Community Property Overview

The issue of community property will certainly arise in a divorce proceeding. Divorce includes the daunting and difficult task of dividing the assets acquired during the marriage. The assets may be items of value such as homes, cars, etc. or intangible assets and also debt.

In community property states, any asset acquired during the marriage is a community asset and must be equally split between the spouses in case of a divorce. Your state law will determine how community property or marital property will be divided in case of a divorce.

State Laws

Wisconsin, Louisiana, Washington, Texas, Nevada, New Mexico, Idaho, California and Arizona along with Puerto Rico have community property laws and are often referred to as community property states. In most these states including California, the martial assets are divided equally but in some states like Texas, the marital property is distributed equitably. The court will consider many factors when deciding how to distribute the marital assets.

Community Property

Generally, any asset that you or your spouse acquires during the marriage is a community property. Generally these assets are distributed equally in case of a divorce. Some states have laws that determine the division of community property.

The following are some examples of community property:

• Wages of both spouses during the marriage
• House and furniture which the spouse brought after the marriage
• Income by way of interest on investments
• Family home and mortgage

The following on the other hand will be considered as separate property:

• Assets owned by either spouse prior to marriage
• Inheritances or gifts during the marriage
• Income after the date of separation

Some properties are considered as “quasi” or “partial” community property. Properties that were separate properties but have become community property as a result of commingling or other reasons associated with the marriage.

Factors that affect the Division of Community Property

Many factors can affect the division of community property. The three many factors are: 1) the earning capacity 2) who is the primary and legal caretaker of the children and 3) fault. Because of these factors, community property is not always divided equally even in community property states. The court will look at the following factors to determine if one spouse is entitled to more than 50% of the community property:

Fault – If fault such as cruelty or adultery is one of the grounds for divorce, then the victim spouse may be entitled to a higher share of the community property.

Continuing Benefits – One spouse may be entitled to higher share of the community property if the termination of the marriage would result in loss of some benefit which he or she receives because of his or her married status.

Earning Capacity – Often the earning capacity of the spouses can affect the division of community property.

Health – The health of the spouses can also play a vital role in determining who gets what.

Age – If there is a significant age difference between the spouse that can affect one spouse’s ability to receive benefits or be suitably employed, it can influence the division of property.

Estate – Generally large estates are often divided equally.

Inheritances – If one spouse is likely to receive significant inheritance, it can affect that spouse’s share of community property.

Gifts – Gifts to a spouse will be considered as separate property.

Children – The spouse with custody of minor children may get more share of the community property.

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