Community Property

by Wes Cowell; updated 2 March 2013 -- suggest a correction

 

Illinois is not a "community property" state.  It is an "equitable division" state. That means property is not necessarily divided 50/50.  Work with our office to secure a fair and equitable property division.  Need advice? Callleave your info, or schedulescheduleschedule a consult.

 

Illinois is not a "community property state" -- Illinois is the other kind; called a "common law" or "equitable division" state.

 

What it is:  "Community property" refers to a legal system of characterizing property in a marriage.  In essence, married couples are presumed to own their property jointly -- in equal, undivided shares.  If you're married, live in, say, Arizona, and your spouse buys a gold watch, that watch is presumed to be owned jointly by the two of you.  If you divorce, you can expect to get half the (value of) the watch.   That's it; no muss, no fuss, a 50/50 split.

It doesn't work that way in "common law" states, like Illinois.  If you're married, live in Illinois, and your spouse buys a gold watch, that watch is presumed to be "marital property."  It is marital property that is owned by your spouse and, if you get divorced, the watch will be divided along with all the other assets "according to equity."  You might get a share of it:  maybe half, maybe more, maybe less, maybe all, maybe none . . . we won't know until the judge says so.

 

Where it is:  Eight states (CA, WA, AZ, ID, NV, NM, TX, and LA -- essentially the West Coast (save OR) and the Southwest) have been "community property states" all along; a development that grew out of the evolution of their legal systems dating back to European settlers.  The concept of community property is a hand-me-down version of Mexico's ganancial community regime (also called "acquests and gains") which was based on the law of Spain (which was largely based on Roman law).

Wisconsin used to be a common law state but, in 1977 they re-wrote their divorce law.  Then, in 1986 they re-wrote their property ownership laws. Wisconsin adopted a "partnership theory of marriage" (expressed in the Uniform Property Act, which has yet to be adopted by any other state).  Under the new Wisconsin law, spouses are viewed as equal contributors to property acquired during the marriage -- it is, for all effects, a community property state.

 

Alaska is a different animal altogether:  Alaska is a "separate property state" where couples may opt-in to a community property arrangement.

 

How it Works:  In a community property jurisdiction, most property acquired during the marriage (except for gifts or inheritances)—the community, or communio bonorum; — is owned by both spouses "in common" and is divided upon divorce, annulment, or death.  Ownership "in common" is presumed by law and may be rebutted only by specific evidence.

 

Why it's Important to Know:  A problem can arise when a married couple lives in a community property state, acquires assets, moves to a common law state, and then divorces.  What happens to all that community property that was acquired prior to the move?  Does it stay community property that should be divided 50/50?  Or does it become "marital property" under Illinois law and become subject to equitable division (meaning you might get less than 50/50 . . . or even nothing at all)?  Under Illinois conflict of law principles, a dispute is governed by the "law of the jurisdiction that has the 'most significant relationship' to the events out of which the suit arose, and to the parties."  Ted Carris v. Marriot International, Inc.,  466 F.3d 558, No. 06-1506 (7th Cir., October 16, 2006).

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