Opinion ID: 1145441
Heading Depth: 3
Heading Rank: 3

Heading: New Mexico (and Other) Case Law on Goals of Dividing Community Property at Dissolution

Text: Before applying the principles reviewed thus far in this opinion, we pause to remind ourselves of some equally important  indeed, fundamental  principles of community property law in New Mexico (and, so far as we are aware, in all other community property jurisdictions). First, it is axiomatic that each spouse in a marriage has a present, vested, one-half interest in the spouses' community property. This has been the law in this state at least since Beals v. Ares, 25 N.M. 459, 492-93, 185 P. 780, 790 (1919). The proposition has been reiterated countless times in our case law. E.g., Harper v. New Mexico Dep't of Human Servs., 95 N.M. 471, 473, 623 P.2d 985, 987 (1980); Delph v. Potomac Ins. Co., 95 N.M. 257, 259, 620 P.2d 1282, 1284 (1980); Miller v. Greathouse (In re Miller's Estate), 44 N.M. 214, 220-21, 100 P.2d 908, 912 (1940). In the seminal case of McDonald v. Senn, 53 N.M. 198, 204 P.2d 990 (1949) (per curiam), in which this Court repudiated the notion that a wife's interest in community property is a mere expectancy, id. at 204-06, 204 P.2d at 993-94, we reaffirmed the basic proposition: `That each spouse, irrespective of survivorship, at all times has an ever-present and existing vested interest in the community property equal unto each other....' Id. at 209, 204 P.2d at 996 (quoting Dillard v. New Mexico State Tax Comm'n, 53 N.M. 12, 21, 201 P.2d 345, 351 (1948), itself quoting In re Miller's Estate, 44 N.M. at 220-21, 100 P.2d at 912) (alteration in original)). Second, as we very recently recognized in Swink v. Fingado, 115 N.M. 275, 277, 850 P.2d 978, 990 (1993) (citing Michelson v. Michelson, 86 N.M. 107, 110, 520 P.2d 263, 266 (1974), and Otto v. Otto, 80 N.M. 331, 332, 455 P.2d 642, 643 (1969)), one of the chief incidents of community property lies in the district court's duty on dissolution to divide the property equally. Other cases, of course, can be cited to the same effect. E.g., Ellsworth v. Ellsworth, 97 N.M. 133, 135, 637 P.2d 564, 566 (1981); Beals v. Ares, 25 N.M. at 499-500, 185 P. at 793. Third, almost as a corollary to the rule requiring equal division of the community property on divorce, we have recognized the desirability of granting each spouse complete and immediate control over his or her share of the community property in order to ease the transition of the parties after dissolution. Hertz v. Hertz, 99 N.M. 320, 330, 657 P.2d 1169, 1179 (1983) (quoting Cunningham v. Cunningham, 96 N.M. 529, 531, 632 P.2d 1167, 1169 (1981)). In Hertz we reversed a trial court's order granting the divorcing spouses' residence to the husband and ordering him to pay the wife her community share of the residence through installments over a ten-year period. We held that the trial court erred in refusing to give the wife `complete and immediate control' of her interest in the community property. Id. at 330, 657 P.2d at 1169. Similarly, in Chrane v. Chrane, 98 N.M. 471, 649 P.2d 1384 (1982), we reversed a trial court's award to the wife of a life estate in the divorcing parties' residence. We reasoned that the effect of the court's award was to divest the husband of his equity in the property. Id. at 472, 649 P.2d at 1385. We accordingly directed the court on remand to order sale of the house and distribution of the proceeds to the parties within a reasonable time or to make such other disposition of the home as will result in the husband receiving, within a reasonable time, his share of the value of the home. Id. Immediately distributing community property on dissolution is of signal importance, not only because it eases the parties' transition following dissolution, but also because it furthers the important goal of minimizing future contact and conflict between divorcing spouses. Any court order that postpones distribution, thereby financially linking the parties to one another following a judgment of dissolution, invites future strife when one of the parties seeks to enforce the order. In the context of distribution of retirement benefits, several courts and commentators have identified severance of the parties' interest as an advantage of the lump sum distribution method over the reserved jurisdiction method. Koelsch, 148 Ariz. at 183, 713 P.2d at 1241 (provides a clean break between the parties); Shill, 100 Idaho at 437, 599 P.2d at 1008 (effects a complete severance of the spouses' interests); Gemma, 778 P.2d at 431 (end[s] the parties' involvement with each other and finaliz[es] the divorce immediately in all respects); Sherry A. Fabina, Note, The Retirement Equity Act: An Accommodation of Competing Interests, 63 Ind.L.J. 131, 143 (1987) (avoid[s] future confrontations about financial matters). With these principles in mind, we now apply them to the issues in these cases.