Comments on: Community Property States & What It Means

By: jillianlou

jillianlou — Tue, 22 Sep 2009 01:23:59 +0000

This is an important point for estate planning purposes – your property will automatically revert to your spouse, even if it’s a second marriage and you’d rather it go to kids from a first. Make sure you work with a financial planner/estate attorney to title/trust things in such a way to get around this if you wish.

By: Damon Day

Damon Day — Fri, 18 Sep 2009 20:56:55 +0000

that is an interesting point dilbert, I have never thought of it that way. Although with this economy that sort of thing is happening everywhere, even in community property states. People are just not financially able to get a divorce. Plus another interesting thing, is now couples are fighting over who has to keep the house The house is now the hot potato that nobody wants.

So that brings up a point say in like New York. Does the first mover have an advantage with an upside down property? Meaning if you move out first the other is stuck with it

By: Kosmo @ The Casual Observer

Kosmo @ The Casual Observer — Thu, 17 Sep 2009 19:29:30 +0000

I think Neil means that typically he’ll be $1000 above his wife … then she’ll get a raise and be $1000 above him … then he’ll get a raise and be $1000 above her again … hence the 4K difference is relatively large, compared to the historical difference between their salaries.

By: dilbert69

dilbert69 — Thu, 17 Sep 2009 15:52:07 +0000

I believe that in California you can be ordered to pay spousal support if divorce leaves your spouse much less well off than when you were married. Splitting the marital property 50/50 makes this less likely to be true, but spousal support still exists.

By: dilbert69

dilbert69 — Thu, 17 Sep 2009 15:51:04 +0000

People who complain about community property don’t realize that in the other states, one or the other spouse can keep _all_ of the marital property. That’s even less fair. In New York, if one spouse moves out of the apartment, the other spouse gets to keep it. That’s why you see couples who hate each others’ guts cohabiting in $10-million apartments on the Upper East Side of Manhattan. Neither one is willing to walk away from that much money.

By: dilbert69

dilbert69 — Thu, 17 Sep 2009 15:49:30 +0000

$4k is a high difference? It sounds pretty small to me.

By: Texas Wahoo

Texas Wahoo — Thu, 17 Sep 2009 15:12:47 +0000

Neil is right. Most community property states don’t have alimony. Also, the community property rules mean that what you get is almost entirely dependent on how long you are together. If you’re married for a year, there probably won’t be very much community property.

One thing to remember though, interest earned on separate property is community property (because it is technically being “earned” during the marriage).

Also, if you move from another state to a community property state while married, it gets really tricky. They don’t apply CP laws to what was earned in the other state, they usually try to figure out who owned what under the other state’s laws.

By: Joan

Joan — Thu, 17 Sep 2009 14:13:02 +0000

A similar issue that is often unexplored is “common-law marriage.” Most states do not and have never had this policy, but people seem to think it’s true anyway!

By: Neil

Neil — Wed, 16 Sep 2009 17:43:38 +0000

Superdiamond – I wouldn’t say screwed. Actually, it seems fairly reasonable. You continue to personally own everything that you brought into the marriage.

I guess in extremely lopsided-income marriages, this might seem unfair, but my wife and I keep swapping places as the “principle” earner (currently we have an unusually high difference, as my wife is making about 4k more than me). But then again, if the marriage arrangement is that one spouse stays home to look after house and kids, why should they own less of the property?

Overall, community property hardly makes you screwed in the event of a divorce. It’s alimony that’s always struck me as the real screw-job. I’ve not understood why someone would have a lifelong obligation to maintain someone else’s lifestyle after a split.

Not that I disagree with you about commitment.

By: eric

eric — Wed, 16 Sep 2009 17:41:18 +0000

Speaking of which…what’s everyone’s feeling on pre-nups?

By: superdiamond

superdiamond — Wed, 16 Sep 2009 16:34:56 +0000

This is a scary thing for divorces to go thru. I will always say that to marry is to the death and if you can make that commitment, don’t bother. You might pay in a big way! According to this post, if you live anywhere within those states, you are screwed!