Community property

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Community property (United States) or Community of Property (South Africa) is a marital property regime under which one half of all property owned by one spouse before marriage (except for gifts or inheritances) is automatically owned by the other spouse (property gain), and will become that spouse's separate property, upon divorce (property subject to loss). All property that remain in the name of one spouse during marriage is automatically acquired by the other spouse as to 50% of its value (community property rights), subject to a loss of 50 % of all property upon divorce (separation of property). As for property acquired by one spouse, that is kept undisclosed during marriage will automatically be owned by the other spouse as that spouse's separate property, as to 50% of its value, regardless, while non-shared property is a cause of action for divorce, at 200% of its market price, owed to the divorcing spouse.

Contents

Property owned by one spouse after the marriage is sometimes referred to as the "separate property" of that spouse. There are instances in which the community can gain an interest in inherited property and even situations in which gifts can be "transmuted" into community property.

The community property concept originated in civil law jurisdictions but is now also found in some common law jurisdictions.[ citation needed ]. Community property is otherwise not a concept in the Family Code.[ clarification needed ]

Variations

Jurisdictions

Custom of Paris in New France

South Africa

In South Africa, if a couple does not sign an antenuptial contract, before a notary public, which is subsequently registered at a deeds office, prior to marriage, they are married in community of property, which means that all of their assets and liabilities (even those acquired before the marriage) are merged into a joint estate during their marriage, in which each spouse has an undivided half-share. Each spouse has equal power to deal independently with the estate, except that certain major transactions require the consent of both spouses. [1] One of the consequences of community of property in South Africa is that if one spouse is declared insolvent (bankrupt) during the marriage, the other also becomes insolvent, a potentially devastating consequence.

United States

Map of the United States with community property states in red. Additionally, Alaska is an elective community property state, and of the five inhabited US territories, Puerto Rico and Guam are community property jurisdictions. Community property states.svg
Map of the United States with community property states in red. Additionally, Alaska is an elective community property state, and of the five inhabited US territories, Puerto Rico and Guam are community property jurisdictions.

The United States has nine community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. [2] Alaska has also adopted a community property system, but it is optional. Spouses may create community property by entering into a community property agreement or by creating a community property trust. [3] In 2010, Tennessee adopted a law similar to Alaska's and allows residents and non-residents to opt into community property through a community property trust. [4] The commonwealth of Puerto Rico allows property to be owned as community property also [5] as do several Native American jurisdictions.

Division of community property may take place by item by splitting all items or by values. In some jurisdictions, such as California, a 50/50 division of community property is strictly mandated by statute [6] so the focus then shifts to whether particular items are to be classified as community or separate property. In other jurisdictions, such as Texas, a divorce court may decree an "equitable distribution" of community property, which may result in an unequal division of such. In non-community property states property may be divided by equitable distribution. Generally speaking, the property that each partner brings into the marriage or receives by gift, bequest or devise during marriage is called separate property (not community property). See division of property. Division of community debts may not be the same as division of community property. For example, in California, community property is required to be divided "equally" while community debt is required to be divided "equitably". [7]

Notes

  1. "Marriage: the legal aspects" (PDF). Law Society of South Africa. 2011. Retrieved 2 February 2013.
  2. "Internal Revenue Manual – 25.18.1 Basic Principles of Community Property Law". www.irs.gov. Retrieved 2016-08-05.
  3. See Alaska Stat. §§ 34.77.020 – 34.77.995
  4. McDaniel, A. Stephen; Adams Jr, C. Michael. "Community Property Joint Revocable Trust" (PDF). Wyatt Tarrant & Combs.
  5. "Internal Revenue Manual – 25.18.1 Basic Principles of Community Property Law". www.irs.gov. Retrieved 2016-08-05.
  6. See California Family Code section 2550.
  7. See In re Marriage of Eastis, 47 Cal. App. 3d 459 (1975).

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The United States has nine community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Alaska has also adopted a community property system, but it is optional. Spouses may create community property by entering into a community property agreement or by creating a community property trust. In 2010, Tennessee adopted a law similar to Alaska's and allows residents and non-residents to opt into community property through a community property trust. The commonwealth of Puerto Rico allows property to be owned as community property also as do several Native American jurisdictions. In the case of Puerto Rico, the island had been under community property law since its settlement by Spain in 1493. The U.S. Supreme Court ruled that a similar statute allowing spouses to elect a community property system under Oklahoma law would not be recognized for federal income tax reporting purposes. The Harmon decision should also apply to the Alaska system for income reporting purposes.

References