When it comes to property division and divorce, you need to understand that states like Arizona, Washington, Texas, and many others are considered a community property state. This means any property you acquired during your marriage will be divided at the time of the divorce. There are two exceptions to this general rule.
The first is if you inherited property while you were married. The second is if you were gifted property specifically to you while you were married. Only in those two scenarios are you allowed to keep the property.
When we speak of property in the context of the divorce, it’s a very broad term. It does not just mean a house or land you and your spouse might own. Property also includes things like a car, a boat, furniture, even stocks, and bonds.
When you are preparing to divorce, there are some important precautionary steps to keep in mind. If you have items in a safety deposit box that are of even minor value, make sure you do not dispose of them. In fact, if you have access to the box, it’s a good idea to bring a friend along with you who can sign an affidavit attesting to what was inside the box and photographs or videos on your phone of the contents inside.
For property that is considered part of the marital community, meaning you didn’t inherit it and it wasn’t given as a gift to you, most state law requires that the judge evenly divide your assets in a manner that is “just and right” or “equitable.”
There are many circumstances that the judge can consider in determining what “equitable,” including:
- Fault of one spouse
- The health of each spouse
- The difference between how much each spouse makes
- The education of each spouse and the future prospects of each spouse
- Which spouse has custody of the children
This list is not meant to be exhaustive or complete. It’s just some examples that a judge will
commonly look at when making a decision as to what is just and right in a particular situation.
Also be aware that a judge could award what are called reimbursements in your case. This occurs if a spouse uses separate property, such as an inheritance, to improve jointly owned property, such as a home, then the court will typically reimburse the spouse for his or her efforts and expenses.
The easier you can make it for the judge the better, such as by providing receipts and showing credit or debit card statements. Be aware that the judge in your case has the discretion to determine the value of whatever it is you’re claiming, be it a home or car improvement project.
These are the factors the judge will consider:
- The value of money that is contributed before the marriage to the other spouse’s separate property estate.
- Payment by the community estate of a spouse’s separate liability.
- The enhancement of value of a piece of separate property stemming from money improvements to the property paid by the community estate—i.e. if the house has appreciated in value.
- The amount of principal reduction on a debt paid by the community estate benefiting property owned by a spouse’s separate estate.
- The amount of benefit lost when a spouse’s time/toil/talent have been used to benefit that spouse’s separate property to the detriment of the community estate.
For the vast majority of spouses, the biggest asset that they own, and thus will have to figure out what to do with, is your house. Most of the time the house will be sold and the assets will be distributed 50/50, but there are other, more creative options available to you as well.
Other pieces of your marital estate that will need to be addressed are:
- Stocks: if the stocks are issued by your company, they may be vested or unvested. The difference is important and can play an important part in how much of the stock you receive.
- Pets
- Frequent flier miles
- Memberships at country clubs
- Tickets for sporting events, the symphony, etc.
If you and your spouse co-own a business, it can be difficult to figure out how much money each spouse should receive from the proceeds of the business. You will likely need a business appraiser, which is an expert witness, to put a value on the business. Be aware that the newer the business is and the more niche the business is, the harder it will be to put a value on the business. In addition, this kind of expert is not cheap, but it is well worth the money because without an expert’s opinion, it will be very hard to evaluate the full extent of the business’ worth.
