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Dividing Community Property in an Arizona Divorce
People going through a divorce must decide how to divide their property or go to trial, present evidence on how each person wants to divide their community property for them.
All a court has to do is to fairly and equitably divide their property.
Although this does not necessarily mean the property is divided equally, the court will usually try to get as close to an equal division of the property as possible.
There may be some reason both parties want a piece of property, such as the marital home, in which case the court can award that assets to one of the spouses or order that it be sold with the parties equally dividing the equity in the home.
The court prefers for spouses to decide for themselves how best to divide their assets and debts.
Such an agreement is typically memorialized in 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.
The agreement will address 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 allocated 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.
Valuing the Community Property
One of the things you or your attorney will need to do is to determine the value of the property you own as well as determining the amount of any loans you mage have on that property.
For homes, that will mean you need to determine the amount of the existing mortgage and the value of the home by either an appraisal or a comparative market analysis from a qualified realtor.
For a car, you may need to do a Kelly Blue Book calculation of value and/or search for similar cars for sale on popular sales websites.
Personal property is not typically appraised because of its nominal value, but valuable personal property such as collections of art, jewelry, coins and the like may justify the use of a personal property appraiser.
Until you know the value of the property, it is hard to determine what would be a fair and equitable division of that community property in an Arizona divorce.
We also may need a business appraisal done if a business is divided in a divorce.
Dividing Sole and Separate Property and Community Property
If the parties are unable to agree upon the division of their property, the court will assign to each party any sole and separate property belonging to him or her and will “fairly and equitably” divide the remaining community property.
“Fair and equitable” will, in most instances, be approximately equal, unless the court finds an unequal division is appropriate.
The Arizona Supreme Court in the seminal Toth v. Toth case upheld a trial court’s ruling of a substantially unequal division of community property, but the case warned that the facts of that case were unique and likely inapplicable to a vast majority of cases.
In yet another case, the Arizona Supreme Court in the case of Schwartz v. Schwartz ruled that a judge typically divides community property equally, but need not do so in all cases.
The Schwartz ruling indicated the court could consider many factors to determine if an unequal division of community property is more equitable than an equal division of that property.
In a case dissimilar to the Toth case, the Arizona Supreme Court in the case of Hatch v. Hatch case reversed a trial court ruling that awarded the husband almost all of the community property because he was responsible for the accumulation of that property.
It is fair to say that a spouse is not entitled to more of the community property because he or she was the spouse responsible for creating wealth.
Many divorce decrees provide for a “catch-all” provision that usually states that each party will be awarded all “other” personal property in his or her possession as his or her sole and separate property.
The purpose of such language is to catch any assets that were not specifically described in the Decree.
As you can imagine, it would be challenging to describe every item of property you own, so this type of provision may be helpful. However, there are some circumstances when a judge will reopen a divorce decree to reallocate assets mistakenly omitted in a final divorce decree.
You may wish to read our summary of the Arizona Court of Appeals ruling in the case of Rinegar v. Rinegar wherein the court of appeals found it was appropriate to reopen the divorce decree to allocate the community property interest in the wife’s retirement account that was not divided in the order.
The court of appeals expressly rejected the wife’s argument that “each party retains all other personal property in their possession” dictated that the retirement account is awarded to her.
For more information on how you enforce a property settlement agreement, you may read our article on the Arizona Supreme Court’s decision in the Proffit v. Proffit case.
Rules Regarding Dividing Military Disability Pay
Federal and state law prohibits the division of military disability pay.
The Arizona statute banning the division of military disability pay was passed into law in 2010. It prohibits both the division of military disability pay.
It also prevents any court order that requires the service member to “make up” for lost retirement pay due to electing to receive disability pay, which is not divisible in an Arizona divorce, instead of regular retirement pay, which is divisible in an Arizona divorce.
The Arizona Supreme Court in the case of Howell v. Howell, however, distinguished application of the Arizona statute in cases in which a spouse of a service member was already awarded a portion of a service member’s military retirement before the enactment of the Arizona law in 2010.
The Arizona Supreme Court reasoned that, in such situations, the spouse’s right to receive a portion of the military service member’s retirement had already “vested.”
Therefore, a trial court may order a service member to “make up” the difference if the service member voluntarily reduces his or her retirement pay by selecting disability pay instead of retirement pay.
You should be aware that one of the reasons a military service member may elect to reduce the monthly amount he or she receives by selecting to receive disability pay instead of retirement pay is because unlike retirement pay, disability pay is not subject to income tax.
Asset and Property Search in an Arizona Divorce
Arizona Divorce: Asset and Property Search
If you are going through a divorce in Arizona, you need to be aware of the extent of the community assets, property, and debts. Not knowing the extent of the community assets can be one of the biggest mistakes a person makes when going through a divorce.
Most attorneys simply rely on what you and your spouse disclose as the community assets and debts. That can be a big mistake in many Arizona divorce cases.
Why Do an Asset and Property Search in an Arizona Divorce
A properly conducted asset and property search in an Arizona divorce may uncover assets and property that your spouse intends to hide from you in an Arizona divorce. It is important for you to consider whether your Arizona divorce attorney has the resources to conduct an asset and property search in your Arizona divorce case.
An appropriately performed asset and property search in an Arizona divorce may uncover hidden cars, real estate, airplanes, and other assets, among other assets and property. We have found many situations, particularly with people who are self-employed, when the other spouse has no idea about the community debts and property.
The spouse who is hiding those assets may not disclose the existence of that property or may attempt to transfer those assets to a friend to avoid having to divide the value of those assets.
How to Do an Asset and Property Search in An Arizona Divorce
Sometimes, those assets can be discovered by reviewing the Balance Sheet of the self-employed spouse. Sometimes, an onsite inspection can uncover hidden assets. However, a complete financial background search utilizing the correct tools will reveal assets held in Arizona or throughout the United States.
Sometimes people may forget to add debts or assets to the division of their property in their divorce decree.
Absent a valid argument otherwise, such as a spouse intentionally leaving an asset out of the divorce decree to defraud the other party, those debts and property are deemed by law to be held equally.
The Arizona Court of Appeals in the case of Ellsworth v. Ellsworth discusses what happens in such situations.
If you need information about how community property is divided in Arizona, you should seriously consider contacting the attorneys at Hildebrand Law, PC. Our Arizona community property attorneys have over 100 years of combined experience successfully representing clients in divorce cases in Arizona.
Our family law firm has earned numerous awards such as US News and World Reports Best Arizona Family Law Firm, US News and World Report Best Divorce Attorneys, “Best of the Valley” by Arizona Foothills readers, and “Best Arizona Divorce Law Firms” by North Scottsdale Magazine.
Call us today at (480)305-8300 or reach out to us through our appointment scheduling form to schedule your personalized consultation and turn your Arizona community property case around today.
Other Articles About Community Property in Arizona
- ARIZONA COMMUNITY PROPERTY LAWS
- CALCULATING A COMMUNITY LIEN ON AN APPRECIATING ASSET IN AN ARIZONA DIVORCE
- VALUING GOODWILL OF A LAWFIRM IN AN ARIZONA DIVORCE
- COMMUNITY PROPERTY AND ANNULMENT OF MARRIAGE IN ARIZONA
- SOLE AND SEPARATE FUNDS USED TO BUY A HOUSE IN ARIZONA
- DIVISION OF MILITARY RETIREMENT AND DISABILITY PAYMENTS IN AN ARIZONA DIVORCE
- SEPARATE PROPERTY CONTRIBUTIONS WHEN DIVIDING COMMUNITY PROPERTY IN ARIZONA
- PROPERTY HELD AS JOINT TENANTS WITH RIGHTS OF SURVIVORSHIP IN AN ARIZONA DIVORCE
- DIVIDING RETIREMENT ACCOUNTS IN AN ARIZONA DIVORCE
- ARIZONA DIVORCE DEBT
- EFFECT OF PLACING COMMUNITY PROPERTY INTO A FAMILY TRUST IN ARIZONA
- COMMUNITY PROPERTY LOTTERY WINNINGS IN ARIZONA
- IS SEPARATE PROPERTY LIABLE FOR COMMUNITY DEBT IN ARIZONA
- CREDITOR COLLECTING A SEPARATE DEBT WITH COMMUNITY PROPERTY IN ARIZONA
- TITLE AFFECTS COMMUNITY PROPERTY RIGHTS IN ARIZONA
- COMMINGLING SEPARATE PROPERTY WITH COMMUNITY PROPERTY IN ARIZONA
- ARE MILITARY RETIREMENT PAYMENTS COMMUNITY PROPERTY IN ARIZONA
- EFFORT DOES NOT ENTITLE A SPOUSE TO MORE COMMUNITY PROPERTY IN ARIZONA
- RESULT OF COMMINGLING COMMUNITY AND SEPARATE PROPERTY IN ARIZONA
- INCREASED VALUE OF A BUSINESS IN AN ARIZONA DIVORCE
- GIFT OF SEPARATE PROPERTY THROUGH A JOINT TENANCY DEED IN ARIZONA
- ABANDONMENT OF MARRIAGE AND COMMUNITY PROPERTY RIGHTS IN ARIZONA
- ARE PROFITS FROM A SEPARATE BUSINESS COMMUNITY OR SEPARATE PROPERTY
- TRACING SEPARATE PROPERTY COMMINGLED WITH COMMUNITY PROPERTY IN ARIZONA
- INTENTION CONTROLS TRANSMUTATION OF SEPARATE INTO COMMUNITY PROPERTY
- RECORDING A HOME IS INSUFFICIENT TO CHANGE SEPARATE PROPERTY INTO COMMUNITY PROPERTY
- COMMUNITY PROPERTY INTEREST IN A BUSINESS OWNED PRIOR TO MARRIAGE
- WHAT IS SEPARATE PROPERTY IN ARIZONA
- VALUATION AND DISTRIBUTION OPTIONS FOR A PENSION IN AN ARIZONA DIVORCE
- UNFAIR SEPARATION AGREEMENT IN ARIZONA
- UNEQUAL DIVISION OF PROPERTY IN A DIVORCE IN ARIZONA
- SEPARATE PROPERTY USED PURCHSE A HOME DURING MARRIAGE IN ARIZONA
- REIMBURSEMENT FOR PAYING SEPARATE DEBTS OF A SPOUSE IN ARIZONA
- REFUSAL TO SELL A HOUSE AFTER A DIVORCE IN ARIZONA
- PENSIONS AND DIVORCE IN ARIZONA
- MILITARY RETIREMENT PAY AND DIVORCE IN ARIZONA
- IS SEPARATE PROPERTY DIVIDED DIFFERENTLY THAN COMMUNITY PROPERTY IN ARIZONA
- IS ARIZONA A 50-50 STATE IN A DIVORCE
- IS ALL PROPERTY OWNED BY EITHER SPOUSE COMMUNITY PROPERTY IN ARIZONA
- INTEREST ON A LOAN BETWEEN SPOUSES IN ARIZONA
- IMPACT OF IMPROVEMENTS TO SEPARATE PROPERTY IN AN ARIZONA DIVORCE
- HOW TO ENFORCE DIVISION OF PROPERTY AND DEBT IN ARIZONA
- HOW TO DIVIDE PROPERTY IN ARIZONA WHEN A SPOUSE IS HIDING ASSETS
- HOW STOCK OPTIONS ARE DIVIDED IN AN ARIZONA DIVORCE
- HOW ARE RETIREMENT ACCOUNTS DIVIDED IN AN ARIZONA DIVORCE
- FILING A LIS PENDENS IN A DIVORCE IN ARIZONA
- FAIR COMPENSATION DEFENSE IN AN ARIZONA DIVORCE
- ENFORCE A PROPERTY SETTLEMENT AGREEMENT IN ARIZONA
- DO RULES REGARDING PROPERTY APPLY TO DEBTS IN ARIZONA
- DIVISION OF DEBT IN AN ARIZONA DIVORCE
- DIVIDING PROPERTY NOT INCLUDED IN A DIVORCE DECREE IN ARIZONA
- DIFFERENCE IN COMMUNITY AND SEPARATE PROPERTY IN ARIZONA
- DETERMINING COMMUNITY VERSUS SOLE PROPERTY IN ARIZONA
- CREATION OF A COMMUNITY LIEN ON SOLE AND SEPARATE PROPERTY IN ARIZONA
- COMMUNITY PROPERTY LAWS ABOUT A SPOUSE’S PERSONAL GUARANTEE IN ARIZONA
- CHOOSING A VALUATION DATE WHEN DIVIDING ASSETS IN A DIVORCE IN ARIZONA
- CAN A SPOUSE BE HELD LIABLE FOR CREDIT CARD DEBT IN ARIZONA
- CALCULATING A COMMUNITY LIEN ON A DEPRECIATING ASSET IN ARIZONA
- EFFECT OF A DISCLAIMER DEED OR QUIT CLAIM DEED IN A DIVORCE IN ARIZONA
- BANK ACCOUNTS AND DIVORCE IN ARIZONA
- DIVIDING PAID TIME OFF IN A DIVORCE IN ARIZONA
- EQUALIZATION PAYMENTS IN AN ARIZONA DIVORCE
- OMITTED ASSETS IN AN ARIZONA DIVORCE DECREE
- CRSC PAY AND DIVORCE IN ARIZONA
- JUDGMENT FOR SEPARATE PROPERTY STOLEN DURING MARRIAGE
- JUDGE IGNORES A BUSINESS APPRAISAL IN AN ARIZONA DIVORCE
- REIMBURSEMENT OF SEPARATE PROPERTY IN A DIVORCE IN ARIZONA
- SEPARATE PROPERTY INCREASES IN VALUE DURING MARRIAGE IN ARIZONA
- PERSONAL INJURY AWARDS AND DIVORCE IN ARIZONA
- VALUING A BUSINESS IN A DIVORCE IN ARIZONA WITHOUT FINANCIAL DOCUMENTATION
- RETIREMENT INCREASE AFTER DIVORCE IN ARIZONA
- FAILURE TO DISCLOSE FINANCIAL INFORMATION IN A DIVORCE IN ARIZONA
- UNAUTHORIZED USE OF A POWER OF ATTORNEY TO DISPOSE OF SPOUSE’S SEPARATE PROPERTY
- COHABITATION AGREEMENTS IN ARIZONA
- FINANCIAL AGREEMENTS BETWEEN UNMARRIED COUPLES IN ARIZONA
- COMMUNITY PROPERTY LIABILITY EXISTS EVEN AFTER PROBATE ENDS
- WHEN A CREDITOR MAY TAKE SOLE AND SEPARATE ASSETS OF A SPOUSE
- LIABILITY FOR A SPOUSE’S NEGLIGENCE IN ARIZONA
- VALUATION OF STOCK HOLDINGS AND DEBT IN AN ARIZONA DIVORCE
- LOANS BEFORE MARRIAGE IN ARIZONA
- CREDITOR LIEN ON JOINT TENANCY PROPERTY IN AN ARIZONA DIVORCE
- INCREASE IN VALUE OF A SEPARATE PROPERTY BUSINESS STOCK IN AN ARIZONA DIVORCE
- STATEMENTS REGARDING PROPERTY ARE BINDING IN AN ARIZONA DIVORCE
- DEBTS NOT INCLUDED IN A DIVORCE DECREE IN ARIZONA
- FRAUDULENT QUIT CLAIM DEED IS INEFFECTIVE IN AN ARIZONA DIVORCE
- DISPOSITION OF COMMUNITY PROPERTY IN A LAST WILL AND TESTAMENT
- DIVIDING BUSINESS PROFITS DURING A DIVORCE IN ARIZONA
- MINORITY DISCOUNT IN A BUSINESS VALUATION IN AN ARIZONA DIVORCE
- HOW A BUSINESS IS DIVIDED IN A DIVORCE IN ARIZONA
- DIVISION OF CIVIL SERVICE RETIREMENT SYSTEM BENEFITS IN A DIVORCE IN ARIZONA
- DISABILITY PAY AND COMMUNITY PROPERTY IN ARIZONA
- VALUATION OF A PROFESSIONAL PRACTICE IN A DIVORCE IN ARIZONA
- JOINING A THIRD PARTY IN A DIVORCE IN ARIZONA
- CONTESTING A RULE 69 AGREEMENT WITHOUT A TRIAL IN ARIZONA
- DEFENSE TO REIMBURSEMENT FOR PAYMENT OF COMMUNITY BILLS IN AN ARIZONA DIVORCE
- SURVIVOR ELECTION AND MILITARY RETIREMENT IN AN ARIZONA DIVORCE
- DEFERRED MILITARY RETIREMENT IN AN ARIZONA DIVORCE
- DIVISION OF DEFERRED RETIREMENT OPTION PLANS IN AN ARIZONA DIVORCE
- CLAIMS OF WASTE IN AN ARIZONA DIVORCE
- DIVIDING ACCOUNTS RECEIVABLE IN A DIVORCE IN ARIZONA
- THE IMPORTANCE OF TITLE SEARCHES ON THE MARITAL HOME DURING A DIVORCE
- FRAUDULENT CONVEYANCE IN AN ARIZONA DIVORCE
- MINORITY DISCOUNT BUSINESS APPRAISAL IN AN ARIZONA DIVORCE
- FINDING A REALTOR DURING A DIVORCE IN ARIZONA
- MILITARY BENEFITS IN A DIVORCE IN ARIZONA
- WHAT TO DO IF YOUR SPOUSE IS HIDING ASSETS IN A DIVORCE IN ARIZONA
- TYPES OF BUSINESS APPRAISALS IN AN ARIZONA DIVORCE
- BENEFICIARY DESIGNATIONS AFTER DIVORCE IN ARIZONA
- RETIREMENT ACCOUNTS, QDROs, AND DIVORCE IN ARIZONA
- DIVORCE AND REFINANCING A MORTGAGE IN ARIZONA
- PROVING PROPERTY IS SOLE AND SEPARATE IN AN ARIZONA DIVORCE
- 7 REASONS YOU MAY HAVE TO SHARE YOUR INJURY SETTLEMENT IN AN ARIZONA DIVORCE
- PERSONAL INJURY SETTLEMENT IN A DIVORCE IN ARIZONA
- CLAIM OF A SPOUSE’S PERSONAL INJURY AWARD IN AN ARIZONA DIVORCE
- PERSONAL INJURY AWARDS AND DIVORCE SETTLEMENTS IN ARIZONA
- PROTECTING YOUR PERSONAL INJURY AWARD IN AN ARIZONA DIVORCE
- DIVORCE AND PERSONAL INJURY AWARDS IN ARIZONA
- ENFORCING A SURVIVOR BENEFIT ELECTION IN A PENSION IN ARIZONA
- MURDERER SPOUSE AND COMMUNITY PROPERTY IN ARIZONA
- DAMAGES CAUSED BY A COMMUNITY PROPERTY VEHICLE IN ARIZONA
- COMPENSATION FOR WASTE OF COMMUNITY ASSETS IN ARIZONA
- USING SEPARATE FUNDS TO BUY JOINT PROPERTY IN ARIZONA
- TRANSMUTING SEPARATE PROPERTY INTO COMMUNITY PROPERTY BY COMMINGLING
- LIABILITY FOR DEBT GUARANTEED BY THE OTHER SPOUSE IN ARIZONA
- USING COMMUNITY FUNDS TO PAY A MORTGAGE ON A SPOUSE’S SOLE AND SEPARATE HOUSE
- DISCLAIMER DEED AND DIVORCE IN ARIZONA
- COMMUNITY LIEN ON A SOLE AND SEPARATE BUSINESS IN A DIVORCE IN ARIZONA
- YOU’RE GETTING A DIVORCE, ARE YOU SURE YOU WANT THE HOUSE?
- CHANGING JOINT PROPERTY TO COMMUNITY PROPERTY IN ARIZONA
- SEGREGATING SEPARATE PROPERTY FROM COMMUNITY PROPERTY IN ARIZONA
- ARIZONA COMMUNITY PROPERTY LAWS FREQUENTLY ASKED QUESTIONS