Community Property Versus Separate Property in Arizona

If you are facing a divorce, it is important to your financial future to understand the difference in community and separate property in Arizona. We are going to talk about what constitutes community property and how it is acquired in an Arizona marriage.

We are then going to talk to you about what constitutes separate property in Arizona and how separate property is handled in an Arizona divorce.

We will talk about how the management and control of community property are different than the management and control of community property in Arizona.

We will also talk about circumstances when separate property can be either intentionally or unintentionally converted to community property.

Lastly, you will learn about how the community may obtain what is referred to as a community lien against what is otherwise a spouse’s sole and separate property.

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What Constitutes Community 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.

What Constitutes Sole and Separate Property in Arizona

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 Assets

Difference Between Community Property and Separate Property.

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 right 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.

Management and Control of Sole and Separate Assets

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 in Arizona

Community Lien in Separate Property in Arizona.

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.

Summary of the Difference in Community and Separate Property in Arizona

So, we have learned that community property consists of all property acquired by either spouse during the marriage other than property acquired by one of the spouses through a gift or an inheritance. We have also learned that sole and separate property in Arizona is all property owned by either spouse prior to marriage or which was received by a spouse as a gift or an inheritance.

We also learned that a spouse has the sole management and control of their separate property while both spouses have equal management and control over community property in Arizona.

Lastly, we learned a spouse may either intentionally or unintentionally convert his or her separate property into community property and, likewise, the community may gain an interest, referred to as a community lien, in one of the spouse’s separate property.

If you have questions about the difference between community and separate property in Arizona, you should seriously consider contacting the attorneys at Hildebrand Law, PC. Our Arizona community property and family law attorneys have over 100 years of combined experience successfully representing clients in community property and family law cases.

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 community property or family law case around today.