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Community Property

The origins of the concept of community property are ancient. Briefly said, the phrase “community property” refers to a form of property ownership that exists between a husband and a wife in which each party has a one-half interest in all property acquired by the labor of either party during the course of the parties’ marriage.

Perhaps the most widely recognized form of community property is the amount of wages earned by one party during the course of a marriage. Several states, mostly clustered in the southwestern United States, continue to recognize the concept of community property.

Fact Scenario I

Daria and Jay were high school sweethearts. They married when they were both only 18 years of age. Jay worked for a while as a carpenter until he saved enough money to begin his own business. Daria raised the couple’s three children. Jay’s construction business was quite successful. The income from Jay’s construction business is community property.

Community property is the converse of what is known as “separate property.” Separate property refers to property which belongs to one spouse or the other individually. Separate property includes property owned by a spouse prior to the marriage, as well as property obtained by either spouse through a gift or inheritance during the marriage. Notably, separate property can become community property by agreement or gift, or where the parties commingle their assets in such a way as to make the origin of the assets untraceable.

Fact Scenario II

Prior to her marriage to Jay, Daria’s father died and left Daria $100,000 in savings bonds. After Daria married Jay, Daria cashed in the bonds and placed the entire $100,000 in a checking account titled jointly in the names of Daria and Jay. Some of the money was used as a down payment on the couple’s first house, which was later sold and another purchased thereafter. Daria also used some of the money to pay the couple’s bills, including car payments and medical expenses. By her actions, Daria may be deemed to have converted her separate property into community property.

The law with regard to community property and separate property varies from state to state. Thus, the laws of the various states must be consulted individually for details.