How Do We Distinguish Between Community and Non-community Property?
Whether property purchased or acquired by one spouse is owned solely by that spouse depends on the state in which the couple resides. States have differing laws regarding community property and non-community property. A community property state is one that recognizes property acquired during the course of the marriage as belonging to both spouses. A non-community property state recognizes property acquired by one spouse as the sole property of that spouse. There are states that recognize quasi-community property as well.
- Community property: There are nine states with community property laws, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Under community property statues, if a married couple acquires personal property during the course of their marriage it is considered owned by the couple. Each spouse will have an equal one-half interest in the personal property, except in matters where the property was acquired by inheritance or by gift from one spouse to the other.
- Quasi-community property: If a divorce or administration of an estate occurs in a community property state, some state laws may permit the court to treat the non-community property as community property. If the couple acquired the personal property while residing in a non-community property state and then files for divorce or the administration of an estate in a community property state, that property may be treated as if it were acquired while residing in the community property state.
- Non-community property: If a married couple resides in a non-community property state and one spouse purchases property, that property is non-community (non-marital) property. If the married couple moves to a community property state, the property acquired prior to the move does not become community property. Likewise, if a spouse acquires property while living as a married couple in a community property state, that property remains community property even if the couple moves to a state that does not have community property laws.
What is the affect of a divorce on community/non-community property?
If a couple is in a community property state or a non-community property state, the appreciation of martial/non-marital property may be an issue during a divorce or legal separation. Generally, if non-community property increases in value during the marriage and either spouse has not contributed to this increase (by adding funds, property or other action), the appreciation of the value is still considered non-community property, or the property of the spouse who acquired it. Alternatively, if personal property that is considered community (or marital) property increases in value during the marriage, that increase is owned by each spouse equally.
However, the courts may view ownership of the property differently if the increase in value is due to conduct of one or both of the spouses. It some jurisdictions, if non-marital property appreciates due to marital funds, conduct or efforts, the amount of appreciation may be considered community property and thus owned by each spouse. To determine the affect of appreciation on your community or non-community property in our state, contact our firm to schedule a consultation with a family law attorney.
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