The laws about property rights in a marriage vary in different states, but the states break down into two basic categories: those that have community property laws and those that do not. These state laws affect how the spouses can use or dispose of property during the marriage and how the property is divided if the spouses divorce or if one of the spouses dies. All states allow spouses to modify the state’s laws about marital property to some extent through agreements between the spouses.
Types of Property
The property that spouses own during the marriage is either marital property or non-marital property. In community property states, marital property is often called community property, and non-marital property is called separate property. Marital or community property is the property that the spouses own together; non-marital or separate property is property that one of them owns alone. Non-marital property can become marital property if it is mixed with marital property. For example, if one spouse uses money from a saving account she had before the marriage to pay part of a down payment for a house, and the two spouses pay on the house from money earned during the marriage, the full equity in the house will probably be considered marital or community property.
In community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin), the money both spouses earn during the marriage is community property. Anything the spouses buy with the community property is also community property. So, for example, if the spouses each buy a car in his or her own name with money each earns, both cars are community property. If the parties divorce, community property is usually divided equally. If one dies, all the community property usually goes to the other spouse, without any need for a will, unless the deceased has a will giving his or her half of the community property to someone else. Debts of the spouses are usually the debts of both spouses in community property states. The spouses can also have separate property, as long as they do not commingle it with community property. Separate property can include property owned before the marriage and kept separate, inheritances and gifts from third parties.
States that do not have community property are usually called common law states. In those states it matters whose name is on the title of property. If the spouses have cars in separate names, those cars belong to them separately. If a house is in the wife’s name, she owns it. If a boat is in both names, the spouses each own a half interest. If the spouses divorce in these states, the courts usually divide the property fairly (but not necessarily equally) between the parties and do not have to give property to the person who holds title. If one spouse dies, that spouse can usually leave any property in his or her name to anyone, but the other spouse often has a right to a certain share of the deceased spouse’s property under state law.
Tenancy by the Entirety
Tenancy by the entirety is a form of ownership available only to married couples and is frequently used to own real property. In this form of tenancy each spouse owns an undivided half of the property, and neither spouse can give away, sell, or will his or her interest in the property to anyone else without the consent of the other spouse. Tenancy by the entirety includes a right of survivorship, which means that if one spouse dies, the other owns the whole property automatically, without any need for wills or probate. If the parties divorce, they can jointly sell the property or get a court order to divide their interest in the property.
Prenuptial and Postnuptial Agreements
All states allow spouses to make private agreements about divisions of property, but details of what is allowed vary by state. Spouses can never limit the amount of child support they will pay, and some states do not allow them to limit spousal support. They can usually make agreements about ownership of property. Courts are more likely to enforce a prenuptial agreement (one made before the marriage) than they are to enforce a postnuptial agreement (one made after the marriage). This is because married people have legal rights with regard to marital property, and it is more difficult for them to give up those rights, than for an unmarried person, who does not yet have legal rights, to give up future rights. Prenuptial and postnuptial agreements will usually only be enforced if the parties have equal bargaining power and there has been full financial disclosure between the parties.