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Identifying the difference between marital and separate property

Property division may be one of the most complicated issues couples must negotiate in the divorce process. In many cases, property division involves strong emotions, as people become attached to items accumulated during marriage.

Since Arizona is a community property state, the court divides all marital property equally in half between spouses. Yet, not all property is community property. It is helpful to know the difference between community and separate property so couples can ensure they receive all they are entitled to in the final divorce settlement.

What is marital property?

Also referred to as community property, marital property includes everything a couple accumulates throughout the marriage, according to the Financial Times. In addition to the family home, car and furniture, community property include the following, less common items:

  • Rewards points and frequent flier miles
  • Memberships to exclusive golf courses and county clubs
  • Intellectual property, such as copyrights, patents and trademarks
  • Collections, such as antiques, art, coins, classic cars and wine
  • 401k plans, retirement accounts, money market accounts and stocks
  • Term life insurance policies, income tax refunds and lottery ticket winnings

Any gifts exchanged between spouses are also eligible for division in a divorce settlement.

What is separate property?

Separate property involves items either spouse obtained prior to the marriage, as well as some assets received during the marriage. This may include inheritance money, personal injury compensation or gifts given by a third party.

It is important to avoid mixing separate property with community property, as it may then become eligible for division. For instance, if one party deposited their inheritance money in a joint banking account linked with their spouse’s name, the assets may become community property.