Know all about Community Property

Community Property is any property that a married couple has obtained during their marriage. It is a marital property regime which developed in civil law jurisdictions, and is now also found in some common law jurisdictions.

According to a community property jurisdiction, what ever property a married couple obtains during the marriage (excluding inheritance or gifts) should be jointly owned by the husband and wife and the property should be divided equally upon annulment, divorce or death. Even if one partner has all the money to obtain the property, all the obtained is regarded as community property. That is 50% owned by the husband and the rest 50% owned by the wife. Joint ownership of a community property is automatically presumed by law in the lack of definite proof which would point to a contrary conclusion for a specific piece of property. In most cases the community property system is justified by the idea that such a joint ownership distinguishes the theoretically equal contributions of the husband and wife to the making and functioning of the family unit.

There are mainly nine community property states in the United States. They are California, New Mexico, Idaho, Arizona, Texas, Washington, Louisiana, Wisconsin, and Nevada. Besides this, Puerto Rico also falls in a community property jurisdiction. And in the western, community property is derived from the law of Mexico. According to the law in Alaska, married couples are also entitled to adopt community property rules by merely signing an agreement. This helps the married couples to use the rules at least for the purposes of that state’s law. According to history, most states which operate under the community property regimes were said to be first colonized by France or Spain, which have always been civil law jurisdictions.

Community property boasts several federal tax implications, which the IRS explains in its publication 555. Generally, community property can result in lower federal capital gain taxes after the death of either the husband or wife. This is applicable mainly when the surviving partner sells the property. There are several states which creates an updated form of community property, known as “community property with right of survivorship.” According to this, the holding title features several likenesses to joint tenancy with the right of survivorship.

The rules as well as effects of holding title as community property – or any other form of concurrent ownership – varies from one state to the other. It is advisable that the consumers must make a thorough research on the community property rules of their state if they are considering on how to hold their property. You can also discuss these matters with an attorney, who will be much familiar in these matters. Keep in mind that you selected a right attorney who is well experienced as is renowned for his/her service.