Glendale AZ Property Division Attorney

Glendale AZ Property Division Lawyer

Divorce is never an easy event to go through. All parties involved generally want to come to a fair and equitable resolution as quickly as possible. Arizona family law can become a complicated matter, and it can often require the help of a Glendale AZ property division attorney. In many divorces, there is property involved in some way, and it is important to understand how that property can and should be divided among spouses.

Community Property State

The state of Arizona is considered a community property state. This means that all assets that were acquired by the spouses while in the marriage are jointly owned. These assets are considered community assets. Once a divorce or separation is filed, these assets will be divided equitably between spouses. This is also true for any debts or liabilities that were acquired during the marriage.

There can also be assets and liabilities that were acquired before the marriage. These assets and liabilities are considered separate property and will generally be excluded from the property settlement. This can hold true for both a civilian divorce and a military divorce. A Maricopa County asset division lawyer can help review your specific case and help you understand how your property will potentially be viewed by the court.

Valuation of Property

It is not uncommon for spouses to disagree on who owns the assets, whether the property is a community or separate property, or what the value of the property is. If the spouses cannot agree on the status of the property, the court will most likely determine if the property will be considered community or separate.

Once separate property has been excluded, the court will then divide up the community property equitably. It is important to note that although Arizona is a community property state, that does not mean that the community property will always automatically be split 50-50. There are several factors to be accounted for when determining if a property is separate or community. Those factors can include:

• Retirement assets. For retirement accounts, the general rule is that any funds that were accrued in a retirement account, such as a 401(k), IRA, or pension prior to the marriage, are separate property. Any funds that were accrued or added after the marriage are considered community property.
• Real estate. Any real estate that was owned separately before the marriage will be considered separate property. Any real estate assets that are inherited separately during the marriage will also be considered separate property. This also applies to any increase in the values of the subject properties or any profit made from the properties, such as rent.
• Legal settlements. Assets or funds that are awarded as a result of a legal case settlement can be considered either community property or separate property. Generally, any funds that are awarded for lost wages are considered community property, and any funds that are awarded for pain and suffering damages are considered separate property.
• Joint property. In most cases, if a property, such as a real estate title or a bank account, has each spouse’s name on it, then they both may have an equal claim to the property. This is true whether the property was owned before the marriage or not. For example, if a couple lives together before they get married and they buy a home in which both of their names are on the title, that property may be considered separate property in the event of a divorce.
• Inheritance. Inheritance can become a bit complicated when dividing it among spouses in a divorce. Generally speaking, any assets that are passed down individually through a trust or an inheritance belong to the individual recipient and are considered separate property.

However, there are cases in which if the assets are deposited into a joint bank account, that could make them community property. Engaging a qualified and experienced estate planning or family lawyer can help to understand the specifics of inheritance and how they apply under Arizona state law.

Special Circumstances

There are certain circumstances in which the line between community property and separate property can become a little unclear. A few examples of this are:

• Quasi-community property. It is uncommon for couples and individuals to own property either in another state or property that was acquired while in another state. It is important to know that under Arizona state law, these properties may be treated as community property even if the state in which they were acquired is not a community property state. This is known as quasi-community property.
• Transmutation. It is possible for a property to transform from a community property into a separate property and vice versa. This is known as transmutation. Common ways that transmutation is accomplished include commingling separate property with community property, an agreement between the spouses, or a gift from one spouse to the community.

An example of this is as follows: If one spouse purchases a home using separate property assets and the home is then titled in both spouse’s names, the house may now be considered community property.

Arizona Property Division

The state of Arizona generally breaks the division of property during a divorce into four main steps.

• Identifying the property
• Classifying the property
• Determining the value of the property
• Dividing the property

Identifying The Property

The first step the court will take when assessing property division from divorce is to identify the assets and liabilities that are to be divided. This can include the home, other real estate, vehicles, bank accounts, brokerage accounts, retirement accounts, jewelry, and any other personal assets. Debts can include mortgage payments, vehicle payments, and any other personal loan payments. The court will take an inventory of every valuable asset and debt owned by each spouse.

Classifying The Property

As outlined above, the court will classify the property into separate or community property. It is important to consider when the property was purchased, whose name is on the title, and if any commingling or transmutation was done. Gifts or inheritances are generally regarded as separate property unless they are commingled with community property.

Determining The Value of The Property

Generally, the assets will be valued according to their fair market value at the time of review. This is typically used for assets that are not overly complex to value, such as real estate or vehicles, and these values can usually be verified with comparable assets.

Some assets that contain sentimental value to both spouses can be more difficult and complex to value. There are other methods that can be used to determine the value of these assets. These valuations can include an agreement on value from both spouses, a party’s testimony, or expert testimony.

There are also instances in which a professional forensic accountant or appraiser may be brought in to help value certain assets. A forensic accountant can help analyze financial data, identify assets, and present their findings to the court.

Dividing The Property

The final step in the property division process is to divide the property. Once all of the property has been identified, classified, and valued, then it can be divided among the spouses. In most instances, the court will first award each spouse their separate property. Then, the court will divide the community property up to each spouse, depending on their equitable share. It should be noted that the spouse’s equitable share may not always be 50-50 in every circumstance.

Common Law Marriage

Common law marriage is a marriage between people who didn’t purchase a marriage license or have a marriage ceremony but are considered to be legally recognized. Couples who have been in a relationship and have lived together for a certain number of years may be considered married without having any legal paperwork or ceremony.

Some states recognize common-law marriages, although the timeline for living together can vary, and some states do not recognize common-law marriages at all. The state of Arizona does not recognize common-law marriages. This means that for couples who are cohabiting in Arizona, and are not legally married, and want to end their relationship, the divorce process does not apply.

It is important to note, however, that the United States Constitution holds each state to give full faith and credit to another state’s court order. This means that if you achieve common law marriage status in another state and you move to Arizona, Arizona will recognize the common law marriage. The marriage will be viewed as equal to all other legal marriages, and the necessary community and separate property laws will apply.

Prenups Can Offer Protection

A prenup can be a responsible way of protecting one’s assets if a divorce should occur in the future. Prenups are generally a good idea to consider for couples who have significant assets, have children from previous relationships, one party owns a business, or are much wealthier, older, or closer to retirement than the other.

For a prenup to be valid in the state of Arizona, the agreement must be in writing, it must be voluntarily signed by both parties, and it must be signed after reasonable and fair disclosure has been made of all property and financial obligations. If all of these criteria are met, then the prenup can be valid and enforceable under Arizona state law.

Drafting a prenup agreement can be a challenging process, and it is highly recommended that spouses utilize the services of a qualified family attorney to help draft the agreement. Common mistakes that are made with prenup agreements include:

• The prenup was signed under duress. Ideally, a prenup should be agreed on and finalized several weeks before the marriage. It is not something that should be brought up at the last minute and then hastily prepared and signed. It is important to remember that a prenup is expected to hold up in a court of law and will be adhered to in the case of divorce.
• Only one spouse used a lawyer. It is always recommended that each spouse engage a separate attorney to provide legal representation when drafting up the prenup. When both spouses utilize their respective legal counsel, it helps to ensure that the agreement is fair and equitable to both parties and prevents one spouse from gaining the upper hand.
• Infringes on child custody. If children are involved, it is generally recommended that the prenup avoid any attempt to interfere or limit child support obligations or child custody rights. A court will likely not look favorably upon these provisions and will likely not enforce them.
• Financial obligations were not appropriately represented. It is not uncommon for one or both spouses to misrepresent their assets or debt obligations. This is not considered reasonable or fair.
• Signed while mentally incompetent. If one or both parties signed the prenup while under the influence of alcohol or drugs, then the agreement is likely unenforceable. Additionally, it could be argued that an individual was suffering from a mental illness at the time of signing and wasn’t capable of a rational decision.

Postnups

Postnups can offer another form of protection in the event of a divorce. While postnups are similar to prenups, they do present some differences that are key to understand. A postnup is not created before the marriage like a prenup. It is instead created after the marriage has already taken place. A prenup is legally binding on both parties and is considered established law in the state of Arizona. It should be noted that a postnup can be less legally binding on both parties.

The court is ultimately responsible for the division of assets resulting from a divorce or separation. A postnup gives the spouses the ability to have advanced control over their own property if a divorce should occur. Postnups are similar to legal arrangements in that they are reviewed and can be subject to change if the court deems that the circumstances under which they were created have changed.

What Is Covered Under a Postnup

• Financial assets and obligations. A postnup often outlines the financial assets and debts of each spouse and how they will be divided in the instance of divorce or separation.
• Property division. A postnup can identify ownership of the spouse’s important and expensive assets and also outline how they are to be divided after the divorce.
• Alimony. Alimony, also known as spousal support, can also be outlined in a postnup. It is fairly common for spouses to create parameters that surround alimony payments to help ensure that no unfair legal action occurs to either spouse during a divorce.

Does My Spouse Have a Right to Half of My House I Bought Before Marriage in Arizona?

Your spouse generally does not have a right to half of the house that you bought before marriage. The short answer is that it depends. There are a multitude of factors at play in this scenario. To keep things simple, if you bought the house before the marriage, and only your name is on the title, then it may be considered separate property, and your spouse will not be entitled to any ownership in the house after divorce.

However, if your spouse’s name is on the title or if your spouse contributed to the property, then an argument may be made that the house is commingled and is considered community property, in which your spouse would have some ownership. Also, if your spouse can prove that they contributed to the increase in the value of the home, then they may be able to claim a portion of ownership in the increase in value.

Does Arizona Use Attorneys for Real Estate?

Yes, the state of Arizona can and often does use attorneys for real estate. Attorneys can often connect a client with another professional, such as a financial planner, estate planner, or property appraiser, who can help with the property division. These professionals, along with the real estate attorney, can help determine a fair and equitable value to the property and help ensure that each spouse gets their fair portion of the property.

Is My 401(k) Considered Community Property?

Your 401(k) may be considered community property, depending on the date on which you opened the account. If the 401(k) account was opened before the marriage, and there was no commingling of funds, then typically, that account is considered your separate property. If the 401(k) account was opened after the marriage began, then it is typically considered community property and would be subject to property division in a divorce scenario.

It is important to know that there are instances in which spouses negotiate to allow for the spouse that owns the 401(k) to keep it entirely. For example, you could offset the value of your spouse’s portion of the 401(k) with other assets of equal value. Your spouse and their legal counsel would have to agree to it, but this can be useful if your 401(k) has a large balance and you do not wish to liquidate half of it.

Should I Change My Estate Plan After My Divorce?

Yes, it is a good idea to reevaluate and possibly change your estate plan once your divorce is finalized in Glendale, Arizona. Items such as life insurance, your will, trust, and power of attorney are just a few items that should be reviewed again after the divorce. It is also generally a good idea to review all beneficiaries, executors, trustees, and agents.

It is important to note that you can prepare changes and updates to your estate plan during the divorce process, but you should wait until after the divorce is finalized before you execute any changes. This will help you avoid a possible preliminary injunction for tampering with your estate plan during the divorce.

Tax Consequences of Property Distribution

For divorces that involve significant property distribution, this transfer of assets can trigger significant tax implications that should be considered and planned for.

• Tax on property transfer. If the court distributes assets to a spouse, it is considered a transfer. As long as the transfer happens within one year of the divorce, then it does not trigger a taxable gain or loss.
• Tax on alimony or spousal support. Alimony payments are not taxable to the receiving spouse, and they are not tax-deductible to the paying spouse. Spousal support or alimony is paid with after-tax dollars. This is the same with child support payments. Understanding the tax implications of spousal payments and child support payments can heavily influence the negotiation during the divorce process.
• Tax on income. Once a property, such as a rental home or a building with a lease, is distributed to the spouse, that spouse is responsible for the income taxes attributable to that property.
• Tax on a lump sum payment. Any lump sum payments agreed on are typically taxable. If the spouses agree to a lump sum payment, the spouse receiving the payment is most likely responsible for attributable tax payments.
• Tax on retirement assets. Retirement assets, once transferred, are generally not taxable as long as the assets are placed into a qualifying investment account.

A Law Firm That Is Right for You

Family law cases are serious matters, and each case needs to be treated with extreme care and attention to detail. The outcome of these cases can have a life-long impact on all parties involved. It is important that individuals get the proper legal advice and representation that they need to ensure they get a favorable outcome. An experienced legal attorney can often make the difference in clients getting the outcome they deserve.

At Lazenby Law Firm, our dedicated legal team takes pride in providing aggressive and exceptional legal representation for our clients. We strive to help individuals across the state of Arizona understand their legal rights and seek the fair resolutions that they deserve. Our legal team has experience in handling all types of cases related to family law matters. If you need a family attorney to help review your case and discuss potential options, contact our office today.