In the context of marriage and divorce or separation, community property is property that is owned by both spouses. It is different from separate property, which is property owned by one spouse individually. States have different laws with regard to how property is classified in a marriage setting.
Generally, any property that a married couple obtains or accumulated during the marriage is considered community property. If the partners divorce or separate, then both spouses own an undivided share of the community property.
States that follow community property laws start with a strong presumption that anything acquired during marriage is a community item. As such, a spouse who is claiming that a particular item is not community property has the burden of proving their claim.
There are nine states that follow community property rules. These are: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
How Do Community Property States Differ from Others?
The nine states, listed above, are considered community property states. These states share many similar legal concepts and principles when it comes to dividing assets accrued during a marriage. Generally, any property or assets that a married couple accumulates during the marriage is considered community property, so it belongs to the community (a.k.a. marriage) and not to the individuals. As a result, both spouses will own an undivided share of the whole if they divorce.
In a non-community property state, the courts might divide the property differently. In these states, they will usually follow what are called “equitable distribution” principles. That is, the court will attempt to divide the property in a way that think is most fair for the parties. In such states, court may consider a variety of factors to distribute the property, which may include:
- Whether a prenuptial agreement exists;
- The length of the marriage;
- Characteristics of each spouse, including age, employment, health, and financial assets; and
- The overall estate of each spouse.
In comparing the two different types of state property laws, community property states tend to be more rigid in the distribution. They may apply formulas or set rules for the distribution. This can be more straight-forward than equitable distribution states, which may use more complex determinations.
In both community and equitable distribution states, marital misconduct generally is not a main factor when it comes to determining property distribution. However, if a spouse attempted to hide assets or spend assets before the divorce, then they can be punished by the court when it is time to distribute the assets.
The state of Alaska is somewhat of a “hybrid” state. It employs equitable property distribution factors, but allows couples to treat assets as community property if they sign a joint agreement.
Are There Any Exceptions to the Community Property Rule?
In some community property states, there may be exceptions to the general rule. The following are assets that are common exceptions to the community property rule (that is, they are treated as separate property):
- Assets acquired before marriage;
- Assets acquired as a personal gift; and
- Assets acquired through inheritance.
It also must be clear that it was intended to be separate property. For example, Wife sold her condo (after the wedding) that she owned when she was single. She put the proceeds from that account into a separate bank account that Husband never had access to. He could not withdraw or put any money into the account. Wife used the money in the account, occasionally, but never for something that Husband would also benefit from. She used that money to send her parents on a vacation and to buy herself some new clothes.
When they divorced, Husband attempted to argue that the assets in that account were community property as acquired the money during their marriage. In this case, the court will very likely say that the assets in that account are solely hers. She made clear steps to not let Husband have any access to it, and never used any of the funds for the benefit of the community. The money’s source can also be traced to an asset, the condo, that she owned before she was married.
What if My Spouse and I Acquired Property while Living in Another State?
Community property states will typically categorize this property as “quasi-community property.” Quasi-community property is usually defined as: property acquired by either spouse in a non-community property state that would have been community property had the couple been living in a community property state at the time of acquisition.
While the couple is married, quasi-community property is generally treated as separate property, belonging to the spouse who acquired it (as long as the acquiring spouse also treats it as separate property).
If the couple divorces, quasi-community property is typically treated as if it were community property. This means that quasi-community property is split equally between the spouses (50/50 split).
Do I Need a Family Law Attorney for My Divorce in a Community Property State?
Divorce proceedings can be very complicated, and the distribution of property can be complex. An experienced divorce lawyer in your area can help you determine how your state’s laws will affect your divorce. A lawyer can also represent you in court if a dispute arises over the distribution of property or any other legal issues.