Our previous post in this three-part divorce series on dividing property began with Arizona’s legal presumption that property and debts acquired during a couple’s marriage are community assets and liabilities – to be divided equally between them in a divorce. The Court may deviate from an equal division under certain circumstances, as when the parties’ separation agreement provides for a departure from an equal split of marital assets and debts, something the couple is free to do.
In today’s post, we provide some answers to one of the most frequently asked questions we get from our clients – What can I keep in the divorce?
What Can You Keep?
What You Keep Depends on the Character of the Property.
To answer the basic question – What can I keep in the divorce? – we look to the history of each item of property, whether it be real property, personal property, or intangible. As a general rule, the circumstances surrounding the asset’s acquisition are essential to characterizing it. The characterization we are speaking of is whether the subject item is community property (marital property) belonging to both spouses, or the separate property of one spouse.
When both spouses are in agreement as to the character of an asset, then it is designated as his, hers, or theirs. When the couple is not in agreement, when there is conflicting evidence, or when there has been a transmutation, then litigation may be necessary to establish the parties’ respective interests in the property.
Because separate property is not divided in the divorce (unless a separation agreement provides otherwise), identifying separate assets and debts is the first step in determining what each spouse has a right to keep. If the asset was acquired prior to the marriage or was given to one spouse as a gift, or by devise, or was inherited by descent, then that spouse will keep the property. What a spouse does with his or her separate property after the marriage can change its character, and transmutation of separate property into community property is an example of this change. Simply stated, transmutation of property can occur by agreement between the spouses, by gift from one spouse to the other during the marriage, or by commingling separate property with marital property to the point of no return.
When Separate Property Is Yours to Keep.
Keep in mind, though, that a pre-marital asset will not lose its separate property character just because the owner later married. When marital funds (such as wages earned during the marriage) are applied to improve the property or pay off a second mortgage, for example, then reimbursement to the community would be reasonable so one spouse does not benefit unfairly when dividing property in divorce.
We know from experience that property division and debt settlement can be both confusing and complicated for divorce clients. At the Law Offices of Scott David Stewart, each of our Arizona divorce attorneys has the legal knowledge and financial tools needed to ensure that our divorce clients are not taken advantage. Know that your rights will be protected, too, when you contact us for a confidential consultation in regard to your divorce. When dividing property in divorce, there is no complexity that we cannot handle, and handle well.
