Property that both spouses own is called community property in the context of marriage, divorce, or separation. It is distinct from separate property, which is property owned solely by one couple. Regarding how property is categorized in a marriage situation, states have varying laws.
All assets acquired or gained by a married couple throughout the marriage are considered common property. In the event of a divorce or separation, the community property will be equally divided between the couples.
Every item obtained during a marriage is strongly presumed to be a communal item in states that have community property laws. So, the burden of proof rests with the spouse asserting that a certain item is not communal property.
What Are Community Property Assets?
Courts frequently categorize property as separate or common property in divorce or legal separation cases. The owner fully holds separate property after the divorce process is through and a decision has been made. However, assets that belong to the community can be divided equally and on a 50/50 basis between the parties.
Assets acquired by the couple while they were lawfully married are often referred to as community property assets. Generally, any property acquired during legal separation is not considered separate property.
Which Assets Fall Under the Definition of Community Property?
During a divorce, many properties might be regarded as community property. These assets may include both tangible property, such as a marital house, or intangible assets, such as:
- Funds from a joint bank account
- Items of personal property gifted to the couple
- Properties with titles bearing both parties’ names (such as a car or boat)
- Non-tangible assets, such as retirement plans, job benefits, stocks, and other securities, in which both parties have an interest
Most of the property acquired throughout the marriage will be regarded as common property at the end (in the states that follow these rules). One instance where this rule is broken is when a present is given to one spouse, and the sender clearly states that the gift is to be owned entirely by that spouse. The premise is that any assets designated as “community property” are entitled to an equal part of each spouse.
Do Community Property Regulations Appear in All States?
Many states, but not all, have communal property laws. Some might use more permissive interpretations of these regulations that incorporate “equitable distribution” ideas. These decisions examine additional elements that may impact how property is divided, including each party’s employment, age, and financial situation.
Because of this, the state in which the divorce is filed may impact how the parties’ property is divided. Additionally, when married couples relocate from one state to another, they could face problems with how their property is classified for divorce proceedings.
What Separates Community Property States from Other States?
Nine states are regarded as community property states. When it comes to splitting assets accumulated during a marriage, these states have a lot of common legal concepts and principles.
Generally, any property or assets a married couple acquires throughout their marriage are considered community property, meaning they belong to the marriage as a whole rather than to the individual spouses. Therefore, in the event of a divorce, each spouse will hold an undivided portion of the total.
The courts may split the property differently in a state without community property. They often adhere to “equitable distribution” ideals in these states. In other words, the court will try to divide the assets in a manner it deems most equitable for the parties.
When deciding how to divide the property in these states, the court may take into account several variables, such as:
- The existence of a prenuptial agreement.
- The length of the marriage.
- Each spouse’s characteristics include age, employment, health, and financial assets.
- The total estate of each spouse.
Compared to other state property laws, states that recognize community property tend to have stricter distribution rules. For the distribution, they may use formulas or establish regulations. Compared to states that practice equal distribution and may employ more intricate calculations, this may be simpler.
Marital misconduct typically isn’t a major consideration when dividing up property in jurisdictions that practice communal property or equitable distribution. When it comes time to divide the assets, the court may penalize a spouse who tried to conceal assets or spend money before the divorce.
Alaska can be considered a “hybrid” state. It uses equitable property distribution criteria, but if spouses sign a joint agreement, they can regard assets as communal property.
The Community Property Rule: Are There Any Exceptions?
There could be exceptions to the general norm in some states with communal property. Assets that frequently fall outside of the community property rule and are therefore given distinct property treatment include the following:
- Purchasing property before getting married,
- Receiving property as a gift from a friend, and
- Inheriting property.
Additionally, it must be obvious that it was created as separate property. For instance, the wife sold her condo that she had held while unmarried after the wedding. She transferred the money from that account into a different bank account that only she could access. He was unable to make any deposits or withdrawals from the account. Sometimes, the wife utilized the money in the account, but she never spent it on something that would also benefit the husband. She spent that money on new clothing for herself and to send her parents on holiday.
After their divorce, the husband tried to claim that the assets in that account were communal property because they were obtained during their marriage. The court, in this instance, will probably rule that she is the only owner of the assets in that account. She took explicit measures to deny her husband access to it and never used any of the money for the good of the neighborhood. The condo she held before getting married is another asset that can be used to determine where the money came from.
What if My Spouse and I Bought a House While Living in a Different State?
States that recognize community property will often classify this as “quasi-community property.” Property obtained by either spouse in a non-community property state that would have been community property had the couple been residing in a community property state at the time of acquisition is typically referred to as quasi-community property.
Quasi-community property is typically recognized as distinct property throughout a marriage. It belongs to the spouse who acquired it (as long as the acquiring spouse also treats it as separate property).
Quasi-community property is normally handled as community property in the event of a divorce. This indicates that quasi-community property is divided equally (50/50) between the couples.
Do I Require Legal Counsel for Assistance with Community Property Assets?
The division of property during a divorce can be quite difficult and confusing. You can determine how your state’s rules will impact your divorce by consulting an experienced family attorney in your area. A lawyer can also represent you in court if there is a disagreement over the division of property or any other legal matters.
An expert divorce attorney should consult with any conflicts or legal questions affecting communal property assets. You could require help with tasks like making a claim, cataloging your property, or deciphering local and state divorce rules. Your lawyer can assist you with these chores and stand in for you during the court proceedings.
