In most divorces, parties can expect to divide their assets between them as part of the property division process. And with some exception, parties can expect this division to be equal.
However, separate property is typically not eligible for division, meaning that it would stay with the owner in the event of a divorce. This can come as considerable relief to people with separate property, including the following assets.
- Property you owned before you got married – Anything you brought into a marriage as a single person will remain your separate property, so long as you did not “gift” it to you and your spouse as a married couple by words or actions, or mix it with marital property (e.g. within the same bank account) so thoroughly that no one can see the difference any longer.
- Property acquired after serving a petition for divorce or separation – Any asset or financial obligation that one person acquires after service normally constitutes separate property, as long as the divorce or separation becomes final. But if you and your spouse reconcile, for example, and dismiss your family court litigation, Arizona law will treat the divorce case as if it had never existed. That means all the property and debt you acquired while the original petition was pending will become marital again.
- Gifts and inheritances – Property transferred only to one spouse by gift, a last will and testament, or inheritance (because there was no will) is separate property. Be careful with the notion of “gifts,” though. Everyone in a divorce tries to characterize a million different household items as “gifts” they wish to keep for themselves. It doesn’t quite work that way! In order to be a “gift” for purposes of Arizona family law, you have to have some evidence that the person who gave the gift said or did something at the time clearly showing they meant to exclude the other spouse from receiving any benefit. The question of who actually used or kept the item during the marriage is not relevant.
- Property you protected in a prenuptial agreement – If you created a prenuptial agreement before you got married, you probably identified separate property to remove all doubt. If the agreement is valid, it should protect those assets from any division.
If you have these types of property, you may very well keep it in an Arizona divorce. However, complications can surface.
For instance, if you commingled separate and marital assets, separate property can lose its special status. And if separate property generated a profit during the marriage, the property itself may be separate, but the profits could be eligible for division, depending on the extent to which spouses actively contributed to the increase. Also, if the employment income of either spouse was used to pay off a mortgage on real estate separately owned by one of the spouses, the marital “community” (i.e. combination of husband and wife together) may be entitled to an investment return – even though the land remains titled to just one person.
Separate property can be a contentious topic during a divorce, and there could be sizable assets on the line. Therefore, it is important to address such matters with legal guidance as early as possible.