Arizona is a community property state. In Arizona, spouses are treated as having a one-half interest in most property acquired during the marriage. The effect of a community property classification comes into play when the relationship ends, by either death or divorce. Understanding how the law treats the assets owned by a married couple will help eliminate some of the confusion when it comes time to divide property in Arizona.
Defining Community Property
In Arizona, property that is classified as community property will be subject to division as part of divorce. Community property generally includes all property acquired during the marriage, excluding inheritances and gifts. Property acquired before the marriage is known as separate property, and generally remains the property of the spouse that acquired it. The classification of the property is not affected by it being obtained out of state.
The classification of property during a divorce can be affected by how it was treated by the parties. For instance, commingling assets is the process by which separate property and community property are mixed together to the point where the source cannot be traced. This issue typically arises with regards to cash, particularly if the parties share one joint bank account that is used to pay all household bills. If a cash gift is given to you during the marriage and it is deposited into an account used by your spouse, it may be considered community property unless you can demonstrate that all of the money spent from the account was from other deposits.
Another way that the classification of property can change is through transmutation. Transmutation is the voluntary conversion of property by a couple from separate to community. The typical example involves real estate. If you owned a house prior to the marriage, which was then re-titled to you and your spouse as joint tenants during the marriage, it is considered a gift and will effectively change the classification of the property from separate to community.
Community property may be changed to separate property by prenuptial agreements. Prenups are contracts entered into that can control the classification of property at divorce. An example might be a provision that states that all real property acquired by either couple during the marriage remains the separate property of that spouse. These are legal in Arizona, provided that they are in writing and signed by both parties.
Once all of the assets owned by a couple have been classified as either community property or separate property, they may be distributed as part of a divorce. A spouse is entitled to one-half of the community property, regardless of whether marital misconduct has been committed. However, specific acts of destruction or fraudulent concealment of the community property can be taken into account by the judge, and may result a in smaller award.