Other Family Issues

questions & answers

Question: How can we separate finances during our sepatation? I want to buy a house of my own with out obligating him or puting myself at risk of it being considered community property. He has moved out and our home is up for sale.

Answer:

You can separate finances during your legal separation simply by opening a new bank account (in your name alone) and depositing your salary and other liquid assets into it. Just remember under Family Law Rule 49 both of you and your spouse will have to disclose the existence of such accounts to each other (assuming he has done the same thing), as well as bank statements for the new accounts dating back six months before the petition for legal separation was filed (if they existed that long ago), and running all the way to the present. 

If you want to buy your own home, it will not be community property unless you get back with your husband (reconciliation) and dismiss the separation Petition. If you do get back with your husband, all of the separate assets and debts that you both accumulated after the Petition was served on the respondent will automatically become community property.

You will want to take care not to use community funds (e.g., money that was deposited into the marital checking account before the separation petition was served on the respondent, or money gathered from the sale of marital property, like a shared automobile) to make the down payment on your new home. While the new home would be your separate property, the marital community would enjoy a lien on your real estate because you used marital property to acquire it. See A.R.S. § 25-318(C).

Get the funds from a source that is indisputably and exclusively your own, whether it is money that you inherited, or a loan/gift from your parents, or salary that you have saved since the separation petition was served on the respondent. If you intend to use your share of the proceeds from selling your marital home to purchase your new residence, consider asking your husband to sign a partial settlement that splits the income from selling the family home, and explicitly recognizes that each 1/2 share constitutes that spouse's separate, discretionary money to use as s/he sees fit. (If you are concerned that your husband has wrongfully squandered or hidden other marital assets, and you intended to use the equity in your home to help offset that misconduct, then your settlement can alternatively break the sale proceeds into thirds - rather than halves: 1/3 to you, 1/3 to him, and 1/3 to be held in escrow until the separation case has concluded. That way the judge has money to work with if she determines that your husband should be penalized for other issues.)

Don't be surprised if the lender who funds the purchase of your new home insists that your soon-to-be-ex-husband signs off on a series of documents (e.g. quitclaim deed) that formally recognize his lack of interest and obligation concerning your purchase. Mortgage companies (and sellers) like to protect themselves, and generally will not want to take the chance that your husband would sue them later for conducting a transaction that (in your husband's opinion, no matter how erroneous) should have involved him.