What Divorcing Couples Need To Know About Community Property Issues

Law Blog

A divorcing couple's state of residency can have a great deal of influence on the way property and debts are divided. Some states use the equitable distribution method of dividing assets and debt, but some use community property guidelines. Read on to find out more about how things work in community property states.

Current Community Property States

As of now, only nine states adhere strictly to community property guidelines with regard to divorce. A 10th state, Alaska, along with a few other states, provides divorcing couples with that option, but the laws of those states are primarily of the equitable distribution model.

What Is Meant By Community Property and Equitable Distribution?

Equitable distribution is not meant to perfectly divide a couple's assets and debt right down the middle. Instead, the guidelines seek to provide the parties with a fair and just division of property. With that in mind, factors like which party took out the debt, who took care of the dog the most, how much of a certain party's money was deposited into an account and so forth are considered. Community property, on the other hand, treats property and debt as if it is all the responsibility of both parties jointly.

The Couple Is the Community in Question

With this way of divorcing, the couple is considered a community of two. All marital property is owned equally, and all debt is also owned equally. As you might imagine, this can make for some very contentious divorces when one party doesn't want to be responsible for their spouse's debts (or at least 50% of them).

A Word About Marital Property and Debt

Not everything a couple deals with during divorce is considered marital property. Anything that was bought or acquired prior to the marriage belongs to that party alone, and the same goes for debts. Also knocked out of the marital property bucket are inheritances and gifts given to only one spouse. Complications can occur when non-marital property or debts are intermingled with marital property. That might happen if one party begins making deposits into the other party's savings account or using a credit card obtained prior to the marriage. Often, when that happens and the assets and debts are high-dollar, a forensic accountant is used to untangle the true ownership of an asset or debt.

50/50 In General

For marital property and debts, the general guidance is to divide them 50/50. Assets that are not easily divided may be ordered to be sold, or a trade-off might be appropriate. For example, if the values are close enough, a home may be traded for a greater share of a retirement account.

Things can get complex when dealing with community property issues. Talk to a divorce lawyer so that you can protect your assets and debt responsibility.

To learn more, contact a divorce attorney.​


11 August 2020