Community Property

Community Property

What is community property?

Community property laws establish a set pattern of property ownership for married couples. To date, community property laws are effective in 10 states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin have mandatory systems while Alaska has an optional system. Although the laws vary among these states, some general characteristics are shared by all. In general, community property states consider property and income acquired or earned by spouses during their marriage while domiciled in a community property state to have been acquired or earned by both equally regardless of which spouse actually contributed or earned it. Each spouse owns a one-half interest in all such property or income. In contrast, separate property states (or common law states) attribute all property and income to the person who acquired or earned it regardless of marital status. There are five exceptions to the above general rule:

  • Property acquired or income earned prior to the marriage remains separate property

  • Property received by one spouse as a gift, devise, or inheritance does not become community property

  • Property acquired as separate property or income earned while domiciled in a separate property state remains separate

  • Property (or the portion of property) bought with separate funds or exchanged for separate property during the marriage does not become community property

  • Property converted from community property through a valid agreement executed by both spouses becomes separate property

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