Property Division and Divorce
Courts award property to spouses based on whether it is community or separate property. Community property is any property acquired by a spouse during the course of the marriage that is not separate property. Separate property is property owned by one spouse prior to marriage or acquired during marriage by gift or inheritance.
Separate property can also be created or modified by agreements like prenuptial agreements before marriage. Exceptions apply when separate property is “mixed” together with community property. This “mixing” is called commingling.
Dividing assets and debts can be difficult because of the type of assets couples own. For example, bank accounts are easy to split in half. A home purchased by the spouses during marriage is not. The most common large asset in divorce is the marital home.
Property division gets more difficult when you start including what assets each spouse brought into the marriage. Arizona requires the equitable division of community property. If you and your spouse cannot agree, the court will determine whether property is separate or community.
Arizona is one of about a dozen states that follow community property laws. Arizona requires the division of community property to be reasonably fair and equal. The division does not need to be perfectly equal. Sometimes spouses can achieve a true “fifty-fifty” split, but it is quite rare.
It helps if both spouses are represented by family law attorneys when a lot of assets and debt needs to be divided. The attorneys know how courts will most likely classify property as community or separate. Knowing how a court is likely to act will encourage settlement
Arizona Divorce Rules for Property Division
Sometimes even with the help of family law attorneys, the court will need to decide the final distribution of assets and debts. In these cases, the spouses were unable to come to an equitable agreement on their own.
The assets and debts gained during marriage belong equally to each spouse. Arizona law does not require the assets and debts to be equally distributed between the spouses upon divorce. However, Arizona law does require the division be fair.
The division of the assets and debts are determined by whether they are community or separate property. Community property will be split fairly between the spouses. Separate property will be kept separate.
Separate property include property with the following features:
- Property owned by one spouse before the marriage
- Property acquired by gift or inheritance by a spouse before, during, or after the marriage
- Property covered by a prenuptial or postnuptial agreement
If separate property is commingled with community property, it can lose its separate property status and may be divided as community property during divorce.
Sometimes assets are determined to be both community and separate property. A common example of this is when retirement accounts are started by one spouse before marriage, but the spouse continued to invest during the marriage with community funds.
In Arizona, the presumption is all non-separate property acquired during the course of marriage belong equally to both spouses. Defining whether property is community or separate can be complicated.
For example, when one spouse owns a business and the other spouse contributes labor, money or other property to the business. If a settlement cannot be reached, the court will determine whether the asset is community or separate property. The court may determine commingled assets or combinations of separate and community property a marital gift. In other cases, one spouse may get reimbursed in whole or part for their contribution.
One exception to Arizona’s laws on equal distribution is if one spouse wastes or recklessly spends community property. For example, if one spouse loses a lot of money gambling on sports, they may have committed waste. In this case, the spouse who committed waste may have their division reduced by the amount wasted.
Settling property division out of court is in the best interests of both spouses. No one can be sure how a judge will view their specific case. If you and your spouse can agree on dividing property in a fair and equitable manner, you can reduce legal fees and time spent in court. Often times the best way to settle is with the help of a family law attorney.
A family law attorney can provide insight and clarify the status of community assets and debt. Family law attorneys can also advocate for you in mediation, another excellent way to avoid court. Spouses can also divide assets by having one spouse “buy out” the other. In this case, one spouse keeps a particular asset and the other receives money or other property.
Some spouses prefer to continue to grow community assets together even after divorce. Although not for everyone, some couples choose this option for tax or investment purposes. Others may choose to wait to divide property until after their children have finished school or leave the home.
All debt acquired during the marriage must also be divided among the spouses. In some cases, a spouse may leave the marriage with little or no assets, but no debt. Property division during divorce can be complex. You should consult with a family law attorney to find out more about how your assets and debts may be divided