There are many perplexing issues that can complicate a marital dissolution in New Mexico. The resolution of financial issues can substantially determine your post-divorce standard of living and financial security. Since New Mexico is a community property state, the general approach to property division involves community property being divided equally between the parties while separate property is retained by the party who acquired the property. Community property basically includes any property acquired during marriage that is not a gift, inheritance or appreciation on a separate property investment or asset.
While this may seem fairly straightforward, most parties commingle separate and community property assets in various ways during marriage, such as:
• Depositing both separate property and community property funds in the same bank accounts
• Contributing income after marriage into a retirement plan established prior to marriage
• Using community property funds or income during marriage to improve real estate acquired by a spouse prior to marriage
When assets or bank accounts have both a separate and community property interest, the process of dividing property can become complicated. Certain types of assets that are harder to value like a small business can make resolving property division issues even more complicated. Because these complications can make it difficult to agree on terms of a marital settlement agreement, we have suggested some strategies for anticipating and simplifying these issues:
Minimize Commingling Funds:
While many times it is not feasible to avoid commingling separate property and community property funds deposited in bank accounts, the commingling of funds requires tracing to facilitate property division. The tracing process is used to identify what part of the principal came from each source so that the percentage of appreciation attributable to each source of investment can be allocated and divided.
Utilize a Prenuptial Agreement:
A prenuptial agreement can be used to identify assets that will be considered separate property. The pre-marital agreement also can include an agreement on property division so that the parties are not required to litigate these issues in the event that a marriage does not work out.
Avoid Using Marital Income for Maintaining Separate Property Assets:
Most people own real estate and/or other assets when they get married. If you use income earned during the marriage to improve real property acquired by one party prior to the marriage, the parties must treat the real estate like an asset with both a community and separate property component. A mathematical formula must be employed to identify the contributions from each source so that any increase in value from each type of contribution can be determined.
The Role of Experts in a New Mexico Divorce
The above information is designed solely to illustrate general principles of law, and does not constitute a specific legal opinion on individual cases. We suggest that you contact experienced legal counsel for a specific opinion tailored to your individual circumstances.
If you have questions about property division in a New Mexico Divorce, we invite you to talk to our Santa Fe divorce attorneys. Jay Goodman & Associates offers a free consultation in our centrally located offices in Santa Fe and Albuquerque so that we can discuss your situation and answer your questions. Call us today to schedule your free consultation at (505) 989-8117 to learn about your rights and options.
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