Community Property Division during Divorce in Arizona

Dividing Your "Stuff" During Divorce in Phoenix and Scottsdale, AZ

What exactly is community property?

Community Property is essentially all of the “stuff” you and your spouse accumulated throughout the marriage. This can include furniture, electronics, cars, and houses. Most if not all of your property acquired during marriage is considered community. But you need to be aware that property can also include debt.

Arizona is a community property state. The law in Arizona declares that property and debt acquired during a marriage belongs to both parties and it requires that the property and debt to be divided equitably during a divorce. All property acquired during marriage until the time one party is served with the divorce paperwork is presumed to be community property.

In order to protect your best interests and your property, you need to consult with an attorney as early in the process as you can. Protect what is rightfully yours. Call us today at (480) 219-2433 and we will make sure that you know what you are entitled to.

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Community Property - What You Need To Know

Property includes real property, which is land or a house. Property also includes your furniture, bank accounts, savings account, investments, deferred compensation plans such as 401Ks or IRAs.

Social Security is not considered community property. Social security law governs your social security account and it cannot be changed in a divorce decree. If you want to know specific information about your social security, contact the Social Security Administration.

The body of law in Arizona which creates a presumption that property and debt acquired during a marriage belongs to both parties and require such property and debt to be divided equitably during a divorce.

– A.R.S. § 25-211: “All property acquired by either husband or wife during the marriage is the community property of the husband and wife except for property that is: (1) acquired by gift, devise or descent (2) acquired after service of a petition for dissolution…”

Any and all property acquired before the marriage or after service of the dissolution paperwork is presumed to be separate property.

All property acquired by gift, devise or inheritance during marriage is also presumed to be separate property.

HOW IS COMMUNITY PROPERTY DIVIDED?

Once property is considered community property, it must be divided equally between the spouses. That is why it is important to determine the characterization of the property at the beginning of the divorce. There may be arguments about whether property is community or not, but most property is fairly easy to characterize

WHAT HAPPENS TO THE MARITAL HOUSE?

Most property disputes during divorce revolve around houses. For some reason, many couples have complicated facts about when and how a house was purchased and whose name is on the deed. It is important that you know if your name is officially recorded on your house deed.

WHAT IS THE "COMMINGLING OF FUNDS"?

Commingling of funds is when a spouse combines their sole and separate property with community property. It can be difficult to prove what is separate property if it is mixed with community property. These types of complications are beyond the scope of this website and can be better answered with more facts and an attorney’s advice.

Frequently Asked Questions About Property Division During Divorce

How will our property be divided? (A.R.S. §28-211 & 25-318)

You and your spouse may decide this for yourselves, but 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% 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% 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.

What about the 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. Within thirty days after receipt of a written request for information from a litigant which includes the Court name and cause 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.

What if neither of us can afford the house?

This is no different than if you were together. You have the same problems and issues as if you were together (divorce just makes it more difficult). The mortgage company expects both of you to pay. If there is a deficiency judgment because of a line of credit, the creditor will look to both of you to pay, no matter what your divorce agreement says.

My spouse and I purchased the house together but I made her sign a disclaimer deed two years later when I refinanced the house. The house is all mine, right?

Quite possibly, but while disclaimer deeds are valid, there can be suspect issues. Disclaimer deeds make it look like you were trying to cheat your spouse out of the house. A court will want to know if she was represented by counsel and how much she understood about that she was doing. And again, there is the equitable lien issue as outlined above.

My spouse made the down payment but after our marriage put the house deed in both names as joint tenants. Is the house community or separate property?

The house is community property and the spouse who made the down payment most likely “gifted” the property to the other spouse.

Who gets our digital camera?

If you both use it and bought it with community funds, it needs to be divided along with other property.

What if my spouse does not pay the community debts as ordered in the final decree? Can our creditors force me to pay?

Yes, Arizona Revised Statute §25-318 states that a creditor can collect a marital debt from either spouse regardless of which spouse is ordered to pay the debt by the Court. The innocent spouse then has the right to recover from the obligated spouse, unless he or she files bankruptcy. If a party fails to comply with an order to pay debts, the Court may enter orders transferring the property of that spouse to compensate the other party.

I won a settlement for a car accident and put it in an account with both our names on it. Do I have to split it?

If you can trace the original amount, it will most likely still be considered your sole and separate property. If it is commingled beyond recognition, you will most likely have to split it.

I had stocks before marriage, but bought more stock after marriage. Who gets the stocks?

The stocks you had prior to marriage are your sole and separate property. The stocks that you purchased with community funds are community property.

Is everything we own 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 (by 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.

What if my spouse does not pay the community debts as ordered in the final decree? Can our creditors force me to pay?

Yes, Arizona Revised Statute §25-318 states that a creditor can collect a marital debt from either spouse regardless of which spouse is ordered to pay the debt by the Court. The innocent spouse then has the right to recover from the obligated spouse, unless he or she files bankruptcy. If a party fails to comply with an order to pay debts, the Court may enter orders transferring the property of that spouse to compensate the other party.

Decide who pays for repairs during the dissolution, who should sell and how long they have to sell? If one party agrees to buy out the other party, when do you appraise the house? What if one party made the down payment with money earned prior to marriage, but after marriage put the house deed in both names as joint tenants?

The house is community property and the spouse who made a down payment may have “gifted” the property to the other spouse. Some courts will award the spouse a return of the down payment and then split the net equity.

My husband will not get out of the house and I just filed for divorce.

You will have to file a motion to ask the court for exclusive use of the home. This is discretionary with the Judge and will likely take a month or more to get a hearing; usually this is part of a temporary orders hearing. If you both own the house, maybe you can negotiate this move. Once one person moves out, the leaving spouse should not come and go in the house without permission of the other spouse. Some judges consider the “leaving spouse” as moved out of the house until further court order.

Who gets the kids' furniture?

This is negotiable, but it should be a consideration if one parent has to buy all new furniture, beds, etc. for the kids in a shared custody arrangement.

Who gets the vehicles if both vehicles have debt and no equity?

Usually whoever gets the vehicle gets the debt. Remember, the lender will not honor your decree; your spouse can ruin your credit if he/she does not pay. There can still be an equitable set-off.

I am getting ready to file for divorce. Can I take all the money out of our joint savings account?

No, because although the temporary injunction is not in place, you are intending to file and it is not fair to take all the money. You may take half of the money and this should not cause any problems in case you have to explain this to a judge.

What property is not divided?

Per 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 the community-for example, by re-titling the property as community property.

What happens when the spouses own a business together?

During the divorce process, the court will usually attempt to keep the things the way they presently are when it comes to the day-to-day operations of a family business. A business valuation expert can assess the value of the business during the pendency of the divorce matter. The court, with the input from the business valuation expert, will determine the value of the family business. The spouse that is ultimately awarded the business may be required to pay the other spouse that individual’s share of the business. That amount is normally one-half of the value assigned to the family owned business. You should consult an attorney for this matter.

What if I paid the down payment, my spouse has lived here during our entire marriage but her name is not on the deed?

The house most likely remains your sole and separate property but your spouse has an equitable lien on the house for the community effort put into the house during the marriage that increased its value. You may want to consult an attorney.

Who pays for repairs while our house is for sale?

You can agree that the party living in it pays for everything under a certain amount such as $100. Any other repairs are split 50-50 and can be reimbursed at the sale. It might be wise to purchase a home warranty to prevent any unexpected expenses.

What is considered my sole and separate personal property?

Usually jewelry given, gifted to you, your sports equipment, your personal electronics, clothing, and whatever you owned prior to marriage. Also, anything you owned prior to marriage and anything you inherited is your sole and separate property.

I inherited money when my mom died six years ago and put my husband's name on the account. Is this money community or my sole and separate money?

This might be considered gifted to him and commingled with community funds. If you can trace the amount, you can have it returned to you. A fair way to handle this is to allow you to get your lump sum deposit back. If there is an issue of commingling, such as you putting other community money into the account, it is discretionary with the judge. Let’s assume that you inherited $100,000 and put it in an account and never did anything else with that account. You should be able to consider it sole and separate and it should be awarded to you.

I won an award for a car accident and put it in an account in my name alone. Do I have to split it during the divorce?

No, a personal injury settlement for pain and suffering is your sole and separate property.

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