Marital Property Agreements – Estes & Madine, PLLC

Marital Estate Planning:

In the past, most estate planning engagements involved representing a husband and wife, each of whom had only been married to each other, for the purpose of accomplishing the following general goals:

Providing adequately for the surviving spouse (whomever that turned out to be);
Upon the death of the surviving spouse, providing for the proper distribution of their assets to their children (who were the children of both spouses); and
Minimizing the tax consequences involved in such planning.

Today, when divorce is more common and people often marry more than once, the result is that many couples have so-called “blended families” consisting of each spouse’s children from a prior marriage (plus, perhaps, additional children who are the children of both spouses). This makes planning for the ownership and ultimate distribution of the assets owned by each spouse and/or the marital community rather more complicated.

Community or Separate Property:

Arizona is a community property state. Therefore, when dealing with a married couple domiciled in Arizona, it is necessary to make a distinction between each spouse’s “separate property” (if any) and the married couple’s “community property” as follows:

Community Property: All property acquired by a spouse during marriage except that acquired by gift, devise, or descent. There is a presumption that all property acquired by either spouse during marriage is community property; and a spouse claiming that an asset is the spouse’s separate property must overcome that presumption by clear and convincing evidence.
Separate Property: Property of a spouse that is (a) owned by the spouse before marriage; (b), acquired by the spouse after marriage by gift, devise, or descent; or (c) the increase, rents, issues, and profits of separate property.

Marital Property Agreements:

A couple, whether prior to or after their marriage, may enter into an agreement to spell out their rights and responsibilities regarding their respective separate property and their interests in their community property. These agreements might include premarital agreements, post-marital agreements, and community property agreements. The purposes of these agreements may include:

Maintaining the separate property character of some or all of their separate property
Opting out of some or all of the “community property” rules otherwise applicable to the property they acquire during their marriage
Waiving certain rights (e.g, in the event of divorce or upon the death of one of the spouses) to which they might otherwise be entitled because they are married
Converting some or all of their separate property to community property (or vice versa) because of estate planning objectives or income tax planning opportunities