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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Beals v. Beals (6/28/2013) sp-6789

Beals v. Beals (6/28/2013) sp-6789

        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@appellate.courts.state.ak.us. 



                 THE SUPREME COURT OF THE STATE OF ALASKA 



PATRICIA A. BEALS,                              ) 

                                                )       Supreme Court No. S-14688 

                        Appellant,              ) 

                                                )       Superior Court No. 3AN-08-12700 CI 

        v.                                      ) 

                                                )       O P I N I O N 

MARK L. BEALS,                                  ) 

                                                )      No. 6789 - June 28, 2013 

                        Appellee.               ) 

                                                ) 



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

                Judicial District, Anchorage, Eric A. Aarseth, Judge. 



                Appearances:   Jacob A. Sonneborn, Ashburn & Mason, P.C., 

                Anchorage, for Appellant.  Shana Theiler, Walton, Theiler & 

                Winegarden, LLC, Kenai, for Appellee. 



                Before:   Fabe, Chief Justice, Winfree, Stowers, Maassen, and 

                Bolger, Justices. 



                FABE, Chief Justice. 



I.      INTRODUCTION 



                Patricia Beals challenges the superior court's property division in a divorce 



case. Patricia argues that the superior court incorrectly characterized as separate property 



a lot that she and her former husband, Mark Beals, jointly purchased with cash obtained 



from refinancing their marital home, which Mark had   owned before their marriage. 



Patricia also contends that the superior court erroneously valued the mortgage on their 


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

marital home as of the time of separation rather than the time of trial.  Because the entire 



value of the jointly titled lot should have been characterized as marital property and 



because the home equity should have been valued as of the time of trial, we reverse. 



II.     FACTS AND PROCEEDINGS 



                Patricia   and   Mark   Beals   married   in   November   2000   and   permanently 



separated   in   November   2008.   They   divorced   in   2011.      Mark   had   children   from   a 

previous relationship, and together Mark and Patricia had two children.1                The superior 



court   issued   its   findings   of   fact   and   conclusions   of   law   concerning   the   division   of 

property in February 2012.2        Patricia filed a motion to reconsider, which the superior 



court denied.    This appeal followed. 



        A.      The 534 Second Avenue Home And 528 Second Avenue Lot 



                When      Patricia  and   Mark     married,   Mark    already    owned    a  house    at 



534 Second Avenue in Seward.             They lived there together for their first six years of 



marriage.  In 2001, about one year after their marriage, Mark and Patricia refinanced the 



534 Second Avenue home and placed the title and mortgage in both of their names. 



From the refinancing, they converted $42,092 of equity to cash.  They used this cash to 



buy the adjacent lot at 528 Second Avenue, again placing the title in both of their names. 



                After the refinance, both Patricia and Mark contributed to the mortgage 



payments for their 534 Second Avenue home.               Until 2006, when they bought another 



home, Patricia and Mark continued to live in the house at 534 Second Avenue.  The 



parties agree that the 534 Second Avenue residence transmuted into marital property. 



        1       No custody or support issues are raised on appeal. 



        2       The   superior   court   bifurcated   the   divorce   and   property   division.    The 



divorce decree became effective on November 17, 2011.   The superior court held a trial 

for   the   division of the marital estate in January 2012 and decided the final property 

division in February 2012. 



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

               Patricia filed for divorce in 2008.    Trial was held on November 9 and 17, 



2011 and January 19, 2012 before Superior Court Judge Eric A. Aarseth.            Patricia was 



represented by counsel and Mark represented himself. 



               At trial, Mark testified about refinancing the marital home and described 



the parties' "conscious decision" to use the cash they received from the financing "to 



jointly . . . purchase the [adjacent] Second Avenue [lot]."      He also explained that "we 



wanted the piece of property next door" and "[w]e used the equity [from the home] to 



buy this Second Avenue lot." 



               In February 2012 the superior court issued a decision dividing the marital 

property equally and ordering Mark to pay an equalization payment of $80,172.17.3  The 



superior court found that "Mark came to the marriage with assets and Patty came to the 



marriage with debt."  "[B]ased on the comparison of their incomes, retirements and non- 



marital assets," the superior court also found that "both parties were equally situated" at 



the   end  of  the  marriage.   Accordingly,    the  superior   court  decided  their  situation 

warranted the presumed even distribution of the marital estate.4 



               Patricia argued at trial that the proceeds from the refinance of the marital 



home at 534 Second Avenue were marital.  The superior court, however, concluded that 



these proceeds were Mark's separate property, reasoning that most of the Second Avenue 



        3      In the superior court's decision, the equalization payment is $80,172.17, but 



the spreadsheet attached to the decision lists the payment as $82,497.17. 



        4      See AS 25.24.160(a)(4); Green v. Green, 29 P.3d 854, 860 (Alaska 2001) 



("An equal division of the marital property is presumptively valid." (citing Brooks v. 

Brooks , 733 P.2d 1044, 1058 (Alaska 1987))); Sampson v. Sampson, 14 P.3d 272, 277 

(Alaska 2000) ("An equal division of the marital property is presumed to be equitable." 

(citing Nicholson v. Wolfe , 974 P.2d 417, 422 (Alaska 1999))). 



                                              -3-                                         6789
 


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

home remained separate property because Patricia and Mark had only lived there for one 



year before they refinanced.        The superior court further reasoned: 



                        Mark had approximately $71,000 in equity in the 534 

                2nd Avenue residence in November 2001 when he,   along 

                with Patty refinanced the home to convert a portion of that 

                equity   into   cash.   The   parties   married   in   November   2000 

                therefore a small portion of that $71,000 was likely marital as 

                some   small   portion   [o]f   the   mortgage   had   been   paid   with 

                marital funds. . . . [T]he unpaid balance changed by $2079 

                over a six month period of time.          That represents a growth 

                rate in equity of approximately $346.50 per month.               At the 

                time   of   the   refinance,   the   Beals[es]   had   been   married   12 

                months, therefore approximately $4158 (346.50 x 12) of the 

                $71,000 was marital equity leaving the remaining $66,842 as 

                non-marital equity. 



                        The   Beals[es]   converted   $42,092   of   the   equity   into 

                cash . . . .  The remaining equity remained in the home which 

                was the marital house and now financed by a marital debt 

                (the    new    mortgage     was    the  joint   responsibility    of  the 

                Beals[es]). 



The   superior   court   decided   that   "Mark   is   entitled   to   claim   the   $42,092   [from   the 



refinance of the home] as a non-marital asset as it can easily be tracked and separated 



from the marital assets."  Because marital debt financed the new mortgage, the superior 



court treated the remaining equity in the home as marital.  Thus, while recognizing that 



the 534 Second Avenue home had become marital property, the superior court viewed 



the equity from that home that was invested in the 528 Second Avenue lot as Mark's 



separate asset.   The superior court ultimately valued the lot at $45,000, treating $42,092 



of the lot as Mark's separate property, and the remaining $2,908 as marital property. 



                Patricia moved for reconsideration.           In its order denying reconsideration, 



the superior court reasoned that "[t]he pre-marital equity in the 534 2nd Ave[nue home] 



                                                   -4-                                             6789
 


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was readily identifiable and separable from the marital estate. There was no need to treat 



it any differently than if the funds were in a pre-marital IRA." 



        B.      The Orlander Avenue Home 



                In 2006 Patricia and Mark sold the 534 Second Avenue home and used the 



revenue   to   buy   a   new   house   at   33946   Orlander   Avenue   together.     After   taking   the 



mortgage and title to the Orlander home in both of their names, they lived together and 



raised   their   children   there   for   about   two   years.  The   parties   acknowledge   that   the 



Orlander home is part of the marital estate.           On appeal, the parties dispute whether the 



superior court erred by valuing the home at the time of separation instead of the time of 



trial. 



                After Mark and Patricia separated, the Orlander home was appraised at 



            5 

$280,000  and the mortgage loan amount was $193,768. During the three years between 



the date of separation and trial, Mark lived in the home and paid monthly mortgage 



payments of around $2,100. Patricia  testified that Mark excluded her from the Orlander 



home and she rented a separate residence during these three years.  By November 2011, 



the time of trial, the home's mortgage had decreased from $193,768 to $156,651.50 due 



to Mark's payments. 



                At trial, Patricia asked the court to determine the net equity of the Orlander 



home by valuing the amount of the mortgage loan at the time of trial, not the time of 



separation. The superior court declined to adopt this approach, reasoning: "[Mark] used 



post-separation      income     to  create   equity   and   should    be  able   to  benefit   from   that 



investment.  Further, the market is flat so he will not enjoy any windfall due to a rise in 



value that is not accounted for in the final tally." 



        5       Relying on this 2009   appraisal and testimony about the need for home 



repairs, the superior court estimated the home value at $270,000. 



                                                   -5-                                                6789 


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

                In her motion for reconsideration, Patricia argued that the superior court 



improperly valued the Orlander   home   at the time of separation.                The superior court 



denied that motion, stating that "[a]fter separation, Ms. Beals could have purchased a 



home and paid toward equity and not rent."            Reasoning that "[t]he value of the home at 



separation and at trial are the same" the superior court concluded that "[t]he only change 



in the value was the mortgage and that was paid with post-separation income." 



                On appeal, Patricia challenges the classification of the 528 Second Avenue 



lot as separate property and the home mortgage valuation. 



III.    STANDARD OF REVIEW 



                There are three basic steps in the equitable division of marital assets: (1) 



deciding what specific property is available for distribution, (2) finding the value of the 

property, and (3) dividing the property equitably.6             This appeal involves the first two 



steps. 



                We   take   this   opportunity   to   clarify   the   correct   standard   of   review   for 

characterizing      property    as   either  marital    or  separate.7    In   the   first  step,  "[t]he 



        6       See Doyle v. Doyle, 815 P.2d 366, 368 (Alaska 1991) (citing Moffitt v. 



Moffitt , 749 P.2d 343, 346 (Alaska 1988));  Wanberg v. Wanberg, 664 P.2d 568, 570 

(Alaska 1983). 



        7       Our   past   decisions   involving   the   first   step   in   the   equitable   division   of 



property have described inconsistently the correct standard of review.                Compare Odom 

v. Odom, 141 P.3d 324, 330 (Alaska 2006) ("The characterization of property as separate 

or marital may involve both legal and factual questions." (citing Martin v. Martin , 52 

P.3d 724, 726 (Alaska 2002))), Cox v. Cox, 882 P.2d 909, 913 (Alaska 1994) (same), 

and Moffitt , 749 P.2d at 346 ("Step one - determining what property is available for 

distribution   -   is   reviewed   under   the   abuse   of   discretion   standard,   although   it   may 

involve   legal   determinations   to   which   this   court   applies   its   independent   judgment." 

(citing Wanberg, 664 P.2d at 570)), with Carr v. Carr, 152 P.3d 450, 454 (Alaska 2007) 

("We review a trial court's decision to classify property as marital only for abuse of 

                                                                                         (continued...) 



                                                   -6-                                             6789
 


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

characterization of property as separate or marital may involve both legal and factual 

questions."8       Underlying       factual   findings    as   to  the  parties'    intent,  actions,    and 



contributions to the marital estate are factual questions.9  "Findings of fact are reviewed 



for clear error, but whether the trial court applied the correct legal rule in exercising its 



discretion     is  a  question    of   law   that  we   review     de  novo    using    our   independent 

judgment." 10     The second step, valuation of assets, is a factual determination that we 



review for clear error.11      We review the trial court's third step, the equitable allocation 



of property, for an abuse of discretion.12 



                 "Additionally,   the   trial   court   must   render   findings   of   ultimate   fact   that 



support any decreed property division; the findings must be explicit and sufficiently 



detailed     to  give   this  court  a  clear   understanding      of  the   basis  of  the   trial  court's 



         7(...continued) 



discretion; and we review the court's underlying factual findings only for clear error." 

(citations    omitted)), Krize v. Krize , 145 P.3d 481, 484 (Alaska 2006) (reviewing the 

characterization of property under the abuse of discretion standard), and Sampson, 14 

P.3d at 275 ("Property divisions require a three-step process . . . .                    These   steps   are 

reviewed under the abuse of discretion standard . . . ." (citations omitted)). 



         8       Odom, 141 P.3d at 330 (citing Martin , 52 P.3d at 726); see also Cox, 882 



P.2d at 913; Moffitt, 749 P.2d at 346 (citing Wanberg, 664 P.2d at 570). 



         9       See Odom , 141 P.3d at 330 (citing Martin , 52 P.3d at 726); Doyle , 815 P.2d 



at 368 (citing Moffitt , 749 P.2d at 346). 



         10      Hanson v. Hanson , 125 P.3d 299, 304 (Alaska 2005) (quoting Schmitz v. 



Schmitz, 88 P.3d 1116, 1122 (Alaska 2004)); see also  Odom, 141 P.3d at 330 (citing 

Martin , 52 P.3d at 726); Doyle , 815 P.2d at 368 (citing Moffitt , 749 P.2d at 346). 



         11      See Doyle, 815 P.2d at 368; Rodriguez v. Rodriguez , 908 P.2d 1007, 1012 



n.6 (Alaska 1995) (citing Thomas v. Thomas, 815 P.2d 374, 375 (Alaska 1991)). 



         12      See Doyle, 815 P.2d at 368 (citing Moffitt , 749 P.2d at 346). 



                                                    -7-                                               6789
 


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

decision."13  Whether a superior court's findings are sufficiently clear is a legal question, 



which we review de novo.14 



IV.    DISCUSSION 



       A.      The Characterization Of The 528 Second Avenue Lot Was Incorrect. 



               The superior court's characterization of property owned by the parties to 

a divorce as marital or separate is the first step in the equitable division of property.15 



Here, the superior court characterized $42,092 of the $45,000 value of the 528 Second 



Avenue lot as Mark's separate property because the assets used to buy the lot "can easily 



be tracked and separated from the marital assets." 



               Patricia appeals that determination and argues that the equity in the marital 



home at 534 Second Avenue transmuted entirely into marital property.  Accordingly, she 



claims, the superior court should have determined that the $42,092 from refinancing the 



marital home was also marital property.       In addition, she points out that Mark did not 



overcome the presumption that jointly held property is marital because "there is   no 



evidence that Mark ever intended to keep this property separate."         We agree that it was 



error to treat the jointly held lot as separate property. 



               The superior court found that "the intent of the parties was to treat 534 2nd 



Avenue as the marital home along with the equity and debt as part of the marital estate" 



and that Mark and Patricia "refinanced their home to convert a portion of that equity into 



cash."  The superior court's decision that the home was marital property is supported by 



the factual record and is consistent with our case law holding that "[f]actors relevant in 



determining the parties' intent regarding real property include: '(1) the use of property 



       13      Id. (citations omitted).
 



       14      Miller v. Miller , 105 P.3d 1136, 1140 (Alaska 2005) (footnote omitted).
 



       15      Odom, 141 P.3d at 332.
 



                                              -8-                                          6789 


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

as the parties' personal residence; (2) the ongoing maintenance and management of the 



property by both parties; (3) placing title in joint ownership; and (4) using the credit of 

the non-titled owner to improve the property.' "16          Patricia and Mark lived in the home 



as their family residence.      Patricia claims that they jointly managed the home.          Finally, 



after residing there together for one year, they placed the title in joint ownership and used 



Patricia's credit in the refinancing.      As a result, the superior court correctly concluded 



that the Second Avenue home had transmuted into marital property. 



                "Transmutation occurs when married parties intend to make a spouse's 

separate property marital and their conduct during marriage demonstrates that intent."17 



An    owner's     intent  may    be  illustrated   through    words   and   actions.18    And     once 



transmutation occurs, an asset is converted "entirely from separate to marital."19             As the 



        16      Hanson v. Hanson , 125 P.3d 299, 307 (Alaska 2005) (quoting Green v. 



Green, 29 P.3d 854, 858 (Alaska 2001)); see Matson v. Lewis , 755 P.2d 1126, 1128 

(Alaska 1988) (affirming decision to treat jointly held parcels as marital property even 

though the wife had paid the down payment with   her premarital assets);  Carlson v. 

Carlson, 722 P.2d 222, 224-25 (Alaska 1986) (treating a four-plex as marital property 

even though the husband paid the down payment with his separate property because the 

parties had demonstrated an intent to jointly hold the building); see also Lewis v. Lewis , 

785   P.2d   550,   555   (Alaska   1990)   (holding   that   jointly  held   stocks   acquired   with 

premarital assets were marital property when there was no evidence that the husband 

intended to keep the shares as his separate property). 



        17      Odom, 141 P.3d at 332 (quoting Harrower v. Harrower , 71 P.3d 854, 857 



(Alaska 2003)) (internal quotation marks omitted). 



        18      Hansen v. Hansen , 119 P.3d 1005, 1013 (Alaska 2005) (citing Green, 29 



P.3d at 857). 



        19      Miller , 105 P.3d at 1141 (citing Harrower , 71 P.3d at 857-58); see also 



Heustess v. Kelley-Heustess , 158 P.3d 827, 831 (Alaska 2007) ("We have repeatedly 

indicated that transmutation of real estate converts the entire property from separate to 

marital in character."). 



                                                  -9-                                           6789
 


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

superior     court    correctly    concluded,     Mark     and   Patricia's    Second     Avenue     home 



transmuted into marital property.  Thus, when the parties refinanced their home, which 



was a marital asset, the funds that they received from the refinance were in turn marital 



funds. 



                 Moreover, Patricia and Mark used the marital funds that they received from 



the refinance to buy a lot that was titled in both of their names.                  We have held that 



"placing   separate   property   in   joint   ownership   is   rebuttable   evidence   that   the   owner 

intended the property to be marital."20 



                 Generally,   "all   assets   acquired   by   the   parties   during   their   marriage   are 

marital property" except for gifts and inheritances.21  Our rule is supported by authority 



from other jurisdictions:       "The joint title gift presumption is presently recognized in a 

majority of American jurisdictions."22          And "[w]here this presumption applies, property 



transferred into joint title is presumed to be a gift to the marital estate, and the burden of 

proof is on the party who seeks to show that a gift was not intended."23                     Here, Mark 



failed to rebut this presumption because Mark presented no evidence of an intent to keep 



        20       Schmitz v. Schmitz, 88 P.3d 1116, 1128 (Alaska 2004) (citations omitted); 



Chotiner v. Chotiner, 829 P.2d 829, 833 (Alaska 1992) (citing Lewis , 785 P.2d at 555); 

see also Miller, 105 P.3d at 1142 ("There is a strong presumption that placing separate 

property into a joint account demonstrates an intent to treat the property as marital." 

(citing Brown v. Brown , 947 P.2d 307, 311 (Alaska 1997))); Johns v. Johns , 945 P.2d 

1222,   1225   (Alaska   1997)   (jointly   held   fishing   boat   was   marital   property   despite 

husband's contributions of premarital assets to the boat purchase). 



        21      Johns , 945 P.2d at 1225 (citing Lundquist v. Lundquist, 923 P.2d 42, 47 



(Alaska 1996)). 



        22       1 BRETT R. TURNER , EQUITABLE DISTRIBUTION OF PROPERTY  5:43, at 476 



(3d ed. 2005) (footnote omitted). 



        23      Id. 



                                                   -10-                                              6789
 


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

the property separate.       Therefore, it was error to treat $42,092 of the jointly titled lot, 



which the parties acquired during marriage, as Mark's separate property. 



                Mark points out that the superior court found that he "was entitled to claim 



the $42,092 as a non-marital asset as it could easily be tracked and separated from the 



marital assets."    Tracing the source of assets may be appropriate in unusual cases such 



as when the marriage is of short-term duration and the spouses did not commingle their 

assets.24  In Rose v. Rose , we stated that "in marriages of short duration, where there has 



been no significant commingling of assets between the parties," the superior court may 



trace the parties' assets and place the parties in the financial position they would have 

been without the marriage.25 



                But tracing the source of the asset was not appropriate in this case.  There 



is a clear presumption that jointly held assets are marital, and tracing can only take place 

"[i]f evidence is presented that is sufficient to overcome this presumption."26   Here the 



parties were married for eight years before separation. And not only did they commingle 



their assets, they also placed the lot in question in both of their names after using a 



marital   asset   to   purchase   it. Because   the   entire   marital   home   transmuted   to   marital 



property, and because Mark failed to rebut the presumption that the jointly titled lot was 



marital, we conclude it was   error to treat most of the lot's value as Mark's separate 



property. 



        24      See   Rose   v.   Rose,   755   P.2d   1121,   1125   (Alaska   1988)   (affirming   the 



superior court's tracing of assets in property division after 18-month marriage during 

which parties did not commingle their assets). 



        25      Id. 



        26      Schmitz, 88 P.3d at 1128. 



                                                   -11-                                             6789
 


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

                According to Mark, even if the superior court erred, any error was harmless 



because "the ultimate result . . . fulfills the lower court's obligation to fairly allocate the 



economic effect of divorce, and Patty has made no showing to the contrary." But Mark's 



harmless error argument has little merit. The superior court expressly found that an even 



distribution was just under the circumstances because the parties' "financial standing[s] 



both currently and prospectively are relatively equal." Once the superior court found that 



the    home    was    marital   property    and   that   an  even    distribution    was   appropriate, 



mischaracterization   of   the   lot   cannot   be   framed   as   a   proper   unequal   distribution   of 



property. 



                Because Patricia and Mark refinanced and jointly titled their marital home, 



cash proceeds of the refinance were also marital property.   Patricia and Mark then used 



these marital proceeds to buy a lot, which was itself jointly titled. There was no evidence 



of intent to maintain the property as separate, so the lot was a marital asset.  We therefore 



conclude that it was error to treat the $42,092 of the 528 Second Avenue lot as Mark's 



separate property. 



        B.      The Orlander Avenue Home's Equity Was Incorrectly Valued. 



                1.	     It was error to value the Orlander Avenue home at the time of 

                        separation. 



                Patricia argues that the trial court incorrectly determined the parties' equity 



in the Orlander Avenue home because it should have valued the mortgage on the home 



at the time of trial rather than the time of separation.          Property valuation is the second 

step in the equitable division of property.27        In valuing the mortgage debt remaining on 



the Orlander Avenue marital home at the time of separation, rather than trial, the superior 



court reasoned that Mark "used post-separation income to create equity and should be 



        27      E.g. , Wanberg v. Wanberg, 664 P.2d 568, 570 (Alaska 1983). 



                                                  -12-                                               6789 


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

able to benefit from the investment."  The superior court also explained that "the market 



is flat so he will not enjoy any windfall due to a rise in value that is not accounted for in 



the final tally."    On reconsideration, the superior court further reasoned that Patricia 



"could have purchased a home and paid toward equity and not rent."                     Patricia appeals, 



arguing that the superior court should have valued the home mortgage at the time of trial, 



rather than at the time of separation.         We agree with Patricia because valuation at the 

time of trial provides the most accurate information.28 



                Alaska Statute 25.24.160(a)(4)(I) directs the superior court to consider, 

among other factors,"the value of the property at the time of division."29               We made clear 



in  Ogard v. Ogard that the date on which the superior court values marital property 

generally "should be as close as practicable to the date of trial."30              Valuing property at 



the time of trial uses the most current and accurate information, thereby avoiding unfair 

results.31  But "[i]n special situations, the trial court may value property as of the date of 



        28      See Ogard v. Ogard, 808 P.2d 815, 819 (Alaska 1991) (concluding that 



valuation at the time of trial, the end of the joint marital effort, provides the most current 

and accurate information). 



        29      AS 25.24.160(a)(4)(I); see also Lewis v. Lewis, 785 P.2d 550, 555 (Alaska 



1990)   (holding   that   shares   of   jointly   held   stock   were   marital   even   though   husband 

acquired stock with his premarital assets); cf. Laing v. Laing, 741 P.2d 649, 656 (Alaska 

1987) (treating both vested and nonvested pensions as marital property); Wanberg, 664 

P.2d at 573-74 (treating entire equitable value of townhouse bought after marriage as 

subject to equitable distribution rather than just appreciated value). 



        30       808 P.2d at 819; see also Stevens v. Stevens , 265 P.3d 279, 284-85 (Alaska 



2011) (citing Ogard, 808 P.2d at 819); Heustess v. Kelley-Heustess , 158 P.3d 827, 832 

(Alaska   2007)   (holding   that   it   was   error   to   value   the   marital   house   at   the   time   of 

separation, rather than the time of trial, though superior court stated three "unpersuasive" 

reasons for valuing at the time of separation). 



        31       Ogard, 808 P.2d at 819 (quoting L. GOLDEN , EQUITABLE DISTRIBUTION OF 



                                                                                           (continued...) 



                                                   -13-                                              6789
 


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

separation of the parties."32      The exceptions to the  Ogard rule are limited:           We have 



approved exceptions when one spouse dissipates assets or purposefully allows the value 

to decline during separation33 or when the value of marital property has risen due to the 



efforts of only one spouse.34      Occasionally, we have approved an earlier valuation date 



when a later valuation date was less reliable.35        But the "reliability" cases are not "true 



exceptions to the principles of accuracy underlying Ogard because in these cases the 

more accurate valuation was the earlier one."36            Additionally, we have held that the 



superior court's use of an earlier date was not reversible error when the parties did not 

present evidence of a later valuation37 or object to the use of the earlier date.38          When a 



trial court finds that an exception to the  Ogard rule applies, it must make "specific 

findings as to why the date of separation is the more appropriate choice for valuation."39 



        31(...continued)
 



PROPERTY   7.01, at 207 (1983)).
 



        32      Doyle v. Doyle , 815 P.2d 366, 369 (Alaska 1991) (citing Ogard, 808 P.2d 



at 820). 



        33      E.g. , Foster v. Foster , 883 P.2d 397, 399-400 (Alaska 1994); Ogard, 808 



P.2d at 820. 



        34      Ogard, 808 P.2d at 820. 



        35      Stevens, 265 P.3d at 286 (citing Henderson v. Henderson , Mem. Op. & J. 



No. 1075, 2002 WL 844717, at *1-2 (Alaska, May 1, 2002)). 



        36      Id. 



        37      See Brotherton v. Brotherton, 941 P.2d 1241, 1245 (Alaska 1997). 



        38      See Odom v. Odom , 141 P.3d 324, 336 n.48 (Alaska 2006). 



        39      Doyle v. Doyle , 815 P.2d 366, 369 (Alaska 1991) (quoting Ogard, 808 P.2d 



at 820) (internal quotation marks omitted). 



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              Mark claims that the superior court correctly valued the mortgage at the 



date of separation and made sufficient findings to warrant an exception.  Mark contends 



that because he paid mortgage payments with his post-separation income and because 



the Seward real estate market was flat, the superior court did not err in departing from 



the Ogard rule. 



              But post-separation mortgage payments to maintain marital property are 

common and do not qualify as unusual circumstances.40        Parties to a divorce frequently 



make post-separation payments to preserve the marital estate,41 and the proper time to 



value the equity of the home is still the time of trial.42   For example, in Rodriguez v. 



Rodriguez , the superior court properly valued the marital home at the time of trial.43  On 



appeal, the husband argued that the superior court should instead have valued the home 



       40     See    Rodriguez   v.   Rodriguez,   908  P.2d  1007,   1012-13  (Alaska  1995) 



(valuing the home at the time of trial and addressing post-separation mortgage payments 

as a possible credit). 



       41     See Dodson v. Dodson, 955 P.2d 902, 912 (Alaska 1998) (holding that it 



was not an abuse of discretion to deny husband a credit for post-separation mortgage 

payments he made to maintain the marital estate before entry of the divorce decree); 

Harrelson v. Harrelson , 932 P.2d 247, 253 (Alaska 1997) (concluding that the superior 

court did not abuse its discretion by denying credit for post-separation house payments 

even though other spouse had exclusive possession of the house during the separation); 

Rodriguez , 908 P.2d at 1013 (holding that while payment of rental value for use of the 

marital home may be required in some cases, trial courts have discretion whether to give 

credit for post-separation payments to maintain marital property); Ramsey v. Ramsey , 

834 P.2d 807, 809 (Alaska 1992) ("[T]he fact that one party has made payments from 

non-marital income to preserve marital property should be considered as one of the 

circumstances to be weighed by the trial court in dividing the marital property."). 



       42     See Rodriguez, 908 P.2d at 1013; Ogard, 808 P.2d at 819; see also Stevens 



v. Stevens, 265 P.3d 279, 285 (Alaska 2011) (citing Ogard, 808 P.2d at 819); Heustess 

v. Kelley-Heustess , 158 P.3d 827, 832 (Alaska 2007). 



       43      908 P.2d at 1012-13. 



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at the time of separation because his post-separation mortgage payments alone increased 

the value of the marital home.44      But because post-separation mortgage payments did not 



justify divergence from the  Ogard rule, we held that the superior court properly valued 

the home at the time of trial.45       We emphasize that in almost all cases, valuing marital 



assets and debts at the time of trial is the most equitable approach because it provides the 

most accurate financial information.46         Post-separation mortgage payments are common 



and thus will not ordinarily provide an exception to the Ogard rule.47                  As we discuss 



below and have held many times in the past, the appropriate method to account for post- 



separation payments to maintain marital property is to consider a credit in the third step 

of the property division.48      We conclude, therefore, that the Orlander Avenue mortgage 



        44      Id. 



        45      Id. 



        46      See Heustess, 158 P.3d at 833 & n.14 (citations omitted); Rodriguez , 908 



P.2d at 1012-13; see also Ramsey v. Ramsey , 834 P.2d 807, 809 (Alaska 1992) (citation 

omitted); Doyle v. Doyle , 815 P.2d 366, 369 (Alaska 1991) (citation omitted); Ogard, 

808 P.2d at 819 (citations omitted); 2 BRETT R. TURNER , EQUITABLE DISTRIBUTION OF 

PROPERTY  7.4, at 621 (3d ed. 2005). 



        47      See Heustess, 158 P.3d at 833 & n.14 (citations omitted); Rodriguez , 908 



P.2d at 1012-13; Ogard, 808 P.2d at 819; see also  cases cited supra note 41.                    To the 

extent that our decision in Brown v. Brown suggests otherwise, it is incorrect. See Brown 

v. Brown , 914 P.2d 206, 208 (Alaska 1996). 



        48      See,    e.g.,  Partridge    v.  Partridge ,   239   P.3d   680,   691   (Alaska    2010) 



(concluding that the superior court should have considered crediting husband for post- 

separation debt payments from separate property in the property division); Haines v. 

Cox, 182 P.3d 1140, 1145 n.21 (Alaska 2008) (" '[T]he fact that one party has made 

payments from non-marital income to preserve marital property should be considered as 

one   of   the   circumstances   to   be   weighed   by   the   trial   court   in   dividing   the   marital 

property.' " (quoting Ramsey, 834 P.2d at 809)); Heustess , 158 P.3d at 833 & n.14; 

                                                                                         (continued...) 



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

should have been valued at the time of trial in accordance with our rule.49 



               In sum, Mark's post-separation payments do not merit diverging from our 



rule that ordinarily "the date of valuation . . . should be as close as practicable to the date 

of trial."50  Because post-separation mortgage payments do not justify an earlier valuation 



date, we reverse and remand for revaluation of the home mortgage. 



               2.	    The    superior   court   may   grant   a  credit  for  post-separation 

                      mortgage      payments    to  maintain    marital   property,    but  any 

                      credit is to be considered in the final step of property division. 



               Once the superior court has determined the value of the marital property, 



contributions made from post-separation income are to be considered during the final 

division of property.51    But even where contributions are made from post-separation 



       48(...continued) 



Edelman v. Edelman , 3 P.3d 348, 354 (Alaska 2000); Dodson v. Dodson, 955 P.2d 902, 

912 (Alaska 1998); Harrelson v. Harrelson , 932 P.2d 247, 253 (Alaska 1997); Cox v. 

Cox, 882 P.2d 909, 919-20 (Alaska 1994); Ramsey, 834 P.2d at 809 (citations omitted) 

(holding that in the final property division, courts should consider a credit for payments 

made from post-separation income to maintain marital property). 



       49      Mark also argues that the superior court did not err in departing from the 



Ogard rule because the Seward real estate market was flat.         But even if the market was 

generally flat, as the superior court found, there may still have been some appreciation 

in value during the three years that Mark lived in the home during separation.  If so, that 

change must also be taken into account. 



       50	     Ogard, 808 P.2d at 819; see also Compton v. Compton, 902 P.2d 805, 812 



n.9 (Alaska 1995) (citing Moffitt v. Moffitt , 813 P.2d 674, 678 (Alaska 1991)); Ramsey , 

834 P.2d at 809 (quoting Ogard, 808 P.2d at 819). 



       51      See, e.g., Ramsey , 834 P.2d at 809 (trial courts may credit a spouse for 



contributions from post-separation income in the final property division); Doyle, 815 

P.2d at 369 n.5; see also Chotiner v. Chotiner , 829 P.2d 829, 835 (Alaska 1992) (quoting 

Laing v. Laing , 741 P.2d 649, 654 (Alaska 1987)) (recognizing that the superior court 

may consider, at the time of division, a spouse's contribution of substantial separate 

                                                                                 (continued...) 



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

property to maintain marital property, the superior court need not grant dollar-for-dollar 

credit.52 



                 At the same time, the superior court should consider "whether any such 



credits should be offset by the value of the benefit of [the spouse's] post-separation 

occupancy   of   the   house."53       Where     the   use   of   marital   property   during   separation 



effectively excludes the other spouse, the trial court should consider whether the marital 

estate   should   receive   payment   for   the   fair   market   rental   value   of   the   property.54 In 



Rodriguez v. Rodriguez , we held that "the superior court did not abuse its discretion in 



ruling that [the husband] was not entitled to a credit for any post-separation payments he 

made   on   the   parties'   home."55     We   reasoned   that   "any   benefit   which   he   may   have 



imparted to the marital estate was offset by the benefit he received from the estate by 

living rent-free."56    Thus, we affirmed the trial court's determination that the husband in 



Rodriguez was not entitled to reimbursement for his post-separation mortgage payments 



        51(...continued) 



property to the marriage). 



        52       See Ramsey , 834 P.2d at 809 (stating that there is "no fixed rule requiring 



credit in all cases" and that payments from separate income should be considered as one 

of the circumstances to be weighed by the trial court in dividing the marital estate). 



        53       Heustess , 158 P.3d at 833 (footnote omitted); see also Carr v. Carr, 152 



P.3d 450, 454 (Alaska 2007) ("The superior court may impute the rental value of one 

party's   exclusive   use   of   the   marital   residence   after   separation   to   that   party   when   it 

equitably divides the marital estate between the parties." (citation omitted)). 



        54       See Heustess, 158 P.3d at 833 & n.14 (citations omitted); Rodriguez v. 



Rodriguez , 908 P.2d 1007, 1013 (Alaska 1995) (citing Wood v. Collins, 812 P.2d 951, 

958 (Alaska 1991)). 



        55       908 P.2d at 1013. 



        56       Id. 



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----------------------- Page 19-----------------------

because he had lived in the home after separation and therefore a credit would have given 

an unfair benefit to the husband.57 



                A trial court should therefore "consider payments made to maintain marital 



property from post-separation income when dividing marital property" and whether such 

a credit should be offset by the value of the benefit of post-separation use of the home.58 



There is no requirement that a trial court give credit for the post-separation payments in 

all cases.59 



                Here, the superior court valued the mortgage at the time of separation in 



order to credit Mark for the post-separation mortgage payments. Although we have held 



that trial courts should consider payments made to maintain marital property from post- 



separation income in the property division, the appropriate time to consider a credit for 

payments is in the third step - the final division of property.60 



                The superior court also failed to address the benefit to Mark of living in the 



marital home during separation.          Patricia points out that she was "excluded from the 



home   and   forced   to   pay   rent   from   her   post-separation   earnings."     On   remand,   the 



superior   court   should   consider   both   whether   Mark   should   be   given   credit   for   post- 



separation mortgage payments he made from separate property and whether any such 



        57      See id. 



        58      Id. (quoting Ramsey v. Ramsey, 834 P.2d 807, 809 (Alaska 1992)) (internal 



quotation marks omitted); see Heustess , 158 P.3d at 833. 



        59      See Rodriguez, 908 P.2d at 1013. 



        60      See, e.g., Ramsey , 834 P.2d at 809 (stating trial courts have authority to 



credit a spouse in the final property division for payments made from post-separation 

income to maintain marital property); Doyle v. Doyle, 815 P.2d 366, 369 n.5 (Alaska 

1991). 



                                                  -19-                                             6789
 


----------------------- Page 20-----------------------

credits should be offset by the value of the benefit of his post-separation occupancy of 



                         , 

the marital home.61       62 



V.       CONCLUSION 



                 Because the superior court improperly treated the jointly held 528 Second 



Avenue lot as Mark's separate property, we REVERSE that decision.  The lot is marital 



property and should be divided in the equitable division of the marital estate.                      Since it 



was   error   to   value   the   Orlander   Avenue   home   equity   at   the   time   of   separation,   we 



REVERSE the mortgage valuation and REMAND for further proceedings. 



         61      See, e.g., Haines v. Cox , 182 P.3d 1140, 1145 (Alaska 2008) (citing Korn 



v. Korn , 46 P.3d 1021, 1024 (Alaska 2002)) ("[T]he trial court may award rental value 

but only as an adjustment to the equitable division of assets in the third step of the 

property-division process, if it provides a careful explanation."); Heustess , 158 P.3d at 

833; Carr v. Carr, 152 P.3d 450, 454 (Alaska 2007); see generally 2 TURNER , supra 

note 46,  6.86, at 458-63. 



         62      We make no assumptions as to the relationship between the amount of 



mortgage payments and the value of the benefit Mark received by living in the marital 

home during separation. 



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