Featured News 2016 Understanding ‘Community Property’

Understanding ‘Community Property’

In the United States, there are two methods for dividing spouses' property during a divorce: equitable distribution and community property. In effect, a state is either an equitable distribution state or a community property state.

Most states are equitable distribution states, with the exception of Arizona, California, Idaho, Louisiana, New Mexico, Nevada, Texas, Washington and Wisconsin. Puerto Rico also divides marital property based on the laws of "community property."

What is the theory behind community property?

The concept behind "community property" is that each spouse has made valuable contributions to the marital union, even if one of the spouses has been unemployed or underemployed during the marriage.

Contributions as a stay-at-home parent or a homemaker are considered valued by the family court system.

Under community property law, the marital assets acquired during the course of a marriage are "community property," meaning each spouse has a 50% interest in the property, regardless of whose name is on the bank account or title.

Likewise, the debts incurred during a marriage are considered community debt, which means that both spouses are equally liable for the debts.

Unlike community property, which belongs to both spouses, separate property is owned solely by one spouse and is not subject to division in a divorce. Separate property includes:

  • Personal injury awards,
  • Property acquired before the marriage, and
  • Property acquired during the marriage through a gift or inheritance.

Seven out of the nine community property states, with the exception of California and Washington contend that a married couple's community property estate terminates upon a legal separation or divorce. In these states, living apart does not cancel the community property estate.

California and Washington are more flexible; these states hold that the community property estate terminates once the parties physically separate and intend to obtain a divorce.

If you are interested in learning more about your state's property division laws, contact a divorce lawyer in our directory.

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