When it comes to marital property law, American states follow one of two schemes, community property or common law property. In a community property state, when a couple gets divorced or legally separated, all of the property they acquired during the marriage, except gifts and inheritances, is characterized as community property.
It must be divided between the spouses equally. In common law states, property acquired during the marriage might be marital property. If it is, it must be divided in a way that is fair and equitable.
The same is true of debt that the spouses incur during their marriage. Debt can also be community debt that must be divided equally between the spouses when they separate or divorce.
The law in each state determines how property acquired during the marriage should be classified and distributed between spouses. These concepts of property acquired by married couples may also have an effect in probate when either of the spouses passes away.
An issue arises, however, when a couple is married and acquires property in a non-community property state and then moves to a state in which community property is the law. This is where the quasi-community property characterization comes into play.
What Does Quasi-Community Property Mean?
When a couple acquires property in a non-community property state and then moves to a community property state, a court in the community property state treats as community property all of the property that would be classified as community property in the state to which the couple moves.
Essentially, if the property would be community property if the spouses had been living in a community property state when they acquired it, then the court treats the property as community property. The court treats separate property as separate if that is what it is. This is a legal “fiction” that the courts adopt when they divide up property that was acquired in another state in a divorce or in a probate proceeding.
If only one spouse has moved to the community property state and the other has remained in the non-community property state, the quasi-community property doctrine would not apply.
Again, the main point of the doctrine of quasi-community property is that courts in some community property states, e.g., California, apply the community property system to assets acquired by a married couple in a non-community property state when they seek a legal separation or divorce in a community property state.
In Washington, whether property is quasi-community property depends on the type of property an item is. If the property is personal property, as opposed to real property, it is treated as community property. If the property is real property, then the property is given the status it would have in the state in which the property is located.
If that state applies the law of the state in which the owner resides, the quasi-community property rule will apply. If the state applies its own law and it is not a community property state, the rule would not apply.
What Happens to Quasi-Community Property in a Divorce?
Louisiana, Arizona, California, Texas, Washington, Idaho, Nevada, New Mexico, and Wisconsin are the nine community property states in the U.S. In a state where community property is the law, all property, including real property, income, and any other assets acquired during the marriage, are deemed to be owned equally by each spouse.
All debt incurred during a marriage would belong to both spouses equally as well, even if only one of them used the credit card to run up the debt.
Again, when a couple gets a divorce, all of their community property is divided equally between them. Quasi-community property is treated just like community property on the occasion of a divorce or legal separation. So even though the couple acquired the property in another state, perhaps even in a state that is not a community property state, it is still treated like community property. It must be divided between the spouses equally.
What Is Separate Property?
In a community property state, it is possible for a spouse in a marriage to have property that is separate property, that is, property that belongs exclusively to that spouse. The general rule is that any asset that a person acquires before they get married remains their separate property after they get married. Also, any property that a person acquires after they separate from their spouse is the separate property of that spouse.
Property that a married person receives as an inheritance or as a gift given to that person is also separate property. In some cases, separate property can be assets that a person or their spouse acquired during their marriage.
Separate property can become community property in certain circumstances. For example, if a person buys a house before they marry and then puts their spouse on the title after their marriage, the property might be considered to have been changed to community property.
In any event, the concept of quasi-community property does not apply to separate property for the reason that separate property is always going to be treated as separate wherever it is acquired.
Of course, a married couple can always use a prenuptial agreement to make their own provisions regarding the character of their property.
What Happens to Quasi-Community Property When One Spouse Passes Away?
The rules regarding the disposition of quasi-community property after one spouse passes away are different. In probate, only real property can be quasi-community property, and then only if it is situated in a community property state.
Upon the passing of one spouse, one-half of the deceased spouse’s quasi-community property belongs to the surviving spouse and the other half to the deceased spouse. In the probate context, the distribution of a person’s property on the occasion of their death depends on who acquired the property.
If the deceased acquired the property, 50% of the quasi-community property belongs to the deceased, who can bequeath or devise it as they want. The other 50% belongs to the surviving spouse who is allowed to keep it.
If the surviving spouse acquired the quasi-community property, then when the spouse who did not acquire it passes away, it belongs solely to the spouse, who acquired the property.
Do Creditors Have Access to Quasi Community Property?
Creditors of either of the spouses can access community property and quasi-community property. That is because the debts of both spouses are community debts, and both spouses are liable for them. This would be true for quasi-community property as well.
On the other hand, separate property can be accessed only by the creditors of the spouse who owns the separate property. That would be the case if the liability was incurred only by the spouse who owns the separate property. If the liability was incurred by the other spouse, then community property and the other spouse’s separate property could be reached by the creditor.
Do I Need the Help of a Lawyer for My Marital Property Issues?
Divorces and probate issues can arise at times that are very stressful, even under the best of circumstances. If you are dealing with a divorce where quasi-community property might be an issue, you want to consult with an experienced property division attorney in your state to help guide you through the process.
The same goes for probate matters. An attorney well-versed in estate law matters can help you navigate how property should be classified and distributed in probate.