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Divorce and retirement assets in Arizona

On Behalf of | Jul 12, 2021 | Blog, Divorce |

In Arizona, property acquired by either of the spouses during the marriage belongs to both of them, even if the other spouse didn’t take part in obtaining that property. So, how are retirement assets treated during marriage dissolution? Read on to find out more about this.

Arizona, a community property state

A community property state divides marital property equally, or at least close to. So, your 401(k)s, IRA, pensions, stock options, timeshares, mortgage, salaries, and anything purchased using your salaries will be divided equally between partners during a divorce. Of course, if you had signed a prenuptial agreement to dictate how your property would be divided, then the court may consider it.

Your separate property

If you owned an asset before you were legally married to your spouse, that property is not divided during marriage dissolution. The same also applies to debts prior to your marriage. However, if a spouse contributes to the value of the separate property, that contribution will become community property, whereas the initial value will remain separate property.

Also, separate property includes gifts and inheritance obtained by a partner during the marriage. Moreover, after the divorce decree is entered, any property or profits acquired afterward are separate property.

The role of QDRO in dividing retirement assets

QDRO is an acronym for Qualified Domestic Relations Order. QDRO is a court decree that governs how retirement assets are divided.

There are two parts to QDRO: the plan participant, who is the person with the retirement asset, and the alternate payee, who is the person receiving part of that retirement asset. So, if you have pension benefits, 401(k)s, IRA and the like, QDRO will award half of it to your ex-spouse.

Of course, there are occasions where spouses may agree to divide their marital property by themselves. In this instance, QDRO won’t be involved in splitting the retirement assets. It only works if there is no separation agreement between the divorcing couples.

Before you start the marriage dissolution process, it would be helpful to consult with a divorce attorney to guide you through the process or at least make it easier for you. The divorce process in Arizona can be long and can also get ugly; however, you can sometimes avoid all of that with some help.