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Phoenix Divorce Law Blog

Beware of issues with keeping the family home after divorce, P.1

We've been talking a lot about property division lately in our posts, both with respect to the case of oil baron Harold Hamm and dealing with debt in prenuptial agreements. Here we'd like to take it a different direction and discuss an issue that is important for many people going through divorce. This is the issue of how the family home is dealt with in divorce.

The family home is, for many couples, the largest asset they own. Unfortunately, dividing up the family home is not always an easy issue to settle, both because there can be disputes over who should get the home, the potential that one or both of the parties may be unable to keep the home on their own financial terms, and because of certain arrangements couples may enter into which could involve some risk.

Beware of issues with keeping the family home after divorce, P.2

In our last post, we began talking about the issue of keeping the family home in divorce, an issue which can be somewhat contentious in divorce. As we noted, couples are not always able from a financial standpoint to keep their home, especially when a refinance is not possible.

Where refinancing is possible, it is important to check title transfer documents to ensure everything is done correctly. It is also important for couples who have an agreement for one party to refinance the home to make sure in advance the refinance will go through. This can be done by asking the lender to run a credit check. If problems are likely to arise, changes in the agreement can be negotiated.

Dealing with debt in prenuptial agreements, P.2

In our last post, we began speaking about addressing debt in prenuptial agreements. As we noted, Arizona law provides specific guidelines for how community and separate debts are to be paid in the event of divorce, and it is important to be aware of these before hammering out a prenuptial agreement.

Prenuptial agreements, of course, can effectively trump state property division laws and this is why they are such a great tool for financial protection for the wealthy, or even the not so wealthy. When it comes to including debt in a prenuptial agreement, there are a variety of ways to proceed depending on the couple's circumstances and financial goals.

Dealing with debt in prenuptial agreements, P.1

When most people hear about prenuptial agreements, they tend to think of an agreement that deals with how assets are to be divided in the event of divorce. This is correct, of course, but it is certainly not the whole picture, as prenuptial agreements can address a variety of other matters as well. One of the issues a prenup can and should address, but which is sometimes not thought about as much, is the division of debts in the event of divorce.

Under Arizona law, as in other states, there are default rules for how property and debt is handled in divorce and it is helpful to understand these when talking about prenuptial agreements. One of these rules is that the separate property of one spouse is not liable for the separate debts and obligations of the other spouse. Community property, however, can be liable for the premarital separate debts and liabilities of a spouse to the extent the indebted spouse contributed to community property. This, to be clear, is the amount of the community property which would have been the indebted spouse's separate property if he or she were single.

Oil baron's divorce among the costliest in history

Back in August, we wrote about the impending divorce case of self-made oil baron Harold Hamm. At that time, commentators were saying that the Oklahoma fracking tycoon's divorce could be one of the most expensive split-ups in history. This was being said because, according to Hamm's wife, his business has increased its wealth by $17 billion since the couple was married 25 years ago. Depending on the way Oklahoma property division was to be applied in the case, a lot was potentially at stake.

In Oklahoma, money which is earned by the efforts of one party can be subject to division, while property gained because of economic circumstances outside that individual's control is deemed separate. With Hamm's reputation as a self-made man, it was a hard sell to argue that he accidentally came into his wealth.

How do judges make spousal support determinations in AZ? P.2

In our last post, we began speaking about how judges in Arizona go about making determinations of spousal support. Again, the first thing judges need to determine is whether there is any entitlement to spousal support, and then how much the entitled party should receive over how much time.

As we noted in an October post, there are several types of alimony courts in Arizona may award depending on the circumstances. These include compensatory and rehabilitative alimony, temporary maintenance, and permanent alimony. The type of alimony awarded depends on the circumstances of the case and the reasons for the entitlement.

How do judges make spousal support determinations in AZ?

Spousal maintenance, also called alimony or spousal support, can be an important resource for a disadvantaged spouse after divorce. It can also be a significant burden to the paying spouse. When considering the issue of spousal support in Arizona, judges have broad discretion to award or not.

Generally, judges will first consider whether one spouse is entitled to spousal support. Arizona law spells out several reasons a court might find such entitlement. If one party does not have property to meet their reasonable needs, that can be a reason for support. Another reason might be that one spouse is not financially self-sufficient through employment or that, because of the need to care for a young or disabled child, a spouse is unable to seek employment or cannot find work that would bring in sufficient money.

Dealing with the family home in divorce

In divorce, it is not always an easy task to separate from a spouse in every way. This is particularly the case when there are children involved and both parents want to continue to be involved in their lives. It can also be the case when one or the other party wants to keep the family home but is unable to have the other spouse removed from the mortgage.

Typically, the party who is keeping the home after divorce will seek to have the mortgage loan refinanced in order to remove his or her ex from the loan. This is not always possible, though, particularly for large mortgages. Part of the problem with refinancing lies in the inability of many divorced individuals to demonstrate an acceptable debt-to-income ratio. Weak credit history can also be a barrier to refinancing for some divorcees.

Work with an experienced attorney in garnishment proceedings

Child support and spousal support can be challenging financial responsibilities to deal with for those who have gone through a divorce. In some cases, financial strain can lead to the inability to meet one's financial responsibilities to a former spouse and one's children, which can then result in a court issuing an order for garnishment of earnings.

Garnishment is the legal process under which a party is able to collect payments from another party who owes them money under a court judgment. This includes payments for spousal support and child support. In order to pursue garnishment in Arizona, the money one seeks to obtain must be located in Arizona rather than another state. Those who want to pursue payments from an out-of-state party need to do so under the laws of the state in which that individual is located.

Default property division rules can be trumped by effective premarital agreements

In recent posts, we've been speaking quite a bit about prenuptial agreements, particularly about their usefulness in divorce, provided they are wisely negotiated and properly executed. To understand the usefulness of prenuptial agreements in divorce, it is helpful to have a basic understanding of the default rules for property division in the state of Arizona, since these are the rules that apply in the absence of an agreement to the contrary.

Generally speaking, there are two approaches states take to property division. One is called equitable distribution, which involves a fair division of property and debts deemed to be marital. The other approach-which Arizona uses-is community property, an approach which generally involves equal distribution of marital assets and debts. That being said, Arizona is a bit different than other community property states in that courts are supposed to divide marital assets equitably.

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