Community Property

Community property, also called marital property, is recognized in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin, but the laws vary from state to state. In these states, property is generally divided into two categories: separate property and community (marital) property. Be aware that if you have ever lived in one of these states while married, property that became "community property" in that state retains that character even if you move to a non-community state.

Separate property. Property that was owned by either spouse before marriage or was acquired by one spouse after marriage as a gift, inheritance, bequest or devise is considered to be separate property. Income from separate property is also considered separate property, as is property acquired during the marriage with funds derived from the separate property. However, if separate property is commingled with community property so as to make it impossible to identify, the separate property is presumed to be community property.

Warning If you have ever lived in a community property state, it is important to keep complete and accurate records of how separate property was obtained and used. This will be required to overcome the presumption that it is community property.

Community property. All property owned or acquired by a married person is considered to be community property unless the person can prove that it is separate property. Each spouse owns one-half of the property and has an equal right of management and control of the community property, but neither spouse may enter into any form of agreement to buy, sell, or mortgage the property without the other spouse's consent. Community property cannot be used to satisfy a separate debt of either spouse.

Upon divorce, community property is divided equally and is deemed to be owned by husband and wife as tenants in common. If one spouse dies leaving a will, his or her share of the community property will go to the persons named in the will. Who inherits community property when there is no will varies from state to state. In some states, the surviving spouse inherits the property, and in other states the decedent's share goes to his or her descendants.