Logo
Call Now(480)305-8300

Joint Property in an Arizona Divorce | Voted “Best of the Valley”

Posted on : December 22, 2015, By:  Christopher Hildebrand
Joint Property in an Arizona Divorce

Joint Property in an Arizona Divorce

Handling Joint Property in an Arizona Divorce

Joint Property in an Arizona Divorce.

Joint Property in an Arizona Divorce.

It is important to understand the difference between community property and joint property in an Arizona Divorce. Valladee v. Valladee is an excellent example of the difficulty posed to the courts when attempting to provide an equitable division of marital assets. This appeal and cross-appeal resulted from a decree that provided for the division of a number of tracts of jointly held real property. The property was jointly held between the appellant-cross appellee (wife) and the appellee-cross appellant (husband). To understand the nature of both the trial court and the appellate court’s decisions, it is necessary to start at the beginning to obtain the necessary facts.

The marriage of the parties involved took place in Utah in 1966. During the marriage, the couple moved to Arizona where they resided at the time of the dissolution of marriage. The couple had four children. The husband, a Ute Indian, held an account with the Bureau of Indian Affairs (BIA account). The Ute tribe deposited funds into the BIA account at various times. The BIA account had been held by the husband as his sole and separate property since he was a child. He inherited two parcels of tribal land and sold the land back to the tribe for $50,000. The funds for the transaction were deposited into the BIA account as the husband’s sole and separate property.

In the late 1970s, the husband made a withdrawal from the BA account in the amount of $60,000 to provide the down payment on the purchase of five parcels of land. He had the deed for each of the five parcels of real property drawn up to himself and his wife as joint tenants. He also created a business account for rental income from the jointly held investment properties and other investment funds he transferred from the BIA account he had held since childhood.

Hildebrand Law, PC | Voted Best of Our Valley in Arizona Foothills Magazine.

Hildebrand Law, PC | Voted Best of Our Valley in Arizona Foothills Magazine.

Joint Accounts and Division of Property in a Divorce

The business account was also held jointly between husband and wife. It was also kept separate from other community accounts. It was used only for the maintenance and management of the investment properties that the two jointly held. The husband spent time and skill managing the properties as well as the financial side of the business. The couple never spoke of the actual characterization of the business account of five investment properties in regards to separate v. community property. The wife assumed equal interest due to joint tenancy. The husband, at the time of the trial, claimed both as his separate property. He claimed this was always his intention and that they were only placed in joint tenancy to avoid probate and offer “security” to his wife in the event of his death.

Additional investment properties were acquired through the same business account – all placed in joint tenancy with the wife. At the time the dissolution of marriage was filed the couple held twelve parcels of land in joint tenancy. Unrelated to the above, but considered in the case due to financial implications is the fact that the wife left the couple’s community home on October 1, 1982, and took $11,000 with her. $10,000 of the $11,000 was withdrawn from the business account held in joint tenancy but previously set aside strictly for maintenance and management of the investment properties. The money was spent almost in its entirety within 2 months. A significant amount of the money was spent in a fashion that is clearly not a community expense. Soon after her departure, she filed for dissolution of marriage.

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.
A Google User
A Google User
20:31 20 Sep 17
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.
A Google User
A Google User
21:41 07 Nov 17
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.
Google User
Google User
14:58 04 Oct 17
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.
A Google User
A Google User
16:03 22 Nov 17
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!
A Google User
A Google User
22:14 28 Jun 17
Chris is a smart and aggressive attorney for his clients. Chris always tries to reach a fair settlement of his cases. I’ve represented clients when Chris was the opposing counsel and while he is professional and amicable to work with, he does not back off on what he needs to do for his client
A Google User
A Google User
18:16 18 Sep 17
Kevin Park of Arizona Estate Planning Attorneys was just what I needed for my divorce. He was very approachable and personable. He was quick to recognize what I needed and provided it quickly and efficiently. I hope to never need a divorce lawyer again, but if I know anyone else who does, I will definitely recommend Kevin.
A Google User
A Google User
19:22 23 Aug 17
I feel that Tracey Van Wickler is certainly one of the best family lawyers around. She is logical, intelligent, and truly cares. Tracey always does what is in the clients best interest, does it well, timely and with integrity. She is good at keeping her clients informed as to what is going on and clear in her communication both written and verbally. I have recommended Tracey to other people and will continue to recommend her. I recommended Tracey to someone who was having issues with their ex-wife and his response was, “I know how good she is because I went up against her and she ate me for lunch”. This same person was so impressed with her, he even recommended her to someone else, WOW, that is impressive! I am exceptionally happy with her attention to detail, her ability to explain things in ways that are easy to understand, as well as her ability to keep everyone focused on the most important things. I would recommend Tracey to anyone who may be in need of her services.
A Google User
A Google User
17:44 23 Jun 16
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.
Bassam Ziadeh
Bassam Ziadeh
21:20 02 Apr 18
I have worked with Hildebrand law for about 8 years. They are always ready to serve, provide guidance and give you a few options. When they provide you options they also take the time to walk you through the pros and cons of each and give you a recommendation of what is best, but will listen to you and support whatever course you choose after making and educated choice. I’d recommend them to my closest friends and feel Chris Hildebrand is now a friend to me.
Larry Flint
Larry Flint
21:53 27 Feb 18
Despite the unfortunate situation I found myself in, Chris Hildebrand @ Hildebrand Law helped me maneuver every step with professionalism, expertise, and even a sensitivity that was an added bonus.Chris and his staff helped me even when I didn't know I needed the help. In other words. . . they made sure we did not leave anything undone. And in the rare instance we needed the expertise of another professional, Chris knew exactly who to recommend.Chris also knew, because of his experience, what to anticipate down the road of litigation. That meant we were better prepared to meet the challenges head on, which lead to a more equitable and fair outcome. I appreciated that Chris did his best to meet my every need in a timely fashion, even if I had a simple question that required only a phone call or e-mail or if we needed to talk face-to-face.I highly recommend Chris Hildebrand @ Hildebrand Law, PC.
Sam Franchimone
Sam Franchimone
22:09 12 Sep 13

When the trial court considered the case, the main dispute was the nature of the jointly held properties. This constituted the bulk of the couple’s marital estate. The findings of the trial court were that the placement of the properties in joint tenancy combined with the expenditure of the husband’s skill and time created a “presumed gift” to the wife.

Handling Joint Property in an Arizona Divorce.

Handling Joint Property in an Arizona Divorce.

The court held that the husband’s claims (that the joint tenancy was strict to provide his wife with security at the time of his death and to avoid probate) were not sufficient to overwhelm the presumption of gift evident by his actions. The trial court also found that to complete an equitable distribution of marital assets, the initial source of funds utilized to obtain the investment properties could be considered which left the actual distribution of marital assets slightly unequal in the husband’s favor as the down payment came from sole and separate funds belonging to the husband. The trial court gave the husband approximately 62% of the jointly held property. They saw this as effectively reimbursing him for his initial investment of sole and separate funds. Both parties appealed the trial court’s decision.

The Court of Appeals of Arizona had to consider two issues on appeal:

  1. Did the trial court abuse its discretion in relation to finding the placement of property in joint tenancy as cause to determine presumption of gift?
  2. Did the trial court abuse its discretion in relation to “reimbursing” the husband for an original investment of sole and separate funds to purchase properties held in joint tenancy?

The first issue is supported by well-established rule in Arizona presuming a gift occurs if one spouse places separate real property in joint tenancy. This can only be rebutted by clear and convincing evidence to the contrary. (See Becchelli v. Becchelli, 109 Ariz. 229, 508 P.2d 59 (1973); Battiste v. Battiste, 135 Ariz. 470, 662 P.2d 145 (App. 1983); Sloane v. Sloane, 132 Ariz. 414,646 P.2d 299 (App. 1982). After the fact testimony by one or the other of the parties involved does not constitute “clear and convincing evidence” that the placement of the properties in joint tenancy was not intended as a gift. (See Sloane, supra. In Sloane, quoting Machado v. Machado, 58 Cal.2d 501,25 Cal. Rptr. 87, 90, 375 P.2d 55, 58 (1962). The Court of Appeals of Arizona found that the trial court acted well within its discretion when determining that the placement of the properties in joint tenancy by the husband constituted making a gift.

The Court of Appeals of Arizona did find, however, that the trial court abused its discretion with the unequal distribution of the jointly held assets as a means of reimbursing the husband for his initial investment when purchasing the properties. While the wife argued that the husband was not entitled to receive a “reimbursement” of investment funds due to previous rulings that one spouse may not be ordered reimbursed from community property for voluntary expenditures of separate funds unless there is an agreement in place allowing it. The Court of Appeals of Arizona finds this precedent non-applicable due to the nature of the property.

In this case, the property in dispute is not community property. It is property held in joint tenancy. Due to the nature of the property, the Court of Appeals of Arizona based its decision on the law of joint tenancy. Where the property is held in joint tenancy, the law of joint tenancy applies. This law may permit reimbursement to a co-tenant who contributed so the issue becomes determining whether the presumption of a gift when a spouse places a separate property into joint tenancy creates a gift to the spouse individually as a joint tenant rather than to the community.

Joint Versus Community Property in Arizona.

Joint Versus Community Property in Arizona.

The court found only two cases supporting the claim that the gift would be one to the community and therefore found these cases to be contrary to the majority interpretation of the law on the subject. Instead, they went with the majority in that the gift is to the noncontributing spouse individually as the joint tenant of the property. (See e.g., Battiste v. Battiste, 135 Ariz. 470, 472, 662 P.2d 145, 147 (App. 1983) ; Sloane v. Sloane,132 Ariz. 414, 646 P.2d 299 (App. 1982); Batesole v. Batesole, 24 Ariz. App. 83, 86, 535 P.2d 1314, 1317 (App. 1975). Additionally, the rule traditionally followed in the state of Arizona is that the legal result of holding property jointly is for each spouse (or joint owner) to take an undivided separate property interest in one-half of the property at hand. (See Becchelli v. Becchelli, 109 Ariz. 229, 508 P.2d 59 (1973); Collier v. Collier,73 Ariz. 405, 242 P.2d 537 (1952); Blaine v. Blaine, 63 Ariz. 100, 159 P.2d 786 (1945); Oppenheimer v. Oppenheimer, 22 Ariz. App. 238,526 P.2d 762 (App. 1974).

Arizona law states that upon dissolution, a jointly held property should be divided equitably between both parties. This is typically interpreted to mean a substantially equal division except in cases where reason exists to deviate from the norm. Thus the appeals court found that the trial court abused its discretion when they ordered the unequal division of the jointly held property. The jointly held property is to be divided equally by law similar to community property, but this does not eliminate the difference between community property and jointly held property. Arizona has a number of precedents for recognizing that the general rules of joint tenancy should apply between spouses. Collier, supra; In re Berger, supra; Bowart v. Bowart, 128 Ariz. 331, 625 P.2d 920 (App. 1980); Graham v. Allen, 11 Ariz. App. 207, 463 P.2d 102 (1970).

General joint tenancy rules allow cotenants to contribute for the benefit of the common property, but before a tenant can claim this right there must exist a common obligation or liability among joint tenants at the point in time when the expenditure occurred. See Ocean Accident & Guarantee Corp. v. United States Fidelity & Guaranty Co., 63 Ariz. 352, 162 P.2d 609(1945); King v. King, 163 Or. 84, 95 P.2d 66 (1939); 20 Am.Jur.2d, Ccotenancy and Joint Ownership, § 59 (1965); see also, 18 Am.Jur.2d, Contribution, § 9 (1985).

The court questions whether such a common obligation or liability existed between the parties in this instance at the time when the husband used his sole and separate funds towards the down payment during the purchase of the investment properties. The wife only took interest once the properties were placed in joint tenancy after the husband had already expended the funds in dispute. Therefore, using general joint tenancy laws in place in Arizona, the husband does not have the right to seek “reimbursement” or contribution from the cotenant (the former wife, in this case).

The trial court’s order of reimbursement also presents a clear conflict with the legal presumption of a gift to the wife due to joint tenancy of the investment properties. The initial investment of the sole and separate funds would clearly be included as part of the “gift” as it was required in order to obtain the properties in the first place. To order reimbursement of these funds is found to be both inconsistent and inequitable.

In conclusion, the Court of Appeals of Arizona found that the trial court ruling did, in fact, abuse its discretion in ordering an unequal distribution of joint investment property as well as ordering reimbursement of funds invested during the purchase of the properties. The trial court decision was reversed by the court of appeals with an order for equitable division of properties between the parties in accordance with Arizona law.

Call us at (480)305-8300 to schedule your personalized consultation with one of our experienced Phoenix and Scottsdale Arizona divorce lawyers.