How To Keep Your Financial Accounts And Personal Property Your Sole And Separate Property
By: Michelle J. Perkins, Esq.
In second, third and subsequent marriages, it often becomes important to the person that has their own savings, financial accounts or expensive personal property items to keep them as their own separate property, even though Arizona is a community property state. Younger people just starting out together typically don’t run into these issues as many of them just have debt and/or student loans with very limited assets, if any. But, as we go through life, many people accumulate savings and property that they would like to keep as their own, even in the unfortunate event of a divorce.
There are steps that you can take that will make your life a lot easier in the unfortunate event of a divorce and make the divorce much less expensive if you follow these suggestions.
Financial accounts: Most couples will open up a joint bank account before or after they get married to pay their monthly living expenses. Each spouse is not required to contribute equally to the account, the contributions to the joint account will be whatever the parties decide. Going into it, you should assume that any money you put into that joint account will belong one-half to you and one-half to your spouse. If the money is spent, it’s gone. Contrary to popular belief, there is no legal claim in a divorce that will bring money back that has been spent during the marriage (absent a waste claim, but that is a complicated topic for another blog).
Let’s say that you have a financial account that has $50,000 in it. You have scrimped and saved for years and years and now you have accumulated a very nice sized nest egg. Just because you decide to get married does not mean that you have to make a gift of part or all of that $50,000 savings to your spouse. You can keep that savings in an account in your own name and just let it continue to grow. You do not want to make contributions to the account during the marriage from your paycheck because by doing so you will then commingle community money with your sole and separate money, making it much harder to trace and prove what you had at the time you got married. So, in short – if you have a financial account that you want to keep your sole and separate property first, keep it in your own name, do not add your spouse’s name to the account; second, don’t make deposits to the account from your paycheck during your marriage; and, third, don’t take money out that you are not willing to spend and lose forever.
Personal property: Typically the most expensive piece of personal property that people own is their car. When you get married if you are lucky enough to have your car paid off prior to getting married, the car will remain your sole and separate property in the event of a divorce. If you owe on your car and payments are made on the car during the marriage, your spouse could assert a claim for a community lien against the car in a divorce. You are not required to put your new spouses name on your vehicle, it should stay in your name alone. Many newly married couples start discussing estate planning and what happens to their assets in the event one of them passes away. Fortunately for Arizonans the Motor Vehicle Department has a Beneficiary Designation Form on their website that you can fill out. If you want your new spouse to get your car in the event of your untimely death complete the Motor Vehicle Beneficiary Designation form. CLICK HERE - Motor Vehicle Division - Beneficiary Designation Form
If you would like more information about how to best handle your financial accounts and personal property items to keep them your sole and separate property, please call OWENS & PERKINS at480.630.2464 to schedule your free 30-minute consultation with one of our experienced attorneys.