Arizona Community Property Laws | The Valley Law Group
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November 3, 2022

Understanding Community Property Laws in AZ

Divorce and Family Law

Community Property in AZ

Though the divorce rate in the United States is declining, 40-50% of marriages still end in divorce, so it’s important to understand Arizona community property laws. How your property will be divided depends on the state where you reside and the particular circumstances of your marriage. One major deciding factor that specifies how property is split between spouses is whether the state of residence has enacted community property laws.

Another statistic worth noting is that the average length of a US marriage that ends in divorce is just under eight years. This means that for the average divorcing couple, there is eight years’ worth of collected assets, combined finances, and accumulated wealth that must be split during the divorce.Though most states have some form of a community property concept, few states are official community property states. These include Arizona, California, Louisiana, Idaho, Nevada, Texas, New Mexico, Wisconsin, and Washington.

About Arizona Community Property Laws

Arizona’s community property laws were created and adopted by some states in an attempt to ease the contentiousness of a contested divorce. In these community property states, couples are legally required to equally split all assets that were acquired during their marriage. The intent of these laws is to reduce lengthy litigation regarding which spouse will keep each property by giving the state control over property division.

Arizona Community Property Versus Separate Property

Community property includes any and all property that was purchased or acquired by either spouse during the marriage. Each spouse will then have an equal interest in community property, regardless of which spouse technically obtained the property during the marriage. Community property includes not only physical property but also other assets.

Examples of community property, sometimes called marital property, include: 

  • Real estate
  • Vehicles
  • Artwork
  • Furniture
  • Electronics
  • Wages and earnings
  • Retirement contributions during the marriage
  • Joint bank accounts

Separate or sole property is the property that was obtained before the marriage or following a divorce petition. It also includes property that was given to one spouse as an inheritance or gift.

Items that could be considered separate property in community property states include: 

  • Inheritance given to one spouse
  • Bank account held in the name of one spouse
  • Money from a personal injury lawsuit
  • Property that was gifted to only one spouse
  • Any property listed in writing
  • Asset that was purchased with separate property

The burden of distinguishing property as separate property typically falls on the spouse making the claim. They must provide documentation or support to substantiate their claim. Without proof, the property will likely be considered communal and subject to a 50/50 split.

Community Debt

Assets and real property are not the only things affected by community property laws. Debt can also be community or separate, depending on the circumstances. Debt that was acquired jointly by the couple or by a single spouse for a property that benefits the couple is considered community debt. These types of debt would be divided and distributed in the event of a divorce.

However, there are some types of debt that would not be considered community debt. Any debt that was brought into the marriage by a spouse would remain with that spouse in its entirety. There may also be another route available to make debt acquired during the marriage separate property. If one spouse is negligent and wastes assets or incurs debt through adverse actions like gambling, that debt can be considered that spouse’s sole responsibility.

Equitable Distribution States

As mentioned, only nine states in the US are true community property states. The other 41 are considered equitable distribution states and focus on a fair and equitable division of property. As a result, property distribution in these states may not be 50/50.

Instead, the courts will consider numerous factors relating to the property, including how it is titled, how it was acquired, how the spouses behaved while married, the value of the separate property, the spousal contributions to the property, and child custody agreements. Because there is such a substantial list of factors the court must address before determining property division, contested divorces can become much more contentious in equitable distribution states.

Arizona Community Property Laws

Community Property in AZ

Arizona’s community property laws are typical of the traditional Spanish division of spousal property. This is relevant for Arizona’s community property laws because of geography—modern-day Arizona lies on lands that used to belong to Mexico. Even as Arizona changed hands and jurisdictional responsibility, it maintained its history with community property laws, bringing those laws with it when it became a state in 1912.

Arizona has continued this standard since the beginning of its history, proven by LaTourette v. LaTourette in 1914. In this case, the Arizona Supreme Court stated that the law would not distinguish between two spouses with respect to the rights toward community property. Neither should be treated better or receive more property than the other.

Though Arizona is a community property state, it is not a strict community property state in the sense that all property may not be divided precisely 50/50. In other words, the law in Arizona does not dictate that each spouse receives equal assets; instead, it requires that the state equitably divide community assets. Justice Sandra Day O’Conner, while serving as an Arizona state Senator, convinced the legislature to replace the word equal with equitable in the 1973 proposed draft. This phrasing has remained in the law ARS § 25-318(A) since it was passed in 1973.

When applied, this means the assets are all divided equally unless fairness requires them to be divided unequally. The default is to divide the assets equally, but exceptions can be made to this split. The Arizona Supreme Court reiterated in 1976 that community property should be apportioned equally unless sound reasoning justifies an unequal division. The court further explained that property division should not be used to reward one spouse or penalize the other. For these reasons, it is not common for the court to divide property unequally in a divorce.

One example of a case where the assets were divided equitably but not equally is Toth v. Toth, where a home was purchased during the marriage, but one spouse was awarded 85% of the home’s value. This is because the home was purchased entirely with funds the spouse saved prior to the marriage, and the marriage itself lasted only two weeks. It was found that the other spouse did not contribute to the purchase of the home, and it would not be equitable for her to receive half of the home’s value.

Unequal Division of Property as a Sanction

Arizona courts will not consider any misconduct of one of the spouses while granting a divorce or splitting community property between the spouses. This means that things like abandonment, adultery, and abuse will not give one spouse more rights to the community property than the other.

The court, however, can sanction a party in the divorce and force them to forfeit community property as a result. During divorce proceedings, both spouses are legally required to fully disclose all information and supply documentation regarding their assets and debts within the time limits given by the court. They are also obligated to follow the final division of property and distribution of assets ordered by the court and must turn over certain items to the other spouse if they currently have possession. If a spouse fails to follow these directions given by the court, the court can sanction the individual by awarding the other spouse a disproportionate amount of community property.

Arizona Home Division

Many people wonder who gets the house in a divorce in Arizona. In addition, is a house owned before marriage community property in Arizona? In most cases, the marital home will be considered community property that must be divided equally between the two spouses. However, a home obviously cannot be divided down the middle and used by both spouses after a divorce.

Divorcing spouses may not even desire to live in the home together while the divorce is going through the court system.

So, can a spouse kick you out of the house in Arizona? Though one spouse cannot remove the other from the shared home, either spouse can file a motion for temporary orders that request exclusive use and possession of the home.

In the event of domestic violence, an Order of Protection can be granted that prevents the offending spouse from returning to the home. In these cases, a judge can remove one of the spouses from the home.

Real Estate Appraiser

Typically, divorcing spouses will decide between themselves who will keep the house and the amount of equity the other spouse will receive. If the parties cannot agree on the equity, an appraisal can be completed to resolve the equity amount. If the parties cannot agree on who should receive the house in the divorce, the court will either grant the property to one of the spouses or order it sold and divide the value. The court will usually order the spouse retaining the home to refinance the mortgage and remove the other party from their obligation on the mortgage.

Community Property in the Event of Death

There are two possible outcomes for community property if one of the spouses dies. Which outcome occurs depends on whether the property is subject to a right of survivorship. If the community property does have a right to survivorship clause, the property will revert in entirety to the surviving spouse. This distinction must be made in the property title or in other ownership documents.

If the property does not have the right to survivorship distinction, it is passed to the surviving heirs of the deceased spouse. A spouse also has the right to specify a beneficiary for their portion of the community property. This bequest will take precedence over the right to survivorship.

Arizona Community Property Laws FAQs

Q: Is Arizona a Community Property State?

A: Arizona is one of nine United States community property states. Though it is a community property state, it is not a true community property state because there are potential exceptions to the equal division of assets and property. Property belonging to an Arizona couple is split equally between the spouses unless one can demonstrate that the division should be public instead of private.

Q: What Does Community Property Mean in a Divorce Proceeding in AZ?

A: During a contested divorce, spouses often have problems dividing their assets equitably. Arizona is a community property state, meaning the state requires almost all property acquired during a marriage to be shared equally between the two spouses when they separate in a divorce. All community property will be split equally between the two spouses, even if the property is only in one spouse’s name. Community property includes physical property like real estate, vehicles, and furniture, and it also includes other assets like wages and retirement collected while married.

Q: What Is Not Community Property in Arizona?

A: Community property is any property acquired during the marriage that should legally be divided equally or equitably between the two partners. Property that is excluded from this division is called separate or sole property, as it belongs to a single spouse. This can include any gifts that were given to a single spouse during the marriage, money in a bank account with only one spouse’s name on it, inheritance of a single spouse, and property brought into the marriage.

Q: Is Arizona a 50/50 Divorce State?

A: The answer to this question is complex. Arizona is a community property state, but state law specifies that property division should be equitable instead of exactly equal. In practice, this means property division is typically 50/50 between the two spouses, but there are circumstances where an even split is not fair or equitable. In these instances, the court can grant an uneven split of community property.

Q: Does Arizona Have Community Property With the Right of Survivorship?

A: Community property can have the distinction of a right of survivorship, but it is not necessarily automatically applied to community property. The distinction must be made on the title or other ownership document for this clause to apply. If the right of survivorship is not specified, the half of the community property that belongs to the deceased will pass to their surviving heirs. Even if the property has a right of survivorship clause, the spouse still has the right to specify other beneficiaries. If documented, these wishes will trump the survivorship clause.

Dividing Community Property in Arizona

If you are facing a divorce, dividing the assets that you have collected over the years of your marriage can be a daunting task. It is in your best interests to speak with an experienced attorney to ensure your assets are divided equitably, especially if there are considerations like separate property or children to consider in the divorce.

 

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