Understanding Property Division in an Arizona Divorce

One of the most pressing concerns for anyone facing divorce is what will happen to their home, bank accounts, retirement, investments, and other property. Understanding how Arizona law applies to the division of assets and debts can help bring clarity and peace of mind during an otherwise overwhelming time.

Arizona is a community property state. In the most basic sense, this means that we presume all assets and debts acquired by either spouse during the marriage (from date of marriage to date of service of dissolution or separation documents) is community property and debts subject to equitable division.  Assets include wages, real estate, investment and retirement accounts, vehicles, business interests, and other property earned or acquired during the marriage. Property division also includes debt, meaning that any liabilities incurred during the marriage—such as credit card balances, mortgages, or personal loans—are typically considered the joint responsibility of both spouses, even if only one name appears on the account.

 Of course there are always exceptions. Arizona law recognizes “separate property” as assets acquired by either spouse before the marriage or “by gift, bequest or devise” which is a fancy way of saying property received  as a gift or inheritance. These “separate property” assets generally remain the sole property of the spouse who received them, so long as they haven’t been “commingled” with community assets in a way that makes them legally indistinguishable. 

For example, if one spouse inherits money during the marriage and deposits it into a joint account or uses it to pay off a jointly owned home, a court may find that the separate property has been transformed into community property. The same applies to premarital assets if they are mixed with marital property without clear documentation or intent to keep them separate.

Complications often arise when community and separate property become intertwined over time. Retirement accounts, for instance, may contain both premarital contributions and earnings accumulated during the marriage. While the original premarital balance may remain separate, the value accrued during the marriage is typically community property. Untangling these interests requires careful documentation and, in many cases, financial tracing or expert valuation.

The first step in dividing property during divorce is creating a complete inventory of all community assets and debts that are subject to division. Courts expect full disclosure from both parties, which means providing records of real estate, bank and investment accounts, business holdings, vehicles, and personal property of value such as jewelry, art, or collectibles. Parties must also disclose income tax returns and documentation of any retirement or pension funds. 

Valuation of assets and debts can be a complicated process.  In Arizona, we typically use the date of service (date a Petition is served to the other party) as the valuation date for community property assets and debts.  However, arguments can be made against using the date of service to value assets and debts.  Parties can agree on a value for their various assets, or, in the event of a disagreement with high value assets such as real property or business interests which may have fluctuating values, the parties can hire experts to provide their opinion as to the value of the asset as of a certain date and why the chosen date is fairer and more equitable for the community.  

Once assets and debts are identified and valued, they can be divided either by agreement or through litigation. Many couples are able to resolve property division through negotiation or mediation, which allows for more flexibility and privacy. 

However, if a settlement cannot be reached, the court will decide how property is divided following a trial. While many assume that community property must be divided exactly 50/50, Arizona law does not require a perfectly equal split. Instead, under A.R.S. § 25-318, the court aims to divide marital property fairly and equitably, considering factors such as the length of the marriage, each party’s financial circumstances, and any agreements between the spouses.  

Dividing property during a divorce in Arizona can be a lengthy and complex process, particularly when emotions are high and financial records are unclear. At Paradise Valley Family Law, we’re committed to helping our clients understand their options and reach fair outcomes. If you're considering divorce or need help navigating property division, contact us today on our website or call us at 480-498-3175 to schedule a consultation.