What is Arizona’s Community Property Law?

Are you engaged in divorce proceedings or otherwise considering divorce? Among the many considerations is what will become of the marital assets. How will they be divided? Who gets what? With such concerns, it is wise to be informed about property division and property laws in Arizona divorces. Our law firm is proud to lend knowledgeable legal advice to those needing a little guidance in this regard.

Arizona is one of nine community property states in the US. Everything earned or incurred during an Arizona marriage is considered community property, meaning both spouses share it. This is an important factor to understand, as it informs divorcing spouses of how their marital property will be divided in a divorce.

It doesn’t matter whether one spouse purchased it without the financial assistance of the other spouse; as long as it was purchased during the marriage, it will be considered shared property or community property in most instances under Arizona community property laws.

In an Arizona divorce, family law courts strive for equitable distribution of assets between the two spouses. Under the state’s community property laws, that means that each spouse owns approximately 50% of all community property in the marriage.

Some marital property cannot be split directly down the middle. In such instances, the property’s value is first determined, and then one spouse has the option of buying out the other spouse’s interest in that property.

What is Considered Community Property in an Arizona Marriage?

All assets that have been accumulated during the course of an Arizona marriage will be considered shared community property between the two spouses. Many assume this to mean only real estate and automobiles, but it extends beyond that.

Potential community assets may include the following:

  • Art and collectibles.
  • Boats.
  • Bonuses.
  • Businesses.
  • Cars.
  • Commissions.
  • Debts.
  • Dividends.
  • Income.
  • Investments.
  • Jewelry.
  • Land.
  • Life insurance policies.
  • Personal property.
  • Real estate property.
  • Retirement accounts.
  • Savings.
  • Taxable investment accounts.
  • Wages and earnings.
  • And more.

It is crucial to understand that in Arizona, community property laws presume that any property acquired during the marriage is jointly owned by both spouses. This includes not only tangible assets but also financial obligations such as credit card debt and loans incurred during the marriage. The essence of community property is equal ownership, meaning that both spouses have an equal obligation and interest in the assets and debts acquired during the marriage.

Moreover, Arizona’s community property laws emphasize the importance of clear ownership documents. For instance, if a property is purchased using community funds, it will likely be considered community property, even if only one spouse’s name is on the title. This is why maintaining separate bank accounts and keeping records of individual property is essential for distinguishing between community and separate property.

If you believe a certain asset should or should not be considered community property, you must speak with a divorce attorney about your case. Our law firm is staffed by a highly skilled legal team fully capable of handling even the most complicated Arizona divorce cases. To learn more about our legal services, please contact our law firm for a case evaluation.

What Are Examples of Sole Separate Property?

Not all property is to be considered community property in a marriage. There is such a thing as separate property in Arizona divorces.

Separate property is not divided between the divorcing spouses. This type of asset may be something that you purchased prior to the marriage, such as your house or car. Other potential separate property may include assets you obtained through an inheritance or as gifts.

However, please note that separate property easily becomes commingled property and might lose its separate legal status. From then on, that property may be considered part of the marital estate. For example, if you had financial assets prior to your marriage and then moved those finances into a shared marital bank account, your separate financial assets would become commingled assets, essentially making them community property.

If you bring separate property that is solely owned by you into a marriage, it is vital that you find a way to keep it separate. That often means never mixing it with community property, shared ownership, or marital assets. To learn more, please contact our legal team.

Is Arizona a 50/50 State When it Comes to the Distribution of Assets in a Divorce Case?

Arizona tries to keep things as equal as possible in divorce cases. While a 50/50 split might be the intent, splitting everything right down the middle is often impossible. Arizona courts will attempt to make things as equal as they can.

In practice, this means the courts aim for an equitable division of marital assets, which doesn’t always translate to an exact 50/50 split. The court considers various factors, such as the length of the marriage, each spouse’s financial situation, and contributions to the marriage, both financial and non-financial. Additionally, the court evaluates any prenuptial agreements that might influence the division of assets.

Arizona’s community property laws dictate that property acquired during the marriage is presumed to be community property, thus subject to division. However, the courts recognize that each divorce case is unique and may require a tailored approach to asset division. This ensures that both parties receive a fair share based on the specific circumstances of their marriage and divorce.

How Are Business Assets Divided?

If you and your soon-to-be ex-partner started a business together with shared community funds and labor, that business will be considered part of your community property and will be subject to division by the family law court overseeing your divorce case.

If, however, the business was started by one spouse before the marriage, the business may be considered sole, separate property.

To determine the division of business assets, the court will evaluate various factors, including the business’s value, each spouse’s contribution to the business, and whether any community funds were invested into the business after marriage. This evaluation often requires the expertise of financial analysts or business valuation experts to accurately assess the business’s worth and the extent of each spouse’s involvement.

Moreover, if the business has increased in value during the marriage due to the efforts of either or both spouses, the appreciation may be considered community property. This means that even if the business was initially separate property, any growth attributed to joint efforts or community resources could be subject to division.

The court may also consider the possibility of one spouse buying out the other’s interest in the business to maintain its continuity. Alternatively, the business might be sold, and the proceeds divided between the spouses. The chosen method of division will depend on the particular circumstances of the case, including the desire to keep the business operational and the financial feasibility for the parties involved.

It is crucial for divorcing couples with business interests to seek legal advice from a family law attorney experienced in handling complex asset divisions. This ensures that business assets are fairly evaluated and divided, protecting both parties’ financial interests.

What About Property That is Owned in Another State?

If you or your soon-to-be ex-spouse own real property like a house or land in another state, Arizona courts may not have jurisdiction over that property. This may lead to some legal issues, especially in cases where your spouse resides in a different state other than Arizona.

If you wish to see the out-of-state real property divided as community property in a divorce, an Arizona family law judge must establish personal jurisdiction over your spouse in the divorce proceedings. If the court elects to establish personal jurisdiction over your spouse, the court may potentially order your spouse to divide the out-of-state real property the same as any shared Arizona property.

Arizona Community Property State Laws

Divorce is a challenging process to go through, both legally and emotionally. If you are going through a divorce in Arizona, seeking professional legal representation to defend your legal rights is highly recommended.

The firm of Arizona Family Law Attorneys has years of experience dedicated to family law cases like divorce, child custody, and more. We are uniquely qualified to represent your legal interests and divorce case and help you retain the assets you deserve.

Contact our Phoenix-based law office to schedule a case evaluation today. (480) 448-0608.