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What are community and separate properties?

On Behalf of | Jan 25, 2023 | Property Division

Asset division often makes up the hardest part of divorce for many couples. Having an understanding of how it works can go a long way in making it easier.

Thus, understanding community versus separate properties is the first step to take.

Community properties

The Business Professor takes a look at community versus separate properties. These are the categories that nearly all assets fall into.

Community property constitutes the assets that get divided. These are jointly owned, or purchased using jointly owned bank accounts. Typical examples of items in this category include houses, cars and land parcels.

Separate properties

Separate property, on the other hand, typically does not go through division and instead remains the sole property of the individual in question. Examples of separate property include gifts given directly to an individual, inheritance, or anything owned by the person before the marriage.

Properties that change

However, in some cases, separate property might become community property. This happens if a person uses their separate assets to purchase a joint asset, or if they deposit their separate assets into a joint bank account.

For example, if a person uses inheritance money to buy a house that has both spouses’ names on it, then the house itself does not count as separate property even if bought with inheritance money.

Likewise, if a person deposits any gift money into a joint bank account, that money then becomes community property.

Understanding the definition of separate and community properties and what may cause one to change to another may help a couple a lot during the divorce.


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