Like many states, Arizona is a community property divorce state. In a community property state, divorcing spouses must equitably divide all marital property in a manner that’s fair if not strictly 50/50. The way the spouses or the judge divides the entirety of the couple’s property depends on when and how they acquired each asset and debt and whether or not they had a prenuptial agreement in place.
Divorces are rarely friendly and amicable. More often, they are turbulent and hotly contentious. If you have assets of significant economic or sentimental value it’s important to protect them during the process of dissolving a marriage.
Separate vs. Community Property
During the distribution of assets during a divorce, each spouse keeps their separate property while all assets accumulated during the marriage are evenly divided between both spouses in their pre-trial divorce settlement agreement or by a judge if they are unable to come to mutually agreeable terms. The state defines separate and community property in the following ways:
- Separate property includes all assets belonging to each spouse separately before their marriage, inherited by them, or gifted to them during the marriage. Also, any assets accrued after the separation are separate
- Community property includes all assets accumulated by the couple during the years of their marriage, including bank and investment accounts in only one spouse’s name
While this may seem straightforward, the lines are often blurred during years of commingling assets during marriage. A spouse may have a valid claim on half of the other spouse’s separate asset if they invested time and/or money into improving the asset, or if they were given access to the asset or account during the marriage.
Because married spouses often inadvertently commingle their separate assets, a contentious spouse may make a claim against an asset you thought was yours alone unless you took steps to protect it from distribution.
What Can Happen During a Contested Divorce
It’s important to protect your separate assets during a divorce battle when heated emotions come into play and often bring out the worst. During negotiations, a spouse may make a claim against an asset you thought was separate, and the court may find their argument valid.
In some cases, a spouse might decide to seek revenge by disposing of assets through a spending spree, moving money from joint accounts into new accounts, or hiding assets. Some spouses try to cheat the system by loaning or “gifting” large amounts of money or assets to family and friends with a secret agreement for the return of the assets after the finalization of the divorce. It’s important to protect your assets to make these tactics impossible.
Understanding Asset Protection
The best way to protect important separate assets is to protect them before marriage in a prenuptial agreement or at any time after marriage in a postnuptial agreement. Contrary to common belief, a pre or post-nuptial agreement doesn’t indicate that you believe the marriage is destined for divorce. In fact, it can protect both spouses by carefully defining and predetermining what belongs solely to them while they are on good terms.
Protecting your assets during divorce does not mean you are greedy or vengeful, it means you’re taking an intelligent and necessary step. You can protect your assets as you prepare for divorce in the following ways:
- Consult with an attorney and choose an Arizona divorce lawyer with a strong track record of success
- Make an inventory of all of your personal belongings
- Avoid unnecessary or lavish spending
- Gather all financial documents
- Secure your personal valuables in a safe place
- Close joint accounts and freeze joint credit cards
- If you inherit anything before or during the divorce, don’t place it in a joint account or any account to which your spouse has ever had access
- Don’t sign anything from your spouse or their lawyer without your attorney present
Your attorney can help you to make decisions that are within Arizona law to protect your assets. In cases of high-asset divorces, your Phoenix family law attorney may consult with a divorce financial expert to maximize your asset protection.