Got Questions? Just Ask Freeman.
Ask Freeman.
Call Toll Free:
(866) 471 7233

Freeman's Blog


The question of  ownership can be contentious in the event of a divorce, but even in the happiest marriage it may be helpful to understand the laws regarding ownership of property obtained before and during the marriage.

Community Property Laws in these States:

Community Property Laws

Currently, nine states have community property laws: Arizona, California, Idaho, Louisiana, New Mexico, Nevada, Texas, Washington, and Wisconsin. (Alaska allows a married couple to opt for community property status.) In these states, all property earned or acquired by either spouse during their marriage is owned in equal shares by each spouse.

Equitable Distribution Laws:

In other states, ownership is determined by “equitable distribution” laws, which means that property is divided fairly though not necessarily equally, typically by a judge if the couple cannot agree. If you have more than one home, the laws that affect your property ownership will depend on the state where you are officially “domiciled”, according to IRS rules.

If you are domiciled in a community property state, identifying community property and income can be important when filing separate tax returns. Depending on the state, income derived from separate property may be community or separate. The IRS generally considers the following as separate property. (Reference to “marriage” in this list also refers to a legal domestic partnership.)

1. Property owned separately before marriage

2. Money earned while domiciled in a non–community property state

3. Property received separately as a gift or inheritance during marriage

4. Property bought with separate funds, or acquired in exchange for separate property, during marriage

4. Property converted from community property to separate property through an agreement valid under state law

5. The proportion of property bought with separate funds, if part was bought with community funds and part with separate funds

 
In order to do your estate planning correctly, you should know the community property laws. There are no restrictions on how each spouse can give away his or her half of the community property, and a spouse is not required to leave his or her half to the surviving spouse, though many people do so. Be sure to consult a legal or estate planning professional familiar with the laws of your state before taking action regarding taxes or property distribution. Designating heirs that are appropriately ages and named is essential in your estate planning.

Freeman Owen, Jr -Retirement Specialist

A comprehensive retirement plan is so important. Let me help you get started!

Meet me for a FREE retirement strategy consultation at my office at (866) 471-7233 | MD, VA & DC.