During your divorce process, you may see or hear the term “community property.” At times, it may be used to describe marital property that you and your soon-to-be ex-spouse share. But more often, it’s used to describe a specific group of states and the laws that govern the division of marital property for divorcing people in those states.
First, let’s look at the concept of marital property. This refers to property co-owned by two spouses. Any items or money obtained by a couple during marriage is marital property.
Of course, exceptions exist to this general rule. For example, if you inherit money from a relative during your marriage, that money is yours alone – it’s your separate property. However, if you deposit that money into a bank account shared by you and your spouse, or if you use it to make improvements to your marital home, it may no longer be considered your personal property. Instead, it may now be considered a marital asset.
One of the biggest issues any divorcing couple faces is how to divide their marital property between the two of them. When two people share one house, one car, or one dog, for example, it can be hard for them to decide who gets what – especially if they aren’t getting along.
For this reason, each state has a law governing property division. For example, California follows the principle of community property. If a divorcing couple in California cannot agree on who should get, say, the family home, the court will make that decision for them. The court’s decision will be guided by whether the state is a community property state or an equitable distribution state. In a California divorce, the principle of equal division would be employed.
Suggested reading: 7 Ways to Make Asset and Debt Division as Fair as Possible
Property and debt division should be as equal as possible in a community property state. Each spouse is expected to walk away with approximately 50% of the marital property.
Now, you may be wondering how a couple in one of these states would divide a marital home in half. Obviously, they cannot literally slice the building in two. Here’s what they might do instead:
You may also be wondering what divorcing spouses would do with a shared pet, like a dog. This is a tough one. Unfortunately, if a couple can’t decide what to do with the dog they share, a judge would step in to make that decision.
You can imagine how heartbreaking a scenario like this might be. This is just one reason why resolving your divorce settlement amicably is, in most cases, the best option. Hence, it’s a good idea to work with your spouse if you can. Sound difficult? Consider hiring a mediator to help the two of you strike a creative solution that allows you both some satisfaction.
Community property states are in the minority in the U.S. Most states are actually equitable distribution states. A fair division of assets and marital debt is expected in equitable division states, too – but “fair” is not always a 50/50 split in equitable distribution states.
Whether you live in a community property state or an equitable distribution state, you can get help making big decisions about the division of debt and property in your divorce. If you’d like to learn more about divorce mediation, read this article, and then click here for information about our mediation rates.
At Hello Divorce, our goal is to make divorce as inexpensive and pain-free as possible. To accomplish this, we’ve assembled a strong team of professionals who know how to help. We provide everything from affordable online divorce plans to hourly sessions of flat-rate legal advice.
To learn more about us, schedule a free 15-minute phone consultation with a friendly and knowledgeable Divorce Navigator today.
What is community property?
Community property is a legal concept in certain states where most assets and debts acquired during the marriage belong equally to both spouses, regardless of whose name is on the title or account.
Which states follow community property laws?
Nine states follow community property rules: California, Texas, Arizona, Nevada, New Mexico, Washington, Idaho, Louisiana, and Wisconsin. Alaska allows couples to opt in.
What counts as community property?
Income earned during marriage, real estate, retirement accounts, vehicles, and debts incurred while married are usually community property. Exceptions apply if an asset was acquired before marriage or by gift or inheritance.
What is separate property?
Separate property is generally anything acquired before marriage, gifts or inheritances received during marriage, and assets protected by valid prenuptial or postnuptial agreements.
How is community property divided in divorce?
Courts in community property states usually divide assets and debts equally unless spouses reach a different fair agreement or special circumstances apply.
Can separate and community property get mixed?
Yes. When separate funds are combined with marital assets, they may become commingled and harder to trace. Courts may treat them as community property unless clear records show otherwise.
List all assets and debts
Write down everything owned or owed, including real estate, bank accounts, vehicles, credit cards, and retirement funds.
Identify acquisition dates
Mark whether each item was acquired before or during the marriage, or whether it came from inheritance or gift.
Check for agreements or titles
Review prenuptial/postnuptial agreements and ownership documents. Even if only one name is listed, property may still be community if acquired during marriage.
Look for signs of commingling
See if separate funds were mixed into joint accounts or used for marital purchases, which may change classification.
Assign categories
Label each asset or debt as community or separate. If uncertain, set it aside for clarification.
Prepare records for negotiation or court
Keep clear documentation for each asset or debt to simplify settlement talks or court proceedings.