Common Law is the other flavor of law that dictates ownership of marital property. Most states in the U.S. are common law states. Under the common law system, property acquired by a spouse automatically belongs only to that spouse, regardless of whether that property was acquired before or during marriage. This is referred to as “separate property.” However, if both spouses’ names are voluntarily put on the title or deed for a piece of property, they both own that property (“community property”). Again, the default rule is that property acquired by any one spouse is that spouse’s sole separate property, unless that property is actively converted to community property.
Keep in mind, if you don’t like the default rules of your state, you can get around them. In both common law and community property states and before marriage, a couple can establish a prenuptial agreement, which allows the spouses to decide beforehand how to distribute shared property if they get a divorce, in spite of that state’s marital property laws. Note that postnuptial agreements are not as ironclad as prenups are because courts are reluctant to enforce postnups.
Prenups and postnups are not the only written instruments that govern distribution of property. Additionally, when a spouse dies in a common law state, their will may determine how their property is distributed. If they don’t leave a will, the distribution is determined by probate. Similarly establishing a trust will affect property distribution.
If you need a lawyer to sort out your documents and property, Lawmato can help you connect with a qualified Wills & Trusts or Family law attorney to help you keep track of and maintain control over what you own.
The nine community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In these states, property acquired by either spouse during a marriage belongs to both spouses equally as community property. To be clear, property acquired by either spouse before a marriage belongs to that acquiring spouse alone as separate property. And like the common law system, spouses may choose to convert separate property into community property. Community property can include the money they earn, what they buy with that money, and their debts. Married couples in community property states must account for both their community income and their separate income when filing separate federal tax returns.
If a married couple divorces in a community property state and isn’t sure how to divide their shared marital property, a court will make the decision.
In the event that a spouse dies testate in a community property state, the deceased spouse’s separate property will pass by testament (will or trust), and if they die intestate, then the property will pass by the laws of succession in that state (probation). The deceased spouse’s community property will pass entirely to the surviving spouse. Remember, when both spouses were married, they each owned ½ of their shared community property. So, when a spouse dies, the surviving spouse already has their half and will go on to receive their deceased spouse’s half, effectively owning a whole undivided interest in the property.
Importantly, most states, community property and common law ones, have what is called the Slayer Statute. In the context of marriage, this law prevents a spouse from receiving property from their deceased spouse if they intentionally killed or played some part in bringing about that spouse’s death.
Some property is still considered separate even if a couple lives in a community property state. Such property is typically owned or acquired before marriage and can include things such as, an inheritance or gift received by one spouse or a settlement from a personal injury case affecting one spouse.
Alaska, South Dakota, and Tennessee allow married couples to opt in to be governed by community property laws.
There are three types of property within a marriage in community property states. We’ve already touched on separate property and community property, but there is a third type: “quasi-community property.”
Quasi-community property is property acquired during a marriage in a common law state before the couple moved to a community property state. Essentially, this can mean that what was deemed separate property in a common law state will presumptively become community property upon moving to a community property state and will generally be treated like community property during divorce. This can occur without either spouse actively trying to convert separate property into community property.
If you move from a community property state to a common law state, what was formerly you and your spouse’s community property might still have some community property protections. Some states have adopted the Uniform Disposition of Community Property Rights at Death Act (the “Act”); in those states, your community property retains its status for estate planning.
Survive Divorce lists four ways to keep your property as your own in a community property state:
Don’t get married
The simplest way to keep your own property separately from that of your partner is to not get married. However, there are instances in which a court would view an unmarried couple’s property as community property.
Don’t commingle
If a couple’s property is joined in any way, it may be considered community property. Examples include deposits made to a joint bank account or both spouses living in a house that was inherited by or given to one spouse.
Establish a pre-nuptial or post-nuptial agreement
Whether you’re not yet married or already married, you and your partner can create a legal agreement to determine who gets what. You can agree to protect certain property as separate property or convert community property to separate property in the event of death or divorce.
All community property states allow couples to opt out of the system by creating a formally written premarital agreement that conforms to the Uniform Premarital Agreement Act (UPAA). Though you might be able to opt out without a formal agreement in some states, it’s safer to always create a formal legal document.
Want a second look at your prenup? Lawmato can help! Lawmato is dedicated to connecting people with qualified attorneys experienced in handling your legal issues.
Use the Innocent Spouse Act
In the U.S., spouses are protected from tax liability that their partners didn’t inform them of. To be eligible for relief from this law, you must meet certain criteria. In the words of Survive Divorce, they are:
Most community property states will divide property 50/50 between spouses when they divorce. This is unlike common law states which tend to allow spouses to keep 100% of each individual’s own separate property. However, there are factors a court might consider that will influence their decisions. Survive Divorce lists factors such as:
