Nelson v. Nelson

NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE

JENIFER AYCOCK NELSON, Petitioner/Appellee,

v.

STEVEN RICHARD NELSON, Respondent/Appellant.

No. 1 CA-CV 25-0045 FC
FILED 05-04-2026

Appeal from the Superior Court in Maricopa County
No. FN2021-050782
The Honorable James Knapp, Judge

AFFIRMED

COUNSEL

Scottsdale Family Law PLLC, Scottsdale
By Robyn Barrett
Co-Counsel for Petitioner/Appellee

Reardon House Colton PLC, Scottsdale
By Taylor S. House, Sally M. Colton
Co-Counsel for Petitioner/Appellee

Adam C. Rieth PLLC, Mesa
By Adam C. Rieth
Counsel for Respondent/Appellant
NELSON v. NELSON
Decision of the Court

MEMORANDUM DECISION

Judge Michael S. Catlett delivered the decision of the Court, in which
Presiding Judge D. Steven Williams joined. Judge Andrew M. Jacobs
concurred in part and dissented in part.

C A T L E T T, Judge:

¶1 Steven Richard Nelson (“Husband”) appeals the superior
court’s Domestic Relations Order (“DRO”) allocating community pension
benefits. We conclude we have jurisdiction over Husband’s appeal, and we
affirm the DRO because the court did not abuse its discretion in rejecting
Husband’s proposed remedies after Jennifer Aycock Nelson (“Wife”)
violated the court’s decree of dissolution.

FACTS AND PROCEDURAL HISTORY

¶2 Wife petitioned to dissolve her marriage to Husband. In
January 2023, the superior court issued a decree (“Decree”) doing so.

¶3 In dividing the parties’ assets, the court found Husband
owned an individual retirement account (“IRA”) and Wife owned a
pension through the Arizona State Retirement System (“ASRS Pension”),
designated both community property, and awarded half to each party. The
court ordered the parties to select a “qualified person” to prepare any
“necessary qualified domestic relations orders” by February 6, 2023. The
court ordered the individual selected as a special master to “make
recommendations to the Court as to whether [Husband] should be awarded
a survivor benefit.” The court also instructed the special master to “identify
the cost for the election of a survivor benefit and, if appropriate, [to] allocate
the cost thereto.” The Decree required both parties to “cooperate” by
“diligently provid[ing] all plan statements necessary[.]”

¶4 In May 2024, Husband and Wife chose a special master.
When an individual participating in ASRS retires, that individual may
select either a life annuity or a survivor annuity. Husband wanted Wife to
select the survivor annuity, but Wife disagreed. Husband argued Wife
earned the entire value of the ASRS Pension during their marriage, the
ASRS Pension made up the bulk of the community’s retirement assets, and
Wife was likely to predecease him due to health issues. Wife opposed

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selecting a survivor benefit because that option would reduce her monthly
benefit and prohibit her from leaving a survivor benefit to a potential future
husband.

¶5 Initially, the special master favored Husband’s argument. But
before completing her report, the special master discovered that Wife had
retired a year earlier (in May 2023) and selected the life annuity option
without a survivor benefit. The special master explained that before
discovering Wife had retired and selected a life annuity, the special master
believed the DRO should include a survivor benefit and reduce Husband’s
monthly benefit to offset any reduction in Wife’s benefit. But the special
master concluded Wife’s selection was irreversible, rendering the survivor
benefit issue “somewhat” moot. The special master instead recommended
awarding Husband half of any payments or distributions from the ASRS
Pension during Wife’s life. The court signed the special master’s
recommended DRO.

¶6 Husband asked the court to vacate the DRO because the court
signed it before his deadline to object. The court agreed, granted Husband’s
motion, and ordered briefing on whether it should accept the special
master’s recommendation. Husband argued the special master should
have been the one to decide whether he received survivor benefits, not
Wife. He requested an order changing the ASRS Pension from a life annuity
to a “50% joint and survivor annuity.” Alternatively, he requested that the
court award him the full value of his IRA and require Wife to obtain an
insurance policy on her life naming him the sole beneficiary. He also
suggested that the court allow Wife to reduce the amount of the policy each
year she did not predecease him. Wife responded that Husband’s
argument was moot because she had already retired and selected the life
annuity option and did not violate any court order in so doing.

¶7 The court issued two orders and a minute entry. The court
issued a new DRO awarding Husband half of any benefits from Wife’s
ASRS Pension accrued during marriage, to be paid monthly during Wife’s
life. The DRO recited that “no further matters remain pending and that
judgment is entered under Rule 78(c).” The court also issued a clarifying
order about Husband’s IRA. Lastly, the court issued a minute entry
explaining it was “unpersuaded” by Husband’s arguments. The minute
entry instead adopted the special master’s reasoning “in full” but required
Wife to compensate Husband for benefits paid since her retirement. The
court did not sign the minute entry or include any finality language.
Husband appealed.

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JURISDICTION

¶8 Husband’s notice of appeal states he is appealing from the
superior court’s clarifying order, the DRO, and the minute entry. In her
answering brief, Wife argues we lack jurisdiction because the orders were
not final, and they are not special orders issued after final judgment. Two
weeks after Wife filed her answering brief, Husband asked this court to stay
the appeal to obtain an order with a signature and Rule 78(c) finality
language. This court granted the stay request and revested jurisdiction in
the superior court.

¶9 In a new minute entry, the superior court explained that none
of the three documents it entered were final judgments, and it admitted to
causing “confusion” by including Rule 78(c) finality language in the DRO
and not signing the minute entry. The court explained that the clarifying
order, DRO, and minute entry were now “signed as formal orders of the
Court, nunc pro tunc.” The court stated that “no further matters remained
pending” on the date of the original minute entry. The court also signed
the new minute entry “as a formal order[.]” This court lifted the stay but
expressed no “opinion regarding whether any rulings are substantively
appealable.”

¶10 We have a “duty to determine whether [we have] jurisdiction
to consider an appeal.” Sorensen v. Farmers Ins. Co. of Ariz., 191 Ariz. 464,
465 (App. 1997). “[T]he inclusion of Rule 78 language alone does not make
a judgment final and appealable[.]” In re Marriage of Chapman, 251 Ariz. 40,
43 ¶ 10 (App. 2021).

¶11 We conclude we have jurisdiction over the DRO and the
minute entry explaining it. In Boncoskey v. Boncoskey, the superior court
entered a separate order adopting a special master’s recommendation about
how to allocate an ASRS account “but contemplated the . . . entry of the
DRO.” 216 Ariz. 448, 450–51 ¶¶ 7–9, 12 (App. 2007). We concluded that
“once the court issued the DRO, the DRO became a final appealable order”
because it was a special order made after judgment. Id.; see Caswell v.
Caswell, 255 Ariz. 356, 358 ¶ 5 (App. 2023) (stating a stipulated DRO was
“an appealable order under A.R.S. § 12-2101(A)(2)”). We see no difference
here. Although the court filed its minute entry adopting the special
master’s report two days after entering the DRO, the court signed the DRO
and recited that “no further matters remain pending and that judgment is
entered under Rule 78(c).” The DRO and the minute entry adopting the
special master’s recommendation are special orders made after final
judgment. In a timely notice of appeal, Husband explained he was

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appealing the DRO and the minute entry. We have jurisdiction. See A.R.S.
§ 12-2101(A)(2).

DISCUSSION

I. ASRS Pension

¶12 Husband argues the superior court abused its discretion in
allocating the ASRS Pension because the DRO does not provide “protection
against Wife predeceasing him[.]” We review the court’s apportionment of
retirement benefits for an abuse of discretion. Boncoskey, 216 Ariz. at 451
¶ 13. “‘Abuse of discretion’ is discretion manifestly unreasonable, or
exercised on untenable grounds, or for untenable reasons.” Tilley v. Delci,
220 Ariz. 233, 238 ¶ 16 (App. 2009). We view the evidence in a light most
favorable to upholding the superior court’s decision and will affirm if
reasonable evidence supports the decision. Kohler v. Kohler, 211 Ariz. 106,
107 ¶ 2 (App. 2005).

¶13 Husband emphasizes that the special master acknowledged
that he wanted survivor benefits. He argues Wife violated the Decree by
retiring and unilaterally selecting the life annuity option. We interpret the
language in the Decree de novo. Merrill v. Merrill, 230 Ariz. 369, 372 ¶ 7
(App. 2012).

¶14 The superior court did not expressly decide whether Wife
violated the Decree. The court, instead, explained it was “unpersuaded that
it should order the remedies proposed by Husband based on the
circumstances, to include an unequal distribution of the IRA account or a
requirement that Wife obtain a life insurance policy with Husband as the
beneficiary.” So it appears the court implicitly found that Wife violated the
Decree but exercised its discretion not to impose either remedy Husband
proposed.

¶15 We agree with the court’s implicit conclusion that Wife
violated the Decree. Wife is correct that the Decree did not expressly
prohibit her from retiring or, once she did, selecting a life annuity. But the
Decree ordered the parties to evenly split the costs to prepare a DRO. It
also ordered the parties to select a “qualified person” to prepare a DRO.
And the court appointed the person selected as special master “[t]o the
extent there may be survivor benefits” to “make recommendations to the
[c]ourt as to whether [Husband] should be awarded a survivor benefit.”
(Emphasis added).

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¶16 The parties were required to have the DRO prepared by
February 6, 2023. Wife delayed in agreeing to a special master by seeking
an appellate stay of the Decree’s special master provision, and Wife retired
in May 2023 but only later told the special master she had done so. Before
learning that information, the special master would have recommended
that the DRO require Wife to select a survivor benefit to provide Husband
with continued pension payments should Wife pre-decease him. But after
the special master learned Wife had retired, and that no survivor benefit
was possible, the special master said Wife’s actions made the possibility of
a survivor’s benefit “moot[.]”

¶17 A divorcing spouse possesses an “immediate, present, and
vested interest” in retirement benefits awarded to them in divorce,
regardless of whether those benefits are mature or not. Koelsch v. Koelsch,
148 Ariz. 176, 181 (1986). An ex-spouse may not prevent the other from
receiving the benefits of property awarded in a divorce decree. Id. (“[I]t is
a settled principle that one spouse cannot, by invoking a condition wholly
within his control, defeat the community interest of the other spouse.”)
(citation omitted); see also Birt v. Birt, 208 Ariz. 546, 556 ¶ 37 (App. 2004)
(trial court may modify a dissolution decree when an ex-spouse attempts to
prevent the other spouse from receiving the benefits of property awarded
in divorce).

¶18 Even if a survivor benefit is not, in and of itself, a community
asset, the court recognized that it was a material component of Husband’s
interest in community retirement benefits. And the court therefore
established a process for determining whether Husband should be
awarded survivor benefits. It is evident that the Decree did not allow Wife
to retire and unilaterally choose a life annuity, thereby rendering moot one
material reason for appointing a special master to propose a DRO. Wife’s
decision to retire and select a life annuity without consulting Husband, the
Special Master, or the court violated the Decree.

¶19 We therefore turn to whether the court abused its discretion
in not adopting Husband’s proposed remedies. Husband requested that
the court enter an order changing the ASRS Pension from a life annuity to
a “50% joint and survivor annuity.” Alternatively, he requested that the
court award him his entire IRA and require Wife to obtain and pay for a life
insurance policy naming him as the sole beneficiary. He explained that
Wife could reduce the policy amount each year by the value of the survivor
benefits not used and the amount of expenses Husband did not incur for
which he would have been responsible, based on his own life expectancy.

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¶20 Husband provided no authority supporting that the court
could retroactively order the ASRS Pension converted from a life to
survivor annuity. Husband acknowledges Wife retired in May 2023 and
that more than sixty days passed before they hired the special master.
Under ASRS, “[a] member may exercise a onetime election to make changes
to the retirement application within sixty days after the member’s retirement
date.” A.R.S. § 38-764(H) (emphasis added). The special master opined that
“[n]ow that Wife did elect a life annuity, such election cannot now be
changed.” Husband provided no contrary authority supporting that the
superior court could order the sixty-day election deadline extended after it
had expired.

¶21 Husband also provided no evidence about the viability and
expense of requiring Wife to procure a life insurance policy. Husband did
not submit evidence about the present cash-value of the ASRS Pension
(including Wife’s life expectancy), which was required to know how much
life insurance Wife would need to obtain and for how long. Husband did
not submit evidence about his own life expectancy, which would also be
required to determine an accurate policy amount to cover what Husband
would have expected to receive in survivor benefits. Husband did not
show that Wife could obtain any life insurance policy, let alone in the
amounts required to approximate what Husband would have received in
survivor benefits. This was important considering Husband’s assertion
that “[t]here is a real possibility that Wife will predecease Husband because
of her many health issues.” Even if Wife could procure a life insurance
policy in the correct amount, Husband submitted no evidence about how
much the necessary policy would cost. Husband criticizes the superior
court for not setting an evidentiary hearing, but the record does not show
he requested one. Without some evidence that insuring Wife’s life was
viable and not cost prohibitive, the superior court did not abuse its
discretion in refusing to compel Wife to do so.

¶22 In fact, ordering Wife to procure a life insurance policy post-
Decree could have undercut the “compelling policy interest favoring the
finality of property settlements.” See Reed v. Reed, 124 Ariz. 384, 385 (App.
1979). Had the court ordered Wife to select a survivor benefit, her monthly
payment from the ASRS Pension would have decreased, which is why the
Special Master suggested that Husband would have to compensate Wife for
such reduction. See A.R.S. § 38-760(B)(1) (listing the option of a “[j]oint and
survivor life annuity in a reduced amount payable to the retiring member
during life”). But requiring Wife to procure a life insurance policy would
have had the same effect (the expense for premiums would have reduced
the amount of funds available to her), and yet Husband did not suggest that

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he would cover any of the cost for Wife to obtain insurance. To the contrary,
Husband requested that the court allow him to retain the full value of his
IRA, which was split 50/50 in the Decree. The record does not indicate how
the insurance option Husband proposed would have globally impacted the
court’s prior property allocation or the net amount of income Wife would
receive under the ASRS Pension. So we take no issue with the court simply
maintaining the status quo at the time of the DRO, especially considering
the limited information Husband provided to show that his alternatives
were viable and equitable.

¶23 Husband cites Hoobler v. Hoobler, 254 Ariz. 130 (App. 2022), to
highlight that we have “upheld the use of an insurance policy to mitigate”
the risk of one spouse predeceasing another, which would otherwise
prevent the living spouse from receiving “a full pay out” of a retirement
account. But Hoobler stands only for the proposition that the superior court
may use a life insurance policy to mitigate the effect of one spouse
predeceasing another. See 254 Ariz. at 138 ¶ 17 (“The court did not abuse
its discretion in developing a hybrid method of distributing the retirement
accounts.”). Hoobler does not require the court to do so in all circumstances.

¶24 In any event, the superior court in Hoobler was armed with
much more information than the court was here. For example, the superior
court in Hoobler was presented with evidence of the present cash-value of
the pension—“where the present value of the pension is calculated
actuarially.” Id. at 137 ¶ 10. Based on that value, the court concluded that
the husband should “obtain a ten-year $1,000,000 life insurance policy
naming [w]ife as owner and beneficiary.” Id. And it appears the court
knew that procuring such a policy was an option and what the cost of doing
so would be because it ordered the parties to “share the cost of the premium
for the first five years, and then [w]ife would be responsible for it.” Id.
Here, the superior court did not know the present cash-value of the ASRS
Pension, whether Wife had the ability to procure life insurance in the
necessary amount, and, even if she did, what it would cost her to do so.

¶25 To be sure, our supreme court has instructed courts “to be as
creative and flexible as possible, within the guidelines[.]” Koelsch, 148 Ariz.
at 185. But Husband has not shown that the options he proposed were
viable or equitable or that the court abused its discretion in simply
maintaining the property allocation reflected in the Decree.

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II. Attorney Fees at the Superior Court

¶26 Husband argues the superior court abused its discretion by
not awarding him attorney fees stemming from the parties’ dispute about
the allocation of the ASRS Pension. We review the court’s attorney fees
decision for an abuse of discretion. Mangan v. Mangan, 227 Ariz. 346, 352
¶ 26 (App. 2011). The superior court may award reasonable attorney fees
“after considering the financial resources of both parties and the
reasonableness” of their positions. A.R.S. § 25-324(A).

¶27 Husband contends Wife forced him to “further pursue
alternative remedies” to protect his interests but concedes there is a “lack
of disparity in income” between himself and Wife. The court made the
same factual finding about the lack of disparity of income in the Decree.
And Husband has not demonstrated that Wife took unreasonable positions,
especially considering she was (and remains) the successful party. The
court did not abuse its discretion in declining to award Husband attorney
fees.

ATTORNEY FEES AND COSTS ON APPEAL

¶28 Both Husband and Wife request attorney fees and costs on
appeal under A.R.S. § 25-324. We exercise our discretion to deny both fee
requests because neither party showed a disparity of resources and neither
took unreasonable positions on appeal. We award Wife, as the successful
party, her appellate costs upon compliance with Arizona Rule of Civil
Appellate Procedure 21.

CONCLUSION

¶29 We affirm the DRO.

J A C O B S, Judge, concurring in part and dissenting in part:

¶30 I join in Paragraphs 1 through 18 of my colleagues’ decision
in this matter, which are well-reasoned. I agree that Jennifer Nelson
(“Wife”) violated the Decree by secretly defeating the prospect of the
equitable division of the marital community’s retirement assets. I part
company from my colleagues in how to deal with Wife’s breach of the
Decree.

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Jacobs, J., Concurring In Part and Dissenting In Part
¶31 Why? Wife effected an unequal division of community
property by fundamentally altering the largest remaining asset in the
marital estate. The superior court’s divorce decree had already ratified an
equal division of all other community assets, leaving only two retirement
accounts – of which Wife’s ASRS account was easily the largest – for final
allocation. By irrevocably electing a pension option that eliminated a
survivor benefit before the division was effectuated, Wife transmuted that
final and most important asset. When the court affirmed that
transmutation, it sanctioned an unequal division of assets. The distribution
that resulted violated the court’s prior decree and Arizona’s requirement of
substantial equality. See A.R.S. § 25-318(A); Toth v. Toth, 190 Ariz. 218, 221
(1997). I would remand for further consideration of an appropriate remedy
for Steven Nelson’s (“Husband”) proper and well-preserved objection to
the unequal division of the community’s property.

FACTS AND PROCEDURAL BACKGROUND

¶32 In January 2023, the superior court issued a decree dissolving
the marriage of Husband and Wife and ordering an equal distribution of
their community property (“Decree”). The court acknowledged that
“[o]nly rarely is unequal division of community property appropriate” and
found that this case did not present a “unique set of facts or circumstances”
justifying an unequal division.

¶33 Consistent with our law’s requirement of substantial equality,
the court equally distributed the following community assets: (1) net
proceeds from the sale of the marital home, valued at $278,786; (2) the net
proceeds, debts, business account balances, and potential liabilities from
the family business; (3) all household property, divided by creating a list of
all household property and making alternate selections; (4) proceeds from
the sale of a 2013 Honda Accord, if title is not transferred to the parties’ son;
(5) all community debts, including personal loans, credit cards, and
judgments, valued at a total of $56,390.90; and (6) any refunds or taxes owed
from taxes filed for years 2017 through 2021.

¶34 Two significant assets remained to be divided: Husband’s
IRA, valued at $73,956 and Wife’s ASRS pension account, valued at
$252,697. The court awarded half of what could be identified as the
community portion of each retirement account to each party. To effectuate
that division, the court ordered the parties to retain a Qualified Domestic
Relations Order (“QDRO”) drafter. The court addressed any survivor
benefits associated with the accounts, ordering that “the QDRO drafter
shall be appointed as a Rule 72 Special Master to make recommendations

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Jacobs, J., Concurring In Part and Dissenting In Part
to the Court as to whether the non-employee spouse should be awarded a
survivor benefit.” Ariz. R. Fam. Law P. 72.

¶35 In May 2024, Husband and Wife entered into a Rule 69
agreement, hiring Georgia Wilder as the Rule 72 Special Master. Ariz. R.
Fam. Law P. 69. The parties provided the Special Master with their
respective positions regarding the survivor benefit associated with Wife’s
ASRS pension.

¶36 Husband requested that he receive a survivor benefit due to
the likelihood that Wife would predecease him and given the substantial
disparity between the value of the ASRS account and his own IRA. Wife
opposed this because a survivor benefit would reduce her monthly pension
benefit and would limit her ability to leave a survivor benefit in the future.
The Special Master ultimately concluded that the equitable resolution
required Wife to provide Husband a 50% survivor benefit, with Husband
covering the reductions in the monthly pension payments attributed to that
election.

¶37 The Special Master’s proposed equitable division of the ASRS
account was made impossible by Wife’s actions. In May 2023, after the
Decree was entered, Wife retired and told no one. When she did so, she
irrevocably selected a pension plan with no survivor benefit. After learning
of Wife’s election, the Special Master concluded the survivor benefit was
moot. Instead, the Special Master recommended awarding Husband 50%
of Wife’s monthly pension payments, though she did not make a finding
that this was an equitable division.

¶38 Husband objected to the Special Master’s recommendation,
asserting that Wife’s unilateral election of a pension with no survivor
benefit deprived him of “the full value of his share of [Wife’s] pension.”
Husband requested that the court direct Wife to change the ASRS survivor
benefit option to a 50% joint and survivor annuity. Alternatively, Husband
requested that Wife prepare a life insurance policy naming him as the
beneficiary, based on the value of the ASRS plan and Husband’s life
expectancy.

¶39 The court denied Husband’s objection and requested relief.
In doing so, it “adopt[ed] the reasoning of the 9/30/2024 Special Master
Report and Recommendation in full,” but found Husband’s arguments
unpersuasive. The court did not address Wife’s retirement, the ASRS
pension’s potential survivor benefit, or decide that the resulting
distribution was equitable.

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DISCUSSION

¶40 In a dissolution proceeding, courts must divide community
property equitably. A.R.S. § 25-318(A). This fundamental rule generally
requires a substantially equal division of all community property. Toth, 190
Ariz. at 221. Property acquired during the marriage is presumptively
community property subject to division. A.R.S. § 25-211. That presumption
applies to both vested and unvested property interests. Howie v. Howie, No.
1 CA-CV 23-0587, 2025 WL 1711285, at *7 ¶ 35 (Ariz. App. June 19, 2025)
(mem. decision); Johnson v. Johnson, 131 Ariz. 38, 41 (1981).

¶41 Here, the court faithfully applied the rule of equal division to
nearly every asset in the marital estate: the proceeds from the sale of the
marital residence, the family business, household items, community debts,
tax liabilities and refunds – down to the parties’ 2013 Honda Accord. But
when it came to the parties’ most significant assets, their retirement
accounts, the court did not complete the division. Though the court
awarded each party one-half of the community portion of the retirement
accounts, it delegated to a Special Master the implementation of that
division, including the determination of any associated future interests.
Walker v. Walker, 256 Ariz. 295, 299 ¶ 12 (App. 2023) (holding that retirement
plans are community property subject to division upon dissolution).

¶42 The court’s delegation of this task to a Rule 72 Special Master
was not unilateral. Husband and Wife stipulated to the appointment and
compensation of Georgia Wilder as Special Master through a Rule 69
agreement. Ariz. R. Fam. Law P. 69. Wife expressly agreed to submit the
division of her ASRS pension, including any associated future interests, to
the Special Master’s recommendation.

¶43 Wife’s subsequent retirement election undermined the
Decree’s mechanism for achieving an equitable division of the retirement
assets. The Decree directed that the Special Master make recommendations
concerning survivor benefits associated with the retirement accounts. Wife
was therefore put on notice that the survivor benefits associated with her
ASRS account would be subject to the Special Master’s evaluation. By
electing a pension benefit before the Special Master could fulfill that charge,
Wife circumvented the Decree’s process and contravened the Rule 69
agreement in which she stipulated to the Special Master’s appointment.

¶44 “[I]t is a ‘settled principle that one spouse cannot, by
invoking a condition wholly within his control, defeat the community
interest of the other spouse.’” Koelsch v. Koelsch, 148 Ariz. 176, 181 (1986)
(quoting In re Marriage of Stenquist, 21 Cal. 3d 779, 786 (1978)). Wife’s

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election did precisely that. Wife violated the decree by fundamentally
limiting and recharacterizing the single most important asset in the marital
estate. By irrevocably electing a pension option that eliminated any
survivor benefit, Wife altered not merely the form of the ASRS funds, but
the substantive value of the community interest awarded to Husband. The
community’s interest in the ASRS pension included not only the monthly
payments during the life of the parties, but the contingent survivor
component that would preserve the value of that asset should Wife
predecease Husband. Once extinguished, the asset was no longer the same
asset the court had ordered to be divided equally.

¶45 The court erred by adopting the Special Master’s
recommendation without addressing the effect of Wife’s unilateral conduct
on the equitable division mandated by A.R.S. § 25-318(A). See Tilley v. Delci,
220 Ariz. 233, 238 ¶ 16 (App. 2009) (“‘Abuse of discretion’ is discretion
manifestly unreasonable, or exercised on untenable grounds, or for
untenable reasons.”).

¶46 The Special Master had initially concluded that awarding
Husband a 50% survivor benefit would achieve equity. After Wife’s
election rendered that option impossible, the recommendation shifted to
awarding Husband 50% of Wife's monthly pension payments, without
determining whether that revised division remained substantially equal.
The court reviewed and adopted this recommendation in full, without
finding that the changed division remained equitable. Nor did the court
reconcile the changed division with its prior ruling that unequal division
was not justified by any unique facts or circumstances. See Inboden v.
Inboden, 223 Ariz. 542, 547 ¶ 18 (App. 2010) (examining factors that justify
an equal division of property). Instead, it accepted a recommendation that
acknowledged the survivor benefit was “moot,” without examining the
consequences. This amounts to saying the court didn’t need to figure out
whether the new division was equitable in light of the changes Wife
unilaterally effected, which was error.

¶47 “A divorcing spouse possesses an ‘immediate, present, and
vested interest’ in retirement benefits awarded to them in divorce,
regardless of whether those benefits are mature or not, realized, or
contingent.” Riley v. Tolmachoff, No. 1 CA-CV 24-0101, 2024 WL 4679118, at
*2 ¶ 14 (Ariz. App. Nov. 5, 2024) (mem. decision) (quoting Koelsch, 148 Ariz.
at 181). That principle necessarily encompasses any survivor benefit
attached to Wife’s ASRS pension plan. When Wife extinguished the
survivor component of her pension plan before the Special Master could
affect its equitable allocation, she removed a community asset that was
meant to be divided equally. The court’s ratification of that result with no

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other justification than “adopt[ing] the reasoning of the 9/30/2024 Special
Master Report and Recommendation in full,” was error.

¶48 Husband’s objection to the Special Master’s report had merit
because he had a vested interest in the ASRS plan’s survivor benefits.
Koelsch, 148 Ariz. at 181. The survivor benefit was not dependent upon
Wife’s goodwill in maintaining that asset – it was part of the divisible
community estate. Once the Decree awarded each party one-half of the
community portion of the retirement accounts, Husband acquired a legally
protected interest in the full value of that award. The proper course was to
restore the parties, as closely as possible, to the substantially equal division
the court previously determined was required.

¶49 Arizona law recognizes that alternative mechanisms may be
used to create equity when an asset cannot be equally divided in its original
form. In Hoobler v. Hoobler, 254 Ariz. 130, 135 ¶¶ 1-2 (App. 2022), this Court
approved the use of a life insurance policy as an appropriate vehicle to
secure pension benefits when a direct division was impracticable. In Birt v.
Birt, 208 Ariz. 546, 552 ¶ 25 (App. 2004), we held that a superior court had
the authority to modify a decree when a spouse’s conduct in filing for
bankruptcy created a substantial injustice in asset division. In Merrill v.
Merrill, 230 Ariz. 369, 371-73, 375 ¶¶ 1, 7, 12, 19 (App. 2012), we affirmed
the superior court’s ruling that a husband could not unilaterally waive his
retirement benefits where the decree awarded his wife one-half of his
retirement, and required him to indemnify her for the destruction of her
interest. These cases reflect the superior court’s authority to impose
corrective measures when one party’s conduct frustrates equal division.

¶50 The majority argues the court lacked sufficient information
regarding the ASRS pension’s cash value or the feasibility of Wife obtaining
life insurance, and faults Husband for failing to supply it. But that
information gap only arose because Wife unilaterally altered the asset after
the Decree and before implementation. Equity does not permit the party
that frustrated the division to benefit from the resulting uncertainty. See
Martin v. Martin, 156 Ariz. 452, 458 (1988) (adopting rationale that “one
spouse may not dissipate the marital property and avoid the inclusion of
the value of the dissipated property in the total estate” and holding “the
superior court, in a dissolution proceeding, is authorized to award a spouse
a sum of money representing the value of his or her interest in community
or commonly held asserts which are not available for division due to the
. . . destruction . . . of such assets by the other spouse.”). Additionally, once
Husband objected to the Special Master’s recommendation and proposed
remedial options, the court had the authority and discretion to request
additional evidence, or to remand to the Special Master for actuarial

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NELSON v. NELSON
Jacobs, J., Concurring In Part and Dissenting In Part
findings regarding the ASRS pension’s value. But it did nothing further,
given that it incorrectly determined that further analysis of the subject was
“moot.”

¶51 By declining to undertake that inquiry and instead adopting
a recommendation that treated Wife’s destruction of the survivor benefit as
inevitable, the court allowed Wife to reallocate assets in a manner that
defeated equity and rewarded her unilateral conduct that destroyed a
community asset. That result is incompatible with A.R.S. § 25-318(A) and
the Decree’s commitment to equal division. I would remand to direct the
superior court to take such evidence so as to allow the court to equitably
divide the now fundamentally-altered retirement benefits. Our hands are
not tied. There is no reason to ratify Wife’s improper self-help. I
respectfully dissent.

MATTHEW J. MARTIN • Clerk of the Court
FILED: JT

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