In Arizona, financial investments are divided by the same process as any other type of asset in a divorce. Before reviewing this process, it is vital to discuss the property division laws of Arizona divorces. The following is an overview of the community property laws of Arizona as they apply to financial assets and ownership of property.
Arizona is a community property state. Community property refers to all property acquired by the spouses during a marriage. Community property includes all marital assets and debts, including financial investments, regardless of how the property is titled.
Community property is divided equally in a divorce.
Separate property stands apart from community property. This property is excluded from property division in a divorce. Instead, it remains with the owner-spouse.
When a financial investment is the separate property of a spouse, it may be designated as such by a valid premarital or postmarital agreement. It may also be separate property when acquired by one spouse:
Before a marriage;
By gift, bequest, or inheritance; and
With proceeds, rent, interest, or profits from any separate property.
The owner-spouse may choose to dispose of separate property as they please. To remain separate property, the owner-spouse should keep their financial investment traceable and distinguishable from marital investments.
There are situations where a spouse’s efforts or contributions cause an increase in the value of separate property, including financial investments. In these circumstances, the contributing spouse may claim the increase in value as community property.
Financial investments, such as stocks, can be both community and separate property. For example, stock ownership depends on the date the stock becomes vested. Unvested or vested stock acquired during a marriage is community property.
Typically any unvested stock that a spouse held before marriage, along with any portion of the stock that was vested at the time of marriage, is separate property. When an increase in the value of separate property results from a shift in the market, the property remains separate property.
Commingled or mixed financial investments regularly require a financial expert and an experienced divorce attorney for identification, valuation, and division amongst the spouses.
Some financial investments cannot practically be split. These are investments with tax implications for withdrawal or division. Pensions generally require the pension administrator to draft a Qualified Domestic Relations Order or QDRO before releasing funds to a former spouse.
When there are drawbacks to dividing investments, spouses may choose an alternative means of asset division. For example, one spouse may decide to keep the marital home and other valuables, while the other spouse takes the intact investment.
It is imperative to note that investments made after the date of separation are considered separate property so long as those investments were funded with separate property. After the date of separation, a spouse’s earned income is counted amongst separate property.
The date of separation is when one spouse makes their actions to leave the marriage known to the other spouse. This is often designated by the choice of a spouse to leave the marital home.
If you want more information about how a divorce affects financial investments, marital property, or separate property, contact the experienced divorce attorneys at Wilson-Goodman, PLLC. Our divorce professionals will speak with you in confidence about the impact of asset and debt division on you, your spouse, and your future.
At Wilson-Goodman, PLLC, our Chandler divorce attorneys can also help you with other divorce matters like child custody and visitation, child support, alimony, and more. Contact us in our Phoenix office today for competent, qualified assistance with any divorce or family law need.