SB1151

THE CONTEXT: Arizona is what is commonly referred to as a community property state. This means that all property acquired by either spouse during a marriage, with some exceptions, is considered to be the community property of both spouses, and thus owned by each spouse in equal shares ( A.

WHAT THE BILL DID: The final vetoed version would require a court that is assessing the value of a business interest to determine the community share to be paid to the spouse who will no longer maintain his or her interest in the business to assess the value of the business as of the date of service of the petition for dissolution, legal separation or annulment, unless the court determines another date would be more appropriate as the result an extreme market condition or the parties agree otherwise, specifies that, beginning on the date of service of the petition for dissolution, legal separation or annulment, the spouse who will no longer maintain an interest in the business interest is neither entitled to any share of the business's profits nor responsible for any new liabilities earned or incurred by the business after that date, and mandate that any compensation to the business owner that is included in the value of the business, as specified above, cannot be used for the purposes of calculating spousal maintenance or child support.

WHY IT MATTERED: The practical reason for this bill was to turn the Legislature's standard for community property into an enforceable rule. It would require a court that is assessing the value of a business interest to determine the community share to be paid to the spouse who will no longer maintain his or her interest in the business to assess the value of the business as of the date of service of the petition for dissolution, legal separation or annulment, unless the court determines another date would be more appropriate as the result an extreme market condition or the parties agree otherwise, and would also specifies that, beginning on the date of service of the petition for dissolution, legal separation or annulment, the spouse who will no longer maintain an interest in the business interest is neither entitled to any share of the business's profits nor responsible for any new liabilities earned or incurred by the business after that date, rather than leave the current rule unchanged.