Community Property States
What Is Community Property?
Community property is the legal term for assets that belong to both partners in a marriage. In a state with community property laws, any income and real or personal property acquired by either spouse during the marriage belongs to both partners. Community property laws extend to debt liabilities in most cases.
Even if one spouse earns more or contributes more income to the household, assets are owned equally under community property laws (also called marital property) in nine states.
The community property estate typically is dissolved only in death, divorce, departure from the state, or physical separation.
What Is a Community Property State?
If you live in a community property state, the assets you accrue and the debt you incur during the marriage are community property and must be split in the event of a divorce.
These assets include:
- income earned while married
- savings and retirement accounts
- real estate
- personal property, including vehicles and furniture
- debts acquired during the marriage
What Are the Community Property States in 2024?
Nine U.S. states have community property laws in 2024. The nine states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
In California, Nevada, and Washington, domestic partnerships must follow community property law.
In several states—Alaska, Florida, Kentucky, Tennessee, and South Dakota—spouses can elect to participate in a community property system or designate certain assets as community property.
For example, in California, community property is divided in half, meaning each spouse gets 50 percent of any assets found to be marital property.
In Texas, a judge may divide assets in a way they consider to be equitable to both parties.
What Property Is Exempt From Community Property Laws?
There are some exceptions to community property laws. They include:
- property acquired before the marriage
- property protected by a prenuptial agreement (also called a prenup)
- property one spouse received through an inheritance, will, or trust fund
- property one of the spouses received as a gift
- property acquired after the spouses are legally separated and not living together
- debts, including student loans, acquired before marriage
However, assets and debts can become community property if they are part of a joint account or if their status changes to joint ownership.
Start a Prenuptial Agreement now
Community Property States vs Common Law States
Other than the nine community property states, most states follow a common law property system. A common law system is in direct contrast with a community property system.
Under common law property law, the assets acquired by one spouse belong to that person unless they were legally put in the names of both spouses.
The theory behind common law is that every individual, whether married or not, has individual property rights. Therefore, under common law, individuals are treated separately from their spouses.
However, a judge can make exceptions during divorce proceedings by assigning debt to another party.
How to Consider Community Property In Estate Planning
Property is an essential component of estate planning, and life changes can have a significant impact on the financial management of community property. Each state has its own specific definitions of the following changes to a marriage.
- Relocation to another state. If the married partners move from a community property law state to a common law state, their household is no longer covered by community property law.
- Death of one spouse. If one spouse dies in a community property state, the surviving spouse usually is entitled to the remaining assets.
- Divorce. Most states designate that the community property estate ends after a divorce decree, annulment, or legal marriage separation.
- Physical separation. Some states terminate community property laws if the spouses live separately from one another with the intention of ending the marriage.
Make sure your documents are up to date, and use a proper separation agreement to set terms for the division of assets.
Create a Separation Agreement now
Helpful Resources:
Cornell Law - Community Property
California Courts - Property And Debts In A Divorce
Texas Family Code - Chapter 3. Marital Property Rights And Liabilities
What Is Community Property?
Community property is the legal term for assets that belong to both partners in a marriage. In a state with community property laws, any income and real or personal property acquired by either spouse during the marriage belongs to both partners. Community property laws extend to debt liabilities in most cases.
Even if one spouse earns more or contributes more income to the household, assets are owned equally under community property laws (also called marital property) in nine states.
The community property estate typically is dissolved only in death, divorce, departure from the state, or physical separation.
What Is a Community Property State?
If you live in a community property state, the assets you accrue and the debt you incur during the marriage are community property and must be split in the event of a divorce.
These assets include:
- income earned while married
- savings and retirement accounts
- real estate
- personal property, including vehicles and furniture
- debts acquired during the marriage
What Are the Community Property States in 2024?
Nine U.S. states have community property laws in 2024. The nine states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
In California, Nevada, and Washington, domestic partnerships must follow community property law.
In several states—Alaska, Florida, Kentucky, Tennessee, and South Dakota—spouses can elect to participate in a community property system or designate certain assets as community property.
For example, in California, community property is divided in half, meaning each spouse gets 50 percent of any assets found to be marital property.
In Texas, a judge may divide assets in a way they consider to be equitable to both parties.
What Property Is Exempt From Community Property Laws?
There are some exceptions to community property laws. They include:
- property acquired before the marriage
- property protected by a prenuptial agreement (also called a prenup)
- property one spouse received through an inheritance, will, or trust fund
- property one of the spouses received as a gift
- property acquired after the spouses are legally separated and not living together
- debts, including student loans, acquired before marriage
However, assets and debts can become community property if they are part of a joint account or if their status changes to joint ownership.
Start a Prenuptial Agreement now
Community Property States vs Common Law States
Other than the nine community property states, most states follow a common law property system. A common law system is in direct contrast with a community property system.
Under common law property law, the assets acquired by one spouse belong to that person unless they were legally put in the names of both spouses.
The theory behind common law is that every individual, whether married or not, has individual property rights. Therefore, under common law, individuals are treated separately from their spouses.
However, a judge can make exceptions during divorce proceedings by assigning debt to another party.
How to Consider Community Property In Estate Planning
Property is an essential component of estate planning, and life changes can have a significant impact on the financial management of community property. Each state has its own specific definitions of the following changes to a marriage.
- Relocation to another state. If the married partners move from a community property law state to a common law state, their household is no longer covered by community property law.
- Death of one spouse. If one spouse dies in a community property state, the surviving spouse usually is entitled to the remaining assets.
- Divorce. Most states designate that the community property estate ends after a divorce decree, annulment, or legal marriage separation.
- Physical separation. Some states terminate community property laws if the spouses live separately from one another with the intention of ending the marriage.
Make sure your documents are up to date, and use a proper separation agreement to set terms for the division of assets.
Create a Separation Agreement now
Helpful Resources:
Cornell Law - Community Property
California Courts - Property And Debts In A Divorce
Texas Family Code - Chapter 3. Marital Property Rights And Liabilities