What is Marital/Community Property?
Most states follow common law regarding assets and debts incurred by a married couple. Common law typically results in the party that acquired the asset being the owner of that asset unless it’s owned jointly.
Arizona is one of a smaller group of states that follows the marital/community property rule. Arizona regulations state that: “all property acquired by either husband or wife during the marriage is the community property of the husband and wife…” A few exceptions are gifts made to one party or the other or items protected via a prenuptial or post-nuptial agreement.
This can mean that either partner can acquire assets or debt throughout the marriage, and barring a few restrictions, this item should be equitably divided between the parties amidst divorce. Income, debt, and assets are viewed as legally owned by both parties unless those assets or debts were acquired before marriage.
Examples of marital property can be;
- Bank accounts and other cash
- Real and personal property
- Life insurance assets
- Business interests
Examples to Consider
Common misconceptions can be that one party isn’t financially responsible for the other party’s habits or choices when, in fact, they may be. As finances are a large part of why couples choose to seek divorce, it’s essential to understand how you may be impacted as a result of dividing shared marital assets.
For example, a wife purchases a vehicle for her business and puts the asset in her name only. The husband doesn’t have anything to do with the company and doesn’t contribute to it financially, but the vehicle was purchased with marital income. This asset may need to be divided equally due to the shared funds that were purchased while married.
Another example is a husband who racks up debt rapidly and often. The wife decides he isn’t financially responsible and wants to end the marriage. In Arizona, it’s possible that she will be responsible for half the debt he incurred while they were married and may be forced to pay back half regardless of whether her name was on the debt or not.
Other Examples to Consider
One party works, and the other stays home – the party bringing in income purchases a house, vehicles, and other necessities for the family while they are married. Suppose that party decides they want a divorce and assumes they get to keep all of the assets, leaving nothing to the other party. In that case, they may be surprised to learn that even though it was their income used to purchase the items, the courts will view that income as shared, and therefore, the other party is entitled to half the value of those assets.
One spouse receives an inheritance while married – if it’s stipulated explicitly that the inheritance goes to one spouse, and those funds are kept separate without blending them with marital assets, the receiving spouse may be entitled to keeping the entire inheritance rather than splitting it with their spouse.
How Can I Protect My Assets?
Before marriage, you can utilize a prenuptial agreement to offer protection for your assets. You may also choose to create a post-nuptial agreement shortly after marriage.
Another way to ensure that the assets you brought into the marriage stay solely yours is to keep them separate. For example, suppose you had significant savings before being married. In that case, you can keep that money in a different account and ensure that marital money isn’t deposited into it, and also be the sole owner of the account. These extra steps can help ensure that the courts can quickly determine that the asset was yours only and wasn’t comingled with other shared assets.
Protecting your assets without the above options should you choose to seek a divorce can be more complex. Still, an experienced attorney can help you prove that the assets or debt were or were not yours and ensure that the division is fair upon finalizing the divorce.
Further Protection of Your Assets
Suppose you can compile a thorough list of the assets you brought into the marriage and prove that you didn’t combine those assets with other marital property. In that case, you may be able to protect those assets from being divided.
Doing this may require you to dig and find evidence of bank statements or assets owned and their values before being married. Your attorney will know what to look for and how to help you compile this information to protect that asset.
Your Fierce Advocate When You Need it the Most
The division of assets in a divorce can be one of the most complex and emotional aspects of the divorce. One of the parties may want to take advantage of the other, initiating painful or stressful conversations when realizing how much your financial future may be impacted.
We have worked with many clients over the years to help them overcome the obstacles of divorce. We understand and respect how trying this time of your life may be and the costs associated with litigation. We help our clients to formulate strategies that help them resolve disputes as timely and cost-effectively as possible.
Call our office today at (623) 267-0026 to get started. Let us help you ensure that your financial future is protected and that you can navigate this chapter of your life well and move on to the next.