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@akcourts.gov. 

THE SUPREME COURT OF THE STATE OF ALASKA 

VERONICA LOUISE HUDSON, 

 Appellant, 

v. 

DANIEL LEE HUDSON, 

 Appellee. 

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Supreme Court No. S-18242 

Superior Court No. 4FA-20-01685 CI 

O P I N I O N 

No. 7665 – July 7, 2023 

Appeal from the Superior Court of the State of Alaska, 

Fourth Judicial District, Fairbanks, Brent E. Bennett, Judge. 

Appearances: Eric K. Ringstad, Golden Heart Law, LLC, 

Fairbanks, for Appellant. Jason A. Weiner, Jason Weiner & 

Associates, P.C., Fairbanks, for Appellee. 

Before: Maassen, Chief Justice, Carney, Borghesan, and 

Henderson, Justices. 

HENDERSON, Justice. 

INTRODUCTION 

 A former wife appeals several aspects of the division of property in her 

divorce. The couple separated in June 2020, after the wife left Alaska without telling 

her husband. Soon after separation, the husband received a large severance and bonus 

package. On appeal the wife challenges the superior court’s determination that the 

husband’s severance and bonus pay were separate property. She further challenges the 

superior court’s division of the marital estate, contending that the court erred both in 
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concluding that her concealment of her plans to separate amounted to economic 

misconduct, and in finding that the parties’ respective financial conditions were equal. 

Finally, she challenges the court’s order allowing the husband to make an equalization 

payment over five years rather than in a lump sum, as well as the court’s denial of her 

request for attorney’s fees.

We conclude that the court lacked sufficient information to classify the 

severance and bonus pay, and clearly erred in its findings related to economic 

misconduct and the financial condition of the parties. We further conclude that the

court abused its discretion in ordering a schedule of equalization payments over 

multiple years under the circumstances. We remand for further proceedings to 

determine the purpose of the severance and bonus pay, and whether, in light of our 

holdings on the contested factors, a different division of property is warranted.

FACTS AND PROCEEDINGS

A. Facts

Veronica and Daniel (“Dan”) Hudson married in July 2011.1 During the 

marriage the couple lived in the marital home in the Fairbanks area. Veronica worked 

as an administrative assistant, earning about $24,000 annually with benefits and 

retirement. Dan worked for BP on the North Slope, earning around $178,000 annually 

with benefits and retirement. 

In fall 2019 BP announced it was leaving Alaska and selling its assets to 

Hilcorp. The company gave employees three options: stay employed with BP but leave 

Alaska, take a position with Hilcorp (which purchased BP’s assets in Alaska), or take a 

severance package and give up the option of further work with Hilcorp or BP. Dan 

elected to take the severance package, and informed BP of his decision in January 2020. 

In order to receive the severance pay, Dan was contractually obligated to continue 

1 Because the parties have the same last name, we refer to them by first 

name for clarity.
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working through June 2020 to ensure a smooth transition from BP to Hilcorp

management. 

In February 2020, Veronica retained a divorce attorney. Veronica did not 

tell Dan that she was planning to divorce him, and instead continued to send him 

“romantic and otherwise normal marital text messages.” Veronica testified that she did

not want to separate until after the school year finished in May. Additionally, Veronica 

testified that she did not tell Dan about her plans because she feared his reaction based 

on prior alleged threats and incidents of domestic violence. Dan denies all allegations 

of domestic violence. Dan also claims that their marriage had “no issues,” they had “a 

great relationship,” and he was “totally shocked” when Veronica left. 

On June 11 Veronica left Alaska for Nevada. Dan was working for BP on 

the North Slope on a two-week rotation at the time. Shortly after she left, Dan’s son 

visited their home and noticed that all of Veronica’s belongings were gone. Dan called 

Veronica and she confirmed that she had left him and Alaska, not merely gone on a 

short trip as she had previously told him. She filed for divorce shortly thereafter. 

According to Dan’s later testimony, he attempted at that point to get a job 

with Hilcorp instead of taking the severance, but he was told it was too late. Dan 

testified that had he known Veronica’s plans sooner he would have applied for and 

likely gotten a job with Hilcorp. On June 18 Dan finished his last shift and returned 

home from the North Slope. Dan received the severance and a completion bonus later 

that summer. The severance pay was $145,000, and the completion bonus was 

$22,671.66. 

B. Proceedings

Veronica filed her complaint for divorce on June 15, 2020, a few days 

after leaving Alaska. A trial date was set for the week of February 22, 2021.

Over three days of trial, both Veronica and Dan testified, along with an 

appraiser, Dan’s financial adviser, and four additional witnesses called by Dan. The 

major contested issues relevant to appeal are the following division and valuation of 
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Dan’s BP severance and bonus pay; whether domestic violence occurred during the 

relationship; and the overall economic impact of the divorce on each party. Veronica 

also requested attorney’s fees: either enough fees to cover trial costs or, in the 

alternative, an order that the $7,500 of marital funds she spent on attorney’s fees not be

credited to her portion of the marital estate. 

1. The testimony regarding severance and bonus pay

Both Dan and Veronica testified about Dan’s decision to take severance.

Dan testified that he took severance because he and Veronica had a plan for him to work 

part-time and travel to figure out where they wanted to retire outside of Alaska. 

Veronica testified that she was “not really” part of the decision-making process on 

whether Dan would take severance; she described the conversations not as 

“discussions” but just Dan “saying what he wanted to do.” She testified that she did 

not encourage him to retire from BP, that he had plans to continue working after he took 

severance, and that she did not talk with him about travel or retirement plans. 

Dan’s financial advisor testified about the value of the couple’s retirement 

accounts and Veronica’s involvement in the couple’s planning. He testified that while 

Dan was “the primary contact for a lot of the stuff,” Veronica participated in almost 

every call and even had direct conversations with the advisor about structuring her own 

retirement accounts. According to the advisor, Veronica’s claim that she did not talk 

to Dan about the retirement plan was “not true.” 

Dan and Veronica also testified about the purpose of the severance pay 

and the bonus pay. Neither Dan nor Veronica testified about how the severance pay 

was calculated, and only Dan testified about his understanding of the purpose of the 

severance package.2 Veronica testified that the bonus pay was something that Dan 

received every year based on performance. Dan testified that the bonus pay was a 

2 This testimony was admitted over a hearsay objection and only for Dan’s 

understanding of the purpose, not as evidence of the purpose itself. 
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“completion bonus” for ensuring BP was able to safely and smoothly hand over 

operations to Hilcorp. 

2. The domestic violence allegations

Veronica testified about alleged incidents of domestic violence to rebut 

Dan’s allegation that she “fraudulently duped him into staying in a marriage before she 

left.” She testified that she was afraid of Dan after numerous threats of physical 

violence. She also testified about one incident of physical violence. On crossexamination Veronica testified that while Dan never punched her, he pushed her and 

grabbed her by the throat. 

Dan denied the allegations outright and said he was “surprised” when he 

heard Veronica was claiming domestic violence. Dan testified that they had a great 

relationship and he was not aware of any issues in the marriage. 

Dan called four witnesses to testify on this point. One friend, who had 

known Dan and Veronica since at least 2009, testified that throughout their friendship 

she never heard of any domestic violence between the couple. This changed when 

Veronica texted the friend a few months before the trial to say that the “abuse was 

getting too bad,” which is why she left. A second friend of the couple testified that 

Veronica also called her a few months before trial to “reconnect” and talk about the 

divorce and abuse. 

Dan and Veronica’s neighbor testified that Veronica texted her “probably 

when all this first started.” In the text Veronica said she left because the relationship 

was getting “increasingly physically violent.” The neighbor shared the message with 

Dan because she was “shocked,” as she never saw any signs of domestic violence 

between the couple. Another neighbor, a police officer, also testified that he never saw 

any signs of domestic violence between the couple. 

3. The financial status of the parties after separation

Both parties provided testimony about their current financial status. After 

failing to find a job with Hilcorp, Dan testified that he found employment at Eielson 
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Air Force Base at the wastewater treatment plant, making approximately $68,000 per 

year. Dan testified that while this had been less money than he was making, it was the 

best job he could get. He also receives about $41,000 per year from military disability 

and retirement. In addition to normal expenses, Dan has a mortgage and home 

improvement loan on the marital house, which the parties agreed he would keep during 

the property division. 

At the time of trial, Veronica rented a home in Nevada. She testified that 

she had a full-time, temporary job without benefits, with a contract through March 17, 

2021. Her monthly take-home pay was $2,600. After leaving Alaska Veronica applied 

to numerous jobs in the hopes of finding a permanent position. In addition to her earned 

income, Veronica received approximately $16,000 per year from a prior ex-husband’s 

military benefits. 

Veronica testified that her expenses included typical expenditures such as 

rent and food, and also payments on a personal debt consolidation loan. Her itemized 

expenses add up to over $4,000 per month, but Veronica stated on cross-examination 

that she estimated her expenses were “at least $3,000 a month.” Adding to these 

expenses, Veronica was going to have to purchase her own health insurance after the 

divorce was finalized. Veronica testified that health insurance would cost about $400

per month if she purchased the COBRA plan from Humana military to replace the 

coverage she used to have under Dan’s military health insurance.3

4. The superior court’s findings and property division order

The superior court issued its final property division on August 31, 2021. 

The court established June 11, 2020, the day Veronica left the marital home, as the 

separation date. 

3 Evidence admitted at trial actually showed it would cost $533. 
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In the final order, the court classified Dan’s severance pay and bonus pay 

as his separate property. This decision was based on the fact that the severance pay and 

bonus pay were conditional benefits before Dan’s last day of work, June 18, which was

after the parties’ date of separation. Additionally, the court discussed the general

purpose of severance pay to compensate employees for future lost wages, not past work. 

The court made specific findings about each of the statutory factors under

AS 25.24.160(a)(4) in order to fairly allocate the economic effect of the divorce.4 The 

court found that most of the factors were either neutral or did not apply to the parties’ 

situation. 

The court found that both parties’ incomes were adequate to cover their 

expenses, and that both were “financially stable.” The court found that Dan could 

adequately cover his expenses, including the mortgage, with his income. The court also 

found that Veronica could cover her expenses, including health insurance. Despite a

lack of evidence on the point, the court speculated that Veronica could find health 

insurance on the marketplace that was less expensive than the COBRA Tricare plan she 

had testified about. The court therefore found that the factor related to the parties’ 

respective financial conditions was neutral. 

The court found that the factor related to respective conduct of the parties 

favored Dan. In particular the court did not find Veronica’s domestic violence 

allegations credible. Therefore, the court found that Veronica acted in bad faith when 

she concealed her plans to divorce from Dan. The superior court found that Veronica’s 

4 The superior court must consider the Merrill v. Merrill factors, now 

codified in AS 25.24.160(a)(4), when deciding an equitable division of marital property. 

Hooper v. Hooper, 188 P.3d 681 (Alaska 2008) (citing Merrill v. Merrill, 368 P.2d 546, 

547-48 n.4 (Alaska 1962)). Two factors are relevant on appeal: “the financial condition 

of the parties, including the availability and cost of health insurance,” and “the conduct 

of the parties, including whether there has been unreasonable depletion of marital 

assets.” AS 25.24.160(a)(4)(D)-(E).
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actions cost Dan a more lucrative position and that she therefore did not act 

“appropriately” and the court would “not [reward] her for her bad faith actions.” 

After making findings about the relevant factors, the court decided that a 

50-50 division of the marital estate was equitable. This determination was based on the 

fact that most of the factors were neutral and each party had one factor weighing in their

favor, which “balance[d] out.” 

The net value of the marital estate was $1,318,396.59. Since the parties 

agreed that Dan would retain the marital home, valued at $325,000, his share of both 

marital assets and marital debt was larger. To equalize the distribution to each party,

the court ordered Dan to make a $48,614.33 equalization payment to Veronica. 

Considering the earning capacity, liquifiable assets, and attorney’s fee 

liability of the parties, the court found that a lump-sum payment would have presented

a hardship for Dan. Instead, the court ordered Dan to repay that value through monthly

equalization payments. Under the order Dan would have to pay Veronica $810.24 per 

month for 60 months. Relying upon the size of the marital estate and earning capacity 

of the parties, the court denied Veronica’s request for attorney’s fees. 

Veronica now appeals the court’s property division and various findings 

under the Merrill factors. 

STANDARD OF REVIEW

The first step of an equitable property division, characterizing property as 

either marital or separate, may involve both legal and factual questions.5“[F]indings

as to the parties’ intent, actions, and contributions to the marital estate are factual 

questions.”6 “Findings of fact are reviewed for clear error . . . .”7 “To reverse for clear 

5 Grove v. Grove, 400 P.3d 109, 112 (Alaska 2017) (quoting Beals v. Beals, 

303 P.3d 453, 458-59 (Alaska 2013)).

6

Id. (quoting Beals, 303 P.3d at 459).

7

Id. (quoting Hanson v. Hanson, 125 P.3d 299, 304 (Alaska 2005)).
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error, we must be left with a definite and firm conviction on the entire record that a 

mistake has been made.”8 Within the superior court’s entire analysis, we review the 

application of legal standards based on our independent judgment.9 

We review the court’s equitable allocation of property for an abuse of 

discretion, reversing only if it is clearly unjust.10 We find an abuse of discretion if the 

court considered improper factors, failed to consider statutorily mandated factors, or 

gave too much weight to some factors.11 

“Trial courts have ‘broad discretion’ over attorney’s fees awards in 

divorce actions, and we will reverse an award of attorney’s fees only if it is ‘arbitrary, 

capricious, manifestly unreasonable, or stems from an improper motive.’ ”12

DISCUSSION

Equitable property distribution after divorce involves a three-step process: 

first, the superior court must characterize property as marital or separate; second, the 

court must value the property; and third, the court must determine the equitable 

allocation of the property.

13 Veronica challenges the first and third steps, specifically

(1) the classification of the BP severance pay and completion bonus as separate 

property; (2) the finding that the conduct of the parties favored Dan; (3) the finding that 

8

Id. (quoting Hansen v. Hansen, 119 P.3d 1005, 1009 (Alaska 2005)). 

9 Rohde v. Rohde, 507 P.3d 986, 992 (Alaska 2022) (quoting Wanberg v. 

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

10 Grove, 400 P.3d at 112 (citing Hansen, 119 P.3d at 1009).

11 Rohde, 507 P.3d at 991 (quoting Thompson v. Thompson, 454 P.3d 981, 

995 (Alaska 2019)).

12 Thompson, 454 P.3d at 989 (quoting Ruppe v. Ruppe, 358 P.3d 1284, 1289 

(Alaska 2015)). 

13 See Grove, 400 P.3d at 112; Odom v. Odom, 141 P.3d 324, 339 (Alaska 

2006) (citing Wanberg, 664 P.2d at 570). 
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the financial condition of the parties was neutral; and (4) the court’s equalization 

payment plan. She also challenges the court’s denial of her request for attorney’s fees. 

A. It Was Error Not To Examine The Purpose Of The Severance And 

Bonus Pay.

The general rule for determining whether property is marital or separate 

is whether the property was “created by the enterprise of marriage.”14 “Assets acquired

during marriage ‘as compensation for marital services’ — most commonly salaries 

earned by either spouse during marriage — are considered marital assets.”

15

 These 

assets can include future benefits like retirement plans, so long as those benefits are 

compensation for work performed during the marriage.16

The classification of severance and bonus pay related to employment 

during the marriage, but received after separation, is an issue of first impression in 

Alaska. Other states that have decided this issue look to the intended purpose of the 

severance benefit. Generally, “[t]o the extent the benefits are additional compensation 

14 Schanck v. Schanck, 717 P.2d 1, 2 (Alaska 1986).

15 Schmitz v. Schmitz, 88 P.3d 1116, 1124 (Alaska 2004) (quoting Brett R. 

Turner, Equitable Distribution of Property § 5.23, at 263 (2d ed. 1994)).

16 See Hansen v. Hansen, 119 P.3d 1005, 1015 (Alaska 2005) (dividing 

benefits into marital and nonmarital portions based on portion of benefits earned during 

marriage versus after); Mann v. Mann, 778 P.2d 590, 592 (Alaska 1989) (listing variety 

of retirement benefits that are divisible marital property if earned during marriage).

Future benefits that we have determined to be marital property include the following: 

non-vested pensions, Laing v. Laing, 741 P.2d 649, 655-58 (Alaska 1987); federal 

military retirement benefits, Doyle v. Doyle, 815 P.2d 366, 370 (Alaska 1991); Chase 

v. Chase, 662 P.2d 944, 946 (Alaska 1983); federal civil service retirement benefits, 

Monsma v. Monsma, 618 P.2d 559, 561 (Alaska 1980); post-retirement military 

healthcare benefits, Horning v. Horning, 389 P.3d 61, 65 (Alaska 2017); and 

contributions to a thrift fund made during the marriage, Schanck, 719 P.2d at 4. 

Additionally, worker’s compensation and tort recovery are classified as marital 

property to the extent they compensate for lost wages during the marriage. Miller v. 

Miller, 739 P.2d 163, 165 (Alaska 1987) (workers compensation); Bandow v. Bandow, 

794 P.2d 1346, 1348-49 (Alaska 1990) (tort recovery).
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for prior marital services or a replacement for lost marital pension rights, the benefits 

are marital property. To the extent that the benefits are compensation for lost post 

marital wages, they are separate property.”17 Involuntary severance benefits are usually 

found to compensate for lost future wages when the amount of compensation is based 

on past salary and given for a number of weeks post-severance.

18

 But these benefits are 

found to compensate for past work when entitlement to the severance is based on past 

service, as opposed to merely using salary as a basis to compute the amount of lost 

future wages.

19

 When determining the purpose of severance pay, courts in other states 

have relied on the language of the agreement20 or testimony from the employer.

21

 

We conclude that this purpose-based analysis aligns with Alaska law, 

because it classifies severance benefits based on whether they are “compensation for 

marital services”

22 or are intended to replace future, post-divorce earnings.

Here, the superior court combined its analysis of both the severance and 

bonus pay, and it determined that both were separate property. The court’s analysis 

was based in part on when Dan received the severance and bonus pay. Since Dan could 

17 2 BRETT R. TURNER, EQUITABLE DISTRIBUTION OF PROPERTY § 6:27 (4th 

ed. 2018, updated 2023) (citations omitted).

18 Id; see also In re Marriage of Bishop, 729 P.2d 647, 648-49 (Wash. App. 

1986); In re Marriage of Holmes, 841 P.2d 388, 388-91 (Colo. App. 1992); Franklin v. 

Franklin, 859 P.2d 479, 486-87 (N.M. App. 1993); Zahn v. Zahn, 420 S.W.3d 706, 709-

10 (Mo. App. 2014).

19 TURNER, supra note 17, § 6:27. While it is often true that salary reflects 

past service, this connection is “not the sort of dependency which makes severance 

benefits marital property.” Id. 

20 See, e.g., Luczkovich v. Luczkovich, 496 S.E.2d 157, 161 (Va. App. 1998);

In re Bishop, 729 P.2d at 648.

21 See, e.g., In re Holmes, 841 P.2d at 389-91 (relying on testimony from 

corporation on purpose of severance).

22 Schmitz v. Schmitz, 88 P.3d 1116, 1124 (Alaska 2004).
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not have received the benefit until his last day of work, which was after the date of 

separation, the superior court found that the severance and bonus pay were separate 

property. It further concluded that private severance pay is generally intended to ease 

the economic transition after a worker leaves employment, or to alleviate economic 

fallout from an unexpected dismissal. On reconsideration the court emphasized and 

reiterated its finding that severance generally is for lost future wages. But the court did 

not examine the purpose of this specific severance package. 

The focus on the date the benefit vested was erroneous, because the 

determinative factor is the purpose of the benefit.23 While the court is correct that in 

some cases private severance pay is a substitute for future economic loss, or lost future 

earnings,

24 this is not always the case. Severance packages may also award employees 

more money based on the length of prior service, and therefore compensate at least 

partially for past work.

25 It was therefore error for the court not to examine the purpose 

of the severance pay.

There is little evidence in the record regarding the purpose of the

severance package or bonus pay in this case. Neither the severance agreement itself 

nor any informational materials from BP were admitted at trial.

26

 The only information 

related to the purpose of the severance and bonus pay comes from Dan’s and Veronica’s 

testimony. But neither Dan nor Veronica testified about how the severance pay was 

23 See Laing v. Laing, 741 P.2d 649, 655-56 (Alaska 1987) (holding that 

nonvested pension was marital property because purpose of benefits was to provide 

deferred compensation for services already rendered, rather than looking to contingent 

nature of benefit).

24 E.g., Zahn, 420 S.W.3d at 709-10; In re Bishop, 729 P.2d at 649.

25 Prescott v. Prescott, 736 So. 2d 409, 412 (Miss. App. 1999); Malin v. 

Loynachan, 736 N.W.2d 390, 397-98 (Neb. App. 2007).

26 Dan lists “BP Severance Information Packet” in his Exhibit List, however, 

it was never offered or admitted at trial. 
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calculated, and Dan’s testimony about the purpose of the severance pay was limited by

a hearsay objection.27 Both parties testified that the bonus pay was mostly for work 

Dan had previously performed, but they disagreed on specifics. 

Because the superior court erred in failing to examine the purpose of the

specific severance and bonus pay at issue, we vacate the court’s decision that the 

severance and bonus pay amounted to separate property, and remand so that the court 

can consider the purpose of those payments. We note that this may require admission 

of additional testimony and other evidence.

B. The Court Erred In Analyzing Two Property Division Factors.

The third and final step in a superior court’s equitable division of marital 

assets is dividing the marital estate.28 An equal division of property is presumptively a 

just distribution.29 The court must consider and make findings about the factors listed 

in AS 25.24.160(a)(4), also known as the Merrill factors, in reaching its final property 

distribution.

30

Veronica argues on appeal that the court erred in finding that the factor 

related to the conduct of the parties favored Dan,31 and that the factor concerning the

relative financial condition of the parties was neutral.32 We conclude that the 

27 The purpose of the severance was only admitted as evidence of Dan’s 

understanding of the purpose, not as proof of the actual purpose. 

28 Grove v. Grove, 400 P.3d 109, 112 (Alaska 2017) (citing Hansen v. 

Hansen, 119 P.3d 1005, 1009 (Alaska 2005)).

29 Odom v. Odom, 141 P.3d 324, 339 (Alaska 2006) (quoting Fortson v. 

Fortson, 131 P.3d 451, 456 (Alaska 2006)).

30 AS 25.24.160(a)(4);see also Merrill v. Merrill, 368 P.2d 546, 547-48, 547

n.4 (Alaska 1962).

31 Factor 5 is “the conduct of the parties, including whether there has been 

unreasonable depletion of marital assets.” AS 25.24.160(a)(4)(E).

32 Factor 4 is “the financial condition of the parties, including the 

availability and cost of health insurance.” AS 25.24.160(a)(4)(D).
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determination that the “conduct of the parties” factor favored Dan based on Veronica’s 

“bad faith actions” was erroneous. We also conclude that the court erred in finding that 

the financial condition of the parties was neutral. We therefore vacate and remand the 

overall property distribution to the superior court for further consideration consistent

with this opinion.

1. It was error to find that the relative conduct of the parties 

favored Dan. 

Under AS 25.24.160(a)(4) a property division must be made “without 

regard to which of the parties is in fault.”33 The court, however, can consider “the 

conduct of the parties, including whether there has been unreasonable depletion of 

marital assets.”

34

 In Jones v. Jones we limited the definition of “conduct of the parties” 

to economic misconduct, in order to resolve this tension.

35

 Economic misconduct does 

not include a party’s “moral or legal marital failings” that lead to the failure of the 

marriage.36 The concept is broad enough, however, to include social or moral failings

that lead to an unreasonable depletion of marital assets, such as domestic violence that 

reduces the earning capacity of one spouse.

37

Three elements are important to determine whether there has been

economic misconduct: (1) use of marital property for the spouse’s own benefit; (2) at 

a time when the marriage is breaking down (either before or after separation); and (3) 

33 AS 25.24.160(a)(4).

34 AS 25.24.160(a)(4)(E).

35 942 P.2d 1133, 1139-40 (Alaska 1997).

36 Id.

37 Id. at 1139, & n.6 (noting that other jurisdictions have defined economic 

misconduct justifying unequal property distribution to include situation in which on 

spouse’s physical abuse of the other resulted in health problems and substantial 

likelihood of future medical expenses for abused spouse).
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an intent to deprive the other spouse of their share of the marital property.

38

 Not all 

factors must be present in every case,39 but the intent to deprive is usually present. The 

second element is also important, as questionable financial decisions throughout the 

marriage do not generally constitute economic misconduct.40

We have previously found economic misconduct when a spouse

vandalized the marital home after separation;41 a spouse sold marital property in 

violation of a court order, and collected rent and did not pay maintenance costs on 

marital rental property;42 a spouse failed to make mortgage payments and ultimately 

placed the marital home in foreclosure;43 and a spouse transferred property to his 

brother for no compensation right before the divorce was initiated.44

Here, the court based its conclusion that this factor favored Dan on two 

findings. First, the court found that Veronica did not present sufficient evidence of 

domestic violence to support her theory that Dan committed misconduct warranting an 

unequal distribution of the marital estate in her favor.

45 Second, since the court did not 

deem the domestic violence allegations to be credible, the court found that Veronica 

“purposefully deceived” Dan about her plans to leave with no excuse, leading to his 

decision to take the severance package instead of continuing to work in a higher-paying 

38 Id. at 1140.

39 Jordan v. Jordan, 480 P.3d 626, 631 (Alaska 2021) (quoting Jones, 942 

P.2d at 1140 n.7).

40 See Elliott v. James, 977 P.2d 727, 733 (Alaska 1999) (affirming lack of 

economic misconduct where intent factor not present and evidence only showed party 

was a poor money manager during marriage).

41 Stanhope v. Stanhope, 306 P.3d 1282, 1288-89 (Alaska 2013).

42 Hockema v. Hockema, 403 P.3d 1080, 1094 (Alaska 2017).

43 Oberhansly v. Oberhansly, 798 P.2d 883, 884-85 (Alaska 1990).

44 Forshee v. Forshee, 145 P.3d 492, 501 (Alaska 2006). 

45 Veronica does not challenge this aspect of the superior court’s ruling. 
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position. Dan testified that he would not have taken severance from BP and he would 

have tried to get a position with Hilcorp if he had known Veronica was leaving. The 

court held that Veronica’s “bad faith actions” amounted to economic misconduct 

because they resulted in the reduction of Dan’s earning capacity. In all, the court found 

this factor favored Dan, because it did not want to reward Veronica after finding that 

she “did not act appropriately,” and because her actions led to “a negative economic 

impact on [Dan].” 

It was error to conclude that Veronica’s conduct before separating from 

Dan amounted to economic misconduct, because the factors typically important to 

evaluating claims of economic misconduct were not considered.

46

 In comparison to 

other cases where we have found economic misconduct, Veronica did not destroy 

property, fail to pay a mortgage, disobey a court order relating to marital property, or 

otherwise devalue the marital estate.47 Indeed, we have previously determined that one 

spouse concealing plans to separate while making financial decisions is not economic 

misconduct without a showing of economic harm to the marital estate.48 In Heustess v. 

Kelly-Heustess we concluded that a husband did not commit economic misconduct 

when he participated in refinancing the marital home right before separation, even 

though he knew at the time that he wanted to separate from his spouse.49 There, we 

reasoned that the refinancing did not deplete the marital estate; rather, the refinancing 

helped the parties to pay off marital debt.50

46 Jones v. Jones, 942 P.2d 1133, 1139-40 (Alaska 1997).

47 See cases cited supra notes 41-44. 

48 Heustess v. Kelley-Heustess, 158 P.3d 827, 831-33 (Alaska 2007).

49 Id.

50 Id. This was true even though most of the debt that was paid off was 

incurred by the husband, but was nevertheless still marital debt. Id. at 830-32.
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Here, there was no explicit discussion of the three factors that may 

establish economic misconduct. And our review of the record does not uncover 

evidence that establishes such misconduct. Examining the three factors, the record 

arguably supports only one: Veronica’s deception may have occurred “when the 

marriage [was] breaking down.”

51 The timing is not wholly clear from the record, but

considering Veronica retained an attorney in February 2020, it is likely that the marriage 

was breaking down when Dan decided to take severance in January 2020.

Evaluating the first factor, Veronica did not damage the marital estate.52

All of Dan’s earnings after she left are separate property, regardless of whether she told 

him she was leaving or what job he had. Concealing her plans from Dan did not 

constitute use of personal property or result in any financial benefit to her. As to the 

final factor, regardless of Veronica’s intent in withholding her plans to separate from 

Dan, the record contains no evidence supporting any claim that her actions negatively 

impacted the value of the marital estate or decreased Dan’s share of the marital estate. 

In all, the analysis of this factor was flawed because the appropriate legal 

factors were not considered. We therefore reverse the court’s finding that Veronica 

committed economic misconduct and that the relative conduct of the parties favored 

Dan. Given the record in this matter, this factor is neutral, favoring neither party.

2. The finding that the financial circumstances factor was neutral 

is clearly erroneous.

Another factor courts must consider in determining an equitable division 

of property is “the financial condition of the parties, including the availability and cost 

of health insurance.”53 Generally, this factor includes an evaluation of the parties’ 

51 Jones, 942 P.2d at 40.

52 Veronica did use marital property for her own benefit when she left. 

While she took half of their cash, and used some marital funds to pay for an attorney, 

those things were ultimately credited against her portion of the estate. 

53 AS 25.24.160(a)(4)(D).
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reasonable expenses relative to their earning capacity and other debts.54 In evaluating 

this factor, this court allows the consideration of separate property, such as Social 

Security payments and separate retirement funds.55 The statute explicitly requires that 

the superior court consider the cost of health insurance within this balancing.56

The superior court found that “[b]oth parties are financially stable” and 

able to cover their expenses from their monthly salaries.

57 But the court provided little 

discussion of the parties’ earnings and expenses to support its determination. The court 

did consider Veronica’s health insurance costs in deciding this factor was neutral, but 

noted that “Veronica receives health insurance outside of her employment” and that it 

was “not convinced that Veronica does not have other, more economical options 

through state-certified health insurance plans.” 

The finding that the parties enjoyed fairly equal financial conditions is not 

supported by the record. The disparity in access to health care is wide: Dan will receive 

military Tricare health benefits at little to no cost for the rest of his life, while Veronica 

will have to purchase health insurance. At the time of trial, Dan’s income was twice as 

large as Veronica’s. Although Dan was allocated the mortgage on the marital home, a 

significant expense, he was also allocated the home itself, a significant asset. 

Additionally, there is evidence in the record that Veronica would not be able to cover 

54 Odom v. Odom, 141 P.3d 324, 340 (Alaska 2006) (noting party’s lack of 

work experience and retirement funds in comparison to substantial need for supporting 

children); Jordan v. Jordan, 480 P.3d 626, 632-34 (Alaska 2021) (evaluating one 

party’s financial need based on debts relative to earning capacity, which was much 

lower than ex-spouse’s). 

55 Dunmore v. Dunmore, 420 P.3d 1187, 1191-93 (Alaska 2018) (Social 

Security payments); Odom, 141 P.3d at 340-41 (retirement funds).

56 AS 25.24.160(a)(4)(D).

57 On reconsideration the superior court maintained that “although the 

parties earning capacities are different, the parties felt a similar economic effect from 

their expenses,” including insurance and other debts. 
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her monthly expenses in her current employment situation, even without factoring in 

healthcare insurance costs.

58

While evidence of the financial status of the parties in the record is not 

particularly detailed, it clearly shows that Dan’s financial condition, especially in light 

of his future health insurance costs, was much better than Veronica’s. The finding that 

the parties enjoyed equal financial status was clearly erroneous. We thus reverse the 

superior court’s determination that this factor was neutral, and hold that this factor

weighs in favor of Veronica. We remand the overall property division to the superior 

court to determine an equitable division in light of our holdings.59

C. It Was An Abuse Of Discretion To Order Equalization Payments

Over A Five-Year Term.

In general superior courts have discretion to determine the best method 

for equalizing the marital estate.60 The preferred method is transfer of property.

61 A

lump sum equalization payment is also appropriate where there is “no hardship” to the 

paying party.62 Courts have discretion to award equalization payments over a period of 

time, if the equalization amount is too large for a party to make in a single payment.

63

 

This discretion must be informed by the underlying preference to avoid continued 

58 At trial, Veronica reported more than $4,000 in monthly expenses, but her 

total monthly income at the time of trial was $3,878. 

59 Veronica argues, based on her lower earning capacity and greater health 

care costs, that the court should order a 60-40 split of the marital estate in her favor. In 

light of the extensive factual findings required to determine an equitable property 

division, we do not reach the ultimate issue of what overall division of property is 

equitable; rather, we remand so that the superior court can reach that determination in 

light of our decision.

60 Thompson v. Thompson, 454 P.3d 981, 997 (Alaska 2019).

61 Cox v. Cox, 931 P.2d 1041, 1045 (Alaska 1997).

62 See Green v. Green, 29 P.3d 854, 861 (Alaska 2001) (quoting Cox, 931

P.2d at 1045); Fortson v. Fortson, 131 P.3d 451, 459 (Alaska 2006).

63 Thompson, 454 P.3d at 997.
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financial entanglement of the parties by resolving financial concerns in the property 

division.

64

When determining whether to order a lump sum or installment payments, 

the court must consider all relevant financial circumstances. This includes the negative 

impact of a lump sum payment on the obligor,

65 and the hardship the recipient may 

suffer from delay due to equalization payments made over time.

66

 If the court orders 

equalization payments over time, it must give sufficient reasons for that decision.67 For 

equalization payments over multiple years, the trial court can award interest to account 

for the time value of money.

68

Here, the court looked to the parties’ earning capacity, liquefiable assets,

and attorney’s fee liability in determining that a lump-sum equalization payment would 

pose a hardship for Dan. Rather than order a lump-sum equalization payment, the court 

ordered payments stretching over five years, and did not award interest. 

This decision was an abuse of discretion. Dan has significant liquefiable 

assets in the marital home, along with the severance and bonus pay from BP. The court 

valued the marital home at $325,000, and the severance and bonus pay totaled 

64 See Fernau v. Rowdon, 42 P.3d 1047, 1058 (Alaska 2002) (stating the 

preference to resolve financial concerns during divorce through property division 

instead of spousal support to avoid financial ties over a long period of time); Hopper v. 

Hopper, 171 P.3d 124, 135 (Alaska 2007) (noting the same).

65 Fortson, 131 P.3d at 459.

66 Thompson, 454 P.3d at 997.

67 McDaniel v. McDaniel, 829 P.2d 303, 309 (Alaska 1992).

68

“[T]he power to award or withhold interest on a judgment should prove a

useful tool in effecting a just resolution of a divorcing couple’s financial affairs.” Dixon

v. Dixon, 747 P.2d 1169, 1172 (Alaska 1987); see also Thompson, 454 P.3d at 997 

(discussing four-year repayment plan with 5% interest on $85,000 equalization 

payment); Stanhope v. Stanhope, 306 P.3d 1282, 1286, 1293 (Alaska 2013) (allowing 

one year to make equalization payment with no interest based on evidence of earning 

capacity and limited assets).
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$167,671.66. These are significant amounts, especially in comparison to the size of the 

equalization payment ($48,614.33). These assets indicate that a lump sum payment 

would not pose a hardship for Dan — certainly not so much as to justify keeping the 

parties financially entangled for the next five years.

69

 

Additionally, the lack of an award of interest ignored the time value of 

money. Considering the size of the equalization payment relative to the marital estate,

the lack of provision for interest over five years represents a loss in value that could 

impact the percentage allocation of the property division in favor of Dan. While the 

court has discretion in determining whether or not to award interest, it must explain its 

decision.

70 This is especially true in a case such as this, where the timeline of the 

repayment without interest could impact the overall property division.

Given that the status of significant assets and the ultimate overall property 

division may change on remand, we refrain from mandating a lump sum equalization 

payment. However, we vacate the court’s equalization payment schedule, and remand 

for further consideration consistent with the above discussion.

D. The Superior Court Did Not Abuse Its Discretion When It Denied 

Veronica’s Request For Attorney’s Fees. 

“The superior court has broad discretion in awarding attorney’s fees in

divorce cases.”

71

 The goal is to ensure both parties are litigating on an equal plane, not 

to reward a prevailing party.72 When deciding whether an award of attorney’s fees is 

69 See Stanhope, 306 P.3d at 1293 (relying on very low earning capacity and 

limited assets to justify giving party one year to make equalization payment).

70 See Cox v. Cox, 931 P.2d 1041, 1045 (Alaska 1997) (overturning lump 

sum equalization payment because it was unclear if superior court considered other 

methods or hardship).

71 Stevens v. Stevens, 265 P.3d 279, 290 (Alaska 2011) (citing Carr v. 

Carr, 152 P.3d 450, 457 (Alaska 2007)).

72 Id. (quoting Fernau v. Rowdon, 42 P.3d 1047, 1059–60 (Alaska 2002)); 

Day v. Williams, 285 P.3d 256, 268 (Alaska 2012).
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appropriate, the court must consider the relative financial status and earning capacity of 

the parties at the time of trial.73 Absent a significant disparity in finances, a refusal to 

award fees is likely not an abuse of discretion, especially if the moving party received 

significant assets from the property distribution.74

Here, the superior court found that an attorney’s fees award to either party 

was unwarranted because each party could afford to pay fees based on the marital 

estate’s size. This determination was not an abuse of discretion.

Veronica argues that the court should have looked solely at the relative 

earning capacity of the parties when deciding the question of attorney’s fees, rather than 

at the size of the party’s share of the estate. Veronica relies on Day v. Williams, where 

we upheld an award of attorney’s fees based on significant income and health disparities 

between the parties, regardless of the size of the estate.

75

 But it would be a mistake to 

interpret Day — where we held the trial court was within its broad discretion in 

awarding attorney’s fees to ensure an even playing field between divorcing parties — as 

removing a trial court’s discretion in balancing parties’ earning capacities with their 

access to sizable marital assets in deciding whether to award either party attorney’s 

fees.76 Indeed, we have repeatedly affirmed trial courts’ consideration of both income 

and the size of the marital estate in determining whether an award of attorney’s fees 

was appropriate.77 Given the total record, it was not an abuse of discretion for the court 

to deny Veronica’s request for an award of partial attorney’s fees. 

CONCLUSION

73 Stevens, 265 P.3d at 290.

74 See id. at 291.

75 285 P.3d at 259, 267-68.

76 Id.

77 Tybus v. Holland, 989 P.2d 1281, 1289 (Alaska 1999); Thiele v. Thiele, 

473 P.3d 327, 336 (Alaska 2020); Stevens v. Stevens, 265 P.3d at 290-91.
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We VACATE the superior court’s determination that the severance and 

bonus pay are separate property and REMAND for further consideration in light of this 

decision. We REVERSE the superior court’s findings related to the relative conduct 

and financial circumstances of the parties, and REMAND for the court to determine an

equitable property distribution, and to further address the terms of any equalization 

payment, consistent with this decision. We AFFIRM the superior court’s denial of 

attorney’s fees.