January 10, 2022
With regard to marital property, Arizona is a community property state. Knowing what this means can help you better understand and prepare for the outcome should your marriage or relationship end. In this blog, we’ll explain the legal concept of community property, which assets do and don’t qualify, and how state courts determine property awards.
What is Community Property?
Under Arizona law, community property is defined as all assets that a couple acquires during the course of their marriage. It does not include:
- Property that each spouse owned while still single
- Inheritances left to one spouse only
- Gifts provided to one spouse
- Recoveries for personal injuries, with the exception of any awards for lost earnings
Arizona is one of nine community property states, meaning that all marital property is assumed to be owned equally by both spouses and must be divided equitably in the event of divorce. Judges follow the fairness principle when distributing marital property, which does not always add up to a crisp 50-50 split. Factors taken into account include:
- Which spouse has primary custody of the children
- The income and earning potential of each party
- Whether or not either spouse dissipated the marital estate, either spitefully or by buying
In most situations, the distribution will correlate with an even split, but judges can vary at their discretion. The objective is to be fair, not mathematically precise.
Marital Property: a Broader View
Marital property is not confined to purchases and acquisitions that a couple makes together. A lot of married people think that buying something and registering it in their name only keeps it separate and not subject to division during a divorce. The reality is that if you purchase a house, car, or other assets while married, it’s communal, regardless of whose name is on the deed.
Any interest that one spouse accumulates in an employee benefit plan such as a pension or profit-sharing system is also community property. Like other assets, they do not have to be divided on an exact 50-50 basis. For example, if both the husband and wife have their own pensions or retirement accounts, the court may let each spouse keep their own account, especially if the value of each one is similar.
Perhaps the most challenging asset to divide in an Arizona divorce is a business or professional practice. Even if one spouse owned either one prior to getting married, any developments that took place afterward are community property that must be split accordingly. Business appraisers and certified public accountants are usually hired to determine the value of this kind of asset and prepare a report that will guide the court’s decision.
When Properties Co-mingle
When assets are co-mingled, separate property can become part of the marital estate. For example, if the husband receives a gift of money from a relative and uses it to repair the marital home, that money joins the value of the home. To preserve the separate identity of each spouse’s property, it should be maintained in its own financial account or be titled to one spouse only (in the case of property acquired before the marriage).
Educating yourself on how Arizona law defines and distributes marital property is essential for anyone contemplating divorce. Monahan Family Law will advise you on your rights in this regard and help you preserve as many assets as possible once the divorce action finally commences. To schedule a consultation with a Glendale divorce attorney, call (623) 385-3190.