Four Major Issues in Gray Divorce
Division of Property
Arizona is a community property state, which means that anything that acquired by either party during the marriage belongs to both parties. This includes houses, retirement accounts, stock portfolios, bank accounts, vehicles, businesses, and debts. There are exceptions for items that were acquired by gift or inheritance. If your case goes to trial, the Court will divide the community party “equitably”—this generally means, the Court will divide it equally. The parties, though, can agree to divide it another way.
Whatever retirement account either of you earned during the marriage is community property and will be divided as part of the divorce proceeding unless the two of you agree otherwise. When a retirement account must be divided, the parties should divide it using a Qualified Domestic Relations Order (QDRO).
When a retirement account was earned partially before marriage and partially during the marriage, only that part earned during the marriage is community property.
Divorce will impact your health insurance. Often, one party is providing the health insurance for both spouses. Often, the paying party is anxious to get the other spouse off his or her health insurance. And just as often, the spouse receiving health insurance is worried about losing their health insurance.
Until the divorce is finalized, the party paying for health insurance cannot remove the other party from their health insurance coverage. But once the divorce is finalized, the party who has not been paying for their health insurance will no longer be able to be on the other party’s health insurance. After divorce, each party is responsible for their own health insurance.
We have sometimes seen couples choose to do a legal separation rather than a divorce so that one spouse can stay on the other spouse’s health insurance.
Spousal Maintenance (Alimony)
Spousal maintenance is where one spouse is ordered to pay the other spouse a certain amount of money each month after the divorce is finalized. It is rare, though, that one spouse is ordered to pay spousal maintenance indefinitely.
Spousal maintenance is perhaps the murkiest area of Arizona law. Spousal maintenance is the issue most likely to go to trial in a “gray divorce” than any other issue. We see more awards of spousal maintenance in a gray divorce than any other type of divorce. Spousal maintenance has a big impact on both parties’ financial futures.
This is a complex issue, and we recommend that you speak with an experienced family law attorney before negotiating or reaching any agreements. We see too many people reach agreements prior to speaking with an attorney that put them in a precarious financial position. These agreements are hard to undo.