LEGAL GUIDE
Written by attorney Clayton Harold Walker Jr. | Jun 29, 2013

Alaska Rules Regarding Equitable Distribution of Marital Property

There are three basic steps in the equitable division of marital assets in Alaska: (1) identifying the property available for distribution, (2) determining property value, and (3) dividing property equitably. 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).

The first step, identifying the property available for distribution involves determining which property is a marital asset or separate asset. Yesterday, the Alaska Supreme Court revisited the first step of the process. They recognized that their prior decisions had enunciated a number of different standards. They compared their prior decisions inOdom 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 characterization of property 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)).

In the first step, “[T]he characterization of property as separate or marital may involve both legal and factual questions." 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). Underlying factual findings as to the parties’ intent, actions, and contributions to the marital estate are factual questions. 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). “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." 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).

The second step, asset valuation, is a factual determination reviewed for clear error. 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)).

While the third step -- equitable allocation of property, must pass the abuse of discretion standard. 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)).

Now that you understand the standards of review there are a few more rules that come into play in wading through step one -- Identifying the property available for distribution. Separate property is typically limited to what you bring to the marriage along with gifts and inheritance received by one marital member. There is a rebutable presumption that jointly titled property is marital property. 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).

The parties may transmute separate property into marital property through words or actions demonstrating intent. Hansen v. Hansen, 119 P.3d 1005, 1013 (Alaska 2005) (citing Green, 29 P.3d at 857). Transmutation is an all or nothing change in the character of ownership. 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."). 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).

During short marriages or unusual circumstances where a person's separate property is easily traceable they may prevent the transmutation of separate property into marital property. 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).

Normally when valuing the property, the relevant date for valuation is not the separation date. Rather the date is the date of trial. 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." 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). The few exceptions to the trial valuation date are:

  1. a spouse disipates value prior to trial E.g., Foster v. Foster, 883 P.2d 397, 399-400 (Alaska 1994); Ogard, 808 P.2d at 820;
  2. a single spouse causes the appreciation Ogard, 808 P.2d at 820;
  3. the parties fail to provide evidence at trial of the trial value, See, Brotherton v. Brotherton, 941 P.2d 1241, 1245 (Alaska 1997); and,
  4. a party does not object to the use of an earlier valuationSee Odom v. Odom, 141 P.3d 324, 336 n.48 (Alaska 2006).

A party's claim of value accretion or appreciation after separation but prior to trial is closely scrutinized. If you're living in the marital home and making the mortgage payments, the appreciation is generally offset by the rent you would then owe to your spouse. 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).

However, using your separate assets to preserve the marital assets is generally credited to the party making the contribution. 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; 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).

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