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Division of Property & Debts

Division of Property and Debts

Many divorcing couples struggle to come to an agreement on how to fairly split property and debts. It is important to keep in mind the value of the different properties, how the split may affect taxes and future expenses associated with the property. Sometimes the parties can work through these issues on their own and other times these are issues that need to be addressed with the court.

Sole and Separate Property vs. Community Property

In Arizona, there are two types of property, sole and separate property and community property. Sole and separate property is property that is typically owned by one person prior to the marriage. Examples include a house titled in one person’s name that was acquired before the marriage, inheritance, and gifts. As long as the sole and separate property remained separate and not comingled with community accounts and/or funds, then it will usually be regarded as sole and separate property. On occasion however, a community lien might be found to exit against sole and separate property when community money or community labor was used to improve the property or to reduce a loan obligation on the property. The other type of property is community property. Community property is property that was acquired during the marriage or from community labor. Examples of community property include houses, cars, retirement accounts and bank accounts. Sometimes property that started out as sole and separate property may become community property during the marriage. An example is when a spouse that owned a home prior to the marriage adds the spouses name to the deed of the home after they were married.

Sole and Separate Debt vs Community Debt

Debt incurred before the marriage is sole and separate debt. Meanwhile, debt incurred during the marriage is typically designated as community debt and will be equitably split between the parties, normally, on a 50/50 basis. If a spouse buys tools for their job and/or hobby and incurs debt paying for the item during the marriage, then that debt is still considered community debt even if the other party never uses the items obtained by the debt. Sometimes, there can be exceptions to this rule when a spouse commits community waste. It is important to discuss these issues with an experienced family law attorney.