Most property that is acquired during marriage is considered marital or community property. For example, wages earned by the husband and wife during marriage generally are considered marital property. If one or both spouses buy a house or establish a business during the marriage, that usually will be marital property, particularly if the house or business is purchased with the husband’s and wife’s earnings.
Separate property is property that each spouse owned before the marriage. Separate property also includes inheritances and gifts (except perhaps gifts between spouses) acquired during marriage. During and after the marriage, each spouse may keep control of his or her separate property. Each spouse may buy, sell, and borrow money on his or her separate property. Income earned from separate property, such as interest, dividends, or rent generally are classified separate property. However, in some states that recognize community property, these profits may become marital property.
Separate property can become marital property if it is mixed with marital property. If, for example, a wife owned an apartment building before the marriage and she deposited rent checks into a joint checking account, the rent money probably would become marital property, although the building is likely to remain the wife’s separate property as long as she kept it in her name. If the wife changed the title on the building from her name alone to the names of both herself and her husband, that probably would convert the building into marital property. In addition, if one spouse put a great deal of work into the other spouse’s separate property, that could convert the separate property into marital property, or it could give the spouse who contributed the work a right to some form of payback.
A husband and wife may own property together during the marriage. This occurs automatically in community property states. Ten states: Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin, as well as Puerto Rico, use the community property system. These jurisdictions hold that each spouse shares equally the income earned and property acquired during a marriage. This is true even if one spouse supplied all the income. In the other states, spouses generally share property under one of the following three forms of co-ownership:
Joint tenancy. A form of ownership that exists when two or more people own property that includes a right of survivorship. Each person has the right to possess the property. If one partner dies, the survivor becomes the sole owner. Any two people–not just spouses–may own property as joint tenants. A creditor may claim the debtor’s interest in joint tenancy property.
Tenancy by the entirety. Allowed only in some states, tenancy by the entirety is a type of co-ownership of property by a husband and wife. Like joint tenancy, it includes a right of survivorship. But a creditor of one spouse may not attach (seize) the property. Each party usually must consent to the sale of the property. Divorce may result in a division of the property.
Tenancy in common. This form of co-ownership gives each person control over his or her share of the property, and the shares need not be equal. The law does not limit tenancy in common to spouses. A tenancy in common has no right of survivorship; when one spouse dies, his or her share passes to the heirs, either by will or state laws.
Tenancy rules vary from one state to another. Some tenancies are complex and must be created in a precise manner; otherwise the courts may not enforce them.