Community Property and Equitable Distribution: What Are They?
It is no secret that divorce can be difficult. There are complexities even when it is amicable. Next to the question of “Who gets the children?”, the most difficult and complex arguments and agreements will be about property, assets, and money.
There are two different methods of dividing property in divorce proceedings: Community Property and Equitable Distribution. Community Property is everything the couple accumulated while they were married. This includes all real estate, businesses, bank accounts, personal property (stereo, car, boat, furniture, etc.) and even debt. In Community Property states, everything is split 50/50, no questions asked. Equitable Distribution, however, is when everything is split in accordance with how the judge sees fit. That does not mean everything will be split equally.
Arizona is one of nine states where all Community Property gets equally divided (along with Puerto Rico and Alaska, the only state with an “opt-in” stance on the Community Property Law).
What is the Process for Proper Distribution of Community Property in Arizona?
In the State of Arizona, Community Property accumulated in the marriage may be divided up, but not always divided 50/50. In Arizona, the Court will divide assets and debt as fairly as it sees fit to do so. As difficult as it is to separate a personal and financial union you have had with someone, your best bet is to independently divvy up the Community Property. It is best if both parties can calmly and maturely negotiate an agreement of division, rather than leave it up to the Court. If the Court is brought in to divide and negotiate the distribution of your Community Property, please prepare yourself for conflict with each other, and drawn-out legal proceedings.
The Court may not favorably give you what you deserve. Plus, neither party knows how the Court will divide everything. If, however, you and your spouse cannot come to a sensible agreement, the Court will have to be called in to divide everything. Anything acquired prior to the marriage like a business or stocks is considered Separate Property, unless funds from both parties have contributed to it, which would then make it Community Property.
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How Do We Divide Our Community Property?
Start with pure disclosure of EVERYTHING the two of you own, even if it is property or a business that the other party is not aware of. Houses, cars, pets, land, businesses, 401K, bank accounts, stocks, etc. Even debt is considered Community Property in Arizona. Hiding assets is not smart in a divorce, especially when there are so many resources to find information on ownership of businesses and property. Doing so can result in a very long divorce proceeding with higher attorney fees, possible missed time from work, and more emotional distress.