Arizona Divorce & Family Law Blog

Spousal Support - What The Arizona Court of Appeals Is Thinking

Alexander D. Nirenstein — Mon, 08 Feb 2010 12:04:10 -0700

More about Naseman.

As we know, Husband and Wife, married 11 years at time of the filing of the petition for dissolution of marriage, initially resided in Massachusetts. However during the third year of their marriage Husband purchased property in Arizona and the parties subsequently moved here. Prior to the marriage, Husband who had accumulated substantial wealth and property was already retired; however, 6 years into the marriage, he returned to work. Wife owned her own business prior to the marriage, a bridal shop in Massachusetts, which was sold 3 years prior to the filing of the action. She then operated a business that provided cellulite reduction treatments and facials. (Wife was obviously savvy choosing to get into this line of business in Arizona.) Trial was held in 2006. The Arizona family court awarded Wife spousal maintenance of $4,200 per month for 6 and ½ six years. Additionally, the court explained that rather than increasing Wife's spousal maintenance, it would allow Wife to keep furniture she removed from the Arizona home. On appeal Husband contests the amount and duration of spousal maintenance awarded.

Spousal Maintenance

In this case, the Family Court did list all of the factors pursuant to A.R.S. § 25-319(B), issued findings under each, and concluded spousal maintenance of $4,200 per month for 6 and ½ years was appropriate because it would “allow an adjustment for Wife to raise her own income, or to moderate her return to a more standard lifestyle.”

Regarding Wife's financial needs, Wife presented two affidavits of financial information which indicated a range of monthly expenses from $5,000 to $6,200. At trial, she testified her expenses were approximately $5,000 per month. She also testified she had extensive debt. The court determined Wife was still building her current business and noted she currently makes only $150 per month. Additionally, the court found Husband had sufficient earnings to assist Wife, Wife's property will be modest, and Wife cannot live without assistance while she works on improving her business. The Court held that Wife's reasonable needs were sufficiently established through testimony and documentary evidence, and the trial court did not abuse its discretion taking this evidence into account when awarding $4,200 per month in spousal maintenance. The duration of the maintenance award was also supported since a vocational expert's report indicated it would take more than 5 years for Wife to reach an income level that would enable her to experience a reasonable standard of living.

Husband argued on appeal that the parties' incomes contradict the amount and duration of the maintenance award. The Court disagreed finding that Husband's annual income averaged $250,000 while Wife’s $150.00 per month.

Further, the court appropriately considered evidence of the parties' luxurious lifestyle while married under A.R.S. § 25-319(B)(1). Wife explained that her lifestyle diminished significantly since the petition for dissolution. Husband did not believe his standard of living should be affected by the dissolution because his lifestyle predated the marriage and he funded the parties' way of life during marriage.

As Husband points out, however, the high standard of living was not solely a product of the marriage because the first 5 years of marriage were funded by Husband's sole and separate property. When Husband returned to work, the parties' lifestyle was funded by his wages as well as his separate property. Notwithstanding Husband's significant contributions of separate property, the court properly considered the relevant statutory factors, noting the marriage lasted 13 years and Wife's decision not to work was a “mutual decision” to accommodate the parties' lifestyle. Further, Wife reduced her earning ability by giving up the opportunity to develop her bridal business in Massachusetts because of the marriage and Wife would undergo a significant change in lifestyle. Nevertheless, the spousal maintenance award does not give Wife anything close to the luxurious lifestyle she had.

Household Furtniture & Its Effect on Spousal Support Award

Finally, although Wife admitted the furniture was Husband's sole and separate property, Wife requested additional maintenance if she was ordered to return the furniture. The family court was held to have properly exercised its discretion by noting Wife would have additional expenses if she had to return the furniture she was using.

Practice Tip - Findings of Fact & Conclusions of Law

Alexander D. Nirenstein — Fri, 05 Feb 2010 15:29:20 -0700

Procedure is something that just cannot be ignored. In the recently decided divorce case, Naseman v. Naseman, Division One of the Arizona Court of Appeals indicated just that.

In Naseman, Husband argued on appeal that the family court failed to make sufficient findings regarding spousal maintenance pursuant to Rule 82, Arizona Rules of Family Law Procedure. The Court noted that when a party timely requests findings of fact, the family court's factual findings must be sufficient to allow an appellate court to examine the family court's basis for its decision. However, a litigant must object to inadequate factual findings and conclusions of law to give the court an opportunity to correct them. Since Husband did not challenge the sufficiency of the findings in the family court. Thus, he was found to have waived this argument.

More on Naseman and its substantive ruling to come.

Contact Nirenstein Garnice Soderquist PLC for all of your Arizona Family Law needs.

Children with Special Needs

Alexander D. Nirenstein — Thu, 21 Jan 2010 13:38:26 -0700

Children with special needs further complicate child custody and care issues during and after a divorce. As a result, your family law attorney needs to know what parents rights are under the Individuals with Disabilities Act (IDEA) and with the Section 504 (504) in the Americans With Disabilities Act when advising their clients and when crafting custody agreements.

The following article "Impact of Divorce Agreements on Special Education Decision-Making" highlights some issues and concerns to think about when one of your client's children are suspected of having or are diagnosed with a learning or emotional disability.

NGS Lawyer Appointed Chair of Family Law Section

Alexander D. Nirenstein — Wed, 20 Jan 2010 15:35:20 -0700

Nirenstein Garnice Soderquist PLC is pleased to announce the appointment of Leslie A. Satterlee, Esq. as Chair of the Family Law Section of the Maricopa County Bar Association. Ms. Satterlee will serve as the Chair for a two-year term.

Ms. Satterlee has been employed by the Firm throughout her career, initially coming on board as a Law Clerk. She has been involved in many divorce and family law matters, both on the trial and appellate levels. She is also particularly adept at negotiating complex financial settlement agreements.

Pyeatte Distinguised -- Student Loans, Earning Potential & Divorce

Alexander D. Nirenstein — Fri, 15 Jan 2010 11:46:32 -0700

In Jacobsen v. Jacobsen, 2009 WL 5062291 (Ariz.App. Div. 1), Husband appealed from a decree of dissolution that required him to pay certain student loan debt, among other things. Husband filed a motion for new trial regarding the student loan debt and other issues. The court declined to alter its allocation of student loan debt. The Court of Appeals discussed and distinguished Pyeatte v. Pyeatte, 135 Ariz. 346, 357, 661 P.2d 196 (App.1982).

Student Loan Debt

Husband contends the family court abused its discretion by ordering him to pay one-half of Wife's student loan debt, though he concedes that debt was a community obligation. Husband argues Wife was unjustly enriched because she left the marriage with increased earning potential as a nurse practitioner due to the graduate degree she obtained during the marriage, which the community financed without realizing any benefit.

The Court of Appeals held that although increased earning potential based on a degree earned during marriage is not community property subject to division, a spouse who works to allow the other spouse to obtain a degree may, under some circumstances, be entitled to restitution in subsequent divorce proceedings pusuant to its prior ruling in Pyeatte v. Pyeatte, 135 Ariz. 346, 357, 661 P.2d 196, 207 (App.1982), but that was not the case here.

In Pyeatte, the parties agreed wife would work to put husband through law school, then husband would provide financial support while wife earned a graduate degree. Husband obtained his law degree and, shortly thereafter, told wife he “no longer wanted to be married to her.” The Court of Appeals noted that

“[t]he mere fact that one party confers a benefit on another ... is not of itself sufficient to require the other to make restitution.” Restitution is appropriate “only if the circumstances are such that it would be unjust to allow retention of the benefit without compensating the one who conferred it.... One circumstance under which a duty to compensate will be imposed is when there was an expectation of payment or compensation for services at the time they were rendered.”.

The Court of Appeals further stated that

"[a]lthough there was no enforceable contract between the spouses in Pyeatte, the court found their agreement “still has importance in considering [wife's] claim for unjust enrichment because it both evidences [wife's] expectation of compensation and the circumstances which make it unjust to allow [husband] to retain the benefits of her extraordinary efforts.” We also noted the “difficult problem of the ‘working spouse’ claiming entitlement to an equitable recovery where there is little or no marital property to divide and therefore the conventional remedies of property division or spousal maintenance are unavailable.” Finding that the husband “left the marriage with the only valuable asset acquired during the marriage-his legal education and qualification to practice law,” we concluded, “It would be inequitable to allow [husband] to retain this benefit without making restitution to [wife].”

The Court then held that Pyeatte was readily distinguishable from the Jacobsen case because in Jacobsen

"Husband presented no evidence of an agreement regarding Wife's schooling. Additionally, these parties had other assets, including substantial retirement accounts and a home with significant equity. Another distinguishing fact is that Wife worked part-time while attending graduate school, and the community benefited, albeit relatively briefly, from her increased earning potential (Wife obtained a job in 2005 earning approximately $20,000 more per year than she did as a registered nurse). Finally, Husband earns over $10,000 per month, and unlike the non-student spouse in Pyeatte, there is no indication his career or educational goals were affected by Wife's schooling or the timing of the divorce.

As a result, it found that The Honorabloe Judge Gentry-Lewis did not abuse her discretion in requiring the parties to equally share the student loan debt.

Recent Ruling - Undisclosed Line of Credit on Marital Residence

Alexander D. Nirenstein — Fri, 15 Jan 2010 09:54:38 -0700

The Court of Appeals affirmed The Honorable Judge Hugh Hegyi's ruling in Frantz v. Frantz, 2009 WL 4981533 (Ariz.App. Div. 1), a case that dealt with an issue that is becoming more and more common in Arizona as a result of the State's heavy financial reliance of the real estate market. In Frantz, Husband appealed from a decree of dissolution arguing that the family court erred in its determination that a second lien secured by the marital residence was not a community obligation. At the dissolution hearing, Husband, Wife, and a real estate appraiser testified. Judge Hegyi stated:

“In finding that the community has $92,000 in equity in the [residence], the court does not deduct the value of the $84,000 second lien on that property. It finds that WIFE has established by clear and convincing evidence that the lien is not a community obligation. The money was received by HUSBAND alone. HUSBAND alone had the ability to explain what happened to the proceeds of the loan, and has failed to do so. After observing the parties' demeanor in testifying, the court finds HUSBAND expended these proceeds in a manner that was not intended to, and did not, benefit the community."

Husband filed a motion to alter or amend the decree requesting that the court value the residence at $8,000 - an amount reflecting the fair market value minus any and all of the liens and encumbrances obtained by the parties during the marriage. The court denied Husband's motion.

Husband first argues that the trial court erred in finding that the second lien secured by the marital residence was not a community obligation. The Court of Appeals found no error stating:

"Husband submitted a statement indicating that the balance on the line of credit was $83,096 as of March 2007. Husband only testified that the line of credit was opened prior to February 2007, and that he wanted the value of the residence to reflect the two liens that were secured by the house. Wife testified that she was not aware of what the funds from the line of credit were used for. Wife also testified that she did not believe that the line of credit should be included in reducing the equity in the property. Based on the above, the trial court did not err in finding that that Wife overcame the presumption that the second lien was a community obligation."

Bottom line, credibility counts! What Judge Hegyi obviously concluded was that the Husband tried to pull a "fast one" and was caught without an explanation as to where the money went. The Court of Appeals agreed. The moral of this case can be summed up as follows: "if it smells funny, something probably stinks" or if you prefer, "where there is smoke there is usually fire".

Launch of Arizona Probate & Elder Law Litigation Blog

Alexander D. Nirenstein — Wed, 13 Jan 2010 14:56:20 -0700

Nirenstein Garnice Soderquist PLC is proud to announce their second entry into the world of legal blogging. The Firm has created The Arizona Elder Law & Probate Litigation Blog, which will discuss all issues and newsworthy events relating to the practice of Arizona elder law and probate litigation. Topics to be discussed will include guardianships, conservatorships, will contests and trust litigation, claims against fiduciaries, powers of attorney, expolitation of vulnerable adults, and other related issues. The Firm welcomes participation in the discussion of these exceedingly important topics and hopes to provide useful information to all Arizonans as the average age of its citizens continues to rise.

Courtroom showdown set to begin over same-sex marriage

Alexander D. Nirenstein — Mon, 11 Jan 2010 08:44:21 -0700

Same-Sex Marriage issue takes over national spotlight in San Fransisco. CNN is reporting on its website in Courtroom showdown set to begin over same-sex marriage, that Kristin Perry and Sandra Stier's partnership, a relationship lasting more than eight years with the couple having four sons together, will revisit the controversial issue.

The case involves California Proposition 8, which bans same-sex marriage.

Recent Ruling - Arizona Child Custody Appeal

Alexander D. Nirenstein — Thu, 07 Jan 2010 14:45:36 -0700

Sometimes the simple things count the most. Remember, if you are in the process of appealing a child custody determination made by the Arizona Family Court, make sure you attach a copy of the transcript of the custody hearing for the Appellate Court's review.

In Bourgo v. Bourgo, 2009 WL 5062194 (Ariz.App. Div. 1)(Dec. 24, 2009), Mother forgot to do just that and as a result, her appeal challenging the denial of her petition to modify child custody was denied.

For all of your Arizona child custody related issues, make sure to contact Nirenstein Garnice Soderquist, experienced Arizona family law attorneys.

As for the underlying facts, Mother and Father have three children in common. Mother petitioned for dissolution in 2003. The parties disagreed regarding custody of the children. An evidentiary hearing was held. The court awarded sole legal custody to Father and granting Mother parenting time. The court found that because there had been a significant history of domestic violence between the parties, an award of joint custody was prohibited by Arizona Revised Statutes (“A.R.S.”) section 25-403(E) and Mother's mental health issues did not support awarding her sole custody. In March 2006, the court adopted the parties' Parenting Plan and allowed Father to have sole legal custody of the children in Oregon. The court ordered Mother would have parenting time in Oregon with 48 hours' notice to Father.

In April 2008, Father petitioned to change Mother's parenting time to supervised parenting time. Mother filed a petition to modify child custody, seeking sole legal custody of the children. The court set an evidentiary hearing on both parties' petitions and referred them to Conciliation Services for a parenting conference. After the hearing, the court denied Mother's petition to modify and ordered that her parenting time must be supervised. The court also ordered that before Mother could exercise her parenting time, she undergo a psychological assessment to rule out any pathology that could pose a risk to the children's safety and well-being. In support of its ruling, the court adopted the findings of fact and conclusions of law set forth in Conciliation Services' Parenting Conference Report. Mother timely appealed the court's decision.

The court's order reflects that it considered both parties' testimony and arguments as well as the Parenting Conference Report dated August 15, 2008. The court adopted the findings of fact and conclusions of law contained in the Parenting Conference Report, which included detailed and specific findings as to each of the statutory factors contained in A.R.S. § 25-403(A). In addition, the court made further findings regarding certain specific circumstances that affect the children's best interests, in particular Mother's lack of recent contact with the children and her alleged mental health problems.

Nevertheless, Mother contends the court's findings that Mother acknowledged she had not received any mental health treatment since June 2004 and had not spent any time with the children since 2006 were incorrect. She alleges she testified that she had been seen and treated by three doctors and visited the children in 2006.

The Court of Appeals held that "[a] party arguing that a superior court ruling was not supported by the evidence must provide a certified transcript of the evidentiary hearing on appeal and, if he or she fails to do so, we will assume the evidence was sufficient to support the court's findings. As Mother has not provided a copy of the transcript from the evidentiary hearing, we presume the evidence supports the family court's findings."

Arizona Spousal Maintenance - Recent Opinion on Attribution of Income

Alexander D. Nirenstein — Tue, 29 Dec 2009 10:14:43 -0700

Last Thursday, the Arizona Court of Appeals rendered an opinion in Pullen v. Pullen, wherein it decided how and when trial courts should attribute income to a spouse for purposes of calculating Arizona spousal maintenance.

The Court of Appeals recognized that Arizona case law had previously only addressed this issue in the context of child support (e.g., Little v. Little). The Court held that the reasoning of the Little court, to apply the intermediate balancing test in lieu of the strict rule test or the good faith test, applied equally in the context of spousal maintenance.

The Court of Appeals went on to hold, however, that it is not possible to rely upon the holding in Little to determine what factors to balance in the context of spousal maintenance, because the Little court focused on the need of the child for child support. Rather, the Court of Appeals enumerated five (5) factors, and held that trial courts should balance these five factors in addition to other evidence in determining whether to attribute income for purposes of calculating spousal maintenance.

The five factors are:

The reasons asserted by the party whose conduct is at issue;
The impact upon the obligee of considering the actual earnings of the obligor;
When the obligee’s conduct is at issue, the impact upon the obligor of considering the actual earnings of the obligee and thereby reducing the obligor’s financial contribution to the support order at issue;
Whether the party complaining of a voluntary reduction in income acquiesced in the conduct of the other party; and
The timing of the action in question in relation to the entering of a decree or the execution of a written agreement between the parties.

For any questions regarding Arizona spousal support, contact Nirenstein Garnice Soderquist PLC and an attorney will discuss this information with you in more detail.

Child Support for an Adult Child

Alexander D. Nirenstein — Sat, 19 Dec 2009 08:58:49 -0700

In Arizona, the family law court has the authority to award child support to an adult child. Usually child support ends when a child turns 18 years old, unless they are still in high school in which case support continues until the child graduates high school, but only until the child reaches the age of 19. However, pursuant to Arizona Revised Statutes section 25-320(E), the court can award child support to a child over the age of majority.

A.R.S. 25-320 states:

“E. Even if a child is over the age of majority when a petition is filed or at the time of the final decree, the court may order support to continue past the age of majority if all of the following are true:

The court has considered the factors prescribed in subsection D of this section.
The child is severely mentally or physically disabled as demonstrated by the fact that the child is unable to live independently and be self-supporting.
The child's disability began before the child reached the age of majority.”

Thus, in order for the Court to award child support to an adult child, the child must have a disability which makes the child unable to live independently or be self-supporting. Additionally, the disability must have began while the child was still a minor.

In Gersten v. Gersten, the Arizona family court recognized the ability of the Court to award support to a parent that is providing support to the disabled adult child. Gersten stated that the current statute regarding child support for an adult child superseded prior case law which required an order for custody or guardianship of the disabled adult child before support could be ordered.

If a case is brought for child support for an adult child, the court may require that the adult child be joined in the action if the disabled child does not have a legal custodian or guardian as any ruling for child support would affect the child’s best interests. Additionally the Court may determine that the support should be paid directly to the disabled adult child or to the parent caring for the child.

If you have any questions regarding child support, please contact Nirenstein Garnice Soderquist, PLC - Arizona Divorce & Family Law Firm.

This article was written by Leslie A. Satterlee, Esq., an attorney at Nirenstein Garnice Soderquist PLC. Ms. Satterlee's practice focuses on Arizona divorce and family law.

Worker's Compensation Ruled to be Community Property

Alexander D. Nirenstein — Sat, 19 Dec 2009 08:46:30 -0700

In an Arizona Divorce case, if you are injured during the course of your employment and are compensated for lost wages or medical expenses, then those proceeds are considered community property. However, if you are compensated for injury to your well-being, then those proceeds are considered your sole and separate property. The importance of this determination is that if you are getting divorced, the divorce court has the authority to divide community property between you and your spouse; however, they do not have authority to divide your sole and separate property.

In Gersten v. Gersten , a recent court case determined by the Arizona Court of Appeals, the Court ruled that proceeds received by husband from an injury incurred in the course of his employment with the United States Post Office were community property. In so ruling, the Court noted that the purpose of husband’s FECA (Federal Employee’s Compensation Act) benefits were to compensate husband for his lost wages, loss of earning capacity, and medical expenses. Since any wages earned during a marriage are community property and any debts paid during the marriage for medical expenses are paid by the community, any benefits paid to compensate for these losses are considered community assets. Conversely, if you are compensated for injury to your self or your well being, then those proceeds are considered sole and separate property.

Similarly, a personal injury award may be considered compensation for lost wages, medical expenses, or injury to your self or well being. Whether a worker’s compensation or personal injury award it is possible that the proceeds include community property and separate property components. It is the burden of the spouse claiming that any portion of the award is separate property to prove that to the family court in a divorce action.

In addition to compensation for injury to one’s self or well being, gifts to an individual are considered separate property. Thus, in Gersten, husband tried to argue to the Court that the worker’s compensation received was a gift to him and thus should be his sole and separate property -- the court denied this argument however because worker’s compensation is not considered a gift.

If you have any questions about your worker’s compensation, personal injury award, or the classification between community and separate property contact Nirenstein Garnice Soderquist PLC - Arizona Divorce & Family Law Firm.

This article was written by Leslie A. Satterlee, Esq., an attorney at Nirenstein Garnice Soderquist, PLC, who focuses her practice on divorce and family law matters.

IRAs, Community Property Law, Transmutation, Commingling

Alexander D. Nirenstein — Fri, 06 Nov 2009 15:52:06 -0700

The Arizona Court of Appeals recently rendered a decision regarding Arizona community property law in an Arizona divorce case. A summary follows.

In Quinlan v. Quinlan, Not Reported in P.3d, 2009 WL 3644806 (Ariz.App. Div. 1), the wife appealed from a ruling from the Arizona divorce court arguing that the family court erred in determining that Husband's IRA accounts were his sole and separate property, among other things. In this case, husband and wife were married in October 1989; wife filed a petition for dissolution of marriage in October 2006, and the decree of dissolution was entered in July 2008.

In this case husband worked for a drug company for many years prior to the parties' marriage and for a relatively short time during marriage. During his employment, husband acquired an interest in the drug company’s profit sharing plan. Most of his shares were acquired prior to the marriage. After husband was terminated his entire profit sharing plan was rolled over into an IRA bank account. Eventually, those funds were rolled over into a second IRA account to hold real property investments. Both IRAs were in husband's name only. Ultimately, the family court found that 84.62% of the IRA accounts were husband's sole and separate property and 15.38% were community property under Arizona community property law.

Wife's argument was two-fold. First she argued husband's IRA accounts were community property due to commingling, agreement, and gift of husband's original profit sharing plan stock funds and second, in the alternative, if husband's IRA accounts remained his sole and separate property, the community was entitled to an equitable lien for the increased value of the IRA accounts due to community efforts.

Wife contended that when “she took over” management of the first IRA, a “transmutation occurred and the funds became community property in their entirety since the sole and separate nature of that asset was lost.” The Court of Appeals disagreed stating that “a mere change in the form of an asset does not necessarily change its character as either community or separate”. Wife relied on the commingling rule in Cooper v. Cooper, 130 Ariz. 257, 259, 635 P.2d 850, 852 (1981), which states unless one can explicitly trace his or her separate property, commingled community and separate funds will be presumed community property. The Court of Appeals held that wife's reliance on Cooper was misplaced because Cooper involved a savings account that was owned by the wife prior to marriage and that during the marriage, deposits were made to the savings account, some from checks the husband made payable to the wife.

The Court of Appeals found that while the profit sharing plan shares changed in form, their identity as community or separate shares was not lost. So, the Arizona family court was correct when it apportioned the shares husband earned prior to the marriage, and awarded those as his sole and separate property and the shares earned during the marriage were awarded to the community.

Wife also argued that because she took over management of the IRA accounts during the marriage and because husband purportedly told wife that the funds were for their shared retirement, the IRA accounts became community property by gift and/or agreement. However, wife testified that the agreement was not reduced to writing and there were no witnesses to the agreement. Husband testified that while he told wife the IRA Accounts would be used when they both retired if they were still married, he never gave or promised wife any interest in the IRA accounts. The Arizona family court found the purported statement by husband to wife of “we're in this together,” if made, was insufficient to transform the nature of the property or create a gift and further found there was no gift or agreement to transmute Husband's IRA Accounts to community property. The Court of Appeals deferred to the Arizona family court's factual findings, and as a result, found that there was sufficient evidence for the Arizona family court to determine that the IRA accounts were husband's sole and separate property.

Wife then argued next that if the IRA accounts were husband's sole and separate property, the increases in husband's IRA accounts were due in part to community efforts and therefore, the community was entitled to an equitable lien in the amount of the increase in value of the IRA accounts. The Court of Appeals recognized that increases in the value of separate property during marriage due to community efforts should be divided between the separate property of the owner and the community property of the spouses. And that when the value of separate property is increased, the burden of proof is on the spouse who contends the increase is due to the inherent nature of the property rather than community efforts. Additionally, when there is an increase in value due to both the inherent nature of the separate property and community efforts, the increase must be apportioned between the two accordingly.

Wife contended that the increase in the IRA accounts was not solely attributable to the inherent nature of the stock, but was also due to her “effort in researching and analyzing the market, managing the sale and purchase of the stock, devising and implementing new investment strategies.” The Arizona family court found the increase in value of the IRA accounts was “solely because of the inherent nature of the investments, and not because of any community efforts.” Here, the Court of Appeals disagreed that the increase in value of the IRA accounts can be attributed solely to the inherent nature of the investments.

Wife argued that while community efforts may not have caused the stocks themselves to increase in value, the community efforts in research and management increased the overall value of the IRA accounts. While husband testified that “there was little or no effort other than a discussion by either of us” regarding investments made for the IRA accounts, he also testified both he and wife made investment decisions during their marriage. Husband testified that “[o]n occasion, [he] would call the Wells Fargo person,” however, the investment decisions were made by both parties. In his testimony, he also admitted community efforts were used to select and manipulate certain assets held in the IRA accounts. Furthermore, wife acted as property manager on some of the rental properties held in the real estate investment IRA.

The Court of Appeals recognized that as the party asserting the increase in value is separate property and not community property, husband bore the burden of proof. And that Husband did not meet his burden regarding his assertion that the increase in the IRA accounts was due solely to the inherent nature of the assets and investments rather than the inherent value coupled with some degree of community efforts.

The Court of Appeals also recognized that the testimony of both husband and wife indicated that there was at least some degree of community effort during marriage in regards to researching and acquiring investments in the IRA accounts. And, as a result, increases in the value of separate property during marriage that are due at least in part to community efforts should be “apportioned between the separate property of the owner and the community property of the spouses.” Therefore, the Court of Appeals disagreed with the Arizona family court's finding that the increases in value of the IRA accounts were due solely to the inherent nature of the investments and not due in part to some amount of community efforts. As a result, the Arizona family court’s ruling was reversed and remanded.

Cases regarding Arizona community property law in Arizona divorce cases can be very complicated and fact-specific. It is always a good idea to seek the assistance and advice of a good Arizona divorce and family law lawyer when dealing with these issues. Contact Nirenstein Garnice Soderquist PLC and we will be glad to answer any questions you may have.

Arizona "No Fault" Divorce

Alexander D. Nirenstein — Sun, 25 Oct 2009 14:58:39 -0700

Many people often ask what an Arizona "No Fault" Divorce really means. In simple terms, it means that in Arizona any husand or wife, despite what the other spouse may want, can get divorced without the other agreeing that the marriage should be disolved.

The Arizona divorce statute requires that there must be an "irretrievable breakdown" of the marriage for the court to be able grant a divorce, or as it is technically called, a dissolution of marriage.

If either a husband or wife by petition under oath state that the marriage is irretrievably broken or if one of them so states and the other does not deny it, the court will make a finding as to whether or not the marriage is irretrievably broken. If either the husband or wife denies under oath that the marriage is irretrievably broken, the court will conduct a hearing to consider whether reconciliation is possible and will also (1) make a finding as to whether or not the marriage is irretrievably broken, and (2) stay the divorce proceeding for not more than sixty days. At the request of either party or on its own motion, the court may also send the husband and wife a conciliation conference.

There are other possible strategic reasons why a husband or wife may want to ask for a concilliation conference other than to stay the court's determination as to whether the marriage can be reconcilled. For further information on this and other issues relating to Arizona divorce cases, contact Nirenstein Garnice Soderquist PLC.

Arizona Child Support Update

Alexander D. Nirenstein — Mon, 19 Oct 2009 20:04:55 -0700

The Arizona legislature is in the process of reviewing the Arizona Child Support Guidelines. This review process occurs approximately every 4 years in order to insure that the Arizona Child Support Guidelines are in sync with the current economic situation. The review process is required by federal law, which requires states to have child support lawsthat are: (a) applicable state wide; (b) take into consideration the non-custodial parents earnings and income; (c) are based on specific numeric and descriptive criteria; (d) results in a computation of the child support obligation; and (e) are reviewed and if necessary, revised, at least once every four years.

It is appears that there will be changes to the maximum combined gross income for child support and there will be changes to definitions to gross income when calculating Arizona child support awards. For example, one proposal is to indicate that cash value may be assigned to in-kind or other non-cash benefits for recurring contributions from any sources that reduce living expenses as opposed to making that a "shall" provision. A revised chart is being proposed for use in terms of defining adjustments for support of other children. These would be children for which the parent is legally obligated to support including children being supported by court order. There will also be provisions as proposed in the new guidelines to discuss situations when a parent's income as the obligor is over $12,000 monthly. Recognition of possible changes to Arizona Child Support Guidelines is important.

As more information becomes available, we will continue to let you know how these changes could affect you. In the meantime, if you need any assistance with Arizona child support issues, contact Nirenstein Garnice Soderquist PLC.

Arizona Child Support

Alexander D. Nirenstein — Mon, 19 Oct 2009 19:52:28 -0700

In Arizona, the legislature has indicated that the goal of the Arizona child support statute is to ensure that the amount of child support ordered approximates what would have been spent on a child if the family remained intact and were living together. The Arizona child support guidelines were created to establish a standard and uniform method for calculating child support. The Guidelines apply to all children and parents in Arizona and are only deviated from under special circumstances.

If you would like more information on Arizona child support, please contact Nirenstein Garnice Soderquist PLC.

The Arizona Court of Appeals recently rendered a decision dealing with the issue of Arizona child support. In East v. Matthews, the Arizona Court of Appeals reaffirmed that the standard of living that the child would have enjoyed had the family remained intact and lived together applies to all children, whether the parents were married at one time or were never married (paternity cases). The court also held that a parent seeking a monetary award greater that what would be presumtively correct under the Arizona Child Support Guidelines must prove to the trial court why an increase in the child support award would be in the child's best interests. One way for a parent to do this would be to establish what standard of living the child would have enjoyed if the parents relationship remained intact and both the parents and the child resided together.

Other factors can also impact the child support calculation in Arizona. For example, the definition of gross income and adjusted gross income as used in the Guidelines do not have the same meaning as when they are used for tax purposes. Gross income for child support calculation purposes includes income from any source and may include but is not limited to income from salaries, wages, commissions, bonuses, dividends, severance pay, pensions, interest, trust income, annuities, capital gains, social security benefits, workers compensation benefits, unemployment insurance benefits, disability insurance benefits, recurring gifts, prizes and spousal maintenance (alimony). Also, cash value shall be assigned to in-kind or other non-cash benefits. Normally, the Court will not attribute income greater than that which would have been earned from full time employment. Each parent shall have the right to choose to work additional hours through overtime or at a second job without increasing the child support award.

Defining income is not always easy. In the case of Hetherington v. Hetherington, the trial court was instructed that it must consider the amount an employer contributes toward a party's benefits in determining a party's income for purposes of computing child support. Benefits that must be considered include contributions to retirement income and health insurance. Workers compensation insurance contributions do not need to be considered. The trial court may consider a deviation from the child support guidelines if the inclusion of the benefits would artificially inflate a parent's income. One particular element of the child support calculation formula concerns a situation in which child support is paid for two children and the oldest child is emancipated. Does the child support amount automatically decrease in light of a parent's continuing duty to pay child support for the remaining minor child? The answer is no. In the case of Guerra v. Bejarano, the appellate court determined that in such a situation the parent was required to make a written request to the Court for modification of child support and in so doing, allow the Court to apply the child support guidelines to calculate a new child support obligation. Statutes prohibiting retroactive modification of child support to a date prior to the date in which a written request for modification is filed, means in effect that a parent paying child support should not simply assume that child support will automatically be decreased when the oldest child is emancipated. The support payor must be proactive in filing the request to recalculate child support.

Arizona Legislation Affecting Family Law

Alexander D. Nirenstein — Fri, 02 Oct 2009 16:56:56 -0700

The following changes will become effective September 30, 2009.

A.R.S. §25-403, which deals with child custody cases in Arizona has been modified to provide that the court will disregard the factor, which parent is more likely to permit frequent and meaningful continuing contact with the other parent, if the court determines that “ a parent is acting in good faith to protect the child from witnessing an act of domestic violence or being a victim of domestic violence or child abuse.”

This has obvious implications when dealing with Arizona child custody cases where domestic violence is involved.

On a related note, another subsection has also been enacted, (A)(11), which requires the court to make a finding of whether there has been domestic violence or child abuse as defined in §25-403.03.

Contact Nirenstein Garnice Soderquist PLC for all of your related Arizona Child Custody matters.

Uncontested Divorces in Arizona

Alexander D. Nirenstein — Tue, 22 Sep 2009 15:41:36 -0700

In Arizona there are many people who have never been divorced before. Often times, one married person decides that they would no longer like to be married and would like to know more about "uncontested divorces". They don't exactly know what an "uncontested divorce" is but have heard that it is an easier and relatively cheaper process. Well, that is true. However, most people believe that an Arizona uncontested divorce can only be accomplished when the other spouse's whereabouts are unknown. That is not the case. When both husband and wife have come to terms that they will be divorcing and have come to an agreement regarding the terms, i.e., division of community property, assumption of community debt, spousal maintenance (also called alimony or spousal support), and if children are involved, child custody and child support, an uncontested divorce can be used to simplify the process and get the divorce done quicker.

What actually is an "uncontested divorce" in Arizona? Well, it is a divorce automatically granted by a court when the spouse who is served with a summons and complaint for divorce fails to file a formal response with the court. Many divorces proceed this way when the spouses have worked everything out and there's no reason for both to go to court -- and pay the court costs.

For more information regarding uncontested divorces, contact Nirenstein Garnice Soderquist PLC and they will be glad to answer any questions you may have, or assist you with the process.

Arizona Child Custody Statutes - Best Interests of the Child

Alexander D. Nirenstein — Tue, 22 Sep 2009 14:53:19 -0700

When there are children involved in divorce cases in Arizona (or paternity cases), many questions arise as to how child custody is resolved. Arizona Statutes deal with child custody issues in Arizona divorce and paternity cases and are a great first place to start.

Some definitions need to be known and understood. For instance, with respect to Arizona child custody, "Joint legal custody" means the condition under which both parents share legal custody. In this situation, "both parents share legal custody and neither parent's rights are superior, except with respect to specified decisions set forth by the court or the parents in a final judgment or order." Normally, the major decisions regarding a child involve medical, education and religion. Most other decisions made by a parent such as daily activies of the child, what the children eat and wear, etc. are made by the parent who has physical custody of the child at the time the decision needs to be made.

That brings us to "Joint physical custody", which is defined as "the condition under which the physical residence of the child is shared by the parents in a manner that assures that the child has substantially equal time and contact with both parents." What "substantially equally time and contact with both parents" is, of course, where many problems may arise as both parents may have very different views on this subject.

In an Arizona divorce or paternity case, if mother and father are unable to reach an agreement as to what custody arrangements should be put in place for their child, Arizona statute authorizes the court to award when deciding child custody that custody be either "sole" or "joint". Importantly, there is no presumption in favor of one custody arrangement over the other. And, "the court in determing custody shall not prefer a parent as custodian because of that parent's sex". So, the sex of the parent when determing child custody in Arizona should not be a factor in the court's decision.

Many questions often arise about "what is in the child's best interests" in Arizona custody cases. The divorce or paternity case judge considers the following: 1. the wishes of the child's parents; 2. the wishes of the child; 3. the interaction and interrelationship of the child with the parents, the child's siblings and any others who may significantly affect the child's best interests; 4. the child's adjustment to home, school and community; 5. the mental and physical health of all individuals involved; 6. which parent is more likely to allow the child frequent and meaningful continuing contact with the other parent; 7. whether one parent, both parents or neither parent has provided primary care of the child; 8. the nature and extent of coercion or duress used by a parent in obtaining an agreement regarding custody; and 9. whether either parent was convicted of an act of false reporting of child abuse.

Of course, this is only the basics. When dealing with Arizona child custody disputes each case is different because no two situations are exactly the same. Facts always differ. If you have any questions regarding Arizona child custody in the context of an Arizona divorce or paternity case, contact Nirenstein Garnice Soderquist PLC.

Tax Issues And Arizona Divorce

Alexander D. Nirenstein — Sat, 12 Sep 2009 21:59:59 -0700

When people divorce in Arizona, there are many complex tax questions that arise. While it is impossible to address all of them without knowing the specific facts in each case, simple answers to some general questions are addressed here. First, because these issues are usually complicated, you should always talk these matters over with your divorce attorneys and CPA to get the answer for your specific situation.

Must I pay tax on money and property I receive in a divorce settlement? Is money I pay to my ex-spouse tax deductible?

If a payment qualifies as alimony under federal tax rules, the paying spouse deducts it and the receiving spouse reports it as income. If a payment is child support, it is not deductible by the payor and is not taxable income to the payee. If a payment is property settlement, there is no immediate tax consequence on the payment. If the payment isn't money, though, there may be a capital gains tax later when the property is sold.

Can I deduct my legal and accounting expenses for the divorce?

Generally, you cannot deduct these expenses. But the part of the fees related to obtaining a payment of alimony is deductible.

I get a payment from my spouse's pension plan on retirement. Is that taxable?
Generally, there is no tax right away but when you do get payments they will be taxable just as if they were you own pension.

I am getting a payment from my former spouse's IRA. Is that taxable?

If you are less than 59 and you don't "roll the payment over" into your own IRA, it will be taxable. If you roll it over into your own IRA, its only taxable when you start to withdraw it under the normal rules. If you are 59 or older, this is also generally true but the rules get more complicated. See your CPA for your options.

I am making payments for my ex-spouse as a result of the divorce decree for items like medical expenses, rent and tuition. Are these deductible? If these payments meet all of the other rules to qualify as alimony they are deductible by the paying spouse and income to the receiving spouse.

I am making payments on a life insurance policy and my ex-spouse is the beneficiary. Is that deductible?

If the ex-spouse owns the policy, its alimony - deductible by the paying spouse and income to the receiving spouse. This isn't true if the ex-spouse doesn't own the policy though.

What is my filing status and why do I care?

A filing status is an important factor in how much tax you pay. Joint is better than Head of Household and that is better than Single. Generally, divorced people who are not remarried file as single. However, if a dependent lives with you most of the year, and you provide most of the support, you may qualify as Head of Household.

I'm making house payments on the house my ex-spouse lives in. Are these deductible?

If your spouse owns the home and you are making the payments, the payments are deductible by you and they are income to the recipient provided they otherwise qualify as alimony.

If you and your ex-spouse still own the home jointly, it gets even more complicated. Half of the mortgage payments can be deductible as alimony if they otherwise qualify. The other half is treated as a regular mortgage payment and you might be able to deduct a portion if you are itemizing deductions. Property tax and insurance deductibility depends on the legal form of ownership. You have to talk to your CPA or attorney about it.

Can I claim a dependency deduction for my child?

Usually, claiming a dependency deduction reduces your taxes. As a general rule, the parent with custody can claim the deduction. Almost all of the time, though, this issue is specifically addressed in the divorce decree to allow shifting of the exemption from year to year or to allow the non-custody spouse to claim the exemption.

Should I be concerned about keeping records on property I get from the divorce?

If you get property in a property settlement as a result of the divorce, you might later have to pay a capital gains tax when you sell the property. You have to know what the tax cost is to figure that tax. It is very important that you get the necessary records to compute the tax cost for any item you might later sell. This is usually an issue for the house, and investments like mutual funds, stocks, and bonds as well as collectible items and valuable art work.