Different states view assets and debts acquired during marriage and who exactly owns that property differently. There are two different types of state, community property, and common law property.
What is a Community Property State?
In a community property state, all money earned, assets acquired, and debts incurred during the course of a marriage are equally owned by both husband and wife. At death, all assets go to the surviving spouse unless there is a valid will directing otherwise.
A spouse or member of a couple can own separate assets and dispose of those assets as they wish. Gifts and inheritances are not considered community property.
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Community Property States
Community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Alaska is on “opt-in” community property state where both parties can, in writing, make their property community or keep it separate.
What is a Common Property State?
In a common property or equitable distribution state, property acquired by one spouse belongs 100% to that spouse unless the asset is in both names. All other states are common property.
What is the Advantage to Living in a Community Property State?
The biggest advantage to living in a community property state is in estate taxes and tax planning. In a community state, the surviving spouse receives, tax-free, 50% of the decreases spouse’s separate assets and 100% of commonly held property.
What is Marital Property?
Marital property is any property acquired by either spouse during the marriage. Non-marital property is property acquired before marriage, as a gift or inheritance after marriage.
What is a Spousal State?
Spousal states affect mainly people taking out loans or mortgages. Spouses must sign a document acknowledging the loan, but not taking responsibility for it.
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This is a complex area and this information just the tip of the issues. If you have questions about community and common property, moving states, or debt, contact an attorney.