Hinderaker Law Topics Internal

What is Community Property?

Arizona is one of 8 community property states in the nation. So what does this mean?

All property acquired by a married couple during the marriage is considered community property except property (1) acquired by gift, devise, or descent (e.g. inheritance), or (2) property acquired after the service of the petition for dissolution/legal separation. This means that every paycheck received, every contribution into a retirement account, and every vehicle purchased during a marriage is, with few exceptions, community property.

Community property is distinct from separate property, which belongs to one spouse. Separate property typically falls into one of four categories: (1) property acquired by one spouse prior to a marriage; (2) property that one spouse receives during the marriage through a gift or inheritance; (3) any increased value on separate property that occurs during a marriage; and (4) property acquired after the date of service of the petition for dissolution/legal separation.

A spouse can give up an interest in community property through an affirmative act. For example, a spouse might surrender community property rights by signing a prenuptial agreement. But if one spouse places community funds in a “separate” bank account, that act alone will not convert the funds into separate property belonging to the other spouse. Generally, without an affirmative and knowing act by one spouse to waive his or her community property rights, all property acquired during the marriage is deemed by the law to be community property.

The same concept applies to the debts and liabilities of a marital community. Both spouses are entitled to equal management and control of community property. Thus, with few exceptions, debts and liabilities incurred during a marriage, and before the petition for dissolution/legal separation is served, are considered to be community obligations, for which both spouses are equally liable. In order to prove that a debt incurred during a marriage is not a community obligation, one must prove by clear and convincing evidence that the debt was not intended to benefit the marital community. One such example are debts incurred by one spouse to carry out an extramarital affair.

In general, a court will divide community property (assets) and community obligations (debts) "equitably" between the parties. Equitable is a legal term, but more often than not it means equal.

Community property concepts can be complicated and confusing, especially when the involve business interests, real property, student loans, personal injury awards, gambling debts, inheritance, retirement accounts, and the like. I can help you understand this concept, identify all community assets and liabilities, ensure that you receive your fair share of all community property, and that you only take responsibility for paying your share of the actual community obligations.