What is Community Property Law?

Community property law is a body of law governing the division of marital assets in the event of a divorce. Community property law is applicable primarily in the United States, and only in those states termed "community property" states. Nine states within the US use the community property system to divide marital assets.

The states within the US that use community property law to determine the division of marital assets are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Other states use varying other forms of law to govern distribution of property. In some states, such as Alaska, parties can opt in to a community property system, but it is not the default rule for property distribution.

In a state that uses community property law, any assets acquired during a marriage are automatically considered to be community property. This means that all assets that either spouse acquires during marriage belong to both spouses equally. When spouses divorce, the property is thus split down the middle, in a 50-50 split under the terms of this property law. This is true regardless of how much each spouse individually invested in acquiring the property in question. For example, if one spouse worked and bought a home but the other spouse did not have a job during the marriage, the home is still considered to be community property.

Assets acquired beginning on the first day of marriage are all classified as community property. Assets that one spouse owned prior to getting married are not necessarily considered community property in every case. If the spouses co-mingled assets that they owned prior to marriage, however, those assets automatically become community property.

For example, if one spouse had a bank account prior to marriage but used that bank account as a down payment on a home that both spouses owned together, the home is community property. Likewise, if spouses mix money in a joint bank account, it becomes community property. This voluntary co-mingling of assets changes any property into community property.

An asset can become community property even if only one spouse contributes money towards it, if the other spouse contributes equity or enhances the value of the asset in some other way. For example, if one spouse owned a home prior to marriage and the other spouse contributed to it by doing home improvement projects, that home can become community property under community property law. This is true even if the other spouse did not invest money in the home.

Under this property law, some assets acquired after marriage can remain separate if not co-mingled. This list, however, is very limited. For example, if one spouse inherits money from his parents or receives a personal injury settlement, that property does not automatically become community property unless he co-mingles the funds with other community property.