Community Property vs. Common Law Property Systems

I. Historical and Theoretical Foundations

Community Property System

Derived from civil law traditions (Spanish and French)

Marriage is an economic partnership

Assets acquired during marriage are jointly owned, regardless of who earned/purchased them

Common Law Property System

Originates from English legal traditions

Property rights determined by title ownership

Assets acquired by one spouse belong solely to that spouse, unless otherwise indicated

II. Community Property Systems

Definition and Scope

Applicable in nine U.S. states (CA, TX, AZ, LA, NV, NM, WA, ID, WI)

Any asset acquired during marriage is presumed community property, regardless of title/deed

Separate vs. Community Property

Community Property: Income, wages, assets acquired during marriage

Separate Property: Assets acquired before marriage, inheritances, gifts

Division in Divorce

50/50 split of marital property

Disputes arise when separate and community property commingle

Some states allow unequal distribution in rare cases (e.g., financial misconduct)

III. Common Law Property Systems

Definition and Ownership

Ownership determined by title

Asset acquired in one spouse's name is presumed separate property, even if marital funds contributed

Equitable Distribution in Divorce

Property divided fairly, but not necessarily equally

Courts consider length of marriage, contributions, future earning capacity, standard of living

Discretion of the Courts

Broad discretion to ensure fairness

Factors: financial contributions, non-financial contributions, length of marriage, agreements, impact on financial future

IV. Key Comparisons and Additional Considerations

Transmutation and Commingling

Community Property: Commingling occurs when separate and marital funds are mixed

Transmutation occurs when spouses agree to change property classification

Common Law: Burden of proof on spouse claiming separate property to show no conversion to marital property

Treatment of Businesses and Real Property

Business Interests: Increase in value during marriage may be marital property if both spouses contributed

Real Property: Community property states - acquired during marriage belongs to both spouses equally

Common law states - ownership determined by title deed

V. Legal Precedents and Jurisprudence

Community Property Case: Marriage of Moore (1980) - Marital estate can gain interest in separate property when community funds used to pay off mortgage

Common Law Case: Krause v. Krause (2015) - Spouse's indirect contributions warrant increased share of marital assets

VI. In Summary

Community Property Systems: 50/50 split of assets acquired during marriage

Common Law Property Systems: Discretionary, fair distribution of assets, considering individual contributions

Family Law Implications: Affects divorce, estate planning, contracts

Practical Applications: Critical for fairness in asset division and estate planning