What Is Considered Community Property in Divorce?

One of the most significant issues in a divorce is the division of property. Ideally, you and your spouse will be able to reach a mutual agreement about who gets what property. If you’re not able to agree, you’ll have to pursue litigation where a judge will decide for you how your property will be distributed. In some cases, like high-net-worth divorces, it may be best to move straight to litigation.

Whether you settle out of court or end up in front of a judge, it’s important to have a solid understanding of the differences between separate property, community property, and domicile. Here’s what you should know.

What Is Separate Property?

Separate property is generally property owned by one spouse prior to the divorce. For example, if your spouse owned a home in their name before they married you, that property would likely remain theirs in the event of a divorce. A few other assets are also considered separate property, such as an inheritance or a settlement award from a civil suit. Ideally, separate property is identified in a prenuptial agreement before the marriage so it’s clear who brought what into the marriage if a divorce occurs.

What Is Community Property?

Community property, also called marital property, is the majority of property in a marriage. Usually, any property that you and your spouse acquire during your marriage is considered community property and owned by both of you. For example, if you purchased a home after your marriage, this would be considered community property even if only one spouse’s name is on the title.

All money earned during the marriage is also regarded as shared, even if it is placed in a bank account under the name of only one spouse. Any furniture, vehicles, computer equipment, small home appliances, and other items purchased during the marriage will be considered community property. Typically, the only exception is a gift. If a spouse bought their partner a gift during the marriage, this property remains under the ownership of the recipient. This is most commonly the case with jewelry.

What About the Marital Home?

The marital home is considered community property if it was acquired after the marriage took place. Generally, there are two things ways to distribute the marital home:

• One spouse can “buy” the other out by paying for half of the home’s value. This allows one spouse to become the sole owner of the home.
• Both spouses can choose to sell the home and share the proceeds under equitable distribution.

If both spouses agree on what to do with the marital home, this is usually simply entered into the final divorce decree. However, if neither party can agree on what to do with the marital home, a judge will have to decide. It’s difficult to know ahead of time how a judge will choose to allocate the marital home. If the judge mandates the sale of the home, it’s possible that it will sell for less than it’s worth, leaving both you and your ex-spouse with less in the long run.

How New York Equitable Distribution Laws Can Affect Your Divorce

Many people mistakenly believe that equitable distribution means equal distribution and that all assets will be split evenly between both spouses. While this is the way property was divided in the past, courts have since realized that the fair allocation of property between spouses does not always mean equal.

For example, if one spouse earns significantly more money than the other and will be able to easily live independently after the divorce, a judge may award the couple’s liquid assets to the lesser learning spouse so that each party has more equal footing when leaving the marriage. Or, if one spouse will have primary physical custody of the children, a judge may award the primary caregiver the marital home and distribute other property, such as a boat or recreational vehicle, to the other spouse.

Divorcing? Hornberger Verbitsky, P.C. Can Help

If you’re considering getting a divorce or have received divorce papers from your spouse, it’s important to know your legal rights in regard to property owned by you and/or your soon-to-be-ex spouse. At Hornberger Verbitsky, P.C., we can help evaluate the types of property you and your spouse share and don’t share, and how best to allocate them. Contact us today for your free consultation at 631-923-1910.