Divorce and Community Property Division

Divorce and Community Property Division

One of the biggest worries and frustrations of couples pursuing divorce is division of assets. This one question can also cause additional conflict in an emotionally-charged process. Among the many aspects of divorce that can be regulated by state governments is the division of property and assets. In Arizona, the statute that regulates the disposition of property is Title 25 Marital and Domestic Relations, Chapter 318: Disposition of property; retroactivity; notice to creditors; assignment of debts; contempt of court.

This statute provides that, in a divorce or legal separation proceeding, the court can assign each spouse’s sole property to such spouse. The court can also divide any joint assets, which is why Arizona is referred to as a “Community Property” state. Community property may include all property and debt that was acquired from the start of the marriage to the cut-off date. Property acquired by either of the spouses outside of Arizona is still considered community property, if the property would have been legally considered community property if originally acquired in Arizona.

The formal property and debt settlement between the spouses is called a Marital Settlement Agreement or property award decreed by the Arizona Superior Court. The division of property is done without regard to any marital misconduct.

Debt is not something that many people consider when they think of marital property divisions. The court may consider all debts and obligations related to the property in their final judgments. Debts include taxes (accrued or accruing) that are a part of the sale of any property. There are certain exemptions to certain properties, included in Title 33 Property, Chapter 8: Homestead and Personal Property Exemption.

Note that the decision made by the courts regarding division of debts is binding on the spouses and not the creditors. Because debts are made between individuals and creditors (i.e. banks, credit card companies, medical companies, retailers, etc.), the court’s decision may not necessarily discharge a spouse’s responsibility from fulfilling the obligations of a debt.

If a spouse requests it, the court may issue a lien against the property of the other spouse in an effort to secure payment of the debts that the court orders the spouse to pay. This may be done to secure the payment of specific types of debt, including:

• Interest or equity that one spouse has in the property
• Community debts required to be paid by the spouses by the court
• Child support
• Spousal maintenance

Title 25, Chapter 318 of Arizona Marital and Domestic Relations also allows the court to consider damages and judgments that resulted in criminal conviction of a spouse. This refers to situations which the other spouse or child was the victim of “abnormal expenditures, destruction, concealment or fraudulent disposition of community, joint tenancy or other property held in common.”

Any property owned jointly, which is not included in the settlement provisions, will be held in joint ownership. This means that both spouses will maintain half ownership or interest in the property. Additionally, the final decree or judgment will describe, in legal terms, the property affected by the provisions (including prospective and retrospective operation to property).

The complexity of property division is not determined by the reasons for which the divorce is being filed. Whether in a contested or uncontested divorce, this determination is generally made on a 50/50 basis, unless there are extraordinary circumstances. Due to the process involved and potential for conflict, many spouses prefer to reach a private settlement, with the aid of a divorce attorney.

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