Arizona community property laws generally provide that property acquired by either spouse during marriage is community property. Those same community property laws also provide that property acquired by either spouse prior to marriage or that was received as a gift or inheritance by a spouse during the marriage remains the separate property of that spouse.
 

Who has the burden of proving when property was purchased or how that property was acquired for the purpose of proving whether that property is community property or separate property in Arizona?

Arizona community property laws include a presumption that all property owned by either party is owned by the parties as community property, regardless of how title to that property is held. An Arizona Judge presumes, therefore, that all property owned by either spouse is community property. The burden of proving that an item of property is the separate property of a spouse rests upon the spouse making that separate property claim.
 

Do Arizona community property laws apply to debts?

Yes. Although the applicable Arizona community property statute does not specifically address the payment of debts incident to a divorce, the Arizona community property cases have interpreted that statute to require a judge to divide debts in the same manner as it divides assets.
 

How are community property and debts divided in an Arizona divorce?

The very general rule is that a judge must equitably divide all the spouses’ community property and debts. The term equitable is generally presumed to be equal; meaning the court will usually equally divide the community debts and assets. However, there are circumstances when a judge may unequally divide community assets because the judge determines it is equitable (i.e., fair) to do so, such as when one spouse has wasted community assets through gambling or an addiction to drugs.
 

Are retirement accounts divided in an Arizona divorce case?

Retirement assets are treated in the same manner as all other community property in Arizona and are, therefore, divided between the spouses in a divorce. The court will apportion the community property interest in retirement accounts between the spouses and will award each spouse his or her separate property portion of those retirement accounts.

The actual division of the accounts occurs by rolling out an amount into a separate account for the spouse receiving an interest in the retirement account, offsetting that spouse’s interest in the other spouse’s retirement account by awarding him or her more of some other asset, or by preparation of a special Order referred to as a Qualified Domestic Relations Order, which is an Order that directs the plan administrator as to how to divide the community property portion of the retirement account.
 

Can the court decide who will be awarded the community residence?

Arizona community property laws allow the court to equitably divide property in kind if it so chooses. This in kind distribution means the court does not have to equally divide each community asset but, instead, allows the court to award certain items of property to one spouse and other items of property to the other spouse. So long as the ultimate distribution of property is fair, it doesn’t particularly matter who gets any particular item of property. An Arizona judge, therefore, may award a community residence to one spouse, so long as the other spouse is fairly compensated for his or her interest in that property.
 

What happens to a business that was owned or operated by a spouse during marriage?

Business interests may be treated as community property in Arizona. The same Arizona community property presumptions discussed above apply to a business. Specifically, a business owned or operated during a marriage may be classified, partly or wholly, as community property. The appraisal process necessary to determine the value of a business is complicated but, generally, is based upon the determination of the income earned from the business, the expected future growth in those earnings, and an evaluation of the assets and debts owned by the business.