After a rocky end to your marriage, you may be dreading the day you have to divide assets during divorce. This process can be as simple as reviewing a list of personal property and home furnishings. Or it can be as complicated as separating shared businesses, real estate, investments and pension accounts with survivor rights. In a perfect world, couples would fairly and equitably divide assets during their divorce with no disagreements or negative feelings. Unfortunately, divorce is rarely a perfect world.
Types of Assets
Determining what “belongs” to whom as you divide assets during a divorce is more emotional than it may seem. This process is often where passionate disagreements occur.
Although Arizona is a community property state, some assets are considered separate property. In a community property state, anything you acquire during the marriage (with some exceptions) will be divided equitably during the divorce. Separate property includes assets that either spouse acquired before the marriage as well as any growth or appreciation on those assets. It also includes assets received during the marriage by gift or inheritance. Separate property is not subject to division during a divorce.
Spouses often disagree about who “deserves” what assets. A collaborative divorce is customizable and can help avoid a high conflict situation. Rather than leaving the distribution of assets up to a judge, a group of professionals can help you come to a mutually beneficial agreement.
Determine Asset Values
Before you begin the discussion of how to divide assets during divorce, make a list of the value of each. Some items to consider include:
- Benefits from previous employers. It’s easy to forget about these unless you regularly review statements. Employment benefits, retirement accounts, stock options and stocks from previous employment are marital assets. However, vesting rules can require an analysis to determine if portions might be separate property.
- Cars. Purchasing a vehicle after the marriage and before the divorce makes it community property. Regardless of whose name is on the title or who made the payments, it will likely be considered a joint asset. If you can prove it to be separate (e.g. if personal money from before the marriage paid for the vehicle in full), an exception may apply.
- Cemetery plots. Again, easy to forget. Neighboring plots may have originally been a good idea. However, if you are divorcing, you will likely prefer to be buried somewhere else. Selling the plot or transferring joint ownership can resolve the issue.
- Collector’s items. Review collectibles separately from “household items.” Unless you can prove otherwise, they are a shared marital asset.
- Gifts. Jewelry and other gifts to each other are marital assets. Gifts from someone outside the marriage are considered separate property, as long as they have not been commingled with shared assets. Many spouses allow each other to retain ownership of gifts received during the marriage.
- Household Items. Separate your furniture from the décor. Décor includes art, photographs, vases and more. Your furniture category can include items such as your dining table, bedroom furniture, couches, electronics and appliances.
- Intellectual property. Don’t forget items such as trademarks, patents, copyrights and royalty rights. These may be marital assets, no matter how insignificant the amount.
- Loans. If you loaned your brother $1,000.00 during the marriage, half the amount he will pay back might belong to your spouse.
- Memberships. Other assets may include a gym, golf course or country club membership. Airline miles and credit card rewards can also fall into this category.
- Real estate. Some collaborative divorce couples choose to keep the family home. Their goal is to keep their children’s living arrangements the same, while the parents take turns living in the home, a situation often referred to as “nesting”. The house and all real estate owned are often a couples’ most valuable assets. Don’t forget to include vacation homes, timeshares and even undeveloped land.
- Tax refund. If you receive a tax refund from a jointly filed return for any year during which you were married, it should be addressed as community property. You can work with an accountant to estimate this and review any changes in your filing status.
Ways to Divide Assets During Divorce
After you have identified and determined the value of all assets, it’s time to discuss who gets what. Making three lists – one for each spouse (agreed-upon items) and a third for the assets you can’t decide on – can help get the ball rolling. Sometimes selling the asset and splitting the income is the easiest way to divide assets during divorce.
A collaborative divorce attorney can help guide you through the process of how to divide assets during divorce. Best Legal Choices is a resource that gives you the added benefit of having access to other professionals, including communication coaches and financial neutral advisors. Whether it’s understanding how to split assets or learning about the potential consequences of your decisions, the collective knowledge of these professionals can help you navigate your divorce in a mutually beneficial manner.
If you want to learn more about ways to divide assets during divorce, contact a Best Legal Choices professional today.