Marital Property: Common Law vs. Community Property

Definition

Marital property generally means assets and debts acquired during a marriage that are subject to division on divorce or distribution at death. Property owned before marriage, inheritances, and many gifts remain separate unless they are commingled with marital assets.

How marital property is treated depends on the law of the state where a couple lives: most states follow common law (also called equitable distribution), while a smaller group follow community property rules.

Key points

• Marital property = assets and debts acquired during the marriage.
• Separate property = assets owned before marriage, inheritances, and gifts kept separate.
• Title and state law determine ownership in common law states; community property states treat most marital acquisitions as owned equally by both spouses.
• Prenuptial and postnuptial agreements can change how property is classified and divided.

What counts as marital property

Common examples:
* Real estate purchased during marriage
* Bank and brokerage accounts funded with marital income
* Retirement accounts and pensions if contributions were made during the marriage
* Vehicles, furniture, artwork, and other personal property bought with marital funds
Debts incurred during the marriage are generally treated as marital obligations in community property states and often so under equitable distribution rules, depending on state law.

Common law (equitable distribution) states

Most U.S. states follow common law principles. Core features:
* Ownership is determined by title: the person named on a deed, title, or account is ordinarily the legal owner.
* If both spouses are listed, they typically share ownership (often a half-interest unless otherwise specified).
* Courts divide marital property at divorce according to equitable distribution—meaning a fair, but not necessarily equal, split.
* At death, separate property is distributed according to a will or probate rules. Jointly owned property with rights of survivorship or tenancy by the entirety passes to the surviving spouse regardless of the will. Tenancy in common allows a deceased owner’s share to pass by will.

Community property states

Nine U.S. states recognize community property: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In these states:
* Earnings and assets acquired during the marriage are generally owned equally by both spouses.
* Debts incurred during the marriage are normally shared.
* Separate property includes assets acquired before marriage, inheritances, and gifts received by one spouse (unless commingled).
* Community property arises at marriage and typically ends when the couple physically separates with intent to end the marriage; earnings and debts after separation are usually separate.

Elective/opt-in community property

Some jurisdictions (notably Alaska) allow spouses to opt into community property rules by agreement. Tennessee, South Dakota, and Puerto Rico have enacted elective community property regimes in certain circumstances. These options require a formal agreement.

Division on divorce and at death

• Common law states: courts use equitable distribution to divide marital property at divorce; factors include length of marriage, contributions, and each spouse’s needs.
• Community property states: the default is a 50/50 division of community property, though some departures can occur for misconduct or by agreement.
• Prenuptial and postnuptial agreements that are valid under state law generally control property division and can override default state rules.

Practical considerations

• Check your state’s rules—treatment of property differs substantially by state.
• Keep records that document whether an asset is separate (purchase receipts, inheritance paperwork, account statements).
• Avoid commingling separate assets with marital assets if you want to preserve separate status.
• Consider title placement carefully when acquiring property.
• Use prenuptial or postnuptial agreements to clarify ownership and avoid disputes.
• Consult an attorney or financial advisor when buying major assets, starting a business, or planning estate and tax matters.

Conclusion

Understanding whether you live under common law or community property rules is essential for planning ownership, estate transfers, and divorce outcomes. Clear documentation, careful titling, and written agreements (prenups/postnups) help preserve intended property rights. Seek legal advice for state-specific guidance and complex situations.