Joint Tenancy vs. Community Property in Divorce
Going through a divorce is a daunting task, and property division with your former spouse can be difficult. It’s crucial to understand how property may be shared in your particular situation, especially when it comes to your family home.
Two terms you may encounter as you negotiate the terms of your divorce are '“joint tenancy” and “community property.”These concepts, while similar in some respects, differ significantly in their implications.
Legal ways to share marital property
Property sharing in a marriage can take several forms. Joint tenancy and community property are two prevalent ones. These terms might seem interchangeable, but in the legal world, they carry distinct meanings, rights, and responsibilities.
Joint tenancy
Joint tenancy is a form of joint ownership where two or more people hold an equal interest in the property – they co-own it. Each person has an undivided right to the entire property, and the “right of survivorship” applies. This means, upon the death of one tenant, their share automatically transfers to the surviving co-owners, regardless of any will left behind. Property can be owned as joint tenants without marriage.
Community property
“Community property” refers to the principle where all assets and income acquired during the marriage are considered equally owned by both spouses. This concept is primarily practiced in nine U.S. states, known as community property states.
Unlike joint tenancy, there's no right of survivorship in community property. This means that each spouse can will their half to someone else, if they wish.
Community property applies strictly to married couples and registered domestic partners.
Your state laws regarding property and divorce
In a divorce, the determination of who gets what depends on whether the couple's property is held as joint tenancy or community property.
Joint tenancy vs. community property in divorce
For joint tenants undergoing a divorce, the property is usually sold and the proceeds are divided equally, thereby dissolving the co-ownership. However, if one party can afford to buy out the other's share, they can become the sole owner.
Read: Calculating a House Buyout in Divorce
For divorcing couples in community property states, each spouse retains 50% ownership of all community property. However, the court has the discretion to divide the property in a manner deemed fair and equitable during the divorce proceedings. This may not always mean an equal split.
At Hello Divorce, we know you may be wondering what will happen to your house after divorce. You likely have a lot of other questions, too. Our mission is to make divorce understandable, accessible, and affordable for everyone.
We offer online divorce plans for every budget and every situation. Whether you need legal advice, financial consultation, or help finding a mediator, we have your back. Don’t forget to check out our suggested readings below for more helpful information.
FAQs
What is joint tenancy?
Joint tenancy is a form of co-ownership where each spouse owns an equal share of property and has a right of survivorship. If one spouse dies, their share automatically transfers to the surviving spouse.
What is community property ownership?
Community property ownership means both spouses jointly own property acquired during the marriage, with each entitled to 50%. It does not include the right of survivorship unless specifically titled that way.
How does divorce affect joint tenancy?
A divorce filing usually severs joint tenancy. The property then becomes tenancy in common, meaning each spouse owns a share without survivorship rights. Division is then subject to community property rules.
Which is better for tax purposes: joint tenancy or community property?
Community property with right of survivorship often provides a full step-up in tax basis upon the death of one spouse, potentially reducing capital gains taxes. Joint tenancy typically gives only a half step-up.
Can we change title from joint tenancy to community property?
Yes. Spouses can sign and record a new deed converting joint tenancy into community property or community property with right of survivorship, as long as both agree.
Does title always decide how property is divided in divorce?
Not always. Even if a home is titled as joint tenancy, if it was acquired during the marriage with community funds, courts generally treat it as community property for divorce purposes.
How to Address Property Ownership in Divorce When Title Is Joint Tenancy or Community Property
Obtain and review the deed
Check how the property is titled: joint tenancy, community property, or another form. This determines survivorship rights and can affect division.
Document financial contributions
Gather proof of down payments, mortgage payments, or renovations. Note whether funds came from community earnings or separate property.
Clarify community vs separate property interests
Evaluate whether the home is fully community property, separate property, or a mix. Consider tracing separate contributions to establish reimbursement rights.
Get a current property valuation
Order an appraisal or comparative market analysis to determine the home’s fair market value for negotiation or court purposes.
Decide on division or buyout
Negotiate whether one spouse will keep the property and refinance to buy out the other, or whether the home will be sold and proceeds divided.
Record updated title or court order
After agreement or court decision, record new deeds or court orders with the county to reflect ownership changes.
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