Community property issues can arise during divorce proceedings and after a spouse’s death. When spouses divorce or pass away, they are frequently left with the arduous task of dividing property and proceeds acquired during the marriage. This may include tangible assets (such as stocks, bonds, and legal title), as well as intangible assets (such as automobiles, furniture, paintings, and family homes) and debt.
In some states, property acquired during the marriage is considered “community” property and is frequently divided 50/50 in the event of a divorce. The manner in which states treat “community property,” also known as “marital property,” will determine what happens to debt or assets upon divorce.
Common Property Statutes
State laws govern community property, and not all states have such laws on the books. Community property laws in nine states (and Puerto Rico) govern the division of debt and property in a divorce. Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin are included in this group. In such states, property is typically divided equally, whereas in all other states, distribution is determined by a judge based on what is equitable or fair.
Alaska is distinctive in that divorcing couples have options.
Despite the fact that each state determines how property is divided upon divorce, the laws may vary slightly. For instance, some states, such as California, divide debts and assets “equally” (50/50), while others, such as Texas, divide them “equitably.” Even in community property states, courts in jurisdictions that apply the equitable distribution doctrine consider numerous factors, some of which justify unequal distribution of property or debt.
Because these laws affect property and other valuable assets, they can have a profound impact on the future of a spouse who is forced to share a portion of an asset that was previously considered separate property. In the absence of a prenuptial agreement between the parties, property distribution will be governed by the law of the state in which the couple was married.
In most cases, property acquired during a marriage belongs to both partners. This is particularly true in states where community property laws exist. Despite the fact that not all states have such laws, property acquired during the duration of a marriage is distributed equally upon divorce.
The following are examples of community property:
Earnings of each spouse during the marriage
Home and furnishings acquired with marital funds during the marriage (reword)
Investments and operations of a company generate interest income.
The mortgage and family home
Separate property, on the other hand, is that which was owned prior to the marriage, was inherited or received as a gift during the marriage, or was earned after the date of separation by either spouse.
These are examples of separate property:
- Bank accounts that are held independently
- Separately held inheritances acquired during a marriage
- presents to either partner
- Personal injury compensation
- Any property acquired after the dissolution of a marriage is considered separate property
Courts have also categorized certain properties as “partially” or “quasi” community property. This includes assets that would have been considered separate property at the beginning or during the marriage, but have become marital property as a result of co-mingling or other circumstances.
Considerations a Judge Might Employ to Determine Property Division
A judge may consider several factors when determining how to divide property acquired during the marriage. A judge will consider 1) the earning capacity of each spouse, 2) which parent is the legal custodian of the children (if any), and 3) the existence of fault grounds such as adultery or cruelty.
Consequently, even in states with community property, property may not always be divided 50/50. Instead, courts will consider the following factors to determine whether an unequal property division is necessary:
- One spouse may receive a larger share of the marital assets if fault-based grounds for divorce exist (such as adultery, cruelty, etc.).
- Loss of Continuing Benefit: Whether one spouse will incur the loss of compensation they would have received had the marriage continued.
- Disparity of Earning Capabilities: Whether disparities exist between incomes, earning capacities, and business opportunities that may impact property division.
- Health and Physical Conditions: Whether the physical health or condition of the spouses may impact the property division.
- Age Disparities: Whether there is a disparity between the ages of the spouses that could affect one’s ability to work or receive retirement benefits.
- The size of the estate can have an impact on the distribution of property. The larger the estate, the more likely the court is to favor a 50/50 split.
- The likelihood that one of the spouses will receive a substantial inheritance.
- Gifts to a Spouse: After a divorce, gifts are typically converted to separate property.
- A spouse who obtains primary custody of children under the age of 18 may affect the division of property.
Consult with a Divorce Lawyer Concerning Community Property
Legal issues surrounding a divorce can be overwhelming in number. Property matters, alimony, child custody, child support, division of retirement benefits accrued during the marriage, visitation rights, and other legal matters must all be handled with care. Finding the appropriate divorce attorney is crucial. Contact a local divorce attorney with experience in your area today.