Do You Live in a Community Property State?

Aug 8, 2012 by

One very important aspect of divorce law is the concept of community property. The premise behind community property is that property a couple acquires during their marriage is considered to be jointly owned by both spouses. In the event of a divorce, this property is divided between the spouses.

Many states do not recognize the concept of community property in their divorce laws, and in the states that do, the way that a court divides community property is determined by state law. In California, for example, state law mandates that community property be divided 50/50 between spouses. In most community property states, however, courts use the theory of “equitable distribution,” which simply means that division of community property must be fair.

With equitable distribution, the court considers the financial situation of each spouse and compensates for inequalities by adjusting the division of community property. If one party is likely to be worse off financially than the other after a divorce, the court may give the disadvantaged party more of the property acquired during the marriage to compensate. For example, a court may decide to give a stay-at-home mother with less earning potential than her husband a larger share of the couple’s community property.

Courts consider a number of factors when determining equitable distribution in each case. The particular factors considered are determined by each state’s law, but factors can include:

How long the couple has been married.
The age and health of each spouse.
Property or income brought into the marriage by each party.
The standard of living established during the marriage.
The income and earning potential of each spouse.
The contribution made by each spouse to the earning potential of the other.
The contribution of each spouse regarding the property that was acquired during the marriage.
The need for the parent with primary custody of the couple’s children to stay in the marital      home and keep household items.
The value of the couple’s community property at the time of the divorce.
The tax consequences to each party of a proposed distribution.
Any written agreements made by the parties regarding property distribution.
Debts and liabilities of each spouse and the ability to pay those debts, and
other factors the court deems relevant.

Community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.

 

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