Opinion ID: 2581632
Heading Depth: 3
Heading Rank: 2

Heading: The Superior Court Correctly Classified the Marital Home and a Cash Gift to Chad Miller as Marital Property.

Text: Chad Miller argues that the superior court erred in classifying the family home as marital property subject to equitable distribution. While he acknowledges that a premarital home owned by one spouse can transmute into marital property if it is used as the primary marital residence, [14] he claims that the home remains his separate property because the parties always viewed it as such. Alternatively, he argued below that if any portion of the home's value was marital property, it would be only that amount by which the home appreciated in value during the marriage. On appeal, he advances a different alternative argument: that the superior court abused its discretion by failing to apply the Merrill factors. [15] Chad's principal argument is not supported by the record. His first alternative argument is incorrect as a matter of law, while the second was waived by failure to present it to the superior court. Property owned by one party as separate property becomes marital property if the parties demonstrate an intent to treat the property as marital. [16] In determining whether a home should be treated as marital property, a court will consider factors such as: (1) use of the property as the parties' personal residence, (2) both parties' participation in ongoing maintenance and management, (3) placing title in joint ownership, and (4) using the credit of the non-titled party to improve the property. [17] The superior court found that although the home was originally a gift to Chad from Molly Miller prior to his marriage to Violeta, the residence was transmuted from separate to marital property by the actions of the parties over the thirteen years that they lived there together. The court found that taxes, insurance, and maintenance expenses were paid from marital property; that Violeta cleaned and maintained the house during the marriage; and that Chad made no attempts to maintain the separate character of this property. These factual findings are supported by the record. The parties lived together in the home for a substantial period of time and both of them contributed toward maintenance and upkeep. The superior court's determination that the parties intended to treat the home as marital property was not clearly erroneous. Chad also argued before the superior court that, if any portion of the home is marital property, it would be only that portion representing its appreciation in value during the time the parties lived together. He claimed that the court should at most award Violeta only one-half of the increased value rather than one-half of the total value of the home. This argument ignores the differences between the theories of transmutation and active appreciation. While separate property can become marital property under either theory, transmutation converts an asset entirely from separate to marital, while active appreciation converts to marital property only the increase in an asset's value due to a contribution of marital funds or efforts. [18] These theories are mutually exclusive, and we have previously held that if separate property is transmuted into marital property, the trial court must allocate the entire equity in the property rather than just the appreciation in value. [19] The parties stipulated that the home was worth $144,000. The house was unencumbered through March 2001 when the parties separated, and thus the superior court correctly determined that the full equity value was marital property. [20] Perhaps recognizing that the active appreciation argument he made below was inconsistent with transmutation, Chad argues on appeal that his contention before the superior court that Violeta should be awarded one-half the amount by which the house appreciated during the marriage was only a short-hand method of backing out the premarital value of the home, believing that an equitable division of this asset should weigh heavily in his favor because it was [a] gift from his family. Chad then argues that the superior court erred in not applying the Merrill factors to the home to determine an appropriate division. Because Chad did not make this argument to the superior court, arguing only an active appreciation theory to that court (as an alternative to his principal argument that the house was his separate property), we decline to address it here. [21]
Chad also argues that the court erred in classifying as marital property an investment account opened with funds given to him by his mother. He claims that this gift was an advancement on his inheritance that remained his separate property throughout the marriage. The superior court found that these funds were transmuted into marital property when Chad transferred them from an account in his name alone into an account in the parties' joint names. This finding is not clearly erroneous. Molly Miller gifted Chad $230,000 in 1998. With these funds he opened an investment account in his own name at Morgan Stanley Dean Witter, listing Violeta and his children as beneficiaries of equal shares in the event of his death. Approximately one year later, these funds were transferred to a joint account in the names of both Chad and Violeta. Under this account the parties were joint tenants with rights of survivorship, so if one party died before the other, the surviving spouse would receive the entire account balance. At trial Chad testified that he transferred the funds to a joint account so that if he died before Violeta the funds would transfer to her without going through probate, but that he was fully in control of the account because it was his inheritance. Inherited property is separate, even if received during marriage, though it can be transmuted into marital property where that is the intent of the owner. [22] There is a strong presumption that placing separate property into a joint account demonstrates an intent to treat the property as marital. [23] Thus, absent evidence to the contrary, Chad's decision to move the funds into a joint account will be viewed as a demonstration of his intent to treat the property as marital. [24] Chad argues that this presumption is rebutted by Violeta's testimony that she never tried to access the funds and by Chad's testimony that the joint account was created strictly for probate purposes. While Violeta testified that she never attempted to access funds from the joint account, she also stated that she considered the account to be marital property because her name was on it, and that the parties used these funds for ongoing household expenses such as taxes. The trial court found that the fact that Violeta never made withdrawals from the account was insignificant given Chad's general unwillingness to allow Violeta to participate in major decisions or to exercise control over the family's finances. Furthermore, the evidence does not support Chad's claim that account ownership was changed solely for probate purposes. At trial Chad testified that he put the account in joint ownership in 1999 on the recommendation of his mother because of the delays and costs the family experienced dealing with the probate process after the death of Chad's father. Chad claimed that joint ownership would ensure that Violeta got the funds automatically upon his death. But earlier he also testified that the house was put into his name alone based upon the advice of his mother because she knows about probate and it would be best if [the house] was in my name free and clear, before I get married, so that if something did go wrong later with the marriage, that [Violeta] couldn't try to take the whole thing. It appears that Chad's father died in the early 1980s, well before Molly's gift of the Anchorage home in 1988 and her subsequent cash gift in 1998. If the ownership decisions were made to avoid problems with probate, it would make little sense to maintain sole title to the home while placing the investment account in joint ownership. The trial court's finding that the investment account transmuted to marital property was not clearly erroneous.