Are Vacation Days Community Property in an Arizona Divorce?
The Questions Presented in Andrews v. Andrews, 2021 WL 5903259
- Are accumulated vacation days community property?
- Can a court deny a spouse’s claim for reimbursement if that spouse presents no evidence of the amount paid toward community bill, but the other spouse admits to the amounts expended in her Pretrial Statement?
- Can a recipient spouse in Arizona reasonably claim they can only work part-time?
Legal Background
Anything acquired by either party during the marriage is presumed to be community property. This includes certain benefits received at work. Prior to Andrews, no case in Arizona had ruled on the issue of accumulated vacation days. The presumption that property earned during the marriage is community property applies even if the property is not received until after the community ends. The Court of Appeals cites as examples of this, eg. pensions and unvested stock options.
When an issue is in front of the Court of Appeals for the first time, it is called a matter of first impression. The Court of Appeals will often look to how other states, particularly California, handled similar issues. Arizona is not bound by what other states have done—and Arizona can go a different path entirely.
Key Impacts
- Accumulated vacation days are community property if the accumulated days are reimbursable (and, therefore, divisible in the divorce). If they are not reimbursable, they are not community property.
- If you’re going to ask for reimbursement for community bills during the pendency of your matter, you need to present evidence of bills paid to the Court. In the absence of such proof, reimbursement may still be ordered if the other party admits those bills were paid.
- A Court may conclude that part-time work is more appropriate for the recipient spouse.
Andrews v Andrews Factual Background and the Appealed Superior Court Decisions
This was a 28-year marriage. Throughout the marriage, the parties both worked for American Airlines; Husband was a pilot and Wife was a flight attendant. Toward the end of the marriage, Wife began having some medical issues that required her to reduce her workload to part-time work. The Superior Court awarded Wife Spousal Maintenance and determined that Wife could only work part-time. Husband argued that she shouldn’t be awarded additional spousal maintenance because she brought the health problems on herself because she smokes and has pets. The Court disagreed and awarded Wife Spousal Maintenance and determined that Wife could only work part-time. Husband also argued that he should be reimbursed for the mortgage payments he made during the pendency of the divorce. The Court denied his reimbursement request, ruling that he did not provide evidence. Finally, Husband argues that his accumulated vacation days were sole and separate property because only he could use the time off. The Trial Court ruled that the vacation days were community property, noting Husband’s willful failure to disclose documents about the value of the accumulated vacation days. Husband appealed the Trial Court’s decision.
THE ANDREWS COURT OF APPEAL RULING
1. If vacation pay is reimbursable, it’s community property. If it is not reimbursable, it’s separate property. As vacation pay was a matter of first impression in Arizona, the Court looked to other jurisdictions. California has ruled that vacation time is community property if it can be cashed in at retirement. Colorado has held accrued leave is community property when the employee has an enforceable right to be paid for it.
Husband argued because he can only use the vacation time post-date of service, it should be separate property. He relied on the decision in Helland v Helland, a case where the parties purchased disability insurance during the marriage that Husband later used post-marriage. The court there held it was separate property because the insurance could only be paid out under certain conditions. And because it was contingent on Husband becoming disabled, the community did not acquire a right to disability benefit payments when it purchased the policy. Whereas, reimbursable vacation benefits that allow for reimbursement of unused days contain a right to payments.
2. The trial court erred by concluding Husband presented no evidence regarding reimbursement because Wife admitted to certain amounts he paid in his Affidavit of Financial Information (AFI) and in her testimony. “A spouse who voluntarily services community debt and maintains community assets with separate property should not be penalized when a mutual agreement cannot be reached. When such payments are made, they must be accounted for in an equitable property distribution.” Husband, though, only submitted an exhibit summarizing what he had paid rather than the statements and bills showing he had paid them. Wife, though, admitted on the stand that he paid the mortgage and utility bills and gave an amount for each on her AFI, so the Court of Appeals adopted this as the amount for which Husband was entitled to reimbursement.
3. A court may conclude that part-time work is more appropriate for the recipient spouse. Reasonable evidence supported the court’s conclusion that Wife could only work part-time due to her asthma, including her doctor’s opined that she would benefit from a less intensive work schedule. Husband also disputed some items on Wife’s AFI, including the $150/month she sent to her elderly mother. The Court of Appeals was not impressed with these arguments.
RELATED CASES
Koelsch v. Koelsch, 148 Ariz. 176 (1986). Held that deferred compensation is community property, even if received after marriage, if any part of it is earned during the marriage.
Jurek v. Jurek, 124 Ariz. 596 (1980). Held that personal injury awards for pain and suffering are sole and separate property because it is injury to one’s body, and one’s body is their own sole and separate property. Further developed the distinction between property acquired by onerous title— “by labor or industry of the spouses” in exchange for community property and lucrative title – acquired by any other means. Property acquired by onerous title is community property; property acquired by lucrative title is not.
Sebestyen v. Sebestyen, 250 Ariz. 539 (App. 2021). Held that even when a pension plan is based on a disability, when the pension calculates the benefit solely on accrued years of service, the pension is earned entirely through onerous title and is therefore community property.
RELATED ARTICLES
Bobrow Claims and Reimbursement for Bills Paid During Divorce (state48law.com)
In Divorce – sometimes a gift is no longer a gift (state48law.com)
Arizona is a Community Property State – a Brief History (state48law.com)
