Understanding Property Division in Your Divorce
Each state has its own laws and procedures when it comes to the various aspects of ending a marriage. Things like child support, spousal support, and custody orders can look quite different depending on which state your marriage occurred in (or which state it ends in). Property division after a divorce is no exception. While some states allow the court to assign assets to each ex-spouse based on a variety of financial or evidentiary factors, other states attempt to split assets evenly between the spouses.
Community Property Law
In the state of Arizona, your marriage is subject to “community property law,” which means any property acquired during the marriage is presumed to be community, or jointly held, property. This means any property acquired by you or your ex-spouse during the course of your marriage is owned in equal part by each of you in the eyes of the law.
The principles of community property law exist to create fair and reasonable outcomes for property division in divorce. The model of a marriage as a 50/50 financial partnership is a concept most people can understand, even if they don’t personally agree with it on a philosophical or ethical level. At the very least, it must be acknowledged that an even split is one of the simplest, and therefore most expeditious, ways of dividing property. However, one problem with community property law is that it leaves little room for nuance or subjectivity. At times, community property law can also seem impractical.
While it is simple math on paper, this 50/50 split can quickly become an abstract concept in the courtroom. It’s not as if a judge can simply assign each ex-spouse one half of the same house or car, for example. The process of evaluating every asset a divorcing couple owns can be tedious and stressful, but it must be done accurately and completely so that property can be divided according to Arizona law.
The division of property pursuant to a divorce in the State of Arizona follows this basic timeline:
- The court will determine which assets (and debts) are communal marital property, and which are the separate property of one individual. You may be asked to provide documentation.
- The court will determine the total value of all assets that have been determined to be jointly held marital property
- The court will divide and award these assets to each party evenly
You will naturally have a great deal of specific questions about what will happen to your assets and personal property as you go through the process of seeking your divorce. A qualified divorce attorney from The Valley Law Group will be an invaluable resource for finding answers to these questions.
Arizona Community Property Statute
Community property law is a far-reaching concept. The legal presumption created by the statute applies to all sorts of property, including:
- Real estate
- Personal property
- Financial instruments
- Assets and investments
- Other valuable collections or holdings of physical goods
Such assets need not have been acquired “jointly” in any sense of the word. By default, anything obtained by either party during the course of the marriage is subject to the legal presumption created by the Arizona community property law statute. This property is therefore owned 50/50 by each party to the marriage.
If, for example, your spouse purchased an expensive piece of jewelry during your marriage, you own half of that piece of jewelry in the eyes of the law. Likewise, if you had been stashing a stockpile of secret cash throughout the course of your marriage, your ex-spouse has a legal right to half of it upon your divorce. Too often, however, misunderstandings regarding community property result in lengthy courtroom proceedings that will ultimately end with a judge’s decision.
That’s why, to achieve a smooth and timely divorce, it is critical that all parties are willing to be transparent and honest with one another, the court, and their legal representation throughout the entire process of property division.
What is Not Community Property?
While nearly all assets obtained during the course of the marriage are considered community property, this is not true in all cases. Property obtained during the by a single individual under certain circumstances is not subject to division under community property laws. In addition, some property obtained before the marriage is considered community property, but most is not.
Assets that are not community property may include
- Property that one party owned prior to the marriage, and which was not co-mingled with the couple’s joint property thereafter
- Property included in a legally binding prenuptial or postnuptial contract
- Inheritances and gifts in a single individual’s name
Divorce, Property Division, and Debt
It is also important to be aware that the AZ divorce laws for community property also apply to a couple’s outstanding debts in addition to their assets. A mortgage for a shared home or credit card bills that were amassed during the marriage will be split evenly under community property law just like assets.
As with your assets and bank accounts, accounts with outstanding debts attached may be split and reassigned to each party or may be kept whole and used as a tool in balancing the overall division of property. The final division of debts depends on the sorts of assets and debts a married couple holds and how complex those holdings are.
Understanding Legal Presumption
When we say that Arizona’s community property statute creates the “legal presumption” that all assets and debts are jointly and equally held, that means exactly what you’d suspect. The 50/50 ownership of all assets is merely a presumption that the court begins with and is a guideline or a place to start from rather than a binding order. In some circumstances, these presumptions can be rebutted and overcome through the correct legal action.
While Arizona’s community property law provides a simple framework for each party of the marriage to walk away with an even share, there is another concept at play called “sole and separate property.” Arizona law allows for a plaintiff or defendant in a divorce to try to prove that a particular asset, be it a bank account, car, or prized possession, is not jointly held at all, but in fact the sole and separate personal property of one party alone.
Proving that an asset is your sole and separate property and should therefore not be subject to the community property law statute is an uphill battle. Because it will be the court’s “presumption” that all property acquired during a marriage is jointly held, it is entirely incumbent upon you and your legal representation to prove that a certain asset is yours alone. If you cannot prove your sole and separate property claim, the asset will be split evenly with your ex. Proving sole and separate property might involve financial documentation, personal testimony, or some other legally actionable evidence that the asset in question is not jointly held.
If you feel that a 50/50 split of your marriage assets is inappropriate or unfair, you may be able to take legal action to prevent it from happening. The high-powered divorce law team at The Valley Law Group can help you understand all the options and legal tools available to you.
Divorce in Arizona endeavors to keep property division simple with a 50/50 split. However, as noted, this is not always practical or even possible. Consider the example of a couple who owns their home but who has no significant savings or financial assets at the time of divorce due to financial hardship. Their home is the only community asset of significant value, and it obviously cannot be split 50/50 between two people who are no longer interested in living together. A complex, high value retirement or investment account that cannot be readily liquidated into two separate accounts is another good example.
Such situations will naturally result in one spouse receiving significantly more assets than their ex. The Arizona legal system accounts for this imbalance through equalization payments. Equalization payments can work in a few ways, depending on the arrangement that works best for the parties involved and how the judge decides to write the final order. Typically, the spouse who has received more of the assets will be ordered to pay their ex a lump sum equaling 50% of the value difference between the assets received.
An equalization payment does not necessarily have an impact on any other aspect of Arizona divorce laws. Alimony, for example, is a separate concept and will be calculated and ordered independent of the division of property.
AZ Divorce Laws & Community Property – Frequently Asked Questions (FAQ) AZ
Q: When Does Community Property End in Arizona?
A: In Arizona, the community property statute is no longer in effect as soon as one party in a marriage has served the other with a complaint for divorce. This means that any assets acquired after you initially file and serve your spouse with papers (or assets acquired after you are served yourself) are your sole and separate property and will not be subject to the property division process. This allows parties to get on with their lives and support themselves throughout divorce. They can proceed without fear of losing additional assets while they go through the process of completing their divorce.
Q: If I Can Prove That I Earned More Money Than My Spouse During Our Marriage, Will I Be Allowed to Keep a Larger Percentage of My Assets?
A: No. The court is not interested in which spouse earned more during the marriage, and this information will not affect the outcome of a divorce. The community property statute is designed to make such calculations irrelevant by looking at a marriage as a legal and financial contract in which each spouse is an equal partner. However, if equal division of assets leaves one spouse suffering a vastly reduced standard of living compared to that which they enjoyed during the marriage, they may qualify for spousal support or alimony payments, separate from the asset division process.
Q: Can Community Marital Property Be Sold During a Divorce?
A: No. Typically, the judge in your divorce will order a freeze on any sale of community property while the assets are evaluated. Once the division of property has been completed and all assets are transferred to the correct party per the court’s order, property—now solely and separately held—may once again be sold as normal. A court may allow exceptions to this under rare circumstances, such as if the sale of communal property could be used to eradicate significant shared debts that complicate the division of property.
Q: Is There a Way to Keep the Division of Property Out of Court?
A: Sometimes, yes. Out-of-court mediation can be a great option for couples looking to reach a settlement, especially when they wish to limit drawn-out and dramatic visits to court. This method is often better than a courtroom, especially when the division of property needs to address very complex issues, such as a couple who wishes to divorce but wants to continue owning certain property or assets together. Ex-spouses who are amicable toward one another may even expedite this process by choosing to work with a single lawyer rather than individually seeking representation, which tends to naturally add a competitive element to the process. A judge must still approve your settlement to finalize the division of property.
A Better Understanding of Property Division in AZ
Ending a marriage is difficult and stressful under the best of circumstances, but can be even more so when significant assets, complicated property, or contentious division proceedings are involved. Expert legal counsel ensures that you’re treated fairly and that your assets and future are protected to the fullest extent of the law.
*Editor’s Note: This article was originally published May 9, 2021 and has been updated September 12, 2022.
Ryan Reppucci, Co-Founder of The Valley Law Group, is recognized as one of Phoenix’s leading family law attorneys. After graduating from Arizona State with the highest honors and inclusion in America’s most prestigious student honor societies, Ryan attended the University of Detroit Mercy School of Law. His career as a law student was decorated with numerous awards, including the University of Detroit Mercy School of Law Book Award, nomination for membership in Who’s Who Among Students in American Colleges and Universities, as well as Moot Court.