Division of Assets Illustrated, How Assets are Divided in Divorce

Divorce Division of Assets Illustrated

In a previous post, I addressed the process of identifying, categorizing and valuing assets prior to the assets’ being divided in an Arizona divorce case. This post will provide an example of how assets and debts could be divided in a hypothetical case.

Under A.R.S. §25-318, a judge in an Arizona divorce case is to divide assets equitably, “though not necessarily in kind . . . .” This phrase–“not necessarily in kind”–simply means that, while the overall division of assets and debts must be fair, or substantially equal, an Arizona judge is not required to equally divide each individual asset equally. Similarly, the judge is not required to liquidate all assets and divide the proceeds equally.

In the example I will use, the husband and wife have community property consisting of a house with $50,000 equity, a truck with $15,000 equity, a car with $20,000 equity, a boat worth $20,000, a 401(k) worth $100,000, and credit cards totaling $15,000. The table below illustrates one possible division of these assets and debts so that, at the “bottom line”, each party receives $95,000 net.

HUSBAND WIFE

Truck/Debt $15,000 House/Mortgage $50,000

Boat 20,000 Car/Debt 20,000

401(k) 65,000 401(k) 35,000

Credit Cards (5000) Credit Cards (10,000)

Total $95,000 Total $95,000

Note in this example that none of the assets needs to be liquidated. As long as the “bottom line” is equitable, or substantially equal, the division of the marital assets is valid under the law.

The example assumes, of course, that there is no premarital agreement dictating a division of assets other than that prescribed by Arizona community property law. Furthermore, although our example ignores tax consequences for simplicity’s sake, in the real world, the 401(k) dollars would need to be tax-effected before the division is calculated in order to achieve a truly “equitable” division of the assets.

Copyright © 2017 by Scoresby Family Law – J. Kyle Scoresby, P.C. All rights reserved.

[brambledemon]

Fair and equitable means whatever the judge thinks it means.

[sabaadrees]

What about the pay check you received from your work. But in separate bank account ?

[wilsonrawlin]

Given the times and moral changes in our society. I highly recommend doing a Prenup agreement. I made a promise to God and to my wife of 28yrs I would love her and unconditionally care for her for my entire life. The same promise she made to me. She decided she wants to pretend she is in her 30s again and be a single woman who can party and play the field. The only way I could prevent her from destroying me financially was to have had a prenup when we married. Unfortunately I trusted her and am now paying the price.

[jimn]

I have a question: we have a boat with a loan in both our names. There’s about 20k still owed on the loan. If I choose to keep it, how is it divided between us? Do I pay her half of the current market value even though it will be me paying for the entire loan into the future? Or do I pay her back half of what we’ve paid into it together to date? In other words, could I be forced to give her half of what the market value is even though I have to make 5 years of loan payments yet? Thanks

[sabrinat]

This example is in states that are 50/50 split. Some states such as MD are an equitable division state. Dividing the 401k should be more complex than what he shows. For instance, the employer's contribution which can vary from one spouse to another is NOT marital property

[hanskasper]

The bottom line is 50-50; however, the division may not be equitable. Why? Because the division has not taken into account the future income tax affect on the retirement accounts And the future growth of the retirement accounts. It is true that we do not know what the future growth will be; however we certainly can make a projection of what the income tax affect will be.

[NoisyTumbleDryer]

Every time I check on this I just get content related to the US, I'm not American, just need information on how this works in England?

[FORLAN]

Everything about inheritance was mentioned 1400 years ago in the Holy Quran, and the division is very fair

[ButcherBird-FWD]

His example shows each party receiving $95k, and stating it is equal. It is not.... They are receiving disparate amounts of 401k funds, which are pre-tax. They should be counted as (about) 70 cents on the $ to allow for taxation when the given party takes constructive receipt of the funds (and faces taxation thereon).

[phish_]

My husband brought me to Utah! He signed the I-864 as my petitioner/sponsor!

He did not declare his car and condo on the I-864 on his I-485 petition for me and the properties bought within our marriage under his name! Me and my husband don’t have children!

What can you say?

[MrTwins]

What’s needed to settle divorce? Where husbands parents purchased property! Put half in daughters in laws name! Now she’s asking for divorce six months in?? Son in the military!

[JuniperJennifer]

Yeah, sure - a house is an asset, a car or a boat is a liability. U said u re a lawyer?