Understanding Common Law vs Community Property

One of the most common questions spouses ask themselves (and eventually, each other) when they’re considering a divorce is, “Who gets what?” The answer is often complicated, but a big factor is understanding the difference between common law vs community property laws.
 

What Is Common Law?

Most states in the US are known as “common law” states, the exceptions are the states listed below as community property states. Common law property ownership is very straightforward for the most part: whomever’s name is on the deed, registration, title, receipt, or other record of ownership — that’s who owns and keeps the property.

If a married couple has purchased items or property where both their names appear on the record of ownership, then common law typically considers that each spouse owns a half interest in that item or property.

For items with no record of ownership, common law considers the owner as the person who paid for the item or received it as a gift. If there is confusion or debate about who paid for a certain item, that is typically an issue that attorneys will hash out in the event of a divorce or separation.
 

Community Property

Community property laws apply in the following states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.

Furthermore, In Alaska and Tennessee, spouses can opt in to the community property system by signing an agreement designating specific assets as community property.

If you live in one of the aforementioned states, it is very important to understand the differences between common law vs community property.

Generally, in community property states, money earned by either spouse during marriage and all property bought with those earnings are considered community property that is owned equally by husband and wife. Additionally, debts incurred during marriage are typically considered debts of the couple.

With few exceptions, the rules of community property apply no matter whose name is on the record of ownership for a particular piece of property. If a married man buys a car and only his name is on the title, if he lives in a community property state, his wife may own a half interest in that car.

However, it is important to know that items acquired before marriage are usually not considered community property. Understandably, this can make division of assets more confusing in the event of a divorce, and it really is best to engage a competent divorce attorney if there are questions about property ownership.
 

Common Law vs Community Property Awareness

It’s important for couples considering either marriage or divorce to be aware of and understand the differences between common law vs community property. While most couples will not choose to live in a particular state because of these laws, it is an important issue to discuss with an existing or potential partner.

For additional help learning about common law vs community property, contact a reputable attorney in your area and see if there are any unique rules or laws in your state that you should be aware of before getting married or filing for divorce.