Arizona is a community property state. In fact, it is one of only nine in the United States. There are some common misconceptions regarding what is considered community property in an Arizona marriage and how community property is divided in an Arizona divorce. The following attempts to clarify these for the reader.
Community property is all property, including assets and debts, acquired by the spouses during a marriage. It does not matter how the property is titled or whose name is on it.
The only excluded property is separate property and property defined as separate property by a valid premarital or postmarital agreement. This includes any income earned during the marriage, known as community funds and anything purchased with this income.
In Arizona, community property is divided equally. However, there are times when the nature of the property makes this an impossibility.
There are two primary types of assets in Arizona. These are real property, meaning real estate, personal property, or goods and other items of value. These assets can sometimes become commingled or mixed assets, meaning they are partially community and partially separate property.
For example, if a spouse deeds community real estate to the other spouse alone after the real estate was bought and maintained with community funds, the real estate becomes a mixed asset. A retirement account can also be a mixed asset if it started before marriage and grew throughout the marriage. The increase in the retirement account is community property.
Any time there are mixed assets involved in a divorce, it is crucial to consult with an experienced divorce attorney who can ensure these assets are correctly identified, valued, and divided amongst the spouses.
Separate property is set apart from community property in Arizona. It is property acquired by one spouse either:
A spouse may choose to transfer, invest, or otherwise dispose of their separate property. Separate property remains separate as long as it is traceable back to its independent source.
However, if the separate property increases in value due to the other spouse’s efforts, the increase in value may be claimed as community property. An example is a second home that the other spouse fixes up for resale. The increase in the value of that home is due to the other spouse’s efforts, and the additional profits are community property.
It is important to note that when a spouse who owns real estate separately adds the other spouse to the property as a joint tenant, it becomes community property and is subject to division in an Arizona divorce.
Community property ends when one spouse serves the other with a petition for divorce or legal separation. From that point on, any income earned or property and debts acquired are separate property as long as the funds used were made after the service of the petition.
Although community property ends at the date of separation, the same is not true for obligations between spouses. When applicable, a spouse may still be required to pay spousal support and child support.
If you need more information about community property in Arizona and how it will affect your upcoming or pending divorce settlement, contact the divorce professionals Wilson-Goodman, PLLC. We will confidentially review your assets and debts to determine an equitable division between you and your spouse.
At Wilson-Goodman, PLLC, our Chandler divorce attorneys can also review your separate assets to ensure they are traceable to their source or employ financial experts to ensure your individual assets are protected. Contact us in our Phoenix office today for assistance.
