What’s the difference between community property and separate property?
When property is divided up in a divorce, you often have to determine what is separate property and what is community property. Separate property is that which belongs to one spouse only and is not subject to being divvied up in a divorce proceeding. Community property is property that belongs equally to the spouses and must be divided.
The characterization of property as separate or community varies in different states. Generally speaking, community property is everything that was earned or acquired during the marriage. Meanwhile, separate property is generally assets that were already owned before the marriage or given to one spouse as a gift or through inheritance. For example, if you and your spouse bought a house and a car after the marriage, then it is likely community property. If you have a car before you entered the marriage, then that car is likely your separate property.
The characterization may be further defined by whether you live in a community property state or a common law state. If you live in a common law state, then it is a little easier to determine what is community and what is separate property. In common law states, if the deed to the car or real estate is only in one spouse’s name, then the car or real estate is the separate property of the person whose name is on the deed or title. In a community property state, it does not matter whose name may be on a title or deed; if the property was acquired during the marriage, it is likely community property.
The following are generally considered community property states: Alaska (by agreement), Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.
Things can get complicated when you start using community property, such as wages earned during the marriage, to pay off debts or to improve separate property. If your marital estate has a number of complex financial arrangements, you may want to consult with an attorney on those specific issues or consider having legal counsel handle your divorce.