What About the Personal Property?

We are often asked how the court goes about dividing personal property, and how detailed a person should be in outlining the personal property.  As with all property acquired during the marriage, the first presumption is that personal property belongs equally to the spouses and should be equally divided. 

First, address items that may not have any monetary value, but have enormous personal significance.  This most often comes up with photographs, memorabilia from children, and holiday decorations.  When it is possible to copy such items so that each spouse has a complete copy, this should be done.  Otherwise, the fairest approach is to equally divide these items.

            Personal property with a financial value also must be addressed.  Some ways to go about dividing the personal property without having to determine the value of those items is to have the spouses alternate picking items, with the first pick to be determined by the flip of a coin.  Another alternative is to instruct one spouse to make two lists that separate all of the property.  The second spouse then picks between the two lists and retains the property outlined on the selected list.  This method gives some incentive to the first spouse creating the list to be fair in outlining the division, since the second spouse would pick a list that has the greater value.

There may be items that need to be valued so that one spouse can receive the appropriate compensation.  The court considers the value of personal property to be the resale value at the time of the divorce, and not the purchase value at the time that the item was acquired.  An appraisal may be necessary.  An internet search may also reveal at what price comparable items are selling.

If the spouses cannot resolve the division of personal property or the value of that property, it may be necessary to involve a judge.  First, be sure that the item is worth sufficient money so that litigating regarding the item makes sense.  The judge can order that one party will retain a disputed item at a certain price, and order an equalization payment if one spouse is receiving more than half of the value of the property.  The judge can also require the disputed property to be sold, with the proceeds to be divided between the parties.  If the spouses do not cooperate sufficiently well to manage a sale together, it is possible to hire a liquidation company to facilitate the sale of marital property.

Don’t hesitate to contact McNorton Fox PLLC if you need advice about how best to manage the personal property division in your case.

-Erin Fox

Child Support Modification Time!

April is almost over, which means that the month of May and high school graduations are rapidly approaching!  This is the time for most parents with a senior in high school to file to modify or terminate a child support obligation.

            Arizona law defines the emancipation of a child for child support purposes as generally taking place when the child is both eighteen years of age and has graduated from or is no longer attending high school.  This means that most parents of high school seniors will need to modify or terminate child support effective May 31 so that the high school senior is no longer covered by the support order.  May 31 is also the appropriate end date for the support obligation if your child is still under the age of eighteen but is graduating from high school in May. 

            Modification is the appropriate process if there is another minor child common to the relationship that is covered under the support order.  Termination of the support order should be requested if the child in question is the only child or the youngest child covered by a Child Support Order.

            In the event that child support arrears are owed, and a termination of the support order is requested, the Court will terminate the ongoing child support amount but will require payments on the arrears until they are satisfied in full.

            It is important to note that the Court does not track when your children are emancipating, and the Court will not take any steps to terminate or modify your support order for you.  It is your responsibility to prepare and file the appropriate paperwork in a timely manner to address these issues.  Contact McNorton Fox PLLC for guidance if you are interested in pursuing a change to your Child Support Order! 

-Erin Fox

Updates on Retirement Division

Retirement division is often a thorny subject in a divorce proceeding, and it is at its most complicated when a defined benefit plan is in question.  A defined benefit plan is a retirement benefit that does not have a savings account component.  Instead, the benefit is usually determined by the employer after considering factors such as the length of employment and the highest or most recently earned wages of the employee.  A pension is a defined benefit plan.  So is military retirement, Arizona State Retirement System benefits, Public Safety Personnel System benefits, and more.  Defined benefit plans are often the most valuable asset of the marriage, and they are difficult to value.  Even if a financial expert is able to quantify a present day cash value for a defined benefit plan, sometimes there are not enough other assets to be divided for the employee spouse to buy out the other spouse’s interest.  One of the hardest issues to address then becomes how to address the plan division if the employee spouse continues to work after the marriage ends. 

            The seminal case in this area is Koelsch v. Koelsch, which was decided by the Arizona Supreme Court in 1986.  The primary issue addressed in this decision was how to handle a situation where the employee spouse voluntarily decided to continue working past the date when he was eligible to retire, which in turn postponed the date when his former spouse could receive her share of his pension.  The Arizona Supreme Court ruled that the employee spouse did not have the right to deprive his former wife of her property interest in his pension.  The Court required the employee spouse to pay his ex-wife the amount she was entitled to receive from the pension out of his own pocket each month to compensate her for the delay of her receipt of the pension money.

            In the two-plus decades since Koelsch was decided, it has played a significant role for employee spouses in determining when they will retire.  It has also spawned litigation where the non-employee spouse has wanted to recover pension payments that he or she would have been entitled to receive if the employee spouse delays retirement past the eligibility date.

            However, over the past several months we have seen two cases that have pushed back at the Koelsch precedent.  The first is the Barron v. Barron decision out of Division One of the Arizona Court of Appeals.  This case found that 10 U.S.C. §1408 prohibits the courts from requiring a military member to indemnify a former spouse if the servicemember chooses to continue to serve in the military after becoming eligible to retire.  The holding in Barron essentially means that Koelsch no longer applies to military pensions.

            The second decision that has narrowed Koelsch is also from Division One of the Arizona Court of Appeals.  It is called Quijada v. Quijada and was issued in February 2019.  In this decision, the Court found that the non-employee spouse must explicitly reserve the right to pursue Koelsch payments of retirement at the time of the divorce to obtain compensation from the employee spouse if the employee spouse postpones retirement and continues to work.   The Court of Appeals found that if the right to these payments is not reserved, and the non-employee spouse pursues Koelsch payments after entry of the divorce decree, the request for the payments is an impermissible request to modify the property distribution in the divorce decree.

            These two decisions have significantly narrowed the scope of Koelsch v. Koelsch.  It remains to be seen if further changes to the division of defined benefit plans will be forthcoming.

-Erin Fox