a  result  of  the  doctrines of either  active  appreciation  or
transmutation.   The superior court found that  neither  doctrine
applied  and  that  Bills interests had not become  part  of  the
marital estate.
          In its distribution of the marital estate, the superior
court  awarded  Bill approximately $57,000 more than  Carey.   In
making  the  division, the superior court found  that  the  Odoms
lifestyle  had  been one of unusual opulence  and  privilege  and
commented  that the value of the estate was relatively small  due
to  deliberate choices made by Bill and his brothers whereby Odom
Company  assets were used to pay substantial household  expenses.
The  superior  court also noted that Bills separate property  has
considerable  income  generating  capacity  while  there  is   no
likelihood that [Carey] would ever be able to generate an  income
          level that even remotely resembles the manner of lifestyle [to]
which she and the children have been accustomed.
          The  superior court therefore proceeded to examine  the
Merrill  factors codified in AS 25.24.160 and determined that  in
order  to  balance  the  equities it must invade  Bills  separate
property  as allowed under AS 25.24.160(a)(4).  Bill was  ordered
to pay $2,250,000 to Carey within one year of the superior courts
order  (dated  February 22, 2005) and to pay $8,000  a  month  in
spousal  support to Carey until that sum was paid.  The  superior
court  recognized that Bills obligations might impose a  hardship
in  terms  of  cash flow but found that Bill had the  ability  to
obtain  loans or sell his interests in order to make the payments
and,  furthermore, that if Bill were to suffer hardship, he  must
bear  the  brunt  of  those  problems as  they  result  from  the
decisions  that [he] and his brothers have made  as  to  how  the
assets of their various enterprises would be used.
          Bill  appeals  as  excessive the amount  by  which  his
separate property was invaded, as well as the finding that he had
the  ability to pay a lump sum amount of $2.25 million.   In  her
cross-appeal,  Carey  disputes  the  characterization  of   Bills
interests   as   separate  property  and,  in  the   alternative,
challenges as inadequate the amount by which the separate  estate
was invaded.
III. STANDARD OF REVIEW
          The  division of the marital estate requires first that
property  owned  by the parties be characterized as  separate  or
marital,  that the marital property then be valued,  and  finally
that   the   marital  property  be  allocated  equitably.3    The
characterization of property as separate or marital  may  involve
both  legal and factual questions.4  Legal questions are reviewed
de  novo5 and in so doing we adopt the rule of law that  is  most
persuasive in light of precedent, reason, and policy.6  We review
findings of fact under the clearly erroneous standard.7
          We  review the distribution of property under the abuse
of  discretion standard and will reverse that distribution if  it
is  clearly unjust.8  The equal division of the marital estate is
presumptively  valid.9   Whether  or  not  the  equities  require
invasion   of  premarital  assets  is  reviewed  for   abuse   of
discretion.10  We review de novo whether the trial court  applied
the correct legal rule in exercising its discretion.11
          The  superior  court  has  broad  discretion  in  child
custody decisions.12  A trial courts determination of custody will
be  set  aside  only if the entire record demonstrates  that  the
controlling  findings of fact are clearly erroneous or  that  the
trial  court abused its discretion.13  Findings of fact  are  set
aside if a review of the entire record firmly convinces us that a
mistake has been made.14  We find an abuse of discretion  if  the
trial  court  considered improper factors in making  its  custody
determination,  failed to consider statutorily mandated  factors,
or  assigned disproportionate weight to particular factors  while
ignoring others.15
IV.  DISCUSSION
     A.   The Custody Award
          Although Bill sought equal physical custody of his  and
Careys two children and asked for a schedule of two weeks on  and
two  weeks  off,  the  superior court  awarded  primary  physical
custody  to  Carey.  Bill was awarded three weekends each  month,
alternate  holidays  with shared Christmas vacations,  and  three
weeks in the summer.  Bill disputes the factual findings made  by
the  superior  court  and appeals the award of  primary  physical
custody  to  Carey.   Because the custody award  was  within  the
discretion of the superior court, we affirm.
          The  superior court relied on the fact that  Carey  had
been the childrens primary caregiver on a full-time basis and was
an  excellent mother.  The superior court additionally found that
Bill  tends to place his own needs and interests above  those  of
the  girls.   Bill disputes these findings.  Bill also  complains
that   the  final  custody  arrangement  awarded  him  even  less
visitation  with  the  children  than  had  the  interim  custody
arrangement because it provided for only three, rather than  all,
weekends per month with the children.
          Custody determinations are to be made based on the best
interests  of the child.  Alaska Statute 25.24.150(c) provides  a
list  of  factors to be considered in determining  the  childrens
best  interests.  The superior court may properly  conclude  that
awarding custody to the primary caregiver will establish  greater
emotional stability for the purposes of AS 25.24.150(c)(5), which
requires  the court to consider the length of time the child  has
lived  in a stable, satisfactory environment and the desirability
of maintaining continuity.16  Additionally, there are many reasons
why  the  childrens best interests might require  one  weekend  a
month  to be spent with their mother.  It is the function of  the
superior  court  to  judge  witness  credibility  and  to   weigh
conflicting evidence.17  Because the superior court did not abuse
its  discretion, we affirm the award of physical custody to Carey
and the visitation schedule.
     B.   The Award of the Anchorage House
          At  trial, Bill sought to be awarded the Anchorage home
which  belonged  to  his father and was where  he  was  born  and
raised.  The home contains many Odom family heirlooms.18  To help
Carey  find a new home, Bill had proposed that she be  given  six
months  to  locate another home (financed in part by Bill).   But
the  superior  court awarded the home and its contents  to  Carey
because  it  had  awarded Carey primary physical custody  of  the
children.  Because that award was not an abuse of discretion,  we
affirm.
          Bill  attacks the superior courts reasoning on  several
grounds.   First, he addresses the link that the  superior  court
made  between the award of custody and the award of the Anchorage
home.  Bill argues that if the award of the home was based on the
custody  decision, then Carey should have been required  to  sell
the  house  to  Bill once the children left home.   Second,  Bill
argues  that custody decisions by themselves should not determine
property division decisions.
          But  both of these arguments have little merit.  Alaska
Statute 25.24.160(a)(4)(F) directs the superior court to consider
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 [the] children.  It is  well  within
the  broad  discretion of the superior court to determine  how  a
marital asset should be allocated at trial.19  The superior court
noted  that  the children had lived in the Anchorage  home  their
entire lives.  And the trial court recognized Bills attachment to
the home by awarding him a right of first refusal to purchase  it
should  Carey  predecease him, or should she choose  to  sell  it
during  her  lifetime.  Because it was well within  the  superior
courts discretion to award the family home to Carey, we affirm on
this issue.
     C.   The  Characterization  of  Odom  Enterprises  as  Bills
          Separate Property
          The  characterization of property owned by the  parties
to  a  divorce as marital or separate is the essential first step
in  the equitable division of property. Therefore, we examine the
merits  of  Careys challenge to the superior courts determination
that  Bills  interests in Odom Enterprises were  separate  before
addressing  Bill and Careys appeals of the amount by  which  that
separate property was invaded.
          1.   The   superior   court  did   not   err   in   its
               characterization  of  Bills  interests   in   Odom
               Enterprises as separate property.
               
          The  superior court found that Bills interests in  both
the  Odom  Company  and the partnerships were separate  property.
Carey  appeals that determination and argues that Bills interests
became   marital   property  under  the   doctrines   of   either
transmutation or active appreciation.
               a.   Transmutation
          Transmutation  occurs when married  parties  intend  to
make a spouses separate property marital and their conduct during
marriage  demonstrates  that  intent.20  The  central  issue   in
determining  transmutation is the intent  of  the  owner  of  the
separate  property,  as demonstrated through  .  .  .  words  and
actions.21   If  transmutation  is found,  the  property  becomes
entirely  marital.22  In this case, the superior court determined
that  the  doctrine  of transmutation was inapplicable  to  Bills
assets.   Carey argues that Bills interests in both  the  company
and  the partnerships became marital assets through transmutation
in  two ways: (1) the untraceable commingling of assets23 and (2)
the treatment of the asset as a joint holding.24  We disagree and
uphold the superior courts conclusion that Bills interests in the
company   and   partnerships  did  not  become  marital   through
transmutation.
          Carey  first  argues that Bills separate assets  became
marital  through  transmutation as a result of commingling.   Her
argument  is  essentially  that because  Bill  used  his  company
account  as  the  main  checking account to  pay  bills  for  the
marriage,  the company account transmuted into marital  property.
But it is well established in Alaska that the mere commingling of
separate  property  with marital property  does  not  lead  to  a
finding  of transmutation.25  Using part of a premarital  account
for  a  marital  purpose  does not  change  the  balance  of  the
          [premarital] account into marital property so long as no new
contributions  of marital funds to the [premarital]  account  are
made.26  Thus, while Bills payment of money for marital bills out
of  his  separate account converts the money actually  used  into
marital  property, it does not, without more, convert the  entire
separate account into marital property.
          Careys  second  argument relies on  the  joint  holding
theory of transmutation.  Separate property can become marital if
the  parties, by their actions during marriage, demonstrate their
intention to treat [separate] property as joint holdings.27  Carey
alleges  that  Bills  intent to make his interests  in  the  Odom
Company  marital  is evidenced by the fact that Bill  and  Careys
marital  finances  were  enhanced in large  part  by  perquisites
supplied by Odom Enterprises in the form of paying the bills  for
vacation residences, travel, and transportation, as well  as  for
housekeepers,  the  cars  fuel  and  insurance  costs,  and   the
maintenance  and  painting of houses.  As  Carey  put  it,  every
aspect  of  the  Odoms opulent and privileged  marital  life  was
supported,   in   whole  or  substantial  part,   by   the   Odom
[E]nterprises  money.   She  claims  that  the  support  of  Odom
Enterprises of the marital life was pervasive to the extent  that
the  line between separate and marital property [became] so  thin
as to be substantively meaningless.
          But  when  determining  whether separate  property  has
transmuted  into marital property, we have previously  determined
that  the mere use of an assets proceeds for marital purposes  is
insufficient.28  In affirming findings of transmutation, we  have
taken into account the active involvement of both parties in  the
ongoing maintenance, management and control of the property;29  a
pooling of both parties time, talents, and any premarital  assets
that  they  had into the joint holding;30 or a showing  that  the
owner-spouse made no attempts to maintain the separate  character
of this property.31
          But  in this case, there is no evidence beyond mere use
of  the  assets proceeds to fund marital activities to support  a
joint holding theory of transmutation.  Carey did not maintain or
manage  Bills separate property.  Careys name was not on  any  of
the  companys bank accounts; her credit was not used for any bank
loans; and she never held any Odom stock.  Carey was not involved
in planning the details of company business and conceded that she
played  no  role  in  the  management  of  the  company  or   the
partnerships.   Finally, Carey was aware that the  Odom  brothers
did  not  want  their wives working in the business  or  to  have
ownership  interests in the shares owned by the brothers.   These
factors together indicate not only that Carey did not maintain or
manage the separate property but also that Bill intended and made
active  efforts to ensure that his property remained  separate.32
Because  the  mere  use of a separate asset for marital  purposes
cannot  transform the separate asset into a marital asset, Careys
transmutation argument fails.
               b.   Active appreciation
          Active  appreciation  occurs  when  marital  funds   or
marital efforts cause a spouses separate property to increase  in
value during the marriage.33  Under this theory, any increase  in
          value of Bills separate interests subsequent to the date of
marriage  is treated as marital property to the extent  that  the
increase  results  from active marital conduct:  Appreciation  in
separate property is marital if it was caused by marital funds or
marital  efforts;  otherwise it remains separate.  34   For  this
doctrine  to  apply, there must be (1) appreciation  of  separate
property  during  marriage;  (2)  marital  contributions  to  the
property;  and  (3)  a  causal  connection  between  the  marital
contributions and at least some part of the appreciation.35  Carey
bears  the burden on the first two elements36 and Bill bears  the
burden  of  proving  the  absence of a causal  link  between  his
efforts  and  any appreciation in value of his separate  property
during marriage.37
          In  determining whether active appreciation applies  to
Bills  interests,  a  distinction  must  be  made  between  Bills
interests   in  the  Odom  Company  and  those  in  the   related
partnerships.   With  regard to the Odom  Company,  the  superior
court  found  that  it  had not increased  in  value  during  the
marriage and, therefore, the doctrine of active appreciation  did
not  apply.  As for the partnerships, the doctrine was found  not
to apply for two reasons: first, because any increase in value in
the  partnerships  was passive, and second,  because  no  marital
contribution was made to the property.
                    i.   The Odom Company
          We  first  discuss Bills interests in the Odom Company.
The superior court did not reach the second and third elements of
the  doctrine  of active appreciation because it found  that  the
Odom Company had not increased in value during the marriage.   At
trial,  Bill presented evidence from two experts to explain  that
the  Odom Company, and by extension his interests in the company,
had  not  increased in value.  Although she bore  the  burden  of
proof  and  was aware that the valuation of assets  would  be  an
issue in the division of assets upon divorce, Carey presented  no
experts to counter the testimony of Bills experts at trial.   And
although Carey claims that her cross-examination of Bills experts
was  sufficient to impeach their testimony, the trial  court  did
not  find her evidence to be credible.  Carey now challenges  the
superior   courts   application  of  the   doctrine   of   active
appreciation.  In the alternative, she disputes the  findings  of
Bills experts and points to other economic indicia to claim  that
the  Odom  Company did increase in value.  Because  the  superior
court  was  correct in its application of the doctrine of  active
appreciation, we affirm the superior courts finding that the Odom
Company did not increase in value.
          Careys   first  approach is to challenge  the  superior
courts  interpretation  of the doctrine of  active  appreciation.
She  makes two arguments: (1) that inflation should not be  taken
into account when determining whether an asset has appreciated in
value;  and (2) that any asset that is actively managed satisfies
the  active appreciation test whether or not it has increased  in
value.   Neither  claim is in accord with our decisions  in  this
area.
          First,  Carey argues that adjustments for inflation  or
other  passive economic factors should not be taken into  account
          when determining the value of an asset.  Instead, she argues that
the  proper test is fair market value.  Thus, an asset worth  $80
ten  years  ago  and  $116 today should  be  considered  to  have
appreciated by $36.38  But this argument is not in accord with our
practice,  which is to take into account inflation and purchasing
power  of  the  dollar.   In Brooks v. Brooks,  for  example,  we
defined  passive appreciation as appreciation that occurs without
any  significant contribution being made toward that increase  by
either  spouse  (i.e. inflation or other economic factors  beyond
the spouses control).39
          Careys second argument, that any asset that is actively
managed satisfies the active appreciation test, whether or not it
has  increased in value, is also not in accord with  Alaska  law.
Carey  argues that the superior court misunderstood the  doctrine
of  active appreciation because it is the causal element,  rather
than  value, that ought to be key to the discussion.  In essence,
Carey  argues  that  the fact that the share price  of  the  Odom
Company  fluctuated  over time or did not fall  even  further  in
value  by the time of separation is due to the active efforts  of
Bill  and  his  brothers.   Carey  cites  to  Brooks40  for   the
proposition  that  passive appreciation can  only  occur  in  the
absence  of  any active marital efforts.  Under her  theory,  the
only  way  for there not to have been active appreciation  in  an
asset,  whether  or  not the asset had objectively  increased  in
value, would be for the asset to sit idle for the duration of the
marriage.
          But  Careys approach conflates the elements of the test
for  active appreciation and misreads Brooks.  The test  requires
that  the  value of the asset have actually increased before  the
discussion may turn to whether that increase was due to active or
passive forces.  In Brooks, for example, the fact that the  asset
had  increased in value had already been determined41 and we were
concerned with determining whether the appreciation in value  was
due  to  passive forces or to active efforts on the part  of  the
spouse.42  Most recently, in Hanson v. Hanson, we made  it  clear
that  the  trial  court must first determine  whether  the  asset
increased  in value before proceeding with the other  elements.43
This   approach   is   in  accord  with  decisions   from   other
jurisdictions,  which also require that it  first  be  determined
whether  the asset increased in value before moving to the  other
parts of the test.44
          The  doctrine of active appreciation cannot  take  into
account the fluctuations of an assets value through time.  Turner
illustrates  this  principle when he notes  that  if  a  $100,000
business  increases  in  value to $150,000  during  the  marriage
because  of  active efforts,  but then drops  back  in  value  to
$100,000  by  the time of separation due to market  forces,  then
there is simply no marital interest to divide.45  Turner does not
suggest  that  marital  contributions  be  parsed  such  that  an
increase  in  one year be compared to a decrease  in  another  or
examined  as  to whether they stopped the business  from  further
plummeting  in value.  In Foster v. Foster, we acknowledged  that
the  spouse had made improvements to the property.46  But because
those  improvements were all in a state of disrepair by the  time
          of trial, there was no evidence that his efforts had added to the
fair market value of the property, and we thus affirmed the trial
courts  denial  of an award based on the value  of  the  work  he
performed.47   In valuing assets upon divorce, it  is  a  settled
principle that the asset is valued on a date certain, even if the
vagaries  of market forces might cause the value of the asset  to
be unusually high or low on that date.48 Therefore, Careys attempt
to  dispute the superior courts rejection of the applicability of
the doctrine of active appreciation must fail.
          In  the  alternative,  Carey challenges  Bills  experts
determination  that Bills interests in the Odom Company  had  not
increased  in  value.  At trial, Bill presented the testimony  of
Dr.  Richard Parks, who qualified as an expert economist and  who
compared the value of the shares of the Odom Company at the  time
of marriage to that at the time of separation.  The initial share
price  was  an  average  of a price of $80  used  in  a  minority
redemption transaction in 1990 and a price of $89.64  used  in  a
buy-out  of  the fourth Odom brother in 1992.49  The final  share
price  of  $116 was based on valuation undertaken by the companys
independent  advisor, T.S. Leung, on March 31,  2002  (the  Leung
Report).50  Dr. Parkss comparison found no real increase  in  the
value of the company and determined instead that the company  had
failed to keep pace with inflation and had far underperformed  as
compared  to  several industry and stock market  standards.   The
Odom Company lost money in 1998, 1999, 2000, and 2001.  Bill also
presented  the testimony of Ronald Greisen, who was qualified  as
an  expert,  to explain to the court issues of federal  taxation,
accounting, and business valuation.
          Carey  now  claims that it was error for  the  superior
court to rely on the $116 share price in its findings because the
Leung  Report should be considered inadmissible hearsay.  But  no
objection  on  this  basis was raised  at  trial.   And  even  if
hearsay, the report could be used as a basis for expert opinion.51
Moreover,  the superior court did not itself use that number  but
merely referred to it when describing the process by which  Bills
expert  valued the company.  Carey also argues that she  disputed
the  price  of $116 by showing that the book value of the  shares
was listed as $158 per share.  But she did not call a witness  to
explain  why  book  value  should  indicate  fair  market  value.
Instead,  Bills  expert repeatedly explained that the  accounting
entry  of  historical book value had nothing to do with the  fair
market  value of [Bills] minority and unmarketable shares of  the
Company.   Carey  offered no other evidence as to the  connection
between  book  value  and fair market value to  contradict  Bills
expert.   Therefore, the superior court had no evidentiary  basis
for selecting the method which [the expert] had rejected.52
          In  the  alternative, Carey argues that  certain  facts
that were before the superior court are in themselves prima facie
indicators  of an increase in value.  She points particularly  to
the increase in Bills income during the marriage and the increase
in the Odom Companys gross revenues.53  But the cases relied upon
by Carey do not support her contention that these facts, standing
alone,  are  sufficient to require a finding of  appreciation  in
value.54
          For  example,  in  Harrower v. Harrower,  it  was  only
because neither party presented any evidence of asset value  that
we  concluded  it  was  reasonable  to  infer  that  stock  would
appreciate  over a period of thirty years.55  But in  this  case,
evidence of the value of Bills interests in the Odom Company  was
squarely  before  the  court  and  both  of  Bills  experts  were
qualified  as experts by the superior court.  And in  Schmitz  v.
Schmitz,  we  used  the  fact that the revenue  of  the  separate
business  increased during the period of marriage to  infer  that
the value of the business may have increased during the marriage,56
but  we  did  so  because  the financially  disadvantaged  spouse
claimed that she was financially unable to hire an expert due  to
inequitable  conduct  on  the part of  her  former  husband  and,
moreover,  because  she  had alerted the superior  court  to  her
predicament prior to trial.57  In this case, in contrast, there is
no  evidence  that Bill obstructed Careys attempts to  value  the
Odom  Company.  Bill provided Carey with documents pertaining  to
the  companys finances as well as a summary of asset values.  But
she  did not ask for a continuance to develop a valuation of  the
Odom  Company.  Although Carey argues now that she did  not  have
the  financial  wherewithal to present evidence of asset  values,
there  is  no  evidence in the record that Carey requested  extra
attorneys fees to pay for an independent valuation of the company
or other assets owned by Bill.58  Instead, there is evidence that
Bill paid for Careys attorneys fees.
          In  sum,  it  was Careys responsibility to bring  forth
evidence to show that Bill was wilfully obstructing her access to
company documents or to request aid in the event that the cost of
an  appraiser  was too heavy for her to bear.  But  the  superior
court  found  that  Carey upon whom the  burden  of  proof  fell,
offered  no  competent evidence as to the fair  market  value  of
Bills interests in the company.  We have held that it is the duty
of  the  parties,  not the court, to ensure  that  all  necessary
evidence is presented at trial in divorce proceedings and that  a
party  who  fails to present sufficient evidence  may  not  later
challenge the adequacy of the evidence on appeal.59
                    ii.  The related partnerships
          We  now turn to a discussion of Bills interests in  the
related  partnerships. The superior court found that the doctrine
of  active appreciation did not apply to the partnerships for two
reasons:   (1)   because  the  partnerships  had   not   actively
appreciated in value and (2) because neither Bill nor Carey  made
marital  contributions  to  the property.   No  evidence  of  the
partnerships  value  was presented before  the  court  by  either
party.   The superior court found that while the evidence is  not
sufficient  for  the  Court to determine  if  these  assets  have
appreciated, the evidence is quite clear that if there were  such
appreciation it would be passive, rather than active.  In  short,
rather  than  requiring that the assets be separately  appraised,
the  superior  court  relied  on  Bills  experts  view  that  any
appreciation in value was passive.
          We  have  remanded for further findings when an  assets
value  was  not  first  determined.  For example,  in  Foster  v.
Foster, we stated that it was error for the superior court not to
          value the allotment of native land that was the wifes separate
property because that valuation should be taken into account when
assessing the relative economic positions of the parties.60   But
in  Foster,  no  evidence of the propertys value was  before  the
court,  and  it  was in the light of that paucity of  information
that  we determined it was clear error for the superior court  to
decide  that the property value was negligible.61  In this  case,
although  the superior court did not have evidence of the  actual
value  of either partnership before it, it did have testimony  to
the effect that if there had been an increase in the value of the
partnerships, it quite clear[ly] would have been entirely passive
in  form.   On  appeal, Carey now asserts that  the  evidence  of
appreciation cannot be reasonably disputed, but every example she
offers  is an example of passive appreciation rather than  active
appreciation.62   As previously noted, Carey had  the  burden  of
proof  on this issue, yet she failed to offer her own experts  at
trial  or  attempt  to  appraise  the  separate  assets  of   the
partnerships.63
          Furthermore,  the second finding made by  the  superior
court,   that   no  marital  contributions  were  made   to   the
partnerships,  is  sufficient on its own to  counter  the  active
appreciation  argument.64   The superior  court  found  that  the
partnerships were not a result of Bills plans or ideas  and  that
he   did  not  work  on  them  as  part  of  the  business.   The
partnerships  are  run instead by Odom Enterprisess  managers  as
part  of  the company assets.  Although it was her burden,  Carey
did  not offer any evidence at trial that Bill managed or ran the
partnerships during the marriage.
          In sum, Carey failed to meet her burden of showing that
there had been an increase in value of either Odom Company or the
partnership  or  that any appreciation would  have  been  active.
Thus,  the  superior court did not err in its determination  that
Odom Company and the partnership were Bills separate property.
     D.   The  Equitable  Division  of  the  Marital  Estate  and
          Invasion of Bills Separate Property
          
          Bill challenges the division of the marital estate  and
the  invasion  of  his separate property.  Both  Bill  and  Carey
appeal  the  amount  by which the superior  court  invaded  Bills
separate  property as being arbitrary.  Bill additionally  argues
that  the lump sum form of the required payment of $2.25  million
imposed upon him an impermissible hardship.  We agree that it was
error  to  invade  the separate estate without first  determining
whether  an unequal division of the marital estate would properly
balance the equities between Bill and Carey.  We therefore remand
for a re-examination of the division of the marital estate.
          The  division  of marital property in a  divorce  is  a
matter  of  discretion for the trial court.65  But in  exercising
that   discretion,  the  trial  court  should  follow  a  process
incorporating  a number of statutory and common law principles.66
Since Wanberg v. Wanberg, we have articulated this process  as  a
matter  of  three steps:  First, the trial court  must  determine
what  specific  property is available for distribution.   Second,
the  court must find the value of this property.  Third, it  must
          decide how an allocation can be made most equitably.67  Again
since  Wanberg, we have consistently noted that the  trial  court
generally  should  begin  with  the  presumption  that  an  equal
division  of marital property is most equitable.68  We have  also
noted that this presumption can be overcome by a consideration of
the   Merrill   factors69  as  codified  and   expanded   in   AS
25.24.160(a)(4).70
          But  if either spouse owns separate property, then,  as
we noted in Chotiner,
          the  division  of property actually  involves
          more   than  three  steps.   The  court  must
          determine  what marital property is available
          for  distribution, value that  property,  and
          make  an equitable division if possible.   If
          an  equitable  division is not possible,  the
          court   turns   to   the   parties   separate
          property.[71]
          
It  is clear from this language in Chotiner that the decision  to
invade  separate property 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  reasonable
needs.   It  is  only if that attempt has failed that  the  trial
court  should turn to the separate estate and proceed  to  adjust
the initial distribution as needed.72
          In this case, the superior court invaded Bills separate
property  before  effecting an uneven  division  of  the  marital
estate, including assets and debts, in light of Careys reasonable
needs.   Indeed, the marital estate was divided in a manner  that
benefitted  Bill, rather than Carey.73  Rather than dividing  the
marital  estate  unequally in an initial attempt to  balance  the
equities, the superior court turned to Bills separate property.74
It  was  error  to  invade  the  separate  estate  without  first
considering  other equitable methods of distributing the  marital
estate in light of the parties reasonable needs.
          The  superior  court  found, in light  of  the  Merrill
factors,  that  the  value of the marital estate  was  relatively
small;  that  Carey had been long absent from the workforce;  and
that  Carey  lacked  both retirement funds  and  other  financial
resources.   The superior court particularly found  Carey  to  be
unable  to  generate an income level that even remotely resembles
the manner of lifestyle [to] which she and the children have been
accustomed.75   As a whole, these factors suggest  that  a  large
deviation  from  the  equal division of  the  marital  estate  is
justified.
          But  in  some  cases, even a large deviation  from  the
equal  division of the marital estate will not be  sufficient  to
fairly allocate the economic effect of divorce.76 The legislature
has  recognized  that  invasion  of  separate  property  may   be
necessary  and  has  provided  that  the  court,  in  making  the
[property]   division,   may  invade  the   property,   including
retirement  benefits, of either spouse acquired  before  marriage
when  the  balancing of the equities between the parties requires
it.77   In  Sampson  v. Sampson, we determined that  the  Merrill
          factors78 applied to the decision whether to invade separate
property.79    In  Sampson,  we  explained  that  courts   should
particularly  consider  factors  such  as  the  duration  of  the
marriage,  the  conduct of the parties during the  marriage,  the
manner  of acquisition of the property, its value at the time  of
acquisition  and  at the time of the property division,  and  any
other  factors bearing on whether the equities dictate  that  the
other spouse is entitled to share in that property.80
          In  this case, the superior court relied on its finding
that  the parties lived an opulent and wealthy lifestyle and that
Bill  will  continue to have access to such luxuries  and  wealth
from  the Odom Corporation after the divorce while Carey will  no
longer be the beneficiary of these privileges.  But in Alaska  it
is  not  expected  that a former extravagant  lifestyle  will  be
supported.81  The proper test to be applied by the trial court is
the reasonable needs of the parties.82  The result of the property
division  must  not lead to a widely disparate lifestyle  between
spouses,  particularly  when children are  involved.   The  trial
courts  goal  should be to provide Carey with a  comfortable  and
financially  secure  lifestyle,  where  her  activities  and  the
childrens hobbies are able to continue and the children  live  in
comparable surroundings when with either parent.
          Carey did provide evidence of her reasonable needs.  In
the  trial  court, Carey submitted two projected monthly  budgets
ranging  from $11,550 to $12,489.  The superior court  presumably
considered these projections when it awarded Carey $8,000 a month
in  interim support pending the ordered lump sum payment of $2.25
million   by  Bill.   After  weighing  the  conflicting  evidence
concerning Careys reasonable financial needs, the superior  court
certainly  could have found that the equities demanded that  100%
of  the marital assets be allocated to Carey and 100% of the debt
to  Bill.83  Indeed, in her proposed findings in the trial court,
Carey  urged  the court to award her such marital assets  as  the
Anchorage  and Girdwood residences free of debt as a  first  step
toward  equitable division.  As she remarks in her brief to  this
court,  [t]his  would  have given [Carey]  .  .  .  saleable  and
appreciating  assets  that  could  provide  reasonable  financial
security and something approaching the lifestyle that the  family
enjoyed during marriage.84
          And  if,  after  such  an unequal division  of  marital
property,  the  trial court were to find that  Careys  reasonable
needs  would still go unmet, then long-term spousal support might
be  warranted.85   In  Alaska,  awards  of  spousal  support  are
permitted under AS 25.24.160(a)(2) if they are determined  to  be
just and necessary.  The legislature provided a number of factors86
to  help  determine the amount and form of spousal support.   For
example,  in  Broadribb  v. Broadribb, we affirmed  the  superior
courts finding that
               the  available property in this case was
               insufficient   to   compensate    Sandra
               adequately or to provide adequately  for
               her     reasonable     future     living
               expenses. . . .  Given Sandras  age  and
               limited  earning  capacity,  the   court
               concluded   that   it  is   questionable
               whether  she will accrue any substantial
               employer-provided   pension    in    her
               remaining work years, and that she  will
               therefore  need to invest a  significant
               sum  to  provide for her  future  needs.
               Against  the backdrop of these findings,
               the   court   awarded   Sandra   spousal
               maintenance in the amount of $3,000  per
               month  for  three years, and $2,000  per
               month  for two additional years.   Based
               on   its  extensive  findings  regarding
               Michaels  financial  status,  the  court
               concluded that he would be able  to  pay
               this amount of maintenance.[87]
               
And  Bills financial status, including his separate property, can
be taken into account when awarding spousal support.88
          Initial  consideration of the unequal division  of  the
marital  estate and spousal support may have rendered unnecessary
the invasion of Bills separate property and avoided the practical
problems  entailed in such a large lump sum payment, as  well  as
the issue of the excessive size of the invasion.89  In this case,
the invasion of the separate property in the sum of $2.25 million
was  an abuse of discretion.  Thus, we vacate the division of the
marital estate and the lump sum award of $2.25 million and remand
for  reconsideration of the property division so that  the  trial
court  may examine an unequal division of marital property,  with
an  award  of most or all assets to Carey and the debt  to  Bill,
along  with  the possibility of spousal support as the  preferred
method of meeting Careys reasonable needs in this case.90
V.   CONCLUSION
          The  custody order and award of the Anchorage home  are
AFFIRMED.   The finding that Bills interests in Odom  Enterprises
are separate property is AFFIRMED. Because the superior court did
not  first attempt to balance the equities by unequally  dividing
the  marital estate, awarding property to Carey and debt to Bill,
its  property division and invasion of separate property  in  the
amount  of  $2.25 million are VACATED and we REMAND  for  further
proceedings consistent with this opinion.
_______________________________
     1    The superior court acknowledged an inconsistency in its
language in the first order and ordered both the Anchorage  house
and  the  debt associated with it to Carey.  Bills other  motions
were denied.

     2     For  the  purposes  of  this opinion,  the  term  Odom
Enterprises  is  used to indicate both the Odom Corporation  (the
Company) and the two related partnerships.

     3    Martin v. Martin, 52 P.3d 724, 726 (Alaska 2002).

     4    Id.

     5    Id.

     6    Guin v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska 1979).

     7    Martin, 52 P.3d at 726.

     8     Bellanich  v.  Bellanich, 936 P.2d  141,  143  (Alaska
1997).

     9    Brooks v. Brooks, 733 P.2d 1044, 1058 (Alaska 1987).

     10     Chotiner  v.  Chotiner, 829 P.2d 829, 834-35  (Alaska
1992).

     11    Schmitz v. Schmitz, 88 P.3d 1116, 1122 (Alaska 2004).

     12     Chesser-Witmer v. Chesser, 117 P.3d 711, 715  (Alaska
2005).

     13    Hamilton v. Hamilton, 42 P.3d 1107, 1111 (Alaska 2002).

     14    Schmitz, 88 P.3d at 1121.

     15    Hamilton, 42 P.3d at 1111.

     16    Veselsky v. Veselsky, 113 P.3d 629, 635 (Alaska 2005).

     17     In  re  Adoption of A.F.M., 15 P.3d 258, 262  (Alaska
2001).

     18    The heirlooms were one of the subjects of the motion to
reconsider  filed by Bill.  The motion was denied;  the  superior
court  stated  that [e]vidence was not presented as  to  specific
items  to  which Mr. Odom is sentimentally attached and [it]  was
the Courts intent that the Anchorage home be conveyed to Ms. Odom
fully  furnished.   If the parties wish to negotiate  alternative
arrangements . . . they are free . . . and . . . encouraged to do
so.

     19    Cox v. Cox, 882 P.2d 909, 913 (Alaska 1994).

     20    Harrower v. Harrower, 71 P.3d 854, 857 (Alaska 2003).

     21     Green  v.  Green,  29  P.3d 854,  857  (Alaska  2001)
(alteration in original).

     22    Miller v. Miller, 105 P.3d 1136, 1141 (Alaska 2005).

     23    Schmitz, 88 P.3d at 1128-29.

     24    Beal v. Beal, 88 P.3d 104, 119 (Alaska 2004).

     25     See,  e.g., Abood v. Abood, 119 P.3d 980, 984 (Alaska
2005).

     26     Hansen v. Hansen, 119 P.3d 1005, 1014 (Alaska  2005);
see  also  Gardner v. Harris, 923 P.2d 96, 99-100  (Alaska  1996)
(using  separate  property  bonds  as  collateral  to  obtain   a
favorable  interest rate on a marital loan did not transmute  the
bonds into marital property).

     27    Wanberg v. Wanberg, 664 P.2d 568, 571 (Alaska 1983).

     28     Cf. Abood, 119 P.3d at 988 (requiring factors such as
the  ongoing  maintenance and managing of the  property  by  both
parties,  as well as placing the title of the property  in  joint
ownership and using the credit of the non-titled owner to improve
the  property  in  addition to the use of  the  property  as  the
parties personal residence).

     29    Keturi v. Keturi, 84 P.3d 408, 418 (Alaska 2004).

     30    Green, 29 P.3d at 858.

     31    Miller, 105 P.3d at 1141.

     32     See, e.g., Nicholson v. Wolfe, in which the following
was  not  considered transmutation absent a specific  finding  of
intent:

          The    record   indicates   that    Nicholson
          maintained title to the Northstar  assets  in
          his name alone; he meticulously kept separate
          records,  so  that Wolfe was unaware  of  the
          assets and debts of the business, and exerted
          minimal   control  over  them;  Wolfe   never
          assumed  any liability for the business,  nor
          did she co-sign any business loans; Nicholson
          spent  little  or no marital  monies  on  the
          business.  According to Wolfe, she helped set
          up  Northstars books (although she apparently
          did not maintain them), answered the business
          phone, and occasionally accompanied Nicholson
          on his business activities. (Emphasis added).
          
974 P.2d 417, 423-24 (Alaska 1999).

     33    Harrower, 71 P.3d at 857.

     34     Id. at 858 (quoting turner, Equitable Distribution of
Property  5.22, at 230 (2d ed.1994)).

     35    Schmitz, 88 P.3d at 1125.

     36    Id. at 1125-26 (quoting turner, Equitable Distribution
of  Property   5.22,  at  236 (2d ed. 1994))  (There  is  general
agreement  that  the burden of proving marital contributions  and
the  burden of proving an increase in value are on the spouse who
seeks to classify appreciation as active.).

     37     Schmitz, 88 P.3d at 1125-26 (citing Harrower, 71 P.3d
at  859  (Cases divide as to who bears the burden  on  the  third
element,  causation.  The  majority  view  would  assign  it   to
[appellant], requiring him to prove the absence of a causal  link
between his efforts . . . and any appreciation in his stock  that
occurred during the marriage.)).

     38     In  support of her argument, Carey cites to Hayes  v.
Hayes, 756 P.2d 298, 300 (Alaska 1988), where we noted that [t]he
concept  of value is keyed to the price that a prospective  buyer
would  pay.  But this cite is inapposite.  In that case  we  were
discussing whether a minority discount should be applied  to  the
valuation of the spouses separate property.  Id. at 299-300.   We
were  not discussing the effect of inflation on the valuation  of
an asset.

     39     733 P.2d at 1054 & n.22 (Alaska 1987) ([T]he $625,000
appreciation in the apartment complexs value appears to have been
passive  rather  than  active.  In  other  words,  the  propertys
increased  value  was  caused solely by  inflation  and/or  other
economic  factors to which [the spouse] in no way  contributed.);
see also Hansen, 119 P.3d at 1014 n.42 (Alaska 2005) (quoting  In
re  Marriage  of  Gottsacker v. Gottsacker, 664 N.W.2d  848,  853
(Minn.  2003) ([A]n increase in the value of nonmarital  property
attributable  to  inflation or to market  forces  or  conditions,
retains its nonmarital character.)).

     40    733 P.2d at 1054.

     41    Id.  ([The husband] bought the complex for $300,000 in
February of 1976. In August, 1985 [the property] was appraised at
$925,000.   During  the  period of the Brooks[es]  marriage,  the
record  does  not indicate that any major repairs or improvements
were  made  to the property.  Thus, the $625,000 appreciation  in
the  apartment complexs value appears to have been passive rather
than active.).

     42    Id.

     43     125  P.3d  299,  305 (Alaska 2005)  (Turning  to  the
specific  elements  of  active appreciation,  we  first  look  to
whether the record shows that [the asset] gained value during the
course  of the marriage.).  In Hanson, we remanded for a  finding
as  to  the  value of the asset at the beginning of the marriage,
since neither party had presented such evidence before the court;
in  this case, however, ample evidence of the value of the  asset
was presented before the court.

     44    See, e.g., Smith v. Smith, 475 S.E.2d 881, 888 (W. Va.
1996)  (The court enunciated specific issues to be determined  by
the  lower  court  upon remand, including (1) the  value  of  the
interest in the corporation at the time of acquisition,  (2)  the
value  of  the  interest  at  the date  of  separation,  (3)  the
difference  between  the two, and (4) the  [proportion]  of  that
difference that is due to active appreciation, i.e., attributable
to  funds,  talent,  or  labor that are  assets  of  the  marital
community.   The resulting amount is marital property subject  to
equitable  distribution.  (quoting McLeod v. McLeod,  327  S.E.2d
910, 915 (N.C. App. 1985), overruled on other grounds, Dunlap  v.
Dunlap, 354 S.E.2d 734, 736-37 (1987))).

     45     Turner,  Equitable Distribution of Property  (2d  ed.
1994) Supp. 2004  5.21, at 332.  The opposite is also true, since
if  the  separate propertys value at the end of the  marriage  is
greater than at the beginning, then there is marital interest  to
divide  even if the property had lost value at times  during  the
marriage.  Turner,  Equitable Distribution of  Property  (3d  ed.
2005)  5.56, at 559 & 561 n.20.

     46    883 P.2d 397, 401 (Alaska 1994).

     47    Id.

     48     We have previously held, generally, that the date  of
valuation for property in a divorce proceeding should be as close
as  practicable to the time of trial.  Ogard v. Ogard,  808  P.2d
815,  819  (Alaska 1991).  In Ogard, the former husband  appealed
the  date  of  valuation of the property because if the  date  of
separation were chosen, then he would have to cash out his former
wife  at  a  greater  amount due to changes in  the  real  estate
market.  We agreed with the husband to the detriment of the wife.
Id.  at  819.  This general presumption can be overcome  and  the
superior  court  can  decide which appraisal  provides  the  most
reliable  information.  See id. at 820; Berg v.  Berg,  983  P.2d
1244,   1247-48  (Alaska  1999).   In  this  case,  an  appraisal
performed  near the date of separation was accepted for valuation
purposes.  Carey did not object to that date during trial nor has
she on appeal argued for the use of a different date.

     49    Bill and Carey were married in June 1990.

     50     This  valuation  was completed by the  Odom  Companys
independent advisor in March 2002 and was considered sufficiently
close to the date Bill and Carey separated (May 2002).

     51    Alaska Rule of Evidence 703 provides:

          The facts or data in the particular case upon
          which an expert bases an opinion or inference
          may  be  those perceived by or made known  to
          the expert at or before the hearing. Facts or
          data need not be admissible in evidence,  but
          must  be of a type reasonably relied upon  by
          experts  in  the particular field in  forming
          opinions or inferences upon the subject.
          
     52    Hayes, 756 P.2d at 299.

     53     Carey also points to various economic indicia such as
the  prices at which other insider interests had been bought out;
a price-to-revenue comparison with the recent purchase of another
company by the Odom Company; and the increase in property  values
held  by the related partnerships.  But it was her responsibility
to  provide expert testimony to show a link between these indicia
and  an  appreciation in value in the Odom Company during  trial.
The  superior  court indicated that Carey provided  no  competent
evidence as to the fair market value of Bills interests.

     54     Carey also argues that the perquisites drawn from the
Odom  Company show that the company had increased in value.   But
the  superior court found that the amount of perquisites had  not
increased during the marriage.

     55    71 P.3d at 859-60.

     56    88 P.3d at 1126.

     57     Id.  at  1126-27 (Where a partys inequitable  conduct
hampers   an  opposing  partys  ability  to  develop  potentially
important  evidence, a court on appeal is justified in  remanding
for development of appropriate evidence.).

     58     Carey  complains that the superior court should  have
ordered   a   fact-finding  hearing.   But  the  superior   court
explicitly  found  that there was enough evidence  before  it  to
value  Bills interests, noting that [p]laintiffs failure to offer
evidence  on  this issue does not mean that there is insufficient
evidence before the Court.

     59     Brandal v. Shangin, 36 P.3d 1188, 1193 (Alaska 2002).
In  addition, Alaska Civil Rule 90.1(e)(3) and (4) requires  both
parties  to file with the court information concerning the  value
of each asset and liability and the proposed disposition, if any,
of each asset or liability.

     60    883 P.2d at 401-02.

     61     Id. at 402.  Moreover, the assumption that the spouse
actually owned and would be entitled to sell the property was  in
doubt due to an administrative appeal mounted by the state.  Id.

     62     For example, Carey tries to use Dr. Parkss example of
his  own  home,  which has appreciated in value over  the  thirty
years  he  had owned it, but Dr. Parks was using that example  to
show  the  effects  of market appreciation,  a  form  of  passive
appreciation.  She also attempts to use Greisens concession  that
Bills  interests had gained in value, but Greisen was once  again
explaining  the  concept  of  market appreciation.   Furthermore,
Carey  neglects to acknowledge Greisens balancing  of  rents  and
other  inputs which would increase the value of the  assets  with
the  depreciation  of the buildings and other forces  that  would
decrease the value of the assets.

     63     Carey cites with approval the fact that Bills  expert
acknowledged  that  the  partnership  assets  could   be   easily
appraised.  But her point, that Bill should have had the separate
partnerships appraised, works against her own position, since she
also could have had the assets appraised.

     64     See, e.g., Turner, Equitable Distribution of Property
5.57,  at  582  (3d  ed.  2005) (The  most  important  factor  in
determining whether a given person contributed to the value of  a
particular  asset is control.  A person who had no  control  over
the  value  of  an asset was not in a position to  contribute  to
it.).

     65    Chotiner, 829 P.2d at 831.

     66    Id.

     67    Wanberg v. Wanberg, 664 P.2d 568, 570 (Alaska 1983).

     68     Fortson  v. Fortson, 131 P.3d 451, 456 (Alaska  2006)
(quoting  Brown v. Brown, 947 P.2d 307, 313 (Alaska  1997));  see
also Wanberg, 664 P.2d at 574-75.

     69     Merrill v. Merrill, 368 P.2d 546, 547-48 n.4  (Alaska
1962).  See, e.g.,  Tybus v. Holland, 989 P.2d 1281, 1286 (Alaska
1999)  (using  the Merrill factors to decide whether  an  unequal
distribution of the marital estate is just).

     70    AS 25.24.160(a)(4) states in pertinent part:

               (a)   In  a  judgment in an  action  for
          divorce . . . the court may provide
          
               . . . .

               (4)    for  the  division  between   the
          parties    of   their   property,   including
          retirement   benefits,   whether   joint   or
          separate, acquired only during marriage, in a
          just  manner and without regard to  which  of
          the  parties is in fault; however, the court,
          in   making  the  division,  may  invade  the
          property,  including retirement benefits,  of
          either  spouse acquired before marriage  when
          the  balancing  of the equities  between  the
          parties  requires it; and to accomplish  this
          end the judgment may require that one or both
          of the parties assign, deliver, or convey any
          of their real or personal property, including
          retirement benefits, to the other party;  the
          division of property must fairly allocate the
          economic effect of divorce by being based  on
          consideration of the following factors:
          
               (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
          
               (I)   the  income-producing capacity  of
          the property and the value of the property at
          the time of division.
          
     71    829 P.2d at 831.

     72    Id.

     73     Bills  share of the marital estate came  to  $482,650
while Careys share came to approximately $425,000.

     74     This error is similar to that in Brown v. Brown,  947
P.2d  307 (Alaska 1997).  In Brown, the case was remanded because
an  examination of the superior court opinion on remand indicates
that the trial court clearly failed to begin with the presumption
that an equal division of marital property is the most equitable.
Instead,  the  trial  court  appears  to  have  begun  with   the
presumption that an equal division of the marital property and of
Wendys separate property would be the most equitable.  Id. at 313-
14.

     75     We  have  previously noted that [w]hen a  couple  has
sufficient  assets, the spouse with the smaller earning  capacity
can   and   should  receive  a  larger  share  in  the   property
distribution.  Dodson v. Dodson, 955 P.2d 902, 914  n.19  (Alaska
1998) (alteration in original); see also Berry v. Berry, 978 P.2d
93,  96  (Alaska 1999) (noting that [a]n unequal division may  be
upheld when it is justified by relevant factors identified in the
findings of the court  (quoting Hayes, 756 P.2d at 300)).

     76    AS 25.24.160(a)(4).

     77     AS 25.24.160(a)(4) (emphasis added); see also Carlson
v.  Carlson, 722 P.2d 222, 223-24 (Alaska 1986) (construing  this
statute).

     78    Merrill, 368 P.2d at 547-48 n.4.

     79    Sampson v. Sampson, 14 P.3d 272, 277-78 (Alaska 2000).

     80    Id. at 278 (quoting Vanover v.  Vanover, 496 P.2d 644,
648 (Alaska 1972)).

     81    Beal, 88 P.3d at 112.

     82     Turner, Equitable Distribution of Property  8.16,  at
867 (3d ed. 2005).

     83    Cf. Tybus, 989 P.2d at 1286 (affirming an award of all
of the marital debt to the spouse with the higher earning power).

     84     Carey  continued to maintain that [s]ome division  of
Bills claimed separate property would still be necessary; but, as
Carey  proposed,  the amount awarded from those  interests  would
have  been substantially offset in a final reconciliation by  the
fair market value of the two homes.

     85    See, e.g., Hammer v. Hammer, 991 P.2d 195, 199 (Alaska
1999)  (affirming award of permanent spousal support as just  and
necessary  due to spouses lack of work experience, responsibility
as  childs custodial parent, her deafness, lack of job prospects,
and limited ability to retrain for employment).

     86    AS 25.24.160(a)(2) provides:

               (a)   In  a  judgment in an  action  for
          divorce . . . the court may provide
          
               . . . .

               (2)   for the recovery by one party from
          the   other   of  an  amount  of  money   for
          maintenance,  for  a  limited  or  indefinite
          period  of time, in gross or in installments,
          as  may  be just and necessary without regard
          to which of the parties is in fault; an award
          of   maintenance  must  fairly  allocate  the
          economic effect of divorce by being based  on
          a consideration of the following factors:
          
               (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 division of property under (4)
          of this subsection; and
          
               (G)   other factors the court determines
          to be relevant in each individual case.
          
     87    956 P.2d 1222, 1226 (Alaska 1998).

     88     AS  25.24.160(a)(2)(D); see, e.g., Turner,  Equitable
Distribution of Property  8.33, at 941 (3d ed. 2005) (noting that
a  spouses  separate  property can be  taken  into  account  when
awarding alimony).

     89     Both  Bill  and  Carey challenged the  $2.25  million
amount.   Bill additionally challenged the lump sum form  of  the
award as imposing an impermissible hardship on him.

     90     We do not mean to imply that when an unequal division
of the marital estate is determined to be insufficient to meet  a
spouses  reasonable needs, spousal support is to be preferred  to
the  invasion of separate property in every case.  The  facts  of
each case will determine whether an invasion of separate property
or  spousal support is warranted.  In this case, spousal  support
is  preferable  to invasion of separate property because  of  the
illiquid  nature of Bills interests combined with the  likelihood
that they will continue to yield considerable cash flow.

This site is possible because of the following site sponsors. Please support them with your business.
www.gottsteinLaw.com
Case Law
Statutes, Regs & Rules
Constitutions
Miscellaneous


IT Advice, Support, Data Recovery & Computer Forensics.
(907) 338-8188

Please help us support these and other worthy organizations:
Law Project for Psychiatraic Rights
Soteria-alaska
Choices
AWAIC