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Arizona Community Property Laws


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Arizona Community Property Laws

Community Property

Arizona community property laws include a presumption that all property owned by either party is owned by the parties as community property, regardless of how title to that property is held. An Arizona Judge presumes, therefore, that all property owned by either spouse is community property. The burden of proving that an item of property is the separate property of a spouse rests upon the spouse making that separate property claim.


Community & Separate Property

Arizona community property laws generally provide that property acquired by either spouse during marriage is community property. Those same community property laws also provide that property acquired by either spouse prior to marriage or that was received as a gift or inheritance by a spouse during the marriage remains the separate property of that spouse. However, a spouse may waive a community ownership interest in a home or other parcel of real property by signing a Disclaimer Deed at the time the property is acquired.


Equitable Division

The very general rule is that a judge must equitably divide all the spouses’ community property and debts when it enters its final decree of dissolution of marriage. The Court, coincidentally, may not order the sale of community property during the pendency of the divorce absent an agreement between the parties, a separate partition action has been filed and consolidated with the divorce case, or the home is at risk of being foreclosed upon and neither spouse has the ability to save the home to preserve the equity in that property. Please

The term equitable is generally presumed to be equal; meaning the court will usually equally divide the community debts and assets. However, there are circumstances when a judge may unequally divide community assets because the judge determines it is equitable (i.e., fair) to do so, such as when one spouse has wasted community assets through gambling or an addiction to drugs.


Community Property Presumption

Arizona community property laws include a presumption that all property owned by either party is owned by the parties as community property, regardless of how title to that property is held. An Arizona Judge presumes, therefore, that all property owned by either spouse is community property. The burden of proving that an item of property is the separate property of a spouse rests upon the spouse making that separate property claim.


Business Interests

Business interests may be treated as community property in Arizona. The same Arizona community property presumptions discussed above apply to a business. Specifically, a business owned or operated during a marriage may be classified, partly or wholly, as community property. The appraisal process necessary to determine the value of a business is complicated but, generally, is based upon the determination of the income earned from the business, the expected future growth in those earnings, and an evaluation of the assets and debts owned by the business.


Retirement Accounts

Retirement assets are treated in the same manner as all other community property in Arizona and are, therefore, divided between the spouses in a divorce. The court will apportion the community property interest in retirement accounts between the spouses and will award each spouse his or her separate property portion of those retirement accounts.

The actual division of the accounts occurs by rolling out an amount into a separate account for the spouse receiving an interest in the retirement account, offsetting that spouse’s interest in the other spouse’s retirement account by awarding him or her more of some other asset, or by preparation of a special Order referred to as a Qualified Domestic Relations Order, which is an Order that directs the plan administrator as to how to divide the community property portion of the retirement account.


What is "community property?"

All property is characterized as sole, community, joint, common or other property. The legal characterization of your property may have a significant impact on the court=s decision regarding the possession of, control over, and division of that property.

Community property generally describes all property acquired by either spouse during the parties= marriage. Typically, it does not matter whether the property is titled in one or both spouses' name(s), so long as the property was acquired by either spouse during the marriage. The most significant exceptions to this general rule pertains to property acquired through a spouse's inheritance or was gifted to a particular spouse.

The term property generally refers to all forms of property including financial accounts, retirement accounts, land, homes, stock options and the like.


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Arizona Community Property Laws.


Is all of the property owned by either spouse considered to be community property?

No. Generally, all property that was owned by either spouse prior to the marriage, was acquired by either spouse after service of the divorce petition, was acquired by inheritance, or was acquired through a gift is the separate property of the spouse so acquiring the property. The increase or decrease in value of that separate property is also the separate property of the spouse who acquired the property. Despite these rather simple sounding rules, there are typically very complicated issues concerning community liens against a spouse=s separate property, transmutation of separate property into community property, commingling of separate property with community property, and tracing of separate property which were commingled with community funds. All of these issues should be discussed with an experienced family law attorney before any decisions can be made regarding your rights to property owned by either spouse; regardless how or when ownership of that property occurred.


Does the court divide separate property differently than community property?

The court is required to award a spouse 100% of all property the court determines to be that spouse's sole and separate property. The court is also prohibited from granting a spouse possession, use, or control of the other spouse's sole and separate property. Unlike sole and separate property, the court is required to equitably divide all property the court determines to be community property. The court typically equitably divides the community property by equally dividing that property; albeit, the court may grant an unequal division of the community property if the judge believes it is fair to do so. The distinction, therefore, between separate property and community property is extremely important.


Can we decide how to divide our own property without involving the court?

Yes. The court actually prefers for spouses to decide for themselves how best to divide their property and debts. Such an agreement is typically memorialized within a written settlement agreement often referred to as a Marital Settlement Agreement. The agreement is, essentially, a written and binding contract between the spouses in which they divide their assets, divide their debts, and resolve other financial issues such as income tax issues, refinancing of debts to remove a spouse's name from an assigned debt, and indemnification from one spouse to the other for debts assigned to each spouse. Indemnification is an agreement between spouses that grants a spouse the right to enforce the parties' agreement for the payment of debts if the spouse assigned a debt fails to pay the obligation.


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Contact Our Scottsdale Arizona Community Property Attorneys

Call us at (480) 305-8300 to schedule a consultation with one of our Scottsdale Arizona Community Property Attorneys regarding Arizona community property laws or any other Arizona family law matter.

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4900 N. Scottsdale Rd. Suite 2800 Scottsdale, AZ 85251.
Phone: (480) 305-8300
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