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New Mexico Property Division
Property Distribution Laws in New Mexico

In New Mexico the courts generally accept a fair and reasonable property division the parties agree to, but if the parties cannot agree, the property is divided by the District Court within the Judgment of Divorce.

New Mexico is a community property state, and it divides the marital estate on the dual property model. The appreciation of separate property is marital. In a community property state, each spouse has a one-half vested interest in the property of the other spouse. The only property that does not come into the court's distribution is that which is listed as an exception under New Mexico Statute Section40-3-8(A).

Community property means all property and debt acquired from the date of marriage until the marital cut-off date is subject to equal division. Since New Mexico is a community property state, the courts divide all marital property in a 50-50 fashion unless agreed to otherwise by the divorcing spouses. The marital estate is "up for grabs" in the dissolution of marriage. Obviously this does not entail cutting a house in half but rather each spouse receives assets of equal value.

The purpose of New Mexico property division laws is to make sure that New Mexico marital property is allocated equally. If a 50-50 division would not be equitable, the courts may choose to divide the property in a more equitable fashion under New Mexico case law.

Factors in Community Distribution

In New Mexico, separate property can be classified or defined as follows:

  • property acquired by either spouse before marriage or after entry of a decree of dissolution of marriage;
  • property acquired after entry of a decree;
  • property designated as separate property by a judgment or decree of any court having jurisdiction;
  • property acquired by either spouse by gift, bequest, devise or descent; and
  • property designated as separate property by a written agreement between the spouses, including a deed or other written agreement concerning property held by the spouses as joint tenants or tenants in common in which the property is designated as separate property.

According to New Mexico Statutes - Article 4 - Sections: 40-3-8, 40-4-7, all community property acquired by either or both spouses during the marriage is divisible upon the termination of the marriage.

Marital Property vs. Separate Property

New Mexico community property means any property acquired by either or both spouses during the marriage that is not separate property. Immune property or separate property is property listed as separate property under New Mexico Statute Section40-3-8(A). Some examples of immune property are:

  • property designated as separate by a judgment or decree of any court having jurisdiction;
  • property acquired by either spouse before marriage or after entry of a decree of dissolution of marriage;
  • property acquired by either spouse by gift, bequest, devise or descent
  • property classified as separate under an agreement between the spouses

New Mexico law also has a designation of property called quasi-community property. This is for property that was acquired by either spouse while domiciled elsewhere that would have been community property if that spouse had been domiciled in New Mexico when it was acquired.

If both parties are domiciliaries of New Mexico at the time of the divorce, the quasi-community property is deemed marital/community property for the purposes of property division.

Valuing and Dividing Property

First, the court classifies assets and liabilities, property and debt, as marital or separate. Then it assigns a monetary value to the marital property and debt. Finally, it distributes the marital assets between the two parties.

The Marital Home

In New Mexico 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 New Mexico 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 New Mexico 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 employees 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.

In New Mexico, if spouses share in each others 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.

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