No divorce is easy, either emotionally or legally, but when divorcing spouses have diverse portfolios, high assets, or complex financial resources, businesses, and retirement packages, the process becomes far more complicated in a community property state like Arizona. When divorcing spouses rent a home and own few assets, the state’s requirement for the equal division of their marital assets is straightforward; however, those with complex properties and many jointly owned assets accumulated during the marriage require skilled legal counsel and financial experts evaluating their assets. A skilled Arizona divorce attorney helps untangle separate and joint assets to ensure that their client retains what belongs solely to them and also receives their fair share of assets belonging to the “marital community.”
Is Arizona a 50/50 Divorce State?
Like a handful of other states, Arizona requires spouses to divide “community assets” as close to 50/50 as possible or practical. Divorcing spouses can decide on their asset division and draft an out-of-court settlement agreement for a judge to review and sign into binding orders in an uncontested divorce. If they aren’t able to reach a mutually acceptable agreement, they can argue their sides of all disputes in divorce court for a judge to decide. This is a contested divorce.
The agreement or divorce orders in Arizona are typically very close to 50/50 when a judge signs the final decree, but the circumstances of each marriage and divorce are unique. For instance, in complex property division divorce cases, it becomes challenging to distinguish separate assets from community assets due to commingling, or the purposeful or accidental blending of separate assets into the marital community.
What Are Separate Assets In Arizona Divorces?
The first step toward determining which of a spouse’s complex assets are separate and which are a part of the marital community involves each spouse submitting full financial disclosures for the other side to review. During the discovery period, each spouse and their attorney carefully evaluate the financial disclosures and may request additional documents from the other spouse who must produce them. In complex property division cases, divorce attorneys may also rely on divorce financial forensics experts to review the assets and properties to ensure their client doesn’t miss any portion of an asset that belongs to the marital community, and that they fully retain their separate assets. In Arizona, separate assets may include any or all of the following:
- Real estate property, businesses, and financial accounts owned by one spouse before the marriage and not commingled with the other spouse
- Any assets or property inherited by one spouse during the marriage
- Assets or property gifted to one spouse during the marriage
- Any property or asset purchased by one spouse after a legal separation or after filing a divorce petition
In some divorces, determining a spouse’s separate property is relatively straightforward, but distinguishing separate assets becomes challenging in complex property division cases due to commingling.
What Is the Commingling of Separate Assets in Marriage?
Commingling of assets occurs in many marriages, particularly those with high assets or diverse portfolios. Examples of commingling include one spouse allowing the other access to an investment account or bank account, a spouse investing time or money into improving the other spouse’s property, or a spouse working in another spouse’s business. When commingling occurs, a spouse may be entitled to a portion of the other spouse’s separate asset or half of the asset or property’s increased value.
What Are Community Assets in Complex Property Division Cases?
Arizona is a community asset state requiring divorcing spouses to equally separate and distribute any assets belonging to the “marital community” or those accumulated during the marriage. Examples of community assets include the following:
- Bank and investment accounts begun or contributed to during the marriage regardless of whose name is on the account
- Real estate property purchased during the marriage, including the marital home, rental properties, vacation properties, or investment properties
- Businesses and companies purchased or begun during the marriage
- Retirement accounts and pensions, regardless of whose name is on the account
- Cars, boats, and RVs
- Antiques, collectibles, artwork, and other valuables
- Houseware, electronics, furniture, and appliances
Complex property division cases sometimes also involve intellectual property, such as one spouse’s manuscript or artwork.
According to Arizona §25-211:
“Service of a petition for dissolution of marriage, legal separation or annulment does not alter the status of preexisting community property … change the status of community property used to acquire new property or the status of that new property as community property… or alter the duties and rights of either spouse with respect to the management of community property.
What If There Is a Prenuptial Agreement In Place?
Prenuptial and postnuptial agreements are formed by couples either before marriage or during the marriage to address the distribution of their separate and community assets in the event of a divorce, separation, or death (as part of an estate plan). When spouses form and sign a prenuptial agreement, the division of community property and retention of separate property during a divorce is much easier. The spouses must abide by their binding prenuptial agreement in all matters of their complex property division as long as the agreement is well-executed and valid.
Navigating a Divorce With Complex Property Division
When spouses have complex, diverse, or extensive assets and properties, they face challenges during the process of property division during the divorce. Each spouse must address questions such as the following:
- Did the other spouse fully disclose their assets and debts?
- Did commingling occur in this account, property, or other separately owned asset?
- What about valuing assets placed in a trust?
- How do we minimize tax penalties when dividing a retirement package?
- Which assets should be regarded as income-producing for a spouse’s maintenance and which are community property subject to equal division?
- How much is an asset or property worth, and do we divide the value or the equity?
- Do we have to sell the marital home, or how does one spouse retain it while still giving the other spouse half of its value?
- How does the division of assets impact our taxes?
- Can we divide frequent flier miles?
These are the financial complexities many spouses find challenging in divorces requiring complex property division.
How Can a Complex Property Division Divorce Lawyer Help?
When divorcing spouses have complex or extensive assets, they require skilled financial forensics, access to the best valuations of their assets, and experienced legal counsel throughout their divorce process. A divorce attorney with years of experience in the division of marital property in Arizona is essential in a complex property division case to protect a client’s rights during negotiations for a settlement agreement out of court, or to assertively defend their client’s best interests in court. Call Stewart Law Group today for the Phoenix divorce legal representation you need in your complex asset divorce case.