Arizona and nine other states are community property states. They follow the confusingly termed 50-50 system of divorce. Not all property divisions in Arizona conclude with each party getting an equal share of assets. Rather, the court’s goal is to equitably divide a couple’s assets at the conclusion of the divorce process.
What Is community property in Arizona?
Only community property can be divided by a divorcing couple in Arizona.
Community property includes all assets and debts that the couple accumulated during marriage and prior to their separation date. Community property includes:
• salaries and other forms of income
• homes and other real estate
• investments, funds, and pensions
• cars and recreation vehicles
• jewelry and costly possessions
• furniture, appliances, and other household items
What Is separate property in Arizona?
Exempted from 50-50 division are any assets acquired by each spouse before the marriage, by inheritance, or those the couple agree is separate property.
Separate property includes:
• any asset solely owned by either spouse before the marriage
• any asset acquired as an inheritance or gift by either spouse before, during, or after the marriage
• any asset that is included in a valid prenuptial or postnuptial agreement.
How is community property divided outside of court in Arizona?
Most divorcing couples in Arizona would rather resolve their issues privately than go to court. Fortunately, there are two options that you may consider that can help resolve your issues without court intervention:
1. Prenuptial agreement
A valid prenuptial agreement can be entered into before marriage. Various provisions can be covered including a plan for dividing community property upon divorce.
2. Separation agreement
You and your spouse can still work out an agreement for dividing community property upon divorce, even without a prenuptial agreement. Both of you can agree on terms with the help of a neutral third party or mediator. The agreement must be approved by a court.
Reaching an agreement outside of court is nearly always faster and less costly than getting a court’s decision. What’s more, dividing assets according to your wishes is more preferable than having a judge decide for you.
What are the rules of property division in Arizona?
A divorcing couple’s property and debts will be divided by a court unless they can come up with an agreeable arrangement. Ariz. Rev. Stat. § 25-318 (2020) states that all assets and debts incurred by a couple during marriage equally belong to both spouses. Unlike some 50-50 states, Arizona does not require marital property to be divided equally in a divorce. Division, however, has to be fair and generally be approximately equal.
Cases where Arizona is not a 50-50 state in a divorce
Some conditions may occur in which dividing assets or debts fairly and equitably will not apply in an Arizona divorce. In some cases, the court may determine that it is more fair and equitable to grant one spouse a bigger share of the couple’s assets.
These cases usually happen when the court determines that a spouse is guilty of wasting community assets, deliberately destroying community property, or hiding community assets.
Wasting community assets
An unequal division of property may be ordered by a judge if it is determined that one spouse has squandered assets during the marriage. In Arizona, a couple has a fiduciary relationship that requires both spouses to manage their marital finances in a manner that will benefit the community.
One spouse’s wasting of community assets, such as losing a significant amount of money on gambling and other vices, can be seen as a violation of their fiduciary obligation to the other spouse. In cases like these, the judge could grant more community assets to the other spouse as recompense for the wasted community money.
Destroying community property
If a spouse intentionally destroys community property, a court could award more than half of the remaining community property to the other spouse.
Hiding community assets
A court may inequitably divide property as well, if one spouse is found concealing community assets. Such discovery could have the court award the other spouse with up to 100% of the hidden assets.
Dividing property 50-50 between spouses is a fairly rare thing for a judge to do in Arizona.
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