Opinion ID: 2637181
Heading Depth: 3
Heading Rank: 3

Heading: Financial Accounts

Text: James opened his FNBA savings account on January 11, 1984. James deposited the proceeds from the sale of the Fouts lots into this account. The trial court valued the savings account at $19,313. James opened his FNBA checking account on June 1, 1994. The amount in the account at the time of the dissolution was $6,858.00. James sometimes referred to this account as the business account, and he paid the bills from and deposited the rent into that account. Because the rental proceeds from the real property were marital property, James was therefore depositing marital income into what were otherwise his premarital bank accounts. In Schmitz v. Schmitz , we reviewed a decision of the trial court classifying various bank accounts as separate property. [15] As bank accounts are a secondary asset, the court must first identify the asset from which it was derived and determine whether that asset was marital or separate property. [16] The party seeking to prove that the bank account is separate property has the burden of proof, and the bank account is presumed to be marital property if it is not possible to determine whether the account was funded through primarily separate or marital property. [17] If it is known that a bank account contains both separate and marital funds but the amount from each source cannot be determined, then [t]he unknown amount contributed from the separate source transmutes by commingling and becomes marital property. [18] James did not make any attempt at trial to show what money in his checking account was derived from rents from the disputed four parcels of property and his other properties. The record does not contain any information regarding the checking account, other than James's testimony that he deposited rental proceeds and paid property bills out of this account. James testified that he deposited the proceeds from the sale of the Fouts lots into his personal savings account. There was no evidence as to what other money was placed into this account, including whether any money from the rental proceeds of the Irey and Fouts lots was placed into this account. James is the party with the burden to establish that these accounts were not marital, and he has not presented adequate evidence to support such a finding. Thus, the trial court properly concluded that both the checking and savings accounts were marital property.
James instructed that his Social Security payments be directly deposited into his Northrim account, and he testified that this was the only source of funds deposited into this account. Loretta offered no evidence to challenge this testimony. James receives $894 per month from Social Security. A bank statement covering the period from November 1-29, 2002 showed a starting balance of $4,467.92 and an ending balance of $4,961.92. In the trial court's final order regarding the property division, the court stated: The deposits to the Northrim Bank were established to be Social Security payments only. Only the Social Security payments received during the marriage would have taken on a marital quality. The plaintiff [James] did not adequately show the change, if any in the account, to exclude any of the balance. Thus the account is marital. The trial court therefore valued the Northrim account at $4,468, the amount that was closest to the amount in the account at the time of the dissolution. We have recognized that [t]he doctrine of federal preemption prevents state courts from dividing [S]ocial [S]ecurity benefits. [19] Thus, even when the Social Security benefits were deposited during the marriage, they remained James's separate property. James testified at trial that only his Social Security benefits are paid into the Northrim account. The account summary submitted as an exhibit at trial also shows only a deposit from the US TREASURY  SOC SEC. Once James established that the account included only Social Security payments, the burden shifted to Loretta to show that James had improperly mixed the account with marital money, thereby turning the account into marital property. As Loretta presented no evidence regarding any payments into the account besides Social Security, she has not met her burden. As James's Social Security benefits cannot be divided, it was error to determine that the account was marital property. The trial court's determination that this account was marital is therefore reversed.