Division of Marital Assets

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The division of community property in Arizona is generally a two-step process:

Community Property

Community property consists of property acquired by either spouse during the marriage. Community property does not include property acquired by gift or inheritance or excluded by a valid prenuptial agreement.

Division of Community Property

Community property must be divided equitably.

Not All Community Property is Created Equal

Complicating the process is the fact that all assets are not worth what they appear to be worth. For example, is it more beneficial to accept the residence worth $500,000.00 in exchange for the 401K worth $600,000.00? The answer depends on a variety of factors, including, but not limited to:

  • Can you afford to maintain the family home?
  • If you sell the family home, will there be any capital gain taxes to pay? If so, what will they be?
  • If you sell the home, can you qualify for a mortgage on your own?
  • What if you try to sell the home and find out it needs a new roof and $30,000 in repairs?
  • If you take the 401K and need the money to live on, will there be an early withdrawal penalty? Will you have to pay income tax on the amount withdrawn? If so, how much is the penalty, and what is the tax bill? Many people fail to realize until it is too late that if they cash out their 401K, it might only be worth ½ of its market value after penalties and taxes are paid.

Personal Business Interests

If either you or your spouse own a business, the parties may need to hire an expert to determine its value for the purpose of division.

Determine What Each Asset is Worth Based on Your Circumstances

The division of marital property can be complex, and it takes an experienced attorney to help you obtain a fair result. Before agreeing to any type of property settlement, make sure you have considered all the factors that determine the value of each asset.