Community Property in Divorce Proceedings
What is Community Property?
There are nine community property states - Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. In addition, Puerto Rico is a community property jurisdiction.
These states generally regard as community property all property that has been acquired during the marriage, other than a gift or inheritance. Even if one spouse earns all the money to acquire the property, all the property acquired is considered to be community property. While there are a number of differences in each state, all states have special laws that operate on the theory that both spouses contribute equally to the marriage; thus all property acquired during the marriage is the result of the combined efforts of both spouses. In community property jurisdictions, spouses equally own all community property (fifty percent owned by the husband and fifty percent owned by the wife).
What is the Major Difference Between Marital (Community) and Separate Property?
The important distinction is that separate property is owned by the spouse who acquired it. Upon divorce, separate property goes completely to the spouse who owns it. Conversely, marital (community) property is divided between the spouses in the event of a divorce.
I Live in a Community Property State and Divorced My Spouse Soon After He Filed Bankruptcy. Am I Protected From the Creditors?
The community property bond between spouses can linger for years after the couple is divorced. You are still responsible after divorce for your spouse's debts that you originally incurred with him or her during the marriage. If your ex-spouse spouse files a petition for bankruptcy, a creditor can reach non-exempt "formerly community property" to collect on what was a community debt. This could shift the debt to you, obviously to the benefit of your ex-spouse at your expense.
When a debt is incurred during a marriage, property that was "formerly community property" received by either spouse in the divorce settlement, can be considered as assets that can be used to settle the community debt. So, the creditors will more than likely go after you for payment. Recent amendments to the bankruptcy code have attempted to tighten up the rules about property distribution and collection of debt.
Is a Settlement From an Accident Incurred While Married to My Husband Considered Community Property in the Event of a Divorce?
You are not entitled to any portion of the money that your husband may obtain for his pain and suffering; they are his alone because they are payment for his "personal injuries" that he "personally" suffered. In addition, personal injury damages are non-taxable. However, any damages he receives for reimbursement for the automobile and his lost wages are subject of community property laws in the event of divorce, because those are items that, but for the accident, you would have benefited from.