Guarding Assets Owned Before Marriage from Property Division
Scottsdale divorce attorneys protect premarital assets
Arizona is a community property state, which means that all assets and debts acquired during marriage are deemed to be jointly owned. Upon divorce, community property gets divided 50-50 without regard to which spouse played the greater role in its acquisition. However, assets owned by either spouse before marriage are presumed to be separate property and remain under that spouse’s sole ownership. These assets are not subject to division unless the spouses treat them as marital. At Clark & Schloss Family Law, P.C., our divorce attorneys help our clients hold onto property that is rightly theirs. We work meticulously to prove the assets you owned before your marriage were and are your sole property.
Protecting premarital assets from divorce in Arizona
To maintain sole ownership of property you acquired before your marriage, you must meet these two conditions:
- Establish when the property was acquired — You should create a paper trail for the property you want to keep. You can do this with sales receipts or by making a stipulation in a marital contract. A Scottsdale divorce attorney at our firm can draft a prenuptial or postnuptial agreement that specifies which property is separate.
- Maintain the property as separate during your marriage — To avoid commingling your separate property with marital property, you should keep separate accounts for financial assets, avoid using marital assets for maintenance of separate property and not treat separate property as though it is jointly owned by your spouse.
Mixing assets makes them difficult to separate from the marital estate and gives the appearance of intentional conversion to marital property.
Impact of premarital assets on property division
If a spouse has kept premarital assets separate, they will not be part of property division, which only affects community property. Assets generally excluded from community property include:
- Property acquired before the marriage
- Property acquired with funds derived from separate property
- Property acquired after a divorce petition was filed
- Property acquired during the marriage as a gift or as an inheritance
Unfortunately, few people take all the steps necessary to keep property separate. Disputes often arise over the nature of individual assets. Couples must settle these disputes in order for property division to be carried out fairly.
Is a house owned before marriage marital property?
A house is a classic example of an asset that might be transformed from separate to marital property. If one spouse owned a home outright before marriage and maintained the home with separate funds, it would be separate property. But in most cases, a home carries a mortgage, which might be paid for with marital funds. Taxes and maintenance on the home might also come from marital funds. If so, the other spouse would own 50 percent of the equity built up in the home during the marriage.
How business ownership and professional practices are handled as premarital assets
A spouse can acquire an equity interest in a business based on that spouse’s contributions to the business during the marriage. The precise proportion would depend on the growth of the business during the marriage and the value of the spouse’s contributions. To avoid this problem, business owners should always pay their spouses a salary for any participation in the business.
Effect of a premarital assets on alimony in Arizona
Spousal maintenance in Arizona is based upon one spouse’s need and the other’s ability to pay. A court could find that a spouse who has significant premarital assets does not need alimony. On the other hand, a court could view the other spouse’s separate property as a resource for payments.