How Is Marital Property Divided in an Arizona Divorce?

marital property

We know there are many questions that come to mind when a relationship is ending like: “In an Arizona divorce, who gets the house?” Divorcing couples have asked this question so frequently that it has become cliché. But… who does get the house? The fact that this question still begs to be answered points to the confusion about how to separate property in Arizona after a divorce. It does not help that there are different kinds of property and that the way that property is described is dependent upon where you are getting your divorce.

You already have so many things to consider during a divorce, and sadly, things can become messy. A spouse might be lying about income to avoid child support, or you might need to enlist an Arizona custody lawyer for fairness in regards to children. During divorce proceedings, couples need to discuss the division of property and debts –  or ask the divorce court to do it for them. Arizona is a community property state and defines all property acquired during the marriage is owned equally by each spouse and thus will be divided 50/50 upon divorce. Other states follow the equitable distribution approach, which divides marital property in a “fair” manner, which gives divorce courts more discretion to determine what is fair to both parties.

How is Community Property Determined?

I inherited a mansion from my parents; does my ex-spouse own part of that? My wife and I bought a car together—I paid for it, but we used her name on all the documents; who does our Audi belong to? My wife earned more than I did during our marriage; how destitute is my bank account looking, exactly?

The first step to answering questions like these is to figure out which parts of your property are considered separate property and which are considered community property. In Arizona, your property is considered separate property if:

  • You inherited it or received it as a gift (both before or after marriage)
  • You owned it prior to marriage
  • You received the recovery for personal injuries sustained during your marriage (except for recovery for the loss of your earning capacity during marriage)

Generally, anything that is not separate property in an Arizona divorce is community property (although the two can get mixed up). Meaning that since the Audi and wife’s income are assets earned and used by both spouses after marriage, those assets are community property.

Spouses may change an asset that was originally separate property into community property, or vice versa. For example, if a spouse who was the sole owner of the family home before the marriage changes the title to community property, a court would consider this evidence that the owner intended to make a “gift” of the home to the marital community.

Even separate property can become marital property if it becomes commingled. Commingling takes place when assets become so mixed up with each other that it’s impossible to tell what belongs to whom.

There are times where a spouse changes a separate asset into a community asset without meaning to by combining—or “commingling”—separate property with marital property. An example of commingled property can be a bank account opened before marriage by one spouse can become marital property if the other spouse makes deposits to it; so is a house owned by one spouse alone that  can become marital property (either in whole or in part) if both spouses pay the mortgage and other expenses. Many types of assets can be partially community and partially separate, including retirement accounts one spouse contributed to both before and after the marriage, or a business one spouse started before marriage and continued operating after marriage.

For example, say a wife inherits $10,000, which is separate. She adds the money to the bank account she shares with her husband. They both withdraw from and deposit money into the account. Soon enough, no one can keep track of who has taken away more or contributed more to the $10,000. That $10,000 is now considered community property.

It can be very complex to identify if the property is either community property or separate property particularly if one spouse owns a business or other asset to which the other contributed labor or funds during the marriage. It is advisable to consult a Mesa family law attorney if your property situation is complicated. At some point, a divorce court may decide on such cases.

Who Decides How Much is The Value of A Property?

The spouses—generally assign a monetary value to each item of property.  Appraisers may also be consulted by the couple to find out the value of real estate property or personal property like antiques or artwork. As for retirement assets, an actuary, an accountant, or any financial professional may be of great help in evaluating their value.

How is the Property Divided?

There are different ways by which the marital property can be divided between the two parties. Spouses can divide assets by assigning certain items to each spouse. A spouse may also allow the other spouse to buy out the share of an asset, or they can liquidate their assets and divide the proceeds between them. In rare circumstances, they can agree to jointly own the property even after the divorce. But then again, this requires a continued relationship. Other couples hold off on liquidating an investment property, hoping that it will increase in value.

As for debts, the couple must also assign all debt accrued during the marriage, including mortgages, car loans, and credit card debts, to one of the spouses. It is not possible to divide debts because, even if they divided their debts and stated the same in the separation agreement or divorce order, this is not binding on creditors, who may continue trying to collect a community debt from either spouse. If a debt is assigned to one spouse, the other can ask the court to put a lien on that spouse’s separate property as security for payment of the debt. However, it is better to try to pay off all the marital debts when the divorce is finalized—if you are selling the family home or one spouse is buying the other out, there’s often a refinancing of the house loan that provides an opportunity to do this.

Arizona law provides for a few exceptions to the requirement that property be divided approximately equally. Marital misconduct will have no effect on property division, but the court can consider excessive or abnormal use of community property, including actions of fraud, concealment or destruction. If one spouse has wasted a substantial proportion of community assets through an activity like gambling or drug use, the other spouse can ask the court for more than half the community property, or can ask that a large debt be assigned only to the party responsible for creating it.

In short, though Arizona splits its marital property 50/50, things are still not always clear-cut. Even if your divorce is amicable, the process of dividing up property can get heated.

It is imperative that you hire an experienced divorce attorney who will do his or her best so that that is rightfully yours ends up in your hands. During a divorce, asset and debt division can be particularly difficult. The property division process is critical to the financial well-being of divorcing individuals. When a couple’s estate has high value, it is essential to work with a knowledgeable Arizona divorce lawyer who knows where to look and how to value the assets involved with the divorce. Call us now at Zolman Law for a free initial case evaluation.