Community property

Community property (United States) or Community of Property (South Africa) is a family right, under which all property acquired by a spouse during a marriage or domestic partnership registered with the Secretary of State (except for gifts or inheritances) is owned jointly by both spouses and is divided upon divorce, annulment. In case of the death of a spouse, all gifts and inheritance, will become the sole property of the surviving one, until death. There is a theory that marriage creates an economic community between the spouses and that the marital property attaches to that interpersonal community, rather than to the spouses themselves.[citation needed]. A theory only good to remember should you be in possession of the deceased owner's property, and felt it passed on to you, instead of the surviving spouse.

Community property is all property acquired by a spouse during marriage. Separate property is all property acquired by one spouse before marriage. Separate property includes any gift and inheritance, except gifts that were purchased with or financially outsourced from funds that are community property. A gift to yourself, for example, that you've made during marriage or domestic partnership, like putting your home in a trust, is considered community property.

Property owned by one spouse after the marriage, is sometimes referred to as the "separate property" of that spouse, during divorce. There are instances in which the community can gain an interest in inherited property during marriage, especially when any property you receive is subject to estate tax, from which your spouse, or partner, would not gain but be at risk of loss, should the spouse with whom you wished not to share your inherited property, partially paid for the taxes imposed on the non-sharing to receive the inherited property. This unfair scenario can not be avoided, unless the spouse would file as married-separate, which will seriously affect jointly-owned property , for which spouses are required to file as married-jointly. There are even situations in which gifts can be "transmuted" into community property, but not in theory.

The community property concept originated in civil law jurisdictions but is now also found in some common law jurisdictions.[citation needed] However, community property rights are no longer conceptual but a reality, since it is the law. How to enforce this law, is a more pragmatic question.

Variations

Further information: Matrimonial regime

• Community of Acquests and Gains: Each spouse owns an undivided half-interest in all property acquired during the marriage, except for property acquired by gift or inheritance during the marriage, which is separate property; or which traces to separate property acquired before the marriage, which remains separate property; or which is acquired during a period when the couple are permanently living separately and apart (e.g. legal separation, actual or de facto), which is also separate property. This genre of community property is also called "ganancial community property." (Fr communauté réduite aux acquêts, Sp sociedad de gananciales, Du gemeenschap van aanwinst van goederen, gemeenschap van vruchten en inkomsten, Ger Errungenschaftsgemeinschaft, It comunione degli acquisti)

• Community of Profit and Loss: similar to above but liabilities ("losses") are separate property. (Du gemeenschap van winst en verlies, Afrik gemeenskap van wins en verlies)

• Community of Personal and Marital Property: Community property consists of all property, personalty and realty, acquired during the marriage; and all personalty acquired before the marriage. Realty acquired before marriage is separate property. (Fr communauté de meubles et acquêts, Du gemeenschap van inboedel, Ger Fahrnisgemeinschaft).

• Limited Community Property: Similar to community of acquests and gains but certain marital property is separate property. (Fr communauté de biens limitée, Du beperkte gemeenschap van goederen, Swiss Ger Ausschlussgemeinschaft)

• Universal or Absolute Community Property: All pre-marital and marital property is community property. However, if there are children from a prior marriage, the property associated with that marital community may be segregated from the community property of a subsequent marriage, to ensure the children of the prior spouse have an inheritance. (Fr communauté universelle, Sp comunidad absoluta de bienes, Du algehele gemeenschap van goederen, Ger allgemeine Gütergemeinschaft, It comunione universale dei beni)

Jurisdictions

Custom of Paris in New France

Main article: Marriage community

South Africa

Main article: Marriage in South Africa § Financial consequences

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. 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.[1]

United States

Main article: Community property in the 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.

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.

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 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".

References

• Gail Boreman-Bird. Cases and Materials on California Community Property, 10th edn. Revised by Jo Carrillo. St. Paul, Minn.: West Academic Publishing, 2011.
• Jo Carrillo. Understanding California Community Property Law. New Providence, NJ: LexisNexis, 2015.
• Jan P Charmatz & Harriet Spiller Daggett, eds. Comparative Studies in Community Property Law. Baton Rouge: Louisiana State University Press, 1955 (repr: Westport, Conn.: Greenwood Press, 1977).
• Charlotte K. Goldberg. Examples & Explanations: California Community Property, 5th edn. NY: Wolters Kluwer, 2016.
• Robert L. Mennell & Jo Carrillo. Community Property in a Nutshell, 3rd edn. St. Paul, Minn.: West Academic Publishing, 2014.
• William A. Reppy, Jr. Community Property, 18th edn. Chicago: Thomson/BarBri Group, 2003.
• William A. Reppy, Jr., Cynthia A. Samuel, & Sally Brown Richardson. Community Property in the United States, 8th edn. Durham, NC: Carolina Academic Press, 2015.