community property

n.
Property owned jointly by spouses.

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For more information on community property, visit Britannica.com.

Property acquired during marriage and recognized in nine states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), whereby the law presumes the property to be the product of joint efforts.
Income from community property, salaries, wages, and other compensation is considered to be earned one-half by each spouse. Thus, in a divorce, the couple’s total property is divided in half unless a negotiated settlement is reached, even if most of the assets were earned by one member of the couple.

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Property accumulated through joint efforts of husband and wife and owned by them in equal shares. This doctrine of ownership now exists in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, and Washington State. Wisconsin has a virtually equivalent ownership type.


Example: Mary and Jim are getting divorced. During their marriage she inherited $100,000, which is kept in a separate bank account.
All other property was acquired during their marriage. Although she never worked outside the home, half of all property acquired by joint effort during the marriage is hers under the community property laws of the state. Her $100,000 is entirely her separate property.

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This entry contains information applicable to United States law only.

The holdings and resources owned in common by a husband and wife.

Community property law concerns the distribution of property acquired by a couple during marriage in the event of the end of the marriage, whether by divorce or death of one of the parties. In community property states all property accumulated by a husband and wife during their marriage becomes joint property even if it was originally acquired in the name of only one partner. The states that utilize a community property method of dividing resources were influenced by the civil law system of France, Spain, and Mexico.

Laws vary among the states that recognize community property; however, the basic idea is that a husband and wife each acquire a one-half interest in what is labeled community property. A determining factor in the classification of a particular asset as community property is the time of acquisition. Community property is ordinarily defined as everything the couple owns that is acquired during the marriage with the exception of separate property owned by either of them individually. Separate property is that property that each individual brings into the marriage, in addition to anything that either spouse acquires by inheritance during the marriage.

Generally, four types of property acquired after marriage amount to community property: earnings, damages obtained from a personal injury suit, damages awarded in an industrial accident action, and rents and profits from separate property.

Divorce

In many community property law states, a husband and wife may enter into a premarital agreement that there will be no community property. Divorce terminates the community relationship in all community property states; however, the manner in which the property is divided differs.

Upon the dissolution of a marriage, the source of property becomes important in determining whether an asset is community or separate property. Ordinarily, separate property includes that which is acquired through gift, descent and distribution, and devise or bequest. Each partner in a property settlement reacquires whatever he or she owned prior to the marriage.

In some states, community property is divided equally; in others, the division is based on the court's discretion. In certain jurisdictions, the guilt of a spouse in a divorce action can be a factor in reducing his or her share of the community property.

Inheritance Laws

Each spouse owns one-half of the couple's property in community property states, and, therefore, when a husband or wife dies only one-half of the marital property is inheritable since the surviving spouse owns in his or her own right one-half of the marital property.

A U.S. state-level legal distinction of a married individual's assets. Property acquired by either spouse during the course of a marriage is considered community property. For example, an IRA in the name of an individual with a spouse, accumulated during the course of the marriage, would be considered community property.

Also known as "marital property".

Investopedia Says:
This legal definition exists to protect spousal rights. Generally, the spouse of the retirement account owner who resides in a community or marital property state must be the sole primary beneficiary of an investment account designated as marital property, unless the spouse provides written consent to have someone else designated as primary beneficiary of the retirement account. Usually, gift and inherited assets are not considered community property.

Related Links:
In breakup, divorce or death, community or common law will determine how property is divided. State Laws Dictate Division Of Joint Property
Deciding what will happen to your assets when you pass away is a must - no matter how wealthy you are. Estate Planning Basics
Check out the perks designed to promote and preserve your post-work savings - if you're married, that is. The Tax Benefits Of Having A Spouse
Does signing a prenuptial agreement put your marriage on shaky ground, or is it just smart planning? Marriage, Divorce And The Dotted Line
Life changes make it time to rewrite your plan's designations. An Estate Planning Must: Update Your Beneficiaries
Find out how best to claim and convey ownership on your assets. Holding Titles On Real Property
Learn how different rules of asset handling apply to various retirement plans. Getting A Divorce? Understand the Rules Of Dividing Plan Assets

For a list of words related to community property, see:

• Marriage and Divorce - community property: property acquired after marriage that is jointly owned by both partners and that by law must be divided equally upon divorce
• Laws, Procedures, and Court Proceedings - community property: property recognized in some states as owned in common by spouses

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