Marital Property: Who Owns What?

Who owns what property in a marriage and after divorce depends on where the couple lives. States are generally divided into common law property states or community property states. During marriage, these differences may not mean much in your everyday life. However, these differences are more important during a divorce.

The following information will help you better understand who owns what marital property. For legal advice about what happens to your property after separation, talk to a divorce attorney.

Understanding Marital Property

Marital property is the property acquired during marriage. This includes the money, real estate, and debts either spouse brings in during the marriage. Any property each spouse has before getting married is separate spousal property. Separate property includes gifts from family members, inheritance, or income from separate property.

Marital property gets different treatment depending on whether the state follows common law or community property laws.

Marital Property in Common Law States

Most states are common law property states. The term “common law” refers to how states determine the ownership of marital property. Under common law, the spouse who acquired the property owns the property.

Property acquired during marriage can be joint property, depending on how the spouses treat the property. For example, commingled bank accounts become the joint property of both spouses. If the couple buys a piece of property in both spouses’ names, that property would belong to both spouses. Each owns a one-half interest.

Equitable Distribution for Property in Divorce

If the couple gets a divorce or legal separation, the couple can agree on the division of property in their separation agreement. If the couple has disputes, the court will decide how to divide the marital property. Most states follow equitable distribution to divide property. Equitable does not mean 50-50. The court considers many factors in dividing property in a divorce, including:

• How long the marriage lasted
• Child custody arrangements
• Alimony or spousal support
• Individual spouse’s financial situation
• Individual contributions to the marriage
• Standard of living

In common law property states, the family law court will generally keep separate property as separate. They divide the property they both own. However, each state has its own methods for property division in a divorce. Talk to your attorney about how your state handles separate and marital assets.

Marital Property After a Spouse Dies

Property laws also matter when one spouse dies and leaves behind property. When one spouse passes away, their separate property is distributed according to their will. If there is no will, state laws determine the heirs. Most common law states provide an “elective share,” ensuring a surviving spouse receives a portion of the estate regardless of the will’s terms.

Marital Property in Community Property States

A handful of states follow community property principles. In community property jurisdictions, assets acquired during the marriage belong to both spouses. The nine jurisdictions with community property laws are:

• Arizona
• California
• Idaho
• Louisiana
• Nevada
• New Mexico
• Texas
• Washington
• Wisconsin

In these states, both spouses own marital property equally. This marital property includes earnings during marriage, purchased property, and debts acquired during the marriage. Marital property can also include pensions and retirement accounts.

Separate Property in Community States

Community property begins at the marriage and ends when the couple separates. Any earnings or personal property gained after separation will be separate assets. Similarly, any assets acquired before the marriage and kept separate are separate property.

A spouse can change separate assets into marital assets based on how he or she treats the property. Spouses can also combine their separate property with community property. For example, by adding funds from before the marriage to a joint bank account, it becomes marital property.

Dividing Community Property in a Divorce

If the married couple files for divorce, the court divides community property equally between the spouses. Each spouse keeps their separate property. Separate property is not divided.

Sometimes, it makes more sense to award certain assets just to one spouse. For example, one spouse gets to keep the marital home instead of selling it and dividing the money. Each spouse still ends up with an equal share of the total community property value.

Courts can make other arrangements, depending on the situation. For example, the court could award more to one spouse if the other was trying to hide assets or wasted community property before the divorce. Courts can also keep marital loans separate if they went towards one spouse’s education. A personal injury award is considered community property during the marriage but is awarded to the injured spouse in a divorce.

Community Property After Death

When one spouse passes away, they generally have the right to leave their one-half share of community property to whomever they choose in their will. If they die without a will, state intestacy laws determine whether it passes to the surviving spouse or other heirs.

Deciding Property Ownership Before Marriage

Couples can override their state property laws with a prenuptial agreement. A prenuptial agreement determines what happens to the couple’s property in the event of a divorce or separation. For example, a spouse with a family business wants to keep ownership of the business if they get a divorce. A prenuptial agreement would make sure they keep the property. Couples can also make a postnuptial agreement during the marriage.

Protecting Property Rights and Seeking Legal Assistance

Determining who owns what can get complicated, especially for couples who move to a different state. Protect your property rights and make sure you understand what is yours so you get your fair share. Contact a local divorce attorney for legal advice about getting the most out of your divorce settlement.