Community Property & Separate Property
Each state has its own divorce laws. Issue regarding child custody or child visitation, the differences may be minimal. When it comes to the distribution of assets accumulated during the course of the marriage, the differences can be major. Nine states divide property according to community property law. Community property states include: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. All other states apply equitable distribution rules to divide the assets.
Nevada is a community property state. In a community property state the property is typically divided in half. Not all the property. Only the community property is divided in equally. Separate property goes with the spouse who’s separate property it is. The next question then is what is community property and what is separate property?
What is community property?
Community property is anything owned jointly after the marriage date. “Owned” is a little misleading. It doesn’t always need to be in both spouse’s names. It just needs to be acquired during the marriage for a court to presume it to be community property. A car you buy during the marriage (even if it’s in your name only) is considered community property. This is true for everything from houses to investments to patio furniture. If you acquired it during the marriage it is presumed community property.
Community property is also anything the spouses gift or commingle. A car owned before marriage is separate property. If a spouse adds the other spouse’s name to the title then it is considered a gift to the community and is now community property. A home owned free and clear before marriage is separate property. If a spouse adds the other spouse’s name to the title then it is considered community property.
Nevada considers half of each spouse’s income earned after the marriage as community property. This comes up when spouses keep separate bank accounts and believe this is separate property. A bank account may have your name on it, but if the money in the account came from wages you earned while married the money is community property. Depositing wages into a bank account with only your name does not make it separate property. The money in the account is community property.
The following are examples of community property in the state of Nevada:
- Homes bought during the marriage.
- Vehicles and recreational vehicles.
- Businesses started during the marriage.
- Saving accounts, no matter who’s name is on the account.
- Pensions or 401(k) accounts.
- Time shares
What is separate property?
Separate property is something you had before the marriage. Separate property remains yours after a divorce. Separate property is property acquired before the marriage or during the marriage through a gift or inheritance. An example might be $10,000 in bank account that you had before the marriage. Or, a car you had before the marriage. These are separate property. A home your parents willed to you, or a time share given to you by your brother during the marriage are inheritances and considered separate property.
What about money you saved? For example, a separate bank account started before the marriage is separate property. The problem happens when you deposit wages earned during the marriage into the account. Any wages earned during the marriage are community property. Adding those community funds to separate funds starts to commingle separate property.
Exceptions to community property
There are only a few exceptions to the community property. Anything you had before the marriage and did not commingle is separate property. The second exceptions is inheritance. An inheritance is separate property. Whether it is property, cash, or you grandma’s china and silver. If it was a gift to you it is your separate property and not split with your spouse.
Are debts community property?
Yes, although there are some exceptions. Debt works the same way as property. Any debts incurred during the marriage (even if it is only one spouse) belong to both of you. The State of Nevada divides debts equally in a divorce. Your student loans are an exception. Student loans debts are typically separate debts because the person with the student loan gets to take the education with them. Debts incurred before the marriage other than students loans are also separate debts.
Commingling separate property
Commingling property is the term for separate property turned into community property. If we go back to our bank account example, your bank account before your marriage is yours. Once you start depositing your wages in this account, you are turning the account into community property. Because your wages is community property the bank account is becoming a mixture of community and separate property.
Commingling causes accounting issues for the court. Most spouses don’t keep accurate books and records to show what money is community and what money is separate. This makes it hard for the court to decide which money is which. When the court can no longer see which money is separate property they will simply call it community property and divide it equally.
Equitable distribution of property
Nevada, along with most states on the west coast, is a community property state. The other states use a theory called Equitable Distribution. Equitable Distribution states allow divorce courts a lot of discretion in dividing marital assets in an equitable, or fair manner. Courts can consider any relevant factor in achieving an equitable distribution. The most common factors include:
- Length of the marriage
- Age of the spouses
- Health of each spouse
- Ability of each spouse to support themselves
- The fact that one spouse did not pursue a career in order to care for children
A court may balance a small award of spousal and child support with a greater distribution of assets. In some states, although not the law, a fair policy provides for one party to be awarded at least one-third of the assets accumulated during the marriage.
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