Bassal v. Khalil

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

In re the Matter of:

OMAR ALI BASSAL, Petitioner/Appellant,

v.

KHUSHBO FANA KHALIL, Respondent/Appellee.

No. 1 CA-CV 23-0329 FC
FILED 09-24-2024

Appeal from the Superior Court in Maricopa County
No. FC2021-004512
The Honorable James N. Drake, Judge

VACATED IN PART AND REMANDED

COUNSEL

Jaburg & Wilk, P.C., Phoenix
By Kathi Mann Sandweiss
Counsel for Petitioner/Appellant

Convergent ADR, Phoenix
By Peter B. Swann
Counsel for Petitioner/Appellant

Gallagher & Kennedy, P.A., Phoenix
By Melissa Benson
Counsel for Respondent/Appellee
 BASSAL v. KHALIL
Decision of the Court

MEMORANDUM DECISION

Judge D. Steven Williams delivered the Court’s decision, in which
Presiding Judge Michael J. Brown and Judge Daniel J. Kiley joined.

W I L L I A M S, Judge:

¶1 Omar Bassal (“Husband”) appeals from the decree dissolving
his marriage to Khushbo Khalil (“Wife”). For the following reasons, we
vacate the decree in part and remand for proceedings consistent with this
decision.

FACTUAL AND PROCEDURAL BACKGROUND

¶2 The parties married in December 2017 and have one child,
born in November 2019. In July 2021, Husband petitioned for dissolution of
the marriage. 1

¶3 Through mediated conferences, the parties agreed to a
parenting plan. They failed to reach agreement on several other issues,
however, including spousal support and the classification and division of
certain property. The superior court held a one-day trial on contested issues
and entered a decree of dissolution.

¶4 In the decree, and specific to this appeal, the superior court:
(1) classified as community property 51.24% of monies received from
redeemed virtual shares awarded to Husband through an employee
incentive plan (“the incentive payout”); (2) classified as community
property 4,228.74 shares held by a charitable lead annuity trust (“the trust”);
(3) ordered Husband to pay Wife $1,063,469.16 for her one-half share of the
community interest in the incentive payout and $859,977.10 for her one-half
share of the community interest in the trust, for a total of $1,923,446.87, to
be paid over six years in annual installments of $320,574.48; and (4)
awarded Wife spousal maintenance of $3,000.00 per month for four years.

1 Husband served Wife with the petition for dissolution on October
28, 2021, terminating the marital community by operation of law. See A.R.S.
§ 25-213(B) (“Property that is acquired by a spouse after service of a petition
for dissolution of marriage . . . is also the separate property of that spouse
if the petition results in a decree of dissolution of marriage[.]”).

2
 BASSAL v. KHALIL
Decision of the Court

¶5 Husband timely appealed. We have jurisdiction under Article
6, Section 9, of the Arizona Constitution and A.R.S. §§ 12-120.21(A)(1) and
– 2101(A)(1).

DISCUSSION

I. Characterization and Allocation of the Incentive Payout and the
Trust

¶6 Husband challenges the superior court’s characterization and
division of the incentive payout and the trust. Although he acknowledges
a community interest in both assets, he argues, among other things, that the
court overvalued the community’s share in each.

¶7 We review the characterization of property as separate or
community de novo. Bell-Kilbourn v. Bell-Kilbourn, 216 Ariz. 521, 523, ¶ 4
(App. 2007). We review the allocation of community property for an abuse
of discretion. Id.

A. The Incentive Payout

¶8 Husband began working for an investment company (“the
employer”) in March 2011. In January 2016, the employer distributed a
written employee incentive plan policy, backdated to January 2014. “[T]o
reward both short-term and long-term performance,” the plan provided for
annual cash bonuses and a five-year (2014-2018) “virtual share scheme.” As
explained in the written policy:

Virtual shares mimic shares in a company in order to grant
employees the financial benefits of shareholding without
legal ownership.

....

Virtual shares can be issued by the [employer] and
distributed to eligible employees through a process of
awards, allocation and vesting . . . for the purposes of
measuring and rewarding employee performance.

....

The two key benefits to employees of holding virtual shares
are the opportunity to receive dividends and the ability to
redeem the underlying value of the shares:

3
 BASSAL v. KHALIL
Decision of the Court

Dividends: The dividend policy for virtual shares matches the
[employer’s] dividend policy for ordinary shares, making
employees eligible for the same payout terms and amount as
an ordinary shareholder with an equivalent number of
shares[.]

Capital value: Employees stand to gain from increases in the
[employer’s] capital value as long as they hold virtual shares.
Employees holding virtual shares can realize those gains by
redeeming some o[r] all of their shares at any point in time
after those shares vest[.]

....

The allocation of virtual shares is subject to employee
performance each year. As long as [participating employees]
meet performance expectations in a given year[,] [they] are
allocated 20% of their five-year share award in full. . . .
[E]mployees who do not meet performance expectations in a
given year (as defined by the HR manual) are not allocated
any shares for that year.

....

The virtual shares generally vest after five years--at which
point they are owned by and due to eligible employees.

¶9 The policy further states that the value of virtual shares
“depends on whether the [employer] achieves” its performance target, with
a performance exceeding the target resulting in a higher virtual share value
and a performance falling below the target corresponding to a reduced
virtual share value. In fact, if the employer’s performance falls far short of
its target (failing to achieve at least 85% of its stated goal), the incentive plan
participants “forfeit” their virtual shares entirely.

¶10 Apart from imposing collective forfeiture in the event of the
employer’s failure to meet its specified target, the plan provides for
individual forfeiture of virtual shares if a participating employee terminates
his employment before the end of the five-year period unless: (1) the
employer’s board of directors, in its sole discretion, opts to grant the
employee his shares, or (2) the employee’s termination is the result of death,
disability, termination of employment by the employer without cause, or
the employer’s election not to renew the employee’s employment contract.

4
 BASSAL v. KHALIL
Decision of the Court

¶11 Husband enrolled in the incentive plan effective January 1,
2014. At the outset, the employer “awarded” him 415,122 virtual shares. For
each of the five years, 2014 through 2018, Husband met his personal
performance target, and the employer “allocated” one-fifth (83,024) of the
previously “awarded” virtual shares to him.

¶12 At the end of the five-year period, the employer notified
Husband that it had met its performance target and would allocate an
additional 70,643 shares to him from a “reserve” that had been held back to
allow for additional plan participants, if any. Less than six months after
receiving notice that his shares had vested, Husband redeemed them
(September 2019), receiving their accumulated value of $4,901,132.73.

¶13 At trial, the parties presented competing expert opinion
reports and testimony concerning the proper formula for calculating the
community’s interest in the incentive payout. Husband’s expert opined that
the incentive plan primarily compensated Husband for his past labor and
performance, and used a formula outlined in In re Marriage of Hug, 154 Cal.
App. 3d 780 (1984), to calculate the community’s interest in the incentive
payout. Under the Hug formula, the community’s interest in stock options
equals the number of months the employee-spouse worked for the
employer before the marital community terminated divided by the number
of months the employee-spouse worked for the employer before the stocks
became exercisable. Brebaugh v. Deane, 211 Ariz. 95, 100, ¶ 20 (App. 2005).
Wife’s expert, on the other hand, opined that the incentive plan primarily
induced Husband’s continued employment, and because the shares were
redeemed during the marriage, the incentive payout was entirely
community in nature or, in the alternative, the community held an interest
in the incentive payout under the formula articulated in In re Marriage of
Nelson, 177 Cal. App. 3d 150 (1986). Under Nelson, the community’s interest
equals the number of months between an award of stock options and the
termination of the marital community divided by the number of months
between the grant of the stock options and the date of exercisability.
Brebaugh, 211 Ariz. 100, ¶ 21. Finding the employer implemented the
incentive plan primarily to induce its participating employees’ continued
employment, the superior court adopted Wife’s expert’s calculation of the
community’s interest in the incentive payout under the Nelson formula.

¶14 Although Husband and Wife relied on Hug and Nelson to
support their respective positions, those cases analyze whether a
community has an interest in monies received post-dissolution by an
employee-spouse for services rendered during the marriage. See Goodell v.
Goodell, 1 CA-CV 23-0366 FC, 2024 WL 2827166, at * 5, ¶¶ 32-33 (Ariz. App.

5
 BASSAL v. KHALIL
Decision of the Court

June 4, 2024) (explaining a court should apply the Hug formula to determine
a community’s interest in stock options if the employee-spouse received the
stock options primarily to compensate for labor performed “during
marriage” whereas a court should use the Nelson formula to calculate a
community’s interest in stock options if the employee-spouse received the
stock options primarily to incentivize future (post-dissolution)
performance and continued employment). By contrast, here, the question is
whether the community has an interest in monies received during the
marriage that flowed from work the employee-spouse performed before the
marriage.

¶15 Because Hug and Nelson are inapposite, we turn to the general
principles governing the characterization of property to resolve this issue.
The parties have not cited, and our research has not revealed, any Arizona
case addressing the characterization and division of virtual shares.
Accordingly, we borrow from the analytic framework applied in analogous
cases evaluating a community interest in stock options and pension
benefits.

¶16 “The concept of community property law in Arizona is built
upon two pillars[.]” Potthoff v. Potthoff, 128 Ariz. 557, 561 (App. 1981). First,
property acquired during marriage, other than by gift, devise or descent, is
community property. Id.; A.R.S. § 25-211(A). Second, property acquired by
a spouse before marriage, and the increase, rents, issues and profits of that
property, is the separate property of that spouse. Id.; A.R.S. § 25-213(A).
Thus, in general, “property acquires its character as community or separate
depending upon the marriage status of its owner at the time of acquisition.”
Potthoff, 128 Ariz. at 561. “’Time of acquisition’ refers to the time at which
the right to obtain title occurs, not to the time when legal title actually is
conveyed.” Id. (emphasis added).

¶17 ”[T]he community has an interest in the property earned
during the marriage.” Brebaugh, 211 Ariz. at 98, ¶ 7; see also Van Loan v. Van
Loan, 116 Ariz. 272, 274 (1977) (holding that to the extent a spouse acquires
unvested pension benefits from community efforts, that property right is
divisible upon dissolution). But “the opposite is equally true: the fruits of
labor expended before marriage are separate property.” Stock v. Stock, 250
Ariz. 352, 355, ¶ 11 (App. 2020). Indeed, even if labor expended during the
marriage “cause[s] that pre-marriage property right to vest,” the
community does not acquire an interest in any earnings “attributed to
pre-marital service.” Id. at 355-56, ¶¶ 11, 13.

6
 BASSAL v. KHALIL
Decision of the Court

¶18 Accordingly, to determine whether a community has an
interest in an employee-spouse’s stock options or pension benefits, the
salient question is not when the employee’s interest in the benefits vested,
but whether the employee’s right to the benefits was acquired with
community labor. Van Loan, 116 Ariz. at 273 (rejecting employee-spouse’s
contention that the community had only “a mere expectancy” in his
pension benefits because he had not yet acquired a “vested right” to the
benefits at the time of dissolution); see also Johnson v. Johnson, 131 Ariz. 38,
41 (1981) (reasoning that when employment benefits are earned, not when
they vest, is determinative to assess whether the community acquired an
interest). “That there is yet a condition to be fulfilled” before the “right to
payment” vests “does not in any way vitiate” an employee-spouse’s
separate interest in employment benefits earned before marriage. Van Loan,
116 Ariz. at 274. Stated simply, to the extent an employee-spouse earns
employment benefits through premarital effort, the benefits are properly
characterized as separate property, and to the extent the benefits are earned
through community effort, they are properly classified as community
property subject to division upon dissolution. Id.; see also DeFrancesco v.
DeFrancesco, 248 Ariz. 23, 25, ¶ 9 (App. 2019) (explaining that the
characterization of property is not determined by when it “is received,” but
“whether the payment relates to services rendered during the marriage”).

¶19 Applying these general principles to this case and working
from the proposition that virtual shares, like unvested stock options and
pension benefits, “are a form of deferred compensation to employees for
services rendered,” only the virtual shares earned during the marriage are
community property. Van Loan, 116 Ariz. at 273; Brebaugh, 211 Ariz. at 98,
¶ 7. Meaning, the community holds an interest in the portion of the
incentive payout Husband earned during the parties’ marriage but no
interest in the portion of the incentive payout Husband earned before the
marriage. 2 The parties do not dispute that Husband received equal virtual
shares each year he participated in the incentive plan. Nor do they dispute
that they were married for one year and one week during that five-year
period. Therefore, the community has a 20.02% interest in the $4,901,132.73
incentive payout – equaling $981,206.77 – and Wife has a one-half share in
the community’s interest – equaling $490,603.39.

2 Notably, the employee tasked by the employer with designing and
administering the incentive plan testified that participating employees’
“legal entitlement” to virtual shares corresponded to the allocation date
rather than the vesting date. Wife presented no controverting evidence.

7
 BASSAL v. KHALIL
Decision of the Court

¶20 To the extent Wife contends that Husband’s interest in the
incentive payout was a mere “expectancy” until 2019, we disagree. The
employer’s written incentive plan policy delineated specific, legally
binding terms that if met, provided participating employees with an
enforceable right to payment. See DeFrancesco, 248 Ariz. at 24, ¶ 5
(explaining that “the defining characteristic of an expectancy is that its
holder has no enforceable right to its beneficence”) (quotation and citation
omitted).

¶21 However, consistent with the superior court’s finding, the
parties do not dispute that none of the incentive payout remains other than
$770,000 that Husband transferred into the trust. On appeal, Wife reasserts
her trial claim that Husband engaged in waste of the dissipated monies.

¶22 “In the equitable division of property, the court may consider
‘excessive or abnormal expenditures, destruction, concealment or
fraudulent disposition’ of community property.” Goodell, 1 CA-CV 23-0366
FC, 2024 WL 2827166, at *6, ¶ 35 (quoting A.R.S. § 25-318(C)). “A finding of
waste under [A.R.S. § 25-318] allows the court to ‘compensate one spouse
for the misuse of the common property by the other spouse by awarding
the innocent spouse a greater share of the community property to offset the
value of the lost property.” Id. (quoting Martin v. Martin, 156 Ariz. 452, 456
(1988)). The party alleging waste bears the burden of establishing “that the
other party’s disposition of community property was ‘excessive or
abnormal’ or constituted ‘destruction’ of the community property.” Id. If
the alleging spouse makes such a prima-facie showing, the burden falls on
the other spouse to establish the expenditures benefited the community.
Gutierrez v. Gutierrez, 193 Ariz. 343, 346-47, ¶¶ 7-8 (App. 1998).

¶23 We review a superior court’s determination of marital waste
for an abuse of discretion. See Kline v. Kline, 221 Ariz. 564, 573, ¶ 35 (App.
2009) (citation omitted). “An abuse of discretion exists when the record,
viewed in the light most favorable to upholding the [superior] court’s
decision, is devoid of competent evidence to support the decision.” State ex
rel. Dep’t of Econ. Sec. v. Burton, 205 Ariz. 27, 30, ¶ 14 (App. 2003) (citation
omitted).

¶24 In her trial exhibits, Wife itemized five transfers to Husband’s
parents totaling $1,221,500. Husband acknowledged two large transfers to
his parents totaling $1,200,000, and did not meaningfully contest Wife’s
claim of three smaller transfers totaling $21,500. At trial, Husband
presented no evidence that the payments to his parents extinguished a
community debt or otherwise benefitted the community.

8
 BASSAL v. KHALIL
Decision of the Court

¶25 In the portion of the decree addressing the incentive payout,
the superior court implied that Husband’s transfer of “1.3 million dollars”
to his parents constituted waste, but it did not expressly label it as such,
despite Husband’s request for written findings. Specifically, the court
pointed out that Husband “had complete discretion over the parties’
finances” during the marriage and Wife “did not acquiesce” to the transfers
to his parents. Moreover, in analyzing waste as one of the statutory factors
for spousal maintenance, the court characterized Husband’s payment of
“1.3 million dollars” to his parents “in return for his schooling and
essentially, for his upbringing,” as an “extraordinary expenditure.”

¶26 Because Husband had no legal obligation to pay his parents
the monies, the record reasonably supports the superior court’s implicit
findings that the community derived no benefit from the transfers and the
“extraordinary expenditures” constituted waste. But even so, a finding that
Husband engaged in waste of $1,221,500 of the incentive payout monies
does not justify the court’s award of 25.71% of the entire incentive payout
(less the $770,000 transferred to the trust) to Wife – totaling $1,063,469.15 –
when, as the court recognized, the funds “have been spent.”

¶27 Applying the community’s interest of 20.02% in the incentive
payout to the transfer amount itemized by Wife ($1,221,500), the
community had an interest of $244,544.30 in the monies transferred to
Husband’s parents, with Wife’s one-half share equaling $122,272.15.
Therefore, although Wife’s initial share of the incentive payout was
$490,603.39, following the dissipation of those monies, her remaining
interest (apart from the trust) is $122,272.15, representing her one-half share
of the community’s interest in the wasted property.

B. The Trust

¶28 Before the parties married, Husband launched his own
investment management company, Shukr Investments, which he both
owned and operated. Apart from his short and long-term compensation
from the employer, Husband received an annual salary of $100,000 from
Shukr Investments during the marriage, a salary he set.

¶29 In November 2019, after redeeming the virtual shares under
the incentive plan, Husband created the trust to reduce “tax exposure.”
Husband functions as both the donor and the trustee of the trust, managing
the trust assets through Shukr Investments. During its “life,” the trust
makes scheduled contributions to a selected charitable organization
($80,000 per year from 2020 through 2026 and $1,474,326 in 2027), but when

9
 BASSAL v. KHALIL
Decision of the Court

it expires in 2027, the remainder will revert to Husband, the designated
“remainder beneficiary.”

¶30 Initially, Husband funded the trust with 9,313.30 shares of the
Shukr Global Equity Fund (an entity he also owns) that he acquired in 2014,
and $770,000 from the incentive payout. Husband then used $765,000 of the
incentive monies to purchase 4,731.75 Shukr shares. In January 2021, the
trust acquired 2,018.15 additional Shukr shares as reimbursement of Shukr
Investment’s performance fees.

¶31 The parties do not dispute that the community has an interest
in the $770,000 incentive payout monies transferred to the trust in 2019. As
explained, the community holds a 20.02% interest in the incentive payout,
including the monies used to acquire the 4,731.75 Shukr shares in 2019. The
parties also agree that Husband acquired the 2014 Shukr shares as his sole
and separate property and that the community redeemed 222.48 Shukr
shares during the marriage. According to Husband, a single Shukr share
was valued at $406.73 on the date the marital community effectively
terminated by statute, a valuation Wife does not contest.

¶32 Husband disputes, however, the superior court’s finding that
“100%” of the Shukr shares acquired by the trust in 2021 “should be viewed
as community in nature.” Noting that the trust acquired the 2021 Shukr
shares as part of a transaction reversing the trust’s payment of performance
fees to Shukr Investments, Husband argues that the community’s share
“before the issuance of [the 2021] shares should have remained the same
after the issuance of [the 2021] shares.” In other words, Husband argues
that because the trust paid the performance fees to Shukr Investments on
behalf of all the trust’s assets, the reimbursement shares have the same
character (ratio of separate to community) as the underlying assets. But to
determine the character of the 2021 Shukr shares, the relevant question is
not the character of the existing assets at the time the trust paid the monies
to Shukr Investments but whether the performance fees compensated for
labor Husband performed during the marriage as the trust’s investment
manager. Husband’s contention “that a simple reversal of fees should not
impact the characterization” of trust assets fails to recognize that the
performance fees constituted compensation for Husband’s labor, which he
performed through Shukr Investments.

¶33 Although Husband’s expert stated his “understanding that
the performance fee reversal relates to fees incurred since the first Shukr
Shares were acquired in June 2014,” and “[t]herefore, it is necessary to
allocate the Shukr Shares that were recorded when the performance fees

10
 BASSAL v. KHALIL
Decision of the Court

were reversed to the time period prior to the marriage and during the
marriage,” Husband did not create the trust until 2019. Apart from his
expert’s “understanding,” Husband points to no evidence demonstrating
that any portion of the performance fees relate to premarital labor. Absent
such evidence, the return of the performance fees to the trust in the form of
Shukr shares does not change the nature of the performance fees –
community earnings derived from Husband’s labor as an investment
manager. Because Husband failed to rebut the presumption that earnings
received during marriage constitute community property, the superior
court properly characterized the 2,018.15 Shukr shares acquired in 2021 as
entirely community property, but only 20.02% of the Shukr shares (947.30)
acquired in 2019 constitute community property.

¶34 Next, Husband challenges the superior court’s order
requiring him to pay Wife her one-half share of the community’s interest in
the trust over the next six years. Pointing to expert testimony that the trust
is irrevocable and he cannot invade its assets, Husband argues he should
not be required to pay Wife her share of the trust until it terminates in 2027,
the remaining assets revert to him, and the residual value is fixed.

¶35 “There are occasions when it is virtually impossible to
effectively divide the property of the spouses, i.e., equipment of a business,
inventory, stock in closely held business, etc.” Martin, 156 Ariz. at 457. In
such circumstances, A.R.S. § 25-318 “authorizes the court to make an
equitable division of such property by awarding an amount of money to
one spouse representing that spouse’s share of the value of the property,”
while “set[ting] aside” the specific property for the other spouse. Id.

¶36 Arizona courts recognize two methods for fashioning a
monetary award to equitably compensate one spouse for her community
share of indivisible property such as stocks and pension benefits. See
Johnson, 131 Ariz. at 40-42; see also Brebaugh, 211 Ariz. at 98, ¶ 10 (explaining
the court has “broad discretion to fashion approaches [for the division of
community property] which will achieve the most equitable results under
the facts of each case”) (internal quotation omitted); Neal v. Neal, 116 Ariz.
590, 594 (1977) (explaining the superior court has “great discretion in the
apportionment of the community assets”). Under the “present cash value
method,” the court determines the community’s interest in the asset,
calculates the present cash value of that interest, and awards half of that
amount to one spouse in a lump sum, allowing the other spouse to receive
the asset in the natural course “free of community ties.” Johnson, 131 Ariz.
at 41. “Under the ‘reserved jurisdiction method,’ the court determines the

11
 BASSAL v. KHALIL
Decision of the Court

formula for division at the time of the decree but delays the actual division”
until the asset is realized. Id.

¶37 “The present cash case value method provides a number of
advantages over the reserved jurisdiction method.” Id. “The former spouses
are spared further entanglement because the litigation is completed, and
the problems of continued court supervision and enforcement . . . are
avoided.” Id. at 42. As declared by our supreme court, “the present cash
value method is preferred if the [indivisible asset] can be valued accurately
and if the marital estate includes sufficient equivalent property to satisfy
the claim[.]” Id.

¶38 Citing Husband’s “complete discretion over the parties’
finances” during the marriage, Wife’s lack of agreement to forming the trust
or transferring money to Husband’s parents, and the potential for Husband
“to manipulate future payouts” when the trust terminates through his
“nested legal entities,” the superior court expressed considerable “concern”
with leaving any portion of Wife’s financial interests in Husband’s
“control.” For this reason, the court ordered Husband to pay Wife her one-
half share of the community’s interest in the incentive payout and the trust
(separating out the $770,000 transferred to the trust from the incentive
payout to avoid double counting). In so doing, the court clarified that it did
not “order[] that funds be removed or withdrawn” from the trust, leaving
the “source” of the payment to Husband’s “discretion.”

¶39 The trust document clearly states that the trust “shall be
irrevocable.” But the irrevocable nature of the trust is not dispositive. The
superior court did not order Husband to dissolve the trust or change its
terms. Instead, the court ordered Husband to pay Wife for her share of the
trust’s value, leaving the “source” of the payment to Husband’s discretion.
The trust document specifically provides that the trustee, Husband, has the
power to “borrow money . . . whether by mortgage, deed of trust, pledge or
otherwise.” Thus, under the terms of the trust document, Husband may
encumber the trust to obtain the monies to pay Wife her one-half share of
the community’s interest, cf. Boncoskey v. Boncoskey, 216 Ariz. 448, 451-52,
¶¶ 16-17 (App. 2007) (approving use of the reserved-jurisdiction method
when no community assets were available to satisfy the non-employee
spouse’s community interest and the pension rights had not yet matured),
and on this record, Husband has not demonstrated that requiring him to
borrow against his future, remainder interest in the trust would cause
undue hardship, see Johnson, 131 Ariz. at 42 (explaining preference for
present-cash-value method unless the employee spouse cannot “satisfy the
claim of the non-employee spouse without undue hardship”). While the

12
 BASSAL v. KHALIL
Decision of the Court

court had the discretion to establish the percentage of the community’s
interest, retain jurisdiction over the matter pending the expiration of the
trust, and then order the division of the remainder of the trust assets at that
time, given Husband’s sole control of the trust in the meantime, and
deferring to the court’s ability to observe the parties and assess their
credibility, Husband has not shown that the court abused its discretion by
ordering him to pay out Wife’s interest in the trust. See Ariz. Dep’t of Econ.
Sec. v. Oscar O., 209 Ariz. 332, 334, ¶ 4 (App. 2004).

¶40 In sum, the community holds a 20.02% interest in the 4,731.75
shares acquired in 2019 (947.30 shares), a 100% interest in the 2,018.15 shares
acquired in 2021, and a 100% interest in the 222.48 shares redeemed during
the marriage. Therefore, 2,742.97 shares constitute community property.
Using Husband’s share valuation of $406.73, the community’s interest in
the trust on the date the community terminated equaled $1,115,648.19. Of
this amount, Wife’s one-half community share equaled $557,824.09. Apart
from her interest in the trust, however, Wife is also entitled to her one-half
share of the community’s interest in the incentive monies Husband
transferred to his parents, $122,272.15. Therefore, Wife’s interest in the
incentive payout and trust equals $680,096.24.

II. Award of Spousal Maintenance

¶41 Husband challenges Wife’s spousal maintenance award.
First, he contests Wife’s eligibility under the governing statutory
framework. Second, he argues the superior court awarded Wife
maintenance in a greater amount and for a longer period than warranted.

¶42 We review a spousal maintenance award for an abuse of
discretion. Gutierrez, 193 Ariz. at 348, ¶ 14. In so doing, we will affirm the
superior court’s order if reasonable evidence supports it. Id.

¶43 When considering a request for spousal maintenance, the
superior court must first assess the requesting spouse’s eligibility. A.R.S.
§ 25-319(A); In re Marriage of Cotter, 245 Ariz. 82, 85, ¶ 7 (App. 2018). If the
court finds the requesting spouse eligible for spousal maintenance, it then
determines the amount and duration of any award. A.R.S. § 25-319(B);
Cotter, 245 Ariz. at 85, ¶ 7.

¶44 In making the threshold eligibility determination, the court
considers five factors, any one of which establishes the requesting spouse’s
eligibility:

13
 BASSAL v. KHALIL
Decision of the Court

1. Lacks sufficient property, including property apportioned
to the spouse, to provide for that spouse’s reasonable needs.

2. Lacks earning ability in the labor market that is adequate to
be self-sufficient.

3. Is the parent of a child whose age or condition is such that
the parent should not be required to seek employment
outside the home.

4. Has made a significant financial or other contribution to the
education, training, vocational skills, career or earning ability
of the other spouse or has significantly reduced that spouse’s
income or career opportunities for the benefit of the other
spouse.

5. Had a marriage of long duration and is of an age that may
preclude the possibility of gaining employment adequate to
be self-sufficient.

¶45 As outlined in the decree, the superior court considered each
statutory factor and determined that Wife was eligible for a spousal
maintenance award because she: (1) lacked “almost any property of her
own and certainly nothing that would provide a sufficient income stream
to meet reasonable needs,” and (2) significantly reduced her income and
career opportunities, finding she “testified credibly” that Husband did not
support her “working outside of the home.”

¶46 As noted, we defer to the superior court’s assessment of
witnesses’ credibility and do not reweigh the evidence. Hurd v. Hurd, 223
Ariz. 48, 52, ¶ 16 (App. 2009). Applying that standard, no evidence supports
the court’s finding that Wife lacked “almost any property.” To the contrary,
the decree allocated over $2,000,000 in cash to Wife. Even as reallocated on
appeal, Wife will receive over $770,000 in cash ($680,096.24 plus $91,729.50
from the uncontested division of community bank accounts). The record
does support, however, the court’s findings that upon the parties’ marriage,
Wife quit her job at an American university, relocated to Saudi Arabia to
live with Husband, and that Husband discouraged her from pursuing any
employment opportunities during the marriage. Therefore, Wife qualifies
for spousal maintenance under A.R.S. § 25-319(A)(4).

¶47 Under A.R.S. § 25-319(B), the superior court may award
spousal maintenance “only for a period of time and in an amount necessary
to enable the receiving spouse to become self-sufficient.” In considering the

14
 BASSAL v. KHALIL
Decision of the Court

duration and amount of maintenance, the court must consider together and
weigh all relevant statutory factors. See Rainwater v. Rainwater, 177 Ariz. 500,
502 (App. 1993) (explaining the court “need not apply every factor,” only
those that are applicable on a “case-by-case” basis); Cullum v. Cullum, 215
Ariz. 352, 355, ¶ 15 (App. 2007) (“The determination by the court is done on
a case-by-case basis and some factors will not apply.”). In this case, the
relevant factors include:

1. The standard of living established during the marriage.

2. The duration of the marriage.

3. The age, employment history, earning ability and physical
and emotional condition of the spouse seeking maintenance.

4. The ability of the spouse from whom maintenance is sought
to meet that spouse’s needs while meeting those of the spouse
seeking maintenance.

5. The comparative financial resources of the spouses,
including their comparative earning abilities in the labor
market.

6. The contribution of the spouse seeking maintenance to the
earning ability of the other spouse.

7. The extent to which the spouse seeking maintenance has
reduced that spouse’s income or career opportunities for the
benefit of the other spouse.

8. The ability of both parties after the dissolution to contribute
to the future educational costs of their mutual children.

9. The financial resources of the party seeking maintenance,
including marital property apportioned to that spouse, and
that spouse’s ability to meet that spouse’s own needs
independently.

10. The time necessary to acquire sufficient education or
training to enable the party seeking maintenance to find
appropriate employment and whether such education or
training is readily available.

15
 BASSAL v. KHALIL
Decision of the Court

11. Excessive or abnormal expenditures, destruction,
concealment or fraudulent disposition of community, joint
tenancy and other property held in common.

A.R.S. § 25-319(B).

¶48 Applying these factors to this case, the superior court found:
(1) “the parties enjoyed a lavish lifestyle while married,” (2) the marriage
lasted less than four years, (3) Wife has a graduate degree and employment
experience, but quit her job after the marriage and did not work outside the
home because Husband wanted her to focus on “wifely duties,” (4)
Husband sets his own salary, “artificially depressed” at $100,000 per year,
(5) Husband’s “financial resources and earning ability exceed those of
[Wife],” (6) Wife “worked in the home so that [Husband] could fully
dedicate his efforts to working,” and (7) Husband’s transfers of over $1.2
million to his parents constituted “an extraordinary expenditure.” Based on
these findings, the court ordered Husband to pay Wife $3,000 per month
for four years.

¶49 Record evidence supports each of the superior court’s
findings. Although Husband denies artificially depressing his salary,
noting his business has reported significant losses, the record reflects that
Husband earned a substantially higher income historically, both before and
during the marriage. And although Wife will receive substantial cash from
the dissolution, it is not clear how much time it will take to convert that cash
to income-producing assets. Therefore, on this record, the court did not
abuse its discretion by entering the spousal maintenance award.

16
 BASSAL v. KHALIL
Decision of the Court

CONCLUSION

¶50 For the foregoing reasons, we vacate the dissolution decree in
part and remand for proceedings consistent with this decision. Both parties
request an award of attorneys’ fees under A.R.S. § 25-324, which authorizes
an award of attorneys’ fees after considering both parties’ financial
resources and the reasonableness of their positions on appeal. In our
discretion, we deny both requests. Each party has prevailed in part and
therefore both are responsible for their own costs on appeal.

AMY M. WOOD • Clerk of the Court
FILED: AGFV

17