Opinion ID: 1296720
Heading Depth: 3
Heading Rank: 2

Heading: Method of Property Distribution

Text: A three-step process is used in Alaska to divide marital assets. See, e.g., Jones, 835 P.2d at 1175. First, the court determines what specific property is available for distribution. Wanberg v. Wanberg, 664 P.2d 568, 570 (Alaska 1983). Second, the court values that property. Id. Finally, the court equitably allocates it. Id. The trial court used this method of distribution in this case.
This court has used an alternative approach for marriages of short duration where there has been no significant commingling of assets. Rose v. Rose, 755 P.2d 1121, 1125 (Alaska 1988). C.B. proposes that this rescission approach should have been used in the present case. The trial court in this case specifically found that this marriage ... is one in which the commingling of assets was general. See Finding No. 6 in Addendum. The Coxes had a joint checking account. Before Vicki's debt to the IRS arose, she deposited her paycheck into that checking account. After they became aware of her debt to the IRS, she removed her name from the joint checking account and deposited her paychecks into a separate account from which the IRS would be paid (the IRS account). However, she continued to transfer money as needed to the checking account in C.B.'s name, from which marital expenses were paid. She also paid for food for the family out of the IRS account. In addition to his paycheck, C.B. also transferred the rental income from the Pokey Circle house into the family checking account. Thus, there is sufficient evidence in the record of commingling so that the trial court's finding regarding this aspect of the parties' management of their property was not clearly erroneous, and therefore C.B.'s argument that the Rose method is appropriate must fail.
Alternatively, C.B. proposes that a third approach to property division should have been used in this case. He argues that this court should adopt the source of the funds rule. Without fully defining this rule, he describes it as providing that the measure of compensation to each party is the base amount of the marital contribution along with any appreciation or depreciation, so that both parties receive a fair and proportionate return on their investment. [2] As C.B. points out, in Zimin v. Zimin, 837 P.2d 118 (Alaska 1992), this court affirmed the trial court's use of the source of funds approach: Although we do not adopt the source of funds rule per se, it is not inconsistent with our statutes and caselaw. Id. at 122 n. 6. However, the circumstances under which the rule was applied in Zimin differ from the instant case. In Zimin, the trial court was essentially forced into a source of funds approach because there was no evidence regarding the present value of the disputed property. Id. at 122. Therefore, the court valued the marital portion of the various assets based on the debt payments made during the marriage. Id. The trial court recognized that this method failed to take into account the post-marital appreciation or depreciation of the property. Id. Our holding was thus limited to the approval of the source of funds approach in the limited context of determining current value in the absence of any other evidence. Id. n. 6. We recognized that the trial court could have reached the same result under our rules of equitable division and therefore it did not abuse its discretion under the circumstances. Id. To require the use of the source of funds rule in this case would be an expansion of the Zimin holding. It is one thing to hold that use of the source of funds rule in limited circumstances is not an abuse of discretion; it would be quite a leap from Zimin to hold that it must be applied in a given set of circumstances as a matter of law. We are not satisfied that such a leap would be appropriate. Therefore, we decline to depart from the Wanberg method of property distribution.