Diane M. Rush v. Ray A. Rush, 559 P.3d 1088

Diane M. Rush and Ray A. Rush divorced, disputing the classification of funds in Diane’s Charles Schwab IRA, which originated from an employer-provided retirement account.
The retirement account was created before marriage and held over $60,000 at the time of marriage; more was added during the marriage.
During the marriage, large withdrawals (about $40,000 and $75,000) were made from the account for marital expenses; the remaining funds moved through various accounts, ultimately ending up in the disputed Schwab IRA.
At trial, the court ruled the entire Schwab account was marital property, concluding either that Diane intended to make the whole account marital by using some funds for marital purposes or that only marital funds remained after withdrawals.
Diane appealed, arguing both that an enforceable agreement at mediation made the account nonmarital and that the court misapplied legal standards when dividing the account.
Alaska Supreme Court vacated the trial court’s decision, finding legal error in how the account was classified and in the interpretation of withdrawals from mixed accounts.

Issue	Rush (Appellant) Argument	Rush (Appellee) Argument	Held
Did the mediation agreement require classifying the account as nonmarital?	The mediated settlement (with proviso) made account nonmarital if she provided documentation.	No meeting of the minds—agreement was just to provide docs.	No enforceable agreement—no mutual assent, so agreement does not control classification.
Can spending some separate funds on marital purposes transmute entire account?	Spending some does not donate all; only used sums become marital.	Large withdrawals evidence intent to transmute entire account to marital.	No—spending some separate funds on marriage does not show intent to transmute the rest.
What rule governs withdrawals from mixed (marital/separate) accounts?	“First in, last out”—marital funds withdrawn first; separate funds remain until marital funds exhausted.	“First in, first out”—separate funds lost first, so only marital funds remain.	"First in, last out" applies: withdrawals for marital expenses reduce marital portion first.
Did Diane meet her burden to trace separate property?	She traced the original premarital funds to the present account.	She needed to show the differential performance/growth of marital vs. separate parts.	Diane sufficiently traced her separate funds—contribution ratio is enough.

Bilbao v. Bilbao, 205 P.3d 311 (Alaska 2009) (Mixed assets traced by ratio of separate and marital contributions; burden is on party claiming separate property)
Kessler v. Kessler, 411 P.3d 616 (Alaska 2018) (Separate property can transmute to marital by clear evidence of donative intent)
Odom v. Odom, 141 P.3d 324 (Alaska 2006) (Use of some separate funds for marital purposes transmuted only those funds, not the entire account)
Pasley v. Pasley, 442 P.3d 738 (Alaska 2019) ("First in, last out" principle for withdrawals from mixed marital/separate accounts)
Schmitz v. Schmitz, 88 P.3d 1116 (Alaska 2004) (Tracing rules for mixed secondary assets and commingled funds)