What is the Difference Between Community and Separate Property in Arizona?
Community Property Versus Separate Property in Arizona
Community property consists of the property you purchase while you are married. It doesn’t matter whether you, your spouse or both of you purchased the property during your marriage. The money you or your spouse earns during your marriage is community property. It doesn’t matter if those earnings go into a joint bank account or a separate account of you or your spouse.
Separate property consists of property you or your spouse owned prior to your marriage. It also consists of property you or your spouse received as a gift or an inheritance. Interspousal gifts, likewise, are the separate property of the spouse who received the gift. So, gifts from one spouse to the other spouse are the separate property of the spouse who received the gift.
Management and Control of Community Versus Separate Assets
Under community property law in Arizona, both spouses have the joint and equal right to manage and control community property. This simply means both spouses in Arizona have the rights to buy, sell, and transfer community property without the express consent of the other spouse.
Both spouses, however, owe a fiduciary duty to manage, sell, and transfer community property in a manner that benefits or serves the community. If a spouse breaches that fiduciary duty and sells or transfers community property in a manner that does not benefit or serve the community, he or she can be held to have wasted community assets in a divorce or legal separation. The court may then give more of the community assets to the innocent spouse.
Separate property, however, is under the sole control of the spouse who owns that property. Similar to community property, a spouse does not need to obtain his or her spouse’s consent to sell or transfer the separate property of that spouse. If a spouse sells, transfers, conceals or damages the separate property of his or her spouse, the divorce court has no authority to do anything about it. Instead, a separate civil lawsuit would need to be filed against the spouse who sold, transferred, or conceals the separate property of the other spouse.
Changing Separate Property into Community Property
The separate property of a spouse can be turned into community property in Arizona. This typically occurs when a spouse owns a home during a marriage but then adds his or her spouse’s name to the Deed to the home. Adding your spouse to the title to your sole and separate home constitutes a gift of your separate property to the community.
Also, commingling community money with separate money in bank and investment accounts is another way you can change separate property into community property. If separate money is so mixed with community money that you can no longer clearly trace the separate property from the community property, the entire account will be turned into community property.
Community Liens in Separate Property
When community funds are used on a spouse’s separate property, Arizona law provides the community with a community lien against the separate property of a spouse. This typically occurs when the mortgage on a spouse’s sole and separate home is paid with community money. This can also occur when community funds are used to make repairs or improvements to a spouse’s separate property.
It is important to know that the amount of the community lien is not how much money was spent on the mortgage on the separate property or the amount paid for improvements to that property with community funds. Instead, the community lien is up to but not exceeding the amount of additional value resulting in the property or the decrease in the mortgage from the use of community funds.
To learn more about how community liens are created against separate property, you may read our article on the Arizona Court of Appeals Decision in the case of Rowe v. Rowe or watch the video below regarding that case to learn more about community liens in Arizona.
Contact our experienced Phoenix and Scottsdale Arizona community property attorneys at (480)305-8300 to discuss your Arizona community property case.
Chris Hildebrand wrote this article about the difference between community and separate property in Arizona to ensure everyone has access to information about community property laws in Arizona. Chris is a family law attorney at Hildebrand Law, PC. He has over 24 years of Arizona family law experience and has received multiple awards, including US News and World Report “Top Arizona Divorce Attorneys”, Phoenix Magazine “Top Divorce Law Firms”, and Arizona Foothills Magazine “Best of the Valley” award. He believes the policies and procedures he uses to get his clients through a divorce should all be guided by the principles of honesty, integrity, and actually caring about what his clients are going through.