Arizona is a community property state, which generally means that anything acquired during the marriage is presumed to belong to the community (i.e., the married couple). This means that, no matter how an asset is titled, it’s presumed to belong to the married couple equally.
This also includes wages, income, and contributions to retirement accounts during the marriage – it all goes into the community pot. The same general principle applies to debts – whether that credit card is in his or her name, if the charges were incurred during the marriage, it is presumed to be both parties’ debt.
Dealing with Exceptions to the Community Property State Laws of Arizona
There are exceptions to the rule above, but there are too many to list or go into here. The questions that many couples considering marriage are, “Well, what if I don’t want to have my income or things that I acquire after we’re married to belong to the community?” Or “What about what I bring into the marriage; what happens if I need to fix it up (like a car or house) or I am still making payments on it?” Or “What if I sell the thing I had and then use the money to buy something else?”
The answer to lots of these questions is a Prenuptial Agreement. In this legally binding document, the couple gets to decide before marriage, among other things, how they want to acquire or share their property, both now and in the future. They can choose to contract under, over, and around the community property laws of Arizona.
For example: say a person owns a house when they get married, and during the marriage, they use their wages to make upgrades to the house or to make mortgage payments. Under community property law, the other spouse may have a lien on that house, now, meaning they may be entitled to reimbursement for those monies spent on the house. The house remains with the original owner, but their spouse basically has a monetary claim against it for the monies used during the marriage to pay down on the mortgage as well as an equivalent amount of the appreciation in value of that house now.
With a Prenuptial Agreement, the parties can choose to agree that no matter what is done on behalf of that house, it doesn’t create a community lien. Or they could agree that the community gets a dollar-for-dollar reimbursement. Or anything in between.
Prenuptial Agreements are a Wise Choice
Prenuptial Agreements can address situations like this and many others, including spousal maintenance (alimony) and how to divide bank and retirement accounts. So, even if you don’t have anything that you’re bringing into the marriage, you may want to explore whether a Prenuptial Agreement is a good fit for you and your future spouse. It can serve to help resolve these issues before they even happen and can eliminate a lot of stress and headaches in the event that you get divorced.
Looking to set up a prenuptial agreement? Contact Owens & Perkins for a Zoom or phone consultation today.
