Opinion ID: 2572638
Heading Depth: 3
Heading Rank: 2

Heading: The First National Bank accounts

Text: Christina argues that because Michael deposited money he earned during the marriage into both of his First National Bank accounts, the superior court should have characterized the accounts as marital property. Michael counters that the accounts are comprised in part of his separate property and that commingling of separate and marital funds in the accounts does not transmute the accounts into marital property. He argues that these accounts are his separate property. In its findings of fact, the trial court never mentioned the First National Bank accounts and thus never explicitly characterized the accounts as separate. However, the accounts are not listed as joint property in the superior court's findings of fact and the trial court determined that Michael's separate property would remain his separate property. Thus, we assume that the superior court characterized the bank accounts as Michael's separate property. The superior court reasoned generally that Michael's separate assets flowed from his personal injury claim and investments arising from his settlement award. The court also found that Michael never intended to transfer any property, other than the marital home, to Christina. The court stated: [Michael] was careful only as a trained and suspicious [certified public accountant] could be in making sure that there was not commingling and he did that intentionally and deliberately. To the extent separate money was placed in joint accounts the evidence was strong that it was only temporary and not to make into joint property. To provide a context for our discussion of the First National Bank accounts, we must first discuss briefly the nature of separate and marital assets and the concept of tracing an asset to either a primary marital or primary separate source. [43] As mentioned earlier, the three primary types of separate property include property acquired by one spouse before marriage, property acquired by gift, and property acquired by inheritance. Assets acquired during marriage as compensation for marital servicesmost commonly salaries earned by either spouse during marriageare considered primary marital assets. [44] Some assets might have been acquired through a source other than described above; for example, from another asset through exchange, appreciation, or income. [45] These assets are referred to as secondary property because such an asset requires for its classification the classification of another asset. [46] To classify secondary assets, courts must first identify the specific asset from which it was derived (the source asset ), and then determine the classification of that asset. [47] This process is referred to as tracing. [48] When the source asset is primary marital property, the secondary asset is secondary marital property. Likewise, when the source asset is primary separate property, the secondary asset is secondary separate property. [49] However, if the source asset itself is secondary property, tracing continues until either a primary separate or primary marital source asset is found. [50] The process of tracing can therefore be simply described as a search of sources backward through time until every asset is linked to primary marital or primary separate property. [51] Because bank account funds generally are not in and of themselves either marital or separate property, bank accounts are a secondary asset. [52] Thus, if possible, the funds must be traced back to their sourceeither primary marital or primary separate property. Tracing back to the source of a secondary asset frequently stops, however, when a secondary asset's source cannot be determined. [53] When a secondary asset's source cannot be proven, it is impossible to know whether the asset in question is marital or separate property. The party seeking to establish that the property is separate always bears that burden of proof; thus untraceable assets are marital property. [54] Both parties concede that the bank accounts included both marital and separate property. Michael concedes that $132,100 in marital earnings went into the checking account, while a total of $65,500 in separate property was contributed to both accounts. The accounts could thus be referred to as a mixed secondary asset because they have more than one source. [55] The record shows that Michael deposited money he earned during his marriage into both of the First National Bank accounts. Specifically, Michael claims that he deposited into his regular or checking account those funds needed to cover wedding expenses, profits from his accounting business, transfers from his business account, wedding gifts, and baby gifts for Johnathon. The record suggests that Michael deposited earnings from his accounting business into his business account. The record also suggests that in addition to marital property, Michael also deposited separate property, for example, proceeds from the Nugget Men's Store. A spouse's separate property does not become untraceable to its separate source merely because it is mixed with marital property in the same secondary asset. [56] However, placing separate property in joint ownership is rebuttable evidence that the owner intended the property to be marital. [57] If evidence is presented that is sufficient to overcome this presumption, tracing can take place. To characterize a mixed secondary asset, the superior court must know the character of each source feeding into the mixed asset and the amount of value each source contributed to the mixed whole. [58] The court can then determine the ratio between the sources. The marital and separate interests in a mixed secondary asset are ordinarily in the same ratio as the marital and separate contributions used to acquire the asset. [59] If, however, the sources can be proved but their respective amounts cannot, the proper ratio cannot be determined. Thus, even when it is known that a mixed secondary asset derived partly from a separate source, if the amount contributed from that source cannot be determined, then the asset cannot be traced and [t]he unknown amount contributed from the separate source transmutes by commingling and becomes marital property. [60] Because the record suggests that the First National Bank accounts consisted of both marital and separate property, we reverse the superior court's determination that these accounts were solely Michael's separate property. [61] Additionally, given the above considerations and the lack of relevant findings by the superior court, we remand to the superior court to make findings as to whether the presumption that commingled property is intended to be marital has been rebutted and if so, to make findings recharacterizing the accounts. [62]