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Separate vs. Community Property in Arizona Divorces

by | Jul 31, 2023 | Community Property

Are you going through a divorce and wondering what assets are subject to division in the process? Or are you contemplating leaving a spouse, but are concerned you’ll be saddled with half of your ex’s small business debt? Understanding what assets are considered separate property versus community property in Arizona is an important place to start.

We know that going through a divorce is stressful no matter how unhappy you are in your marriage. Divorce presents both emotional and financial challenges. At Frank Amar Matura, we can help.

Identifying Separate and Community Property in Arizona

As experienced Phoenix divorce attorneys, we can help you understand the difference between separate and community property in Arizona and how that affects the likely division of assets in your divorce. This information will help you make an informed decision on your marriage and work through the process of dividing marital property if and when you decide to separate.

Is Arizona a Community Property State?

Everything you own—including your house, car, bank accounts, and retirement funds—is considered an asset or property. When it comes to who owns what in a marriage, Arizona is a community property state. This means that unless you and your spouse signed a prenuptial or postnuptial agreement or qualify for exceptions under the Arizona Revised Statutes (A.R.S.) § 25-211, any asset acquired during your marriage, regardless of who paid for it, is community property that is co-owned by both spouses.

The same rule of law generally applies to your debts. Even if a debt is acquired by one spouse during a marriage, you are both liable for paying it back. This is true even if your name isn’t on the loan or account or if your spouse incurred the debt without your knowledge.

During a divorce, community property and debts are generally (but not always) divided equally. But that doesn’t mean you have to sell everything and split the proceeds 50/50. As your attorney, we look at the combined value of all your community property and liabilities. Then, we work with you and your spouse’s attorney to separate those shared assets and debts in a way that is equitable to both parties.

There are various strategies we can use during a divorce to fight to maintain ownership of the assets that are most important to you. For example, if you’d like to keep the marital home, you can refinance it in your name alone and pay your spouse his or her share of the equity (the appraised value of the home less the existing mortgage amount); or you may be able to keep the house and trade your spouse something of equal value, such as money in a bank, investment account, or a retirement account. It all depends on what you’re able to negotiate.

What Is Separate Property in Arizona?

Under Arizona Revised Statutes § 25-213, anything you owned before the marriage is legally your separate property. Examples of separate property might be a coin collection from when you were a kid or a car you owned before you were married. And the good news is, you don’t need to divvy up separate property during a divorce. The court will identify and award each party his or her separate property before dividing up the community property.

If you alone owned the house before you got married and maintained the title in your name only, you get to keep it, even if you’ve both lived there during your entire marriage (although it may be subject to a community lien for improvements or mortgage payments made during the marriage). The old retirement fund you rolled over when single is yours to keep, too.

Additionally, certain assets are considered separate property regardless of your marital status when they are acquired. Examples of this type of separate property include:

  • The inheritance money you received when your grandfather passed away;
  • The stock your parents gave as a gift when you graduated college; and
  • The appreciation in value of the small business you started before you were married.

As you can see, when determining what is separate property in Arizona, state law recognizes that even though you may have been married when these assets were initially obtained, they really should belong to you and you alone.

Can Separate Property Become Community Property in Arizona?

For a variety of reasons, sometimes separate property is converted to community property during a marriage. This process is called transmutation, and it can be complicated. Finding out your separate property has been transmuted into community property can be very difficult both emotionally and financially.

This typically happens when money that was separate property is placed in a joint bank account and is comingled with community funds or when a spouse’s name is placed on the title to a house or other real property that was previously owned separately.

Here’s an example: The money you inherited when your grandfather died would normally be your separate property. But consider this scenario: at the time you received your inheritance, things were going great in your marriage. So, you deposited the money into a bank account you shared with your spouse, and deposits and withdrawals were made to that account over time to the extent that the separate monies can no longer be accurately traced. Now you’re getting divorced and your ex is claiming a right to half of that inheritance money. Because the inheritance funds were deposited into a joint bank account and comingled, your ex is, unfortunately, correct. Transmutation has converted your originally separate property into community property, which is generally divided equally between spouses in a divorce.

If you’re considering divorce and think you have separate property that’s been commingled or transmuted, we can help you strategize before you begin divorce proceedings. By working with us before filing for divorce, we can identify transmuted property and develop a strategy to align with your goals.

Contact Our Phoenix Divorce Attorneys for Help Dividing Assets During a Divorce

Wherever you are in the divorce process, we’re here for you. Our Phoenix divorce attorneys can help you determine what marital property is community property in Arizona and what is separate. We can help you get a plan together before filing papers in court, or begin representing you now if your divorce proceedings are already underway. Contact Frank Amar Matura today for a consultation by calling (602) 922-9989 or by completing our online contact form.

Let's Discuss Your Case - We're Here For You.

When dealing with a family matter issue, you do not have to go at it alone. Schedule your comprehensive attorney consultation now and we can discuss the entire case.

Let's Discuss Your Case - We're Here For You.

When dealing with a family matter issue, you do not have to go at it alone. Give us a call and we can discuss the entire case during a comprehensive attorney consultation.

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