So you probably know Arizona is a "community property state" but what that really means isn't always intuitive. One of the most common misconceptions is belief that it means that community property is always equally divided. That is not always the case. Arizona family courts actually have discretion to divide community property unequally.
Property division often can be the most complex (and contentious) issue in a divorce or legal separation. The first step in these disputes is to correctly define property as either community property or separate property. Under Arizona law, all property acquired by either spouse during the marriage is presumed to be community property even if the property is titled in one one spouse's name. This presumption is rebuttable, meaning that it is possible for an individual to acquire separate property during the marriage, but right now we want to focus on how community property is divided and when unequal division is appropriate.
Equitable, not equal
During a divorce or legal separation, the family court must divide community property equitably pursuant to A.R.S. § 25-318. If you're thinking that 'equitably' sounds a lot like equally, you're not alone. However, Arizona law uses equitable to mean "fair" and not necessarily equal. In practice, courts typically do divide community property equally and that is always the starting point of the analysis.
The "Toth" opinion
In 1997, the Arizona Supreme Court heard a case called Toth v. Toth. It was an appeal arising from a divorce where property division was the central dispute. Immediately after the parties were married, the husband used separate funds to purchase a home for the parties. Just a couple weeks later, the husband filed for annulment. The trial court divided the property substantially unequally and awarded just $15,000 to the wife. She appealed and the Arizona Court of Appeals reversed the trial court decision and held that 25-318 requires substantially equal division of community property absent community waste. The Supreme Court vacated the Court of Appeals' decision and held that equitable division does not necesessarily mean equal division.
It is important to note that the Supreme Court was careful not to extend this opinion to overrule existing case law prohibiting family courts from dividing property unequally solely to reimburse one spouse for separate funds used to purchase the property. This is a pretty common issue that arises during divorces and legal separations. The Toth opinion hinged more narrowly on the opinion that its combination of circumstances, including the brevity of the marriage, would have made equal division unfair to the husband.
Conclusion
Fairness is the most important takeaway. This may sound like a typical lawyer answer, but there is no black and white rule for when community property should be divided unequally. The judge must determine that based on the unique facts of the case, equal division would be unfair. Court cannot divide community property unequally solely to reimburse a spouse for their separate contributions to community property. These contributions are presumed to be a gift to the community. There has to be more to the story and that is one reason it is important to consult with an experienced divorce attorney.
In our practice, we frequently see inexperienced attorneys make critical mistakes in property division cases. These include defining the character of the property, identifying and calculating the value of a community lien against separate property, or misunderstanding the effect of subsequent transactions after property is acquired. Further complicating matters, property division is resolved on a final basis and is not subject to future modification like many other issues in family court. This means a mistake may be permanent. The safest and best course of action is to contact our divorce attorneys to schedule a free consultation before agreeing to any property settlement or otherwise resolving property division disputes.
