What Is Community Property in Arizona
Community property in Arizona refers to property acquired during the marriage, excluding any property received by gift or inheritance. In any Arizona divorce, the court must divide this community property equitably between the parties. However, community property doesn’t necessarily have to be divided 50/50. A domestic relations judge has the discretion to award one spouse more of the total value of community property. The important point here is to know that in an Arizona divorce, as opposed to a divorce in a non-community property state, the starting point for valuing the divorce estate is to treat assets equally.
In a divorce case, the term equitable means fair. It does not mean equal. You, together with your lawyer, must place a value on all items of community property. From these values, you will be able to determine a number that reflects the value of your community estate. For example, if there are $250,000 in assets, the community estate is worth $250,000. When the judge divides the assets, he will first determine the total value of the community estate. Then he will award assets worth $125,000 to each party. If your spouse takes $25,000 of the estate and your spouse is given $100,000 worth of assets, then he will be required to pay you the sum of $25,000 to equalize the division. This is a very common approach to property division in Arizona.
In addition to dividing your property into community and separate property, there is also a presumption of equal ownership of community property. This means that if the court determines that property is community property, it will probably be divided equally. For example, if a home is jointly titled to you and your husband, a judge will assume that the home is owned equally by you as tenants in common. This does not always result in an equal division on a dollar-for-dollar basis. Sometimes, the court may order a greater award of property to you because you are the custodial parent of the children .
Arizona divorce treatment of community property differs from that in states that do not recognize community property. Most states divide marital property into "marital" and "non-marital" property. Property acquired before the marriage is usually termed non-marital property. During the marriage, the appreciation in the value of non-marital property belongs to the spouse who owned the property prior to the marriage. Therefore, if you owned real estate when you married and that real estate appreciates in value during the marriage, the increase in value is usually your non-marital property. With some exceptions, such as increase in pension value due to marital contributions, appreciation in value of property owned before marriage belongs to that spouse who owned the property at the time of the marriage.
Some people think that if they don’t work outside the home, they do not own part of the community estate. Community property means ownership. Each spouse owns a 50% interest in property purchased during the marriage from the money earned during the marriage. The fact that you do not work does not change the ownership of community property that was acquired during the marriage.
If it is determined that the property is separate property, we go through the same procedure of placing a dollar value on all separate property. Often, if the separate property is quickly transmuted, the court will not award any one spouse a greater amount of property. The law will presume that the spouse who acquired the property immediately contributed the full amount of the property to the joint estate.
Love is not ownership. Happy feelings toward a spouse do not make the property in your joint names the separate property of the spouse who purchased the property. While it is important to do the right thing when dividing property, you may also do the wrong thing by giving away your separate property to another without understanding the consequences.
Identify Separate Property
Separate Property is anything acquired by either spouse before the marriage. This may include a house, car, savings account and any other assets. It could also include items received by gift or inheritance. Under Arizona divorce property laws, anything acquire during the marriage is community property and can be subject to distribution under ARS 25-318. However, separate property is not divisible. When determining the amount of separate property the length of the marriage and amount of separate property is an issue. Separate property that has increased in value is known as appreciation. Appreciation is separate property even if it was earned during the marriage time period. When separate property is owned by a couple and one spouse contributes to the value of appreciation is known as commingled property. This could include a spouse who uses marital income to pay the mortgage or renovations to a house they owned prior to the marriage. Any type of commingled property is often difficult to determine how much is separate and how much is commingled. Depending on the circumstances of any particular situation, a judge will determine whether commingled property is partly community property or if the commingled value has been so diluted in the community that it is now part of the community property. This is a case-by-case determination.
How Is Property Divided in an Arizona Divorce
Dividing property during a divorce in Arizona is generally accomplished by identifying and categorizing community versus separate property. Anything owned by the community (the divorcing couple) is subject to equitable division. Any assets considered separate stay solely with the spouse who brought them into the marriage or who acquired them separately.
The process of dividing property in a divorce is straightforward in some cases, but however it is accomplished, it must comply with the requirements for Arizona property division. The goal of an accurate property division process is a fair and just outcome for all parties.
Arizona is not a "community property" state, so terms and procedures used to divide property during a divorce differ from those in some other states. A significant number of assets and liabilities owned by spouses in Arizona, however, are classified simply as "community property." The presumption exists that anything acquired by either spouse during the marriage through one of the elements of community property (money paid for the purchase of an item or service, services rendered related to the acquisition of an item or service, potentially, the creation of an item from a community-owned item) is community property. Equitable division laws are founded on the premise that community property is subject to equal division by the court.
Assets and debts that are separate property and not subject to equitable distribution include:
In a few situations, separate property is classified as community property, such as assets that belong to an unmarried couple that got married under the "community property with right of survivorship" agreement. In Arizona, this is a common way for unmarried couples to transfer property to the surviving spouse should one partner pass away.
Dividing property for an Arizona divorce has only one required standard: equity. Whether through a negotiated settlement or court-mandated equitable distribution, the ultimate result will ideally balance the share of marital assets and debts. Equal doesn’t have to mean 50-50; spouses may negotiate an unequal distribution of property and debts for many reasons, including one party being able to afford more of a debt, frequently taking care of household expenses, or having a larger number of assets. A property division result that is equitable satisfies the court’s requirement for a fair and just result in a divorce.
Factors Guiding Arizona Property Division
Apart from the type of property that is involved, different factors can influence how assets and liabilities are divided among the parties following an Arizona divorce. Some of these include:
The Contributions of Each Spouse During their time of marriage, each spouse makes contributions to the acquisition of property and this should be considered when dividing the couple’s belongings. This includes all money that the individual contributed to the joint assets, such as earnings on a job, savings or investment contributions and other sources of income. Arizona courts tend to favor compensating the spouse whose contributions led to the acquisition of earnings more than the other spouse.
The Length of the Marriage After spending years together , spouses may be entitled to their fair share of as much of the net worth as possible. However, spouses may not be entitled to compensation for large gifts and inheritances if the couple has only been married for a short period of time. In determining what constitutes a "short" versus "long" marriage, courts examine the length of the marriage and the amount of time that has passed since the couple separated.
Spousal Support If one spouse is receiving spousal support, it could influence the division of property. A spouse with income potential may be compensated for sacrificing their career to stay at home for the children or to take care of the other spouse.
Handling Marital Debt
When managing debt in an Arizona divorce, the concept of community property will determine how all marital debt is divided.
Generally, debt that was incurred during the marriage is considered community debt. In Arizona, all debt is presumed to be community unless the debtor can prove the debt should be treated as separate.
There are a few different ways to divide debt:
In most cases, it is most cost effective and easiest to simply add up the community debt and divide it between you and your spouse. In limited situations, the couple may choose to divide the debt unequally. The debt is then transferred (assigned) to one spouse or the other.
Community debt that cannot easily be divided-such as credit card debt-is usually divided on a 50/50 basis. In some cases, where the debt is assigned to one spouse, the spouses may agree or a court may order that a greater percentage of the community property be awarded to the other spouse to make up for any uneven distribution of the debt.
Securing Your Property Rights
To ensure protection of your property rights in the process of an Arizona divorce, it is critical to understand the nature of the property you and your spouse own. Distinguishing between separate property and community property is essential, especially when filing a legal claim for divorce with the court.
If you are in a position where the property is located in another state, such as a vacation home, or even a different country, it is beneficial to hire a lawyer who can help you determine whether it is subject to division in the divorce. If a legal claim for divorce is filed in Arizona, but there are financial assets in other states, this can prove problematic. An experienced attorney can determine the property with which the court should deal, and the one that is beyond its jurisdiction.
As the law firm Law for Real People advises: "It is important to secure legal representation as soon as possible as many states require ‘dissipation’ be pleaded and proven before such property may be recoverable . Moreover, once a spouse learns the other is seeking a divorce, they can be inclined to liquidate or hide assets."
The issue of dissipation often leads to one spouse secretly spending money or selling assets without the knowledge of their partner. In some cases, it can literally involve one partner chucking boxes of personal items and selling valuables without warning. If one partner in the marriage has incurred debt in the period leading up to the split, the courts could likely order payment of the debt from the marital assets.
Protecting property rights through a legal separation agreement can be extremely helpful in a divorce and can be used as proof of what each spouse owned prior to the marriage or the date of separation. A lawyer can aid in an investigation of whether the separation agreement is valid and enforceable once a divorce is sought.
It is imperative to immediately obtain legal help in the event of a divorce in order to protect all of your property rights to the assets of the marriage, which includes everything from a valuable baseball card collection to a family business.