Do you plan to state your wedding vows in the future? Perhaps things aren’t going well. Even if you aren’t expecting to file for divorce, understanding how to prove separate property in a divorce could benefit your current and future financial health.
Married couples collect various assets during their nuptial years, and many will struggle to find common ground about these possessions if they decide to part ways. Divorce proceedings become especially tricky in Arizona because the state legislation follows a protocol that involves the equal distribution of all property and debts.
Below, Lincoln & Wenk’s divorce lawyer in Phoenix, AZ, looks at how separate assets differ from those placed in community of property. The information may help you protect yourself now or in the future. Alternatively, consider scheduling a consultation with the team in Arizona for legal counseling tailored to your situation.
Separate Property vs. Community Property
How does separate property differ from community property according to Arizona law? Since this state adheres to community property laws, your judge may default to equal distribution of property that you and your partner shared during your marriage.
Since the court often splits all marital debts and assets equally between both parties, is it possible to retain some personal property acquired during your marriage? Yes, it’s possible. However, doing so requires understanding how the law defines separate and community property.
What Is Separate Property in Arizona?
Separate property typically has documentation verifying that a single party within the marriage owns it or has purchased it. Examples of separate assets may include the following:
- Belongings procured before the marriage
- Inheritance relegated to a single spouse, regardless of marital status
- Items listed in the agreed-upon terms of a pre or postnuptial contract
The official documentation specifying your ownership of separate property assets matters in your bid to retain it following the divorce proceedings.
What Is Community Property in Arizona?
Community property, also known as marital assets in Arizona, includes any other assets the couple acquires while married to each other. A judge will divide property in equal shares to each divorcee, so you and your spouse might be looking at the following types of assets:
- Debts from loans, unpaid bills, or credit cards
- Residential or commercial real estate
- Debit or savings accounts for retirement funds, emergencies, and other plans
- Assets like vehicles, buildings, or electronics
In Arizona, these items usually fall under the community property category unless proven otherwise.
Commingled Separate and Community Assets
While the differences seem simple, gray areas aren’t uncommon. A marriage may thrive for years while you both confidently and unassumingly contribute to shared asset growth. Understandably, then, property division may not occur as smoothly as you hope unless your legal representative knows how to prove separate property in a divorce despite complications.
For example, sometimes, the court rules that otherwise separate property is now marital property, and commingling blurs the lines of ownership and identity.
How Commingled Assets Influence Divorce Proceedings
Commingled assets are blended property, with a prime example involving a property inheritance you receive from a deceased parent. That piece of real estate initially belongs to you and is separate property. However, if you sell the property and deposit the funds into a shared bank account earmarked for retirement, your spouse enters the picture.
Since you and your spouse share the account, the Arizona court will likely label the funds as marital or community property. That means if you didn’t thoroughly document your contribution from the inheritance, you could lose access to that full amount.
As you can see, commingled assets significantly complicate the property division proceedings, especially if the party claiming ownership doesn’t have proof. Here are a few other examples:
Using Separate Resources to Obtain Property That Becomes Communal
When you use your personal resources to acquire or increase community-held assets, you share your property and ownership of assets with your spouse. Many couples commingle their belongings in this way. However, doing so prevents the party with initial ownership from reclaiming something in full in the event of a divorce proceeding.
Under most circumstances, an Arizona judge will divvy the resources down the middle if you don’t present the proper documentation for the court’s consideration.
Accounting for Separate Assets
Documentation or asset tracing allows you to prove your original ownership of most separate assets. However, you must also do the following to enable the process:
- Collect eligible documents verifying your ownership
- Allege your ownership of said property in court
- Submit the documents and allegations within a predetermined time frame
If not, the court could deem the property a marital asset.
Community Liens vs. Community Claims
Understanding how to prove separate property in a divorce also requires learning the differences between community liens and claims. For example, one spouse might request a community lien when the court assigns them a shared debt during the divorce proceedings. If granted the lien, the spouse has an added layer of security to ensure the other spouse’s continued contribution toward paying off the debt.
A claim occurs when shared resources or efforts increase a separate property’s value. For example, your partner may have purchased a beach house before your wedding, which you fixed up together to become usable for personal and rental purposes. The house might qualify for a claim on your behalf since your community efforts increased the overall property value.
What Arizona Property Laws Say
Removing yourself from long-term entanglements, including marriage, can be daunting. Unusual circumstances that justify liens or claims will also occur due to various circumstances. That’s why it pays to ask an experienced divorce lawyer to assist you in identifying eligible processes and everything else.
Additionally, keep the following points in mind when managing divorce proceedings:
- Expect a community property state default: An Arizona divorce court will typically default to treating all assets acquired throughout a marriage as shared property.
- Work with your spouse: Although Arizona law treats most procured assets as marital property, it leaves room for you to create a spousal agreement regarding shared property.
- Use documents to your advantage: In the event that you must leave property division in the hands of a judge, documentation can support your ownership and rights to various assets.
- Consider the variables: Divorces brim with complexities like not knowing how to account for undocumented labor, time, and other investments. A qualified divorce attorney can prove invaluable in navigating these uncertainties.
Types of Assets to Protect in Arizona Divorce Proceedings
What assets do Arizona property laws apply to? How does a divorce court view certain types of property? Document, track, and verify the examples listed below:
- Settlements: The court typically considers compensation from a legal settlement as a type of community asset, including payments for lost wages. However, a settlement due to pain and suffering may label the asset as separate property instead.
- Real estate: If you owned a building or piece of land before marriage, you will likely retain ownership with the proper documentation in place.
- Joint assets: Property bearing both your name and your partner’s name is communal. However, the court may still treat it as separate property if one party acquired it before getting married.
- Inheritance: When you inherit wealth, you may list it as separate property. If you pool that inheritance into a joint asset, you might lose some of it to community division.
- Retirement and other financial planning efforts: If you opened an account before marriage with only your name, you will likely retain ownership over the account and its contents. It may not be so clear-cut for accounts opened after marriage.
How to Prove Separate Property in a Divorce in Arizona
Can you protect yourself from marital debts while retaining ownership over your separate property during marriage or divorce proceedings? Yes, and you won’t need to know how to prove separate property in a divorce if you implement these practices into the financial aspects of your relationship:
Protect Your Assets Before and During Your Marriage
A prenuptial agreement outlines your asset ownership before marriage, allowing you and your partner to identify and agree upon your personal property in the event of a split. You can draft and update a postnuptial agreement throughout your marriage to serve a similar purpose. These contracts provide evidence of ownership and documented agreement to those ownership terms.
Document All Transactions Throughout the Marriage
Keep records of the following:
- Hours spent on various projects that improve property value
- Resources used to increase asset worth
- Financial receipts when pooling monetary resources
Documentation often sets the standard for proving ownership.
Always Consult with Qualified Arizona Legal Counsel
A reputable divorce attorney can advise you about how to word documents to ensure their legality and legitimacy in Arizona’s court system. A team like Lincoln & Wenk can assist you in seeking a fair divorce settlement.
Contact Lincoln & Wenk’s Divorce Lawyer for a Consultation
Arizona’s divorce attorneys at Lincoln & Wenk understand that your property may be vital during a divorce, as well as how to prove separate property in a divorce proceeding. Exercise your rights and contact us for a consultation today so that you can move forward.