Arizona Divorce & Family Law Blog : Commentary on Arizona divorce, child custody, paternity, child support & family law litigation. : Arizona Family Law Lawyer & Attorney : Nirenstein Garnice Soderquist, PLC

In this case husband worked for a drug company for many years prior to the parties' marriage and for a relatively short time during marriage. During his employment, husband acquired an interest in the drug company’s profit sharing plan. Most of his shares were acquired prior to the marriage.  After husband was terminated his entire profit sharing plan was rolled over into an IRA bank account. Eventually, those funds were rolled over into a second IRA account to hold real property investments. Both IRAs were in husband's name only. Ultimately, the family court found that 84.62% of the IRA accounts were husband's sole and separate property and 15.38% were community property under Arizona community property law.

Wife's argument was two-fold. First she argued husband's IRA accounts were community property due to commingling, agreement, and gift of husband's original profit sharing plan stock funds and second, in the alternative, if husband's IRA accounts remained his sole and separate property, the community was entitled to an equitable lien for the increased value of the IRA accounts due to community efforts.

Wife contended that when “she took over” management of the first IRA, a “transmutation occurred and the funds became community property in their entirety since the sole and separate nature of that asset was lost.” The Court of Appeals disagreed stating that “a mere change in the form of an asset does not necessarily change its character as either community or separate”.  Wife relied on the commingling rule in Cooper v. Cooper, 130 Ariz. 257, 259, 635 P.2d 850, 852 (1981), which states unless one can explicitly trace his or her separate property, commingled community and separate funds will be presumed community property.  The Court of Appeals held that wife's reliance on Cooper was misplaced because Cooper involved a savings account that was owned by the wife prior to marriage and that during the marriage, deposits were made to the savings account, some from checks the husband made payable to the wife. 

The Court of Appeals found that while the profit sharing plan shares changed in form, their identity as community or separate shares was not lost. So, the Arizona family court was correct when it apportioned the shares husband earned prior to the marriage, and awarded those as his sole and separate property and the shares earned during the marriage were awarded to the community.

Wife also argued that because she took over management of the IRA accounts during the marriage and because husband purportedly told wife that the funds were for their shared retirement, the IRA accounts became community property by gift and/or agreement. However, wife testified that the agreement was not reduced to writing and there were no witnesses to the agreement. Husband testified that while he told wife the IRA Accounts would be used when they both retired if they were still married, he never gave or promised wife any interest in the IRA accounts. The Arizona family court found the purported statement by husband to wife of “we're in this together,” if made, was insufficient to transform the nature of the property or create a gift and further found there was no gift or agreement to transmute Husband's IRA Accounts to community property.  The Court of Appeals deferred to the Arizona family court's factual findings, and as a result, found that there was sufficient evidence for the Arizona family court to determine that the IRA accounts were husband's sole and separate property.

Wife then argued next that if the IRA accounts were husband's sole and separate property, the increases in husband's IRA accounts were due in part to community efforts and therefore, the community was entitled to an equitable lien in the amount of the increase in value of the IRA accounts. The Court of Appeals recognized that increases in the value of separate property during marriage due to community efforts should be divided between the separate property of the owner and the community property of the spouses. And that when the value of separate property is increased, the burden of proof is on the spouse who contends the increase is due to the inherent nature of the property rather than community efforts. Additionally, when there is an increase in value due to both the inherent nature of the separate property and community efforts, the increase must be apportioned between the two accordingly.

Wife contended that the increase in the IRA accounts was not solely attributable to the inherent nature of the stock, but was also due to her “effort in researching and analyzing the market, managing the sale and purchase of the stock, devising and implementing new investment strategies.” The Arizona family court found the increase in value of the IRA accounts was “solely because of the inherent nature of the investments, and not because of any community efforts.” Here, the Court of Appeals disagreed that the increase in value of the IRA accounts can be attributed solely to the inherent nature of the investments. 

Wife argued that while community efforts may not have caused the stocks themselves to increase in value, the community efforts in research and management increased the overall value of the IRA accounts. While husband testified that “there was little or no effort other than a discussion by either of us” regarding investments made for the IRA accounts, he also testified both he and wife made investment decisions during their marriage. Husband testified that “[o]n occasion, [he] would call the Wells Fargo person,” however, the investment decisions were made by both parties. In his testimony, he also admitted community efforts were used to select and manipulate certain assets held in the IRA accounts. Furthermore, wife acted as property manager on some of the rental properties held in the real estate investment IRA.

The Court of Appeals recognized that as the party asserting the increase in value is separate property and not community property, husband bore the burden of proof. And that Husband did not meet his burden regarding his assertion that the increase in the IRA accounts was due solely to the inherent nature of the assets and investments rather than the inherent value coupled with some degree of community efforts.

The Court of Appeals also recognized that the testimony of both husband and wife indicated that there was at least some degree of community effort during marriage in regards to researching and acquiring investments in the IRA accounts. And, as a result, increases in the value of separate property during marriage that are due at least in part to community efforts should be “apportioned between the separate property of the owner and the community property of the spouses.” Therefore, the Court of Appeals disagreed with the Arizona family court's finding that the increases in value of the IRA accounts were due solely to the inherent nature of the investments and not due in part to some amount of community efforts. As a result, the Arizona family court’s ruling was reversed and remanded.

Cases regarding Arizona community property law in Arizona divorce cases can be very complicated and fact-specific.  It is always a good idea to seek the assistance and advice of a good Arizona divorce and family law lawyer when dealing with these issues.  Contact Nirenstein Garnice Soderquist PLC and we will be glad to answer any questions you may have.

Lawyers, however, love these sites, which can be evidentiary gold mines. Did your husband's new girlfriend Twitter about getting a piece of jewelry? The court might regard that as marital assets being disbursed to a third party. Did your wife tell the court she's incapable of getting a job? Then your lawyer should ask why she's pursuing job interviews through LinkedIn.

Battles over finances and custody remain the Iwo Jima and Stalingrad of divorce cases. Opposing lawyers will press any advantage they have, and personal information on sites like Facebook, MySpace and LinkedIn is like decoded bulletins from enemy territory. "It's now just routine for us to go over with clients whether they have an active presence on the Web and if they Twitter or have a MySpace page," says Joseph Cordell of Cordell & Cordell, a domestic-relations law firm with offices in 10 states. He advises his mostly male clients to scour their page — and their girlfriend's — for anything that could be used by their ex's legal team. Then Cordell studies the page of the soon-to-be ex-wife.

"We had a custody case where a mom assured the court that she hadn't been drinking," recalls the Missouri-based attorney. "But her MySpace page had actual dated photos of her drinking — and smoking, which is also of interest." In another case, a mom had listed herself on a dating site as single with no kids, which Cordell's firm used to cast doubt on her truthfulness.

And that's just the courtroom stuff.

Half the fun of social-networking sites is the posting of personal news. The other half is the posting of personal opinion, something spurned spouses typically have in spades. MySpace and its ilk offer the giddying cocktail of being able to say something in the privacy of your home that will be publicly accessible, along with a chaser of instant gratification. All this at a time when people are often less than their best selves. On the walls of two Facebook groups — I Hate My Ex-Husband and I Hate My Ex-Wife, which together had been joined by 236 Facebook users as of early June — posts include all manner of (often misspelled) vitriol, including some colorful British slang: "my husband is ... a dirty smelly chavvy theivin alcoholic drug addict selfish scum bag" and "my ex wife is a no good lieing slag," each of which was posted alongside a smiling photograph of the commenter.

There's little the besmirched can do legally, unless there are children involved. Family-law courts routinely issue restraining orders to prevent one parent from disparaging another to a child. "The question is, If it's on the Internet, can that speech be blocked?" says Stephen Mindel, a managing partner at Feinberg, Mindel, Brandt & Klein in Los Angeles. "The First Amendment is going to come into conflict with the family-law courts."

Issuing an order to remove children's access to Facebook is pointless, says Chicago-based lawyer Jennifer Smetters. "The kids just go on a fishing expedition to find out what's so secret. And no child needs to see their parent being publicly humiliated." Smetters has seen cases where messages on a social-networking site were part of a harassment campaign that led to the court's issuing a civil order of protection.

It seems everybody — except perhaps some lawyers — would be better off if divorcing spouses gave each other some space on MySpace. But when confused, anguished people look for ways to work through their feelings, a social-networking site can be an almost irresistible venue.

Patrick and Tammie are still active on Facebook. So are decoupled East Coast residents Andrea and Adrian, even after "he told me he didn't have any money and then posted pictures of his new BMW bike," Andrea says. He says Facebook helped her stalk him. "It's had a very negative impact on our communication," he adds.

But there can be some positives. Tammie's friends post supportive messages on her Facebook page. And Patrick says he understands online social networks better now. "It's like putting everybody you know in the same room. I'm using it, but I'm much more careful."