Community property is a term in family law that is sometimes used in cases of divorce or legal separation. Community property generally refers to any property or assets that a couple gets during the marriage and owns together.
In a divorce or legal separation proceeding, a court will have to determine who owns what property. The court will divide property based on the type of property distribution methods required by state laws. Only a handful of states abide by community property standards.
If the state is a community property state, then the couple’s property usually will be split evenly between the parties. Hence the name, “community property,” or “shared property.”
Any property that belonged to a spouse prior to the marriage, or obtained after a divorce or separation, or was given to them as a gift from a third party during the marriage, is considered to be separate property by the court.
In certain instances, however, the court may find that the separate property has been altered enough to become community property. For example, if one spouse was gifted a house before the marriage, but gets married and decides to put the other spouse’s name on the deed to the house, then the house will now be considered community property. Those deliberate choices made by the spouse who was gifted the house shows that they intended it to belong to the community (a.k.a. Both spouses) and not to themselves.
The following nine states have community property laws: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. The rest employ a different framework for property division called “equitable distribution.”
Equitable distribution is the more popular method that courts employ to divide property during a divorce or legal separation proceeding. Unlike community property rules, equitable distribution requires a court to look at a number of factors and variables when deciding which party should get what item of property.
The most important principle to know about equitable distribution is that it does not mean to divide equally. Instead, equitable distribution refers to a division of property that achieves both a fair and comprehensive result for the parties. In other words, the main focus of the decision for property division is based on fairness to the parties.
For instance, some factors that a court may consider in order to reach a fair result include:
- How long the couple’s marriage lasted;
- Whether a prenuptial agreement existed that sets out specific terms;
- The employment, skills, and financial background of each respective party;
- Whether there will be any issues related to child custody and child support;
- The age and health of each party, including any existing medical conditions;
- Whether one of the parties will require spousal support or alimony;
- What each person’s estate offers compared to the marital estate;
- Whether there are any jointly or independently owned businesses by both or one of the parties; and
- Various other factors.
Again, the point of analyzing these factors is to achieve some kind of comprehensive and fair result when distribution assets between the parties.
Although it will primarily depend on the laws of a particular state, equitable distribution is the preferred method to use over the community property standard. This is due to the variety of factors involved in making a decision and how those results tend to be viewed as a more “natural” and “fair” way to divide property.
The downside, however, is that equitable distribution often involves a deeper analysis. This means that the proceedings for a case may take longer and can present greater challenges.
Community property rulings, on the other hand, are more rigid and sometimes require the court to use set formulas when dividing property. While this may end with “unfair” results, it does make the proceedings less complicated and more straight-forward, so that the parties may predict the outcome beforehand.
As for any issues pertaining to marital misconduct, such as having an affair, neither community property or equitable distribution of property factor-in these types of matters when determining property rights.
As previously mentioned, whether a court applies community property rules or equitable distribution guidelines ultimately depends on the state laws of the jurisdiction. Thus, it does not matter whether the parties prefer one option over the other since it might not be available.
Additionally, just because the proceeding is based in a state with a particular method, does not necessarily mean that every state with that method will follow the same rules.
For instance, the community property laws provided by Washington state statutes may vary widely from what is necessitated by the community property laws found in the state regulations for Texas or California.
Lastly, a state may have certain rules in place that a court must use to divide property, which have nothing to do with either of these methods, but simply has to do with a state’s property laws. Also, if a couple has a prenuptial agreement, the court will most likely need to apply the terms required by the agreement.
On a final note, hiring an attorney for these types of matters may prove to be useful because many decisions in a divorce proceeding are examined on a case-by-case basis, meaning each filing may involve unique facts and circumstances. As demonstrated above, this also means that different laws can apply to each case, which an attorney can help figure out.
Community property and equitable distribution are two very different legal concepts. As such, they are often part of the reason why divorce cases are so complex. To avoid any confusion over which method and laws will apply in your case, it is better to consult an attorney to ensure that the case is handled properly, rather than do it alone and risk making mistakes for such an important matter.
Additionally, these property allocation methods can greatly affect the outcome of your divorce case. Thus, when it comes to the portion of a divorce proceeding that involves managing property distribution, it will generally require the assistance of a lawyer, especially if children are involved.
Hiring a local family attorney can give you information regarding your particular state’s laws on property distribution, can help you to negotiate particular elements of your divorce settlement, and let you know whether there are certain rights available that you can exercise in order to protect your interests.
Regardless of what stage you are in of a divorce proceeding, you should strongly consider contacting an attorney. An experienced attorney can assist you with the filing and processing of a divorce claim, reviewing any contracts concerning the marriage that may affect your divorce claim, and if necessary, providing representation on your behalf in court.