§ 3.5.1 Community and Separate Debts . The fact that Arizona is a community property state is important to keep in mind before filing suit and while drafting the complaint and prayer for relief. The property rights of a husband and wife in Arizona are governed by the law of the couple’s matrimonial domicile at the time that the obligation is incurred. See In re Miller, 517 B.R. 145 (D. Ariz 2014) ; Lorenz-Auxier Financial Group v. Bidewill, 160 Ariz. 218, 772 P.2d 41 (Ct. App. 1989). Even in federal court, property rights are determined by state law. Id. at 149. Although the presumption that all property acquired during marriage is community property is not conclusive, it is nearly so. Kennedy v. Kennedy, 93 Ariz. 252, 379 P.2d 966 (1963) ; Smith v. Smith, 71 Ariz. 315, 227 P.2d 214 (1951) ; Arizona Credit Union v. Holden, 6 Ariz. App. 310, 432 P.2d 276 (1967) . However, a valid prenuptial agreement abrogating community property rights will effectively prevent a post-marriage creditor on one spouse from collecting the debt from the property of the other. See Elia v. Pifer, 194 Ariz. 74, 977 P.2d 796 (Ct. App. 1998).
A.R.S. § 25-214(B) gives both spouses “equal power to bind the community.” There is therefore a statutory presumption in favor of a community obligation. Johnson v. Johnson, 131 Ariz. 38, 638 P.2d 705 (1981) ; Schlaefer v. Financial Management Services, Inc., 196 Ariz. 336, 996 P.2d 745 (Ct. App. 2000) . In Arizona, neither the community property, nor the separate property of one spouse, is liable for the separate debts of the other incurred during marriage. A.R.S. §§ 25-215(A)–(B); see also Schilling v. Embree, 118 Ariz. 236, 238-39, 575 P.2d 1262, 1264-65 (Ct. App. 1977) . The burden of proof is on the one claiming property to be separate; where there is any doubt, property will be treated as community property. Tyson v. Tyson, 61 Ariz. 329, 149 P.2d 674 (1944). The presumption must be overcome by clear and convincing evidence that the debt is a separate obligation of one of the spouses. Hrudka v. Hrudka, 186 Ariz. 84, 919 P.2d 179 (Ct. App. 1995) ; MacCollum v. Perkinson, 185 Ariz. 179, 913 P.2d 1097 (Ct. App. 1996) ; United Bank v. Allyn, 167 Ariz. 191, 198, 805 P.2d 1012, 1019 (Ct. App. 1990) (promissory note was silent as to James Allyn’s capacity, but all other documents stated James Allyn was “dealing with his sole and separate property”). The test is whether the community was intended to benefit from the transaction, not whether the...
