Arizona Community Property Division

What’s the general rule of property division (equitable distribution, community property, or legal title)?

Arizona is one of the nine community property states in the United States. Community property is a principal of Spanish law and the states that are community property states were part of the old Spanish empire.

Community property law means that the marriage is in essence a community that anything earned (or debt incurred) during the marriage is to be divided fifty-fifty. Of course there are exceptions. Property that was earned prior to the marriage or gifted or inherited by one spouse is considered “separate property” and should remain solely the asset of that person.

What effect does the conduct of the parties have on property division?

Arizona is a “non-fault” or “no-fault” state. This means that the court will not consider the conduct of spouses when dividing property. Of course there are exceptions. There is a concept of community waste, meaning that if a spouse spent money on a gambling habit or any other activity that was not for the benefit of the community the innocent spouse should not be liable for those expenses and be reimbursed for any waste.

Because it is not easy to establish community waste it is best for the innocent spouse to file for divorce quickly thus minimizing their responsibility for the debts incurred by the other spouse. Under Arizona law, filing and serving the other party with the divorce action will sever the financial community and debts incurred thereafter will be those of the spouse that incurred them.

What effect does the length of the marriage have on property division?

Under Arizona law there are no provisions regarding the length of marriage and how it impacts the division of property. However, the longer the parties are married the more property they will have acquired that will need to be divided.

Is there such a thing as separate property? What does it take?

Arizona is a community property state. As discussed above community property is property acquired during the marriage. Generally separate property is property belonging to the individual spouses prior to the marriage. This pre-marriage property remains the property of the party who owned it before the marriage, thus the term separate. Gifts and inheritance to one spouse during the marriage are also separate property. Unfortunately many spouses “commingle” their separate property with their spouse and the property losses the protection of separate property and can be divided fifty-fifty.

Any special rules for the marital home?

A marital home can be held “jointly”, as “tenants in common”, as “community property with rights of survivorship”, or even deeded in only one spouses name. Short of the home being deeded in only one spouses name the home is usually divided 50-50. If one spouse wants to keep the home he or she will have to buy the other spouse out of their share of the equity. Also the spouse keeping the home should refinance the home to remove the other spouse from the mortgage. If a home is deeded in only one spouse’s name, the other spouse may still be entitled to a half share, or at the minimum some value based on a theory known as “community lien”.

How do retirement plans get divided?

Retirement plans like any other asset, can be either community or separate. It is not uncommon for a portion of a retirement plan to be earned prior to the marriage and thus part of the plan is separate and part community. The premairriage portion will be the separate and sole property of the spouse who earned it, and the portion accrued during the marriage will be split fifty-fifty. A special court order is needed to divide a retirement plan. This order is called a Qualified Domestic Relations Order or “QDRO”.