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How is Property Divided in Community Property States?


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Question: How is Property Divided in Community Property States?

There are two legal theories that govern how marital property is divided: Community Property or Equitable distribution. Most states use equitable distribution when deciding the division of property during divorce. Only nine states have community property laws, they include:

  • Arizona
  • Californa
  • Idaho
  • Louisiana
  • Nevada
  • New Mexico
  • Texas
  • Washington
  • Wisconsin
Community Property:

In community property states, all property the couple acquires during the marriage is divided equally. Issues such as financial need, ability to earn income or fault are not taken into account when dividing property during a divorce settlement.

Nevertheless, not all property is considered marital property and the definition of marital property can vary from state to state. Normally, marital property includes any property acquired by either spouse during the marriage. Property acquired by either spouse before the marriage is usually not considered marital property.

Non – Marital Property:

In some states, property acquired during the marriage can also be excluded from marital property. For instance, some states do not consider property marital if:

  • It was a gift or inheritance granted to one spouse during the marriage.
  • It was purchased with separate funds acquired by one spouse before the marriage.
  • It was excluded by a prenuptial agreement.
  • It is the result of increased value of separate property acquired before the marriage.
Division of marital property becomes more complex if marital property and separate property have been mingled or if property has been acquired by the couple using both marital funds and separate funds.

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