Division Of Assets In An Arizona Divorce Proceeding
Assets in Arizona divorce cases are divided equitably (fairly). In practice, this means that in virtually all cases the assets will be divided equally. However, the judge does have the discretion to award an unequal division of assets if to divide the assets equally would produce an unfair result. For example, if a husband and wife get married and a month later the husband receives a substantial commission (for example, $50,000), and the parties file for divorce the very next month, there is a decent chance the judge will find that it would be unfair to give the wife $25,000 of that commission.
Of course, this is an extreme example where the parties had a very short marriage. But there are other rare situations in which a judge could award one party more of the marital assets. It is important to know that the judge can only divide community property assets. Community property assets are those that were acquired during the marriage as a result of the efforts or income of one or both spouses. If the asset existed before marriage, that asset is the sole and separate property of the spouse who owned it prior to the date the parties got married. Although you may have a “community lien interest” in the sole and separate asset, the asset’s character as sole and separate (meaning that it belongs to the other spouse) does not change.
Another asset that will be awarded to only one of the spouses is one that was acquired by gift. If the other spouse or a third party made a gift to one of the spouses, that spouse will be awarded the asset as his or her sole and separate property. This is an area in which spouses will often fight in court over whether it truly was a gift, or if it was a gift, whether the gift was to just one spouse or the spouses together as a couple. In such cases it is helpful to have evidence to substantiate your position. For example, if it was a gift from your parents to you and you alone, your parents may need to testify in court to that effect. If there is a promissory note or contract, that will help. Emails, texts, recorded conversations, and other evidence can also help you beat a lying spouse in court.
If there is a birthday or holiday card that contains a message to you about the gift being yours that can be very useful in court as well. Even text messages, email messages, recordings, photos, and all sorts of other evidence can be used to substantiate the fact that this was a gift and the gift was to just one of the spouses. Another example of property that the judge will not divide is inheritances. If you obtained money or assets by inheritance, as long as you did not commingle it with community property or put it in the name of both spouses, you probably will be able to be awarded that asset without having to share it with your spouse.
But as for the community assets, they, as stated above, will be divided equally in most cases. Often an equalization payment is needed. For example, suppose that you are awarded the family residence and the residence has equity of $100,000. If your spouse does not receive assets that are equal in value to the asset you received, you will need to pay your spouse her share of the equity. In this example, you would have to find a way to pay her $50,000 (or some lesser amount depending on the value of the other community assets awarded to her). You could do that by refinancing the home, selling the home, or reaching an agreement with her to pay her a certain amount of money per month until the $50,000 is paid in full.
Another issue that often arises is community contributions to separate property. An example of this is a husband who has a 401k. To keep it simple, let us suppose that his 401k is worth $100,000 on the date the parties get married. A year later, they get divorced. During the year they were married, he contributed $10,000 to the 401k. At the time of divorce, the husband would owe the wife $5,000, which is half the contributions made during the marriage. She would also be entitled to any increases on that $5,000, but to keep it simple this example does not assume there was any increase in the principal amount contributed to the 401k account.
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