Community Property vs. Equitable Property Rules in Divorce

Nine states are Community Property states

In contrast, other states follow an equitable property distribution. Both terms are described below.

Community Property

Community property states consider all property as being in two categories:  separate property or community property.  Separate property doesn’t need to be split at the time of divorce but community property does.

In a community property state all income and assets acquired during the marriage is considered Community Property and is assumed to be equally owned by both parties regardless of how much money each spouse makes.  Even if one spouse does not work at all, the property is assumed to be owned 50/50.  Similarly, any liabilities incurred during the marriage such as loans, mortgages, and credit card balances are equally shared at the time of the divorce.

Separate property includes all assets owned by one party before the marriage, inherited by one spouse during the marriage, or purchased after the date of separation.  Those assets remain with the party who owned them after the divorce.  If there is a way to trace payments before the marriage to one spouse, that payment towards an asset can be considered separate property.  Separate debt works the same way:  it is debt taken on by one spouse before the marriage.  That debt is wholly owned by that person.

Equitable Property Distribution

The more common Equitable Property Distribution rule allows for consideration of which spouse earned the property.  Each spouse can receive between one and two-thirds of the property.   The method the judge uses for determining the split is subjective.  Considerations such as the following are made.

  • If one spouse stayed at home to raise children, that is given a value and considered when the property split is determined.
  • Each spouse’s income level is considered.
  • The length of the marriage is a factor.
  • Abuse and infidelity are considered.
  • Any actions to waste or destroy property are considered.
  • Whether the property is needed to maintain a household for the children is taken into account.
  • The health of the spouses is considered.

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