Did you know that the way your state handles debt and assets can drastically affect the way your divorce agreement is decided? While the vast majority of the United States abides by an equitable distribution model, 9 states use community property laws. Read on to learn more about how community property states treat the division of debt and assets when divorcing.

If you live in one of the below states, your divorce is ruled by community property laws:

• Arizona
• California
• Idaho
• Louisiana
• Nevada
• New Mexico
• Texas
• Washington
• Wisconsin

It should be noted that, while Alaska is not included on the above list, it does allow couples to "pick and choose" some of their marital estate to be governed by either community property or equitable distribution models.

What does community property really mean?

The word "community," in this instance, means both parties, or the marital estate. So both the husband and the wife share the benefits of property owned and the burden of responsibility for debts owed equally.

How is property divided?

All property purchased between the date of the marriage and the date of legal separation or divorce is jointly owned by both parties, regardless of who actually bought the property or whose money was used to make the purchase. Property can be anything from homes, cars, artwork, jewelry, furniture, pets, bank accounts, and more. If you are a stay-at-home parent who gave up opportunities for education and a career to raise the children, you may benefit from this type of divorce model.

Two exceptions to the community property rule should be pointed out:

1. If your property owned prior to the marriage is intermingled, it becomes community property. For example, if the husband used money he had been saving for many years prior to marriage to help purchase a home, that money is now considered to be intermingled and is now community property, as is the house. Had the money been left in his private account, it would be exempt from the community property bucket.

2. Gifts given specifically to one party is exempt, as are inheritances left to just one party, no matter when the party came to be the owners.

How is debt divided?

Unlike property in a community property state, debt taken into marriage becomes joint debt. When marrying in community property states, an open and forthcoming financial disclosure is vital to prevent unhappy surprises when divorcing. Debt is generally split 50/50 between each party, regardless of who took on the debt or in whose name it is. It should be noted that a prenuptial agreement can help ensure that property owned prior to marriage is well-defined and documented.

For more information about how divorce in a community property state treats debts and assets, contact a divorce attorney at a firm like Dunnigan & Messier P.C..