Articles Posted in Family Law

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Arizona is a community property state. “Community property” is a term that  refers to how the property, during a marriage, is viewed in the eyes of the courts. In community property states all property accumulated by a husband and wife during their marriage becomes joint property. In plain terms, this means that all property belongs to both husband and wife equally if it was acquired during the marriage. Even if it was originally acquired in the name of only one partner.

Conversely, all property acquired before marriage, or through a gift or inheritance during marriage, is presumed to be the sole and separate property of the spouse who has acquired the property.  As with anything in law, there are exceptions, but this is the general rule.

The character of property as community or sole & separate can be important.  For example, if spouses divorce, each will retain his or her sole and separate property just as if they had never been married.  Any community property will be divided equitably. Equitably does not always mean equally. However, an “equitable” division of assets means a fair division.

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Like everything else you own, your business is an asset. When contemplating divorce, you will be required to equitably divide your community interests in any assets acquired during your marriage. This includes your business.

However, equitable division does not necessitate that every single item be split in half. Rather, Arizona follows the aggregate theory of community property meaning that each of you will receive a share of the assets which will be equal in value, but not equal in kind.

To determine what will happen to your business you need to consider several things. First, did you make any agreements or plans for this eventuality? Perhaps you and your spouse entered into a pre- or post-nuptial agreement which specifies what happens to the business. Or, perhaps the business itself has agreements in place detailing what occurs when one or more owners divorce. These documents should be reviewed closely.

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Under Arizona law (ARS 25-215) community property, including the earnings of a spouse, can be used to satisfy the other spouse’s premarital debts “to the extent of the value of that spouse’s contribution to the community property which would have been such spouse’s separate property if single.”

In a recent Arizona Court of Appeals Case, SPQR Venture Inc. v. Robertson, 1 CA-CV 14-0341, 5/12/15, the court refined what is meant by “spouse’s contribution”.   The spouse in question was unemployed and had no income. However, the resourceful creditor argued that a non-working spouse still makes a substantial contribution to the community in the form of services. The idea was to place a value on these services and use this value to reach the earnings of the working spouse.

The Court of Appeals rejected this argument and ruled that where a debtor-spouse earns no income, a creditor may not collect from the working spouse’s earnings. Nor may a creditor collect the value of the debtor-spouse’s nonfinancial contributions to the community from the working spouse’s earnings.

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In 2013 Arizona’s grandparent visitation statute was consolidated with our in loco parentis statute. The new terminology is “third party rights” and the statute is ARS 25-409. The idea is to allow a third party, including but not limited to a grandparent or great grandparent, to petition the court to determine custody, visitation and/or legal decision making rights for a minor child. The court recognizes that family life is all too often fractured and non-traditional. Children receive care and emotional and financial support from many persons other than their parents. Parents are sometimes unavailable or ineffective due to illness, absence or substance abuse.

A petition for grandparent or other third party rights should be filed in the existing family law case involving the children if one exists.

The Petition must be well thought out. The statute provides that a Petition shall be summarily denied unless the initial pleading establishes that all of the following circumstances are true:

  1. The petitioner stands “in loco parentis” to the children;
  2. It would be very detrimental to the children to be placed or remain in the care of the legal parent who wants to keep the children; and
  3. No court has entered orders concerning the care of the child in the past year unless a true emergency exists Continue reading
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Like everything else you own, your business is an asset. When contemplating divorce, you will be required to equitably divide your community interests in any assets acquired during your marriage. This includes your business.

However, equitable division does not necessitate that every single item be split in half. Rather, Arizona follows the aggregate theory of community property meaning that each of you will receive a share of the assets which will be equal in value, but not equal in kind.

To determine what will happen to your business you need to consider several things.
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When couples are divorcing, it often occurs that the residence is one of the most valuable assets to divide, and as a result, needs to be sold in order to equitably divide the assets between each party. Typically, a federal income tax exclusion is available to offset some or all of the gain on the house. However, depending on how the divorce is structured, one of the parties could forfeit their portion of the exclusion resulting in a surprise from the IRS.

The IRS permits up to $250,000 exclusion for a single person. A married jointly-filing couple can exclude up to $500,000. If the home sale occurs prior to entry of the divorce and the couple is divorced that same year, the issues are usually fairly easy to deal with. They can jointly file their tax return, or file separately and each claim their half of the exclusion.

However, if the sale will occur after the divorce is finalized, things get more complex. At least one party will be required to remain residing in the property for two out of the last five years before the house is sold.

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What happens if you signed an acknowledgment of paternity and later find out that you are not the minor child’s parent? What can be done if you wish to revoke the acknowledgment of paternity? In Arizona, the mother or father may rescind the acknowledgment of paternity within the earlier of:

1. Sixty days after the last signature is affixed to the notarized acknowledgment of paternity that is filed with the department of economic security, the department of health services or the clerk of the court.

2. The date of a proceeding related to the child, including a child support proceeding in which the mother or father is a party.

A rescission must be in writing and a copy of each rescission of paternity shall be filed with the department of economic security. The department of economic security shall mail a copy of the rescission of paternity to the other parent and to the department of health services.

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Making the decision to divorce is hard. Accomplishing a divorce is harder. Clients often ask what they can do to prepare for divorce and minimize potential problems. Here are some practical steps that will help.

a. Make sure that you have copies of all important documents such as deeds to real estate, titles to vehicles, bank statements, brokerage statements, retirement account statements, insurance information, employee benefit information, paycheck stubs and tax returns, both business and personal. Obtain evidence of all debt including credit card statements, personal loan information and other documentation of indebtedness. Obtain the originals of insurance policies and children’s birth certificates and passports. It is common for these materials to disappear or become difficult to access once a divorce is filed. Monitor the mail for several months prior to a divorce to make sure that you have documents evidencing all assets and debts.

b. Keep your copies of these materials in a safe place–not at home or at any other location that your spouse has access to.

c. Open a new bank account at a new financial institution for the deposit of your earnings and other monies. Change passwords on all accounts that you have access to.

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The collection of child support has become even more difficult during the last years of general economic hardship. But government, State and Federal, wants payment to be made and has provided a large amount of help. If a parent does not pay child support, he or she is subject to enforcement measures to collect regular and past-due payments.

Prior to 2006, there was a three year statute of limitations for collecting on a judgment for child support arrears. The statute of limitations for collection of child support was eliminated in 2006. The following are some of the enforcement measures for collecting past due child support. 

Passport Restrictions: Passport applications may be denied by the U.S. State Department. Presently, Federal law prohibits the issuance or renewal of a U.S. passport to anyone with child support arrears of $2,500.00 or more and allows the government to revoke or limit previously issued passports to such individuals.

Driver’s License Suspension: A valid, active Arizona license may be suspended if a parent willfully fails to pay child support for six months or more. This means the parent cannot be issued a new license or renew an existing license until the past due child support is paid in full or a satisfactory payment agreement has been reached.

Suspension of Professional or Occupational License: A parent can also have his or her professional license or occupational license revoked or suspended if the parent deliberately has not paid child support for over six months.

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In Arizona, any assets purchased during the marriage are presumed to be community property. This presumption can be rebutted in certain instances. One such instance is when one spouse signs a disclaimer deed. This situation usually arises when the couple purchases a home, and one spouse has much better credit than the other spouse.

The couple may decide to put the mortgage and the deed solely in the name of the spouse with the higher credit rating. Typically, the other spouse will sign a disclaimer deed to acknowledge that the home is the sole and separate property of the purchasing spouse. What that spouse may not understand is that by signing the disclaimer deed he or she may be giving away any community interest in the home.

In the case of Bell-Kilbourn v. Bell-Kilbourn, the Arizona Court of Appeals found that a properly executed disclaimer deed rebuts the presumption that property acquired during the marriage is community property. In Bell Kilbourn, the married couple purchased a home and decided to apply for credit solely in the wife’s name to maximize their chances of getting a mortgage loan. The deed was placed solely in the wife’s name as her sole and separate property, and the husband executed a disclaimer deed renouncing his interest in the property. The property mortgage was then paid from community funds until the dissolution action was filed.

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