publications - family law
Division of Property and Spousal Support
How is property categorized in Arizona?
In general, in Arizona, during marriage, property may be owned as separate property of either spouse or as community property belonging to both spouses. The presumption is that all property acquired during the marriage is community property.
All property owned by each spouse before marriage is the separate property of that spouse. A.R.S. § 25-213. The statutes also provide that any, inheritance, and income earned from rents, issues, and profits of separate property during marriage are separate property. Caselaw has established certain other acquisitions as separate property as well. These are:
- Purchases made with separate funds or property,
- Professional degrees and license,
- Damages or benefits for personal injuries, and
- Certain federal retirement benefits such as social security.
Personal injury recoveries are separate property, but recovery for lost wages and medical expenses are considered community property. Jurek v. Jurek, 124 Ariz. 596, 606 P.2d 812 (1980). Any property acquired by either spouse after an action for divorce, separation or annulment is filed is considered to be separate property once the action is finalized. A.R.S. § 25-213.
All property acquired by husband and wife during marriage is presumed to be community property unless it fits one of the descriptions noted above. The acquisition of community property ceases once a spouse files a petition for legal separation, annulment or dissolution of marriage if the petition results in a decree. A.R.S. § 25-211.
Tenants in Common
Property can be acquired by husband and wife as tenants in common. This means that each spouse owns one half of the property under their own separate title.
Joint Tenants with Right of Survivorship
Joint tenancy allows two or more persons take and hold property as if they were one person but with each tenant owning an individual whole, which passes to the surviving tenant or tenants upon the death of one joint tenant. Joint tenancy property does not require probate upon the death of another joint tenant. On the other hand, the community interest of the deceased spouse must be probated. Community property allows spouses to will property to one another and bypass probate.
How does the court decide the division of property and debt?
The court is required by law to divide all marital property. Property acquired outside of the state by either spouse during marriage is considered community property if it would have been community property if acquired in Arizona. Marital property not divided by the decree is held by the parties as tenants in common, each with an undivided one half interest. In the decree, the court shall assign each spouse his or her separate property. The court is to divide property equitably but not necessarily in kind. The division is to be without regard to marital misconduct. However, the court may consider excessive and abnormal expenditures, destruction, concealment, or fraudulent disposition of marital property in making the division. A.R.S. § 25-318.
In making a division the court may also impress a lien upon the separate property of either spouse or upon a spouse's portion of the awarded community property to secure payment to the other spouse for any interest or equity in property, for child support or spousal maintenance, for court ordered community debt, and for damages and judgement incurred from spousal or child abuse. A.R.S. § 25-318(C).
Can life insurance and/or retirement benefits be divided as well?
It is possible that life insurance and/or retirement benefits could be divided in a divorce proceedings. It depends on whether the interest was aquired during the course of the marriage and the benefits can be considered community property. A determination must be made as to what part is the community's, what would be an equitable distribution, should the non-employee spouse be awarded part of the benefits or property instead, and how the division would be implemented. There are various formulas used to determine what is an appropriate division of life insurance and/or retirement benefits. It is recommended that you speak with an attorney to determine which formula should be used in your case.
If retirement benefits are divided, this is usually accomplished through a document called a Qualified Domestic Relations Order, also known as a QDRO ( pronounced "Quadro"). Most companies require you follow specific format on QDROs. It is best to contact the company for an example form or to find out what their requirements are. Military retirees have different requirements under the Uniformed Services Former Spouses' Protection Act; for more information, see the Uniformed Services Former Spouses' Protection Act Bulletin at www.defenselink.mil/dfas/money/garnish/fsfact.htm and the FAQs at www.defenselink.mil/dfas/money/garnish/fs-qa.htm.
How are debts handled?
Creditors should not be able to use the separate property of a spouse to satisfy a separate debt of the other spouse. Community property is available to pay the separate debt of a spouse if the debt was incurred before the marriage and after September 1, 1973, but only to the extent of that spouses contribution to the community property which would have been such spouse's separate property if single. Community property is avaialbe for a spouse's debts incurred outside of Arizona during the marriage if the debts would have been considered communal if incurred inside the state. Spouses are presumed to be acting for the benefit of the community when they incur a debt during the course of the marriage. A.R.S. § 25-215.
What if my former spouse does not pay a debt that he or she was supposed to pay pursuant to the Decree?
Even though the court orders one spouse to pay a community debt, both still remain liable to the creditor. The spouse who pays a debt may bring an action against the one who was ordered to pay for any amounts paid to the creditor. Wine v. Wine, 14 Ariz. App. 103, 480 P.2d 1020 (1971).
Community debts not allocated by a divorce decree remain the joint obligation of the parties. Community Guardian Bank v. Hamlin, 182 Ariz. 627, 898 P.2d 1005 (Ariz. App. 1995). However, a divorced spouse may bring a separate action for contribution from the other spouse for payment of a community debt which was not allotted in the property settlement or in the decree. Fisher v. Sommer, 160 Ariz. 530, 774 P.2d 834 (Ariz. App. 1997).
How does the court determine the amount of spousal maintenance or alimony?
The court has the authority to award maintenance in an appropriate case for any amount and length of time id deems, without regard to marital misconduct and after considering all relevant factors. The court may use any of the following reasons to grant maintenance if it finds that the spouse seeking maintenance:
- Lacks sufficient property to provide for her or his reasonable needs; or
- Is unable to support himself or herself through appropriate employment or is the custodian of a child whose age or condition is such that the custodian should not be required to seek employment outside the home or lacks earning ability in the labor market adequate to support himself or herself; or
- Contributed to the educational opportunities of the other spouse; or
- Had a marriage of long duration and is of an age which may preclude the possibility of gaining employment adequate to support himself or herself.
The court will use numerous relevant factors to determine the amount and duration of an award of spousal maintenance. These factors include:
- The standard of living during the marriage,
- The duration of the marriage,
- The age, employment history, earning ability and physical and emotional condition of the spouse seeking maintenance,
- The ability of the spouse from whom maintenance is sought to meet his or her needs while meeting those of the spouse seeking maintenance,
- The comparative financial resources of the spouses,
- The contribution of the spouse seeking maintenance to the earning ability of the other spouse,
- The extent to which the spouse seeking maintenance has reduced his or her income or career opportunities for the benefit of the other spouse,
- The ability of both parties after the dissolution to contribute to the future educational costs of their children,
- The financial resources of the party seeking maintenance,
- The time necessary to acquire sufficient education or training to enable the party seeking maintenance to find appropriate employment and whether such education or training is readily available,
- Excessive or abnormal expenditures, destruction, concealment or fraudulent disposition of community, joint tenancy and other property held in common.
- The cost for the spouse who is seeking maintenance to obtain health insurance and the reduction in the cost of health insurance for the spouse from whom maintenance is sought if the spouse from whom maintenance is sought is able to convert family health insurance to employee health insurance after the marriage is dissolved.
- All actual damages and judgments from conduct that results in criminal conviction of either spouse in which the other spouse or child was the victim.
The award may be as a lump sum or by way of periodic installments. Lump sum awards may be payable in installments. The guidelines provide that the supporting spouse shall not be required to pay more than one-half of his or her net income as child support and maintenance.
Unless otherwise agreed in writing or expressly provided in the decree, the obligation to pay future maintenance is terminated upon the death of either party or the remarriage of the party receiving maintenance. A.R.S. § 25-327(B). The court shall maintain continuing jurisdiction over the maintenance issue for as long as maintenance continues, unless, parties agree the maintenance order and decree specify that its maintenance terms shall not be modified.
Absent such an agreement, the provisions of a decree for spousal maintenance may be modified or terminate upon showing of changed circumstance that are substantial and continuing. A.R.S. § 25-327(A). The court has no jurisfiction to modify if the original decree was silent as to maintenance. Long v. Long, 39 Ariz. 271, 5 P.2d 1047 (1931).
A request for modification of spousal maintenance is initiated by a verified petition or application or by a motion supported by affidavit(s). The party opposing modification may submit an affidavit setting forth why modifcation should be denied. Siegert v. Siegert, 131 Ariz. 31, 648 P.2d 146 (Ariz. App. 1981).
How will a divorce affect my taxes?
There are numerous tax problems that can occur in a divorce. These problems included, but are not limited to, payment of tax deficiencies, payment of current taxes, form of return for current year (joint or separate), deductibility of attorney's fees, gift tax aspects, estate tax aspects, taxation of spousal maintenance, lump sum payment problems, allocation of payments between alimony and child support, dependency exemptions, division of tax refunds, and income tax consequences of a property settlement. Because answers to tax questions are so specific to each couple's set of circumstances, if you have a concern about any of these tax problems, it is best to seek counsel from an attorney or tax advisor.
What if my spouse tries to dispose of our property after he or she is served with divorce papers?
A Preliminary Injunction is issued with every action for divorce or legal separation. The injunction prevents either party from "transferring, encumbering, concealing, selling or otherwise disposing of any of the joint, common, or community property of the parties except in the usual course of business or for necessities of life, without the written consent of both parties or the permission of the court." The injunction has the force and effect of an order signed by the judge and it is enforceable by all available remedies including contempt. The injunction contains a warning that if either party disobeys any provision of the official order, he or she may be arrested and prosecuted for the crime of interfering with judicial proceedings. A.R.S. § 25-315.