How is Money, Property, and Debts Divided in a Divorce
Written by Michael Juilfs

How is Money, Property, and Debts Divided in a Divorce?

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Wondering how money, property and debts will be divided in your divorce? Here we help you understand how assets are divided in a divorce case.

If you are still married and thinking about getting divorced, you should know that Collaborative Divorce is a more peaceful divorce option. In this process,  you and your spouse brainstorm ideas and rely on the guidance of legal, financial and communication professionals to assist in reaching a settlement agreement. There are many benefits of choosing a collaborative process when you want a healthy and satisfactory separation experience.

Wondering how your marital assets will be divided in your divorce? This is one of the biggest questions divorcing couples have, and the answers aren’t always clear up front. However, many couples are eventually able to agree on dividing the home, vehicles, retirement benefits, and other commonly held assets. If you are among those open-minded couples, your divorce may go a little more smoothly.

Know Your State’s Laws

Diving household items, retirement benefits, valuable collectibles, securities, vehicles, and a home are where most divorcing couples run into issues. State laws vary when it comes to dividing assets in a divorce. In community property states like Arizona, the presumption is that property acquired during the marriage (with limited exceptions) is owned 50% by Husband and 50% by Wife. The 50/50 division rule doesn’t apply to separate property , which generally includes assets owned before the marriage, income generated from property owed before the marriage and property received during the marriage by gift or inheritance.

Community Property Division

Community property can include furniture, real estate, brokerage accounts, art, boats, raw land, , business entities, checking and savings accounts, investments, retirement accounts and other personal or real property. Community property can also include debts, liabilities and obligations. Some spouses divide each individual asset or debt equally. Others allocate certain assets or debts to each spouse, without actually dividing the asset itself.

In a case where one spouse receives assets of a higher value, the spouse that received the higher value assets will normally have to pay a sum of money, called an “equalization” to the other party. The purpose of the equalization is to ensure that each spouse is allocated a roughly equal share of the community’s debts and assets.

Sole and Separate Property

According to FreeAdvice, “In general, separate property or non-marital property is any property, real or personal, acquired before marriage, after divorce (or in some states by separation of the spouses before divorce), by gift or inheritance during marriage, or during marriage with separate property funds.

If you owned assets before your marriage, it remains your property. However, it can become community property if your soon to be ex-spouse made contributions, improvements, etc. to that separate property. It can also become community property if the asset was transferred into the name of both spouses. An attorney can help you to determine whether property will be treated as separate or community.

Can a Pre or Post-Nuptial Waiver Be Reversed?

You can waive your rights to community property by signing prenuptial agreement and in some cases, this can be done by post-nuptial agreement as well. However, these types of agreements can be revoked if the spouses mutually agree. If you have a valid prenuptial agreement that has not been revoked by the spouses, this will likely be upheld in a legal separation, dissolution, or divorce.

Sources:

  1. “Dividing Assets: What to Do in a Divorce.” Legalzoom.com, 16 Aug. 2017, https://www.legalzoom.com/articles/dividing-assets-what-to-do-in-a-divorce.
  2. FreeAdvice. “What Is Separate Property?” FreeAdvice, https://family-law.freeadvice.com/family-law/divorce_law/non-marital_separate_property.htm.

See Also:

Collaborative Divorce is a Peaceful Divorce Option

Divorce litigation can be scary and emotionally draining for you, your spouse, and your children. But it doesn’t have to be that way with collaborative divorce. The collaborative process can result in a less expensive, more efficient, and less harmful outcome for everyone involved. One of the legalfinancial, and communication professionals at Best Legal Choices can help you navigate this difficult time in your life.

OUR PROFESSIONALS CAN HELP WITH THE COLLABORATIVE PROCESS IN ARIZONA!

Divorce litigation can be scary and emotionally draining for you, your spouse, and your children. But it doesn’t have to be that way with collaborative divorce. The collaborative process can result in a less expensive, more efficient, and less harmful outcome for everyone involved. One of the legalfinancial, and communication professionals at Best Legal Choices can help you navigate this difficult time in your life.