Community Property States

From LoveToKnow Divorce

If you want to get a divorce, the issue of division of assets and debts will depend on whether you live in one of the community property states. They are as follows:

  • Arizona
  • California
  • Idaho
  • Louisiana
  • New Mexico
  • Nevada
  • Texas
  • Washington
  • Wisconsin

Theory Behind Community Property

In community property states, the law assumes that each person contributed equally to the marriage, even in a situation where one person stayed at home to raise children and look after the house while the other person worked outside of the home. It doesn't matter which person paid for the property. On separation, divorce, or death, they are each entitled to a one-half share of the marital assets.

Divorce and Community Property States

If you live in one of these states, property is either considered community property or separate property. Community property includes any assets or debts acquired during the marriage. On legal separation, divorce, or death, these items are usually divided equally between the spouses.

In some situations, a couple can live in a community property state but all assets are not divided equally. A judge may order a different division of marital property if there is a large discrepancy between each person's earnings. Another situation where an unequal division may be ordered is where one person is considered to be at fault for the breakdown of the marriage.

Exceptions to Community Property Rules

Any assets that the couple acquired prior to marriage are not included in community property. An asset acquired after marriage as a gift or inheritance is not considered to be community property. There are some situations where separate property becomes community property, though. Here are some examples:

  • A spouse adds the name of his or her spouse to the deed of a property received as a gift or inheritance after marriage
  • Funds received as a gift or from an inheritance are deposited or transferred to a bank account in both spouses' names

The key to determining whether a certain asset is community or separate property lies in tracing where the money came from to pay for it. Keeping detailed records for purchases will make this process easier if you ever need to provide this information.

Alaska: Optional Community Property

Alaska is a state where things are a bit different when it comes to division of property. Under the provisions of The The Alaska Community Property Act, couples may elect to have some or all of their marital property considered community property. Each person must agree to this arrangement and the list of assets considered community property must be put in writing.

If the couple does not choose to designate any or all of their marital property as community property, it remains subject to equitable distribution rules under the law. This means marital property is divided in a fashion that is considered fair. This may not mean that each person gets half of the marital assets, but most judges do use a 50/50 split as a starting point if they are asked to make a ruling at trial.

When to Designate Community Property Under the Law

This is a good choice for people who are in a stable marriage and who like the fact that they each have an equal share in their marital property. For those who have accumulated a significant amount of marital assets, there are important tax benefits to making this designation.

More Information About Community Property

Issues around community property and separate property can be complicated. To get information for your personal situation, please consult with a licensed attorney and/or a qualified accountant in your state.

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