Is Arizona a Community Property State?

Arizona is a community property state. Arizona is one of nine community property states in the U.S. that presents a unique approach to property ownership and marital agreements using the community property system.

Community property, according to state court rules in Arizona, is designed to ensure both spouses have equal ownership of most marital assets acquired during the marriage. This includes income, real estate, and other property purchased while married. However, there are nuances and exceptions within these laws that influence a couple's financial landscape.

Understanding community property rights before marriage can significantly decrease financial issues and impact how property is managed and divided in the event of divorce or the passing of a spouse.

Here are guidelines for couples seeking specific information regarding Arizona's community funds and community property state laws, defining how they function, the types of property affected, and what couples can do to protect their interests.

What is community property?

Arizona is one of nine community property states. Sometimes, community property is also called marital property. This means married couples in Arizona—as in all nine community property states—have equal ownership and control over all property obtained during the marriage. In the event of a divorce, the courts will divide community property equally.

Once a divorce is in progress, the spouses set forth which property purchased is owned between the two of them and which property belongs to each spouse individually, in addition to the value of all property. If the spouses are not able to come to an agreement, the Arizona court is designated as the final word on what is community property versus what is separate property (also referred to as sole property or individual property). 

What is a marital property agreement?

A marital property agreement is generally similar to a prenuptial agreement. However, a marital property agreement can be created or changed at any time  during the marriage. The marital property agreement is drawn up to place a specific definition around what is community property versus a spouse's separate property. The agreement also determines how future income earned from separate or jointly owned property will be labeled and divided, such as whether it is community or separate.

How does a prenup override community property?

A prenuptial agreement can override Arizona's community property laws by allowing couples to define their own terms for property ownership and division. In Arizona—a community property state—community property laws typically state that any property acquired by either spouse during the marriage is jointly owned and will be equally divided in the event of divorce.

However, a well-drafted prenup can specify which marital assets will remain separate property, outline how joint property will be divided, and potentially waive or limit spousal maintenance. By agreeing on these terms in advance, couples can tailor their financial arrangements to better suit their personal and financial goals, providing greater clarity and reducing potential conflicts regarding community property.

For a prenup to be enforceable in Arizona, it must be created voluntarily, with full disclosure of both parties' financial situations, and without any signs of coercion. Both parties should have adequate time to review the document, ideally with their own legal counsel, to ensure it is fair and equitable.

If the valid prenuptial agreement meets these criteria, Arizona courts, in most cases, will uphold the terms outlined in the document, allowing the couple to bypass the default community property laws of the state. This can provide both parties with peace of mind and a clear understanding of their financial rights and responsibilities.

How does property division work in the event of a divorce in Arizona?

In the event of a divorce, only items considered community property can be divided by Arizona courts. All separate property, or property acquired by either spouse prior to marriage, are not subject to the same rules and are not considered marital property. Separate property is officially defined by Arizona law as the following:

• any asset or debt owned by one spouse before the marriage and brought into the relationship with them
• any property received by one spouse as an inheritance or gift before, during, or after the marriage
• all property that is included in a valid, written prenuptial or postnuptial agreement

There are several factors taken into consideration in the state of Arizona to determine if a property is considered separate from the marriage and, as a result, exempt from division during divorce proceedings. These are the major categories of property that an Arizona lawyer will consider:

• Real estate: It should be noted that this also applies to the property's increase in value, and any profit earned (i.e., rent payments), subject to some exceptions, will continue to be community property. 
• Inherited wealth: All assets passed down via an inheritance belong to the individual partner as separate property, even if obtained during the marriage. However, if the assets are deposited into joint bank accounts, they may then be considered community property.
• Retirement accounts: All funds contributed to a retirement account (i.e., pension or 401k) from before the marriage are considered individual property. Retirement funds added after the marriage are considered community property.
• Legal settlements: Funds awarded in a personal injury lawsuit may be treated as separate or community property, depending on several factors, such as the timing of the injury. If damages are given for lost wages on behalf of the plaintiff, the funds will likely be considered as community property. However, any funds paid for a partner's pain and suffering may be considered separate property.

How do I handle community property debt during a divorce?

Any debts incurred during marriage are, generally, community debts and will be equally divided in an Arizona divorce or legal separation. Correspondingly, any debts owed by either spouse before marriage will typically remain each spouse's sole and separate debt.

When does community property end?

Within the confines of a marriage, community property ends when one spouse serves the other spouse with a petition to divorce or legally separate. At that point, each individual's income and acquired debt are typically considered to be their sole property or debt.

How does a married couple handle community expenses once a divorce or separation has been filed?

Generally speaking, both spouses have an equal obligation to pay community debts until they have been officially divided by a final divorce judgment in the state of Arizona during a legal separation or divorce. However, there may be a few exceptions.

In some circumstances, the court may require one spouse to pay community debts during divorce proceedings as part of the agreed-upon spousal maintenance obligation. In the event only one spouse benefits from the use of the asset (i.e., home or automobile), the payment will then become the responsibility of the person using the asset in either a legal separation or divorce. This is generally addressed by the court via an agreement while the divorce is pending or using temporary orders.

How to write a prenup

A prenuptial agreement is a document that defines the property rights and responsibilities of each spouse while married, in a divorce, or for the surviving spouse after the other spouse dies. 

Here are other conditions that typically must be present in order for a prenuptial agreement to be valid:

1. The agreement is in writing.
2. The agreement has been voluntarily signed by both parties.
3. The agreement was signed following a full and fair disclosure of property and financial obligations (disclosure can also be waived in a signed agreement).

Within the state of Arizona, it is possible to independently draft your own prenuptial agreement without the support of legal representation. However, if you want to follow through with drafting your own prenuptial agreement, it is recommended to speak with a prenup attorney in order to help ensure that your agreement is in good legal standing in the event of a divorce. Seeking help from a separate attorney from your fiancé will help to protect your interests.

Arizona state law declares that a properly drafted and executed prenuptial agreement is enforceable without consideration.

FAQs

Is it a good idea to have one or two lawyers while drafting a prenuptial agreement?

It is recommended that each individual be represented by separate attorneys, with each participating in drawing up the agreement. Well-written premarital agreements will consider the potential for wealth imbalance between individuals. This is further complicated if there is an imbalance of emotional or intellectual power between the parties. Hiring separate legal representation can ensure fairness and full disclosure in the negotiating process. It also decreases the possibility of one party claiming that they did not understand what they were signing.

How are child custody rights handled in a premarital agreement in Arizona?

Courts may not look favorably upon a premarital agreement that attempts to limit child custody rights or interferes with child support obligations. You should talk to an attorney if you have any questions about this.

Can a prenuptial agreement completely waive spousal maintenance in Arizona?

Yes, prenuptial agreements can include provisions that waive or limit spousal support (alimony) in Arizona. However, it's important to note that the family court will review these provisions to ensure they are fair and not unconscionable at the time of enforcement.

If circumstances have significantly changed since the agreement was signed, or if enforcing the waiver would result in extreme hardship, the court may choose to modify or disregard the spousal maintenance terms in the prenup. Consulting with a family law attorney is highly recommended to ensure the prenuptial agreement is properly drafted and enforceable.

Can you get a prenup in Arizona after the wedding?

No, you cannot get a prenup after marriage. However, you can create "postnuptial agreements." While prenuptial agreements are made before marriage, postnuptial agreements are established during the marriage. Both types of agreements address similar ideas in reference to the division of assets, debts, and spousal maintenance.

Some couples find such agreements useful if there have been significant changes in their financial situation, including Social Security benefits, or if they simply didn't have time to draft a prenuptial agreement before getting married.

To be enforceable, postnuptial agreements in Arizona must meet similar legal requirements as prenuptial agreements. Both parties must enter into the agreement voluntarily, with full financial disclosure, and without any form of duress or coercion to sign. Additionally, the agreement should be fair and equitable at the time of its creation.