Emotions tend to run high during a divorce or separation, especially when it’s time to divide property and assets. Adriana Blanchette, the founding attorney of Blanchette Law PLLC is an experienced and compassionate Tempe property division lawyer.
She has the tools needed to help you receive an equal and just outcome, and she’ll work hard to protect your best interests. Call Blanchette Law PLLC at (602) 881-1748 to schedule your consultation.
Arizona is a community property state. This means that any assets and debts you and/or your spouse acquired during your marriage belong to both of you, wholly or partially, regardless of who bought them.
There are exceptions to this rule, and in some cases assets may be treated as separate or quasi-community property. Keep reading to learn more about property classification in Arizona and how it might affect your divorce or legal separation.
Under Arizona Revised Statute §25-211, all property acquired during the marriage is community property, meaning it belongs to both spouses. This includes all the assets, retirement accounts, income, or debt you and your spouse accumulated when married.
However, if anything was obtained during the marriage via gift or inheritance, it’s that spouse’s separate property. Upon separation or dissolution, the community estate must be divided equitably between the parties. An equitable distribution might not mean splitting each item 50/50, but it might entail balancing the assets among the two of you, and considering other factors of the divorce.
Sometimes during a divorce, specific property may arise that the couple (or one of the spouses) acquired when not living in Arizona. If these assets would have been community property had they been acquired while you were domiciled in Arizona, they are said to be quasi-community property.
Apart from assets, the quasi-community property also includes any income you or your spouse may have obtained while living outside Arizona during your marriage.
Separate property refers to any assets or debts you and your spouse acquired before you married, or that you acquired during the marriage by gift or inheritance, and any profits or income derived from these individually owned assets. Spouses aren’t obligated to divide separate property or to pay the other spouse’s separate property debt unless they choose to.
In some scenarios the community might have an interest in a spouse’s separate property, such as when community funds are used to pay the debt associated with a spouse’s separate property such as a house. The community might be entitled to reimbursement for paying the mortgage or for paying for improvements to the house.
Another example includes retirement benefits or pensions that one spouse had before marriage then made more contributions or acquired more service credits during the marriage, those retirement benefits have both a separate property and community property component.
Determining interests like this and the amount which is community and separate is complicated and depends on the circumstances of your case such as if title was converted from sole to joint (a transmutation) or if funds were commingled. To ensure that your property rights are protected, including regarding any potential claims of reimbursement, hire Adriana Blanchette and her esteemed team of family law professionals.
Achieving an equitable division of property requires the four step process of identifying the assets and debts, classifying them, valuing them, then dividing them.
Before property division can begin, you must identify all assets and debts. This process involves taking inventory of all property you own either as separate or community property, tangible or intangible, including:
A complete disclosure of all assets and debts is necessary regardless of its classification is necessary to avoid being accused of hiding assets.
After identifying all relevant assets and debts, the next step is to classify them as either community, separate, or mixed property. The following factors are considered when classifying debts and assets:
The date of acquisition will be a dominating factor in determining if an asset is separate or community property. For example, an asset you obtained before the wedding will likely be treated as separate property, however, property purchased during the marriage will be considered community property unless any of the exceptions to acquiring the asset apply.
The court treats all property acquired during the marriage as community property regardless of whose name is on title, who purchased it, or who incurred the debt.
Commingling occurs when separate property is combined with community property, either intentionally or unintentionally, such as the community acquiring an interest in one spouse’s pension plan or placing separate property funds into a joint bank account.
Sometimes a transmutation occurs which converts something from separate property to joint or community property. The most common example of a transmutation is when one spouse owned a home before marriage, and during the marriage changed the deed to include their spouse.
If one spouse transfers the title of a separate property asset into the names of both spouses, the court presumes that this transfer was a gift to the community and the asset will now be treated as community property when dividing the community estate. Either party may challenge this presumption with clear and convincing evidence.
Once items have been identified and properly classified, the value of each item must be assessed. Here’s a look into the three primary methods of valuation.
Spouses can and often agree on the value of some items of the marital estate by using what they believe is the fair market value of the item. For items, the fair market value can generally be found by searching for similar items being sold online or assigning it a garage sale resale value.
For other assets like bank accounts and debts, the account statement is usually used. Agreeing on the valuation of assets saves both parties time and money, however for some assets using an expert in that field is necessary.
In some situations when the parties don’t agree on the value of an asset, either spouse may provide testimony and evidence such as bank statements, receipts, or other documents to support the value they believe is appropriate and should be assigned to an asset or debt.
Sometimes it’s necessary to hire an expert to determine the actual or reasonable value of items and to determine the appropriate calculation of separate or community property interest in an asset or debt.
Blanchette Law PLLC has a long-standing relationship with several qualified, well-respected experts who may be retained to provide expert testimony in many areas, including in the following most common areas and situations.
Forensic accountants are CPAs licensed by the Arizona State Board of Accountancy who have specific experience and training in family law. Forensic accountants can be employed in the following scenarios:
When dividing the assets and debts in a divorce in Arizona, the court begins by awarding each spouse their separate property and separate property reimbursements, then the community receives their reimbursements and the property is equitably distributed between the spouses.
The property division may include an equalizing payment or a non-taxable payment owed by one spouse to the other to achieve an equitable division of the estate. An equalizing payment may be made in one payment or in installments as agreed by the parties or ordered by the court.
For example, if one spouse is keeping the marital home and there aren’t other assets of equal value to assign to the other spouse, an equalizing payment will be owed so that each party has the same net value from the community estate.
Don’t let the confusion and uncertainty of divorce and property division in Arizona leave you with less than you deserve. Adriana Blanchette and the esteemed team at Blanchette Law PLLC will help you accurately value the community estate and protect your financial interests and assets. Call (602) 881-1748 today to schedule your consultation.