Arizona Divorce & Family Law Blog : Commentary on Arizona divorce, child custody, paternity, child support & family law litigation. : Arizona Family Law Lawyer & Attorney : Nirenstein Garnice Soderquist, PLC

Kate Walsh, star of the television show Private Practice (and formerly Grey's Anatomy), and her ex-husband have adopted a long-time but not-often used approach to dividing the community property.  The Stipulated Settlement Agreement provides:

"One-half of the community property furniture and artwork to be divided by alternating picks after the flip of a coin to determine who will pick first".

To read more about Kate Walsh and her divorce, check out the USA Today article "Kate Walsh, Ex To Divide Assets by Flipping a Coin". 

Believe it or not, sometimes this is the most amicable way to divide up personal property, especially when it does not have much value.  Both parties alternate in choosing until nothing is left.  Kind of like picking dodgeball teams.  For more information on community property, contact Arizona lawyers, Nirenstein Garnice Soderquist PLC.

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The Court of Appeals affirmed The Honorable Judge Hugh Hegyi's ruling in Frantz v. Frantz, 2009 WL 4981533 (Ariz.App. Div. 1), a case that dealt with an issue that is becoming more and more common in Arizona as a result of the State's heavy financial reliance of the real estate market. In Frantz, Husband appealed from a decree of dissolution arguing that the family court erred in its determination that a second lien secured by the marital residence was not a community obligation. At the dissolution hearing, Husband, Wife, and a real estate appraiser testified.  Judge Hegyi stated:

“In finding that the community has $92,000 in equity in the [residence], the court does not deduct the value of the $84,000 second lien on that property. It finds that WIFE has established by clear and convincing evidence that the lien is not a community obligation. The money was received by HUSBAND alone. HUSBAND alone had the ability to explain what happened to the proceeds of the loan, and has failed to do so. After observing the parties' demeanor in testifying, the court finds HUSBAND expended these proceeds in a manner that was not intended to, and did not, benefit the community."

Husband filed a motion to alter or amend the decree requesting that the court value the residence at $8,000 - an amount reflecting the fair market value minus any and all of the liens and encumbrances obtained by the parties during the marriage. The court denied Husband's motion.

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While some couples are putting off divorce because they can’t afford it, the situation is different for moneyed clients. Since their assets are worth less, a lot of monied spouses believe the time is ripe to divorce because they will have to give less to the other spouse.  This may be especially true where the more financially empowered spouse wants to keep the marital residence and their 401(k) and other retirement plans.

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In a little noticed change, the US Department of Labor issued a "field assistance bulletin" in May, 2003, that permits employers and administrators of ERISA-regulated defined contribution retirement plans (such as 401(k) plans) to charge QDRO processing expenses. The Wall Street Journal recently reported that one large plan administrator (Fidelity Investments) now charges for QDROs for 40 of its 200 plans for which Fidelity processes QDRO documents. The decision to charge is made by each individual employer.

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For tax-qualified retirement plans, the rules regarding tax-free transfers of pension benefits in connection with divorce are well settled. However, a fair amount of uncertainty remains regarding the taxation of transfers of retirement benefits accumulated during a marriage where the pension plan is a supplemental executive retirement plan (SERP) or other nonqualified deferred compensation arrangement.

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The division of a charitable remainder unitrust pursuant to a divorced
couple's property settlement agreement is entitled to nonrecognition, the IRS has announced in a recent private letter ruling (PLR 200502037 ; IRS, 9/30/04, released 1/14/05).

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