MARITAL PROPERTY AND DEBT

Arizona is a community property state. This means that any property (other than gifts or inheritances) you and your spouse acquired during the marriage belongs equally to both parties and any joint debts incurred during the marriage are the equal responsibility of both parties. Thus, it does not matter whether one spouse worked during the marriage and the other did not. Community Property can include real property, personal property, money, stocks, bonds and a party’s interest in an employer sponsored profit sharing or pension plan or individual retirement plan.

What if a debt is incurred primarily for the benefit of one party?

All debt incurred during the marriage, no matter by whom, is generally considered to be the community debt of both parties. This is true even if the debt was incurred for purchase of an item that only one of the parties uses.For example, if a husband buys tools for his job, hobby, or sporting equipment on credit, that obligation is a community obligation, although the wife might never use those tools or sporting equipment.As with community property, generally, debts owed by one party prior to the marriage remain a separate debt of that party and do not become transformed into a community debt just because the parties got married.

How is Property and Debt divided?

When either spouse files for a divorce, all the community property must be divided into separate property, so each spouse is allocated a certain “equitable” amount of the property. In addition, all community debt must be “equitably” divided. The term “equitable” means that each spouse is entitled to roughly half of the community property and debts.It usually does not matter who paid for the property directly, whose credit it was purchased under, or who uses the property most of the time. If the parties cannot agree upon a division of the community property and community debts, then the Court will make a division of that property and those debts.

Property that was received as a gift by one particular spouse, or that was an inheritance by one spouse, is not generally community property. Also, property that either spouse bought or acquired or paid for before the marriage is generally not community property. But there might be some other results if during the marriage the spouse continued to make payments on the property with community funds. It is possible for separate property to be “co-mingled” so that it loses its status as separate property and becomes community property (i.e. a home owned by one party is deeded to both parties or where community funds are mixed in with separate funds).