9. Comparing Equitable Distribution and Community Property for a Divorce
To understand how your state's laws can affect your divorce settlement, it is important to know the difference between equitable distribution and community property.
Most states follow equitable distribution laws. In these states, property acquired during the marriage belongs to the spouse who earned it. In case of divorce, the property will be divided between the spouses in a fair and equitable manner. There is no set rule in determining who receives what or how much. The court considers a variety of factors. For example, the court may look at the relative earning contributions of the spouses, the value of one spouse staying at home or raising the children, and the earning potential of each. A spouse can receive between one-third and two-thirds of the marital property.
Community property is observed in the following states: Alaska (by agreement), Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.
In a community property state, the spouses are deemed to equally own all income and assets earned or acquired during the marriage. This means that both the husband and wife are deemed to equally own all money earned by either one of them during the marriage, even if only one spouse is employed. In addition, all property acquired during the marriage with "community" money is deemed to be owned equally by both the wife and husband, regardless of who purchased it.
In a community property state, equal ownership also applies to debts. This means both spouses are equally liable for debts. In most cases, this includes unpaid balances on credit cards, home mortgages and car loan balances.