If you’re like a lot of Arizonans who are considering divorce, you may think you have a pretty clear idea of what separate property is and what marital property is. That may be true.
Separate property typically includes any property you had before you got married (like a car or a condo, for example). It may also include any inheritances or gifts that were given only to you and not to you and your spouse jointly, even if you received assets during your marriage.
If you kept those assets separate from any marital assets throughout the marriage, your spouse shouldn’t be able to demand a portion of them under Arizona’s community property asset division model. However, challenges may arise if separate assets have become commingled with marital assets.
How commingling happens
Commingling can happen all too easily. It may even be necessary or at least convenient at a specific time. Say you decide to rent out your old condo. You use your joint credit card or bank account to pay for upgrades and repairs. That may make sense. But, that’s no longer going to be considered a separate asset as a result of your efforts. Or maybe you deposited your inheritance in a jointly owned investment account. Those funds are now commingled with marital assets.
Commingling assets is simply what married couples typically do. Oftentimes, it’s for the family’s benefit. You might have used the dividends you earned from those additional investment funds to pay for your child’s college education, for example.
If your marriage ends in divorce, you need to be prepared to share commingled assets with your spouse – and vice versa. The most practical way to avoid that is to have a prenuptial or even a postnuptial agreement stating that any separate assets brought into the marriage and any inheritances and gifts are not part of the marital estate to be divided.
There are different degrees of commingling, of course. For example, maybe you kept that condo just to use as an informal office where you could work in peace. If your spouse’s contribution to it has been the use of a joint credit card to pay for new carpeting, that likely doesn’t mean that they’ll be entitled to half the value of the condo during your divorce.
Negotiating asset and debt division during divorce can be a complicated endeavor – even in community property states. It’s crucial to understand how the law works and how to protect your right to a fair settlement. Getting experienced guidance is a wise first step.