Arizona Divorce and Property Settlement Agreements
When you are going through a divorce, there are a number of elements that can cause disagreements and result in added frustration for both sides. One of the areas that often causes the most arguments in a divorce is how to divide property. However, Arizona is only one of a handful of states that is a community property state. What that means is that spouses generally share marital assets equally. Other states follow the theory of equitable distribution, which means that assets are divided in a manner that is fair and equitable to both sides, but it does not necessarily mean those assets are split down the middle.
At Arizona Statewide Paralegal, we have decades of experience preparing documents for people pursuing a divorce in Arizona. We can ensure your documents are properly prepared and filed correctly via our conveniently located offices in Maricopa and Pima counties. We are familiar with what questions to ask and provide this kind of services to hundreds of clients throughout Arizona each year.
Defining What is Separate and Community Property
The Arizona Revised Statutes state that all property that is acquired by either the wife or the husband during the course of the marriage is considered community property, unless it is acquired by one of these two methods:
- Descent, gift, or devise; or
- After service of a petition to dissolve the marriage, annulment, or legal separation if said petition results in a dissolution of marriage decree, annulment, or legal separation.
The statutes also define what is considered separate property in Arizona. The law says that personal and real property owned by a spouse prior to the marriage is the separate property of that spouse. In addition, property acquired during the marriage by devise, descent, or gift, along with the increases, rents, issues, and any profits of that property, will also be the separate property of said spouse.
We have listed some possible examples of community property below. Just remember that it will depend on how and when the asset was acquired:
- Real estate
- Personal property, including furniture, appliances, pets, etc.
- Life insurance policies
- Motor vehicles
- Boats, recreational vehicles
- Virtual assets and cryptocurrency
- Intellectual property
- Art collections
- Appreciation on investments
In addition to community property assets, there are debts that must be distributed, as well. Potential community property debts can include:
- Home mortgage
- Auto loan
- Boat loan
- Credit card debts
- Student loans
- Other debts
There are a number of things that can equate to separate property. Some of these may include:
- Inheritances or gifts given to a spouse alone
- Proceeds of a pension vested prior to the marriage
- Personal injury awards received by only one spouse
- Items purchased using one spouse’s separate funds
- Typically, items acquired after the Petition for Dissolution of Marriage has been served to the respondent
In some cases, a business that is owned by one spouse prior to the marriage will remain separate property. However, if the business had an increase in value during the course of the marriage or both spouses worked together at the business, then the courts may consider a portion of the business to be community property.
Separate property can become community property through a process known as commingling. This means the property is mixed together or combined during the course of the marriage. Depending on the circumstances, potentially a portion or all of the asset will now be considered community property. If you purchased something with a combination of community and separate funds, then the asset would be partially community property and partially separate.
How Retirement Plans are Handled in a Divorce
Retirement plans are assets that people are genuinely concerned about in a divorce, and for good reason. You spend your adult years putting money aside and working toward the day you no longer have to work. The last thing you want is to lose all of that in a divorce. The courts will look at a number of factors when deciding how to divide retirement plans and benefits.
There are two main types of pension plans — defined benefit and defined contribution plan. Defined benefit plans give employees a specific benefit amount upon retirement. It could be either a fixed dollar amount or it might be an amount that factors in your years of service with your salary. This type of retirement plan is not as popular as it once was.
Defined contribution plans do not specify an amount when you retire. Instead, you and your employer contribute to the plan. That money is then invested on your behalf. The investments can rise when the investments are performing well, and they can fall when the investment values are dropping. Some employers may offer both plans, or a hybrid plan, to its employees.
If one spouse is enrolled in a private pension plan, the other spouse can attempt to establish a legal right to the proceeds by filing what is known as a Qualified Domestic Relations Order (QDRO). This involves ERISA laws, which stands for Employee Retirement Income Security Act. ERISA places requirements on what a valid QDRO is, whereas the divorce proceeding itself takes place in a standard Arizona state court and is governed by local state laws.
You may hear about another retirement plan for Arizona public sector employees, which is known as the Arizona State Retirement System (ASRS). The guidelines state that if you are married during any portion of time in which you were an active contributing member to this plan, then your spouse could be entitled to a portion of your retirement benefits upon divorce. This is because of community property state laws and the fact that the contributions during the marriage would mean the benefit was “acquired during the marriage,” and therefore belongs to the community aspect of the divorce.
Stages of Property Division in an Arizona Divorce
When the court is looking to make a decision on property division, there are four essential steps they perform. The first is identification. In order to know how to divide assets, it is important to identify what they are to start with. Taking inventory means itemizing everything that could be divided in a divorce — everything from the house to smaller items like outdoor furniture for your pool area.
When compiling a list of your assets, you will find there are two main types of property. These are tangible and intangible. As its name suggests, a tangible object is something you can feel, like the marital home, your vehicle, and cash. Intangible assets are those that have value, but they are not a physical item you can touch. A good example of an intangible asset is intellectual property. This is something that has great value, but it is not something you can physically pick up with your hands.
Once all property has been catalogued, it is important to determine whether each item is separate or community property. Determining whether or not something is community property can often be straightforward, but there are times where it is far more complex. In the more complex situations, the court will look at a number of elements when reaching its decision. Some of these elements include:
- When did the person acquire the asset?
- Whose name is listed on the title?
- How was the asset acquired?
As previously mentioned, commingling funds can often lead to something that was formerly separate property now being deemed community property. Another term that is important to take note of is transmutation. Transmutation is when an asset is converted from one form into another. Transmutation is not all that uncommon, and it can be voluntarily or involuntarily. Sometimes, transmutation occurs through an agreement between spouses, when one spouse gifts it, or as a result of commingling the community property so much that it loses its original and separate character.
An example of gifting in the marriage would be a house that originally had a single and separate title. After the couple is married, the spouse who owns the house adds the other person to the title, listing both spouses as co-owners as “husband and wife as joint tenants.”
The next step in property division is to determine the value of the assets in question. In many cases, the item spouses fight over the most has very little financial value. It is not in either spouse’s best interest to have a long, drawn-out court battle over non-valuable items, which is where the property settlement agreement comes into play. You can make your own agreement regarding ownership.
Determining the value of assets is more complex when the item in question is a family-owned business or an executive’s compensation package. Some assets may require the use of a valuation expert, like a forensic accountant who can determine the real value of these types of assets.
The actual division of assets and debts is a multi-step process. First, the court will award all separate property and then move on to the community property assets and debts. There may be situations in which the court deviates from the standard split due to one spouse’s marital misconduct or fault. Arizona is a no-fault divorce state, so the courts may only deviate if there has been economic misconduct. Economic misconduct would be where one spouse wastes community funds through dissipation. This can include behavior like gambling away all the money in the joint bank account.
One other way the court may deviate from a 50/50 community property split is if there is a valid prenuptial or post-marital agreement in place.
However, if the parties are in total agreement regardless of the above mentioned scenarios, we can prepare a consent decree of dissolution where each party receives the property and pays the debt by agreement. Further, the consent decree will order your agreements with respect to your wishes about child support, parenting time and legal decision making. Both parties sign the consent decree and then the decree is signed by your judge without a hearing. This is the best possible scenario when all parties agree.
Learn More About Our Services
Arizona Statewide Paralegal offers document preparation services throughout Arizona. We have a workforce of skilled paralegals who have been assisting Arizona clients with legal document preparation services since the 1990s. We are proud to say our entire staff is certified by the Arizona Supreme Court.
Depending on the complexity of your asset portfolio, you may need to retain legal counsel for advice during the divorce process and a potential property settlement agreement. However, our proficient team can handle the document preparation and even some of the less complex issues that may arise. Why spend thousands of dollars in attorney’s fees when you only need assistance drafting standard documents? We offer the same services without the hefty hourly rates. From filling out your divorce petition to ensuring everything is filed timely, we can assist with all your document preparation needs within Arizona. Arizona Statewide Paralegal also offers the convenience of in-person consultations for those clients who feel more comfortable handling these types of legal matters in person.
As you conduct research online, you will see search results for many different legal businesses in the state that advertise their document preparation services. However, that is where most of their services end. These agencies offer no additional benefits beyond filling out your necessary forms. Once the preparation of your documents is completed, you will be expected to figure out how to handle everything else that needs to be completed. This can include filing the necessary documents with the appropriate court and, in some cases, hiring a process server to serve any necessary parties. These other document preparation agencies will not assist with any other pending issues, either. This means that if you have any additional questions on a specific process or need to know how to file the documents properly, you will incur additional fees from a completely different legal service.
At Arizona Statewide Paralegal, we maintain a full-service agency and take pride in offering exceptional customer service. We will not leave you to fend for yourself with a mountain of paperwork that needs filing or make you figure out what court you need to contact, or whatever follow up needs to be done. It is important to point out that we are not licensed practicing attorneys; therefore, we cannot legally engage in practicing law in Arizona or any other state. Essentially, this means we are barred from giving you any legal advice or telling you how to proceed with your individual case; however, we can legally prepare all your documents while guiding you through the filing process itself. If you have any specific legal questions that relate to divorce, custody agreements, spousal support, or covenant marriages, we are more than happy to refer you to a qualified and licensed practicing divorce and family law attorney near you.
If you need other divorce related forms, or any other legal documents prepared, contact our skilled team at Arizona Statewide Paralegal to see how we may assist you. We take pride in providing fast and friendly service, while offering convenience, all at a reasonable low price. We have offices conveniently located in Mesa, Phoenix, Tucson, North Tucson. Contact us today to learn more about Arizona document preparation services for your divorce and other legal document needs. We look forward to helping you.