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A few years ago, I was in a pretty serious car accident. During the aftermath, I became really familiar with a lot of different types of lawyers. I worked with personal injury lawyers, insurance lawyers, and many others. Perhaps the most important, though, was the estate planning lawyer. I was really young, and neither my wife or I had thought about starting a will. But the accident kind of scared us into it. What would happen if one of us were to die? Even when still in the hospital, I was working with the lawyer to draw up a will. Now, I have some peace and security about what the future will be like if something should happen to me. And I have a lot of experience working with various types of lawyers! The accident was kind of a blessing in disguise in that way.

Divorcing In Community Property States: What To Know About Debt And Assets

Law Blog

The way your debt and property is handled in a divorce agreement is greatly influenced by where you file for divorce. You may live either in a common law or community property state. Currently there are nine states that follow community property guidelines when couples divorce:

  • Arizona
  • California
  • Idaho
  • Louisiana
  • Nevada
  • New Mexico
  • Texas
  • Washington
  • Wisconsin
  • Alaska (in this state divorcing couples may choose which part of the marital estate is community property).

For those divorcing in community property states, your marital estate (property and debt) is jointly owned by the "community," or the divorcing couple. It should be noted that every state, whether community property or not, has their own specific rules about dealing with property and debt division in divorce. To learn more general information about the distribution of debts and assets in a community property state, read on .

What property is considered community property?

Any property (real estate, automobiles, home furnishings, art, jewelry, bank accounts, pets) acquired after the date of marriage is held to be jointly owned. One major beneficiary of this type of distribution could be to stay-at-home parents who received less income and may subsequently have fewer assets in their own name at the time of the divorce.

Two exceptions to the property guidelines commonly exist:

  1. Normally assets owned prior to the marriage is exempt from inclusion in the marital estate unless that property was intermingled for a joint use. For instance, if one party used a savings account that was primarily funded pre-marriage to pay the down payment on the family home after marriage, that amount used is now community property. Additionally, any money deposited from the other party into any bank account, regardless of the owner or how much was present when the marriage took place, renders that account entirely community property.
  2. Inheritances and gifts are not considered community property, unless the inheritance is commingled.

What debts are considered community property?

All debt acquired during the marriage, regardless of which party acquired the debt or whose name is on the account is owed by the marital estate, or both of you. This means all credit card, mortgage, vehicle and bank loans are joint debt. Debts acquired before marriage (such as student loans) are exempt, unless that debt is reorganized to include a joint holder.

For those who are marrying in a community property state, a comprehensive prenuptial agreement can help alleviate any inconsistencies in who owns what debt and property prior to marriage. Consult with a family law attorney like Kolker Law Offices PC to assist in navigating through the divorce process and emerge in the best financial state as possible.


14 December 2015