We want to talk to you about the effect of placing community property into a family trust in Arizona. In Arizona, each spouse is a co-owner of all property earned by the other spouse during marriage. However, one spouse may gift the other his interest in community property, making it the separate property of the other.
During a dissolution of marriage case, the trial court must divide the community property between the spouses equitably. In Schwartz v. Schwartz, 52 Ariz. 105, 79 P.2d 501, 116 A.L.R. 633, (1938), the question before the Arizona Supreme Court was whether the lower court’s division of property was fair and equitable, given all the circumstances of the case.
Facts of the Case
William and Harriet Schwartz were married in 1918 and divorced in 1936. By 1930, the couple’s relationship was so strained that William – an Arizona surgeon — moved out of the house, providing Harriet and their daughter money each month to live on. He also signed over the home into Harriet’s name. In 1931, William started a trust for his daughter, using $47,208 of community property and $10,000 in inherited property belonging separately to Harriet.
In the divorce, the judge treated the $47,208 of trust assets as community property, and awarded it to Harriet, together with the value of the house, some $15,000. William was awarded the $72,875 in earnings that he had at the time of the divorce.
William was ordered to pay spousal support of $100 per month and child support of $200 per month. Harriet appealed, claiming that the trust monies had been given to her already, so they were her separate property. She argues that the trial court should have awarded her half of the remainder of the community property.
Trust as Community Property
The trial court determined that the trust was not the separate property of Harriet, even though she held a beneficial title to it. The Supreme Court reviewed its reasoning. The only evidence about why the trust was made was the testimony of William. He said he did it to ease his wife’s mind that he would not leave her and their child without support. His intention was for her to have the income from it, not the assets themselves. Given this, the Supreme Court ruled that the assets in the trust did not become Harriet’s separate property. They remained community property and were properly awarded during the division of community property.
Trial Court’s Division of Marital Property
The Arizona Supreme Court reviewed the ultimate property division in the case and determined that it was equitable and that the lower court did not abuse its discretion in dividing it as it did. It noted that if Harriet was to have the trust assets and house as her own and awarded half of the remaining community property, she would have ended up with three-quarters of the community property rather than half.
If you need information about the unequal division of property in an Arizona, you should seriously consider contacting the attorneys at Hildebrand Law, PC. Our Arizona divorce 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 divorce case around today.
Other Articles About Community Property in Arizona
- Community Lien on Sole and Separate Property in Arizona
- Community Lien in Arizona
- Community Liens Separate Property in Arizona
- Community Property and Personal Guaranty in Arizona
- Determining Community Versus Sole Property in Arizona
- The difference Between Community and Separate Property in Arizona
- Disclaimer Deed in a Divorce in Arizona
- Divide Retirement Accounts in an Arizona Divorce
- Dividing Property Not Included in Divorce Decree in Arizona
- Division of Debt in an Arizona Divorce
- Do Rules Regarding Property Apply to Debts in an Arizona Divorce
- Enforce Division of Property and Debt in an Arizona Divorce
- Enforcing a Property Settlement Agreement in Arizona
- Filing a Lis Pendens in a Divorce in Arizona
- How is Property Divided in a Divorce in Arizona
- How to Divide Property in Arizona When a Spouse is Hiding Assets
- Is All Property Community Property in Arizona
- Is Arizona a 50 50 State in a Divorce
- Is Separate Property Divided in Arizona Divorce
- Marital Property Laws in Arizona
- Military Retirement Pay and Divorce in Arizona
- Pensions and Divorce in Arizona
- Separate Property Used to Purchase a Home During Marriage in Arizona
- Sole and Separate Property Divorce Arizona
- Is a Spouse Liable for Credit Card Debt in Arizona
- Stock Options Divided in an Arizona Divorce Case
- Stock Options in an Arizona Divorce
- Unequal Division of Property in Arizona Divorce
- Unfair Separation Agreement in Arizona
- Valuation and Distribution Options For Pensions in an Arizona Divorce
- What is Community Property in Arizona
- What is Separate Property in Arizona
Related Blogs – What’s Hot
About the Author: Chris Hildebrand has over 26 years of Arizona family law experience and received awards from US News and World Report, Phoenix Magazine, Arizona Foothills Magazine and others. Visit https://www.hildebrandlaw.com.