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How is Property Purchased During Marriage With Sole and Separate Property Treated in an Arizona Divorce

Posted on : November 18, 2016, By:  Christopher Hildebrand
How is Property Purchased During Marriage With Sole and Separate Property Treated in an Arizona Divorce

How is Property Purchased During Marriage With Sole and Separate Property Treated in an Arizona Divorce

In Arizona, property owned by a couple during the marriage can be held separately by one of the spouses. It can also be community property, owned by both spouses. In certain cases, the separate property of one can become the community property of both. This can happen as the result of commingling of separate and community money, or as the result of a gift from one spouse to the community. In the case, Bourne v. Lord, 506 P.2d 268 (1973), the Court of Appeals considered whether the separate property had changed to community property.

Facts and Background

Mr. Lord and Mrs. Lord were married in 1952. At that time, husband owned some land in Pima County. In 1955, he arranged to exchange this property for a trailer court. As part of the deal, he assumed the mortgage on the trailer court.

Both the deed and the mortgage named Mr. Lord and Mrs. Lord. However, Mr. Lord said he did not know that occurred. Mr. Lord and his wife operated the trailer court together. He also worked in a restaurant in the evenings.

How is Property Purchased During Marriage With Sole and Separate Property Treated in an Arizona Divorce?

How is Property Purchased During Marriage With Sole and Separate Property Treated in an Arizona Divorce?

Husband put all his earnings and income from the trailer court in one bank account. He wrote checks on that account for mortgage payments on the trailer court and living expenses.

A few years later, husband arranged to borrow $25,000 to pay off debt including the mortgage on the trailer park. He and Mrs. Lord executed the note.

Mr. Lord said his wife’s name appeared only because the lender insisted it was customary. In 1960, husband sold the trailer court. Both Mr. Lord and Mrs. Lord executed the deed. When it appeared they were to receive preferred stock, husband instructed the buyer how to Deed the stock. He said to give half of the stock to each spouse as his or her separate property. However, the seller never issued any stock certificates.

Wife died and her estate went to probate. Her executor asked the court to rule that the proceeds from the trailer court sale were community property. However, the lower court ruled that the trailer park was husband’s separate property. Mrs. Lord’s estate appealed.

 

Husband Acquired the Trailer Park as His Separate Property

Since Mr. Lord acquired the trailer park during the marriage, courts presume that it was community property. He had to prove by clear and convincing evidence that it was his separate property. The Court reviewed the evidence.

First, it considered how husband acquired the property. He bought it in an exchange of his own separate property. He did not spend any community funds in the purchase.

The Court noted that property acquired after marriage in exchange for property owned before marriage remains separate property. Although the seller conveyed the trailer court to both husband and wife, Mr. Lord testified that he didn’t ask to have his wife’s name on it. He also testified that he did not know about it. Therefore, the Court found, the form of the deed didn’t alter the status of the property.

The executor of Mrs. Lord’s estate next claims that the property transmuted to the community because of commingling. Since the couple maintained only one bank account, the trailer court earnings were mixed with community money. However, the Court said that the mere commingling of funds did not change the status of the property.

Property Purchased During Marriage With Sole and Separate Property in a Arizona Divorce.

Property Purchased During Marriage With Sole and Separate Property in a Arizona Divorce.

This is true even if those commingled funds paid in part for Mr. Lords’ separate property expenses. The community acquired a claim for reimbursement of the community funds expended. But it did not acquire an interest in the title of the property.

The Court of Appeals agreed with the trial court that the note and mortgage were husband’s separate property. Mr. Lord bought the trailer court as his separate property, and no evidence established a transmutation to community property. Therefore, the proceeds from its sale are his separate property.

No Gift Because Stock Was Not Issued

The executor of Mrs. Lord’s estate argued that Mr. Lord made Mrs. Lord a gift of half of the proceeds from the sale. He points to the document Mr. Lord executed that directs the buyer to issue stock in Mrs. Lord’s name as her separate property.

He also points to a conversation where Mr. Lord stated that he had given half the “proceeds” to his wife to get rid of her. However, the trial court found that this conversation only referred to the stock. It concluded that since no stock was issued, the attempted gift failed. It furthermore found that the document only reflected an intention to make a gift, but the gift never happened. The Court of Appeals agreed and rejected the gift argument.

Disposition

The Court of Appeals affirmed the lower court decision.

Jennifer, thank you for being my attorney. I could not have been more pleased with the outcome of my family court hearing. Everything you have done for me throughout this case reflects in the final ruling of the judge. You helped me keep my head together and taught me a lot about myself as a person. I learned so much about my life from observing and listening to you. I will take all the advice you gave me to continue taking responsibility for my choices, continue to put the kids' needs first, and always stay truthful. Your diligence, dedication, and persistence in my case made what seemed impossible, possible. You are a wonderful person and an amazing attorney and I am stronger and more confident because of you.
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I just want to again thank the Firm for working with me all that it has. I could not have done anything without everyone's assistance. You, Chris and Stacey have been and continue to provide me with compassion and hard work towards my case. Also a very special thanks to Kip for taking my case in the beginning. Also continued support from him and his dedication to providing me with his expertise in this matter.
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After interviewing several law firms, I came across Jennifer Shick, and her firm, who I hired to represent me for my Family Court case. Jennifer has extensive knowledge of the law and is determined to bring the truth to every issue involved within the case. Throughout my case, Jennifer was prepared meticulously as well as went above and beyond all of my expectations. Even when the other party tried to differ from the truth, lie to the Judge, and turn situations around, Jennifer remained attentive and provided substantial evidence to show the judge the facts as well as the proof to support what was the best interests of my children. Additionally, Jennifer helped me endure many difficult experiences, situations and inspired me to remain positive throughout the entirety of my case. Her kindness, compassion, and professionalism helped me through very difficult times and made the process feel a thousand times lighter on my shoulders. She truly has my children and my best interest at heart and I trust her perspective as well as her honesty on each and every aspect of my case. She lessened the burden on my shoulders and even when I felt like the case was not going to go in my favor, Jennifer was open-minded and reassured me that the Judge would, in fact, see the truth, which he did and the case went in my favor. After nine months of court, everything finally came together. I cannot declare how much Jennifer has been an outstanding attorney. She addressed each and every issue with diligence, she cares about her clients and their families. Jennifer genuinely cares about her clients and her dedication to the details of the case was remarkable. Overall, I am extremely pleased with Jennifer’s services and I am truly thankful that I was so blessed to have her represent my children and me. I highly recommend Jennifer as one of the best attorneys in Arizona and if the situation ever arises, I will definitely have her represent my children and me again.
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Dear Stacey and Kip, How can I ever thank you enough for helping me through the most difficult time in my life? I couldn't put into words my heartfelt gratefulness. You both were so compassionate and professional at every given moment throughout this process with me. I thank you from the bottom of my heart. You helped me to regain my freedom.
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I was a client of Attorney Kevin Park for the dissolution of a divorce in 2016. And since I had never had the need to hire an attorney before for any purpose, I was somewhat apprehensive of the process. But the very calm and professional demeanor of Mr. Park eased my fears. He adeptly answered all my questions and I clearly knew the process and what to expect. And the skilled manner he communicated with opposing counsel was perfect. When it came down to negotiating with my spouse’s counsel, I knew I had selected the best attorney for my situation. What I noticed and appreciated was that he was using just the right amount of pressure with opposing counsel as was necessary. If you find yourself in this situation, you will want a seasoned professional like Mr. Park on your side. I'm very grateful that he was my attorney and not the opposition!
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I retained Hildebrand Law after interview a number of firms in the valley. Working with Michael C. was incredibly easy and informative. My case progressed in such a organized and thought out way to ensure that my needs were met. Michael was incredibly proactive and was able to see far ahead into my case to steer clear of some roadblocks. I would not hesitate to recommend Michael Clancy, and Hildebrand Law in general, to anyone.
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