In AZ, does a wife automatically get half of all assets in a divorce?
You’re not going to believe this, but in Arizona, you don’t automatically get half of all assets after a divorce. You can be entitled to spousal support or alimony payments for up to five years, and that money is yours alone! But what if your spouse has more debt than they have assets? And why should the law determine how our property is divided when we could do it by ourselves? We’ll explore these questions and more in this blog post.
Divorce Rules and Property Division in Arizona
Arizona is a community property state (in contrast to an equitable distribution state) in that all earnings and accumulations during the marriage are presumed to be property owned by both spouses 50/50. But this presumption can be rebutted with evidence that the wife actually owns less than 50% of the portion of assets or income at issue. If there isn’t clear evidence that her share is more than half, then it is considered “community” and divided equally, until otherwise shown.
So for example if a wife earns $40K per year working as a paralegal while the husband earns $80K per year as a dentist, their total joint income would be $120 K. However, if they were to divorce, the wife could show that she owns less than half of all assets at issue (the wife’s $40K in income plus the community portion of their joint income), and would therefore be entitled to a share equal to 1/2 of her husband’s income ($80K). If it can’t be shown easily that the wife owned more than half of all property or earnings by clear and convincing evidence (more on that below), then Arizona law will award her an amount based on one-half the amount of money her husband earned during the marriage.
So how does this apply?
Let’s say you’re married for 10 years during which both spouses work as school teachers. Your wife earns about $30K per year and you earn about $60K per year. After 10 years, the wife files for divorce. Under Arizona law, if there are no assets other than the wife’s school teacher salary ($30K) and your wife contributions to retirement plans (you both chose not to buy a house or have children during this marriage), then she would be entitled to half of her share of those retirement accounts as well as all community property that is not already in an account titled solely in your wife’s name, plus half of your wife’s interest in any retirement plan (in addition to spousal support).
If you were married 15 years instead of 10 but had one child together during that time who is now 12 years old with special educational needs, then your wife could be entitled to spousal support for up to 5 years or until the child turns 18, whichever comes later. If there was no monetary award for educational costs (as determined by the court) and she had sole custody, then she might also receive an additional “equitable distribution” of assets that are not part of retirement accounts. As a result, your wife’s total award would probably exceed 50% of community property.
If there is a dispute about how much property belongs to each spouse or who should get what portion of property and earnings during dissolution proceedings in Arizona, then spouses may offer evidence called “clear and convincing evidence” (which carries more weight than a preponderance [more likely than not] evidence standard ). This is a high standard of proof that requires the wife to be more likely than not entitled to half or more of all community property and earnings. While it can be difficult to meet this burden, there are ways we may help you prove your wife’s entitlement worth more than 50% of all community property and earnings (such as with corporate documents).
How does one determine property value?
Generally, it is the wife that files for divorce in Arizona so she will be entitled to half of all community property and earnings during the marriage unless she can prove otherwise. Our advice is not contesting a wife’s entitlement to more than 50%, but trying to settle out of court by negotiating with her attorney.
You do this by starting with an extremely low settlement offer like $10,000 cash or home, which may seem ridiculous at first blush (and no judge will ever award you a house worth less than $100K as part of an equitable distribution). You then make additional offers that are better and better for both spouses until they agree on something between $60-70K cash or home plus some alimony and child support.
As we discussed above, if there is enough cash to pay the wife a lump sum payment for her interest in retirement accounts plus spousal support, that might be an ideal outcome.
However, the wife could also choose not to accept all that money in exchange for waiving her share of those 401K accounts. In this scenario, the wife would have to prove by clear and convincing evidence that the wife owned more than half of all community property and earnings at issue and did not agree to waive or quitclaim her interest before the marriage. If the wife didn’t file for divorce until after 20 years of marriage and both spouses agreed not to purchase a home or have children during these 20 years, then the wife likely has better than 50% of all community property and earnings.
How to sell a marital property?
In most cases, husbands and wives agree to sell the marital home or business in order to receive cash for their share of community property. This means the wife would own 100% of all profits from this sale if there is a wife’s signature on any documents authorizing the husband or wife (or both) to sign an agreement regarding that property. Even if the wife’s signature is only required because each spouse must consent to certain real estate transactions, the wife would still be entitled to 100% of profits from selling the home as long as the wife consented in writing before a closing day at least three years ago [Arizona Revised Statutes 25-315(B)(1).
Settlement Agreements in Arizona
Once you have reached an agreement about all community property and earnings, it is important to execute a valid Settlement Agreement that can be enforced by the wife if she waived her rights to the wife’s portion of these assets or derivative claims (like using your wife’s interest in retirement accounts as collateral for a loan).
Both spouses should sign this document before one spouse leaves Arizona. If one party moves out of state before executing the settlement agreement and then tries to enforce their “rights” or settle later, there may not be enough evidence to prove who owned what during marriage and whether the wife waived her rights regarding those assets. This makes it imperative that the wife signs any such agreements before she leaves AZ because once the wife leaves the state, she will most likely be held to have waived her rights regarding the wife’s portion of those assets.
The wife should also sign the settlement agreement before a notary public and obtain a signature guarantee card from the notary. This proves that the wife was knowledgeable about the contents of the agreement when she signed it, and the wife may be able to recover attorney fees if she has an attorney review this document before the wife signs it.
We hope you’ve enjoyed today’s blog post! Did we miss any questions or important information? If so, please let us know in the comments below.
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