Community Property

Front 1

SEPERATE PROPERTY

Back 1

1) property owned before marriage,

2) property acquired by Gift, Devise, Descent,

3) income and gains from SP,

4) transmuted property or,

5) property acquired after service of a petition for dissolution/legal separation/annulment if decree results.

Front 2

POST-MARITAL ACQUISITIONS

Back 2

All property acquired after marriage is presumptively community property, whether one or both names are on the title.

Front 3

COMMUNITY PROPERTY PRESUMPTION AND BURDEN OF PROOF

Back 3

All assets on-hand during the marriage, or at the time of the dissolution, are presumptively community property.

The burden of proof is on the party contending that it is seperate and must be proven by clear and convincing evidence.

Hint 3

PRESUMED
CONTENDING
CLEAR
CONVINCING

Front 4

INCEPTION OF TITLE RULE

Back 4

Arizona is an inception of title state. This means that the title of the property is fixed at the time acquired as either CP or SP.

Front 5

TITLE VS. SOURCE

Back 5

Title to an asset is not controlling for determining whether the property is CP or SP. A court will look to the source of the funds used to ascertain the asset.

Front 6

QUASI-COMMUNITY PROPERTY

Back 6

In domestic relations cases only, if an asset acquired while living elsewhere would have been CP if the spouses had been living in Arizona, then the asset will be treated as CP in an Arizona dissolution proceeding.

Front 7

SEPERATE PROPERTY USED TO PAY COMMUNITY DEBT OR MAKE IMPROVEMENTS ON COMMUNITY PROPERTY

Back 7

If SP funds are used to make payments to reduce an encumbrance on CP or to improve CP, the transaction may be a gift (transmutation)or a loan to the community (resulting in a claim for reimbursement).

Courts will likely rule the payments as a gift, invoking the presumption of CP.

Front 8

COMMUNITY PROPERTY USED TO PAY SEPERATE DEBT OR MAKE IMPROVEMENTS ON SEPERATE PROPERTY

Back 8

The use of CP to pay off a SP debt or to improve SP results in the community having an equitable lien in the enhanced value of the property.

Hint 8

EQUITABLE LIEN
ENHANCED VALUE

Front 9

VALID MARRIAGE?

Back 9

Community property applies only to people who are validly married.

Front 10

COMMON-LAW MARRIAGE

Back 10

Cannot be contracted in Arizona, but one validly contracted elsewhere will be given full faith and credit.

Property acquired by non-married cohabitants is not community property but is governed by contract principles.

Hint 10

NOT CONTRACTED
FULL FAITH AND CREDIT
CONTRACT PRINCIPLES

Front 11

PREMARITAL AGREEMENT

Back 11

Prospective spouses may opt out of community property by written, signed premarital agreement…so long as non-drafting spouse has:

adequate separate property,
and
adequate earning capacity,

or independent counsel

Front 12

DEFENSES TO PREMARITAL AGREEMENT

Back 12

Not made voluntarily

unconscionable

lack of full and fair disclosure

Front 13

TRANSMUTATION

Back 13

to convert a separate property interest into a community property interest by agreement between spouses,

by gift or by contribution of marital or community assets to the separate property (as for maintenance or improvements).

Front 14

DEATH

Back 14

Under Arizona community property law, each spouse can dispose of his/her half of the community property (subject to community debts) and all of her separate property at death.

Front 15

SEPARATION

Back 15

A court will not treat the marriage as having terminated prior to service of the petition unless:

the physical separation extends for a long period of time

and

exceptional circumstances lead to a conclusion that the community ceased for CP purposes.

Front 16

DIVORCE

Back 16

Community property rights are terminated by service of a petition for legal separation, annulment, or dissolution.

A marriage is not terminated because H and W are living separately.

Front 17

CREDITORS

Back 17

Each spouse has the power to manage and dispose of community property. Obligations, even when signed by one spouse, are presumptively community property debts.

Both spouses must sign contracts for real estate and guaranty.

Front 18

CREDITORS - COMMUNITY INSOLVENT

Back 18

If the community cannot satisfy a debt, it can be satisfied out of separate property of the spouse who contracted the debt, after the community assets are exhausted.

Front 19

RENTS FROM SEPARATE PROPERTY

Back 19

All rents from separate property remain separate property unless transmuted.

Front 20

EARNINGS

Back 20

During the marriage, all earnings, time, energy and effort of each spouse are community property.

Front 21

JOINT TENANCY

Back 21

Property held in joint tenancy with right of survivorship is NOT community property in Arizona.

Front 22

TRACING

Back 22

SP can change form and remain separate so long as it can be traced.

If the purchase price is traced back to community property, the asset, any earnings, and any profit upon sale, are community property.

Burden of proof is on the party claiming it is separate.

Front 23

COMMINGLED FUNDS

Back 23

are presumed to be CP. Presumption can be rebutted by clear and convincing evidence that the identity of the separate funds has not been lost.

Front 24

EDUCATIONAL DEGREES AND PROFESSIONAL LICENSES

Back 24

There is no community property interest in an ED or a PL, but in an extreme case, the community may be entitled to restitution of expenses to prevent unjust enrichment.

Front 25

PERSONAL INJURY RECOVERIES

Back 25

Damage to the body (pain and suffering, disfigurement, and for post-dissolution lost wages are SP. Damages for medical expenses and lost wages incurred during the marriage are CP.

Front 26

MIXED PROPERTY

Back 26

Mixed property, such as retirement benefits or interest in a closely held business, must be approtioned according to the period spanning marriage and nonmarriage.

Front 27

CLOSELY HELD BUSINESS

Back 27

The increase in value of a separate business that occurs during the marriage is CP to the extent that it reflects indirect compensation for community labor.

The portion of any increase in value that is attributable to the inherent nature of the business is SP.

Front 28

REASONABLE VALUE OF COMMUNITY SERVICES

Back 28

The community portion is determined to be what the community reasonably should have been paid for services rendered during the marriage, minus what the community actually was paid. Anything over that is SP.

Front 29

REASONABLE RATE OF RETURN

Back 29

The separate portion is determined to be the amount of separate investment plus a reasonable rate of return on that investment. Anything over that is CP.

Front 30

RETIREMENT PLANS

Back 30

There is a very strong preference for determining the “present cash value” of a retirement plan as of the date of dissolution, awarding the plan to the employee-spouse, and awarding other off-setting property to the other spouse.

If PCV cannot be determined, or if there is insufficient off-setting property, the court, by a QDRO, can “reserve jurisdiction” to award both spouses their interests in the plan, “if, and when” the benefits are paid.

Front 31

PRESENT CASH VALUE FORMULA FOR RETIREMENT PLANS

Back 31

Community Interest = Present cash value x married years in plan / total years in plan

Front 32

RESERVE JURISDICTION FORMULA

Back 32

Community Interest = married years in plan x monthly pension payment / total years in plan

Front 33

QUALIFIED DOMESTIC RELATIONS ORDER

Back 33

The court will make the non-employee spouse an “alternate payee” of the plan.

That spouse is entitled to the benefits when they are paid

according to the order

Front 34

SALARY

Back 34

Anything purchased with salary during marriage is considered CP.

During marriage any salary earned by each spouse is considered CP unless an agreement to the contrary can be shown by clear and convincing evidence

Front 35

BUSINESS

Back 35

when community labor is used to enhance the value of a SP business, the community is entitled to a share of the increased value but a business started prior to marriage is considered SP

Front 36

TORT RECOVERY

Back 36

Recovery of lost wages and medical expenses incurred by the community is CP. The remainder, such as pain and suffering, is specific to the injured spouse and is SP.

Front 37

CONFLICT OF INTEREST (ETHICS CROSSOVER)

Back 37

A lawyer has a duty to avoid conflicts of interest. A conflict is a situation in which another client’s, the lawyer’s, or a third party’s interests are likely adversely effect the lawyer’s ability to exercise her independent professional judgment.