What Is Community Property?

Written by Attorney Jonathan Petts. 
Updated April 12, 2022

When a married couple owns property it's either marital property or separate property. Generally, marital property is anything that you earned or acquired while married unless you and your spouse agreed otherwise. Separate property varies from state to state, but generally includes:

• Anything that you owned before your marriage.

• Gifts that were given to only you before or during your marriage.

• Property that you acquired during your marriage that's in your name and that was never used for your spouse's benefit during the marriage.

• Inheritances that you received before or during your marriage.

• Property that you and your spouse have agreed is separate in either a transmutation agreement or post-nuptial agreement.

• Property that you acquired using assets that were solely yours and that you intended to keep separate.

• Certain personal injury awards (usually the part that repays you for lost wages is marital property).

In most states, these rules apply equally to traditional and common-law marriages. If you're divorced or legally separated, you own 100% of your separate property and whatever percentage of your marital property was allocated to you in your divorce/separation agreement.

Community Property States

Different states treat marital and separate property differently when you file bankruptcy. If you live in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin (or Alaska, where you can sign an agreement making your assets marital), your Marital Property is considered community property. In these states, you and your spouse each own half of all marital property. 

Common-Law States

In all other states, called common-law states, marital property is owned by whoever's name is on the title, deed, or other ownership documents. If both your name and your spouse's name are on the relevant document(s), you both own half of the property. If there are no such documents, generally whoever paid for the property or received it as a gift is the owner.

Dealing With Property in Bankruptcy

When you file for bankruptcy, you need to ask yourself two questions about your property:

1. What type of property is it? Is it marital or separate?

2. What type of state did I acquire this property in? A community property or common-law state?

Answering these questions will help you determine the total value to list for your property on your bankruptcy forms.

• When listing marital property that you acquired in a community property state, you'll only list half of the total value.

• When listing marital property that you acquired in a common-law state, you'll list whatever percentage of the value you actually own.

• In both community property and common-law states, you'll list the full value of your separate property.

Written By:

Attorney Jonathan Petts

LinkedIn

Jonathan Petts has over 10 years of experience in bankruptcy and is co-founder and Board Chair of Upsolve. Attorney Petts has an LLM in Bankruptcy from St. John's University, clerked for two federal bankruptcy judges, and worked at two top New York City law firms specializing in... read more about Attorney Jonathan Petts

Read About the Upsolve Team