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Arkansas Property Division
Property Distribution Laws in Arkansas

In Arkansas, the courts generally accept a fair and reasonable property division the parties agree to, but if the parties cannot agree, the Chancery Court divides the property within the Judgment of Divorce.

Arkansas is an equitable distribution state. Equitable does not mean equal, or even half, but rather what the Chancery Court considers fair.

Since Arkansas is an equitable distribution state, all marital property will be divided in a fair fashion according to the court unless agreed to otherwise by the divorcing spouses.

Factors in Equitable Distribution

Guided by the Arkansas Code - Title 9 - Chapters: 12-315, the court distributes "one-half (1/2) to each party unless the court finds such a division to be inequitable." In deviating from this, the court considers:

  • the length of the marriage;
  • the age, health, and station in life of the parties;
  • the occupation of the parties;
  • the amount and sources of income;
  • the vocational skills;
  • the employability of the spouses;
  • the liabilities, and needs of each party and opportunity of each for further acquisition of capital assets and income;
  • the contribution of each party in acquisition, preservation, or appreciation of marital property, including services as a homemaker; and
  • the federal income tax consequences of the court’s division of property.

Marital Property vs. Separate Property

Property acquired during the marriage is marital property even if the property is only in the name of one spouse. Separate property is not subject to distribution. This includes all property owned by a spouse prior to the marriage, all property acquired during the marriage by bequest, gift, devise or descent, and all property either spouse acquires with the proceeds of the spouse's separate property. 


Absent a premarital agreement, all marital property is divided equitably. In general, marital property accumulates until the day the divorce is granted, even when the couple has lived apart for some time, with or without alimony, and whether or not one spouse is at fault.

However, Arkansas is one of eight jurisdictions that includes separate property in the marital estate "providing the court finds a special showing of need by the non-titled spouse."

Property Defined

In one ruling, a court stated: "Under Arkansas law, marital property includes all property acquired by either spouse subsequent to the marriage, with certain exceptions not applicable in this case. At the time a divorce decree is entered, the court will distribute all marital property equitably, according to the guidelines established by statute.

Generally speaking, property owned individually by one spouse or co-owned by both spouses may be classified as marital property subject to equitable distribution if that property has been acquired subsequent to the marriage and not specifically exempted by statute. Implicit in the statute is the concept that one party's rights to marital property owned by the other party do not vest until a divorce decree is entered and the court has distributed the marital property."

Other examples of marital property are a spouse's earnings during the marriage, property purchased from the spouse's earnings, lottery winnings, vested retirement accounts, rents from joint property, and most other property acquired during the marriage - with a few exceptions.

Valuing Property

When spouses disagree about what belongs to whom, the judge decides whether any or all of the commingled property is a gift to the marriage or whether the original owner should be reimbursed in whole or in part. Commingled assets often become very complicated and may require the assistance of an attorney or a forensic accountant.

A judge who divides marital property in any way other than equally, or who includes separate property in the division, must explain the reasons.

After determining which property is marital property, the couple, or the court, assigns a monetary value to each item. Couples who need help determining values can hire professional appraisers. Some financial assets, such as retirement accounts, can be very difficult to evaluate and may require the assistance of a financial professional, such as a CPA, or an actuary.

Spouses can divide assets by assigning certain items to each spouse, possibly with an equalizing payment if one spouse gets more than the other, or by selling property and dividing the proceeds. Some couples maintain the marital home until children are out of school. Others may keep investment property in hopes it will increase in value.

The couple must also assign all debt accrued during the marriage, including mortgages, car loans, and credit card debts, to one of the spouses.

The Marital Home

In Arkansas, as in many jurisdictions, the equity in the marital home is often one of the biggest assets the spouses divide. The equity is the market value of the house, less any debts or liens against it. Equity is established by determining what the current market value of the home is at the time of separation. Once the spouses agree to a current market value, any debts associated with the property (mortgage, taxes, home equity loans, etc.) are deducted from the market value to arrive at the equity to be divided. Normally, making this calculation requires a paid real estate appraisal or a real estate agent can prepare a market analysis for free.

From there, couples choose one of three options to divide the equity:

  • The spouses sell the home and divide the proceeds.
  • One of the parties may refinance the home and "buy out" the other party.
  • One spouse (usually the custodial parent) remains in the home with the exclusive use and possession for a certain period of time (for example, until the youngest child graduates from high school), then either buys out the other spouse or sells the home and divides the proceeds.

Pensions and Retirement Accounts

In Arkansas, vested pensions are marital property. A pension vests when all the requirements to receive the pension have been met. Unvested pensions are also marital property. Until the pension has vested, the person under whom the pension is maintained has only an expectancy of interest in the pension. 


Several different methods of valuation are used in determining how much a marital asset is worth, depending upon the asset to be valued and the level of agreement between the parties. Courts generally accept the value when the spouses mutually agree on a value of a particular asset. Experts may be retained by the parties or by the courts to determine the value of marital assets if the parties cannot agree. Such experts may include accountants, real estate or business appraisers, or pension valuators. The use of experts adds to the cost of the divorce.

In Arkansas, the court may include the retirement benefits and plans earned by both spouses as marital assets available for division. Retirement benefits vary greatly but can generally be divided into two groups:

  • Defined Contribution Plans: A defined amount of money belonging to the employee. The employee and/or the employer make defined contributions. The balance of the plan is constantly changing, but its value is definable at any given point. 401(k)’s, 403(b)’s and profit sharing plans fall into this category.
  • Defined Benefit Plans: A retirement benefit where an employer promises to pay a benefit to an employee sometime in the future, based upon some type of formula. Normally, this formula is based on the employee’s salary near the end of his or her career and the number of years he or she worked for the employer before retirement. Defined benefit plans are much more complicated to value and often require the professional evaluation of an actuary to determine exact values.

Arkansas statute places several limitations on the inclusion of retirement benefits as divisible marital assets. These conditions include provisions that:

  • the spouse owning the benefits must be vested in them or be receiving them on the date the divorce is filed;
  • the parties must have been married for ten years, during which the benefits were being accumulated;
  • any retirement benefits earned prior to the marriage must be excluded;
  • the total benefit extended to the non-covered spouse must not exceed half the benefit to be considered;
  • the payout to the non-covered spouse may not begin until the covered spouse begins receiving benefits or reaches age 65, whichever comes first.

In Arkansas, if spouses share in each other’s retirement or pension plan, a Qualified Domestic Relations Order must be completed. A QDRO is a written set of instructions that explains to a plan administrator that two parties are dividing pension benefits. The instructions set forth the terms and conditions of the distribution - how much of the benefits are to be paid to each party, when such benefits can be paid, how such benefits should be paid, etc. The division of retirement and pension benefits can be complicated and result in a myriad of tax consequences. Consultation with a tax attorney or accountant is recommended when determining whether and how to divide such benefits.


 
 


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