What is community property

What is community property?

Community property or Community of Property is a term used in family law which means that all the assets and debts by the couple (either individually or jointly) is owned together by the couple. If the couple splits then the community property will be divided.

According to Washington State’s laws: “neither person shall sell, convey, or encumber the community real property without the other spouse or other domestic partner joining in the execution of the deed or other instruments by which the real estate is sold, conveyed, or encumbered, and such deed or other instruments must be acknowledged by both spouses or both domestic partners.”

What does community property include?

Community property includes every financial asset or loan acquired from the date of marriage such as:
– Houses, condos, land
– Cars, boats
– Bank balance, regardless of the name on the account
– Retirement accounts

Gifts and inheritances are an exception; if something is given to an individual alone then it should and is owned by the individual alone. For instance, if the wife is given a piece of property by her parents or siblings regardless of the fact that she is married at the time of receiving or not. The gifted property stays with the wife alone.

Earnings, income, and salaries also classify as community property, e.g. James would own half of Alice’s earnings and income and vice versa.

Debts are a part of community property.

Debts fall under the umbrella of community property too. If one of the spouses has incurred a loan or even has a credit card bill which is pending, the company can easily ask the other spouse to pay bills without any negotiations or relaxation, even to an extent of jeopardizing the wages.

Divorce and community property

When a couple divorces in community property, each spouse is entitled to a half share of their marital or community property, likewise, each spouse would be responsible for an equal share of all marital debts. Under the law, even if the debt is the name of the wife only, the court will hear both spouses responsible. These laws are however different for every state so it is better to consult a divorce attorney for the division of debt and/or assets.

Community Property and Death

What happens to the property if one of the spouses dies? What happens under Washington’s laws, If the couple did not make a plan beforehand then it would at times depend on the laws of the state that whether or not the remaining spouse is entitled to the left property or not, in some states, these laws matter a great deal. For example, the surviving spouse would inherit the entire property of the dead spouse but if the spouse had children from another marriage too then those children are entitled to receive 50% of the community property. The surviving spouse would only receive her share of 50% from the property.

Ways to keep Property separate

If your spouse came into the marriage with debts and you used your joint income has been used to cover those loans and debts, and you end up in a divorce, then you could be reimbursed for the amount you spent only in the divorce settlement.

If you or your spouse acquires property after your legal separation then that property may be treated as separated property, depending upon the rules in your state.

Other separate property would include educational debts (usually, some exceptions may apply where the degree benefited the community property) or an activity not done for the benefit of the community property.

Community property is somehow complicated as different states have different laws and legislation so before getting into any settlement or dissolving any assets it is important for you to go through the laws of your state and consult an attorney who can guide you in properly and take care of all your legal proceedings. It gets complicated when you try to do your taxes and divisions yourself, you are already going through a rough time and under the emotions, you might make decisions that are not beneficial for the long term so it is better that you hire an attorney and let him/her handle such matters for you.

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