Divorce is rarely a simple process. Instead, it’s emotionally fraught and legally complex. Still, the asset division portion of the process is fairly straightforward for those who rent their home and don’t own property. The legalities of divorce become more complex when spouses have significant real estate holdings, including a family home and additional properties.
How do divorcing spouses in Arizona divide their real estate holdings during a divorce? An experienced Chandler divorce attorney can help you and your spouse arrive at a mutually agreed-upon settlement or represent your best interests in court.
Under Arizona 25-211, the law states the following:
“All property acquired by either husband or wife during the marriage is the community property of the husband and wife, except for property that is:
In other words, a spouse may retain any property that was theirs before the marriage, any that they inherited during the marriage, and anything gifted to them during the marriage as their separate property that’s not subject to division, unless commingling has occurred. When one spouse invests time, money, or talent into their spouse’s property, they have the right to claim half of the property’s increased value.
All real estate property and other assets that the spouses acquire during their property is subject to equal division as community property, regardless of whose name is on the deed. However, Arizona courts do not demand an exactly 50/50 division. Instead, the state requires spouses to divide their property in a way that’s “fair and equitable.”
They may do this by negotiating to arrive at a settlement agreement, or they may take unresolved disputes over property division to court for a judge to decide after hearing both sides.
Some divorcing Arizona spouses have multiple real estate properties, extensive property holdings, or diverse real estate portfolios. Common real estate holdings that are subject to division include the following:
When spouses have extensive real estate holdings, the first step in a fair and equitable division process during an Arizona divorce is to have a valuation performed on each property to accurately assess its value. Then, spouses may begin a series of negotiation meetings together with their attorneys to discuss their options. In most cases, they also attend one or more mediation sessions with a neutral professional who offers creative solutions and suggestions for division that spouses might not have considered on their own.
More spouses than ever before have prenuptial and postnuptial agreements in place to protect their assets in the event of a divorce. A prenuptial agreement should include terms for retaining separate property by protecting properties from becoming commingled. The prenup should also have terms for how the spouses divide the properties they accumulate during their marriage. As long as the contract is well-executed and valid, it’s legally binding. Both spouses must follow the pre-agreed-upon terms for dividing their marital property and retaining their separate property.
Prenups are especially common for spouses who stand to inherit family property that they wish to pass on to their children without dividing the property with a spouse during a divorce or after their death.
Spouses who do not have prenuptial or postnuptial agreements in place must follow the state’s laws for property division during an Arizona divorce. After each spouse categorizes separate property vs. marital property and performs valuations of all separate property based on the current market value, the spouses may choose one of several ways to divide their properties. Common options for dividing real estate portfolios in Arizona include:
If spouses cannot arrive at an agreement on how to divide one or more properties, the judge may issue a partition action to force the sale of a property so the spouses can equally divide the profit from the sale.
If one spouse has separate property, such as a house the spouse inherited during the marriage, it remains their separate property unless the other spouse invests time, talent, or money into the property. In cases of commingling on a property, the property may be sold, and the spouse’s half of the property’s improved value goes to the spouse who made the improvements.
Although asset division becomes more complex and often more contentious when spouses have substantial real estate portfolios, if they communicate and compromise effectively with the assistance of their lawyers and mediators, they can avoid the added distress and expense of a contested divorce by reaching a settlement agreement.
A judge almost always signs off on a property division agreement between divorcing spouses unless the contract is egregiously unfair to one spouse or the judge believes it was signed under duress. Otherwise, the court prefers that spouses settle the division of their marital assets, including real estate, without resorting to court.
An experienced Chandler family law attorney with a history of representing clients with high-asset divorces or divorces between spouses with diverse holdings and real estate portfolios can assist divorcing spouses to arrive at a low-conflict agreement whenever possible without compromising their client’s best interests.
