Division of Assets and Debts

In Arizona the division of the assets and debts the parties acquired during the marriage must be considered “equitable.” The courts have generally defined an equitable division as an equal division. In dividing the assets and debts, the first task is to determine whether they are marital or sole and separate assets. The parties’ assets and debts are presumed to be marital unless shown to be sole and separate. For example, if any asset is acquired by a party prior to the marriage, it is generally considered to be sole and separate and not divided with the other party. The same holds true for a debt. A loan, for example, that one party incurred prior to the marriage is considered a separate debt and the other party is not responsible for its repayment.

Division of the divorcing parties’ assets and debts is a several step process. After determining whether the nature of an asset is marital or sole and separate, the asset must be valued, unless it is to be sold and the proceeds equally distributed to the parties. The goal is to divide equally the equity value in each asset. This may be done by offsetting different assets against each other, so long as the end result is equitable. This means, for example, that one party may take the house and the other party may offset the award of the house with a bank account of similar value. After the division has occurred and been agreed upon in writing, what happens to the asset is of no consequence to the division. For example, if one party keeps the house and the other party keeps a stock portfolio of the same value, and shortly after agreement is made the stock portfolio declines in value, the division still stands. Finally, where both parties want one asset, and there is no clear reason why is should be awarded to one or the other, the court may order the asset sold and the proceeds divided.