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Community vs. Common Law Property: Dividing Property in a Divorce

Spouses who decide to get a divorce will need to divide their property. The question of who will own which asset depends on the laws in their state. States generally follow either of the two types of marital property ownership systems: common law or community property.

Common Law States

Most states use the common law system of property ownership. In these states, it’s easy to determine which spouse owns which piece of property. The spouse whose name is written on the title paper, deed, or registration document gets ownership of the asset.

If both spouses’ names are on the title, they each own half of the property. They can either sell the asset and divide the proceeds from the sale equally, continue to be co-owners, or decide who will gain complete ownership of the property.

If the couple can’t decide how the marital property will be divided, the court will make a decision for them.

When one spouse dies, the couple’s separate property will be distributed according to their will. Their marital property, on the other hand, will be divided based on how their share ownership. The property goes to the surviving spouse if they own it in joint tenancy with the right of survivorship, regardless of what’s indicated in the deceased spouse’s will.

But if the property is owned as tenancy in common, the deceased spouse’s will trumps the right of survivorship. This means the asset can go to someone other than the surviving spouse.

Community Property State

Ownership laws in community property states are more complicated. Only nine states follow this system, and they are:

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

In these states, both spouses equally own almost all the property that either one acquires throughout their marriage. This rule applies regardless of whose name is on the title deed. The only pieces of property that are considered separate are the following:

  • Gifts given to either spouse
  • Inheritances
  • Property owned by either spouse before the marriage and kept separate

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In community property states, the couple also shares any debt either one incurs during the marriage. Half of each spouse’s income is owned by the other spouse as well.

These conditions make it difficult to determine property division and alimony in community property states. If you’re getting a divorce in any of the nine states mentioned above, it would be in your best interest to seek the legal counsel of a child support attorney or a property division attorney.

In case of divorce, all the community property is divided fairly among the spouses. But sometimes, certain assets are granted wholly to one spouse, depending on their economic circumstance.

For instance, the marital home is often awarded to the spouse who maintains physical custody of their children. The other spouse would receive other community assets, with a total economic value that’s equal to half of the marital house’s value.

Prenuptial Agreements

The complex ownership laws in community property states are another reason couples should sign prenuptial agreements. Prenups are considered valid and will be followed in case of divorce, even in community property states.

In the prenup, the couple can specify which assets they want to continue owning separately before entering marriage. They can also determine how to distribute marital property upon divorce.

Having a prenup prevents messy disputes over property, in case of divorce. It also helps ensure that the division would be fair for both spouses if they do decide to legally separate.

Other than getting a prenup, working with an experienced divorce lawyer is one of the best ways to deal with marital property division. The attorney will not only ensure a justifiable outcome for both parties, but their legal advice will also help make the divorce proceedings civil.

An amicable divorce is important to maintaining a positive relationship between the ex-spouses, which is necessary if they have children together.

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