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Community property includes all
the assets and property, regardless of which party
has ownership, acquired during a marriage.
However, some gifts and inheritances are exempt from
being included as community property. These
are the assets that will be divided upon upon
divorce, annulment
or death on one of the parties. Some
jurisdictions have adopted community property law on
the presumption that both parties contribute equally
to the marriage and family and should have equal
ownership rights in the assets acquired by either
spouse.
In some states the court may
provide that one party receive more of the assets
than the other and some states the law requires a
50-50 split. In some instances where there is
a single asset, such as a house, both parties may
share equity in the value of the asset until it is
sold at a later date agreeable to both. In
states without community property laws the assets
are generally distributed in an equitable manner by
the court.
Nine states currently have
community property laws. They include Arizona,
California, Idaho, Louisiana, Nevada, New Mexico,
Texas, Washington, Wisconsin and also Puerto Rico.
Married couples in Alaska may sign an agreement
consenting to community property rules if they so
desire.
"Community Property with Rights of
Survivorship" is a new form of community property
ownership that has been legislated in a few states.
It is similar to the more standard "Joint Tenancy
with Rights of Survivorship". The community
property designation may result in lower capital
gains taxes when a surviving spouse sells the assets.
The federal tax implications are discussed in IRS
Publication 555.
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