How Arizona Law Sees Division of Property

Cindy Best

You and your spouse may decide this for yourselves, but it is important to note that Arizona is a community property state. In accordance with Arizona Revised Statute ?25-211, community property is all property acquired during the marriage by the efforts of either party through the date of service of the Petition for Dissolution. The court presumes that each spouse is entitled to 50 percent of the assets acquired during marriage. Also, the courts generally seek to divide debt equitably in a divorce case. This does not automatically mean that each spouse will have 50 percent of the debt assigned to them. The court will take into consideration the spouse?s income, ability to pay debts and issues of waste of community property assets.

Usually, the community property is divided equally. It does not matter that one spouse contributed more than the other. The court may, in rare cases, give one spouse more than one-half because the other has destroyed, sold or given away community property or for other compelling reasons. The court may divide property by ordering it to be sold or by splitting it between the parties.

If one spouse had property prior to the marriage, but that property has increased in value during the course of the marriage, then the increase in value could be deemed community property and divided between the parties, if the increase came from labor by either spouse during the marriage or expenditure of community funds.

What Is Considered Community Property

According to Arizona Revised Statute, Section 25-211, generally, anything that a married couple accumulates during the marriage is considered community property, that is, both spouses own an undivided share of the whole. Exceptions to this general principle include those assets acquired prior to the marriage, by gift, devise (a will) or descent (inheritance). Because the Arizona courts start with a strong presumption that anything acquired during marriage is a community item, the spouse claiming a particular item is not community property has the burden of proving otherwise.

Property that is Not Divided

According to Arizona Revised Statute ?25-213, ?separate property? cannot be divided by the court. Separate property consists of items owned before the marriage or received as an inheritance or gift during the marriage and kept separate during the marriage. It is possible for a person to gift his or her separate property to community property?for example, by re-titling the property as community property.

Debts

Arizona Revised Statute ?25-318 provides that debt incurred during the marriage is presumed to be community debt. Generally, the court divides debt equally. Debt incurred by a spouse before the marriage remains the separate debt of that spouse. The court may also order the parties to submit a debt distribution plan. This means that within thirty (30) days after receipt of a written request for information from a litigant (which includes the court name and case number), a creditor shall provide the balance and account status of any debts of either party or both spouses, identified by account number, for which the requesting spouse may be liable to the creditor.

Deferred Compensation, 401k, Retirement Benefits

The court will split these 50/50 if it was all acquired during the marriage. There is no penalty to divide and the money is not removed from the accounts. After the division, each party is subject to IRS rules for prematurely withdrawing the money. One spouse cannot create a tax liability for the other spouse. The money/account should not be withdrawn during the pending divorce.

A Qualified Domestic Relations Order may be required if you are dividing your deferred compensation, 401k or retirement benefits. If this is the case, a QDRO expert may be necessary to divide these assets. The QDRO expert will require information concerning the date of your marriage and the date of the plan to value, which is usually the date the QDRO expert actually divides the asset. You will need to contact a QDRO expert for this.

Life Insurance

Life insurance can be negotiated during the pendency of your divorce. You and your spouse can agree to divide the policy. Typically, a court will order that the life insurance policy be sold (if applicable) and the parties will split the cash amount.

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