Quick Answer There are 9 community property states in the United States: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Alaska, Tennessee, Kentucky, Florida, and South Dakota allow couples to opt into community property treatment by agreement. In community property states, almost everything acquired during the marriage belongs equally to both spouses and is divided 50/50 in a divorce. Property owned before the marriage, plus gifts and inheritances received during the marriage, remains separate property and is not divided. The 41 non community property states use equitable distribution, which divides marital property fairly but not necessarily equally.
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What Is Community Property
Community property is a marital property system rooted in Spanish and French civil law. Under this system, almost everything earned or acquired by either spouse during the marriage is considered owned equally by both spouses, regardless of whose name is on the title or who earned the money.
The community property concept treats marriage as a financial partnership. Each spouse contributes to the partnership, regardless of whether they earn income, manage the household, or care for children. The earnings and acquisitions of either spouse during the marriage belong to the partnership, and the partnership owns them equally.
This contrasts with the older common law approach (still used in 41 US states) where each spouse owns what they personally earn or acquire, with marital property divided equitably (fairly) but not necessarily equally upon divorce.
The 9 Community Property States
Nine states are traditional community property states. The list has remained stable for decades:
| State | Year Adopted | Notable Feature |
| Arizona | 1865 (territory) | Spanish civil law roots |
| California | 1849 (territory) | Largest community property state, governed by Family Code sections 760 and following |
| Idaho | 1867 (territory) | Adopted from Spanish Mexican law |
| Louisiana | 1808 | French civil law roots, oldest in the US |
| Nevada | 1873 | Strongly enforced 50/50 split |
| New Mexico | 1907 | Spanish civil law tradition |
| Texas | 1840 (republic) | Spanish Mexican law roots; some unique rules |
| Washington | 1869 (territory) | Codified in RCW 26.16 |
| Wisconsin | 1986 (adopted UMPA) | Most recent state to adopt; uses Uniform Marital Property Act |
Wisconsin technically adopted the Uniform Marital Property Act rather than traditional community property law, but in practice the rules function very similarly. Most family law analysts include Wisconsin in the community property state list.
How Community Property Works
In a community property state, the legal characterization of property follows three steps:
- Identify when the property was acquired. Property acquired before the marriage or after the date of separation is generally separate property.
- Identify how the property was acquired. Property acquired during the marriage as a gift or inheritance is separate property.
- Identify whose name is on the title. This matters less than the above two questions, but title can affect the analysis.
Under California Family Code section 760, all property acquired by a married person during the marriage while domiciled in California is community property. Section 770 defines separate property as property owned before marriage, property received during marriage by gift or inheritance, and the rents, issues, and profits of separate property.
In divorce, community property is divided equally between the spouses. Separate property remains with the original owner. California Family Code section 2550 requires an equal division of the community estate unless the parties agree otherwise in writing.
What Counts as Community Property
Community property includes virtually everything acquired during the marriage:
- Wages, salary, and earned income of either spouse during the marriage
- Real estate purchased during the marriage with community funds
- Vehicles purchased during the marriage
- Retirement accounts contributed to during the marriage (both the contributions and the earnings)
- Pensions earned during the marriage
- Bank accounts containing earnings from the marriage
- Stocks and investment accounts purchased with community funds
- Businesses started during the marriage
- The increase in value of community businesses during the marriage
- Stock options vested during the marriage
- Debts incurred during the marriage
Importantly, debts are also community property. Credit card balances, mortgages, car loans, and tax debts incurred during the marriage are generally community debts and are divided in the same proportion as community assets.
What Counts as Separate Property
Separate property is not divided in divorce. Each spouse keeps their own separate property. California Family Code section 770 defines separate property as:
- Property owned by either spouse before the marriage
- Property received during the marriage as a gift to one spouse
- Property received during the marriage by inheritance
- The rents, issues, and profits of separate property (such as rental income from a pre marriage property)
- Property acquired after the date of separation
- Personal injury settlements (in California, these are generally separate property if received during marriage, with exceptions)
Separate property can lose its separate character through commingling (mixing with community funds) or transmutation (a formal agreement to change the character of the property). These concepts are common sources of dispute in divorce.
Commingling
Commingling happens when separate property is mixed with community property in a way that makes the separate property impossible to identify. The classic example is a spouse who owned a savings account before marriage, then deposited their salary into the same account during marriage. Years later, in divorce, no one can say which dollars are separate and which are community. The result may be that the entire account is treated as community property, unless the spouse can trace the separate funds.
Tracing
Tracing is the legal process of proving which portion of an asset is separate property. This requires bank records, deposit slips, and a clear paper trail. In contested cases, forensic accountants are commonly hired to trace separate property contributions through years of commingled accounts. Tracing fees can run $5,000 to $50,000 depending on complexity.
Transmutation
Transmutation is a formal change in the character of property. A spouse can change separate property to community property, or community property to separate property, by a written agreement. In California, transmutation requires a written declaration signed by the spouse whose interest is adversely affected (California Family Code section 852). Verbal agreements are not sufficient. This rule prevents one spouse from later claiming that the other agreed to change the character of significant assets.
Equitable Distribution States vs Community Property
The 41 US states that are not community property states use equitable distribution. The key difference is that equitable distribution gives the court discretion to divide marital property in a way that is fair, not necessarily equal.
In equitable distribution states, the court considers factors such as the length of the marriage, each spouse’s contributions, future earning capacity, age and health, and others, and decides how to divide the marital estate fairly. The result might be 50/50, or 60/40, or even 70/30, depending on the circumstances.
Equitable distribution allows more flexibility but also more uncertainty. Two divorces with identical facts can produce different outcomes depending on the judge. In community property states like California, the outcome is more predictable: community property is divided equally.
Quasi Community Property
Quasi community property is a unique concept in some community property states. It applies when spouses move to a community property state from a non community property state.
California Family Code section 125 defines quasi community property as property acquired by either spouse while domiciled in a non community property state that would have been community property if the spouses had been domiciled in California at the time of acquisition. In divorce, quasi community property is divided the same way as community property.
This rule prevents spouses from gaining an unfair advantage by moving to or from a community property state. Without the quasi community property rule, a couple who acquired all their wealth in New York (an equitable distribution state) and then moved to California right before divorce might claim it should not be divided as community property. The quasi community property rule treats those out of state acquisitions as if they had been community property from the start.
How Community Property Is Divided in California
Under California Family Code section 2550, the court must divide the community estate equally unless the parties agree to a different division in writing. This is the strongest equal division rule of any community property state. For complex property division involving business valuation or hidden assets, expert assistance is usually needed.
In practice, equal division does not mean each spouse gets exactly half of every asset. The court can award entire assets to one spouse and offset with other assets to the other, as long as the total values are equal. This is called the in kind division approach. Alternatively, the court can order an asset sold and the proceeds divided equally.
A typical California community property division might look like this:
- Spouse A keeps the family home (current equity: $400,000)
- Spouse B keeps the larger retirement account ($350,000) and a cash equalization payment of $50,000
- The vehicles are kept by whoever uses them, with values offset
- The credit card debt is split based on who incurred each charge
Total value to each spouse: $400,000. Equal division achieved.
Opt In Community Property States
Several states have introduced laws allowing married couples to opt into community property treatment, even though those states are not traditional community property states. The most notable opt in states are:
- Alaska (since 1998): Couples can sign a community property agreement
- Tennessee (since 2010): Allows community property trusts
- Kentucky (since 2020): Allows community property trusts
- Florida (since 2021): Allows community property trusts
- South Dakota: Limited community property trust options
These opt in options are not automatic. They require a written agreement or trust signed by both spouses. The main appeal is a tax benefit. Under federal tax law, community property receives a full step up in basis at the first spouse’s death, which can significantly reduce capital gains taxes on appreciated assets.
Frequently Asked Questions
Q: Is California a 50/50 community property state?
A: Yes, California is a strict 50/50 community property state. Under California Family Code section 2550, all community property must be divided equally in divorce unless both spouses agree to a different division in writing. There are limited exceptions, such as separate property contributions to community assets, which can be reimbursed under California Family Code section 2640.
Q: Is my spouse entitled to my inheritance in a community property state?
A: Generally no. Inheritances received during the marriage are separate property in all community property states. However, if the inheritance is commingled with community funds (for example, deposited into a joint checking account and used for community expenses), it can lose its separate character. To protect an inheritance, keep it in a separately titled account and do not use it for community purposes.
Q: What happens to a house bought before marriage in a community property state?
A: A house purchased before marriage is separate property. However, mortgage payments made during the marriage with community income may give the community a partial interest in the home. California uses the Moore/Marsden formula to calculate the community’s interest based on the proportion of principal paid with community funds during the marriage. The community typically does not get a percentage of pre marriage appreciation but does get a percentage of post marriage appreciation.
Q: Are 401(k) accounts community property?
A: The portion of a 401(k) earned during the marriage is community property in all 9 community property states. The portion earned before the marriage is separate property. Dividing a retirement account in divorce requires a Qualified Domestic Relations Order (QDRO), which costs $500 to $1,500 to prepare. The non employee spouse generally receives an equal share of the marital portion of the account.
Q: What if my spouse hid assets during our divorce?
A: Under California Family Code section 1101, if a spouse breaches their fiduciary duty by concealing community property, the court may award 100 percent of the concealed asset to the other spouse as a penalty. This is in addition to the equal division of the rest of the community estate. Hidden assets discovered after the divorce is final can also be addressed by a post judgment motion to reopen the property division.
Q: Can prenuptial agreements override community property rules?
A: Yes. Prenuptial agreements can change how property would otherwise be characterized under community property law. A common provision is that earnings during the marriage will remain separate property of the spouse who earns them, rather than community property. California recognizes prenuptial agreements under the California Premarital Agreement Act (California Family Code sections 1610 to 1617). However, the agreement must meet strict requirements to be enforceable.
Q: What is the difference between community property and joint tenancy?
A: Community property and joint tenancy are both forms of joint ownership but they are different. Community property is created automatically when assets are acquired during marriage in a community property state. Joint tenancy is a specific form of joint title with rights of survivorship. The tax treatment differs significantly. Community property gets a full step up in basis at the first spouse’s death, while joint tenancy only gets a step up on the deceased spouse’s half. For appreciated assets, community property treatment is usually more tax efficient.
Q: How is community property divided when one spouse owned a business before marriage?
A: The business itself remains separate property if owned before marriage. However, the increase in value during the marriage may be partly community property depending on how the increase occurred. If the increase resulted from market forces (passive appreciation), it generally remains separate. If the increase resulted from the personal labor of the owner spouse during the marriage, the community has a claim. California uses two formulas (Pereira and Van Camp) to allocate the increase between separate and community property.
Bottom Line
Community property is fundamentally different from equitable distribution. In the 9 community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), almost everything acquired during the marriage belongs equally to both spouses and is divided 50/50 in divorce. Separate property, including pre marriage assets, gifts, and inheritances, stays with the original owner.
California has the most developed body of community property law of any state. If you are facing a divorce involving complex property, a free consultation with a board-certified family law attorney can help you understand which assets are community, which are separate, and how to protect your interests.
About the Author
Donald Glen Haslam, Esq. is a Board-Certified Family Law Specialist by the California State Bar Board of Legal Specialization and a senior partner at Haslam & Thorne, LLP in Ontario, California. He has practiced family law exclusively for over 40 years, representing families throughout San Bernardino County and the Inland Empire. Reviewed by Brian George Thorne, Esq., Board-Certified Family Law Specialist.
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Disclaimer: This article is for general informational purposes only and does not constitute legal advice. Community property law varies by state, and individual cases involve complex factual analysis. Every property division situation is unique. For advice specific to your circumstances, consult with a licensed family law attorney in your state. Reading this article does not create an attorney-client relationship with Haslam & Thorne, LLP.
