In any divorce proceeding, the issue of how to divide assets and debts must be resolved. This article provides a framework for understanding Arizona marital property law and determining whether an asset is separate property or community property.
Community Property and Separate Property.
Community property is marital property. It includes all assets accumulated during the marriage, regardless of whether the asset is in one spouse’s name or the other. Although assets acquired during the marriage will likely be community property and subject to equal division between the spouses, there are exceptions: the asset was owned prior to the marriage, or was acquired by gift, or acquired by inheritance during the marriage.
An asset that is separate property is not a part of the marital estate and will not be subject to division in a divorce. If an asset was acquired before the marriage, it may remain the separate property of one spouse at the time of dissolution. This is not a hard and fast rule. The characterization of property depends in great part on how the asset was used during the marriage, usage can change the asset’s character from separate to community property. Furthermore, a portion of the asset’s value may remain separate property, while a portion becomes marital property. All of this depends on the facts of each individual case.
The parties are always free to agree on the designation of an asset as the separate property of one spouse or the community property of both spouses -- this is a part of the negotiation of a divorce.
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