Dividing Assets Not Listed in Divorce Decree

Dividing Assets Not Listed in Divorce Decree

What about forgotten assets?

What happens with forgotten assets?

Occasionally a divorcee will realize after the divorce is final that certain assets were not addressed in his divorce decree.

Maybe there was a 401k plan from a former employer that the parties simply forgot about until after the divorce was final.  For a couple with a sizable estate, sometimes even a significant asset can be overlooked.  When you’re dividing 15-20 rental properties, for example, one might slip through the cracks.

When a marital asset is not divided in the divorce either due to an oversight or by the parties’ intentional omission of the asset from the divorce decree, the law provides a remedy.  A.R.S. Section 25-318 D. provides that marital assets not divided in the divorce automatically become tenancy in common assets upon entry of the divorce decree, with each party entitled to an undivided one-half interest.  Such assets can be divided in a post-decree proceeding.

In the 2009 case Thomas v. Thomas, the Arizona Court of Appeals held that when parties intentionally omit an asset from their divorce decree, a subsequent proceeding to divide the omitted asset must be brought as a separate civil action–not as a post-dissolution action in the family court.  205 P.3d 1137, 220 Ariz. 290 (Ariz. App., 2009); see also Dressler v. Morrison, 130 P.3d 978, 212 Ariz. 279 (Ariz. 2006).

In a 2012 case, however, the Court of Appeals clarified that “a separate civil action is not the exclusive method by which a party may request the allocation of omitted property.”   Rinegar v. Rinegar, 231 Ariz. 85, 290 P.3d 1208, 1211 (Ariz. App., 2012) (emphasis added).   Under Rinegar,  a divorcee may, at a minimum, seek division of assets accidentally omitted from a divorce decree by filing a post-decree motion in the family court case to “reopen” the divorce decree under Rule 85 of the Arizona Rules of Family Law Procedure.

Hopefully the practice pointer here is obvious.

Make sure the divorce decree allocates ALL the assets!   Whether a case settles and the divorce decree is prepared by one of the attorneys or the case goes to trial and the judge prepares the decree, all known assets must be addressed and allocated in the decree.

It is never okay for the lawyer to assume his client will be able to retain an asset not mentioned in the divorce decree simply because it is owned in her name or because the parties have always treated it as hers.   Likewise, it is never safe or appropriate for the client to withhold information about assets from her lawyer.  To avoid the uncertainty and expense of a post-decree proceeding to divide an omitted asset, the divorcing party must disclose all assets to her attorney, and the attorney must insure that the decree allocates all assets to the appropriate party.

Learn more about Property & Debt Division.

Copyright © 2017 by Scoresby Family Law – J. Kyle Scoresby, P.C. All rights reserved. Reprinted with permission.

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