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Abood v. Abood9/2/2005
rital property through active appreciation.
After the parties separated, Kimberly traded in her Mercedes-Benz for a new Jeep. Kimberly agrees that the Mercedes-Benz was marital property and that she received less than fair market value for it, but the parties dispute the amount to be recaptured. The superior court did not rule on Patrick's request that it charge Kimberly with the value of a set of Mercedes-Benz rims and tires that she traded for an extended warranty on the Jeep.
Patrick and Kimberly filed a joint tax return in 2001, the last full year of their marriage. After they made payments from marital funds, Patrick used his post-separation earnings to make a Simplified Employee Pension Plan (SEP) contribution for 2001, reducing the couple's tax liability for that year. The superior court found that the resulting tax refund was Patrick's separate property.
III. DISCUSSION
A. Standard of Review
The equitable division of marital assets involves a three-step procedure. First, the superior court "must determine what specific property is available for distribution." Next, it must find the value of this property. Finally, it must determine "how an allocation can be made most equitably."
The superior court has broad discretion in fashioning the property division in a divorce case. We review the superior court's determination of the availability of property for distribution for abuse of discretion. We review the superior court's factual findings for clear error. Likewise, a finding that the parties intended to treat property as marital will be disturbed only if it is clearly erroneous. A finding of fact is clearly erroneous when the reviewing court is left with a definite and firm conviction that the trial court has made a mistake.
B. The Product Liability Settlement Proceeds
Kimberly received $1.6 million in a 1999 settlement with General Motors following the 1989 vehicular accident in which she suffered serious, long-term injuries. The superior court found that the settlement funds remained Kimberly's separate property. Patrick argues that the settlement funds were transmuted into marital property when they were deposited into jointly owned brokerage accounts. Because we discern no clear error in the superior court's finding, we affirm.
Transmutation is the process by which one spouse's separate property becomes marital property, and "occurs when a married couple demonstrates an intent, by virtue of their words and actions during marriage, to treat one spouse's separate property as marital property." Commingling separate property with marital property does not automatically lead to a finding of transmutation. But placing property in joint title raises a presumption of transmutation. Patrick argues that although the funds were initially Kimberly's separate property, a presumption of transmutation arose when she commingled the funds with marital property in Patrick's business checking account and then placed them into the jointly held Merrill Lynch CMAs.
Kimberly testified that the parties chose not to segregate the settlement proceeds from other funds within the CMAs for administrative convenience, to obtain better money managers, and to receive better brokerage rates. The rationale of better brokerage rates was disputed at trial, but there was evidence that the Aboods were able to obtain money management for the marital funds that would have been unavailable without combining them with Kimberly's settlement proceeds.
We have held that evidence of administrative convenience may rebut the presumption of transmutation. In anticipation of the personal injury settlement, th
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