The division of assets in divorce can be challenging. Deciding who gets the house in your Arizona divorce, your vehicles, bank accounts, and other valuable assets is always complicated. Understanding your legal rights and responsibilities and the applicable law is critical to a positive outcome in your divorce case. Fortunately, you can rely on a top family law attorney from Provident Law® to guide you through all stages of your divorce.
Here are some frequently asked questions and answers about dividing assets in an Arizona divorce.
What is Community Property Under Arizona Law?
In an Arizona divorce, the property is divided based on “community property” rules. Under community property principles, both spouses contribute equally to the marriage, even if only one spouse works outside the home and the other spouse manages the household and children. Community property laws assume that spouses should benefit equally from the assets they have accrued during the marriage.
Community property includes any assets that either spouse obtained during the marriage and any income either spouse earned during the marriage. These assets belong equally to each spouse, no matter which spouse’s name is on the property. Likewise, any debts that either spouse accrued during marriage belong equally to both spouses.
What is Separate Property Under Arizona Law?
Under A.R.S. 25-318, separate property includes all property solely owned by one spouse. It includes gifts or inheritances received by one spouse and any property that one spouse owned before the marriage. Separate property can also include property purchased during the marriage using only funds owned by one spouse before the marriage.
However, separate property remains separate only if the spouses keep it separate during their marriage. In other words, suppose one spouse receives an inheritance and commingles those funds with marital funds in a joint bank account. The spouses then continue contributing to that bank account with marital earnings. Ten years later, the spouses use the funds in their joint bank account to purchase a house they both pay to maintain and improve. In that case, the inheritance funds likely are no longer characterized as separate property because they have been inextricably combined with marital funds.
How is Property Divided in an Arizona Divorce?
The first step in the division of assets in a divorce is identifying which assets are community property and separate property. Next, you must assign the current fair market value of each asset. The valuation process may require real estate appraisals or other valuable items if you cannot agree on their value.
Once those steps are complete, community assets must be divided fairly during a divorce, typically an equal 50/50 division. However, the court can adjust this division based on fairness and other factors, which include each spouse’s income, the duration of the marriage, and the anticipated future needs of each spouse. For example, if one spouse has a much lower earning capacity than the other because they stayed home to care for the parties’ children, an unequal split of assets may be fair.
What Happens with Assets that Cannot Be Physically Split Between the Spouses?
Property includes real estate, vehicles, bank and investment accounts, retirement accounts, personal property, and business interests. When an asset cannot be physically split between the spouses, such as a house or car, the spouse being awarded the asset may have to compensate the other spouse for half its value or buy out the other spouse’s portion of the asset. Alternatively, the spouses may have to sell the property and split the proceeds from the sale. Another option, if sufficient assets exist, is for one spouse to receive other assets to compensate for their portion of the indivisible assets.
How is Debt Divided in an Arizona Divorce?
Like property, a court must categorize debt as community or separate debt. Debts include credit card debts and mortgage, vehicle, and student loans. These debts may be community property regardless of which spouse’s name is on the debt.
Debts typically are equally divided between spouses during a divorce. However, some circumstances necessitate an unequal division of debts. For instance, if one spouse has a gambling problem and incurs significant debts as a result, that spouse might be solely responsible for that debt.
Call Us with Your Questions Concerning the Division of Assets
Our goal is to represent your interests throughout your divorce and help you make well-informed decisions on the division of assets. We will advocate on your behalf throughout your divorce and work to protect your property interests. Contact the offices of Provident Law® today at (480) 388-3343 or online and schedule an appointment to speak with a divorce lawyer in Arizona about your legal matter.